WEBVTT - Broadridge CEO on Digitization and Democratization of Investing

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<v Speaker 1>This is Bloomberg Business Week with Carol Messer and Tim

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<v Speaker 1>Steneveek on Bloomberg Radio.

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<v Speaker 2>Let's talk a little fintech here. The company, Yeah, the

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<v Speaker 2>company today is broad Ridge. It's a public traded company.

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<v Speaker 2>The tickers b are you put that into the Bloomberg terminal.

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<v Speaker 2>The company's got twenty two point six billion dollars in

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<v Speaker 2>market CAPAIN stock is up forty three percent year today.

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<v Speaker 2>Joining us today, Tim Goki, chief executive officer of Broadridge.

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<v Speaker 2>He joins us via zoom from New York City, and

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<v Speaker 2>I know the company held today an investor day, so

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<v Speaker 2>we'd like to hear what's going on there. Tim, Thanks

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<v Speaker 2>for much for joining us here. Tell our listeners, our

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<v Speaker 2>viewers just give us kind of the thirty second overview

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<v Speaker 2>what you guys do at Broadridge.

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<v Speaker 1>Yeah, absolutely, thank you. Paul a guest is really great

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<v Speaker 1>to be with you today. So, as you said, we

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<v Speaker 1>are a global fintech and we really sit at the

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<v Speaker 1>intersection of financial services. We power the critical infrastructure that

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<v Speaker 1>really supports perber governance in North America and around the

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<v Speaker 1>WORL world, also capital markets and wealth management, and we're

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<v Speaker 1>sort of the behind the scenes player that makes that

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<v Speaker 1>possible for many of our clients, who are the largest banks,

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<v Speaker 1>broken dealers, asset managers. We have a unique network that

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<v Speaker 1>really connects all market participants, including all public companies through

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<v Speaker 1>their broken dealers, to individual and institutional investors, enabling corporate governance,

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<v Speaker 1>but also supporting capital markets and wealth management.

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<v Speaker 3>Tim, as Paul mentioned, you did have an investor day today.

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<v Speaker 3>Walk us through what you can discuss when it comes

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<v Speaker 3>to some of the business strategies that you unveiled.

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<v Speaker 1>Yeah, it was an exciting day, and I think we

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<v Speaker 1>talked about that network I just described and how that

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<v Speaker 1>has enabled us to build businesses over time. We talked

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<v Speaker 1>about the consistent results that we've produced ten percent recurring

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<v Speaker 1>revenue growth over the past ten years, fourteen percent TOM

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<v Speaker 1>hundred and earnings growth over the last fourteen years, and

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<v Speaker 1>why we think the next is going to be just

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<v Speaker 1>as good based on some really significant trends and drivers

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<v Speaker 1>that we're seeing in the market around the democratization of investing,

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<v Speaker 1>the digitization communications, and the acceleration of trading, and those

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<v Speaker 1>are all areas that we've positioned our company to enable.

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<v Speaker 2>Tim describe kind of the services the products that you

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<v Speaker 2>guys have at Broadbridge. I know you're in communications, you

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<v Speaker 2>also clear trades. Just kind of let us know how

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<v Speaker 2>you guys generate revenue.

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<v Speaker 1>Yeah, a couple of different areas. So in corporate governance,

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<v Speaker 1>we provide a twenty four x seven sixty five SaaS

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<v Speaker 1>platform that takes in investor positions, reconciles them, sends the

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<v Speaker 1>communications that public companies need to send to all of

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<v Speaker 1>their investors for boards of directors elections, and then takes

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<v Speaker 1>back and taglay the results of those, provides end to

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<v Speaker 1>end vote confirmation, and then provides all of the building

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<v Speaker 1>and sort of financials behind that, And so we're really

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<v Speaker 1>behind the scenes player that facilitates all the boards of

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<v Speaker 1>directors elections. We also facilitate many of the meetings themselves.

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<v Speaker 1>Last year we did about twenty five hundred meetings virtually

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<v Speaker 1>on our platform. And so whenever you get a communication

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<v Speaker 1>from your broker dealer, either digitally or if you're stually

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<v Speaker 1>getting it by mail, it's likely that it came through us.

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<v Speaker 1>So that's a big part of our business. The other

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<v Speaker 1>part of our business is providing technology platforms for capital

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<v Speaker 1>markets firms and wealth management firms, and we really provide

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<v Speaker 1>the underlying books and records, paying people their dividends, settling trades,

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<v Speaker 1>clearing trades. So nothing that you would see as a consumer,

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<v Speaker 1>but very important part of the infrastructure for many of

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<v Speaker 1>the largest players.

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<v Speaker 3>Talk to us about how your company is providing guidance

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<v Speaker 3>when it comes to the democratization of investing.

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<v Speaker 1>Yeah, and that's really you know, that is a multi

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<v Speaker 1>decade trend where over time we've seen the cost of

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<v Speaker 1>trading and participating in markets for individual investors continue to

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<v Speaker 1>get lower, culminating in really zero commission trading, which we

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<v Speaker 1>have seen now and also new products going all the

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<v Speaker 1>way back to the invention of mutual funds and ETFs,

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<v Speaker 1>but now managed accounts, direct indexing. All of that is

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<v Speaker 1>drawing more participation, more people participating, and also them holding

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<v Speaker 1>more individual positions, and we get paid per position because

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<v Speaker 1>we're communicating with the old one share of Amazon or

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<v Speaker 1>one hundred that's the position. The number of investors with

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<v Speaker 1>the percentage of adult age US adults that are owned

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<v Speaker 1>at least one share has gone from forty nine percent

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<v Speaker 1>and years ago to fifty nine percent last year. So

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<v Speaker 1>we're seeing increased participation also an increase in the number

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<v Speaker 1>of products that people are holding and so that is

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<v Speaker 1>really causing companies to want to engage with their retail

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<v Speaker 1>shareholders more as causing a demand for new tools. That's

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<v Speaker 1>why we are introducing a lot of digital tools to

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<v Speaker 1>help wealth management firms facilitate that engagement with you with

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<v Speaker 1>your clients.

