This is the fifth article in a series we are calling Winners of WealthTech, where I interview people who have made a name for themselves in wealth management technology and have a track record of innovation and success.
My previous four interviews were wildly successful in terms of views and traffic, so there will be no stopping this series in 2018!
- Aaron Klein, CEO of Riskalyze
- Bill Crager, President of Envestnet
- Stuart DePina, President of Tamarac
- Cheryl Nash, President of Fiserv Investment Services
I’m happy to announce that for this installment, I was fortunate to be able to speak with industry veteran Lori Hardwick. Lori was one of the founders of Envestnet and was instrumental in guiding them from a minor player to the largest TAMP and technology provider in the wealth management space. After 15 years at Envestnet, she left to become Chief Operating Officer of custodian Pershing, but left after just 11 months and took off the end of 2017 to spend time with her family and refocus.
Lori has since resurfaced in style. She is now the founder and president of Advisor Innovation Labs (AI Labs), which is developing systems of engagement apps and smart products to improve the real-time workflows between advisors, clients and partners.
In 2016, Lori was named to the “Women to Watch” list by InvestmentNews and also, made the 2016 Investment Advisor’s list of the 25 most influential people in the financial industry. Also, Lori was named one of the “50 Most Influential Women in Private Wealth” by Private Asset Management magazine in 2015 and one of the “50 Top Women in Wealth” by AdvisorOne in 2011.
In this interview, we talk about what makes Lori’s work so rewarding, what has become more important to her recently, and what some of her habits are that help her to be more productive.
What was your motivation for launching a startup?
Envestnet was a fun run. It was 15 years of riding the wave from when advisors were working primarily with Excel spreadsheets to building a wealth management platform that really helped scale their business. That was transformational, what I felt in a positive way, to the investment industry.
And then I went to Pershing, which was a much larger firm. There were many different divisions. I was COO at the parent company level so I was trying to learn their business, get up to speed in this big behemoth of a company and I just didn’t feel like I could move fast enough. I felt like there were a lot of areas where I wanted to see movement but I just couldn’t. We couldn’t get there with me there or with anyone there I don’t think. It’s just a much larger company with a lot of moving pieces and a lot of underlying reasons why they’ve built things the way they have.
So I decided it was time to just take a step back and I didn’t want to prolong everything, I was there for 11 months. I took a step back and was talking with everyone in the industry (and I mean these were other very, very large companies and then there were some very small RIA companies I spoke to). There was at least 80 or 90 different companies that I was speaking with and getting wooed by to come work for.
Those conversations can always be interesting because someone’s trusting you enough to think about hiring you and having you come into a leadership position, so they’re usually pretty honest about which issues they’re struggling with. Upon reflection, 85% of them had the exact same issue, which was having all these different app stacks, none of which were talking to each other. They couldn’t figure out a way to really leverage their sunk costs in their current technology and therefore, they needed someone like me to come in and show them how to weave them all together so they can build in some scalable ways for both advisors and firms. It depended on the way that that company was structured and who their clients were. But, regardless, it was all the same problem. Everyone was on an old code base and none of these silo applications were talking to each other.
So, I was looking at the industry thinking, well someone’s got to be doing this – where are they, what are they doing? Come to find out, everyone coming into the industry is selling a new product or selling a new piece. They are talking a lot about their open API functionality, but everyone wants to be the anchoring technology. They don’t really want to be fully open to just work the way the firm wants to work with their own voice, with their own ecosystem. So I joined forces with Mike Zebrowski and talked to him about these concerns. If you look at all the statistics in the industry right now, there’s fewer and fewer advisors. Certainly in the next five or ten years there will be more consolidation and more advisors are retiring then we are recruiting into our industry. So we have to build more scalable ways for advisors and clients to interact. Otherwise, we will not be a thriving industry with vitality.
So, I decided I want to make an impact. My goal is that every client who wants financial advice can get it from a human being, from an advisor who knows what they’re doing. So how can we really help those advisors do more in their day? I believe it’s in building connective tissues that allow for all these disparate app stacks to work together in a more seamless way so that advisors don’t have to login to five or ten different, separate apps every single time they talk to a client and try to get the information they need.
