30 Years of Treasury Lessons with Karen Molloy

So welcome to this week's Treasury Career Corner podcast where I interview treasury professionals about their treasury careers. Each and every week, talk to treasurers about how they built their careers, where they are now and where they see both themselves and the treasury profession going to next. In this week's show, I'm joined by Karen Malloy, the vice president and treasurer, Northwestern Mutual Life Insurance Company. Northwestern Mutual was founded as a mutual life Insurance Group in 1857. American financial services based in headquarters in Milwaukee. Now they provide consultation number of different areas which I'll get Carolyn to outline a little bit more. But overall they are a mutual group. They're about 104 in the 2018 Fortune 500. So massive group, 265 billion in assets when we did the research here. Company holds 125 billion of client assets. Massive, but financial security to more than four and a half million people. Great company. Look at them up on the website and everything else. But again, Karen can explain that because she's been there probably the longest, I think for many of my guests, a couple of others on the show. But she's been with the group nearly 30 years, which is interesting I think as a recruiter in itself. But what we'll do, we'll take Caren way back when to when she first ever started. Karen, perhaps tell us if you would, about how your career started and how you discovered the wonderful world of maybe finance and then discovered Treasury. Over to you.

Thanks. So the career really started. I always had an interest in numbers and an interest in money. So my first path was down getting into retail banking. And I did that while still going to school and, you know, found that it was a very interesting career. So like dealing with clients, like understanding how personal finances worked, how the finances of a branch work and of the bank itself. And then once I finished and got my bachelor's degree, I decided to see what the value of that degree was and had applied at a number of places other banks. But one of the other places I applied was Northwestern Mutual. It had a great reputation in the community as a good employer, so was fortunate enough to get an interview and really kind of started out leading the operations team from the treasury perspective and immediately fell in love with treasury and what it means to an organization. I really think it's kind of one of the core competencies. It's kind of at the heartbeat of an organization because you need cash to do anything. So we're not tied into just one aspect of the business. We really have to know the entire organization, what their cash needs are what the cash flows are for those parts of the organization.

Ok. And Karen, when you first started, you said you did sort of running a branch within a bank and then discovered, as you say, Northwestern. But we talked about the values there and the value set insofar as you were working in a bank, they got taken over and then things shifted. And working in a mutual number of times you have things in the UK like building societies and mutual organizations, you said it's quite different. You found that quite early on, is that right? And you sort of grew your career.

So when I started working for the bank, it was actually a mutual. So again it was about your depositors, it was about your customers. But then the bank decided to go public and that really changed the focus. It changed the growth strategy for the bank. It was about dividends to the shareholders which weren't necessarily your depositors. And it was expenses were looked at differently. Just all aspects of the business were looked at differently. So given the chance to go back to work for a mutual company was attractive to me. I don't think coming into the job I had an appreciation of how important mutuality was to Northwestern Mutual. But over my 30 year career here it is something we constantly talk about and the importance of being a mutual and employees know what mutuality means and why that's important. And you hear every employee talk about when they make decisions, you can hear the conversation around how does that affect the policy owner. So it's not. We don't have to have discussions about quarterly earnings. We have a very long range view of things. I think that served us very well in situations like 2008, 2009 where we weren't having to meet quarterly earnings. We could take that long term perspective and maybe make some decisions that we wouldn't have made if we were a publicly traded company. But it is ingrained in all of us. There is this sense of the work that we do is for the policyholders, the product that we have, the service that we bring to people is around financial security, whether that's becoming disabled and not being able to work and closing that income gap or that somebody passes away and that the family can still thrive because those life insurance benefits are there. You hear time and time again about kids that were able to go to college because that life insurance policy was there. So it's just something you know when you know you're, when you're driving for decisions that are really right for the policyholders and you have a product that, that really can make a difference in people's lives. It makes it very fulfilling.

And you're talking there about the benefit if you like and usually working in recruitment, you talk about features and benef and why you might use it. Now one of the things when I was doing my research which I really found interesting, maybe if you would, we'll get the PR spin from you, we'll get the sales pitch for why you'd be with Northwestern, not to join them to work for, but more as a company. Because I found it really interesting. One of the things that sort of struck me as you talked about there where if you're a policy owner and again I think, you know, this has happened less so with some of the building societies and things like that once be for all of them. But some of them, you know, where say you going to get a dividend for being one of the policy owners, you can then either use that to sort of increase your life insurance policy without costing more so then reduce the cost of your premiums if you wanted or take the dividend simply in cash. But it sort of seemed to have that, if you like circularity, if that's the right way of looking after people. So talk about the actual business, if you would and the sort of things you do, life insurance or what are the other things that you guys provide and then we'll dig into your more your treasury path and discovery of that, if you would.

