Broadridge's CEO advises new employees against attempting to revolutionize the company on their initial day of work.
In the world of financial services, Broadridge Financial Solutions stands as a significant player, with a market value exceeding $28 billion. The company, under the leadership of CEO Tim Gokey, has been making strategic moves to expand its addressable market, having overseen three "strategic pivots" so far.
One of Gokey's key focuses has been driving innovation to democratize and digitize corporate governance. By simplifying capital markets and modernizing wealth and investment management through technology advancements like distributed ledger and AI-based platforms, Broadridge is changing who participates at the decision-making table.
However, Broadridge faces competition, even in the proxy vote processing market where it is the largest player. Its main competitor is convincing clients that they have more important things to do than the tasks Broadridge performs. The company is responding to this challenge by developing a rules engine to create an unbiased, data-driven approach to voting decisions, complementing ISS and Glass Lewis.
Broadridge's operations are far-reaching, handling 7 billion regulatory communications annually and settling $15 trillion in trades daily. The company works with 10,000 public companies, a testament to its wide-ranging influence.
In the realm of shareholder voting, the retail vote is becoming increasingly important due to its growing proportion and new tools for access. Retail investors tend to vote with management, making proactive engagement crucial in tight situations. Broadridge is addressing this by working with asset managers to implement pass-through voting for 400 funds this year.
The pricing for proxy vote processing is regulated, resulting in lower margins compared to fintech competitors. However, if Broadridge holds a monopoly, it is considered the worst in the world due to its low margins. Despite this, the potential market for Broadridge's services is estimated to be over $200 billion, offering significant growth opportunities.
In the broader context, issues such as Europe's ESG rules and media companies standing up to political pressure are shaping the landscape. For instance, Exxon's CEO has expressed pessimism about a Trump breakthrough on Europe's ESG rules, while Ed Markey wants media companies to stand up to Trump's FCC.
In the face of these challenges, Tim Gokey sees opportunities to become a bigger partner to broker-dealers, asset managers, and public companies. He believes in marrying outside talent with in-house expertise to change who sits at the table. Broadridge's approach to understanding the 'why' of existing practices during the recruitment process further underscores this philosophy.
Meanwhile, Glass Lewis has discussed scrapping its "house view" on ballot measures, which could open up new avenues for Broadridge to offer unbiased, data-driven voting decisions. As Broadridge continues to innovate and expand, it remains a company to watch in the financial services industry.
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