We’re bubbling up the top 5-10% of the information advisors need and bringing it front and center so they can get their work done. We’re also sending that information out to end clients in a way that’s intuitive and feels like a great experience.
Are you building a platform?
Yes, we’ve built a platform for lots of other platforms. I saw you spoke with Aaron Klein at Riskalyze, you’ve talked to Bill Crager at Envestnet, and you’ve talked to Cheryl Nash at Fiserv. These firms all provide elements that can be worked into our platform. Most people choose a CRM, a financial planning system, a turnkey asset management system and a custodian to begin with. So that’s what we’re doing. We’re not displacing anything that the client already has, we’re just making their technology work better for them.
CI: You’ve had an interesting career. You’ve had the experience of being a company founder and taking it public, you’ve got the experience of coming into a new company, and you’ve got the experience of a startup. Do you have any rules of thumb you can share with other people who might be where you were three years ago, trying to decide which way to go in their career?
Yes. As Steve Jobs said, “You can only be great at something if you love what you do”. I am a strong believer in that. I think that people who give the advice of ‘fake it till you make it’ is one of the worst advice quotes that I know of. I just don’t like it.
I feel like authenticity is important and I think it’s one of my best attributes and what has allowed me to build a really broad and diverse network in this industry. So if I were giving advice I’d say be who you are and be truthful with yourself about what you really love to do. I think that if you are honest with yourself and you’re authentic about what you know, what you don’t know, and what motivates you every day, that mindset will set the course for your career and and for your success.
What has become more important to you in your personal life over the past few years?
I am really hell bent on making an impact. I know that there is an impact you can make in your professional life and one in your personal life. As I’ve gotten older and certainly more recently, I’ve searched for where I’m spending my time in the most meaningful ways. I’m an action oriented person, I do not like complacency in any part of my life.
My husband and I just moved to Philadelphia after 25 years in Chicago and I was reading through your questions before this interview and it was talking about the morning routine. And it made me realize I’m being forced to redevelop all of those routines because I was never on a train before, but now I’m on a train and what do I do with that time now. I’m just loving feeling this new creativity, where I can be flexible and change things around in a way that makes sense for me.
For example, having this new time on a train has allowed me to make lists of my goals for each day, and figure out what is actually going to move the needle, both in my personal and professional life. And I feel like those are still interconnected for me because I just love what I do and I love my work. So there’s not a day that goes by that I don’t think about both. My life is inclusive of both, I don’t have a broad stroke between the two and I never have. So making an impact and figuring out where you’re spending your time most meaningfully is really important to me, and I think that’s something that’s become more important to me now that I’ve gotten older.
Have you always made a list of goals or is that a new habit? 
Well, I think that I always have been very goal driven. I’m a list maker and I always have been, but having a new routine where I am not driving to work, and where I can actually have a moment to think about my schedule for the day and how I’m going to plow through it, makes the day’s activities more meaningful. And more than that, it’s not just getting things done, it’s what the outcome is and how that outcome is going to drive some level of impact. And where is it moving the needle towards a destination or a goal that needs to be achieved.
That’s a difference in the way that I’ve been thinking in the last five years than how I used to think. I used to think okay, this is my job, I’m getting through the day… it’s hard to think more globally sometimes. But if you think about your activities and if they’re actually meaningful, I think it does change how you prioritize your day and what you’re going to work on.
Do you make long-term goals: month, year, five-year career goals?
I certainly have a destination in place or at least a journey I am hoping for. But I will say I typically think in hundred day goals. I do think a year, certainly I know a year out, I know three years out, five years out. But when it comes to really being able to figure out if you’re moving the needle in a productive way, I’ve found that hundred day goals really help. Especially when running a business and building a culture from scratch. Almost everything you do becomes more meaningful because nothing is taken for granted in a startup. At a startup, everything becomes more highlighted.
