In this video session, Tim Gokey, CEO of Broadridge, discusses the trends he sees in shareholder proxy votes with Chana Schoenberger, Editor-in-Chief of American Banker. In this age when half the American public owns shares, investors have more power than ever over the companies they own – but how will they wield it, and what do they want?
Transcript:
Chana Schoenberger:
Hi, everyone. Thanks for joining us this afternoon. I have with me here Tim Gokey, who is the CEO of Broadridge, and he is going to help me talk about what proxy voting reveals about trends for financial institutions. He's in a particularly good position to do this because Broadridge is responsible for really most, I think, of the proxies that public companies are issuing. So Tim, you want to just kick us off by telling us what did you see in this year's proxy season?
Tim Gokey:
Yeah, Chana, first of all, great to be here. Thank you for that introduction. And I will start just with a little advertisement. Broadridge is a 20 billion market cap global FinTech, really focused on powering the infrastructure behind investing governance and communications. And we are at the center of a network that really connects every individual investor to every public company, to every asset manager and every broker dealer. And that, as you said, you know, a large number of the votes each year come through our platform. And so that does give us really unique insight. We also do technology platforms, uh, software and services for asset managers, broker dealers, and both capital markets, wealth management, and we clear and settle $9 trillion a day on that side of the business.
Tim Gokey:
So I do think we're in a unique position. And, you know, I think then coming to your question, I think, you know, the short answer is that, you know, there are mega trends out there around increased participation, which, you know, some call democratization around ESG, around the increased dig digitization and all of these are, uh, coming together to really increase, uh, the interest and focus on corporate governance. And we can get into a number of the trends behind that and things that we're seeing, but we're seeing a real real increase in the number of investors that are, uh, are participating.
Chana Schoenberger:
And why is that?
Tim Gokey:
Well, I think the, the long term trends around this democratization is driven by technology. It is driven by innovation. It's driven by lower costs. And it's been, it's been a trend from the elimination of fixed commissions, to decimalization, to the creation of 401ks, to the creation of, more recently, ETFs and then managed accounts. And as we think going forward, direct indexing. So there's this innovation of financial services that is making it more available to more people at a lower cost. And that over time has driven participation. And we see, you know, what we see is the number of positions that people have. So whether it's one share of Amazon or 10 shares of Amazon, uh, it's a position. And the number of positions sort of over the past couple of decades has increased call it, uh, 5% a year, you know, sort of mid single diges, uh, driven by increased account growth and increased positions per account, as people have more diversification.
Tim Gokey:
And in the last two years we saw a huge spike in that. So in the 12 months ending a year ago, June, it grew 26% in the year ending this June. It grew 18%, really driven by the advent of free and app based investing by people being home and the pandemic, and those things really led to an increased interest in investing. And it wasn't just sort of mean stocks that, that saw a spike. It was, it was, you know, all sectors, all industries, and it wasn't just the online even traditional firms saw a very significant increase in position. So the number of individual investors that are participating has really increased over the past couple of years.
Chana Schoenberger:
Wow. Okay. So the general conventional wisdom number is that about half of Americans are participants in the stock market, and they can participate in a variety of ways. Obviously they can own shares in stocks that they manage themselves. They can own mutual funds, ETFs. They can own things through 401ks or other retirement accounts, or pensions, if they're very lucky. But the percentage of people who actually vote those shares every year is much, much lower. It sort of mirrors what we see in regular electoral democracy, which is that lots of people can vote. Very few people actually do. Is there anything we can do to get people to take more of an active role by voting their shares in the governance of the companies they own?
