Training Treasury Athletes with Steve Rosenthal

Welcome to this week's Treasury Career Corner podcast where I interview treasury professionals about their treasury careers. Each and every week I 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 this week's show. Delighted to be joined by Steve Rosenthal, group treasurer at Broadridge Financial Solutions. Now, Broadridge Financial Solutions are a publicly listed corporate services company originally founded in 2007. They span us from ADP or automatic data Processing. And since they became independent back in 07, we've grown into a global fintech company with over $4 billion in revenues. Recognize and they partner with some of the world's leading companies and financial institutions handling millions of trades every day. Trillions of dollars. Support communications over known in over 75% for instance of North American households. Manager, share manage, shareholder voting. Lots of different things out there, but actually I'm going to let Steve explain a little bit more about that.

Sure. So thanks very much Mike, and I'm very happy to be with you today. So I can take back I did my undergraduate work at the State University of New York at Albany, and I did some graduate work at Bridgewater State, which is part of the University of Massachusetts State Systems, part of UMass Boston. So I did not take the conventional route through Treasury. All of my degrees are in psychology and clinical psychology. So definitely not the conventional route. But I was in an externship program at Bridgewater State University right outside of Boston. Certain issues took me away from my doctoral thesis and back into New York. And at the time I was actually working at health clubs teaching martial arts. I had always done martial arts through my life and bumped into a person who I'd gotten very friendly with, who started a conversation with me, had always been around our classes and asked me what I wanted to do with my life. This is the early 90s, Mike. And so gave him kind of my story. He wound up being a senior executive at Bear Stearns and literally asked me to meet him in his office. So I put on the suit and tie, met him in his office, not knowing what to expect. And before I knew it, I was part of really what was considered at the time an elite management training program. And so started there in the management training program and really learned everything. Broker, dealer and investment banking back office. At the time, one of the pieces of that track was folks came from the treasury organization, talked a little bit about what they do. I would tell you that it was love at first sight. And I was always, yeah, right. And I was Enamored with it. I'd always loved markets and who doesn't love money? And so I got to spend some time with the treasury folks there and when an opening opened up they actually recruited me to be part of their organization right out of the management training program. And again this the early 90s, I then was extremely fortunate because they invested a tremendous amount of time, energy and money in me catching me up on any type of class or education, financial services. I took advantage of all those opportunities so really became a subject matter expert I think faster than either they or I thought. And treasury was clearly going to be my career.

And then you got in there and you fell in love with treasury as we all do. You know, I've done it 22 years plus. What did you, well what caused you to fall in love? What was it you saw that you could have all these touch points within the organization or what was it that thought yeah, treasury is the place for.

Me at the time. You know, you think you know what you're getting into but you really don't until you live it. I think it was the whole notion of being it being really the central nervous system for the company and that's how those people really designed the management of the company's capital structure. Financing money movement, dealing with all the cash every day was to me a really excellent proposition and I got really excited about it right away. And that's without even knowing what the day to day was going to be like. And I can tell you that from there my passion really only grew.

And with that you say it grew, you were there for five years so you start in junior position as such, you come in and you grow and grow and grow. And then you made a move to mortgage study. How did you know? It's quite diverse. I've recruited a number of banking roles in the past more as you've had group treasury roles and things like that and you try to get. We sometimes get banking sales because. Can you help me? No, I do group treasury banking, alm, group risk and things like that. But you were looking after the bank's money and then you made the move across to Morgan Stanley again an ex client and back in those days, massive treasury team. What was it like working for their treasure and look after the bank's money there?