CI: Right, more exposed?
Yes, more exposed, absolutely. And how people are thinking about what you did and why you made that decision and where it’s taking us. It’s much more transparent throughout the organization then it would be in a larger organization.
What is some advice you have for other startups trying to build their culture from scratch and how to do it right?
Right now there’s a lot of emphasis around what the Millennials want to do, and how we can appeal to the talent among the Millennial segment. I think that some of the things that are coming across are a little disingenuous. Meaning they’ll put in a ping pong table, but no one’s really allowed to play ping pong. Or they’ll allow you to bring your dogs to work, but no one’s allowed to bark. It’s disingenuous, I really do believe it.
I think at the end of the day you have to look at what kind of environment you’re actually trying to build. And what you’re actually willing to handle. If you don’t really believe it, I don’t think you should do it. And because it’s so obvious to everybody that it’s just kind of window dressing.
Culture is a tough thing. It’s built on relationships and a lot of it is also built on things that happen to you as an organization and how you work as a team to get through it. I think that every single day can be a culture building moment to identify how you’re going to work through those things and how you’re going to react to certain things.
A lot of culture is built around stories so it’s important to ask yourself what stories are actually being created, and I think that it’s important for leaders to really think through that. If not, you just go through your normal day-to-day work without a thought to it, and you could actually be building a culture that’s very different than what you intended. So it’s a very intentional exercise, especially in the early days of building a new company.
What are some time management tips that enable you to do everything you want to do?
Well, I don’t do everything I want to do. I would love to manage, I would certainly love to have more time, but it does come back to prioritization. You have to think through what is meaningful, what is actually going to move the needle against your hundred day plan, one year, three or five year plan. If it doesn’t move the needle, you need to reconsider if it’s important.
I have a lot of people who call me on a pretty consistent basis from my old firms. And it’s hard to say no because there are relationships there and I always want to be there for people who been there for me in the past. But, I am getting much better at, not exactly saying no, but saying I have 15 minutes two weeks out, how about that? And making it on a time that works for me versus trying to push it into a day where I do not have the time. Then it just becomes more of an annoyance. The person you’re making the meeting with certainly can feel that and then you’re destroying your relationship anyway.
So I am trying to segment my day in more 10 and 15 minute chunks versus looking at things from an hour long or a half hour long. I think it’s important to start to think of things more condensed in order to get so many things done in a day.
CI: Right, you don’t have to say no, but you have to maintain your limits?
On Sunday nights, I go through my whole schedule. For example, if I know I’m going to prepare for an interview with Craig, I mark out that time. People know I am not available for that hour. And then I realize I am not pushing people off, this is a meaningful thing in my world that I want to set time aside for and I don’t feel guilty about it. Nor do I get pushed around and end up not doing it, which is worse in most cases.
A.I. Labs is a different type of firm than you have worked with in the past. How do you identify people that would be a good fit to work there?
In all my time (all the way back to Nuveen and then Envestnet and Pershing), whenever you’re hiring someone, it’s hard to tell if they’re going to do well. I would say that’s way more true at a startup. A lot of people feel like they want to give it a shot and I think people feel like that because they see money behind it. Their thought process is “if I take this risk and we go public, there will be all this money behind it”.
When I can identify that mindset early, that’s a red flag for me because most startups end up having to start over again versus having it go straight to money in the bank. I am particularly good at inspiring and motivating those around me, but only if we share a common mission and a common goal.
Once we get to the point where we really believe that making sure all clients have access to human financial advisors when and where they want to, and the advisors have a better way of scaling their business so they can do that, and they feel passionate about that, that is how we hire. And I can tell if people light up and start to add more conjecture, such as adding on life coaching and that helps an advisor and a client. You know you can tell if they care or not and it really does come down to that.
I will go back to what I said before – if you don’t love what you do, you’re not going to be great at it. And I believe that through and through. I’ve lived it and I know that if you hire people who believe in your mission, it will be much easier to motivate and inspire them through the hard parts.
Who was your biggest influence when you were growing up?