Tim Gokey:
Yeah, I think it is largely about making it easier for people to vote. So if you look at the total shares that are out there, about 70% are held by institutions, 30% by individuals. And the voting rate for institutions is very high. They're basically required to vote, which is one way of getting the voting numbers up there. And the voting rate for individuals is about 30%. That took a big hit. I call it 10 years ago when the industry moved to something called notice and access, which was, instead of sending you something you could vote, we sent you something telling you we could go to get something to vote. And just by adding that step in the process, it really reduced participation, which we saw quite a fall off through digitization, we have the opportunity to take out some of those steps and make it easier. And I think you're seeing, you know, we have a voting app and, you know, we made improvements to that this year that made, you know, sort of one-click sign on, QR codes, ability to be notified, and topics you're interested in. And we're seeing that have an impact that we're a B2B company. So partly we have our own app, but a lot of what we do would have APIs that we would embed into the apps of our clients, whether they're wealth managers or banks or other capital or capital markets firms, we would embed things into their apps and allow them to extend that convenience, to make it easier for people. And I think that that has a real opportunity to increase the voting rate amongst individuals.
Chana Schoenberger:
Do we know anything about whether people want to vote, especially younger investors?
Tim Gokey:
It is. It's interesting because when you do focus groups and individual research, there's a whole segment of people that feel very conscientious about it, that they ought to vote, and they're going to do it with, and those tend to be older. And I'd say over the past 10 years, that group has gotten smaller. And the group that maybe is a little more apathetic has gotten a little bit bigger. And now more recently as we're getting into Gen Z, and we are actually, one of the things we do is we do a pretty in-depth investor analysis every year, because of all the holdings of information we have to show where the money is and where it's going and what we're, even though we've all been talking about the great intergenerational wealth transfer for like 20 years, as you can see it really beginning to happen now. So as we look at a lot of those new investors, a lot of them were younger, a lot of them smaller accounts. And when you overlay that, that trend of participation with another sort of mega trend around ESG, there are a lot of younger investors that have a lot of passion around these topics that do have higher interest in voting.
Chana Schoenberger:
Okay. So it's mostly young people and activists,
Tim Gokey:
I think that's what's causing the uptick right now. And then historically it's been the people that are sort of, you know, just believe it's sort of part of, and it's part of, I would encourage people to be, not just a stockholder, but to be an owner, you know, not just a trader, but an owner too. And really the way to be an owner is to vote.
Chana Schoenberger:
No, definitely it's interesting because there's been so much written and we've written a lot of this too here at American banker about how, um, how especially younger, uh, shareholders are very interested in ESG and all its flavors. They care very deeply about authenticity and they have their own causes that they care about and they want their investments to reflect those causes. So it'll be interesting to see how that shapes up over the next, you know, few decades as they become the people who own most of the stocks, you know, will they start voting, will they start taking a more active role or are they just gonna complain about it?
Tim Gokey:
You know? Yes. And I think the other thing that causes voting is having something interesting to vote on. And so as you see more interesting proposals, or just more proposals that gives more of a reason to vote. And, you know, we are certainly seeing that. So if you look at environmental and social proposals, if you go through and code all the proposals and say, which one's fall in that category, if you go back five years ago and say, what was the aggregate support for those proposals? Not, did they win or not, but just how many people voted for versus against it was about 5%, uh, this season that we have just ended. It was 30%, so, wow. So that doesn't necessarily mean there's a huge tip over that the proposals are winning, but the aggregate level of support is up six times from just a few years ago. So that I think is a real indication of now. Now part of that is also institutional, as well as institutions have increased their mandates around these topics. But a lot of it is retail.
Chana Schoenberger:
Yeah. It'll be interesting to see what happens with that. And then there's the sort of counter trend, which is that a number of states have now said that they're pushing back against companies that are taking more of an activist ESG role by seeing companies that do certain things are not allowed to bid on state business. Texas has, has a law like that now. Yeah. So that, it'll be interesting to see how that, how that plays out.