Yeah, and I think that's one of the things that has evolved over my time with the organization. When I started with the company, life insurance, it's still at the core of what we do. It's still in our name. Right. But the focus was on life insurance. We had disability income as a product line, but that was still relatively new. We didn't have long term care and we did have a broker dealer, but that was a very small aspect of our business. So again, life insurance is still 85% of what we do. So but that being said, I think what we've understood over time is we believe whole life is a very core and important part of somebody's financial security. And it's an important tool to have in your investments amongst the things that you purchase in your life. I think we've taken a broader perspective to say over time you need to have. There's kind of a suite of things that you need to have in order to have that financial security over your entire life. And the way we look at it is kind of there's this foundational piece and we would call that the life insurance and we would call that disability income. Right so at the foundation you're protecting from living too long, dying too soon, you know, you have that foundation protected, then you kind of in life, hopefully go through kind of a wealth accumulation. So now that's a different set of products that you need more. And that's where our broker dealer comes more into play. And being able to invest those assets and grow those assets put you in a position, right, to put your kids through school, save for retirement. And then after you're, you know, as you're going through that part, then as you get towards the end of, end of life, it's, it's more about estate planning. And what are you going to do with these assets that you've now accumulated over time and how are you going to disperse those? So we've tried to look at it more holistically throughout your life and say, what are the needs? And put this entire package together. And again, it's just with the mindset of we're trying to help people have financial security.

And then you yourself, you've been with the group for a number of years, so talk us through that sort of each of the steps in your career and how at the same time, maybe alongside that sort of hand in hand, is how you've seen treasury evolve, because it must have been when you started just approaching 30 years ago, very different. And that's when I started In treasury recruitment 25 years ago, whatever it was. And I've seen it change with the advent of LinkedIn and all those things. But for yourself, firsthand in treasury, talk us through that, if you would.

So I don't know if you would have asked me 25 years ago if I would have defined treasury at that point as simple. But when I, when I go back and look, I think about how it was a lot simpler when I started. You know, it was, you know, they're very defined payment types. There was no even taking those payment rails and trying to make them different. Right? No PayPal's, no. Venmos. Right. It was wire ach, check and check was still a large part of what we did. And you know, that's a much slower pace to it. And the amount of transactions was a lot less the amount of a large part of what we do here. With 265 billion in assets, we have a very, very large investment portfolio. The investments were much simpler back then, more straightforward. You didn't have derivatives that you were trying to understand how those works and the implications. So things continue to get more complex. Our product lines, we didn't have as many product lines as we do today. So the interesting thing is, though, 25 years ago, I had more staff than I have today.

So how many do you have then?

How many were back then? We had 25, and we're down to 20 people now, so.

And the volume of activity that's gone.

Up more than double, more than doubled.

I tell you what, ask your boss for more people. Just say, come on, I need more people. Can't automate too much. I'm joking. How's it changed?

So technology has played a key in what treasury does now. So I was fortunate enough that when I started with the company, we had just implemented a Treasury workstation, which was very innovative back 30 years ago. It's a necessity today, but it was very innovative back then. But that's what really allowed us to grow over time and take on the volume that we did without having to add staff, because we had integrated that technology early. But with that being said, we used to call wire transfers in. Right now, all of that is fed into the banking systems we're able to request, whereby paper from the business areas. Now, that's all electronic and we can feed that information right into the systems. You know, the amount of investment activity, again, by using technology, we're able to take in much higher levels of trade activity, much more complicated trade activity than we used to be able to do. And it gives people a lot of variety in what they do. So technology has continued to grow. I mean, we. I'm trying to. I'm sitting here trying to think, is there anything we do that doesn't have a technology component to it? And nothing really comes to mind whether it's paying the bank bills. Right. We have software that analyzes that. We have to do the bank reconciliation. There's software that does that. So everything has an automated component to it. And I would say where we're at today is now it's about taking that data and saying, what can we learn from that data? So that's kind of the next evolution that we're going to be facing. So you've gone from a lot of manual processes to automating those using leveraging technology there, which has created a ton of data. And now we have to start figuring out how can we use that data to do what we do better.

Yeah. And talk me through each of the steps up in your career and how, what you would attribute those to, because if you like. So back in 2000, you were in a decent role there, but then 2002, you became assistant treasurer, and then you, in 2011, you know, after a number of years with the group, you sort of became treasurer. How did you set yourself up for each of those moves and what was it like making the move? You're already there, you know, you're known as one of the people in the team. But then that first step, and again, we've got listeners who will be making maybe that first step. They're senior treasury manager, there might be a trader or whatever. They're going, right, I'm making that first step to assistant treasurer. What was that like for you? And I was a couple of years ago. But you know what, looking back on it, what would you do?