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<v Speaker 3>I'm glad you brought up tools because AI tools is

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<v Speaker 3>in your notes. We've talked so much of Paulay about

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<v Speaker 3>the AI frenzy here. Talk to us more about what

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<v Speaker 3>that means when you're talking about AI tools as far

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<v Speaker 3>as helping your products.

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<v Speaker 1>Yeah, we are, and as is everyone. We're investing a

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<v Speaker 1>lot in AI and we see it helping in a

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<v Speaker 1>few different ways. So, first of all, you know, generative

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<v Speaker 1>AI will just be part of every product in the future.

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<v Speaker 1>It would be table stakes for most companies. And then

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<v Speaker 1>beyond that, companies that have unique data, we'll be able

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<v Speaker 1>to really create creative products that help and provide them

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<v Speaker 1>in advantage. Earlier this year, we introduced a product called

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<v Speaker 1>Bond GPT and it allows traders Capital markets traders to

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<v Speaker 1>ask sophisticated questions about bonds, which ones are available, the structure,

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<v Speaker 1>details about them, which would be available to look up

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<v Speaker 1>and use your keyboard to consult different databases and find

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<v Speaker 1>the information, but that takes time, and so we can

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<v Speaker 1>take complex queries that might take even experienced trader many

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<v Speaker 1>minutes to do, provide that back in seconds, and those

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<v Speaker 1>kinds of pre trade analytics make the whole process easier

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<v Speaker 1>for them. That's just one example. We're introducing generative AI

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<v Speaker 1>really across our products.

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<v Speaker 2>Hey, Tim, when I was on the street, we settled

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<v Speaker 2>our trades T plus seven. Then it became T plus five.

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<v Speaker 2>Now I think the kids are doing it at T

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<v Speaker 2>plus one and maybe T plus zero. How does that

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<v Speaker 2>impact your business? That's got to be a technology on nightmare.

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<v Speaker 1>Yeah, it is. So we're currently the market is at

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<v Speaker 1>T plus two and it is moving in May to

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<v Speaker 1>T plus one, and so we are working with all

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<v Speaker 1>of our clients on facilitating that change and helping them

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<v Speaker 1>do that. There's a whole series of industry testing that's

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<v Speaker 1>going on even as we speak, and I think that

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<v Speaker 1>the limits of today's technology make T plus T plus

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<v Speaker 1>one will be fine. The move T plus zero will

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<v Speaker 1>be harder. People are beginning to talk about that. There's

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<v Speaker 1>also a lot of behavior change that is required because

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<v Speaker 1>one of the things that happens between today. Between T

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<v Speaker 1>and T plus two is a lot of interchange between

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<v Speaker 1>the person that made the trade and all the participants

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<v Speaker 1>to confirm that it's actually the right trade and that

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<v Speaker 1>gets allocated to the right account, and now all that

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<v Speaker 1>will have to happen in sort of half the time.

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<v Speaker 2>All right, Well, I was on the floor the New

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<v Speaker 2>York Soca Change when to crash in eighty seven.

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<v Speaker 1>Wow.

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<v Speaker 2>We spent weeks trying to match tickets and it was

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<v Speaker 2>a disaster. I can't imagine what Boy, we needed detech

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<v Speaker 2>technology back then. Hey, Tim, thanks so much for joining us.

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<v Speaker 2>Tim Gogie, chief executive officer Broadridge, a fintech company, joining

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<v Speaker 2>us on Zoom from New York City. Yeah, it was

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<v Speaker 2>a disaster. I can't remember the numbers, but typically we'd

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<v Speaker 2>have mismatched trades. Call it ten thousand just at the

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<v Speaker 2>end of the day at Paine Webber, you know, on

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<v Speaker 2>that October day, and then for weeks afterwards, it was

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<v Speaker 2>you know, if it wasn't ten thousand, it was three

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<v Speaker 2>hundred thousand. I mean, it went crazy, So, I mean,

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<v Speaker 2>and it was like that every firm across the street,

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<v Speaker 2>and you'd spend days running around to Morgan, Stanley, Goldman

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<v Speaker 2>sach trying to find the other ticket to match, Like,

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<v Speaker 2>I know I bought three hundred thousand x on here,

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<v Speaker 2>but I can't find it.

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<v Speaker 3>Was that your first job coming out of college where

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<v Speaker 3>we were.

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<v Speaker 2>In a training program and they yanked all the trainees

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<v Speaker 2>and they turned down to the stock is Chraine a

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<v Speaker 2>couple days before that the day wow right, yeah, because

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<v Speaker 2>vimees were just getting so big right in front of

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<v Speaker 2>that that day and then it was just crazy, and

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<v Speaker 2>you know, and then I think everybody turned around and said,

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<v Speaker 2>I think we should probably think about investing in technology.

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<v Speaker 2>You know, that might might be our friend. You know,

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<v Speaker 2>Writing a blue ticket for a buy and a pink

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<v Speaker 2>ticket for a seal is no way to run a

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<v Speaker 2>business