Tim Gokey:
And I think that is creating one of the very interesting innovations that, for anyone who's you know, listening to this webcast and has interest in these topics that they should follow is, pass through voting is a very, you know, interesting and hot topic, uh, led. Uh, and we are fortunate to work with BlackRock on, on creating this, uh, and they introduced it, but you know, many others are now looking at it. And, uh, it is an ability for an asset manager to pass through to the underlying shareholders. And it's first institutional and later will be retail, uh, to pass to the opportunity, uh, to vote to the underlying shareholders. And, uh, I think one of the motivations for some of the largest asset managers to do this is to, uh, get away from the perception that they have too much control and specifically to be able to go to states and to represent that, you know, first of all, we're passive. So we invest in everything. And second, you know, we pass through the voting power to our underlying shareholders. So you shouldn't, you know, don't sanction us, because we're just here to, you know, facilitate the process. And I think that's created real incentive to do the work for path through voting and get it in place. I do think that will be a trend that we'll see over time. And I think it's a really interesting evolution of shareholder democracy.
Chana Schoenberger:
So that's an interesting technology question. How does that work? So let's say I own shares of your company. How would I vote as a shareholder? Like, let's say I own it through a mutual fund and ETF that BlackRock holds.
Tim Gokey:
Yeah. There will be, let's start with institutional. That's much easier, uh, with institutional, uh, most large institutions you mention, they have a lot of this activity going on, so they will have a voting platform. Uh, they will have, uh, uh, you know, different recommendations coming from advisory services, they'll have their own rules engine and based on all that, it will vote on their behalf. And then they'll, they'll validate that. And so it's pretty easy if BlackRock now turns that vote over to them, they're probably already voting on those topics, uh, based on some other holdings. And so they can just run it through that channel for individual investors. Uh, it's a bit trickier and, and it's not happening yet with individual investors. It's so will be happening. Um, but no one wants to have 500 proxies come flying through their door, you know, for the S&P 500.
Tim Gokey:
So it needs to be much more thoughtfully done. Uh, my own hypothesis is that it will be much more based on notifications that you will indicate you have interest in certain topics, and then you get notified based on those topics. So, uh, and that, we're, that's, we introduce that for our app this year. Uh, you know, you can say, well, I'm interested in topics, you know, A and F and then, uh, you get notified with there's a proposal related to, uh, related to those topics. And that allows you to be selective about, you know, what are the things that you would participate in. So I think that will, for the individual investor, it will be more selective. Uh, some companies and we're working with them are trying, uh, the idea of, instead of, you know, going out to every retail investor, uh, doing almost like a mini poll of accredited, you know, certified investors go out to a sample and then use that sample to vote their bigger shares. And that's another sort of way of, it's a bit representative, but it's another way that people are, uh, you know, another model that people are testing.
Chana Schoenberger:
Interesting. Okay. So if I'm an asset manager and I am, I care very much about fossil fuels, and also I care about water. I can flag that those are two issues that are important to my clients. And then when this proxy comes in, I can then pass through, vote on it'll let me know when there are specific votes taking place on those issues, right?
Tim Gokey:
Yeah. I, I think, I think again, for an asset manager, I think likely you would just say, actually, I wanna vote all the topics because I have a voting platform in place and I'm just going, you know, do it. But if I'm an individual investor, it's much more likely that I would say, you know, let me know if there's something that comes up on, uh, fossil fuels and then, uh, you know, when it does for that selected group of companies, then I'll vote that
Chana Schoenberger:
That's so interesting. And what do we do about fractional shares? So many, especially retail investors now own fractional shares in companies. How do you vote those?
Tim Gokey:
Yeah. Um, uh, you can vote them. Um, right now a lot of fractional shares are part of managed accounts and the voting is done by the advisor, uh, and who then who has, who has it aggregated? So it is, um, uh, not as much of a burden for the, uh, for the individual who might have, you know, have a share or something. Right. Uh, but has to be all aggregated to be, uh, to be counted.
Chana Schoenberger:
Okay. So the advisor has to cobble together one share before he can have one vote from lots of different clients,
Tim Gokey:
Uh, and there's rounding in there and stuff like that, but yes.