Well, for sure I know everyone says their father, but he was my biggest influence. There is no way it can be any other answer for me. We lived in a small town, he was a furniture store owner and still is. He was the one who taught me to always put the client’s interests ahead of your own. I think that’s a really critical piece to my success. And understanding that you always do the right thing for your clients and it will come back to you in some way. And sometimes that means giving more than what you made and that’s okay. Sometimes you have to do that in order to show the client that you want to do the right thing on their behalf. I think that a lot of people don’t understand that.
I feel like so much of business school teaches you about the profitability of a company and how to organize the revenues around reinvestment in the company or else what the shareholder value is, but there’s not a lot of emphasis on how to do the right thing for your clients and how to put their interests ahead of your own. And how to really build a relationship that way. And truly, at the end of the day, that’s who’s paying the bills. That is exactly why you will succeed or not succeed. You can spend a ton on advertising, but if everybody is out there saying you are horrible to work with, you’re not going to have a successful business. So, my father is the one who really taught me those very critical values early on and I have really benefited from his wisdom.
Who do you think of when you hear the word successful?
This is hard for me. A lot of people come to mind. I think that the word that would first come to mind is “fearlessness”. Being a leader that people want to follow and that people trust is so important. A few people come to mind. Certainly Bill Crager (President of Envestnet), Sallie Krawcheck (CEO of Ellevest), and Shirl Penney (CEO of Dynasty Financial Partners). I think they’ve all followed their passion, and they’re leaders that people want to follow and that have established trust. There is certainly a long list behind that, but those are the first three that come to mind.
How do you stay motivated with your startup and keep the entrepreneurial spirit going?
I really believe in what I’m doing. I believe in our mission, I know that advisors will be better served by having a solution like ours. And it’s not a self-serving event that I’m going through other than the fact that I am really enjoying making an impact in our industry. That is what gets me up every day. I am dead set on making sure that our advisory industry does not die and in all honesty, I’m concerned about it. I worry about how our industry and advisors will continue to thrive over the next three to five years.
I want to make sure that advisors are giving clients the experience they need and that they deserve so that they can continue to thrive. And that is totally what drives me. I love it. I think there is nothing else that I want to do. 100% of me is passionate about this and so staying motivated is not something I worry about. Having enough of a platform to get it done is more of what I’m worried about and that it’s not coming to the market as quick as it should or as fully as it should to really make the impact that I know it can.
What is the number one reason that the advisory business could go away?
I feel like it’s going to potentially go away because end clients will not be able to receive the experience that they expect and deserve. Our industry has been very slow to adopt intuitive technologies that build the experience with the end client. And we were already way behind and then DOL came along and froze us for another 18 months. Now that’s finally lifting.
Everyone’s thinking about how to add that next new app that will allow them to have more things they can give to their clients. I think that’s entirely the wrong way to think about it. I think that people have the ecosystem they have, mostly because they felt like those were the right solutions for their practice at the time.
And, unfortunately, because they don’t talk to each other, everyone spends way too much time on back office tasks and dealing with administrative issues instead of being in front of their clients. Until we can widen advisors’ bandwidth for spending time with their clients doing meaningful things, we’re going to get stuck in the mud, and I am deeply concerned about this because the experience won’t be what the client wants.
CI: Because clients don’t get the service they expect and they’re going to leave?
Right, exactly. They have great technology at home, and even advisors have better technology at home than they do at work. Somewhere there is a tipping point where technology that once helped advisors scale their business is now hindering their productivity. And that’s really the premise behind A.I. Labs.
What is your morning routine? What do you do the first 60 to 90 minutes of your day?
It is all changing right now, I used to get up and take the kids to school and deal with being a good parent and setting the right tone for the day, and now everything is getting recreated. It’s the first time in my life that I’m able to really just think about my own day and how that’s going to productive and what needs to get done that day. So the first sixty minutes I’m up, I take my dog for a walk.
