I guess we're officially closing the doors. Terrific. Well, thank you everyone. Welcome to the 2017 Broadridge Investor Day. I am Eddings Thibault, Head of Investor Relations.
And on behalf of our entire management team, I want to welcome you and thank you for joining us this morning. Before we begin, let me call your attention to our Safe Harbor statements, my favorite part of the day. During today's presentations, we will be making forward looking statements regarding Broadridge that involve risks. A summary of these risks can be found on the second page of the slides. We encourage all of you to refer to our SEC filings, including our Annual Report on Form 10 ks for a complete discussion of forward looking statements and risk factors faced by our business.
We will also be referring to several non GAAP financial measures, including adjusted operating income, adjusted EPS and free cash flow. We believe these non GAAP measures provide investors with a more complete understanding of Broadridge's underlying operating results. An explanation of our use of these non GAAP measures and reconciliations to their comparable GAAP measures can be found in the appendix
of today's presentation. We have a
great agenda for you this morning. Rich Daley will kick us off with his opening remarks and then Tim Gokey will walk you through the exciting market opportunities we see and provide some additional insight into our business model and our growth strategy. Tim will be followed by Bob Ciaffiletti and Charlie Marchasani, who will talk about our core governance and capital market franchises and their plans to drive sustained growth. After a quick 15 minute break, we will be highlighting the exciting opportunity we see in Wealth Management and additional opportunities in digital and international. We'll break again and then for the final section of the day, Jim Young will walk you through our financial model and provide you with additional insight about our new 3 year financial objectives.
I hope you saw that we issued a press release earlier this morning laying out those objectives. Finally, Rich Daley will close our prepared presentations with a review of what we have heard. We are going to have ample time for questions at the end and we are asking people to hold their questions until the end of the day, but we will set aside 30 minutes at the end of the day for Q and A. I think it's a very exciting agenda this morning. The theme of our day, you'll hear it across all of our presentations is Ready for Next.
And we have a short video on that theme and then you'll hear from our Chief Executive Officer, Rich Daley. Let's roll the tape.
Think about the challenges of the last 10 years. Regulatory uncertainty, shrinking margins, evolving customer demands. Now imagine the next ten. How will you harness Blockchain? What comes after mobile?
What comes after Basel IV? How do your customers connect to the cloud? And how will you connect with them? We see what's coming because financial services run through us and brands reach millions of customers through us. That's trillions of dollars in trades, 1,000,000,000 of shareholder communications.
Yet we're right there with you day in and day out. Everything we do, every insight we provide, multi channel comps. Ready to reach clients at the right time and place. Ready with data that puts your business into view. Broadridge, ready for next.
Broadridge is ready for next. The market for what we do is locked a focused strategy that will enable us to attack our market and the product set to drive success. As importantly, we have the right leadership team, a focus on the client, built on our commitment to the service profit chain and the proven track record to term long term opportunities into reality. Together that's a formula for delivering top quartile total shareholder return. Let's tee up each point.
The financial services market is undergoing a period of rapid change. Return on equity is low. Market trends are only putting more pressure on the bottom line and our clients are facing significant challenges from technological evolution. They know they need to do more and move faster to adopt their business if they want to grow. That creates significant opportunity for a partner like Broadridge, who has the technology, scale and powerful network to help them simplify their businesses and reduce costs.
Broadridge is a natural choice for them in order to accelerate that change. 3 years ago at our last Investor Day, we told you that we had a focused strategy that would deliver double digit earnings growth by extending our strong proxy and regulatory communications business and strengthening our product offering. Today, we have grown beyond our proxy core to serve a broader governance network, enabling us to extend the value we drive for our clients even further. Our investments in our GTO business have enabled us to build a capital markets franchise by enabling our service offering to include managed services and by creating a global multi asset class platform. We also said that we would continue to invest in our business.
The investments we have made have strengthened our core offerings and put us in a position to pursue targeted and meaningful opportunities in wealth management, digital communications and in extending our global business. Another key reason for our success has been our management team, which I'm proud to note is stronger than it's ever been with the right mix of deep experience and proven talent. We now have a clear line of sight on both existing and new growth opportunities, which is why I'm more confident today that Broadridge is better positioned to deliver network value, help its clients transform their businesses and generate sustained growth better than at any point in our history. That's what Ready for Next means to me. What does Ready for Next mean for you as an investor?
The final element of our story is a focus on shareholder value, specifically delivering top quartile shareholder return. We're proud of what we've been able to achieve since becoming a public company and since our last Investor Day and we intend to continue to deliver strong results. We'll also continue to invest in the business in order to ensure that we are as well or even better positioned to achieve sustained growth in fiscal year 2020 as we are today. Before we talk about our growth opportunities, I think it's worthwhile to remember how we got here. When we became a public company 10 years ago, Broadridge had recurring revenues of $1,100,000,000 and adjusted EPS of $1.51 At the end of fiscal year 2017, recurring revenues and adjusted EPS have more than doubled to $2,500,000,000 $3.13 This growth has translated directly into shareholder value creation.
Our shares debuted at $19.70 They closed last week at more than $90 With dividends, that's an annualized total shareholder return of 18%, well ahead of the broader market. From the beginning, we were determined to invest in our business, control our own destiny and stay ahead of market dynamics by expanding our capabilities and services and solidifying our position as a FinTech market leader. Our growth plans were delayed by the financial crisis, which began about a minute and a half after we spun. After we became a public company and the financial crisis took place, we did not lose sight of our goal. We reinvested almost $2,000,000,000 of your money to broaden our product lineup and enhance our technology offerings.
We've invested in our sales and marketing capabilities. We've also brought new perspectives to our management team. When you look at the numbers on this slide, it should reinforce 2 things. 1, Broadridge has real momentum. 2, this team knows how to execute and win.
Speaking of our team, Broadridge's management team is deeper and stronger than it has ever been. Our executive committee reflects a mix of executives have long experience with Broadridge as well as those who have joined more recently. I spent a significant amount of time making difficult decisions about the depth and strength of our top leaders. Those executives who have proven their ability to perform have been rewarded with increased leadership roles including Bob Cipolletti, Charlie Marchesani, Doug DeShutter and Tom Carey. And we have invested to bring in new leaders like Tim Gokey, Chris Perry, Jim Young who have the skills proven at world class organizations we need to scale our business.
At our last Investor Day 3 years ago, we laid out a series of financial and investment objectives. I am proud to note that we are able to hit our marks on all 3 key financial metrics recurring revenue growth, margin expansion and adjusted earnings growth. More importantly, given that the focus of today is on the next 3 years, we did so while making the investments we needed to sustain our next line of growth. We said we would focus our investments on 3 areas. 1st, technology.
We've invested in our technology team and platforms to the point where that now the leading standard for financial communications and on the back office technology utility for more than 60 clients and provide managed service capabilities to 30 of those clients. We're now working to integrate blockchain capabilities and cloud based communications into our product offerings. Next, we said we would invest in strengthening and enhancing our products. Over the past several years, we've continued to make tuck in acquisitions and build new products to broaden our global product portfolio. Finally, we've continued to invest in our sales and marketing capabilities.
We've increased our focus on key accounts, stepped up our marketing support and integrated the sales team from NACC. The result of this has been 3 straight years of record closed sales, a large and growing pipeline and even more strategic dialogues with our clients. 3 years ago, most of these investments weren't in our run rate. We didn't have a global post trade processing platform, nor were we in the process of developing Blockchain capabilities. We didn't have a broad suite of wealth management products and we didn't have a world class sales organization.
Today, those capabilities are in place and their cost is reflected in our run rate. We are now positioned to pursue meaningful opportunities in both our core governance and capital market franchises as well as in wealth management, digital communications and by expanding our global footprint. We're proud of our track record of delivering on our objectives and in creating value. But Ready for Next is about the next leg in our growth journey. A key message today is that Broadridge has a strong and growing franchise in governance and capital markets with additional compelling opportunities in wealth management as well as in digital communications and in growing our global business.
A key word in that sentence is franchise. That's an important concept because it captures what we're trying to build in each of our businesses. At Broadridge, we define franchise as having a truly differentiated value proposition and creating network value. Let me spend a moment on this point because it's really a key sustainability takeaway for today. Network value says that the value of our services increases as we add more clients to our platform and greatly exceed that of any point to point solution.
1 of the drivers of Broadridge's network value. 1, our mutualized platform enables economic efficiencies for all parties. 2, our visibility across the ecosystem allows us to enhance all clients compliance, risk and other capabilities. 3, our data from the network delivers critical and real time insights to all participating clients beyond just their firm, providing a broader and more accurate market perspective. 4, our connectivity enables a faster transition to next gen technologies, including cloud communications and Blockchain.
5, clients can take advantage of our industry leading cyber security capabilities and we see additional opportunities to expand these benefits even further as we go forward. Beyond network benefits, our franchises are defined by a product suite that enables our clients to reduce the cost and complexity of their operations by accessing a powerful shared platform and strong competitive advantages based on 1st mover advantages sustained by our consistent investments on NAV. This is all underpinned by a long term commitment to exceptional client service aligned with the service profit chain. While our governance and capital market franchises will drive the bulk of our growth going forward, we see additional meaningful opportunities that will drive incremental growth and strengthen our long term outlook. The first of these is in wealth management, where Broadridge has a great opportunity to build upon the suite of services we offer to our wealth management clients across our governance, customer communications and capital markets service offerings.
We are also well positioned to take advantage of the migration to digital communications to the cloud and extend our digital leadership and governance, helping our clients further drive down the cost of paper and postage and increasing the effectiveness of their transactional communications. Finally, we have built a growing international presence across both our franchises and intend to expand our global reach even further. As CEO, I keep my own simple scorecard on how I think about Broadridge's future. To do that, I take the base business we have and look at the strength and breadth of our current products. When I look at the market positioning and growth runway of our governance and capital market franchises, I feel great about where we are on that point.
Next, I look at our existing sales pipeline and the opportunities we have to grow that pipeline further over the next several years. Market demand for what we do is growing, our pipeline is strong and the quality of our dialogues with strategic clients is high. Finally, I look at where we are positioned to go after even more new opportunities. This is where I'm thinking about our opportunities in wealth management as well as in digital and international among others. In each case, I see real opportunities based on existing capabilities supported by investments we are already making driving tangible pipeline contributions.
It's that scorecard that has enabled me to consistently say for several years that I'm more excited than ever about Broadridge's future growth opportunities. I hope that as you hear Tim, Bob, Charlie, Chris, Doug, Michelle, Tom and Jim, you will keep your own scorecard. I believe that as you weigh our growing market opportunity, tangible investments, exceptional commitment to the service profit chain and this management team's proven track record of execution, you will understand why I'm so confident that we can achieve the financial objectives we are laying out today. It is truly a great time to be at Broadridge. The next speaker this morning is our President and Chief Operating Officer, Tim Gokey, who will break down the market opportunity we see, give you more insight into how we build franchises at Broadridge and talk more about our additional growth opportunities.
On a personal note, I recruited Tim to join Broadridge in 2010 because I thought the combination of his strategic insight owned by years at McKinsey combined with the operating experience that he gained as Head of H and R Block's Tax Business would bring unique value to Broadridge. Tim has more than rewarded my confidence. In his initial role as Head of Strategy and later as COO, He was the key architect of the growth in our GTO segment and the creation of our Capital Markets franchise among other accomplishments. I look forward to working even more closely with Tim in his expanded role now as President. Tim, you're on.
Rich, thank you very much for that kind introduction and thanks to all of you for being here this morning. I'm Tim Gokey, President and Chief Operating Officer. Rich just described our journey over the past 10 years. 7.5 years ago, when I joined Broadridge, it was because I saw a unique opportunity to be part of taking this company to the next level. It's been a real pleasure working with Rich and the rest of the strong management team that he just described as we have worked to more than triple the market value of Broadridge.
And I have to tell you it's been quite a journey. I remember 5 years ago working with our most important client contact at a global top five institution. And it was a long term relationship, a 20 year relationship with that institution and that individual. And they trusted us for what we did. But we were not credible to help them with their next set of challenges, whether that was simplifying their complex technology environment or bringing their global operations together and we knew that we had work to do.
Since then, we've enhanced our technology architecture, we've brought in new technology assets, we significantly increased our capabilities. As I've worked this past year with that same leader in his team, it's a completely different story. They love our architecture which is very much in line with where they are going themselves. They really bought into the vision. And we're close to a deal to bring together 7 different corporate actions platforms from around the world onto a new single global platform that will set the standard for the industry.
Now, I relate this story because it's emblematic of everything that happened across Broadridge. I could go into any number of different units and show you a story that's just like that. So as we look forward to the next 10 years, it's even brighter than the past 10 years because we are a significantly more capable company. And because of that, clients are asking us to take on bigger issues than they've ever asked us to do before. And I believe that we're better positioned than anyone to address those critical client needs.
And as we do address those needs, we're going to create value for our clients, we're going to engage our shareholders and we're going to create strong returns for shareholders.
I think
we're going to engage our associates, not our shareholders, but we'll all be engaged. So what I'd like to do this morning is I would like to share our vision for how we build on the strong positions that we have today to take Broadridge to the next level of growth and return tomorrow. Our key message today is that Broadridge has strong and growing franchises in governance and capital markets with compelling additional opportunity in wealth management. So, this is important, so let me say it again. We have strongly growing franchises in governance and capital markets with compelling additional opportunities.
In each of these arenas, there are key trends that are creating critical client needs that Broadridge is best suited to address. We're addressing those key needs with our industry leading platform capabilities and our unique network. So why do we have 2 strong and growing franchises with compelling additional opportunity? First, we have a unique business model. This creates unusual value for both clients and shareholders.
2nd, the market context is favorable. The market is large relative to our size. It will continue to grow and we have strong positions within that market. 3rd, our growth platforms address important client needs. These needs are significant and we're best positioned to address them.
4th, next generation technology is a key driving force for change for many of our clients. We are creating that technology and we're making that change a reality. Finally, we have built a culture that knows it takes engaged and knowledgeable associates to serve clients well. And that in turn creates real and sustainable advantage. All in all, this translates into a powerful combination for sustained growth.
Let's look more closely at that business model. It simplifies complexity for our clients, which creates unusual value for all stakeholders. We are focused on financial services. This gives us the deep knowledge necessary to help our clients solve problems, to bring them perspectives they don't have themselves, and it greatly increases the likelihood of success on complex engagements. Next, our model is based on taking entire business processes and performing them for multiple clients with a common SaaS, technology and operations platform.
This creates unique benefits that I'll talk more about in a moment. Finally, when the model is fully mature, we create substantial network value. That's value that goes beyond the impact of a shared technology and operations platform to address opportunities that no client can reach on their own. This is an important point, because one of the things that's different now than 3 years ago is that Broadridge is increasingly focused on how we can use our platforms to drive network value to our clients. A combination of these factors creates real value for the ecosystem, which can be shared between our clients and our shareholders.
Now, Rich already talked about the power of network value. But what makes us distinctive is how we get there with our multi client managed services model. When I talk about multi client managed services, I mean a business process that's been fully neutralized across many clients based on a common technology platform, shared operating model, outcomes based pricing and joint governance, all with independent verifications. This approach gives our clients real immediate value. Because we neutralize the technology, because we neutralize the supervisory layers within operations, and because we invest heavily in process and technology, clients typically see a 30% to 40% reduction in their total cost of ownership.