Yeah. So, you know, as I, as I started my career, I managed kind of the operations for the treasury team. And so that was, was great insight into, you know, what the organization was about, where the cash flows were. I moved on to a project consulting role and I would say that was a key role for me because now I had to take my treasury knowledge and align it with business knowledge. So I would be one that would be representing treasury and some of the tools, payment options that the banks could bring to the table and going out to the business areas and working with them to improve the work they were doing. So one of the big initiatives was to try to get ACH leveraged across all of our product lines, do more with electronic payments. So you're educating people, but you have to understand how their process works. So, I mean, you can do an ACH transaction, but if all that does is deposit the dollars into your bank account, it doesn't update your admin systems, it doesn't do any good. So really making them understand the payment side. But then I needed to understand the business side. And I think that just really opened my eyes to and really gave me a lot of knowledge about the organization that is probably even more valuable today than it was back then. And so I did that for a number of years. And then as with everyone, it's always good to deviate. I took a bit of a left turn and I ended up raising my hand when there was an opportunity to go to our common stock group as a foreign equity trader. So a lot of that had to do with. I had worked with those folks a lot as they had set up a lot of new portfolios. We started set up public mutual funds at the time, so they had gotten to know me well. So they were taking a big chance because this was not my background, but they give me that chance. And really I was kind of at a fork in the road in my career. Where my boss was, you know, I saw her as the heir apparent, you know, to be the assistant treasurer and then to move on into that treasury role. So I thought, you know, I don't know that I want to sit here and wait 15 years before I have that opportunity. So I took this left turn and it was, again, it was great experience. I learned a ton, and I brought things to the table that that team didn't know. So, and how it connected. Ironically, I only ended up doing that a year because my boss, SAC and Treasury, had decided to leave the organization. She wanted to pursue a career in accounting. And so I had a great boss at the time, which is a key in people's career, and sat me down. And she said, karen, if you're interested in going back to treasury, she goes, I don't want you to leave the common stock group, but if that's what you're interested in doing, that's in the best interest of the organization and I'll fully support. So then I had the ability to go back and that was. Can't say how excited I was to kind of build a Treasury team as the assistant treasurer. You know, my boss, as a treasurer, he really let me kind of lead because he had other responsibilities. He kind of let me really kind of form the treasury team into what I wanted it to be.

How did you form it? You know, what was the ethos behind it, or what when you were hiring, what were you looking for, or what the. Again, this is an advice show in many ways that people are going, wow, yeah, I've got to do that. What was your ethos behind it? How did you focus it?

So it was, you know, the thought was that we wanted people that wanted to know really more about how the business ran, wanted to understand how investments work, weren't afraid to get in there, be vulnerable, and that they might not have the knowledge, but we're willing to figure it out and kind of giving everybody that chance to do it. Not pigeonholing, okay, you're just going to do this set of work and really kind of putting everyone through the rotation, the work, and letting them kind of figure out where they felt their skill sets aligned. So the team had really gone through, and at that moment in time, we were going through some turnover anyway. So it allowed us to bring in some different perspectives, some folks with some outside experience, which is always good. And so it just allowed us to kind of go in a different direction. And at that point, the idea was to try to message that treasury is a key strategic partner that needs to be at the table. As you're starting the process, don't wait to include us because you're ready to roll out a product. And now you realize, oops, how are we going to collect premiums on this product? That we should really have a role earlier in the process and be at the table and help, and that we can add a very broad perspective on things.

And then as you grew the team, you grew that over the next 10 years, and you mentioned there that your boss was focusing on other things. After 10 years, nearly 10 years of the role, it was time for you to step up. What was that like making the. Being the number one? And you've been there 2012 to seven years. How was that a change, a shift in things?

So it probably was. I would have to say, as a young treasury professional, was never on my radar to be the treasurer of Northwestern Mutual. So I don't know that it was at the forefront of my mind. I think as I prepared for the role, though, my attitude was always, I don't want to find that there's the next opportunity and I'm not prepared for it. So I think I always took the approach of, what education do I have to have? How do I continue to learn, and how do I continue to take on additional responsibilities that are outside of what I'm currently doing? And I just think from that, I was surprised that I was more prepared for the role than maybe I thought it was going to be. So when you're an assistant, you know, there's always somebody else that you can say, well, I need you to make the decision. So, but now that's your role. And I think, you know, just following the same pattern I'd followed up to that point, I became comfortable in being the one making the decisions. I think you also surround yourself with good people, people that understand the alignment of where you're trying to go, are willing to roll up their sleeves and get at those right answers and that you can. What is the best answer? So I would say it took a number of years. Doing board reports was not something that, you know, it was unnatural for me. But over time, you do one and you feel like, you know, I did that really well. It really gives you a lot of confidence for the next one. And I think as I've gone in now over the years, I go in annually to give an update. I'm even better prepared for their questions. I think they continue to try to challenge our thinking and what we're doing, which is good. So I think just all those opportunities really prepare you for that type of leadership role.