I’m still learning. I take a walk to the coffee shop and get usually a fancy coffee on my way to the train station and then once I sit down on the train (which is the first civilized train I’ve been able to take for a very long time. I was always on the Chicago L where you’re standing and jostling all your things and hoping for the best) for a full twnety minutes, I make my list, starting with what I’d like to do and that list hits my desk. I set it right beside my phone so that I stay on task and I stay focused on what’s going to be meaningful today.
What would your close friends say that you are exceptionally good at?
They would say I’m exceptionally good at motivating and inspiring those around me. I love to do that anyway, but when they’re down or they need advice on how to deal with a situation, whether that’s a spousal situation or someone’s mother-in-law is driving them crazy or, you know, certainly work, they call me. I have a tendency to look at things with the glass half full and I’m pretty good, very creative when it comes to make things harmonious in people’s lives. So helping them through kind of those difficult things that they can’t think about and even today I get calls from people I used to work with at my ex-firms and they say I was trying to channel what would Lori do in this situation, what would Lori do. And so I love that.
CI: Sounds like a book title, “What Would Lori Do?”
Yeah, what would Lori do. But I get told that, I mean I’m not kidding, Craig, probably at least I don’t know, two to three times a month people say that I was trying to channel ‘what you would do’ in this situation because they feel that I handle sticky situations really well, especially interpersonal situations. So that’s what I think I’m really good at.
What is something that you believe that other people might think is crazy?
I’m sure that other people do think this is nuts, but I think that you should always ask for more than what you expect to get. I’ll tell you a story. When I was at Nuveen, I was young. I was 27 years old and I was getting ready to build the first RIA program they ever had. I remember feeling like I don’t want to make this super expensive program because I don’t want people to feel like it’s going to be all that much. I know I can do it in a scrappy way.
And I realized that when I went to present it to the senior folks, and was kicking this around with some other people, they told me to ask for more, and I was hesitant. I was nervous it was going to get dismissed if it cost too much. Instead, what I found out is if they spend a lot of money on it, they have more interest in making it work. They’re totally invested. So it’s kind of counter to what people might think especially when they are trying to go out and sell a new idea to an established organization and say, oh it won’t cost much. But what happens is it gets more dismissed if it doesn’t cost much and that is one of the things that I think I learned really early on thankfully. And it served me well.
CI: Would you say that your belief that human advisors are not going away or shouldn’t go away is something that other people might think is crazy considering the rise of robo-advisors and digital advice?
Absolutely, yes. I absolutely believe in human advice. I believe how important it is for a client, a person, to look at another person and have that feeling of trust and understanding of goals, and someone that they can lean on. I don’t think that technology is easy to lean on in times of strife, and that is what I think a big part of the advisor’s role is. Certainly it’s to look after the financial well-being of their client as well.
But being that person someone can lean on is critically important and I am dead set on that idea, although many people may not agree with me. That is something that I feel extremely strong about, mostly because when I’m building technology, I think about what I would want, what the experience I want, how I would want to interact, and how I want to receive the information. It’s really not that hard when you think about what you want. You learn all these things and don’t always put yourself first, but that’s the time when you put yourself first and ask yourself how you want your experience to be.
CI: Well I think a lot of people who design software probably do the same. But it only helps if they are able to understand how potential users want to experience things.
That’s exactly right. Although, I think you’d be surprised at how few actually do think about it from that lens. I think that we get skewed. I know even at Pershing and Envestnet, we got skewed by getting back to the system of record. It’s almost like you know too much.
And because you know you have to get back into the system of record, well, then it has to be built like this and this and this. And by the time you get to the front end, it’s all watered down. And it doesn’t make a lot of sense to the end consumer.
But, if you think about it from a design-first approach and a system that’s going to be engaging for the client, that’s what builds really beautiful technologies. But so many people know too much and make it more complicated than it needs to be.
CI: Sure, especially engineers.
Absolutely, yes. I’ve seen it a hundred times.
CI: I was listening to a podcast about entrepreneur and investor, Chris Sacca. He was talking about when he started at Google back in 2003, computer science degrees were different. They were not the same as they are now where everyone wants to be a computer science major and people just focus on coding, and they don’t have a life on the outside.
