“Education is one of the most important privileges” With Jason Hartman & David Donovan

Education is one of the most important privileges. Bringing it back to financial literacy gives you the tools for success not just in finance but opens every door. It empowers you to be your own greatest resource. As a part of my series about “Investing During The Pandemic,” I had the pleasure of interviewing David […]

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Education is one of the most important privileges. Bringing it back to financial literacy gives you the tools for success not just in finance but opens every door. It empowers you to be your own greatest resource.

As a part of my series about “Investing During The Pandemic,” I had the pleasure of interviewing David Donovan, Executive Vice President at Publicis Sapient. David oversees Publicis Sapient’s entire financial services portfolio for the Americas. He is responsible for setting operational strategies for the firm and managing relationships with top global investment banks. Donovan brings 25 years of expertise working on Wall Street as an institutional equity trader, including 14 years as the sector leader of technology trading for Fidelity Management and Research, when working with investment banks and asset managers. Since joining Publicis Sapient in 2005, his deep understanding of business, regulatory, operations, and technology challenges facing C-suite executives, has enabled Donovan to help develop top strategic initiatives to evolve Publicis Sapient’s business and improve the company’s ability to deliver transformative work. As a trusted advisor to C-suite executives, David is involved in many key strategic initiatives helping with the digital transformation of banks, building better operating platforms and leveraging globalization to reduce cost and grow revenues. David’s area of expertise includes building and executing strategies to lead digital transformation for banks, helping enterprises best understand data through proprietary data science solutions, providing globalization expertise to create an efficient operating platform for banks, leveraging service level design concepts along with dev-ops & cloud integration, developing and implementing strategies to manage middle office operations and technology among other custom technology needs for clients. As head of Publicis Sapient’s largest business division, Donovan personally leads the Financial Services’ largest clients in their digital business transformations. Donovan has worked hard to foster credibility and trust with his leadership team, and he’s proud of the role he’s been able to play in their personal growth.

Thank you for doing this with us! Before we dig in, our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?

I’ve always been fascinated with Wall Street and the stock market. I saw Wall Street as an extension of the competitive sporting environment that I was familiar with from playing collegiate football at Boston College. I was recruited to work as a trader at Fidelity Management and Resource for the fund manager, William Danoff, who was notorious for his intensity and profound success. He had a reputation for being challenging to work with on the trading desk. Working with Will was crazy but I fed off the intensity. For the first 3–4 years, pretty much the only time I got up was to go to the bathroom. The Fidelity Contrafund grew from $800 million to over a $100 billion fund and I am proud to say I played a small part in its success. After I spent 20 years on Wall Street, it was time for something new. In 2005, there was a market infrastructure change called Regulation NMS which altered the way stocks were traded on the NYSE, as well as in Nasdaq markets. I saw how technology was becoming a driver- it wasn’t about people making big decisions or performing the executions on the phone anymore. I joined the consultancy, Publicis Sapient, where we help financial service institutions reimagine their businesses for the future, leveraging disruptive digital capability.

Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you give the lesson or take away you took out of that story?

Will’s dedication to the market was unmatched, but I learned it wasn’t about self-fulfillment for him. One morning when I brought in his trading sheet he showed me a personal letter addressed to him from a young couple. It included a picture of their son and thanked Will for managing their funds so their son would have the opportunity to go to college. He said, “The reason that I am so maniacal is that I have a greater responsibility” There were dozens of those letters, all thanking him for the opportunity to help them fulfill their life goals. I took on these responsibilities as well, and as a result, I worked harder to ensure these opportunities were provided to the customers who entrusted us with their funds.

Are you working on any exciting new projects now? How do you think that will help people?

Currently, we’re working with a large financial institution to help them build a roadmap for a platform that will allow customers to receive online loans for up to $100,000 within 30 minutes by — providing just their names and social security numbers. This platform is a game-changer because it can be linked to a robo advisor, allowing the customer to toggle money digitally from savings account to robo advisor to stocks, all very seamlessly. The platform also provides access to DIY investing tools, allowing the customer to utilize portfolio analysis and optimization, whether they are an individual or a registered advisor. The customer will have the ability to do everything on one platform with one I.D.

We are also working with a company to rapidly enhance their tech solution, to allow people who are unemployed to get funds quickly. We have revamped their existing technology into a faster, seamless solution that provides relief for their legacy tech, which was bottlenecking the process so that people can get their funds immediately.

Additionally, we are using A.I. and unique data sets to help manage bond portfolios based on consumer behaviors, particularly as it relates to COVID-19. Using A.I. & data, we can unlock tremendous business opportunities at both the enterprise and investor level. A.I. will create so many options for companies, from both an investment and a customer experience perspective, providing a much more personal experience. Consumers won’t be inundated with information that isn’t relevant to them because they will have access to really granular data that is changing in real-time, which they can apply directly to their wants and needs. Since the onset of COVID-19, for example, companies are now tracking data showing how consumers’ interactions with brands are changing — this is insightful for the companies.