Chana Schoenberger:
Complicated, but yeah, but yeah, it's gonna be interesting to see what, what happens with that, because I, I wonder to what extent corporate governance will, will sort of continue to roll into this whole ESG theme? The fascinating thing for me about ESG is that it, it, it has this, it has this sort of, uh, flavor of it's very progressive, but of course it, it doesn't have to be progressive. It's just that there are many progressive organizations that have sort of taken up the banner. A social goal can be whatever you want a social goal to be. Perhaps your views are not progressive, and you want the opposite out of companies where you invest
Tim Gokey:
Well, and there's there's, uh, which you may have seen. There's a story just the other day with an activist investor, looking to press one of the major oil companies to, uh, to, you know, pump more oil over the next 10 years, which, you know, if an oil company sort of, sort of from a business perspective, they might be doing that anyway, but it is interesting that they're taking it from you just exactly what you said as an activist to right. You know, put pressure on to, uh, and it's a conservative activist to say, you know, don't give into, you know, uh, these things, you know, we need fossil fuels, you know, your company is the ones that can do it and you should keep doing it. And so, yeah, I think, yeah, yes, it is. It's not always clear which direction it will go. And that is in fact, the point of democracy is, is that we don't agree. And this is a method for adjudicating disagreements, uh, that we can all, you know, we all agree that we'll, you know, this is the method we'll use.
Chana Schoenberger:
Right? It's funny because you know, the whole idea of shareholder capitalism, you know, the Milton Friedman sort of shareholders win shareholders, they own people we should care about. And as is sort of now, there's this critique of, of it as we should be doing stakeholder capitalism, which is what, you know, the business round table came out and said a couple of years ago, which is we have to care about our communities. We have to care about our employees, which was not at all, what had been going on and, and not the way that corporate boards thought that they were supposed to be governing. So that's also a fun trend.
Tim Gokey:
Yeah. I, I personally don't see as much conflict there as people are making it out to be. I think it's an interesting topic to write about, but I think the, and it's certainly been our philosophy as a company, which is, you know, we'd rather make fair money for a long time than make short money for a short time. So if you do something that's not sustainable, then, uh, you're really, you know, and you think about the NPV of your company, uh, you know, those future cash flows really was creating the value today. And so I think that, uh, right, I think that, and we've always, there's something called the service profit chain, which is sort of the balance of associates, shareholders, and clients, and that keeping those in balance. You know, if you give, um, uh, all the benefit to clients and you can't keep good associates, then you can't actually serve the clients in the future, or you give it all to shareholders, then you know, both your associates and your clients are getting short shift and you lose them both. And then, then that's not good for shareholders in the end. So really, I believe that keeping those things in balance actually is the best value for shareholders as well in the end, because they're getting something that's much more sustainable that has more enduring value,
Chana Schoenberger:
Right? No, that makes perfect sense. And, um, it was interesting. I, I was a foreign correspondent in Japan for several years, and this is, of course the, the whole corporate philosophy in their stock market is that stakeholders matter and employees and community members matter a lot. And it's, it's the reason why there are so few layoffs there because it politically, it just can't be done.
Tim Gokey:
Yeah. I look, I think you can take it too far the other direction where it becomes a big inhibitor to change. And I think that, you know, saying we're never gonna lay off associates is actually not even in the best interest of associates because, because you get ossified and then you, as a company, you lose business and then no associates have a good job. So the best way to have right. You know, uh, really, uh, great careers for the associates that are here is to, you know, stay with innovation. Uh, that means change. That means we, sometimes we, we may have to, de-emphasize an activity and put to put more emphasis on something else, but that creates a healthier company. That's gonna create better careers for the associates that, uh, that remain and longer lasting careers for the associates that, that remain. So I, I think that the, uh, you know, it is easy to use stakeholder, uh, arguments to argue against change and to, to, uh, and it's easier not to change, but it's really not the best in the long run.
Chana Schoenberger:
Yeah. And I wonder if, uh, if maybe where we're going is if more people start to care about corporate governance, you know, maybe we'll get more annual meetings like the famous Berkshire Hathaway meeting that takes over Omaha every year. I've always wanted to go cover that. It just seems fascinating.
