With its noteworthy insights into investor communications, Broadridge Financial’s Q4 results signal budgeting recommendations for fund teams.
While already a powerhouse in the US driving transformation in investment management, Broadridge’s largest business line is investor communication solutions, where the segment saw revenue reaching $1.73 billion (an 8% increase that outpaced overall net earning growth of 6%).
As put forward by CEO Tim Gokey, this comes as a result of the company “building the infrastructure for the markets of tomorrow.” Infrastructure investments look to be directly leading to growth, while other key drivers include greater governance for tokenised assets, a move to digitised communications and “reinventing shareholder engagement.”
These are significant findings given that Broadridge sits in the unique ‘plumbing layer’ intersection of investor communications: proxy delivery, regulatory disclosures and shareholder reporting.
Therefore, if this niche sees above-average growth, it is reflective of asset owners and issuers spending more to modernise their operations, and away from the view of infrastructure development as a budget-burning cost centre.
In turn, this is an indication for where IR and marketing budgets will be led. At hedge funds and asset managers, they usually go wherever infrastructure spend goes.
So, what does this mean for fund marketers?
Digitalisation is key. The emphasis on evolving communications and tokenised asset governance underpins that those who own the distribution rails for fund communications are rebuilding to cater to frequent online investor touchpoints.
Also, continuous digital engagement is a ‘new norm’. If a firm’s LP or shareholder materials are shared via quarterly PDF statements or the occasional meeting, they are immediately not in line with the dynamism of investors’ own tools and platforms. In that case, building direct channels for LP reporting and regular investor updates is an infrastructural expectation for firms today.
When budgets are being raised to increase the quality of such investor communications by the largest players, this insight should grant confidence for any fund marketers that will be looking to ask for more financial backing in upcoming Q4 meetings.
Source
Reuters, via Yahoo Finance, “Broadridge quarterly profit climbs on investor communications strength”