So think about that. This is a huge advantage for our clients, especially in today's increasingly competitive marketplace. That superior process and technology also improves quality. For example, one new Tier 1 bank client saw a reduction in age breaks and exceptions of more than 50%. And you can think about how that cascade through the rest of their operation.
By being part of a shared platform, our clients are also collectively more likely to get it right on key issues like compliance. And if there is an issue, no one is an outlier. In an age of increased regulatory scrutiny, there's safety in conforming with others. In addition, the cost of designing and implementing new regulatory mandates and other changes such as MiFID II are mutualized across all participants. And finally, clients enjoy continuous improvement due to scale and because they benefit from ideas across the network.
For example, Rogers has delivered savings of more than $15,000,000,000 in paper costs for our North American governance clients. And we saved our capital markets clients on the order of $100,000,000 in the recent change to T+2. Now let's look at the market in which Broadridge participates. The operations and technology market that Broadridge serves is more than $125,000,000,000 Note this is ops and tech spending only, so there are other sources of spend for our front office and corporate service offerings. In the next 3 years, spending on global services global financial services infrastructure is expected to grow about 5% annually to more than $140,000,000 And while financial services firms have historically kept much of their technology infrastructure work in house, there is a strong trend to have a trusted outside partner like Broadridge undertake this important work.
All of this is leading to faster growth for 3rd party spending. And within this market Broadridge has strong positions built on deep client relationships, which drive sustained growth. As more people talk about the power of creating industry utilities, the good news is that Broadridge has been doing exactly that for many years. We have proven that we can create, grow and govern multi tenant infrastructures across a variety of functions with high client satisfaction. For instance, in governance, we serve nearly every broker, fund and public company in North America for Boards of Directors elections and for regulatory communications.
With BRCC, we're increasingly doing this for omni channel customer communications, reaching more than 80% of U. S. Households last year. In Capital Markets, we serve 18 of 23 primary dealers for fixed income. We serve 7 of the top 10 in equities and 4 of the top 6 in Canada.
Overall, we clear and settle more than $5,000,000,000,000 every day. Clearly, these two businesses are franchises today. They have attractive underlying economics, they have solid growth, and they have the opportunity to move into relevant adjacencies. In Wealth Management, we're building the next franchise. We already serve 20 of the top 20 wealth managers.
1 third of North American wealth management accounts are on our technology platform and we touch more than 25 percent of financial advisors with our front office products. Let's talk about these market positions and how they translate into addressable market for the products that we have. I said earlier that total operations and technology spending for securities firms is $125,000,000,000 When you look at these specific products that we offer, our addressable market is about $40,000,000,000 of that based on our current product set and near end extensions. That's up from $24,000,000,000 that we talked about at our last Investor Day 3 years ago. Let's look at this briefly by market segment.
The opportunity in governance is up to $13,000,000,000 dollars and this is going to grow as the drivers behind equity and fund growth remain positive, as the need for issuer and data driven solutions continues and as omnichannel customer communications continue to evolve. In Capital Markets, the opportunity is up to 15,000,000,000 dollars Capital Markets Firms are under pressure to cut costs and to meet regulatory demands at a time when legacy systems need upgrades. That is encouraging firms to outsource more of their non differentiated functions to companies like Broadridge. Finally, in Wealth Management, the opportunity is up to $12,000,000,000 as Wealth and Investment Management Firms undergo unprecedented change and need partners to help them navigate the new technologies they require. For all practical purposes, the total market opportunity is infinite relative to Broadridge's $2,700,000,000 in total fee revenue.
That is what Ready For Next is all about. In addition to these drivers in each market segment, there are also broader trends at work. 3 years ago, I outlined 3 broad market trends with which we are aligned. These trends remain very much intact today. The demand for mutualized solutions remains as strong as ever.
What's different is a growing demand for global solutions as firms move to simplify their complex technology environments and their complex operations. Neutralization is also increasingly driven by the desire to leverage next generation technology. And truly next generation neutralization will be based on network value in addition to common operations and technology. For digitization, we see continued growth in preference for digital delivery, especially when the digital experience is better. There's also strong support by regulators for digital channels.
In data analytics, Insight is being increasingly embedded in many applications versus given solely to power users. And the future evolution will be to drive AI and cognitive. The line between traditional data and analytics and AI solutions will be increasingly blurred. Finally, the network value concept as I noted earlier is an increasing area of focus for Broadridge across all of these areas. These 3 megatrends remain as powerful as ever And our focus on bringing the most current developments to our clients is paying off.
In each of governance, capital markets and wealth management, There are key trends that are creating compelling client needs that Broadridge is best suited to address. And in each of these areas Broadridge is addressing these critical needs with our industry leading platform capabilities and unique network. Rogers had a franchise in Investor Communications for a long time. Today, we're going to show you how we will continue to grow and extend that franchise, which is as much about governance as it is about communications. Our GTO segment has performed strongly the past several years due a significant part to the strength of our Capital Markets business.
We believe this franchise will drive significant growth over the next 5 years. Building on our positions in governance and capital markets, we've also invested significantly in our wealth management capabilities and we expect this will grow into a 3rd franchise perhaps by the time of our next Investor Day. Finally, we see digital or omni channel communications and international as important additional opportunities that support these core growth franchises. In each of these businesses, market trends support long term organic growth. We are growing sales, we are expanding into natural adjacencies and we are investing in technology to better serve our clients.
All of this supports attractive growth for the long term. You'll hear from our business leaders in more detail, but let me give you an overview of each arena, starting with governance. Governance is our biggest franchise and our governance business is approximately $1,700,000,000 of total fee revenue. As Bob Ciappoletti will describe, it has attractive underlying growth with many natural adjacencies. Today, our unique network links brokers, funds and public companies, shareholders and regulators.
This creates significant benefits for the entire ecosystem. From this powerful network, we have built multiple strong businesses with a track record of creating new ones like market intelligence, tax reporting, securities class actions. Capital Markets is our 2nd biggest franchise with over $500,000,000 in fee revenue. It's been a strong year of growth for us the past 5 years. The largest global institutions have a strong need to simplify their complex technology environment, especially as they rapidly evolve to the cloud.
Our SaaS technology solution is tailor made to address this urgent need. We are evolving our solution to be the global multi asset class technology platform in the future and client response has been strong. I have talked personally to the heads of operations or COOs at multiple of our large global clients and they are excited by this vision. I said earlier that Broadridge has built on our positions in governance and capital markets to create a strong platform in wealth management. This has been an area of investment for us over the past 5 years and we have a growing set of targeted solutions that drive fee revenues of more than $400,000,000 The commoditization of asset management and other important changes are deeply affecting wealth and investment managers, but we expect to encounter many of the same challenges over the next 5 years that our capital market firms have seen over the past 5.
As Chris Perry will describe, new technology will be key to addressing these challenges. But there is no scale technology player serving the wealth management industry. Clients need to either deliver themselves, which no one wants to do, or they need to stitch together a whole array of point solutions, which is incredibly expensive. We think this creates a real opportunity for a firm like Broadridge to create a set of solutions that work well independently, but they work even better together. Our international presence supports each of our franchises and given strong globalization of financial markets is an independent growth driver in its own right.
In the past, firms outside of North America were much less likely to leverage 3rd parties. As Tom Carey will describe, that's changing rapidly with the integration of the European markets with significantly new regulatory mandates and rapid growth in Asia. Digital, cloud and other new technologies are playing a key role across each of our growth platforms. Our clients know that they need to leverage next generation technology to address their critical business challenges. But they face obstacles in creating the right investment and more importantly in applying the right talent and intellectual capital, which appropriately for them is focused on their most differentiating pieces of their business.
This creates a real opportunity for Broadridge to assist in the areas where we have scale and domain expertise. I'd like to say that Broadridge can be the on ramp for our clients to leverage these powerful new technologies. For example, as Doug Deschutester and Michelle Jackson will describe, nearly every large institution has a significant push on to digitize their client experience. Operational communications like statements and regulatory communications are on that list, but they're so far down that clients will never get to it on their own. The Broadridge can help.
Similarly, every large institution is in the midst of a strong drive to move the infrastructure to the cloud. But for a Tier 1 institution that can mean refactoring thousands of applications. Being able to leverage strong and available SaaS solutions such as ours can take whole chunks of that transformation off our clients' plate. At its core, AI depends on data and scale. The more data you have, the more exceptions you see, the better the opportunity to automate and add intelligence.
Because Broadridge works across many clients that gives us the scale to create AI solutions that no client can create on their own. Finally, distributed ledger technology or blockchain can create significant advantages, but it requires a network of participants. By bringing blockchain to areas like proxy and fixed income, we can be the solution for our clients as and when the technology matures. Broadridge is actively working with our clients today to bring these new technologies live. We've recently concluded TUCE of Concept with in both governance and capital markets with significant players like JPMorgan, Northern Trust, Santander and Societe Generale.
There's a lot of hype around this technology, but Broadridge is making it a reality. Finally, I'd like to talk about something that is less tangible, but which we think has been incredibly important to our success, the service profit chain. We take a very long term view of our business and we view every client as a 100 year client. We are fair in our commercial dealings and we don't optimize for the near term. We deliver every day on every project and we never let our clients down.
We have completed more than 65 major on boardings in the past 5 years and countless smaller ones. And this is technology, so I can't tell you that every one of those went exactly as planned. But the difference is the tenacious way that we do whatever it takes to make it right. Client satisfaction is the one metric on which every associate in Broadridge is compensated irrespective of our financial results. This approach makes a difference.
We are consistently rated a top vendor by our clients, which in turn creates greater client loyalty and willingness to consider other new solutions from Broadridge. Supporting that excellent client delivery takes engaged associates. We are passionate about creating an environment in which every associate can thrive and build on their knowledge and skills. We measure associate engagement every year and we act. All this creates an engaged, client focused, get it done culture that benefits our clients, our associates and our shareholders.
And as this service profit chain balance that has created the company that we are today and that we believe ensures our long term durability. I've been in and around dozens of large scale financial institutions in my career at McKinsey and elsewhere. And I truly believe that this culture is a compelling competitive advantage for Broadridge. In conclusion, I want to say how proud I am of all that we've accomplished of our 2 strong and growing franchises in governance and capital markets and compelling additional opportunities in wealth management and the others. I'm proud of our platform based business model that builds on multi client managed services to create unique value for our clients.
I'm excited about our strong positions in large markets with favorable trends that support attractive long term growth. We are focusing on extending our governance franchise, on driving capital markets and on building on success in wealth management. We're leveraging next generation technology as a catalyst to serve our clients more deeply by helping them transform faster. And our work is underpinned by a durable and highly effective culture. Collectively, this market, this position and this approach will create more opportunity over the next 10 years than we've seen over the past 10.
Broadridge has the right business model at the right time and we have a team that's truly excited about the journey ahead. We are in fact ready for NEXX. So with that, I want to thank you very much again for being here this morning. And speaking of Ready for Nxt, I am going to now introduce Bob Ciceletti. Bob is President of our Investor Communications business.
And Bob has been a key leader since the founding of this business. He has a really strong ability to integrate viewpoints from all different points of the spectrum, which has been critical in building that network that I just described. And in addition to being able to really work well in the context of a mature business, he's unusual and that he's had real success in building new businesses at the same time. So it's been a real pleasure as part of the time that I've been here to get to know and to work with Bob and I know you're going to enjoy talking to him this morning. Thank you.
Good morning. Thank you, Tim, for those very, very kind words. And again, I am Bob Ciafiletti and I am President of our $3,400,000,000 Investment Communications Solutions division. I will cover the governance business. My colleagues, Doug and Michelle are going to cover the customer communications business.
At Broadridge, I have covered several roles in my over 30 years in this business. Some joke that I've been around since we paid the 1st electric bill. That's not exactly true, but it's probably pretty close. 3 years ago, when I had the privilege of talking to this group, I concluded by saying how confident I was that we were going to capitalize on the opportunities over the next 25 years. I'd say 25 years.
Guess it's now 22 because it was 3 years ago. But as you can see, I do love what I do at Broadridge. And I'll tell you this, I remain even more confident about our future. We have proven that we can grow this business. We've grown it over the last 3 years.
I'm confident we can do that again. Now, let me elaborate on Tim's overview. One of the most important points he made is how critical our governance franchise is to the efficient functioning of capital markets. Think about this, every time you make an investment, whether you buy 100 shares or you buy a 1000000 shares, You demonstrate your implicit confidence in the governance of capital markets. Broadridge provides timely and pertinent information about equities and funds to help investors keep current about their financial assets and enables them to participate in governance through voting at shareholder meetings.
Now, let me emphasize 4 messages today. 1st, brokerage is at the center of a unique network that powers corporate governance. 2nd, our business model is sustained by strong external macro trends, including growth in our fund and equity positions. 3rd, we have a tradition of building new businesses by engaging in the network. And 4th, investment in technology is expanding that tradition and it's creating sustained growth across all of our businesses.
This governance process is a complex ecosystem and it reflects the U. S. Trading system. Consider this for a moment. Without Broadridge, issuers would have to connect with shareholders working through banks and broker dealers that hold their shares in beneficial or street accounts.
That's complicated enough for 1 issuer and 1 broker dealer. In this system, myriad, myriad connections must be made. There are more than 5,000 issuers, 24,000 mutual funds that need to connect to more than 140,000,000 retail investors and thousands of institutional firms. They must do this by working through more than 1100 banks and broker dealers. And we're not even counting retirement service providers who are also participants in this process.
Needless to say, it's a gargantuan task. Issuers, banks and brokers would face huge redundancy in investments they tried to solve this without us. Investors would also have more challenges participating in corporate governance. Today, these market participants mostly deal with our governance platform for all of their global investments. And without Broadridge, they have to connect with each bank of broker dealers separately.
Simply put, the system is complex for participants to navigate effectively on their own and there is no company other than Broadridge that has the capability or experience to do what we do. Now, let's add Broadridge to the center of this network. We simplify that complex process and we save issuers significant costs. We allow banks and brokers to avoid huge investments to serve their customers in the same way they are served today by Broadridge. And the Securities and Exchange Commission appreciates the order and efficiency Broadridge has brought to this vital proxy and governance work.
We actually meet with the SEC representatives regularly with our steering committee consisting of all market participants to discuss overall resilience of our capabilities and platform. They also frequently solicit our thinking on new technologies and its impact on investors. We definitely spend lots of time in Washington. We provide critical solution for all participants in this network. Now, I'll talk about each of the network and how we engage with each of them.
So, we have direct relationships with the more than 1100 bank and broker dealers who are responsible for facilitating regulatory communications between issuers and investors. This powerful network enables us to extend our offerings well beyond proxy to a variety of interrelated governance communications and asset servicing solutions. For example, we offer corporate in class action solutions, 1st dollar perspective services, as well as tax managed products and digital communication platforms to these broker dealers. Corporate issuers are obligated to conduct annual meetings. Funds are required to provide regulatory disclosures, including annual and semi annual reports and fund prospectuses.
