Episode 65: “40 Million to One - The Data Behind Investor Engagement” with Dan Cwenar, President of Investor Communications Solutions, Data and Analytics at Broadridge

Matt: I'm Matt Swain, and you're listening to the "Reimagining Communications" podcast, where we discuss the opportunities and challenges facing companies on the road to optimizing their communications for the future. Today I'm joined by Dan Cwenar, president of Investor Communications Solutions, Data and Analytics at Broadridge. Dan, thanks for joining me.

Dan: Thanks, Matt. It's a pleasure to be here, and I'm really looking forward to our conversation today.

Matt: Phonetically, we're close, Cwenar and Swain, but spelled very differently. So, it's nice to have you on the podcast.

Dan: So, you have an S that makes it infinitely easier than throwing a C at people. So, try that on. Stick a C in place of the S and see how your day goes.

Matt: Exactly. Well, Dan, I would say that I thrive on data and insights on the trend spotting, the storytelling, the clarity that comes through the analytics, but at the same time, thinking of what you do and where you've come from, you're at a different level. And, for the benefit of those who don't know you, can you share some highlights of what you've been up to?

Dan: Sure. The journey has been interesting, and it has crossed a number of different industries. And the fascinating aspect is that data has been the common thread. How do you harness it? How do you make sure it's accurate, timely, reflective of what you're trying to understand, and then ultimately, how do you analyze it? And I had the joy of joining a startup right out of school. And that creates unique challenges to being very creative. And it was at a time in which data was hard to come by. That journey ultimately led me to asset management. And the asset management industry is very interesting in terms of what it knows and what it doesn't know in terms of the data ecosystem.

And so, my journey has definitely been about data. That journey ultimately led me to create a company called Access Data with a few other partners. And then we ultimately became part of Broadridge in 2009. So, we just celebrated our 15th anniversary as part of Broadridge. And at each hop, more data was available, and we were able to do some really interesting things over the years with data.

Matt: Yeah, I was thinking about that timing. In reflecting on those 15 years, how has your vision for the data and analytics business evolved? But also, maybe how has client interest in and expectation for that data evolved over the same time period?

Dan: So, let me start with the dimension of client interest in data, because it's a fascinating story. And when I was part of the creating of a business called Access Data, it was in 1997, which to put it into perspective, it was the heady days of the internet.

Matt: Mm-hmm.

Dan: And google.com domain name had just been registered. So, it puts you into some frame of mind as to where we were. And lots of really interesting company names were evolving at that time. And I can remember the initial feedback being, "Why on earth would you create a company name on something boring and dull, like Access Data?" And our journey was really about providing access to data to do really interesting things. And I think at that time, the perspective was that data was something that you had to tolerate, and it was an emerging idea that data was useful.

Matt: Mm-hmm.

Dan: And that has definitely changed over time. And that was really what led the business of Access Data to become part of Broadridge. Broadridge has this incredible network that links issuance of securities to the use of those instruments by asset managers to create products. Ultimately, those products are used by wealth managers and broker-dealer platforms to service the end investor who has the money. And the original vision was what I thought quite lofty, we were going to provide transparency in this industry that is naturally disintermediated, right? Issuers of securities don't know where the securities are. Asset managers don't natively know which advisors actually use their product, and the end investors quite mysterious. And so, the use of data is the one thing that we have to try to put together that network. So, the vision was pretty lofty of creating transparency.

When I look back in retrospect, that vision was very limited because we were focused on the U.S. market. We were focused on mutual funds; we were focused on the retail investor. Today, that journey has taken us to really a much grander vision of providing transparency across the globe. Many different product types, mutual funds, ETFs, individual equity instruments, both the retail and institutional market. And so, the journey was one of, "Why do you want data and why would you create a boring company name," to "Data is gold." And so, it's been a really interesting journey.

Matt: Yeah. And not only is the data seen as more valuable, but also, it's really becoming a driver for other things that investors are demanding or that our clients are demanding. I think of the topic of personalization and how do we make content more relevant for the recipient. Well, one way to do that is to have a better understanding of the data that we have on that recipient and be able to deliver on that value.

Dan: Yeah. Personalization is extraordinarily important. Understanding the consumer of the content that you're creating requires you to understand who those people are, what they value, where they access information, in what form, and what tools. And we spend a lot of time trying to understand the needs of investors as they change over time. And we happen to track investors from very early stage, Gen Z, all the way to our oldest generation, the silent generation, and they're very different perspectives.

Matt: I think about the U.S. investor survey and that's really a testament to the combined power of the foundation of your vision for the business, but also the unique perspective that Broadridge can provide. For instance, the reports driven by de-identified share ownership data from tens of millions of retail investor households. And that's derived from business processes that are proprietary to Broadridge.

Dan: And so, one of the great reasons that I came to Broadridge, thought it would be a wonderful home for the Access Data business, was because of that network.

