10 QUESTIONS WITH:
ROBERT SCHIFELLITE, PRESIDENT, INVESTOR COMMUNICATION SOLUTIONS
BROADRIDGE FINANCIAL SOLUTIONS

Q. Broadridge is widely known as the leader of proxy processing and investor communication services. How did it achieve such a strong market position and reputation for innovation and quality?

RS: We got there by following a basic principle: excellent client service. We are dedicated to client services and the most important aspect of that is to provide reliable service to our clients every day, listen to their needs and requirements and act upon them. By listening to clients, we can understand their needs and provide innovative solutions that are important to them. Given that we service several client groups, we continuously measure satisfaction for each group.

Every year we establish client satisfaction goals that exceed the previous year's goals. We then communicate the goals to every associate in the organization and monitor them throughout the year. Every associate in the company, which now number over 5,000, receives a bonus if the established goals are met. It's an ongoing process that we emphasize and challenge ourselves to improve upon.

Q: The gurus say successful companies are client focused. How do you infuse that focus into your team?

RS: We look at anything we do that impacts the client. For example, we have a steering committee, made up of representatives from each of the client groups we serve, that establishes measurement criteria for several of the functions we perform on their behalf. We report on our performance versus the criteria and then have third party auditors --- a Big Four firm, come in and verify what we report on our service performance.

It's also treating associates with respect. As part of the service profit chain we look to engage associates. We absolutely believe an engaged associate is not only more productive, but will treat their clients with more care. Our work in fostering associate engagement is demonstrated in the accolades bestowed on us. For instance, we've been rated the Number One Large Employer in the State of New York. We've also been rated the number one Brokerage Processing Outsourcing Provider in the Black Book of Outsourcing.

Q. What you're saying is that ultimately it's the culture you create for your individual employees that creates a championship team.

RS: Absolutely. We believe in the service profit chain, that is, if we deliver great service we will retain and do more business with our current clients and attract new clients. What we believe is that you need to "treat associates as you would want to be treated." If the associates in the organization are engaged, if they feel good about being at Broadridge, they're going to perform well and they will service clients better. Every business we are in today is increasingly competitive. Therefore, in order for us to grow we have to continually keep figuring out how to better serve our clients and a key component to that is treating our associates with respect, providing them with the tools that will aid them in assisting clients, and empowering them to take actions and reward success.

Q. How do you do that when you have remote locations? You've grown beyond a New York company, that was historically just a proxy house, or for lack of a better description, a distribution house. Now you're a technology powerhouse. How do you ensure that level of performance culture, whether it's in India or other locations around the world, or even just from Edgewood to Lake Success to Manhattan?

RS: We export our established service principles to all of our locations and business units. These principles apply in every business despite geographic location.

We develop a measurement process that is customized to reflect the initiatives that are most important to our clients.

We export our time-honored associate programs to make it clear that client satisfaction and retention are job one and also implement practices that allow them to be the best they can be.

We establish the service profit principles and create highly engaged associates. For example, we have training programs in place. In facilities that have a density of associates, we provide onsite education, including MBA programs, with tuition reimbursement for undergraduate as well as graduate programs.

We have very good communication that takes place between all the associates. We have continuous communications, we have all hands meetings. We give people the opportunity to raise questions. It's not just outward communications, it's internal communications.

Q. So, the reason you have a strong market share in this industry is because you provide the customer service, the technology, and all the systems that lead to an easy choice for clients?

RS:The world has become more challenging and we are continuously looking at ways to improve our process. Today's service offerings are not going to be good enough tomorrow. We are doing more in terms of understanding client needs.

Q. There appears to be a lot of noise going on about the proxy system, with some critics and gadflies saying the system is broken. As the top Broadridge executive responsible for the company's investor communications business, including proxy services, can you give us an overview of the issue and what Broadridge thinks?

RS: There is some noise being driven by a small and disproportionately loud group of special interests, primarily transfer agents, but the substance of their arguments doesn't hold water. Primarily the criticism is of the street proxy process where investors have the right to privacy, as well as the overall proxy system that underpins it. It's nonsensical in that this attack on our nation's proxy system is an attack on what most thoughtful and informed people describe as the best in the world.

The fact is that transfer agents have not been able to successfully compete with Broadridge because they are unwilling – or unable – to keep up with us as we bring the necessary technological advances to the marketplace. They are advocating regression --- to take the process back 40 years to an outmoded, antiquated, unreliable system --- but one where I guess they believe they have more opportunity to gain business.

They claim changes to the system --- in other words, having regulators order change --- would lower cost to issuers, but the fact is that the charges for street processing are lower than the registered proxy system overall –-- which is the part of the process they're involved in --- and street processing is more complex. Any entity, transfer agents included, can compete for the street processing business today. If they could offer better value, lower cost, increased capabilities, they would win business. But they can't, because they haven't sufficiently invested in their processes and stayed up with the times.

We offer better value to issuers for registered proxy processing and are winning significant market share takeaways from the transfer agents in that space.

Transfer agents have not offered alternatives that can tangibly demonstrate they could improve the process. In their current business practices, they do not provide anything close to the rigor Broadridge puts itself through as far as business processes and performance audits. We engage Big Four accounting firms to verify the accuracy of our processes, and every time we have come through with outstanding results.