Whenever one of these market participants has a regulatory obligation, it is usually Broadridge that provides the solution. Throughout governance business, we service all, that's all, all 5,000 plus corporate issuers, we service all of them and mutual funds, all of them, 24,000. And we have direct relationships with more than 2,000 corporate issuers and 400 fund families representing 1,000 of individual funds. We serve these direct relationships through our end to end suite of solutions including document management, meeting services, shareholder report distribution and data and analytics. Later, I'm going to provide a few examples of how new revenue is being generated through the value added services we have introduced over the last few years.
Institutional investors, we have a proprietary proxy edge electronic voting platform that helps institutional investors fulfill their regulatory obligation to vote in shareholder meetings processing more than 80%, 80% all shares voted in the U. S. And Canada. Through proxy edge, we have direct relationships with approximately 6,000 institutional investor firms globally. We have also integrated multiple sources of content into proxy edge as we continually look to improve this platform.
And this year, we launched a data driven automated solution that allows investors to develop custom proxy policies. We've also initiated a new product for global securities class actions that is getting great traction and is very valuable to institutional investors. Retail investors at $140,000,000 from them. They represent a much larger portion of shares for companies than is generally understood. And their participation in governance serves them and companies well.
So, what do we do here? We've begun analyzing retail data to help funds and issuers improve shareholder engagement and we also provide data driven insights that assist funds in growing their businesses. So, let me give you an example of how we can use this data. A fund that may typically spend today $70 per shareholder on a proxy solicitor to increase retail voting could engage that shareholder at a lower cost in a more targeted fashion by using our data driven solutions. For corporate issuers, where activism is clearly on the rise, we can help reach retail shareholders in a cost effective and targeted manner.
Not to influence them on how to vote, it's not what we do, solicitors will continue to do that, but simply to get them to vote. These retail shareholders can make a big difference in the outcome of these meetings. The 3 most expensive proxy contest just happened over the past few years Procter and Gamble, Arconic and DuPont. Why are they expensive? Why were they expensive?
In part, physicians had to continuously reach out and seek retail shareholders to vote their millions of shares. Our data solutions can reach this important constituency at a fraction of the cost. After the DuPont proxy fight, CEO, Ellen Coleman acknowledged the importance of the retail investor in winning the vote. On the global stage, we work with more than 50,000 publicly traded companies across 100 countries to facilitate annual meetings, processing communications for 5,200,000,000,000 shares, representing 7,600,000 positions. We have significant opportunity outside of North America as we build this international business.
We are expanding our global custodian client base in the space to include sub custodians, which will enhance the proxy services that we provide today and provide more services. Our international growth is also being helped by acquisitions, for example. Our recent Spence Johnson acquisition combined Broadridge's global retail fund data and analytics with their institutional data and market intelligence positioning us well to help asset management clients assess global growth opportunities. We just released our first fund flash in the Japanese language and expect deepen our presence in many other key markets. You will hear from my colleague, Tom Carey about some of the international governance opportunities.
Could get
any more words on it, I would have. So, let me explain our strong position in the governance network and why it's so sustainable. All the green work, all the green is the work that Broadridge does and we believe does well. It's a process that is reviewed independently by a big four accounting firm, which tests various aspects of the accuracy of our processing. Okay, I won't walk through all the steps, but let me explain why brokerage's capabilities, expertise and experience are so critical.
For example, we have a dedicated global team to track record and meeting dates for more than 50,000 publicly traded companies worldwide, right? That's a huge task. There is all sorts of technology to understand when they've had meetings in the past. Big, big, big process that takes place. They ensure that we and therefore the issuers never miss a record or meeting date, critically important.
We also ensure that the delivery preference of every single shareholder is captured and managed and that each regulatory communication is distributed in accordance with their references. Think back to the PNG Snake Pit with its high stakes proxy battle. The aftermath of the case draws a stark contrast to how the votes we processed were finalized minutes after the polls closed have not been challenged as virtually all Beneficial shares that accounted for 94% of Procter and Gamble's total outstanding shares. The rest of the vote is still being debated weeks later. The accuracy of our tabulation results from our significant investments to build and maintain these capabilities.
Verage has an ISO 27,001 certification for information security and ISO 9,001 for our quality management systems. In addition, our technology and operations environment are reviewed by 3rd party auditors in accordance with SSAE 18 standards. We are not the only ones who think this is a world class system. It's also better hearing others say something good than me saying it. Industry leaders, so including Paul Washington, Chair of the last fee review committee of a few years ago and Corporate Secretary of Time Warner said and I quote, the proposed fee structure is intended to continue to support a world class process, a world class process that facilitates communications with and voting by shareholders and one that will be flexible enough to encourage further efficiencies and voter participation by retail stockholders.
This is critically important to these companies. I had shared this with you 3 years ago, but I wanted to share it with you again, because it points to exactly what it is that makes Broadridge position so sustainable. In essence, without Broadridge, this process simply would not work. Economists speak of the Amazon effect, where one retailer has driven deflation in consumer goods pricing across the board. Well, here we have the brokerage effect.
We have significantly lowered costs for the industry. As you can see here, there are stark differences between the unit economics of sending a full package versus sending a notice or digital distribution. Over the past decade, Burge has invested 100 of 1,000,000 of dollars to enable this to help funds and corporate issuers save $15,000,000,000 in postage printing and materials costs by switching to these lower cost delivery channels. For notice in digital, there is an incremental fee that we are paid over and above the regulatory processing fee. Therefore, our earnings remain fairly consistent.
And how far along are we? Well, today, we've eliminated about 70% of traditional mail, they were posted in beneficial accounts on the proxy side and continue to work with issuers and funds to increase digital adoption for their registry accounts where adoption where they have a direct relationship, their adoption there is much, much lower. As you look at the Investor Communications division, you see a balanced portfolio of businesses. Our largest business, the regulatory business, serves banks and broker dealers as well as mutual funds, ETFs and plan providers. This business has enjoyed a compounded annual growth rate of 7% over the past 3 years, primarily driven by stock record growth.
Our focus is to grow internationally and continue our leadership in North America by transforming the communications business. For example, we continue to be engaged with the fund industry to provide improved and more effective fund shareholder disclosures that lowers costs, increases shareholder engagement and continues the path for more digital adoption. We do expect to continue to lead the way in improving disclosures and reducing cost to the industry. Our corporate issuer business has grown at a healthy 16% CAGR over the past 3 years. We continue to grow the registered business, the 2,000 corporate issuers that I referred to earlier that track with us directly through our technology capabilities and a comprehensive solution suite.
Through our recent acquisition that some of you may have heard out of Summit, which is a document management technology and solutions provider, We will continue to aggressively grow this business. We have also created a portfolio of products building on the network driven data assets and relationships. This includes growing our tax solution offerings for banks and broker dealers, data and analytics services and marketing communications. Together, these businesses have grown 16% compounded annually over the past 3 years as well. We expect to continue that growth by winning new clients, creating new use cases for our data and also expanding globally.
The growth of this division is a testament to what we call the service profit chain. Our client satisfaction scores are high with 97% of clients saying they were either satisfied or very satisfied with our services and that's translated into a 99% client retention rate. Additionally, investments in technology have earned us a place in the institutional investors tech top 40 list for 2016 and then again a couple of months ago in 2017, very proud of that. The capabilities of our Broadridge customer communications business, which you will hear about more later from Doug and Michelle, is also going to assist in growing and transforming these businesses.
Now, when you look at
the total addressable market here, it's $9,000,000,000 to $13,000,000,000 And today, we currently have $1,700,000,000 of that $9,000,000,000 to $13,000,000,000 in fee revenue. So we have huge upside potential. All right. I said before that we have these macro level trends that support business and amongst them is positions growth both in equities and in funds, right. So, I have a little quiz.
You have to we don't have any devices, but so the question is go back to 2,008, right, which is the most difficult financial crisis I think any of us in this room has experienced even with my 30 plus years. And if I asked what would have happened to stock position growth, how many would say it would have decreased by 10% or greater? Any hands? Hands, hands, hands. 0% to 10%, who would have thought even more hands?
Okay, here is the answer. Physicians have increased over time and the global financial crisis of 2,008 did not stop the trend. So, from 2,007 to 2011, the decline in equity growth was only 1%. However, critically important, fund positions grew 10%, okay? And understand the economics here.
A 1% increase in fund or equity position growth provides comparable fee revenues as a 1% growth in equities for Broadridge, right. So, they are comparable. So, we had net growth between equities and funds, very powerful model.
Before I said, I am going to give
you a couple of examples. Here is one of those examples about how we are growing in the issuer business. Now this slide points to an issuer where we generate about $5,000 in beneficial proxy services. However, we established a direct and broader relationship and they've become much more valuable. So, we now do transfer agency work for them.
We do shareholder data services for that company. We do print of materials for that company. And the last one document management, so this is a real example. Right. We do at those rates probably rounded, those rates for this company.
Document management is something we expect to get done. That's part of our new acquisitions. So that's 10,000. But if you look at this, dollars 5,000 in beneficial proxy fee now is translating into $67,000 in fees from this issuer, right? And if you extrapolate that across the 5,000 or so issuers that we have a seat at the table all the time, it becomes a very big number.
So, this opportunity exists across all issuers. Now, let me provide a couple of examples on our network and data driven businesses, which also have grown 16% annually over the past few years. We have a product called Opportunity Hunter, which uses our unique data, predictive analytics and location aware services to help mutual fund wholesalers find the right fund for the right advisor at the right time. Compare the ease of that search to trying to sell funds without that data, the huge advantage that we bring through opportunity Hunter to these entities. And our global tax reclaims data solution helps mutual funds improve yield by reclaiming withheld taxes from foreign markets.
And yet, we're just scratching the surface in this business. Earlier, Tim and Rich spoke about the investments we are making in cutting edge technology, especially around blockchain. Now let me talk about governance, the governance view as it relates to technology. So we made a significant investment in blockchain platform for proxy voting. We also made a minority investment in digital asset holdings and have joined the Hyperledger project, which is advancing common blockchain standards.
We also have an in house team that is developing and exploring blockchain use cases. We have already used blockchain in parallel to traditional vote processing for a global company's annual meeting. Blockchain also represents potential growth opportunities for us. For example, this new technology could help us expand our corporate action solutions. And we continue to make significant investments in digital channels through the cloud to support our clients, something again Doug and Michelle will discuss.
So, in conclusion, let me reemphasize the 4 messages that I stated at the beginning of the presentation and why I am so confident about our future. First, Broadridge is at the center of that unique network that powers corporate governance. 2nd, our business model is sustained by strong external macro trends, including the growth in fund and equity positions, as seen by the compounded annual growth over the last decade of 3% and 9%, respectively, for equity and fund positions. 3rd, we have a tradition of building new businesses by engaging the network and as a result, we have an addressable market of $9,000,000,000 to $13,000,000,000 across all of our businesses. And 4th, investment in technology will extend that tradition into the future.
Sustaining growth across all businesses. These core messages add up to significant opportunity that will be realized as we pursue them with brokerage's hallmark blend of discipline, execution and imagination. So, I conclude here. I thank you. Thank you for all being here today.
And yes, I am looking forward to the next 22 years. And with that, I would like to introduce Charlie Matshesani to speak about Capital Markets and I think you will love his story.
Apparently, Bob is a lot younger than I thought he was. It's much warmer up here on stage. So this actually feels good. Good morning. I'm Charlie Marchesani and I'm responsible for our Global Technology and Operations business, which we also refer to as GTO.
I appreciate the opportunity to talk to you today and to share our story as a leading global FinTech provider for banks and broker dealers. I have been with the company for 25 years, servicing in
a variety of client
facing, operational, technology and business leadership roles and have been leading the GTO segment since 2007. Today, I'll provide an overview of our key position in the global capital markets landscape as a leading global technology provider. I'll also show how we are uniquely positioned to create value for our clients and take advantage of the opportunity we see to extend that value and to drive growth. Capital Markets is a $500,000,000 revenue contributor to our results and we have strong market momentum. In fiscal 2017, revenues from Capital Market Solutions rose 12% with total recurring sales of $52,000,000 We expect to build on this momentum as we partner with clients on the strategic opportunity to simplify and transform their technology and operations.
Here are the key points I'll make in my discussion today. First, the strength of our global technology platforms, which we view as industry leading, combined with our managed services operational capabilities position us to lead in the marketplace. 2nd, we are building on that strength and extending the scope of our capabilities with investments in our next generation capital markets technology solution, Global Post Trade Management or GPTM. 3rd, we are addressing a large market opportunity. Our capabilities and investment in extending our solutions will drive strong growth.
Finally, our investments in our product roadmap, network value, especially in the area of fixed income and disruptive technologies uniquely position us with clients as their on ramp for future advancements and innovation. In summary, we are establishing Broadridge as the right FinTech strategic partner for today and for tomorrow. As I'm sure no surprise to many of you, capital markets firms continue to face challenging business conditions. Their revenues at 38% below 2,009 levels and revenue growth has been flat since 2014. At the same time, return on equity remains below the cost of capital for most firms, especially the top 10 global banks.
And these business challenges are not going away. There will be continued competitive pricing pressure on trading and asset servicing activities. Talk to industry analysts, they expect the cost of regulatory compliance to continue to grow and crowd out other investment priorities. In my discussions with clients, we see the results of these challenges. They tell us that they are increasingly searching for the right partners to mutualize cost and support needed change.
Against this backdrop, this challenging backdrop, the burden of legacy technology and operations complicates our clients' ability to transform. Capital Markets Firms need to find a path to drive simplification, scale and cost savings. I recently met with a large firm about their need to transform their legacy technology infrastructure. The challenge they talked to me about was that they lacked the ability to invest to drive that transformation. Their current spend is focused on supporting current regulatory change and compliance costs.
Now they are looking for a partner like Broadridge to mutualize the cost of transformation and future proof them from the ongoing cost of regulatory change. I believe we are the right strategic partner to address the market need to mutualize. We have the best capabilities. We have a strong market position and we are investing for the future. One great example of this is our GPTM solution.
With GPTM, we are working with large global investment banks to replace multiple regional applications with a next generation global solution. This solution helps them simplify and transform their global operating model, while providing them with increased operational controls and cost efficiencies. For more than 50 years, Broadridge has been a leader in providing complex technology solutions aligned with the needs of the market and we are well positioned to lead in the future. We support post trade processing for 18 of the 23 U. S.
Primary dealers. We process equities for 7 of the top 10 global investment banks. We clear and settle trades for our clients in over 80 international markets. We are the leaders in this large and growing market for software as a service delivery and we are extending that leadership support the operation needs of our clients. Our managed services teams of operational experts now support the back office operations of 30 clients, including 30% of U.
S. Fixed income primary dealers. Only Broadridge has a combined technology and operations solution, differentiating us against our competitors who can only do one or the other. This unique combination built on a foundation of best in class operational processes using our technology transforms our ability to help clients gain significant cost savings and scale. Our managed services offering has developed into the leading utility for post trade processing and has been recognized by Waters Technology as the best outsourcing provider since 2015.
Just look at today's headlines. It proves the safety and security of client data is critical. Broadridge provides best in class data security and cyber security models aligned with industry recognized standards. We partner with our clients, the world's largest and most critical institutions to review, validate and test our models and practices on a regular basis. Our investments and scale in this area are a key competitive differentiator for us.