And you're also, you head up the Wisconsin afp and you're involved with those guys. Are you seeing that? The AFP study and ctp, for instance, and things like that? Is that a big thing for you guys or what are your thoughts about studying continuous learning and things like that? Professional development?

Yeah. And I would say, you know, mid, you know, about 10 years into my career is when I took the Certified Treasury Professional exam. And I think that's a really important credential to have. Back then, it was actually called the Certified Cash Manager. And when they switched it, you know, you had to make the decision to take the new credential because you weren't a permanent CCM anymore. You would, as a ctp, you had to have the continuing education and some other requirements. And I went, you know, if you're really committed to being in treasury, this is a credential that you should have. And I think the exam was a good challenge for me because there's the theoretical and then there's the world you live in, which aren't always necessarily 100% in alignment. So, you know, really having to dive in there again and really study for the exam, I think was good. I certainly, my staff gets challenged with taking that exam. There are some other credentials, too, that we're expanding for the treasury group, such as the ACH credential, because that's such a large part of what we do. So having those specialties and having some credibility behind it with a credential, I think is really important. I'm a lifelong learner. I actually really enjoy learning. My team monthly, we do a spotlight topic, and it can be anything from talking to bringing in a panel to have them talk about their careers to last month was about derivatives. So, you know, I just find that very enjoyable. It's what keeps your mind fresh, it keeps you challenged, it keeps you getting to better solutions. So I think through the Wisconsin afp, that opportunity to learn at the national level with afp, you know, it gives you some insight into what vendors are doing, what your peers are doing. One of the things I get teased about a lot, but at the afp, when I attend, they do industry roundtables, and I never, I don't attend the insurance industry roundtable on purpose.

Look at you.

Because I want to know what other industries are doing. And I, I have the insight. I belong to Loma, which is a life insurance industry, Sports for life in this industry, and we have a trusted group. So I have a lot of Insight into the insurance industry. So this gives me a chance to, you know, to look at, you know, I love going to the utility one, the retail one, just what. Because they're out there a little bit further along than an insurance company is when it comes to payments and some other things. So it just gives me some insight into what challenges we have that lie ahead. So I think just you don't have to always stay within your sleeve of industry that you're in. And that's what's been great about Treasury. Although I haven't chosen to leave Northwestern Mutual. I could be go to a Treasury at a manufacturer, I could be a treasurer at a hospital. It's a skill set that, that every company needs across, you know, any industry.

So it's transferable all the way across. It's great. And then, you know, looking at just your leadership style and those guys working for you, obviously we host the podcast the Treasury Recruitment Company. We don't sell like that on the podcast is not our ethos. What we want to do is share your stories and everything else. But in terms of your recruitment, digging into that for a moment, what are you looking for? So someone sending you their resume, you guys are advertising or something like that, what do you pick out of it? What are you looking for? Is it good resume? But then it's all about the meeting or what ticks your box and what are your drivers to freshen up the team and bring new people on.

Yeah, so I think of course experience always matters. So I mean that's that, that's what you're going to get out of looking, I think at somebody's resume. But for me it is that face to face conversation and a lot of it is just looking for that willingness to try new things. A really important aspect for me is willingness to admit mistakes because we all make them. And you know, it's so it's, it's how you handle that that really makes a difference. Right. If you can admit the mistake, learn from this mistake and move on, you know, versus it's going to be somebody else's fau because that's just going to drive a lot of other issues on your team or within the organization. So that's a big one for me. Go ahead.

Sorry to pause you there. I'm asking for the listeners here, you say, yeah, you admit your mistakes and everything else, but you're walking into an interview with Karen Malloy, the 30 year Treasurer of this massive organization and then you want to walk in, oh, I was terrible at this. And I learned from it. But yeah, I was really rubbish. I really failed in this. Surely that's going to be difficult to do at interview. So how are you going to, you know, how are you going to assess that from someone? Because they're going to go, they're always going to give you the most positive thing. Yes, you might do a competency basis. Look, tell us about we've recovered from a difficult situation or how would you pitch that?