Q. You're a Met fan, but what you're saying is that the Yankees are a great example. The Yankees never sit still. They say, "I think this guy's over the hill even if he produced this past season, he's going to be gone because we're going to be even better next season. We're never going to stand still because we're totally focused on being the best team in baseball."

RS: I would use the words constant improvement. We're constantly evaluating, constantly raising the bar, constantly figuring out how we get better. We want as much feedback from our customers as possible to understand issues they have or services they need as the world rapidly changes.

Are there gaps in some of the things we're servicing? Are there pain points for them that we have an ability to mitigate? The world is changing much faster and the implementation of technology is much more significant.

I'll give you an example in the issuer world. Last year we were the first to roll out virtual shareholder meetings, or VSMs as we call them. We believe it is going to do a few things.

One, it helps issuers get their messages out. Two, it creates more voting participation from shareholders, which is a major goal for issuers. Three, it creates more interactive communications between management and their shareholders. That's an example of applications of technology, trying to stay ahead of the curve, by introducing new products and innovation.

Q. Your clients cover the spectrum, from public companies, to broker-dealers and many different financial services companies. Broadridge serves Wall Street, Main Street, and public companies around the world. What are the biggest issues facing those clients today? What are the common critical issues?

RS: First, and foremost, our clients, both broker-dealers and issuers, want to make sure they are compliant with the regulations. Regulations are becoming more and more complex, and regulators are more active than ever before.

Second, they want to provide the highest level of services to their customers, through the best available tools.

Third, they want to make sure their data is safe and that the most rigorous controls and safeguards are in place to protect it.

Fourth, everybody's looking to become more efficient. Specifically related to cost efficiency is e-strategies --- what can be done in the electronic world. That is one of the reasons some critics, who can't compete because of their inability to effectively apply technology, criticize us. They see us gaining market share and the confidence of the marketplace due to our superior technology and track record of innovation.

Q. Your CEO, Rich Daly, said in his interview on the Broadridge website, "The bottom line is we're going to lead in technology --- period!" Do you see it that way from your perspective, from your part of the business?

RS: Absolutely. We look at our business with a long term perspective.

We will --- and do --- make the investments to ensure we continue to be the leader in the markets we serve even if that means that we may sacrifice short term gains.

We will make that decision and that commitment every day. It has served us well. By virtue of the role we play, we make investments to accommodate regulatory change as well as market needs. We always want to be in front of the technological curve for our clients.

I want to get back to the e-strategy because I think it's critically important. Every customer we speak to today has some sort of e-initiative. It allows for two-way interactive communications, something critically important in the corporate governance space. Through e-solutions, these types of communications can be achieved and at lower cost.

From a broker's perspective, they put out a significant amount of communications, for example, their customer statements in paper form, which is very expensive. It's been challenging to have investors agree to electronic delivery of statements, so we're developing more tools to make it even easier for them to adopt e-delivery while improving the "e" experience.

Q. Are the cost savings that significant between paper and electronic delivery?

RS: The cost savings are dramatic for BOTH the broker and the issuer. On the issuer side, what we've done to eliminate physical mailings has resulted in close to $1 billion dollars in annual savings to issuers.

The broker community is coming up with programs to increase the acceptance of e-strategies. Broadridge has also done a lot to make electronic delivery available.

For example, we invested in creating a ground-breaking product called Investor Mailbox. It is an electronic "mailbox" that is on the website of the brokerage firm. The broker's client can get all their relevant communications in one place, not just as information, but as a gateway to act on items they need to act on. It's fantastic. Where we've implemented Investor Mailbox we've seen the adoption rate for electronic communications increase by about 200% --- on average, and in some instances it's significantly higher. It's providing benefits to the broker and the investor and --- just as importantly --- it also is providing benefits to issuers.

In the instances where we deliver information into the Investor Mailbox, we've found voting rates are significantly higher than those that receive paper.

I'll give you an example. Notice and Access came into place about two or three years ago. When you send a notice to a retail investor by paper the voting rate is about 3%. When you send it electronically voting jumps up to 12%. And, it's also great for the environment, reduces costs to the issuer, and creates a much better experience for the investor.

Seemingly, Broadridge can make a significant contribution to corporate governance because your technology, if you will, can help improve retail participation, by going to "e," and specifically employing the Investor Mailbox.

RS: Our goal is to make it as easy as possible for retail shareholders to vote by allowing them to vote in the way they want.

I've given you the example of the Investor Mailbox. Another example that we're all very excited about, is our initiative, starting this proxy season, that will let shareholders vote on their smartphones and PDAs, like iPhones, iPads and Blackberrys.

We had a group of smart college interns in a meeting and asked them if they owned a brokerage account at this point. A few raised their hands. I said, "Do you ever vote your proxies?" and they said, "Hmm, we don't think so." I said, "Okay, if we were able to push the proxy information to your phone and allow you to vote through your device of choice or through the site you spend most of your time on, such as Facebook, would you be more inclined to vote?" The answer was, "Yes, we'd be much more likely to vote if it was incorporated with the technologies we use all the time." That's pretty powerful.

Is it going to take it from 10% to 50%? No, but it will move participation in the right direction.

In sum, let me just say this is just one example of how Broadridge, through our innovative thinking is really contributing to enhancing corporate governance and ensuring the smooth functioning of critical pieces of the global financial markets.