We are investing to extend our capabilities. A great example, a global institution engaged us to help transform their North American fixed income business. They needed help in simplifying their operations and lowering costs. The client contracted for our post trade technology, managed services, reconciliations, securities financing and operational workflow solutions all in a single transaction. This client is now looking to partner with us on the next phase of its mutualization journey and EMEA post trade processing opportunity.
I'm confident in our market position and the growth outlook that we have. We have global momentum in partnering with clients and key wins beyond those represented on this page. One of the things I am most proud of is the next generation investments we have been making in our platform and how they align to the needs of the marketplace. Our global post trade management platform is built on the foundation of our leading North American and international post trade processing engines. This is a big opportunity for us and one of the key things that I want you to take away from my remarks this morning.
GPTM allows clients to choose the components aligned with their processing needs, while also gaining the benefits of a wrapper of a common global data fabric and client portal. We are working with clients to configure and deliver GPTM as an integrated global solution or a phased solution by asset class or geography. The approach gives us the flexibility and agility to support institutions on a global basis or work with institutions across their key geographies. With GPTM, we have also expanded the breadth of our asset class coverage, adding foreign exchange and exchange traded derivative capabilities to our solution. GPTM positions us as a strategic partner who can deliver value rapidly while scaling up and down to meet changing client needs.
This is an illustration of how Broadridge is using our GPTM solution to transform post trade processing globally for a top 10 global investment bank. This bank faces the growing cost of compliance with continued regulatory demand and market changes. They need to improve operational efficiencies by reducing fixed costs and eliminating the complexity of relying on multiple post trade platforms. The firm has 9, yes 9 proprietary and third party systems around the world to support their fixed income and equity processing. Think about the complexity of managing 9 different solutions posting to the bank's general ledger or providing an aggregated view of data across the globe's across the firm's global clients, plus all non needed major renovation, constant maintenance and ongoing investments in regulatory compliance.
Migrating to GPTM will give this bank a simpler global operating model. It will also provide compelling cost savings by shutting down multiple technology platforms. And this client will be able to use Broadridge as their on ramp for future technology, transformation and innovation. We are helping making them ready for next. As I mentioned earlier, we are investing to extend our capabilities, providing clients with a greater opportunity to simplify and mutualize costs.
We have expanded our asset class coverage with investments in exchange traded derivatives and foreign exchange processing aligning with clients' desire to buy a broader suite of solutions from a single provider. Amir, MiFID II, CAT, SFTR and FRTB may sound like a series of code names, but let me provide you with the coder ring. See Bob would
have given you a quiz on them. I'm just going to give you the coder ring.
They are the latest series of regulatory mandates in the United States and Europe with which our clients must comply. To date, clients have been band aiding the compliance for their legacy infrastructures. Now, we are providing them with future proof regulatory solutions that integrate with their full technology footprint. Our acquired securities lending and collateral management capabilities are a logical extension of our post rate capabilities. Now we can integrate with our trading and position data and help clients optimize the use of capital of collateral, enhancing their use of capital as well as enhancing ROE.
When I talk to large global investment banks, they consistently tell me that their worst pain point for operational control and risk is corporate actions. Simply explain, they lack a global integrated solution to manage these activities. Using our global solution, we are partnering with large global investment banks to address this significant pain point. Investing in these opportunities will drive strong growth and provide value for our clients. As both Tim and Bob talked about earlier, network value effects can bring benefits to all participants going beyond what any firm can do individually.
With our scale in capital markets, we have a unique opportunity to create network value for our clients. We are actively engaging with clients and industry partners to realize the power of network value, especially in fixed income where the books and records for 18 of the 23 primary dealers. This is another of the key things that I'd like you to take away from the discussion this morning. We have 2 areas of focus to bring network value to our clients. The first is accelerating operational transformation of the industry.
22 years after moving the trade date plus 3 settlement in 1995, the industry moved to 2 day settlement this past September. Yes, 22 years. As a market leader, I believe we have a responsibility to accelerate the pace of change. We are now working with our clients to further accelerate the settlement cycle or move to real time settlement for the clients in our network. By doing this, those clients and their buy side trading partners can realize the benefits of reduced trading risk and capital optimization without waiting for another 2 decades.
2nd and most exciting, we are working with clients to bring more liquidity and transparency to increasingly illiquid fixed income security trading starting with corporate bonds. As regulatory changes in the U. S. Have moved the fixed income trading market to an agency versus inventory based trading model for sell side firms, finding trading liquidity in the corporate bond market for the buy side has become a challenge. Given our role, we have a unique view into the trading and holdings in the corporate bond marketplace.
We are now building on the foundation of this data to help clients and networks solve this growing liquidity challenge and better serve their buy side clients. This will bring significant value to our clients and help address a critical industry need, one which Broadridge is uniquely positioned to solve. I'm excited about the potential of these activities to create unique network benefits for our clients and a sustainable advantage for our solutions. As Tim mentioned earlier, our investments in innovative and disruptive technologies are resonating with clients. We are focused on advancing 3 new technologies that provide capital markets clients the opportunity to benefit from sharing the intellectual capital and investment of
our network.
With the adoption and capabilities of artificial intelligence and robotics accelerating, we are investing in use cases to automate repetitive operational tasks and incorporate these technology innovations directly into our technology stack. By mutualizing these investments across our scale, we plan to be an industry leader in the use of this technology. As we invest in the next generation of our technology and expanding our solutions, we are leveraging the flexibility and agility of cloud delivery. Combined with our traditional tenants of resiliency and data security, we will be the market leader for the industry in the migration of mission critical applications to the cloud. I'll close with the best.
We believe that the use of distributed ledger technology has the potential to transform business functions and we are committed to leading the industry in the application of these solutions. Recently, we partnered with the Texas Society General and 1 U. S. Tier 1 Bank to successfully complete a bilateral repo processing test case using distributed ledger technology. Transaction flow.
We eliminated time consuming manual processes and we provided a secure and immutable record of the trade details. We are now working to expand this test case to other participants creating a network effect and benefit. Our investments in these disruptive technologies are a great proof point for our value proposition and my confidence in the future. Our historical record of closed sales in capital markets provides momentum and it proves that our services are resonating in the marketplace. With a market runway of $15,000,000,000 the addressable opportunity for the Capital Markets franchise is significant.
Over the past 3 years, we have grown revenue from Capital Market Solutions by 18% and we are confident in the opportunity to continue this growth. Our immediately addressable market is sized at about $10,000,000,000 and that comes from sales opportunities of our multi asset class post trade processing solutions. We will continue to grow this business by expanding relationship with current clients and adding new clients, consistent with the sales success we have had over the past several years. We will address the extended market valued at $5,000,000,000 by expanding into near adjacencies, which include regulatory reporting, reconciliations, securities financing and collateral management, corporate actions and managed reference data. We have enabled these market opportunities through the investments we have made to broaden our value proposition.
We are excited about the potential we see for success and accelerating our growth into the future. In summary, our vision is to be the number one strategic partner to help clients simplify and transform. We will do this by investing in our solutions and innovative technology to further accelerate our leadership. We have a proven track record as a partner. We have delivered for our clients for more than 50 years.
Whether it's global post trade processing solutions are using our fixed income data to solve trading and liquidity challenge, our goal is to be the industry partner of choice for the years to come, 22 years and beyond, Bob. With our strong market position, client relationships and investments, we will lead in the growing market for capital markets infrastructure. I'd like to thank you for your time and it's my pleasure now to announce a short break. Thank you.
Everyone will be back at 9:55. We'll get We're going to get started. Thank you, everyone. We're going to get started again, trying to keep the trains running on time and get us all out of here and efficiently. And so we don't take up more of your time than we've already asked for today.
So I am going to turn it over quickly to Tim Gokey to introduce the second section of the day. Tim?
Great. Thank you. Thank you all. In this next section, you are going to hear about the opportunity we have in wealth management to create a 3rd franchise, as well as the additional opportunities in expanding our digital capabilities and in growing our international business. So we hope you'll come away from this section as excited as we are about the incremental opportunities that we see to drive growth.
So in the first presentation, Chris Perry, will tell you why we think Wealth Management is positioned to grow and why we think this has a potential to be a 3rd franchise for Broadridge. Next, you'll hear from Doug Deschutter and Michelle Jackson as they talk about our digital strategy. Thanks in large part to our acquisition of NACC, Broadridge is better positioned than ever to help our clients accelerate the shift to digital communications. We have been a leader in digital for years in our governance franchise and we are well positioned to extend that leadership and to broaden that change. The 3rd presentation will come from Tom Carey, who will discuss how our increasing focus on global markets will both support our 2 franchises and be an independent growth opportunity in its own right.
I'd like to now turn it over to Chris Perry. Chris came to us 3 years ago with a mandate to build a world class sales organization and he has delivered on that in spades. Prior to that, he was with Thomson Reuters or Thomson before Thomson Reuters for 21 years, where he ran several major businesses, including a global sales organization with more than 4,000 sales and marketing professionals. Chris also brings over 3 decades of experience in the wealth and investment management industry, including several years as a financial advisor. At Thompson, Chris was part of the team that built Thompson 1 into what was the market leader at that time.
So that whole set of different pieces of this background gives Chris a unique viewpoint into the challenges facing the wealth and investment management industry and the opportunities that those present for Broadridge. Chris?
Good morning. I'm Chris Perry, President of Global Sales, Marketing and Client Solutions at Broadridge. Thank you, Tim, for that kind introduction. It's really been a great and pretty quick 3 years here at Broadridge working with this fabulous management team. It reminds me that 3 years ago at this Investor Day, I was the new guy and I had said to everyone that we had an opportunity at Broadridge to punch at a higher weight and really increase our sales.
I'm very happy to say that we succeeded in these efforts over the last 3 years. You will hear more about that in Jim Young's presentation a little bit later. As for my background, I have in fact spent over 3 decades in the wealth and investment management industry and had extensive hands on in-depth experience in these sectors. I started my career as a retail broker and moved into institutional sales and trading where I serviced the investment management community. Ultimately, I saw how technology was a great enabler and I made the transition to marrying information and technology to service financial firms and corporations.
Today, in my current role as Broadridge's Head of Sales and Revenue, I see a huge opportunity for Broadridge to serve wealth providers and investment managers. I am excited to share how we are driving growth by taking a one broad range approach to provide innovative, best in class solutions that enable our wealth and investment management clients to be ready for next. The wealth management industry is undergoing unprecedented transformation and we believe that this evolution creates a significant growth opportunity for Broadridge. Our wealth offerings began as a natural extension of our capital markets post trade and investor communications proxy capabilities. They have now become a substantial solution set with robust capabilities in the front, middle and back office.
Broadridge is continuing to build momentum in the wealth sector and our strategy is focused on combining the strength of our valuable assets to solve the wealth industry's most pressing challenges and their big aspirations. In short, we intend to become the market leader in this space by doing what we do best, helping our wealth clients grow their business, optimize performance and transform operations. Today, my presentation will cover the following four points. 1st, I'll focus on Broadridge's wealth solutions and our substantial industry footprint. 2nd, I'll talk about how major disruptive shifts in the wealth management sector are creating a growth opportunity for Broadridge.
I will then share Broadridge's wealth strategy and how we have aligned our value proposition with industry needs by offering an integrated front to back ecosystem that incorporates valuable data and digital capabilities from across all of Broadridge. Finally, I'll shift gears a bit and briefly talk about the investment management sector, where the need to modernize infrastructure is creating additional growth opportunities for Broadridge's best of suite platform. So, let's dive into our wealth solution set. In the wealth sector, we are historically best known for back office and post trade processing. You'll see our back office functions on the right side of this slide, including our managed services that allow Broadridge to provide outsourced capabilities to support technology and key operational functions such as tax reporting, margin and corporate actions.
However, if there is one thing I want you to take from this presentation, just one, is that our capabilities go well beyond the back office. We help our clients with the full spectrum of their mission critical activities. Over the past few years, we have greatly expanded our footprint via internal investment and acquisitions. To be clear, our powerful wealth solution set also includes front and middle office tools. Now on the left side, we have listed our front office solutions that help advisors acquire and engage customers, including portals, investor education and retirement planning tools for investors.
Our robust set of digital tools helps advisors grow their book of business via state of the art marketing, sales and prospecting functionality, their lifeblood. In the middle office, our solutions perform critical tasks such as client onboarding, performance reporting, advisor education and compensation management. And our data aggregation capabilities enable wealth managers to fulfill fiduciary and regulatory obligations by providing insight in the client assets held with other institutions, held away assets. So where are we in terms of wealth sector revenue, industry footprint and operational scale? Broadridge has established a substantial wealth footprint by building on our leading positions in capital markets governance and customer communications.
Our revenue is over $400,000,000 and over the past few years, our wealth offerings have averaged a growth rate of 10% a year, double digits. Our North American clients include the largest players in key wealth management segments. We provide services to all of the top 20 wealth providers in North America and our wealth business serves everyone from national wirehouses to regionals, fund companies, banks, trust companies and even record keepers. To illustrate the strength of our footprint, we have some numbers that spotlight the operational scale that we bring to the sector across the front, middle and back office. In the front office, more than 25% of U.
S. Advisors use our solutions to enhance their sales prospecting, web portals and investor engagement efforts. In the middle office, more than 228,000 agents and advisors use our data integration service as a way to obtain a more comprehensive view of investor holdings. In the back office, our trade processing systems service more than 50,000,000 retail accounts. Finally, our client base custodies over 7,000,000,000,000 in assets daily on our platforms, a number which clearly illustrates our massive unmatched scale that we currently have in the wealth sector.
Given our substantial market presence, what will drive our future growth in the wealth sector? Both wealth and investment management are undergoing major transformations. I'd like to highlight how our capabilities help these firms facilitate business evolution. First, demographic shifts are creating new problems and opportunities for wealth managers. Today, advisors have to cater to the silent generation and baby boomers, while also trying to attract the younger millennial tech savvy group who want a mobile 20 fourseven self-service experience.
Our tools help wealth managers address the demands of both investor groups. Providing a digital advisory experience that encompasses mobile and self-service functionality. 2nd, disruptive market forces are driving the evolution of Advisors' role and the firm's traditional business model. Major changes include the move from traditional commission based trading to a fee based advisory model and heightened competition from robo advisors. In this case, we are helping wealth managers augment their advisors capabilities via technology and innovative solutions that amplify advisor effectiveness in marketing communications and account management.
3rd, regulatory compliance expense is chipping away at profit margins at both wealth and investment management firms. To counter this pressure, we're implementing next generation technologies, operational solutions that retool their operations and optimize business intelligence to improve asset gathering. Finally, investment preferences favoring low cost and passive products have altered the economics of investment management. Assets under management in passive investments are forecast to grow by 50% between 2015 2020. Investment managers need to cut costs and enhance product offerings to remain competitive.
We are helping firms simplify their technology infrastructure and consolidate multiple legacy systems onto a modern platform that can also centralize their data. Our platform enhances operational agility and fully supports the growing use of alternative investments. Together, these trends provide Broadridge with an addressable market of more than $10,000,000,000 in spending across the wealth and investment management sectors. What is our strategy to capture our share of this revenue opportunity? Well, let's take a look.