Many people have become anxious about the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty and loneliness. From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain it?

We are out in the marketplace, creating awareness around why people need to challenge their institutions to provide better options. We have created COVID-19 related solutions across each of the verticals which Publicis Sapient focuses on. Each of these solutions will impact clients who utilize services within those industries. We’ve encouraged our clients to be more proximate with their clients by getting out in front early and helping them, showing them what emerging tech and leveraging digital can do, like providing new ways to access funding or credit, what they can access with their bank or financial institution whether it be more mobile options, or getting more education online.

As you know, the stock market and the economy, in general, have become extremely volatile and uncertain. Many people “dollar cost average” and put aside a monthly sum into a long term savings plan for retirement, college, or a home purchase. If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?

First, having a good strategy is most important because you can never really time the market. My personal opinion is that the S&P has performed well over a long time. Warren Buffett has said publicly within the last week that he feels the S&P 500 is the best investment around and stated “If you bet on America and sustain that position for decades, you’d do far better than buying Treasury securities, or far better than following people who tell you” how to invest.

I would also emphasize if someone is looking to invest in individual companies, they should focus on companies that are doing well digitally. Microsoft, Facebook, Amazon, Netflix, Tesla are all excellent examples of companies that are thriving right now due to their digital capabilities. Digital allows companies to create a great deal of operating leverage in their business models and to pass those savings on to consumers.

If you look at Facebook, for example, we’ve seen activity explode with over 3 billion people using their apps. Their core mission is now centered on helping people to stay connected since they are unable to meet in person. With that, we’ve seen massive growth in user activity across Facebook, Instagram, and WhatsApp.

Eventually, the economy will recover and rebound. Certain sectors, like travel and hospitality, might be hurting for a while. But other sectors, like technology and healthcare, might do very well. If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?

What the pandemic has done is make it, so we have to be able to interact digitally, whether it be obtaining information or procuring goods. There are new realities that are going to stem from the pandemic that will become standard ways of operating. If you think back to pre-9/11, there were no airport security lines, but post-9/11, security was implemented across all airports and became part of the travel experience, people adapted to that change, and it has now become an expected part of airline travel.

In a similar vein, due to COVID-19, minimal physical contact will be preferred, and contactless payments will be prevalent. Therefore businesses need to create solutions and scale without being proximate. The businesses that can do this quickly are going to have an advantage over the companies that struggle to get up to speed digitally.

One of the reasons I am so bullish on MSFT, Google, Facebook, and Amazon is due to the fact that they have already figured out how to operate efficiently and successfully in a contactless manner within each of their ecosystems. These companies have been very dominant and will only continue to get stronger. They all have a vast customer base, and they’d have to botch things up to not remain profitable for the long term. Companies that can create a business model around a virtual workforce will be able to bring on the best and brightest in the world.

Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?

There is an opportunity in the volatility caused by the pandemic, which has created situations for potential investment, but none of them come without some associated risk. Take the airline industry, for example, which has been decimated due to the lack of travel. People will fly again, and currently, the airline stock is massively cheap, so you could hedge and invest in a particular airline, but how do you know which one will rebound the best? Instead, you could focus on investing in Boeing, which makes the planes as an investment in the travel industry that has a higher potential for payoff.

Purely digital companies are really exciting to invest in. People should concentrate on companies that have captured platforms such as Facebook, Apple, and Amazon. In addition to having an already captured user community, these companies are all digital, with the ability to bring products and services to that community quickly and seamlessly. They all have extensive access to personal data, data sets, people data, analytics, and A.I. Digital currency is likely to proliferate. Traditionally, money has served three functions: to facilitate payments as a medium of exchange, to serve as storage of value that can be relied on for future use, and to simplify transactions by providing a standard unit of account to compare the value of goods and services. The pandemic has raised awareness around the need for digital currency. The Fed is working on a Fed-issued digital coin as digitalization has the potential to deliver greater value and convenience at a lower cost. However, there is still a fair bit of research and experimentation to be completed before this becomes a reality. Digital currency and virtual money could be unpinned from the nominal value.

The digital highway is alive and growing. The Squares and PayPal’s of the world are footprint light with no heavy fixed costs; they could seriously threaten traditional banks as they continue to build out their networks. Square is up 10%. Paypal is up 14%. Paypal CEO Dan Schulman said over 60% of their customer base doesn’t want to have anything to do with handling cash, and they are currently working with partners to put in contactless solutions everywhere. Schulman said, “one profound change will be a dramatic acceleration from physical to digital. It’s clear that digital payments have evolved from a nice-to-have capability to an essential service.”

One other area of investment to consider could be investing in an ETF (exchange-traded fund) that invests in emerging pharma companies. This will allow investors to get particular exposure to rising pharma via pooled investment funds.