Well it was really very different at Bear Stearns. I was exposed significantly to everything. Credit and liquidity understanding, repo credit lines, overdraft facilities, large revolving credit facilities and letters of credit portfolios. And Bear Stearns culture was much more senior directed they kind of ran in fiefdoms, quite frankly, and the senior managing directors of the different organizations or those fiefdoms really ruled the roost. I was recruited to go to Morgan Stanley and to fill a new role originally, which was to which was really a bank relations role that managed bank relations such that we matched all the service and product necessary for all the business units. So it was really, there was a lot of liaison type of role to it, but it was pure culture shock because Morgan Stanley was exactly the opposite of Bear Stearns. Morgan Stanley was much more bureaucratic, a bureaucracy with a lot of checks and balances, a lot of group think. And so there was a lot of thought put into all the different agenda, strategic direction as well as tactical operations. But the decision making was, as you might expect, a lot slower and a lot more architectural. So I could tell you that it was pure culture shock. But looking back, having experienced the thinking and culture of Bear Stearns and then the more bureaucratic way of organization with Morgan Stanley has really helped me and really helped me kind of evolve into both positive and negative modeling on what I thought worked in different cultures and environments. So at Morgan Stanley in the relationship role, I was able to really round out my treasury experience and expertise by delving a lot into cash management and a lot of different cash services and products on the bank relationship side. So by the time my tenure at Morgan Stanley had ended, I had the credit and liquidity debt structuring background at Bear Stearns and then the cash management and relationship type of experience for Morgan Stanley.

Steve, I just want to dig back into that about the contrast between the two firms. To put this in context for people listening, they might say, oh, you got frustrated then at Morgan Stanley and stuff. You were five, six years at Bear Stearns, you were six years at Morgan Stanley. So it wasn't. Oh, no, that's. It got frustrated. How did you deal with those two different structures? You're a Treasury dude, you know, you're doing your treasury work, you're doing all this. But how did you then navigate through that in a very different culture? You know, did you just, well, I'm going to push this through or how do you do? Because there'll be people listening again going, hang on, I do that. Or that sounds familiar, you know, so how did you cope with those things?

It certainly was a challenge. You know, I think the way to. The way that I coped with it was to build the relationships necessary to understand where the places really dictated that I conform and then also where I can Add value in terms of innovation and bring some other types of expertise to the table to push ideas, new ideas on what was a very mature organization. And Mike, that's what they really wanted me to do. At the end of the day, they wanted me to push the envelope and be innovative and take some, you know, some of the thinking that they had related to relationships and product.

Let me pause you there. How can you innovate in a supertanker? You know, how can you, you can't do that. This is a big, it's a big global bank. You can't be innovative in an environment like that. That's impossible.

Yeah, it's so just from experience, it's not impossible. It's a challenge. It's hard. And I think the first thing to, to gain credibility and in order to gain credibility you have to build those relationships. You have to show your subject matter expertise. You have to. There is a sort of confidence and gravitas that I think as you gain more seniority is necessary to bring your ideas forward. So I think at first you pick and choose your spots, Mike. And as you pick and choose those spots and you gain success. And success is not framed always by you being right. Sometimes it can be framed by you bringing a good idea to the table that may or may not be adopted, but is framed the right way, is honest in the right way and shows that you are being a critical thinker to the organization and the architectural design of the organization. So I think it's just picking, choosing your spots and building credibility. I would tell people that, yeah, you know, even in the most bureaucratic of organizations, you can have an impact. You can make changes. You just have to do it in a thoughtful way.

So you had two big box banks. You're going to carry on your life on these big supertanker type esque banks. You're going to carry on your global treasury career that way. And you thought, I know, let's do a brand new treasury setup for Broadridge or explain if you would, for the listeners who are Broadridge Financial Services, what do they do? What was then your entrance to treasury there? So give us the run through of that.

So again, I had become recruited at the time. There was a full, what they called at the time brokerage servicing unit as part of the large payroll provider adp. And that brokerage servicing unit was being spun off and I was being recruited. They needed a subject matter expert to really start a Treasury organization from scratch with, you know, just with nary a bank account, quite frankly. So I will admit to you. At first I did not want to go and I did love being at Morgan Stanley. And this was in 2007, early 2007. So right pre financial crisis, my career at Morgan Stanley was taking off. I was making a large impact. I will admit that Broadridge put a really full court press on me and had the opportunity to live and work much closer. I live on Long Island. Our headquarters also resides in Long Island. And then I took a really different look at the opportun. So how many treasury experts get the chance to start a Treasury organization for a large public company from scratch and to do things exactly the way that you think they should be done, to start fresh with a clean slate and build a Treasury organization from the ground up. When I started to think about it that way, I got really excited and eventually chose to become part of the team and prepare Broad to become a public company.