Our strategy for the wealth sector has 3 components. 1st, driving the growth of differentiated point solutions that address specific challenges within the wealth ecosystem. 2nd, implementing our OneWealth platform, and end to end front to back office solution that integrates the wealth management activities into a seamless experience for the investor, the advisor and the enterprise, all three are critical. 3rd, enriching the value of our solutions by investing in technologies that are taking advantage of data and analytics and of course using artificial intelligence. Let's take a closer look at each of these.
In the past, our efforts were focused on selling products on a standalone basis, like a front office tool to help an advisor with prospecting or a middle office tool like performance analytics, but very standalone isolated. Now, we're bundling tools together and integrating key capabilities to create new solutions to enrich our value proposition and add value for the advisor. This approach has enabled us to increase our penetration of existing clients and has also helped us expand into new clients and in fact also adjacent market segments. As a former financial advisor, one of my biggest challenges was having to use a patchwork of multiple non integrated vendor solutions to support my client base, the spreadsheets, the databases, all of those things. That is why I'm truly excited to tell you about our One Wealth platform as it integrates mission critical functionality across the front, middle and back office and incorporates both proprietary customer data and third party data and tools to form a seamless advisor experience.
In designing this platform, our guiding principle was to ensure that our One Wealth platform had the investor and the advisor at the heart of everything. So, what can our platform do? Well, it helps advisors grow and retain their business, starting with solutions that enable better targeting of potential new clients, as well as retention tools to serve them. One Wealth enhances the client experience with enriched digital communication, educational content, as well as training and account servicing capabilities. And finally, our One Wealth platform also makes the enterprise more efficient, serving key processes such as clearance and settlement and incorporates data management tools that improve the client relationship, while helping to maximize advisor revenue and productivity, so everyone is happy.
We believe our One Wealth front to back platform is the best in the business. And as you'll see, this is a view that is shared by some others in the industry. So to illustrate that point, on this page, we have included a quote from a recent 2017 Sellent report. It's not us, Sellent's talking. Sellent reviewed the top front to back wealth technology platforms in North America and determined that ours was the best.
The report called out an integrated solution and highlighted our use of innovative technology to empower both the advisor and the investor. So, what are some of the ways that we are using innovation to better serve our wealth clients? We're turbocharging the value of our solutions through ongoing investment in digitization, data, AI. Here are
a few
examples. 1st, in terms of digitization, we are using cloud technology to facilitate collaboration between advisors and their clients. Our cloud based solution enables communications in the digital channel preferred by the customer, whether that's email, social media or web portals. You'll hear more about this next from my colleagues, Doug and Michelle during their digital strategy session. 2nd, we're utilizing our data aggregation capabilities to provide the firms with a golden copy of client information.
Having complete information about a client's wealth gives the firm the ability to provide 3 60 degree advice and improves performance reporting and compliance. Finally, as for artificial intelligence, we are launching a compelling cognitive marketing solution that helps advisors grow their book of business by targeting the right clients. Now, I'd like to talk briefly about how we are driving our growth in the adjacent investment management sector. Despite the onslaught of regulation, the squeeze on top line revenue and the shifting economics of investment management business model, which has changed so substantially in active capacity. This is still a growth market.
A recent PwC report projects that assets under management will grow to $111,000,000,000,000 by 2020 from $79,000,000,000,000 just a couple of years ago in 2015. The increase in passive and alternative investments is forecast to increase by 17,000,000,000,000 in these two segments alone. In response, firms are developing new products and seeking to expand geographically. The key obstacle for most firms is modernizing their legacy systems, a challenge that Broadridge is well positioned to address with our platform approach and our proven success at neutralizing costs across the industry. Our powerful best of suite global platform supports investment managers imperative to lower costs and enhance business agility.
As a result, across our product line, we have successfully established a substantial client footprint, including 17 of the 20 largest investment managers in North America and more than 300 firms globally. Our success is being recognized in the market as well in investment management. We've won 6 awards over the past 12 months for our Investment Management capabilities and functionality from prestigious organizations like HFM, Insight Data and Waters. Again, the industry is talking. Our strategy is to grow even more by harnessing the potential of our best of suite platform and by continuing to expand our services.
We are focused on increasing our penetration of our existing clients and we're also targeting other segments, including pension funds, insurance companies and sovereign wealth managers. In closing, I think all of you can now appreciate how Broadridge will benefit from this expanded focus on wealth and investment management. To summarize this presentation in 4 simple points, we have established strong solution sets in the Wealth and Investment Management sectors by building on our leading positions in governance communications and capital markets. 2nd, Broadridge is well positioned to grow as a result of transformative change, changes in the wealth and investment management sectors that we're paying attention to. 3rd, our One Wealth strategy and investments in innovation are positioning us for even stronger growth in the wealth sector.
And 4th, Broadridge is uniquely placed to help the investment management industry simplify its technology infrastructure. Earlier today, Tim described our 2 franchises in governance and capital markets. Now, after hearing my presentation, I hope that you believe as I do that we have the makings of a great future franchise in Wealth and investment management. Thank you. Now I'd like to introduce Michelle Jackson and Doug DeShutter to speak to you about our amazing digital communications capabilities.
Thank you.
Thank you. Good morning, everyone.
We are
good? Okay. Good morning again. My name is Dougie Shutter. You adjust the mics or are
we good?
Okay, good. Okay, good morning for the 3rd time.
It's a really good morning up here. It's a
very good morning. It's a very good presentation. It was worth the wait. Again, my name is Doug Deschutester. I am responsible for Broadridge's overall digital strategy and I'm also President of Broadridge Customer Communications.
I have been with Broadridge for over 15 years and prior to my current role, I led our U. S. Regulatory businesses for several years and was Chief Strategy Officer for Broadridge at the time that we became a public company.
And hello, good morning. I'm Michelle Jackson, I'm Managing Director of our Broadridge Digital Solutions. I actually came to Broadridge 10 years ago with a background both in financial services and digital agencies. Prior to this role at Broadridge, I led our mutual funds proxy business, several of our core bank broker dealer businesses and launched several of our issuer data products in market.
Michelle and I will explain our digital strategy and provide an overview of our digital platform, which is a foundational component of our governance franchise and helps drive overall digital strategy and digital growth.
And we'll also introduce you to something which is truly unique to Broadridge and very much along the lines of Ready For Next, our 21st century digital communications hub that connects brands with consumers in a digital omnichannel world and will accelerate digital transformation for brands and consumers alike.
Okay. Here are 5 key points I'd like you to take away from today. 1st, consumers are digital, but brands are very much struggling with converting their customers from print to digital and getting them to sign up for digital delivery. 2nd, Broadridge has a strong heritage and track record of digital transformation. 3rd, we are investing to accelerate the print to digital transition for our clients.
4, Broadridge's customer communication platform creates a valuable network effect for the benefit of consumers and brands and we will spend quite a bit of time talking about that. And finally, the NACC acquisition generates attractive expansion opportunities and paves the way for future digital growth. Before we get into each of these five points in more detail, I'd like to share with you a little bit of context since not only am I responsible for our digital strategy, but I was also our executive sponsor for the NACC acquisition. I've been running our I had been running our U. S.
Proxy and prospectus business and before that also ran our customer communications business several years ago. And it became very clear at that time that digital was the future. And there were a lot of questions about what digital would look like in the future, how it would happen, when it would happen, what it would look like, what the format that would look like. But we step back as an executive team and we just took the position that look, digital is going to happen and it's going to be the future and we're not going to be passive about it. In fact, we just did the opposite.
We said, we're actually going to accelerate digital adoption even if it means cannibalizing our existing print businesses. So I set aside from at the time what was running a $1,000,000,000 a year annual revenue business. I set aside from that solely to focus on this challenge and this problem around digital transformation I am focused on that now along with BRCC 20 fourseven, 365. Now along the way, Michelle and our teams worked on how do we actually digitize the mail stream. How do we get consumers to turn off paper and go digital, go electronic?
And so we started working with some of the leading technology companies in the world, many of whom you're going to see when we talk about the network and the partners that we work with are part of our ecosystem today. And we're working with these leading technology companies because we had the content and they had the eyeballs and we're both working towards a strategy of digitizing communications. And as we did that, a few things became very clear. It became very clear that digital adoption is ultimately going to be driven by consumer behavior, okay. It's not necessarily what a brand or a company is trying to do.
What the consumer wants to do. If you are going to get a consumer to drive digital, it's going to be led by consumer behavior. It also became clear that the frequency of transactions that a consumer undertakes or makes with a particular service, the greater the likelihood, the greater propensity that they will actually undertake the effort to sign up for that service. Okay, think about online banking, aggregation of content and the value there for the consumer, okay. So what that told us is that the amount of content that we have is important.
And then finally, if you take a consumer perspective, there is an entire source of financial services content outside of Wealth Management that Broadridge simply didn't have before we did NACC. The consumer tech companies that we're working with, many of whom again are channel partners in our network today, told us that we were much more interesting to them with a broader content source and in particularly the type of content source that you could acquire via something like NACC and also that we are much more likely to succeed in our digital strategy with that broadened content source.
And that's a really important point. The expanded breadth of financial services related content and relationships that we gained by way of the NACC acquisition has been a really important factor in our ability to develop a digital ecosystem with partners like Amazon, Evernote and others that are key in our B2C solutions, as well as other business alliances and partnerships that support our digital B2B innovation And I'll talk some more about this later on.
Okay. Let's start with the first point, going back to those 5 points we had before, let's go to the first point. And that's the brands are still very much struggling with the print to digital transition. And what you're going to see here, Pingtan, where we look, the majority of consumers right now are digital, right? 98% of adults making over 75,000 are Internet users.
And then if you look at the stats, 70% of consumers still prefer to get a paper biller statement in the mail at their home.
And interestingly, it's been 20 years since e delivery has been around. So think about that. For 20 years, all of us here in the room as consumers have been getting pleas and incentives, asking us to shut off paper, to sign up for e delivery from banks, brokers, cable companies, virtually every provider that's sending content to your house. And yet collectively, digital adoption is still relatively low
at 30%.
So, what this
of statements, right now, the digital experience holistically has not been better than the physical experience because 7 out of 10 consumers are still saying, send me the paper at home. So from a brand perspective, this is a huge problem, okay? There's a lot of money that gets spent on paper and postage and we are taking a very aggressive stance and position in the leadership position in terms of how to build a network to be able to change that. It's an enormous problem that brands are looking to solve.
Now, it's a little bit bleaker story when you look at the challenge have in creating meaningful engaging digital relationships with consumers. Outside of retail banking and retail banking has strong consumer engagement over websites and mobile. Consumers tend not to actually visit the websites of the brands they use. And the high level story here is this. 1, it simply isn't convenient or worthwhile for consumers to visit dozens of websites and track of all those constantly changing passwords.
And 2, the higher the frequency of transactions a consumer makes with a particular service, the more they're willing to undertake the effort to sign up. Again, this is evident in the case of retail banking, where consolidation of bill pay and the frequency of transactions has created a high digital engagement rate.
And the second point we talked about is that Broadridge has a strong track record of digital transformation. And if you think about us with a very strong governance franchise, which Bob had talked about before, We are using digital as an ability to help again solve this problem and gains for the governance franchise. It's worth noting around our history of innovation here. You see some of the solutions that we've done for the industry and we've helped helped the industry successfully digitize around processing other regulatory communications. We talked about some of these statistics before.
We've effectively digitized 64% of all these communications already either through digital capabilities and solutions or through using data algorithms and suppression technologies and that's a pretty big number. That's resulted in the save that we've talked about to date, which is over $15,000,000,000 save for the industry at large over the course of the last decade. Now, we want to continue to grow beyond the 64%, right? We still got a lot of consumers and investors still getting paper at home. So to get beyond the 64%, we have to continue to add value in the digital experience and we talk about some of the things we're investing in, that's exactly what we're looking to do.
Now that digital transformation has actually been a win win for both our clients and broader delight. And this is a really important point. Brands have a significant savings on postage and print costs. And when we look at this from a broader perspective, distribution revenues go away, fee revenue could be plus or minus and profit generally has the potential to be larger given the value that's created with that shift to digital.
And sometimes we provide print for a client, but we don't yet do the digital. And from that perspective, e delivery can be a headwind. A lot of times we provide both print and digital and we're aligned there. And a lot of times we're not doing print at all, but we're just doing digital. And then we have a tailwind from digital adoption trends.
So look, one of the ways that we're going to look to add value to the customer communications business is to continue to penetrate from a digital perspective and benefit from the tailwind of digital adoption. We continue to invest in order to accelerate the digital transformation and we are doing that along 3 key themes. The first is that we need to make the digital experience better.
Great. Now have any of you ever looked at marketing emails you receive and notice just how rich they are in terms of content and data. They're actually pretty impressive. They're personalized, they're contextual, they're data rich, so the sender can actually track interaction. And a lot of brands spend a lot of resources and dollars to get those communications just right.
Now, by contract, think of that experience as what is typically a text based email that you get telling you that your statement is ready and that you need to go somewhere to pick it up. That's a huge experience gap for consumers. What we're doing is bringing the leading digital capabilities that are so often seen on the marketing side of the house, out bills and statements and other regulatory communications. This is an example of what we mean by having an enhanced experience.
In addition to enhanced experience, we also need to make digital more convenient for the consumer. And one way that we can do that is rather than force the consumer to go to one of the dozen or so websites as we talked about it and remember all those usernames and passwords, we can directly deliver that bill or statement into a digital destination that that consumer already uses. Okay, so we are going to talk about that again. We can directly deliver that bill or statement into a digital destination that consumer already uses into their bank's online banking site, it could be a personal cloud archive like a consumer's Google Drive account or Evernote account, actually I'm going to show you something around that. When we do this, again, we are not just delivering a notification with a link to say the content is available, go somewhere and get it.
We're actually delivering the underlying bill or statement.
Now these two broad capabilities around enhanced experience and enhanced reach are both new. We are in market now with enhanced experience. That platform is several clients already live. And our enhanced reach solutions like delivering mail Q1
of
The Q1 of sum of these multiple investments allows us to create a network and resulting network effect, okay, as for the benefit of both consumers and brands alike. It's going to take time to build out, but it's very powerful and it's very unique to Broadridge. So, this is a network. We are going to talk about the network and the network effect. This is a very important chart.
So, I am going to slow down here a little bit and make sure we just take the time to really go through this and explain this. What I talked about earlier is that consumers are digital, but they are not signing up for redelivery in mass. They're not willing to take the effort to go to 20 plus different websites and manage all these usernames and passwords. So we're looking to be a leader here and create a network to solve that problem. On the bottom, you see we provide communication services today either in print or digital format to virtually every major consumer vertical that sends a bill or a statement to a mailbox, okay.
In fact, you can see that we aggregate and distribute communications on behalf of over 5,000 brands as we do that. As we do that, we are distributing content. Our reach is over 80% of all households across both the U. S. And Canada.
So again, think about the breadth of that content, it's over 5,000 brands, it represents every major vertical and it's over 80% of all U. S. Consumers, U. S. And Canadian consumers.