So one of the things with me is a lot of transparency. And so when I tee up the question, I'll talk about a mistake I make. So right off the bat, putting them hopefully at ease and this is actually even something we're trying to do within the culture today with current employees. Right. We're moving at such a different pace that probably are making more mistakes than we used to, but you're also making them earlier in the process. So anyways, so back from an interview perspective. You know, I think the message is, hopefully when it comes across from me is by admitting that I've made mistakes and giving an example that it's okay to be honest about what that mistake is. And again, a lot of it is going to be. It isn't necessarily the mistake, it's what did you do afterwards? You know, how did you, how did you learn from it? That's the aspect of the answer that's really important to me.

Yeah. And breaking it down and the learning lessons you got from it and stuff. And apologies when the trick question is more that I think people do listen from the outside. And that's why I hoped your answer. But, you know, you might have been a different way. That's why I asked these, these questions. Questions. Okay. You know, just looking back over your time there and we'll come, you know, we'll wrap up shortly, but, you know, what we'll do is we'll put your LinkedIn notes in the show notes so people can connect to you if it's appropriate and things. But looking back over your career, you know, and it's been number of very successful years and that's proven. What would you, you know, if someone says, do you know what? I want the same background as Karen, what are the sort of key tips you would go give to those guys? We do this every week on the show, but maybe some actionable tips or what would you say to people listening to the show today and going, actually that's great, I should be doing that. What would you say?

Yeah, I think two key things come to mind. The first one is around not putting limits around the responsibilities that you have, you need to know what you're responsible for today. You need to do that. You need to do that. Well, but you should be looking around saying, well, what else can I do? You should be going into your boss's office and saying, what can I take off your, your plate? You're a busy person. What can I take from you that will help me learn? You shouldn't be afraid of taking on something that maybe isn't in your comfort zone or something that's going to challenge you. In the last few years, one of the things that I've taken on is up until probably five years ago, fraud was pretty minimal in the organization. But fraudsters have figured out there's some cash value in our product and they're figuring out how to different angles to commit fraud. And so again, if I go back to those mutual values, that's hard when you know that somebody's coming in and harming our policyholders because we're here about protecting them. And so whether it was their email that was hacked or some other way that, you know, they figured out they were a customer of ours. So I raised my hand to start up the fraud committee and kind of really kind of position the organization to say, you know, unfortunately the world we live in, having, you know, a fraud program is now more important than it ever has been. And really communicating that at the corporate level and getting employees to understand, getting our field to understand, you know, that the fraudsters are looking at us now. So it really didn't have anything. Treasury didn't have to do that. As a treasurer, I didn't have to do that. It really, a lot of it has to do with the operations of the organization, but it gave me a chance to a learn more about cyber risk. You know, that, that was something I had to roll up my sleeves and understand more about. It gave me a chance to really kind of message across the organization. It gave me some exposure to our field, which I typically don't have. So just not being afraid of those types of challenges and being willing to raise your hand, you know, what, big, small, whatever, and say, hey, give me a chance to do that. So that would be. One is limiting what you see your responsibilities as. And the other one we kind of talked about a little bit is just that finding time to learn again. There's for me there's so much that we're trying to take 163-year-old insurance company that's been very paper based and make it a digital experience for our clients. And what does that mean and what might that look like? And again, how have other industries transformed in that way so that as treasury has a seat at the table, you can bring in those perspective. So it isn't just, oh, here's what treasury needs. But I've been thinking about so that just that learning aspect and just it's fun to ask people what are you working on? You know, and so you go to a conference, you know, you can ask people from different industries what are you working on, what are some of your challenges, how are you dealing with this, how are you using blockchain, how are you, you know, whatever it is. So that learning aspect. So because that's what's going to keep this, that's what keeps this job very interesting, very passionate about Treasury. But I can say that I don't feel like from a day to day perspective I'm working on the same things several days in a row. Right. There's just lots of things because there's cash around the entire part of the organization. So, you know, you just don't know which part of the business you're going to be brought into on something. So the more you can learn and when you're in those positions of being asked questions, you can give a Treasury answer, but you can also give a broader perspective.

Yeah. Wider than that. And I think that they both link, don't they? So, you know, as you say, I'll just put the notes here, push outside of your comfort zone and by continuously learning and then you can integrate and add value to other parts of the business. So. Wow. Well, thank you very much, Karen. As I expected and hoped for some great advice there. And I think anyone listening today will put Karen's details into the show notes so you can connect with Karen there. You know, just all I can say is thank you very much and here's to the next 30 years.

They probably won't all be in treasury, but exactly now.

I know, but it's great. Thank you very much for your time today, Karen. Thanks.

Thank you.