Tim Gokey:
It is. Um, uh, you know, it's, it, it is a fascinating cultural phenomena. I think it's, I think the trend is a little bit in the other direction though, which is even technology to enable people to participate, uh, conveniently and Mason, certainly one of the, one of the big things that we've seen in the past couple of years, and we should just touch while we're talking here on some of the big innovations that are happening. So, uh, one we talked about was, was, uh, pass through voting. So, you know, really important. Another one, which is where we're talking right here is around virtual shareholder meetings. So, uh, pre pandemic, no, 10 years ago, we had the idea that wow, having to travel to physically go to an annual meeting is a big burden, and you should be able to do it digitally. And we created a virtual shareholder meeting, which is, you know, basically a video shareholder meeting and or audio.
Tim Gokey:
And, uh, I will say it was uphill battle to get people to do that. So after about 10 years, we were up to about 300 meetings a year that were, that were done, uh, virtually, uh, since the pandemic, we're now up to 2,500 in, in three years. And, you know, originally many of the corporate sort of corporate governance activists were against this cuz they thought I would keep, uh, shareholders from being able to sort of have access to management. And that view has really changed when they see how much easier the access is. Um, uh, I don't remember in the number of this year, but you before last 90,000 people participated in a shareholder meeting through virtual means and, you know, instead of having to travel and be, you know, you can click on your calendar, takes a, you know, reasonably short period of time. And so we seem significantly increased participation from the, the, uh, pre pandemic levels. And so yes, people are participating, but they're doing it being able to do it through the convenience of digitization.
Chana Schoenberger:
That's great. Just another reason why the pandemic did have a few silver linings.
Tim Gokey:
I did mention just innovation of things that are, you know, because there is this interest and there's this change, the things that we've been investing in to continue to, you know, push the system forward. I mentioned innovations in the proxy vote app. I mentioned the virtual shareholder meetings. I mentioned pass-through voting. I think another really interesting one is end-to-end confirmation, which is allowing people to know, even though they did know, and it has been there, but, uh, that the vote was cast, you know, as you know, from the electronic platform all the way through and got recorded with the company. We did that for 3000 companies this year, and showed that, that not surprisingly, I guess, but 99.9% of things, you know, happened as they expected to. There are a small number of exceptions, which then had to be handled outside of that.
Tim Gokey:
And then the other one, that's an interesting one that's just starting is universal proxy, which is allowing, if someone is running a campaign, an activist campaign, that both ballots the activist ballot and the company's ballot have to have all the, all the candidates on them. Heretofore, the two ballots are actually different from each other. So it's much simpler, much less confusing and it really lowers the barrier for proposals and for activist efforts. We still don't know if it will create more efforts or not, but that is a, uh, that's something new that will be happening. Just, it just came in into effect September 1st. And so it will be in effect, you know, and we'll see the impact over the next year.
Chana Schoenberger:
That's exciting. So how does that work? Exactly how can you require companies to have universal proxy?
Tim Gokey:
Well, the SEC says the regulations for, you know, what proxies look like and what has to be on there. And, you know, heretofore, the someone who wanted to run opposition directors needed to create a different ballot with those directors independently, send it to all the shareholders. And, uh, now at the SEC has said after long deliberations, you know, in consultation with the industry, is that, you know, any ballot, whether it's sent by the activist or sent by the company would have all of candidates on it.
Chana Schoenberger:
Makes perfect sense. And especially for digital.
Tim Gokey:
Yeah, yeah. It's, it's, uh, it's logical. It was a while in coming, uh, but it's logical and, and, uh, we will have an opportunity to see what the impact of that is.
Chana Schoenberger: Can finally figure out what exactly is going on. So I'm looking at the, uh, the, the stats that you all had, uh, had come up with for Q3 for this proxy season. And I was interested to see the, the number of proposals that companies had about the, the different varying things. So it looks like most social proposals. Um, the, the highest percentage of social proposals were about lobbying, um, environmental. They're mostly about emissions and governance. They're mostly about shareholders' rights to call special meetings. So that's an interesting, uh, group of subjects there.