So you went in, it's fresh. It's fresh out of the box. If that's the right way to do it. You know, how did you. What was your checklist? You know, how did you say. Right, these are the. Again, we'll have people listening going, oh, I've got an opportunity like that. Where did you start from?

So there was trial by fire. Mike. I don't think I had what I would consider, you know, a very organized checklist. At the beginning that had to be developed. We were spinning off with $690 million of debt. And my first order of business was, okay, how do we set up this capital structure, finance this debt, understand how the company should work in terms of our ratings? Are we an investment grade company? Do we want to be an investment grade company? How is that going to fit into the general business model? Remember that Broadridge, even though they were spinning off from adp, it was a very mature business with a business model that had really great defensive mode around it. But it was quite complex. And to this day, Brorage's business is complex. So we are basically known as a company that does proxy, but have grown into so much more than that. We have two main platforms. One is a governance platform where we service financial services, broker dealers and banks for much of their needs. And the other side, the other large platform is technology and outsourcing, securities processing. Also starting a third platform with wealth management. So Broadridge has grown a tremendous amount. But getting back to the spin, it was capital structure, it was cash management, nuts and bolts, block and tackle, until we got our feet under ourselves, making sure that the spin was successful and that we could service the company. And set up the central nervous system so money could move.

Some of the guys listening today, they work for product companies, they'll work for widgets manufacturers. And their treasury issues are one certain set. You're obviously much more financial services related overall. The piece with Treasury, I know that we spoke before and you really enjoy dealing with new people and new setups and everything else and all these new ideas coming at you, but just your basic treasury, how does it operate? Is cash. Cash, Is it exactly the same, but just in a different format? How does it apply? When you go to the AFP conference and you describe what you do and someone said, well, he's in financial services, not very similar to my business. But you are, aren't you? Because we again, we talked about this. How does it cross into treasury and corporate sort of thing rather than corporate finance services? Treasury.

So we're a financial technology company that provides services and technology to banks, broker dealers, asset managers and other financial services concerns and companies. So from that angle, you would think about us as technology, but we're actually a lot more than that because we tend to get into other products and services peripherally to meet the needs of our client base, which again is the greater financial services industry. The treasury here is very capital structure based, but at the same time, the cash management aspects of our role vary. And that's because there are different types of business units that deal with significant amounts of fiduciary cash. For example, we own a transfer agent and we own a 401k asset servicing business where there's large amounts of assets under management and cash to deal with. Some of it is ERISA regulated cash. Other types of cash are obviously regulated by the sec. So there's some nuance to the cash management aspects of this business as well. A lot of that business came through acquisition over the years. We didn't necessarily spin off with that business. But what it's shown you is the evolution of treasury and how treasury, the treasury organization at broadroom had to grow and evolve, reinvent itself time and time again to make sure that we were meeting the needs and requirements of the company and its subsidiaries. There's been a consistent reinventing of ourselves to make sure that we can do that. The company that Broadridge was at, the spin from adp, does not resemble in any way the company that Broadridge is today.

Yeah, because it's just that evolution, the growth and everything else. And how has that changed in maybe people terms as well? Because then again, we talked about this, you know, you very much, you're one of these talk about loads of the shows that CFO say, look, you're our front man, you're, you're the scout in front and dealing with these, this slew of fresh ideas. How do you deal with that and then bring that back to your treasury setup and the people that you've got around you so that.

