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 spanner 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 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 System, 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'd always done martial arts through my life and bumped into a person who I got very friendly with, who started a conversation with me that 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, 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.

It always is.

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 Morgan Stanley. How did you know? It's quite diverse, you know 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 and get, you know, we sometimes get banking sales because. Can you help me? No, no, I do group treasury banking, alm, group risk and things like that. But you know you were looking after the bank's money and then you made the move across to Morgan Stanley again an ex crime and you know, back in those days, massive treasury teams. What was it like working for their treasury and looking after the bank's money there?

Well it was really very different. So 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. 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 and 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 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 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 frustrating lifts. 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. 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 production product companies, they'll work for widgets manufacturers. And their treasury issues are set. One certain set. You're obviously much more financial services related overall. The piece with treasury, we 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 do 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? Well, he's in financial services, not very similar to my business. But you are, aren't you? Because again, we talked about this. How does it cross into treasury in a corporate sort of thing rather than corporate financial 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. 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 Broadridge 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 show.