Tim Gokey: Yeah, I would say, when we get to the end of the season stats, you know, after, you know, when all is said and done, and the dust is, has settled because the, the main proxy season for those that are listening, you know, happens all year long, but most companies have their annual meeting in the April, may, June timeframe. So that's when sort of the governance season quote unquote is, and right. You know, really the top trending topics, uh, were, uh, racial equity audits, uh, climate disclosure, uh, political lobbying disclosures, there's really disclosure about political lobbying. And those three collectively made up about 50% of the proposals that you call, you know, environmental and social, not proposals. And, um, it is an interesting, you know, collection of topics and it is, does show why ESG is such a, you know, there's E, there's S, and there's G and they're sort of get bundled together, but they're pretty different from each other.
Chana Schoenberger:
Yeah, no, for sure.
Tim Gokey:
Um, yeah, there's been a number of, if you look actually then underneath the number of proposals, we look at the, uh, the support that they received. Of those actually the, uh, the racial equity artists actually got the highest, uh, uh, support level, uh, climate in the middle and the political lobbying disclosures, uh, didn't actually receive, uh, that strong support.
Chana Schoenberger:
Yes, yes. Um, right. Yeah. I, I wonder, I wonder how that's, uh, how that's gonna go, because for, for political lobbying disclosures in particular, this, of course being an election year, it's gonna be high season for that. You know, a lot of companies are, are gearing up to support candidates in the midterms either because they think the candidate is good for them, or they think the other candidate is bad for them. So we'll see how that goes.
Tim Gokey:
Yeah. I don't know. I don't have good visibility into, um, how much, uh, direct candidate support public companies are really doing. I don't, I just don't have, I, it's not something that I have the, the direct access to, I think, uh, mm-hmm certain, many companies are part of industry groups. Uh, certainly companies will be making modest contributions just to have a relationship, to be able to discuss topics. Um, I'm not something that's something that we do. So I'm just not aware of sort of a lot of the direction contributions. I know there's a lot of talk about that, but I just haven't seen good data on it.
Chana Schoenberger: Okay. Um, interesting. Yeah. Okay. So just to sort of move away from proxies for a minute, do you wanna talk a little bit about all the other interesting things that you are seeing out there in the securities market? Um, this has been a, a very interesting period for traders for, um, for any sort of company in, in finance. And we, of course, we covered this all day long as does our, our sister magazine financial planning, but, um, what are the coolest things you've seen recently?
Tim Gokey:
Yeah, there's a lot going on, uh, a lot going on, certainly in capital markets and a lot going on in wealth management. Mm-hmm, why don't just hit the wealth management side of it first, uh, given, uh, the financial planning, uh, audience and the, and the, uh, uh, the leaders of American banker, I think. Great. Um, it is, you know, it's just a time of significant change and it's partly because changes of asset management are flowing down into wealth management. Uh, if you think about asset management, it is, you know, what used to be sort of this sort of stock picking and sort of active investing has really barbelled into on one hand, uh, people seeking, uh, sort of market exposure through passive investments, and that's taken a big part of the market and then to get alpha to beat the market, they are going into alternative investments, and whether that is, uh, privates or hedge funds or other sort of alternative investments. So, uh, the role of the, of the advisor has really changed a lot. The asset management side of it has been commoditized to quite a significant extent, uh, if they can provide access to private. So that's the reason for being a lot of, become a lot more about life advice. Uh, if you think about Avi, uh, advisors and financial planners, uh, and so, you know, that's a, that's a big change and a big change in how firms make money. Uh, another big change with people leaving large firms and going independent, uh, is another sort of big mega trend. And, uh, and then there's, you know, product mix changes with really significant growth of managed accounts and, uh, wealth management firms really trying to dis dis intermediate asset managers by basically rolling their own, uh, through managed accounts.