That is such a relevant question. Mike, it won't surprise your audience at all that even through the significant growth, changing and evolution of Broadridge over the years, the treasury organization has not grown very much. Right. In terms of resources, we're a very lean group and expected to set up significant scale as the company grows. Now, we've experienced some growth, but certainly not anywhere in relevant ratio to our company's growth. So we've had to find ways to make sure that we were building our subject matter expertise, but not growing in terms of cost and people at the same rate that Broadridge was. And I'm happy to say that that's been the case. In terms of people, we tend to train athletes and not position players. So what I mean by that, we find really smart, really agile people through our own management training programs or throughout other areas of finance that have a significant interest in Treasury. And when we do usually have openings specific, the junior level, we will transfer them into treasury and train them generically on every aspect of the treasury function. Once that's done, we marry that into the needs and requirements of the company, such that that treasury athlete is now able to take their skills, their talent and translate it into treasury skill to meet the needs of specifically Broadridge. So the position player would be somebody who becomes very deep in cash management or very deep in invest investment portfolios, or very deep in debt structuring within the treasury framework. We don't do that. We train athletes. Our folks can gain expertise and understand all aspects of the treasury function. As they get more senior, they'll have a focus on one area or the other, but had been heavily trained throughout. That's really helped us create the scale that we've needed to keep our costs down, but also to be able to reinvent ourselves and evolve because our folks are those treasury athletes.

When you say cost down, what do you mean? Just not having really just very siloed people. Explain that. I don't understand it.

So keeping costs down meaning adding people growing in terms of headcount, trying to keep the treasury organization lean and mean as we continue to evolve and meet and learn new things as Broadridge continues to grow.

And with that. So you got me. The pause is because I'm thinking, which doesn't happen often, as we know, Steve and I talked before is cool. How did you track people? You know, how did you. Because we've got a series of videos coming up and you know, I'm trying to get out there and explain to people, explain to clients. You get it, which is fantastic. And people can hear through your voice and some of the things you're doing that you understand what you've got to do. The world has changed people. You know, one of the first articles is not about you anymore, it's about them. It's about writing an advert and the things that you do to try and attract people internally and externally. So not just getting people to come into the function, but you were recruiting both internally and externally. From the sounds of it. What was your sell on Treasury? You know, when people came to sit in the office and have a coffee and things like that, how did you sell the treasury dream to those guys?

So internally, I think the best way to market treasury is to have a happy, productive, healthy work environment. And people see that people are attracted to that type of environment. People get to see your management style and want to be a part of that, get to see the organizational design and want to be a part of that. From an internal perspective, whenever we've had the opportunity to look internally to add to our treasury organization, we've never really had to significantly recruit. Those people have really come to us. And again, I do believe that when you have a healthy, happy, productive workplace, that internal recruiting for the most part will take care of itself. At the same time, there are aspects to treasury that are quite enigmatic within any organization, meaning that everybody looks at treasury well, those guys handle all the money. That's great. They handle all the money. Of course, we know that there's so much more to it than that. And the things that we do day over day, whether it's capital planning or investment decisioning, things like that, we get 1,000ft wide and 1,000ft deep. And it's interesting when folks come to sit with us and see what we do on a day to day basis, I think they get quite surprised at the pervasiveness and kind of the wide purview that treasury has. So all of that goes into a positive marketing dynamic such that internal recruitment, it's just not necessary for us or really prevalent. People do come to us looking for opportunities and it's quite flattering. We think that's great. From an external perspective, that's different. And externally I find that it's sometimes Difficult to get the people that not only have the treasury expertise that we want and need. Again, going back to the treasury athlete versus a Treasury position player, but will they also fit into our culture? Sometimes I feel like the culture piece is the more important piece. Again, fitting in from a culture perspective, you know, creates a foundation of which, you know, learning, teaching and learning can succeed and thrive. So it's really, the external piece is a lot more tricky. And I think it's a lot easier to work with with treasury recruiters who understand the treasury dynamic much more than, say, an internal human resources recruiter could ever do.