On the top half, you see we're also connected to major consumer channel destinations, again, like online banks or consumer cloud drives, like Google Drive or Evernote. And of course, these consumer destinations are already used by 100 of millions of consumers. In fact, statistically, what this means is that many of you in the room are, of course, already using these consumer destinations today. So, you see brands on the bottom, you see channels on top and consumers connected to those channels and importantly in the middle what you see is Broadridge. And we're this connection point in this network hub in the middle which makes this happen.
And we are effectively becoming a communications hub and allowing brands to reach consumers through destinations that those consumers are already using.
Great. Now, what Doug just described is the network. So, let me explain what the network effect is. The network effect is a way that we can help brands create digital relationships with consumers at a much faster rate than they can on their own. And for consumers, we can greatly simplify how they connect to brands, how they do business with and receive content in the digital channels of their choice.
And here is how we do it. We offer consumers options on how and where they would like to receive their content. When they sign up for delivery of content in any channel in our network, and again, this could be Google Drive, Evernote, Dropbox accounts, we ask them if they'd like to be notified when content from their other service providers in our network is available. When the consumer says yes, we can then utilize matching algorithms to find matches with those other brands in the network. And once the match is found, the consumer receives an alert, much like what you get, for example, on LinkedIn, which says, would you like to connect to this brand and start receiving this content in your account?
And all the consumer needs to do at this point is opt in. Now remember earlier when we mentioned, we talked about the frequency of transactions can create a higher digital engagement rate. By aggregating content for the consumer at the digital destination of their choice, we're leveraging that fact to drive up adoption. Now to do this takes a very broad content network like the one that Broadridge has to make this all happen. And while a picture might be worth a 1,000 words, Doug and I actually thought a story here might be a little bit better.
So, here is a quick story to illustrate the network effect in action. Sarah. Sarah sees a promotion from her utility company, Edcon, that says she can get her bills delivered directly to the digital channel of her choosing. Sarah signs up to have her bills and statements delivered to Evernote where she stores a lot of her important household information today. Things like her retirement statement, tax, healthcare information, bills and the like.
Sarah receives a notification that her latest bill is available in her Evernote account. When reviewing her bills, Sarah is presented with a new type of communication that hits on key pieces of information she actually cares about. Personalized, dynamic and includes rich content from her utility that's engaging and relevant. She's also able to pay and easily connect back to the utility company's website with a single click. Now when signing up, Sarah asked to be notified of additional companies she can connect with within her Evernote account.
So she now receives a notification that her brokerage account information and her cell phone bill are also available for delivery into her Evernote account. With just a few clicks now, Sarah is able to connect to all of her additional providers and access all of her communications from within her Evernote account. She can easily pay her bills, engage with her providers in one place And all this makes it really easy for Sarah to file, manage, share communications, pay bills and engage with all the important content from her household in a single location of her choosing.
The network effect is a big deal and like we said, it's going to take time to develop and it also requires assembling a lot of different puzzle pieces to make it a reality because it requires an incredible amount of scale to enable the network effect and the matching that we talked about. And the acquisition of NACC was a very important piece of that overall puzzle. So, this page should look familiar. We showed you a version of this pretty similar when we announced the NECC acquisition about 18 months ago. And we said at the time of the announcement that the transaction had compelling financial benefits and I'm happy to say that we will achieve our $20,000,000 annual synergy target and then some, hence the green check.
We also indicated that there were attractive mid term expansion opportunities and I am pleased to say that in our 1st year we achieved over 200% of our sales goals. And the green check here ultimately though will mean that we have made further progress as a consolidation point for large in house platforms. And finally, we also hinted at larger longer term opportunities especially around digital. As you can tell from today's discussion, we're very well positioned to be a 21st century communications hub around digital.
By adding NACC, we have multi vertical reach and vast consumer footprint. As we mentioned, 80% of all households in the U. S. And Canada. And at this point, you might be thinking to yourself, wasn't NACC primarily a print business?
And the answer is yes. But the great irony here is that every communication starts with digital we ever put ink to
paper. So, let's recap here and leave you with some key milestones to track. Again, big picture of what we're doing in the same spirit of what's made Broadridge such an indispensable part of the financial services industry in the communication space, we're looking to use our breadth and our scale and our network to again evolve our capabilities and create efficiencies for the market. And when we succeed here, we're going to create significant value and benefit for our clients and solve for them what is a very big problem. Now again, it's not going to happen overnight.
So to gauge our progress along the way, here are some key milestones. 1st, meaningful outsourcing wins in financial services for our customer communications business. The combination of NACC's scale and efficiency and technology, when we put that together and coupled it with Broadridge's digital platform created an unrivaled capability and platform in the customer communication space. As mentioned in the last slide, we have already seen proof points around this and again, early stages within the 1st year we more than doubled our initial sales goals and expectations. 2nd,
our mix
of outsourcing wins over time with a digital component should steadily increase. Even when we have the initial print opportunity or print application, by creating a relationship and onboarding that client into our omni channel platform, we'll ultimately have a good chance of extending our relationship and services with them into digital over time. 3rd, we are going to continue to launch new digital solutions. Today, we talked about our enhanced experience tool set, solution set the enhanced reach capabilities being brought to market to support branded consumer communications and we have a strong product roadmap to support them and we are also looking to bring in new future B2C applications as well as B2B capabilities to the market. Finally, there is a little bit of foreshadowing, what Michel is going to talk about, partnership announcements to further extend the reach for our digital platform are also a very good milestone to track.
And from our perspective, they not only strengthen our solution offerings, but they validate the value of the assets the puzzle pieces that we brought together to enable our overall digital strategy.
And actually on that note, many of you saw yesterday the announcement we made on the expansion of our collaboration with Amazon Web Services on our B2B data management and archival solutions. We are actually collaborating, working together to build the next generation of managed services for data management and archival. Given the already significant market share that Broadridge has in traditional archival, these innovations, these collaborations with AWS will actually enable our clients, specifically our financial services companies to move beyond what is today in traditional archival, primarily a storage of static documents to meet regulatory obligations and to facilitate presentment. These new solutions will store documents, data and other objects in a repository where organizations can actually leverage machine learning, artificial intelligence, structured and unstructured querying to turn archive into actionable information. This particular collaboration combines our unparalleled data management expertise and leadership in financial services with AWS' leading infrastructure capabilities to be able to deliver a very highly customizable managed service on a global scale.
And what you see here is the tie in to our digital strategy, because we clearly already had a strong presence in providing managed services solutions for financial services, the expanded breadth of our financial services relationships with the extension of the NAC acquisition means that we have expanded opportunity set and that makes us more attractive and interesting to Amazon and continues to drive more opportunities for business alliances and partnerships to drive our product solutions.
This wraps our presentation and we appreciate your time and the opportunity.
Thank you as well and I'm pleased now to welcome my colleague, Tom
Weighing and Foundation Not coming. There we go. So, hello and good morning all. I am Tom Carey, the President of our International Business and I am delighted to be able to talk to you today about our journey to date and how we are going to accelerate our growth by helping our clients transform the businesses. Now like Charlie and Bob, I'm celebrating 25 years at Broadridge.
I know I don't look young enough, old enough. Now, through my career, I've been really fortunate to experience the breadth of what our company has to offer and it's been great to be part of the evolution of this vibrant business. Now I've worked in all aspects of our business across technology, operations, sales and M and A and I've shaped the strategies and growth of our business internationally. Now right now, I'm focused on the next wave performance for our business and how we grow that owned franchise internationally and creating long term value for our clients and Broadridge. This morning, I'm going to talk about EMA and APAC, where we have a rapidly growing presence.
And I'm going to share details of our recent successes and I'll reveal how market drivers are fighting strong tailwinds for our future growth. Our clients face pressures to reduce costs and grow our operations. At the same time, these firms cannot afford a loan to transform their legacy technologies. Now this has opened up a $5,000,000,000 opportunity internationally providing technology and services. And we'll deliver growth through multi year opportunities with our largest clients.
Using the use case that Charlie discussed earlier, we'll also bring our broad capabilities to our regional clients and we'll continue to create incremental value through market relevant solutions adjacent to our core offerings. Now achieving this growth has acquired a strong foundation. Let's look at
what we've built so far.
We began our international business in 1995 through a post trade acquisition in Europe. Now this allowed us to differentiate our offering and provide U. S. Clients with international services. When we added proxy in 1998, it was for the same reason.
Now, our international business has now evolved from that very U. S. Centric model to a sizable global business with customers around the world. And through focus and hard work, we're growing international by addressing client needs within EMEA and APAC. The slide behind me highlights major achievements in this growth period.
In 2013, we closed one of our largest mutualization transactions to date. After this client conducted extensive research to identify Broadridge as the right long term partner. Now, since 2013, we have generated significant new sales, grown our client base and expanded our portfolio solutions and our capabilities. The name of the Chassis numbers are the key drivers behind our recent growth. With industry return and equity depressed, capital markets firms have turned to us to help reduce costs and streamline operations.
This has been our strongest growth area. We've all seen encouraging growth in our Investment Management and Government business lines. And through a balance of sales growth and tuck in acquisitions, we have doubled our revenues inside since 2012. We've achieved a 14% CAGR on revenue predominantly through organic sales driven opportunities. Now in my role, I have a personal mandate to double those revenues again.
So, how have we generated this growth? Well, we've expanded existing relationships. We found partners who promote and distribute our capabilities. We've executed on our commitments. And probably critically, we've delivered solutions with excellent value propositions.
Now, our sales over these 4 years have been really quite strong. We've created approximately $50,000,000 in new recurring value, while also driving new event revenues as our client relationships have deepened. By increasing our sales velocity and client adoption, we are generating renewed interest from other firms. So they're closely monitoring what their peers are achieving with Broadridge today. Now, none of this would have been possible with now the excellent team we've built by promoting our best associates and acquiring great talent.
And I'm truly grateful to them for their hard work and dedication to date. Now, I'd like to share some positive dynamic season of our market opportunities. There are 4 drivers supporting our growth: regulatory and compliance, globalization, cost reduction and acceleration of outsourcing. So let's talk about each of those. Regulatory pressure may have been received in the U.
S, but that's not the case globally. And our 2015 research combined with institutional investor highlighted that over 67% of analysts in Europe and Asia thought that regulatory pressure will continue through to 2020. This is driving our clients' investment choices. Now one example is MiFID II. I'm sure many of you have seen the huge challenges in an industry this is creating.
This regulation demands the firm separate the cost of investment research and trading while also increasing the transparency of their trade reporting. This single regulation will cost our industry $3,000,000,000 Now, on the face of it, MiFID II is a regional issue, isn't it? It's not, because it has global impact due to the interconnectedness of our market and the complex nature of our client businesses. And such changes prompt firms to seek our help in solving the challenges such as accurate trade reporting and research unbundling. And likewise, Brexit, where I come from unfortunately, is bringing new challenges for our clients and there's opportunities for us.
We're helping firms redesign their trade flows to protect the continuity of their businesses moving forward. Now our second driver is globalization. Investment Management and Corporations must achieve greater transparency and control across the regional entities. And in Capital Markets, firms are already moving from solving a silo basis or regional basis to solving globally. This brings with it the benefits of consistency and control and increases cost savings, which leads me nicely to our 3rd driver, cost reduction.
This is even more acute at capital markets firms in EMEA and APAC, where ROE and profits have failed to recover as they have with their U. S. Peers. For McKinsey Research in 2016, European Bank delivered an ROE of 5%. That is roughly half that of their U.
S. Compatriots. Now these challenges are not limited to sales side alone. Investment managers face fee pressures and compression as the popularity of passive products increases. Now from Morgan Stanley Oliver Wyman Research, asset management margins contracted by 6% in 2016 alone.
In Financial Services, Clients has continued due to cost pressures, but they've largely exhausted the internal savings profiles they can achieve. They're struggling to address legacy technologies that require renovation. And why is that? They require renovation because of market demands to change regulation or to allow for the next wave of business transformation by moving to our mutual line services that helps to reduce costs, operate more efficiently and better leverage that data. Now the 4th and perhaps the most critical driver here is the accelerated adoption of outsourcing.
Historically, international clients have been more resistant to outsourcing than their U. S. Peers. However, today's tough environment demands the clients who alter their viewpoints. Our 2017 research highlights that 64% of C Suite Executives believe that outsourcing their non differentiating functions makes more sense than retaining those same functions in house.
Now powered by these market drivers, we have significant growth opportunities. Our solutions fit within an estimated $5,000,000,000 marketplace, and more than half of that is also in Capital Markets, where we're expanding most rapidly. Now historically, much of that fine feeling was out of reach. And why was that? That's because most of that was conducted in house within the banks.
But today, as clients seek active, talented partners like Broadridge, that dynamic is changing. In Capital Markets, Globalization, continued ROE pressure and the evolving regulatory environment are challenges to our clients. Whereas in Investment Management, a sharper focus on performance net of fees is fundamentally changed the industry. In 2016, ETFs saw a 16% net inflow, whereas Conversely, hedge funds saw a 0.04 percent outflow. Of note in governments, regulators continue to promote shareholder engagement with a goal of improving Board oversight.
Our key issues, executive pay, director appointments and conflicts of interest, we are at the forefront of tackling such issues. And we're going to maximize our international opportunities for a set of defined executable plans. And to get ready for next, we will expand our market position in EMEA and APAC to become the preferred global provider. We will actively showcase our most important strategic solutions and invest in our sales talent and account management leadership. In fact, we brought Bob Santangelo, one of our strongest and most experienced sales leaders to international to lead our future growth.
Working with our segments, we will aggressively integrate our products and services for higher value offerings. And our segment roadmaps reflect this work. We're aligning with them to address international needs and demands, this is directly supporting the growth of our 2 franchises. For large and existing clients, we are creating multi year opportunities to help them consolidate technology, globalize operations, increase transparency and manage risk. Now for regional clients, where we see significant runway opportunity, we are introducing our broad portfolio to them and building long term relationships.
The new and existing clients will continue to expand our market reach for new solutions. These will be delivered by our franchises and then customized and configured to meet international market needs. By implementing our plans, we will maximize our strengths and make the most of our existing momentum. Now before I close, I'd like to provide 2 tangible examples of our successes, one by client and one by geography. We have a long standing relationship with this client, a Tier 1 U.
K. Headquartered investment bank, we've been providing proxy governance and post trade services only to the U. S. Business historically. However, since 2014, we've expanded this relationship to provide technology and services globally using solutions from our traditional product sets as well as new product launches and acquisitions.
Through multiple engagements, the client's confidence and trust in our ability to solve their challenges has grown. We're now introducing new solutions to meet their needs. In 2014, we from 2014, we have generated over $17,000,000 in new annual recurring value internationally with this client. And that's a really significant shift in our mix because that now means that over 50% of the new sales value from this account came internationally. We'll continue to expand this global relationship through our new solution offerings and further regional penetration, meaning we have runway.
And that's our model in the years ahead. We'll seek to deepen relationships and identify mutually beneficial business cases. And the approach of this client and the other Tier 1 that Charlie talked about are blueprints for our future global growth. The last example I'll give is how we're winning directly in key markets where our clients face high operating costs, increasing regulatory pressure and a need to transform. So let's look at Japan.