Dan: And I think that a lot of people may not quite understand the power of the network to provide intelligence to every entity of that ecosystem. And the investor study was the brainchild of a wonderful man who was at the heart of a lot of what Broadridge is today, a guy named Bob Schifellite, who said, "Look, we have an opportunity to create some insights that every one of our clients, whether they be issuers, asset managers, or wealth managers  can value because Broadridge is uniquely in a position to illuminate product trends in the marketplace, interest, servicing, all of the dimensions that you might be interested in."

And we've just released the fourth incarnation of the study, representing north of 40 million retail investors, who use broker-dealer platforms or, model portfolios or direct advisors to manage their wealth.  And it's in a very illuminating study, and I think Broadridge is so uniquely positioned to help the industry understand what's coming next, where we've come from, and how to better engage with the end investor who ultimately has the assets to be managed.

Matt: Dan, we have our annual CX and communications research as well, and we're now in the sixth iteration of that one. It's been interesting to see how clients absorb the insights and then apply the insights as they see the trends over time. Have you seen clients, getting specific value out of the investor survey that then leads to shifts in how they're interacting with their investors?

Dan: So, think about it from the investor's standpoint. You have some money you want to invest, whether it's come from wealth transfer or hard work, or you sold your company. You left a job, and you roll over a retirement plan into an IRA, whether you're saving for your children's college education or a trip in the future. And you're thinking about how best to manage those assets. And on the other end of the extreme, you have raw material coming into the industry. Issuers are issuing both short-term and long-term debt and equity. And in between, you have asset managers creating products. And the question is, what products should be created for what market at the right time? And how should those products be presented in the context of a portfolio of solutions for the end investor?

People like knowing that they own certain things that they're passionate about, whether it's your car, whether it's your electronic devices, whether it's the services that you avail yourself of. And I think there's just a wonderful opportunity to think about product creation and product recommendation on behalf of an end investor. And the study does that.

Matt: It’s a great example. I was curious if there were other insights in this study that were particularly intriguing that you wanted to share? That's a great one to start on.

Dan: Many surprising insights I think that we can share. And I think that the study, this fourth incarnation is our broadest and our deepest study to date. As I mentioned, it covers about 40 million investors over the time period of 2018 through the end of 2023. And when you think about what happened during that time period, and it's sometimes easy to forget in the barrage of news that we have that COVID happened, and things like wars around the world have broken out, and meme stocks became a thing. We've seen interest rates rise in the face of inflation. And so, these are all backdrop facts. And the question is always what do investors do in the context of all of this? During this time period of 2018 to 2023, many new investors came into the market who were not investors before. And it might be easy to assume that they're all young people getting their first job or they're taking their summer earnings and putting it to work for themselves. And it's simply not true. New investors have come into the market at every age category we track, and at every wealth level.

So, we have literally people coming into the market for the very first time at the highest levels of wealth that we track, what we call High Net Worth 2, which is $5 million and above managed in their portfolios. And it could be that they sold a home. It could be that they inherited wealth. It could be they won the lottery; it could be that they exited via an IPO. And so, you have to remember that it's not always one kind of investor that you're trying to serve. Also noteworthy during COVID, and if you look at head count for this particular insight, the market became more male based on count of investors during COVID.

And what we saw was that because people were sort of locked into their home, they had time on their hands, there would be some great gamification of interfaces that occurred. Commission-free trading occurred, and fractional share all occurred, rather than going and betting on a football game, you could speculate on stocks. And so, we saw a lot of activity. It was very male-oriented of people participating in meme stock activity. And so just examples of some of the things that you might not expect that we saw in the data and deeply analyzed, highly recommend people take a look at the study. It's very interesting.

Matt: I think about the communications angle of this as well, the sheer number of communications that an investor receives, the regulatory, the transactional, the marketing. Any thoughts based on the data that you have on investor desire to interact with or engage with those communications?

Dan: You know, I get back to a point I made earlier, which is that not everybody consumes information the same way or avails themself of services the same way. And some people love digital interaction, love consuming information on their phones. Some people like consuming digital information, but on a big screen, and yet others like to read physical documents. And so, I think that our data provides the opportunity to understand the makeup of investors. And so, let's look at extreme ends of the spectrum.

If you're an asset manager and you're creating content as part of the regulatory mandate, I have to create a perspective and here are my financials, how best to communicate that can be informed by who is an investor in your product. And if you're an asset manager, as I mentioned earlier, the lack of transparency, sometimes it's hard to know which advisors use your products, let alone who are the investors in your product. And we have products that allow asset managers to understand the dynamics of the investors and their portfolio without providing individual identity information.

Dan: We can understand makeup. Maybe they're younger than you assume. Maybe they're older than you assume. Maybe they're geographically dispersed differently. And that, I think, allows customization of communication, whether it be digital or paper. If you go to the advisor, think about the complexity of people's wealth journey. They may have a retirement plan that they've left with a prior employer's plan. They may have multiple wealth relationships.