I think it's not necessarily a criticism of those guys because I was trying to explain it to someone outside of my industry yesterday and they were saying, why is it? I said, well, because a lot of my treasury guys will hire one, maybe two people a year. Some corporates and smaller groups. It be. Might, might be one person every three years. So it's not something that an HR recruiter said, recruiting an FPA person. They're probably doing one a month and then you do one treasury person. People. How does all these different things fit together? It's knowing what is, and I know that we talked about this, that what is good and bad in that person, it's not, you know, you can teach the skills, you can teach all those things, but, you know, you're never going to teach culture. You know, you know, you hire for FIT and then you can train all the other technical things. And you know, going back to, to that, I know, Steve, you said about this, working with these smarter people around you. Again, you talked about this. This was his phrase, not mine. And knowing what is good and bad in the world of treasury, how do you sort of filter through that yourself and you know, all these new things coming, you and the team, what's your sort of your weather vane for it, if you like.

I think there's a basic tenet and a very old saying that it's a really good idea to surround yourself with people smarter than you. And I would only add to that. That's not only a great. But you can't be scared of it, right? So surrounding yourself with folks that can really bring new and innovative ideas look at things in a different way is extremely important. One of the ways that we manage our treasury organization creates a cultural basis. And the way that we think about that is we manage with loads of discipline, but not, not regimentation. So we're very disciplined in all of our processes and very disciplined in our modeling, analytics and things like that. But we're not regimented with those things. So you don't have to do it my way to get to an answer. And I find that really senior treasury folks, but it's not just treasury folks, it's anybody getting set in your ways. And being regimented is a sure way to destroy crit thinking. It's a sure way to destroy and stunt new and innovative ideas. So creating the discipline around your processes and your organization is critical, but not making it regimented is just as critical. And surrounding yourself with really smart people, let them use their minds, let them use their brains. Don't stunt them by forcing the way that you do things on them. And constantly be a team. Constantly be, constantly, share your expertise. You know, Mike, one of the questions that I'm constantly asked is, how do you manage and deal with young people? How do you manage and deal with millennials? Don't you find them entitled? Or this and that? And Mike, my answer is I don't necessarily find them entitled, but they do have a different way of working. And the days of leading by fear are long gone. Millennials and post millen millennials do not respond to that type of organizational leadership. As a matter of fact, my experience is they really reject the strict hierarchical structure. They want to learn quickly, they want to gain experience in a short amount of time, which many times is very hard to do. But once they gain some experience, they want a sense of empowerment. They tend to be quite agile in their learning methodology. So I think that we need to empower. They're looking for empowerment. They're looking to learn quickly. And the old broker, dealer ways of creating fear and punishment as a result of a strict hierarchical structure is not the way to manage a team. And it's not going to result in a happy, productive environment.

So what is it that with those millennials, we provide everything they want and that. I know some of the answers, you know, because this is what we do day in, day out, and we're recruiting for our clients and giving them advice. Again, this is one of the reasons I'm just. I think it comes back to my speech I gave to the accidental keynote speaker I was giving in Brussels a while ago, a few years ago. And I gave this example that my daughter, she's at university now, but she was getting one of her first jobs three years ago. She was a runner in a restaurant. And she was saying, you know, dad, you know, when I become this runner, I was like, yeah. I said, what else would I get? And I said, what do you mean? You just get Paid and you do your job and you take the food to and from and make sure it's all set. No, no, in my, you know, I get my wages and when I get a pension, it's like you're 16, you know, but like, will I get discount? Will I get this? Will I. But it wasn't a questioning as in, well, what will I get? You know, disgruntled. It was more a request for information. Just what are they going to do? For me is much more responsibility placed on the employer that, look, I'm going to have two or three opportunities, even though I'm 16, 17, you know, right the way through. What are you going to do to make it enticing enough for me to join you, stay with you and develop with you? And I think that's. Well, that's the biggest thing, the shift. I think that, you know, when I started in it before it was you got your wages and that was it, you were done. And if you weren't getting enough learning, you'd have to.