Now we've been incorporated there since 1998. We know it takes time to build a brand, but probably more importantly, the trust of the market and market participants. And we've shown that patience. And now, we're using the benefits for both our franchises. In the last 2 years, we've closed approximately $10,000,000 in new sales in Japan, winning against the historical market choice.
And we've also transitioned this business from a deployed on-site model to a much higher value Software as a Service business. In Capital Markets in Japan, we're differentiated because we solve both domestically and globally. We help these clients standardize across their regions and business lines. In government, we have a strong joint venture with the Tokyo Stock Exchange, the domestic electronic proxy and our adoption since 2012 has accelerated. Why is that?
Because clients have seen the benefit of additional service and the take up by their peers. With our recent sales wins and our growing reputation, we have healthy expectations for Japan and also other large domestic markets. In conclusion, I am extremely bullish about our international opportunities. We are well positioned to support our segments delivering Ready For Next through our international growth and we have large addressable market space and tailwinds from key market dynamics. EMEA and APAC clients are embracing utilization as they face regulatory pressures and they need to globalize, standardize and invest in technology.
We have invested in integration of products, in personnel and in acquisitions.
And we
will provide our clients with a greater understanding of who we are and how we can help them solve their challenges today and tomorrow. We will win new clients in major markets and deepen our relationships with existing clients. They will see us as an integrated partner with a broad portfolio of global solutions, a partner they can trust to help them with their greatest challenges. And I am confident that we will become the preferred global provider. Thank you,
Thank you, Tom. We are going to take a very quick break this time and keep us as much on schedule as we can. So, a 5 minute break only. You are going to come back and watch a short video and then hear from Jim Young. 5 minutes, please.
All right, ladies and gentlemen, let's get started again as I just take our seats for a quick second. As we sit down, I think would be terrific, we have prepared a short video about some of our efforts in our communities on engagement with not just as Broadridge associates, but communities in which we operate. So a short video here. Thank you.
Moment we announced this project, we had associates in a volunteer for this camp. We had associates parents volunteer for the camp. We have associates who go and celebrate their birthdays or children's birthday at the school. We have, you know, associates who take those kids out for various outings as part of their team. In mind, the MDF kids as part of all our celebrations, okay?
We will be now integral part of the Dartmouth family.
In 3 years, I will complete my CA course. Today, I have support from Broadridge and MB Foundation. Don't have words to express about Broadridge and MB Foundation because their goodness is like an ocean.
When you see the kids, they come in. They're there in the camp for a month or 2. Yeah. Come
me here today, I've been to that school at least on one occasion and often cases many, many occasions. And it's more than just corporate social responsibility. As this video said, this is a school that's based in Hyderabad, India that also is the location of our largest office globally. We've got 2,000 associates. When you go there, you're just struck by the energy that we have.
There's an incredible talent base. A Hyderabad. And Hyderabad, our Hyderabad operations have been recognized locally by the state of Telangana, it's about 35,000,000 people as the best employer in the whole state. And this is where there are a lot of big multinationals, big brand names. So it's a real honor.
So it really feeds into the culture that's there. And as VLK, our leader in India said in the video, it really is part of the associates lives there. They go and celebrate birthdays, family celebrations, as we all go and visit. It is part of what you do. Often for me, it's the first thing I do, the first day when you get there is visit.
So it's a very, very special part of who Broadridge is and part of the Broadridge family. For those of you who don't know, I'm Jim Young, I'm our Chief Financial Officer. I joined 3.5 years ago from Visa, where I spent 8 years managing various global finance organizations. I also led the North America Finance Organization. You now have a good sense of our 2 franchises and the opportunities in front of us to grow I'm going to take you through our financial performance, our business model, our capital priorities and of course our financial objectives for the next 3 years.
I'll begin by looking back to the financial objectives we set at our last Investor Day in December 2014. I'm pleased to note that we achieved each of the major objectives. We're presenting 2 views of our performance with and without the acquisition of NACC. We thought it made sense to look at our results this way because the acquisition had such a large impact on our 3 year growth numbers, both recurring and total revenue. All the numbers here except for margin are on a 3 year compound annual growth rate basis from fiscal 2014 to fiscal 2015.
I'll start with recurring fee revenue. We set a target of 7% to 10% growth. We delivered 14% growth with NACC and 7% without. Underlying
both of
these growth rates was organic growth of 5%, which was consistent with our plans and reflective of our steady sales growth. Total revenue growth, we set an objective of 5% to 7%, we achieved 17%. Again, excluding the impact of NACC, we delivered 6% growth. Let's move to margin. We targeted 130 to 220 basis points of margin expansion.
Here, the acquisition of lower margin NACC business set us back nominally. We're off target a bit. Excluding NACC, our adjusted operating income margin rose 160 basis points or in the middle of the adjusted range we set. Rounding out our 3 year performance was our 11% adjusted earnings growth, which was at the high end of our target range and 12% adjusted EPS growth. We accomplished this performance while taking up our leverage to 2:one consistent with the target leverage we announced at our last Investor Day in December 2014.
Our growth track record is clear and compelling. The next question is, what gives us the confidence to target double digit earnings growth and sign up for another set of 3 year objectives? To answer that, let's start with our business model. Our 2 franchises, along with the other businesses targeting large market opportunities, have created a durable business model, which has demonstrated predictable and consistent growth. The pillars of our business model, which have underpinned our strong total shareholder return track record are as follows.
1st, sustainable growth. Long term contracts, many of which are subscription like, anchor our large recurring revenue base. With our historical 98% client revenue retention rate, our model relies on adding new business in the form of multi year contracts, which we've consistently done at greater levels. This has produced solid organic recurring revenue growth in the mid single digits complemented by tuck in acquisitions bringing total recurring growth to the high single digits and greater. 2nd, margin expansion.
Our business continues to gain operating leverage through scale businesses, favorable product mix a relentless focus on finding efficiencies. These factors have helped to drive on average 50 basis points of margin expansion per year. We see a continued path for similar levels of margin expansion. 3rd, strong free cash flow. Our business is relatively capital light, which allows us to convert 100 plus percent of our adjusted net earnings into free cash flow.
And 4th, balanced shareholder friendly capital allocation. We are committed to returning capital to our investors. It begins with our 45% dividend payout ratio as measured as percentage of adjusted net earnings. Next, we look to invest in our business through internal investments and tuck in acquisitions aligned with our strategy. And where we have excess capital, we believe strongly in returning that capital to our shareholders through share repurchase.
Now I'll step back and review our revenue components. To remind you of how our revenue works, let's look at the $4,100,000,000 in revenue we generated in fiscal 2017. The biggest piece here is our recurring fee revenue, representing 59% of our total revenues last year. This is the piece that grew 14% on a compound annual growth rate basis and 5% on an organic basis. The bulk of that revenue here is anchored in long term contracts for services across governance, capital markets, wealth and other businesses.
On a revenue weighted basis, our recurring revenue contracts are approximately 6 years in duration, which give us strong visibility. I'll return to this topic in a few minutes. Further, we have a 98% client revenue retention rate through 2017, which evidences Broadridge's deep commitment to client service. As we noted recently, we expect the inclusion of the NACC business and now BRCC will push this retention number down to 97% for fiscal year 2018 as we run off known losses from clients. It's our recurring revenue base, which is our financial engine.
The smallest revenue component is our event driven revenue, just 5% of our total revenue has been very profitable. We earn event fees from mutual fund proxies, contests and other activities. We consider these events non recurring, but it's important to understand the nature of these services in our service delivery. Part of our governance and regulatory communications business, we maintain an on demand infrastructure to support proxy voting. As Bob discussed earlier, this is a core part of our value proposition to broker dealers, issuers, investors and regulators.
Now while this is integral to our offerings, it is a choppy revenue source and it is difficult to forecast with any precision in any given year. That said, there are some longer term dynamics and some metrics to keep in mind. 1st, mutual fund proxy accounts for a little over 20% of event fees and mutual funds go out for proxy every 7 or so years. This implies that approximately 15% of physicians are being processed for a vote every year. While positions continue to grow nicely, the actual number of positions in a year varies widely and depends on the size of the funds that go out in a given year.
There's another area that has grown in significance and that is corporate issuer contest. Naturally, there's a correlation here with some notable contest activity of late, B and G. It does appear activism is a longer term trend that cannot be discounted. Finally, distribution revenues. They account for about 38% of our revenues and carry low margins, less than 10% on a gross margin basis.
Postage and certain pass through revenue items are the key components that move with mailed pieces. As more paper converts to electronic, delivery growth in this revenue stream will slow and eventually decrease resulting in higher margins. Distribution revenue is only found in the Investor Communications segment. Let's take a look at those segments. ICF is the larger of the 2 segments at $3,400,000,000 in revenue and $1,600,000,000 in recurring revenues.
The biggest part of that business is the governance business that Bob described earlier. Next is the customer communications business Doug and Michelle discussed in their overview of our digital strategy. It also includes approximately $150,000,000 of wealth management products that Chris talked about. The combination of healthy position growth for both stock record and mutual fund interim, strong sales and communications and good uptake on analytics and tax products drove 6% organic growth in fiscal year 2017. GTO is our 2nd segment.
The biggest part of this business is approximately the $500,000,000 capital markets franchise that Charlie discussed with the balance coming from Wealth Management Solutions, again reviewed by Chris. GTO's 6% organic growth in fiscal year 2017 was largely driven by the notable sales success like GPTM and more equity and fixed income wins. The GTO side of wealth has also been a positive factor, along with new asset classes and capabilities such as foreign exchange and securitized lending. Closed sales and client retention are the lifeblood of our business. The sales team under Chris Perry's leadership has grown sales at a 14% annual clip over the last 3 years.
This performance reflecting number of factors including investments in sales, better go to market execution, our stronger brand and a healthy pipeline of new products and services. As a reminder, our sales represent new annual recurring revenue fee additions and are a good indicator of future performance. Net new business, which is our sales plus our historical 98% revenue retention accounts for almost 75% of our organic growth. Our sales performance has been terrific. But given our implementation timelines, revenue recognition lags sales meaningfully.
Our sales to revenue recognition typically about 12 months to 24 months. This lag does however give us good revenue visibility out 4 plus quarters. Conversion management is a critical competency. We take this very seriously. We carefully track close dates, implementation milestones, projected start dates, future revenue generation, deal by deal.
Internally, we use a metric called new recurring revenue backlog, which represents an estimate of new 1st year revenues from sales expected to come online. And we are sharing this metric with you here on this slide. You can think of it as revenue from sales that we've yet to recognize, As we close new sales, our revenue backlog increases. As sales convert to revenue, our backlog decreases by the amount of 1st year's revenues recognized. As shown here, we had a total new recurring revenue backlog the end of last year of $250,000,000 which equates to about 10% of last year's recurring fee revenue.
Of this amount, dollars 170,000,000 or about 7% of last year's recurring revenue has not gone live in any form. This gives us a healthy foundation for mid range planning. The $80,000,000 balance represents partial year revenue where some portion of that full annual contract value has already begun to be recognized. Move to the next pillar of our business model. Broadridge has a good track record of expanding margins.
From fiscal year 2014 to fiscal year 2017, we expanded adjusted operating income margins 53 basis points per year on average excluding the NACC acquisition. And we achieved this margin expansion while investing for the future. Here we've laid out the contributors to margin movement. First off, we have natural scale in our franchise businesses. We're processing an incremental proxy position in our governance business or an incremental equity trade in our capital markets business flows through at very high incremental margins.
In addition, Broadridge has the institutional discipline to find efficiencies each year through new technology, smart resourcing and reducing layers in the organization. More structural drivers of margin include faster growth in our newer recurring revenue only products, which often have higher contribution margins. Looking forward, as Doug and Michelle explained, we are investing with the expectation that we can convert more physical distribution to digital. As this occurs over many years, this should give us a margin lift. On the flip side, Broadridge has been a serial tuck in acquirer and while many of these businesses are SaaS based with higher contribution margins, they are relatively immature businesses that have yet to reach scale.
These growth businesses can be unbalanced dilutive to margins. And also as Rich noted, since becoming a public company, we have been committed to reinvesting in our business, Funding organic investments like building from scratch a tax business for wealth clients or standing up blockchain offerings for proxy or repo dilutes margin. That's just the way it is. And make no mistake, we will continue to invest in the business for future growth. While margin is an important consideration, we are not solving for margin expansion in all instances, but we are always solving for sustainable growth.
So net net, we expect to maintain a pace of about 50 basis points of margin expansion on average per year over the next 3 years. Next, every CFO's favorite topic, cash flow. Broadridge's business model has demonstrated low capital intensity with capital expenditures as a percentage of revenue of 2% to 3%. This low capital intensity has yielded a high conversion ratio where we convert greater than 100% of adjusted net earnings to free cash flow. CapEx has ticked up in recent years as we've undertaken some exceptional projects, including integrating NACC and investing capital to achieve those synergies, building out more capacity in Bangalore, India, our 2nd largest location after Hyderabad, investing in new data center and new product development.
Even with these long lived assets, we have delivered steady and predictable free cash flow. Our strong free cash flow has enabled Broadridge to fund ongoing organic investments and tuck in acquisitions while funding our dividend and returning excess cash to shareholders. Balanced capital allocation is an important component of our approach solving for a top quartile shareholder return. Our 4th priority is our dividend and our target 45% payout ratio underscores our belief in the power of a strong dividend. After the dividend, we pursued disciplined M and A where our playbook has been to identify tuck in acquisitions with compelling returns and support our strategies.
We also have been a consistent buyer of our stock, returning approximately $600,000,000 to shareholders. This equates to about reducing our share beginning share base by almost 10% over the last 3 years. This repurchase activity has been an efficient vehicle for returning excess cash to shareholders. Finally, in balancing our priorities, we remain committed to an investment grade credit rating. We think this is appropriate given the role we play in capital markets and the importance of maintaining the confidence of our clients and other constituents.
Our target leverage ratio is 2 times adjusted debt to EBITDAR, which equates to 1.7 times gross debt to EBITDA. We are currently at our target leverage. Our $1,000,000,000 revolving credit facility gives us ample capital and flexibility to fund our business. As I noted earlier, we see targeted tuck in acquisitions as an important investment vehicle. Over the past 3 years, we have made 12 acquisitions deploying about $800,000,000 As you can see on the slide, the average deal size at less than $70,000,000 Square's falling into the tuck in range.
Most importantly, this investment aligns with growth areas that support our existing franchises or lay the foundation for future growth. These acquisitions also serve to infuse top talent in innovation that fuels our broader business. About half the M and A spend was the acquisition of NACC that as Doug addressed was really investment in digital with some compelling returns from 2 relatively low risk levers, 1 synergy achievement and 2, winning large in house print deals. On the former, as Doug highlighted, we are nearing achievement of actioning all $20,000,000 in annualized synergies with plans for more. On the latter, we have a healthy pipeline and are confident we can meet these deal objectives.