Tim Gokey:
And so all of those things are, and then you have new digital competitors and people's experience of, uh, how they experience other their other, uh, products, you know, like a Netflix, for example, you know, has changed their expectations about what the interaction will be like. So all of those are causing wealth management firms to really evolve their business model, uh, and really have to up the technology that they're using to serve their advisors and that they're using to serve their end clients and even a client that wants to have an advisor wants to have good transparency and sort of good visibility, you know, into, uh, an ability to interact digital. So is putting a real premium on, uh, upping the digital content or the digital connectivity to end clients and digitizing the operations of, uh, of firms. And, uh, so I think that's a big, big trend in, uh, on the wealth management side. Certainly one that we're investing behind, uh, quite significantly as our others. And, uh, I think it, uh, you know, spells a lot of, uh, good news for the productivity of financial, uh, advisors and, uh, and I think also good news for, and investors in terms of being able to have, uh, you know, much better transparency and convenience while still having access to, uh, to professional, you know, when they need it.
Chana Schoenberger:
Yeah, no, it's interesting. I recently interviewed, uh, the head of the private bank at BNY Mellon, Catherine Keating, and she was telling me that, uh, she sees their role now, of course, they're serving the highest end investors over there. Um, but she sees their role as sort of taking asset management principles and using them to serve individual investors because people now have to be their own pension fund manager, because the vast majority of Americans do not have a pension unless you were really lucky or really old. You typically, if you're lucky, have a 401k and, and you may just have nothing at all, but you, you have to sort of create your own retirement savings and you have to have a portfolio that's going to last you and be invested so that you can actually use it during retirement so that, you know, and, and this doesn't really jive at all with the conventional wisdom that you see of most Americans having a very, very small amount of money saved, really not even enough for an emergency fund. So those, those two things kind of have to go together. So the digitization is, is a big trend there.
Tim Gokey:
Yeah. And enabling, uh, first of all, it has been a long term trend of bringing sort of more sophisticated tools to individual investors. And, and, and I think the new technologies sort of enable that, uh, even, uh, even better and, uh, certainly improvements in financial planning, uh, making it a little bit, I think financial planning used to be a pretty heavy process by which you had to like give all this data to do the complete plan, uh, which is good when you, when you got through the process, but hard to keep up to date. I think it's evolved to be a little more componentized bite size pieces that you can consume, uh, as you need, uh, which I think, uh, decreases the, uh, the entry barrier. So that, that planning side of things is, uh, is, you know, really important. And, um, uh, just as you say, the, the, uh, uh, sort of the burden on the individual investor to make sure that they're, uh, they're looking out for their financial future is, uh, is significant and hopefully technology can make it easier.
Chana Schoenberger:
Interesting. Um, now I know you all are, are also involved in some interesting, um, blockchain and distributed ledger related things. Do you wanna talk about that a little bit because that's what always comes up when people think new and shiny.
Tim Gokey:
Yeah, well, it is, uh, we are doing a lot on that and it is, you know, you can get very confused between everything that's going on with crypto versus this versus that. And so I really distinguish between sort of crypto as an asset class, uh, versus blockchain as a technology, uh, right versus, you know, a whole new infrastructure versus central bank, digital currency. Those are all different things that can begin to sound alike, but in, in sort of blockchain as a, uh, enabling technology, there are clear applications and financial services, uh, where it's really good to, uh, to solve problems. And, um, uh, and then, you know, for it to be useful, it has to be lots of people on it. So we're focused on where are the places that we bring the network already. So governance is one area, um, and, uh, fixed income is another area.
Tim Gokey: Uh, if you look at the fixed income in north America, a very significant proportion of it is on our technology platform. And so, uh, we have a lot of, uh, uh, a lot of ability to bring innovation to, uh, the fixed income market. Uh, one of the things we're doing as many of your readers, uh, or listeners will be aware, you know, their repo market is a huge market as a way, uh, you know, almost all large firms finance themselves and, uh, you know, but it is a not, you know, it has some complexities in it and it can be high cost and it it's, uh, uh, and one of the things we're looking to do is use blockchain to, uh, to, uh, make that faster, easier, uh, real time, uh, and, uh, and, and cheaper. And, uh, so we've introduced, uh, repost on, uh, on, on digital ledger and we're doing today about 50 billion a day, uh, of, uh, repo volume. And, uh, we think, uh, there's, you know, a great opportunity for, uh, for that to expand and to, uh, this is really helps institutional investors. Uh, but it, uh, I think there's a lot of opportunity to save the industry money and, and create greater utility particularly, uh, as you make things more real time.