To move.

And the work market, employment market has changed. Is that what you've seen? Again, these guys aren't. It's not an entitlement, it's more a questioning ethos, which I think is actually great in treasury terms. But do you find the same?

I do. I think, Mike, when we first started, I think everyone was just happy to have a job. And you were satisfied to have a job, Happy to have a job. Were fighting the fight day in, day out. The old saying, climbing the corporate ladder. If you were in that type of environment. Right. And so you were just happy to have a job. The folks these days getting into the workplace, that is not the way that they lean. They're not just happy to have a job and they're looking for an environment of learning. And that's why I think it's important for folks in positions like I am as a treasurer to be a constant teacher. They respond. My experience is they really respond to that. Sharing your information, sharing your knowledge, sharing your expertise. I also think that these folks are looking for, to your point, Mike, they're looking for unique benefits. There's a much higher emphasis on the whole work life dynamic than there ever has been before. We used to fit our life into work. And these folks I think have, and I think it's a healthy attitude, are looking to fit work into their life. And what are the unique benefits that I can have here versus somewhere else that help me gain that goal? How do I fit work into my life? And so you constantly have to have your finger on the pulse. Now, this is part the organization that you lead. In my case, it's treasury and Risk and also our human resources departments and organizations to come up with the unique benefits that will attract and retain talent. Over time and again, these things evolve. But I'm going to go back to saying these folks want to fit work into their lives and not the other way around.

Perfect. Steve, we're coming to the end of today's show and we said this back at the beginning, say every week as well, that what I like to do is people then will put your details in the show notes and how to connect with you. I literally, I could carry on for another 10, 15, 20 minutes. I could keep talking about this. I love to, you know, getting into these discussions. But we can't because our show lasts about 30 to 40 minutes is People's commute time. We know they get into the office and everything else. So we want to respect that. But I think there are still some golden nuggets there. So looking back over your career and people look at your and they'll connect you on LinkedIn and things, you'll see it. What are the top tips you're gonna give out? I mean, we've given some brilliant ones there, but maybe just sort of to percolate those into the top two or three. What are you gonna say to people listening today as they get to their desk? They're saying, you know, I'm here with my team, I'm just gonna jot down these notes. And actually that's what I should be doing with these guys today. What are you going to say?

So the way I would give advice is on all levels of your, at every level of your career, always practice intellectual honesty. Intellectual honesty, both to yourself and others really gains you tons of respect from your colleagues and your organization and allows you to make the right decisions and create the right ideas to bring forth and it shows your value. Be intellectually honest with yourself and others at every level of your career and it will be great for your career. I would also say be that fly on the wall. It's the saying, be a fly on the wall. Stick your nose into meetings. Ask your managers, hey, can I sit in on this phone call? Can I sit in on this meeting? Even if you don't have an active role, being a fly on the wall is just a great way to learn things and it's a great way to keep active in and to accelerate the learning process and your growth. And for the most part, it's costless it's absolutely costless. So to me that's a big one. And then the last one is one that is self evident is just take advantage of every opportunity that you get presented with and it may not turn into the something tangible or that next run on the ladder, but take advantage of all the opportunities that get presented to to you. Whether it's an educational opportunity, a learning opportunity, informational, being part of a project or an action item, getting exposed to senior management and thinking, seeing how they think and make decisions. Just take advantage of every opportunity and be present about it. Don't be absent about it.

Awesome. So we'll put these in the show notes but again, intellectual honesty. Accelerate your learning and grab every opportunity. What lovely summary there from Steve. Steve's been amazing. Well definitely meet up when next in the US and traveling around it'd be great to see you and just guys listening today. Connect with him. This is a guy that you can learn from. I know you do a lot of other things with you know, the AFP and hopefully see you on a stage nearby soon as well. But I've thoroughly enjoyed today. So thank you for your time sir.

Wonderful Mike, it's been my pleasure. Thanks so much.