They may have their mad money account. They may have a banking relationship. And each of those have unique communication options. And then the end investor can be barraged by 24-hour-a-day news services, whether it be through television or their electronic devices, alerts. And so how do you make it relevant, becomes the challenges. And I think that we have the data to power appropriate communication. And again, it's the right communication at the right time to make it engaging and interesting to the recipient.

Matt: Are there other data and analytics-related services that we haven't yet discussed that clients are asking for today?

Dan: Yes. When I mentioned earlier on, the vision was what I thought to be big when we started, and it was pretty narrow in retrospect. And the journey of data, I would phrase as we went from tracking millions of data points to today, it's trillions of data points. So, think of it as a 10 to the 6th versus a 10 to the 12th problem. And that is a massive difference in number of zeros. The benefit of that treasure trove of data, that large data set, is that it now informs the training of algorithms, whether they be machine learning, whether they be deep learning algorithms in the form of neural networks, or whether it's generative AI, they all benefit from very large data sets. And the bulk of my data journey has been helping people understand transparency retrospectively, "What happened in my business yesterday?"

Dan: Tomorrow's challenge is, "What do I do differently tomorrow?" And so, we've really moved from an era of retrospective reporting to prospective, "What should I do? What should I say?" And there's a prescription element there. And so, some of our most interesting aspects bring a few different dimensions than we've historically looked at. One is behavior. My world is working in evidence-based data or survey that 40-million investor is looking at hard data on the market, but it ignores the behavioral aspects of why things happened.

And so, we are now investing in behavioral data sets. We just acquired a company called AdvisorTarget that brings a whole behavioral set of data that is blended with our evidence-based data to help inform what to do next. The real demand today is moving beyond all that retrospective data to help inform what products should I create tomorrow, where should I distribute them, and how do I service that end investor? And so, it's really about the power of the data to do really interesting things tomorrow.

Matt: Excellent. Any comments on generative AI and how that might play a role in the large language model or otherwise relative to the trillions of data points that you have at your fingertips?

Dan: So, everything is a journey. The technology starts out as being new and promising and very high expectation. And then reality sets in, and then we get to work solving real problems. And I think we're very early in the journey of generative AI, it's exciting. Our journey of AI started with machine learning, hardcore algorithms, looking for trends in the data. We've been doing that for many, many years. We today have new products that are based on neural networks, again, a pretty proven set of technology. And we now have emerging solutions leveraging generative AI. And so, our very first solution sits on top of 10,000-plus research documents that our analysts author based on the data that we see. And yes, you and I could sit down today and start reading all of those, or we could just ask our large language model some questions.

And that product is called Distribution AI. It's early in its journey. We have tried to tone its answers down to the extent that they're pretty generic purposefully as we monitor the kinds of questions that are asked, and we monitor the answers that are generated. And as the technology matures, and there's still a lot of maturing that needs to occur we will get better and more creative with our answers. And so, we're excited by generative AI and large language models, but we also acknowledge that they're very early in their journey.

Matt: Fair. Yeah. I'd be curious how you see investor communications, wealth communications in general continuing to evolve in the next 2, 3, 4, 5 years…

Dan: Look, let's take personalization down to an individual level. Instead of personalizing for a category of people like we can do today, we can look at a wealth category and age category and presume certain behaviors. I think the ultimate opportunity is to be able to serve individuals uniquely. And I think that's where we ultimately need to get to. And that requires a lot of data about the individual, their wealth, their goals, their journey, what's going on in their life, how they consume information. Do they have a computer? Do they not have a computer? Do they have a powerful mobile device? And so, I think that over time, we will better understand the end investor to create very unique solutions for the end investor, and that will inform how we communicate. Some people need more education, right? I might glibly use the term debt and equity and passive and active and just assume that you know what the heck I'm talking about.

And when in reality, it's a very complex topic to some people who may not be familiar with it.

Matt: Well said. Dan, thanks so much for joining today. This was a great conversation and look forward to having you back on as the journey continues.

Dan: Thanks, Matt. I love the questions. And I think we've just scratched the surface of all the really interesting things that are going on now. Tech has reached a maturity level that is just so interesting and powerful. And the issue is just right tech for right data sets to solve the right problems for our end investors and asset managers and wealth managers. So, thank you.

Matt: I'm Matt Swain. You've been listening to the "Reimagining Communications" podcast. If you liked this episode and think someone else would too, please share it, leave a review, and don't forget to subscribe. And if you're ready to reimagine your communications experiences, consider the Broadridge Communications Cloud, an end-to-end platform for creating, delivering, and managing omnichannel communications and customer engagement. To learn more about Broadridge, our insights and our innovations, visit broadridge.com or find us on LinkedIn.