When you went to college 20 years ago, you had to have a job and you could do a semester abroad and you had a much more well-rounded experience. So when you’re building software for people you don’t know, you have some basis for putting yourself in their shoes.
But now, we have people coming out with computer science degrees but all they know how to do is code. They never had a real job, they got a full ride to Stanford. When they go to build software they often don’t have a clue what someone else would want from a software interface.
LH: Totally agree. I see it over and over again.
We just talked about what your good advice is, what bad advice do you hear being given out most often?
The first piece of bad advice is that ‘fake it till you make it’. I cannot stand that saying because I think authenticity is so very important in really finding a career that will make you successful. I don’t like that saying, I think its bad advice.
The other one is, ‘if you want to be in business, get a business degree first and then get an MBA’. One of my best friends is a professor at Notre Dame and she’s thinks there is way too much redundancy between the two, both business and MBA. It’s important to work in between whatever kind of graduate school you choose. I think that will also help young aspiring talent understand what they like and what they don’t like.
What is one of your favorite phone apps that help you be more efficient?
I love Glassdoor. I think Glassdoor is such a great way to get the truth about what your employees’ experience is at your firm. I think it helps me as a leader to really get an unfettered view of the culture, too. I think that the higher you go up at any organization, the less transparency you have to what it actually is like to work at your firm because everybody makes it seem so great when you talk to them. People will say things worked out great, but, you know, but maybe it didn’t, maybe it did. I’m constantly trying to search for the truth, and I think Glassdoor has a great way of letting you see what the truth is about your company.
I get Glassdoor updates on a regular basis. It’s not a read only in my opinion. You have to read it and respond and figure out, not obviously within the app because you can’t. But, respond to issues that you see that are being brought up as to why you would want to work here or why you wouldn’t want to work here. If you look at the Millennials, they nearly never make a decision about anything without checking with others first and that on Glassdoor they’re looking to see if it’s a good place to work from their peer group. So I think you have to read it and react and continue to fine tune.
Do you encourage your employees to post there?
Yes, absolutely. Not so much that they know (I don’t want them to feel like, ugh, she just told me to post there so now she’s going to know it’s mine). But I do encourage them. I did at Pershing and Envestnet as well. I think that is important.
What book have you gifted most often?
I gift wine most often.
CI: Is that a book?
LH: I don’t gift books. I get books, and I’ve gotten a few really good ones.
CI: What are some good books you’ve received as gifts?
LH: Let’s see, Good to Great (by Jim Collins) is a book I’ve received. There’s another one that I read, that was based on the Navy Seals and how the military works from a leadership perspective. It goes through how they build their trust and the organization.
CI: Extreme Ownership, by Jocko Willink.
LH: Yes, that’s exactly right. I love that book, I think that’s an awesome book.
CI: What kind of wine do you give?
LH: I usually give a red and a white because you just never know.
CI: What brand, is it a certain wine that you give out?
LH: I usually go to wine.com and pick the two that have the highest ratings for the price range I’m looking for. And so, I always am interested in seeing what people think. I always feel like it’s a good fun gift and they know I’m thinking of them.
If you could send a message to your 25-year-old self, what would you say?
Recently, I have felt that it is so important to find the strength within yourself, not within an organization. So many people look at the organization they’re joining and are trying to put the weight of their career and the trust of that in the organization they’re in versus their confidence in themselves. One of my favorite quotes that is so meaningful to me for so many reasons is, “A bird sitting in a tree is never afraid of the branch breaking because her trust is not on the branch but in her own wings.”
For me that means you go to Pershing and if it doesn’t work out, you know what, I can still fly. I’ve got a whole sky of flight plans and opportunities available to me right now. And I think that people get too worried about getting laid off or not making it and therefore it creates this point where they search for safety. And in that regard they don’t stretch themselves like they really would like to, and I believe they would like to in many cases. So that is what I would say I wish someone had told me earlier.
