517: Empowering Your Team to Teach Others | Pete D’Arrigo, CFO, Envestnet

Listen to the Episode Below (00:38:06)

When Pete D’Arrigo is asked to identify the business growth milestones that punctuate his 13-year CFO tenure at Envestnet, he pays passing homage to the company’s 2010 IPO–before drawing our attention to a convertible debt offering made in late 2014: “This was an offering that put us in a different swim lane. It was the first time that we issued debt, and it was a well-received, oversubscribed offering that then allowed us to lay the groundwork for 2015 and beyond to build out the capabilities to drive revenue.”

Whereas the IPO appears to have whetted the company’s M&A appetite
(Envestnet acquired seven companies within the next four years), the debt offering was designed to help with the heavy lifting that often follows a hearty M&A diet.

To achieve greater visibility across Envestnet’s expanded operations, its finance team became focused on building out the infrastructure and systems required to integrate the acquired companies, explains D’Arrigo, who believes that it’s the operational aspects of Envestnet’s finance function that today set it apart. “It’s core to our business today, and that’s with or without an acquisition,” adds D’Arrigo, who notes that these same operational approaches are now empowering Envestnet to better serve its largest customers and partners. –Jack Sweeney

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CFOTL: As you look forward, what role do you expect your team to play?

D’Arrigo: Within finance, while there is still a lot to do, there’s a lot of new stuff that we’re doing. There are new analyses that we’re trying to get deeper on to better understand what’s going on in the business and the need for analytics. We have built teams that understand not just the financial elements but also the operational aspects of the business–again, to be able to dive deeper into what we’re doing to provide management leadership with better intelligence as to what’s going on in the business so that they can make better decisions. I think that the whole intelligence element is part of our core offerings. It’s what we’re trying to drive to the marketplace, and we’re also trying to drive it internally. Right now, for us, it’s all about improving the process, the way we’re doing things, and improving our organization’s understanding of what’s happening in the business in a more consolidated way. We have a line of sight within our business units. But as we try to consolidate and work with more businesses that have been brought in through acquisition or partnership and integrated deeply, there are many, many opportunities for us to improve the way in which we’re doing things. While on the one hand I recognize that one of the strategic moments that we talk about is recognizing that we’re doing things well, the emphasis for the next 12 months will be on continuing to do things better. We spend a lot of time talking about acquisitions and transactions and milestones, and my concern in that is that there’s an overemphasis on that element of the organization.
It’s really all about the operational aspects of implementing clients’ complicated transaction histories and the account structures that are being set up. That is just part of the ordinary course of business for us. When we think about or talk about what we call these “conversions,” these are for large clients with hundreds of millions or up to several billion dollars or more that we put on the platform at one time, as opposed to an advisor that’s already using the platform and opens an account day after day, and that sort of ongoing work. So these conversions can be very complicated and very gnarly. We used to say that we were the least bad at them, but we’ve come to realize in the last three or four years that we’ve been doing so much of this that we’re actually good at them. And it’s that same infrastructure that supports the integration with acquired businesses. jb