Chana Schoenberger:
Yeah, no, that's gonna be interesting. I mean, there's, there's parts of the fixed income market that aren't even traded electronically yet much less on blockchain.
Tim Gokey: Yeah. I mean, the, uh, you know, you look at markets, you know, there, there are, you know, good equities is like, you know, 90% electronic and you go all the way down to the most complex, fixed income instruments and it's, and a 20% electronic. Right. And so, uh, you know, within fixed income, uh, treasuries and things like that are more electronic corporates are less electronic. And, uh, another thing that we are investing in, uh, is to bring electronification to the corporate market, uh, for corporate bonds. Mm-hmm, , uh, really taking two technologies and bringing them together. Uh, first of all, uh, AI, because in corporate bonds, the amount of liquidity that is available has really shrunk a lot over the past 10 years. It used to be people had inventory and now as capital charges have increased, uh, there's way less inventory. So it's moved from a dealer market to an agency market where I'll try to find it for you.
Tim Gokey:
And so the liquidity is way down, but using AI and all the data that we have about what people have done in the past, there's a great opportunity to say, if you're trying to do this, here's the right counterparty. And then we're combining that with, uh, a venue that enables people to aggregate demand. So today let's say I wanna move 20 million of, of a bond. I have to find a counterparty that wants to do that exact trade. And, uh, with this platform allows, is let's say I wanna move 20 million. And there are five people that wanna buy 4 million that that can happen. And so between AI and demand aggregation, uh, we hope to really, uh, increase the liquidity in, uh, in the corporate bond market.
Chana Schoenberger:
That's very interesting.
Tim Gokey:
It's it, early days, there's a long way to go on that, but it's, uh, it's definitely, there's definitely, uh, a need out there. And, uh, is one that I think, uh, you know, because today 97% of corporate bonds, you know, are just frozen. They just, you know, they don't move. And, uh, so I think this would be, be good for companies issuing debt, uh, good for institutional asset managers and eventually good for retail investors as well.
Chana Schoenberger:
So interesting. All right. Great. Well, we're nearly out of time here. What is something that I didn't ask you about that you think I should have?
Tim Gokey: Well, we've covered, uh, we've covered a good range of topics. I think, um, you know, I think that the, uh, the whole tension of being able to, uh, take a long term view and is, is something that, um, is very important to us, uh, culturally, and I think it, um, you know, we talked a little bit about sustainability, uh, earlier, and, uh, one of the things that I'm sort of, uh, progress about is the way that, uh, we are able to, uh, reinvest in the things where we think we'll be able to make a difference in the market and, uh, uh, and also reinvest in our associates and, uh, that balance that I talked about between associates, investors, and clients. And I just, I'm not sure if you, we did talk about it a little bit, but if there's a, a message to leave people with, I think, um, you know, since we're sort of on the topic of governance and, and what's new, this is maybe everything, that's, everything that's, uh, uh, old is new again, but this sort of evolution to, uh, sort of a very balanced, sustainable forward looking view.
Tim Gokey:
And, and then as investors giving people time to make investments that have longer term payoffs, I think there's a lot of opportunity there and that's, that's certainly the way we think about our company. And I think it pays off in terms of the way we're able to support our clients. And I think it's interesting in today's environment, whether there's more, more room for that over time.
Chana Schoenberger:
Great. Wonderful. Well, thank you very much, Tim. I really appreciate you joining me here today and thanks everyone for, uh, for joining us and watching.
Tim Gokey:
Thank you very much. Great to see you today.