Are there alternative investments that you think more people should look more deeply at?

I’m very excited at the pace of innovation in our work. People should look at organizations that are building themselves as digitally native companies, with no debt, and using tech to leverage themselves around consumer behavior and understanding marketing trends. If you take Amazon as an example, when they launched in 1995, they were initially selling books. Due to Bezos’ vision around massive growth and expansion into e-commerce, and the evolution of technology, they wound up in cloud services and have the infrastructure to get into any business they want. They have analytics in the cloud and get the intelligence of corporate customers or consumers, and a best in class delivery model with minimal capital upfront. They can do it better, faster and cheaper than anyone else. It’s plausible we could see them now get into drug delivery and procurement. The power of information is going to continue to proliferate as the experiences cater to the consumer.

To that end, we can anticipate blockchain helping to speed up global procurement — enabling faster and more secure transactions. With blockchain, we can trust the data. Therefore you can safely build on top of it without the risks inherent to less secure databases, which accelerates the ability to streamline business and operations further. We’ll also see a big impact around a more seamless warehouse to client experience from purchasing to payment. Reduction amongst bottlenecked processes and all-around better customer experience is the key takeaway here. This will also spur innovative new companies, which could be possible future investments.

I anticipate we’ll see a decent amount of people shifting their nutrition habits as a result of the pandemic and a hyper-awareness around where and how our food is being produced and handled. I’m personally interested in the alternative food supplies, such as Beyond Meat, which provides plant-based alternatives to protein. Earlier this week, Beyond Meat announced plans to capitalize on potential meat supply chain issues as some U.S. meat plants have become sites for outbreaks.

If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long term investment, what would you advise them to do with it?

Safe Investment — S&P 500. It would be hard to go against the index fund as it’s been profitable over a long period. The U.S. is the most innovative company in the world, which is why you have dynamic companies that have been born out of different periods. G.M. is an excellent example of a car manufacturer that has pivoted to making masks and ventilators in scale during the pandemic. The power of U.S. companies to innovate is limitless. When you buy into the S&P 500, you have access to all the cutting edge companies as they grow and go through enterprise changes. It is a concurrent index that is taking the best of the best and gives exposure to that portfolio of enterprises and the most innovative companies in America.

Rising Investment — FinTechs. Goldman has figured out how to pipe into every fintech that they can then fold into their open-source platform. Jeff Gido, global head of Goldman Sachs financial technology group, has stated, “It’s been about creating opportunities with these private fintech companies first and foremost. We want to be the core adviser to the next generation of companies, those who will be the next PayPal or Square.” The power of platforms and ecosystems is pivotal as they feed off each other and create more robust opportunities.

Risk/Reward Investment — Cloud or companies focused on digital with lean/agile leadership. Invest in anything that has to do with the cloud or any entirely digital company. Amazon is booming due to its digital tech, which allows them to break down barriers to any business. There are very few businesses that Amazon could not penetrate because of its infrastructure, coupled with its ability to deliver promptly. Amazon is constructed with organizational agility, which gives them the ability to pivot incredibly fast into rising opportunities, and they are not gated by administrative brain drain. Companies that have a lean/agile leadership, with the ability to make business decisions quickly and act swiftly will likely be worth the risk of investment. These companies determine what they want to invest in the long term and create value streams, which, when evaluated correctly, can lead to lucrative payoff.

Ok, thank you! Here is a more general finance question. You are a “finance insider.” If you had to advise your adult child about five nonintuitive essentials for smart investing, what would you say? Can you please give a story or an example for each?

1. Take advantage of company benefits. One of the most important benefits is a 401k, which is your employer giving you money in the form of a pre-taxed match. Invest in it, even if you are resistant to sacrificing some of your paychecks.

2. Invest in companies that you understand and can relate to, such as Apple, where you use some of their products daily. As an active consumer, you have a better understanding of the company.

3. Student debt can feel crippling but take advantage of financial tools out there that can help you manage student debt. There are options to find the best way to refinance and consolidate that debt at a lower interest rate while strategically paying down the debt when it’s feasible. This way, you can avoid those times when your budget is too tight, and you miss a payment.

4. Invest in a big cap U.S. index fund with low fees, diversify money, but don’t put your money in something you don’t understand.

5. It’s critical to saving money. It’s hard to put away a lot when you are paying off short term bills but taking the time to put aside money for future endeavors is the best way to set you up for success

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“You can’t go back and change the beginning, but you can start where you are and change the ending.” We learn through our life experiences that there will always be some good and some bad. The lesson is never to stay positive and think about how you can affect change for the better.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂

Education is one of the most important privileges. Bringing it back to financial literacy gives you the tools for success not just in finance but opens every door. It empowers you to be your own greatest resource.

Thank you for the interview. We wish you only continued success!

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