In addition, we made great strides in extending our capital markets franchise through acquisition by adding additional asset classes and capabilities such as foreign exchange trading, securities lending and collateral management. We've also added wealth capabilities around advisor compensation systems and cloud based marketing solutions. A theme you'll see running through all of our acquisitions of data and analytics, which really underpins many of our next generation offerings and build on the exceptional data assets we already have. Our business plan calls for more of the same on the M and A front. Going forward, we will maintain our disciplined underwriting, Strategic fit with the themes and opportunities discussed today will be paramount in our decision making.
We also continue to set a high bar for getting to yes on opportunities. This high bar includes deals accretive to growth in earnings within 12 months to 24 months. We also calibrate performance against deal specific IRRs and return on invested capital relative to the corporate average. And as always, we will challenge ourselves to satisfactorily answer a fundamental question. Why are we a better owner of a business?
You'd be surprised that how effective this question can be in evaluating opportunities. And of course, critical to our strategy and M and A plans is our capacity to invest. As we begin as we look forward to the next 3 years, Broadridge has ample capital to achieve our goals. Based on our financial objectives, we expect to generate $1,400,000,000 of free cash flow. Assuming we maintain our current leverage target as we expect to, we would expect that the capacity to borrow another $500,000,000 After accounting for roughly $600,000,000 of expected dividends, we expect to have approximately $1,400,000,000 to deploy against M and A to support our growth strategy and share repurchase.
Now let's turn to our financial objectives. I hope many of you have seen the press release that we issued this morning laying out our latest set of 3 year objectives. Me give you some additional insight on the drivers behind these numbers, starting with recurring fee revenues. Our recurring revenue fee growth objective on a compound annual growth rate basis is 7% to 9% for fiscal year 20 17 to fiscal year 2020. As a reminder, we achieved 14% growth in the period from FY 2014 to FY2017 and believe that we have the plans and the talent to have equal or better organic performance.
Let's take each of these drivers individually, so you have a sense of how we plan the next 3 years. Remember, RSA sales and retention model, our largest driver is net new business, which again is revenue from sales less losses or cancellations. Given our historical track record of 98% client revenue retention and planned 97% given the runoff of BRCC, this is about our ability to convert our current backlog into revenue, hitting sales of around $200,000,000 a year and onboarding those new sales efficiently. As you can see in the bar chart, we've been averaging about 4% on this metric and have a very healthy revenue backlog on the back of record sales in each of the last 3 years. The $250,000,000 revenue backlog gives us a great head start on our plan.
All this gets us to a target of 5% to 6% growth for net new business. Next is internal growth. Internal growth is largely attributable to position growth and trade volume growth. To provide some additional context, stock record and mutual fund positions have grown reliably over time, recently in the mid single digits as Bob showed you earlier. Trade volume growth is less predictable and not something we depend on in our planning.
We also capture any concessions at renewal here. These elements average 2 points of growth over the last 3 years. With an assumption of similar macro trends and market dynamics and some reductions in BRCC volumes, we assume 0 to 1 point of internal growth over the next 3 years. The combination of 5% to 6% net new business and 0% to 1% internal growth adds up to 5% to 7% organic growth for fiscal 2017 to fiscal 2020. At the midpoint, this would be an acceleration from the past 3 years on a bigger base of revenue.
We do expect acquisitions to also contribute to our growth over the 3 years. Given the inherent uncertainty in M and A, this line item can vary widely based on strategy and opportunities. NACC was an unusual transaction in that it was a lot of recurring revenue for relatively low purchase price. Accordingly, acquisitions contribute a lot in the past 3 years. Going forward, we assume about 2 points of growth from these acquisitions.
On the earnings side, we assume these acquisitions contribute very modestly as they ramp to being accretive in this 3 year window. So all in 5% to 7% organic growth plus 2 points from new acquisitions gets us to 7% to 9% recurring revenue growth. Our total growth objective incorporates our outlook for event driven and distribution revenues. For event fees, we assume flattish event driven fees over the period of around $200,000,000 or so per year in line with our recent average. Picking up on my earlier comments, I said 15% of mutual fund proxy positions come up for proxy on average each year.
Given the concentration in 2 large complexes, Vanguard and BlackRock, the percentage of positions in a given period can vary. For instance, BlackRock went out for proxy in fiscal 2017 and Vanguard will have completed its proxy in fiscal 2018. Because of this and noteworthy contest activity including P and G, fiscal 2018 is shaping up to be a very strong year and above historical averages. As a result, we anticipate lower mutual fund proxy in fiscal years 2019 2020 barring exceptional events such as mutual fund mergers and acquisitions or more contest activity. We expect low margin distribution revenue will grow much more slowly than recurring revenues.
The relative weighting of each of these components brings our total target revenue growth to 5% to 7%. This revenue performance, coupled with 50 basis points of margin expansion, a fairly constant core tax rate and a modest reduction in share count get us to adjusted EPS growth of 9% to 13% and supports approximately 10% to 11% annual dividend growth given our target 45% payout ratio. Additionally, we've not included any benefit from lower U. S. Taxes as a result of the new tax bill.
It does appear that given the House and Senate bills, Broadridge would be a beneficiary of new tax legislation given our heavy U. S. Income mix, recognizing there are other offsetting provisions. If and when there is a final bill, we will update you on the implications for our current year guidance and these objectives. Let me conclude with a quick summary of where we stand.
Broadridge has a strong business model based on growing revenue and strong cash flow generation. As we look ahead, Broadridge is better positioned than ever to drive sustained growth. Over the next 3 years, we think we'll achieve continued 5% to 7% organic recurring revenue growth, driving 7% to 9% total recurring revenue growth. That in turn will lift margins and drive 9% to 13% adjusted EPS growth. Coupled with a strong and rising dividend and continued shareholder friendly balanced capital allocation, we think this is a formula for continued top quartile total shareholder return.
I'll now turn the day back to Rich for his closing remarks.
Thanks, Jim. Well, we're almost there. Let me provide a few closing thoughts about what you've heard today. There's an old saying and certainly a New York saying that I think applies to our situation. You have to be in it to win it.
Well, our message for you is that Broadridge is most definitely in it and we really, really like our odds to win it by continuing to drive network value to our clients and delivering top quartile shareholder return to our investors. What does that mean for you as an investor? First, you should expect continued strong performance from our 2 core franchise businesses. The performance of our governance and capital markets franchises will be the biggest driver of our overall growth over the next 3 years and beyond. As Tim noted, both franchises have been built on the back of a unique business model on building multi client managed services platforms that link our clients to us and to each other.
That linkage not only allows us to drive network value to our clients, it also reduces the cost and complexity of their operations. That's a powerful value proposition with clear relevance in today's markets. In governance, Broadridge has built a powerful franchise that lies at the center of unique network of 1100 banks and brokers, more than 140,000,000 investors, thousands of mutual funds and 50,000 plus global corporate issuers and of course multiple regulators as well. By providing a critical link that enables the governance process of equities and mutual funds, Broadridge will continue to benefit from the long term increasing popularity of these investment vehicles. In addition, as Bob Ciappoletti pointed out, our ability to build solution sets, the issuers, mutual funds, brokers and banks will provide continued incremental opportunities.
We expect these efforts to continue to generate steady growth through 2020 and beyond. Our capital markets franchise will also be a strong growth driver for Broadridge. As Charlie Montesani told you, our clients' challenges are creating strong demand for solutions which mutualize the cost of investment while providing a broad breadth of capabilities, cost savings and inclusion in a strong network of global clients including 18 of the 23 fixed income primary dealers as well as 7 of the top 10 global investment banks. We're building on the strength of that network. We continue to extend our industry leading global technology platforms by adding additional asset class coverage, building compliance capabilities and adding managed services.
We're also investing to drive additional network benefits to our fixed and compliance to improve trading outcomes and boost their capital efficiency. Our capital markets franchise is well positioned to continue to be a growth engine of Broadridge. The strength of our governance franchise and the emergence of our capital markets franchise are a big part of why we think Broadridge remains well positioned to deliver on our growth objectives. We had simply ended our day after the Capital Markets part of the presentation that would have been good enough to keep my cardiologist happy. But we didn't end there because we are well positioned to go after several additional tangible and compelling opportunities.
These new opportunities are results of investments we've made with your capital in recent years. What's so exciting about these opportunities is that they are real and compelling, meaning they reflect capabilities brokerage already has in place and they are based on tangible dialogues we're having with some of our largest and most strategic clients. The first of these opportunities is in wealth management. We already have in place a series of robust capabilities serving the back, middle and front offices with wealth managers. The wealth industry is being challenged by demographic shifts, regulatory pressures and the impact of technology on the role of advisors.
Those challenges which echo those faced by our capital markets clients over the last few years are creating growth opportunities for Broadridge. First, they should accelerate demand for our individual solutions across their business. 2nd and perhaps more critically, there is a growing demand for a platform that will increasingly integrate many of these solutions, thereby allowing our clients to reduce costs and simplify their operations. Next, we're already a leading a leader in helping our governance clients increase the adoption of digital communications. As you heard, the NACC acquisition further strengthens our ability to be a key enabler
of a
broader set of digital channels, especially with emerging cloud channels. The ability to offer both an enhanced experience and an enhanced reach coupled with our low cost physical capabilities positions us well to gain incremental share by driving down our clients' costs of reaching their customers. It also sets up a longer term potential opportunity to be a digital hub linking tens of millions of households and thousands of brands just as today we connect tens of millions of investors with thousands of mutual funds and corporate issuers. The final emerging opportunity we shared with you was around the growth of our international operations. While Broadridge has long had an international presence, we're increasingly focused on how we can pursue opportunities with large global players like Barclays, Lemora and JP Morgan and target even more regional players.
The last key element of the Broadridge story is shareholder value. This management team is very focused on creating top quartile total shareholder returns and we have the opportunities to do it. We have a great financial model. Our focus on recurring revenues gives us the visibility we need to make longer term investment decisions. Broadridge's low level of capital intensity means we throw off significant cash flow to invest and return to our shareholders And our focus on providing medium term objectives gives us the flexibility we need to balance our investment with delivering real bottom line results.
Looking forward, we're targeting 7% to 9% recurring fee revenue growth underpinned by strong continued organic growth of 5% to 7%. That will drive margin expansion and double digit adjusted EPS growth. Those results coupled with a strong and rising dividend and a balanced capital allocation should continue to generate top quartile shareholder return for our investors. Let me conclude by reminding you why I'm more optimistic than ever. 3 years ago, we stood in front of you and said we need to invest to grow our proxy and governance products.
We have made those investments. Today our governance franchise is stronger than ever and well positioned for continued growth. We said we needed to invest in technology to help strengthen our GTO product offering. Today, Broadridge has a strong and growing market, capital markets franchise with a clear mandate from the market to continue to reduce our clients' costs and operational efficiencies and drive real network value for them. There is no question in my mind Broadridge is a stronger company today than we were just 3 years ago.
Moreover, due in large part to other investments we made in digital, blockchain, our people, our brand, We are also well positioned to pursue those additional opportunities I just discussed. More than ever Broadridge is in control of our own growth destiny. When we get back together in 2020 Investor Day, we will expect to be providing you with an update on how our execution against these opportunities has put us in an even stronger position than we are today. That at the end of the day is what we are trying to accomplish. Not only positioning Broadridge to achieve our objectives for the next 3 years, but really positioning our company for sustained growth well beyond 2020.
Broadridge is ready for next and we are in it to win it. Thank you. I'd like to ask my colleagues to join me on and we're going to go right into the Q and A. Dave, you got your hand right up there.
Just a quick point of order. We do have 2 folks with mics, Lina and James. So as you are called upon, please wait for the mic so everyone on
the webcast can hear your question. I got a mic. Okay. I want you to hand the round. Okay.
Thank you. David Togut with Evercore ISI. Rich, with Broadridge now processing equities for 7 of the top 10 global investment banks, the other 3 are
sort of going it alone with Project Scalpel. How will Beave, Goldman and Morgan compete with JP once they're fully on your platform and you take their total cost of ownership down by 30% to 40%?
Well, there's an awful lot going on. I'm actually going to ask Tim who has been, as I mentioned earlier, a key part of the architecture with Charlie in terms of our capital markets franchise. But there is I wouldn't put scalpel as a foregone conclusion at this point yet.
Tim? Yes, it's a great question. And first of all, those to Rich's point, the Scalpel opportunity, I think as people looked at trying to create something that is different than what we're creating, as they've gotten into that, they've seen that is very challenging. They have very great difficulty in coming to agreement on what they would do. They don't have a technology platform that would really work across multiple institutions.
And as we look at the opportunity to transition or the cost of transitioning people onto it's pretty forbidding. So we do think that an industry utility is the right answer, obviously, and we're continuing to build that brick by brick. And we think that continues to be an opportunity. It's particularly building the things around it. So while we it's nice that we have 7 and 10 and that's exciting, but there's a lot of pieces that we don't have.
And it's building those additional pieces within the 7 to 10 and it's taking that over to overseas that where we see the continued growth for us.
Were the other 3 a matter of when, not if?
That is something that we ask ourselves every day and we continue to have good discussions with all of those institutions. For 2 of those institutions, they have multi asset class platforms today. And to date, our platform hasn't had that same capability. And so even while we believe we're more modern and better, I think as we build out that multi asset class piece that we talked about, that will be an even more interesting conversation
in the future. Rich, you founded Broadridge in 1989 and you've clearly built an excellent team. It seems like your succession strategy is pretty clear at this point. What is your own personal timeline in terms of
running Broadridge? Well, I can say with absolute certainty that I doubt all these standing here 22 years from now with Bob Shipper. Let me make that very clear. I'm disappointed. I hope to be standing somewhere.
But beyond that, so let me repeat some of the things we said. So first of all, I really do appreciate you acknowledging the effort that has been put into and in my comments I specifically talked about the very difficult decisions we've made to evolve to the leadership team that we have, all right. And so really from almost the time of the spin and it was really just a year or so afterwards, We have an outstanding Board with significant responsibilities in other major public companies outside of Broadridge, our Chairman and the Lead Director at Merck for example, HP Enterprises etcetera. And so succession wasn't a random thought. Because succession as we know is one of the Board's 2 key responsibilities, okay.
It's to pick the CEO into own succession. So as a member of the Board, I worked with the Board very diligently with outside resources, etcetera. The Board ultimately makes this decision. When we announced that Tim would be President, all right, I said that and that was this past August, I said that I look forward to working with Tim for years to come, right. Now you shouldn't expect anything to go on forever and we have a real strong policy view that change is actually good at times and we believe it's true in terms of fresh ideas, new ideas.
And we also believe very, very strongly that done right, okay, and even though I had the privilege of founding the business, the entity takes precedent over any individual. And so we're very, very focused and that was one of the keys of today, which was to expose the management team and the deep activities. I can say with absolute confidence, okay, that Broadridge from a management point of view is positioned to go forward extraordinarily well, right, when the Board and I decide it's time for me to move on, okay. And I will also say that Broadridge will not become dependent on any single individual at any point in time, all right. And I think that's what you saw demonstrated here tonight.
So I think I have a reasonable shot at going down as being a pretty good CEO. I think one of the key things of being rated that way is getting succession right. So for a long period of time, we have been very, very focused on ensuring that it's not about an individual. It is about the entity and that every activity is covered. I will tell you that today's activities, okay, were led by Tim Gokey, all right.
And as difficult as it was, I kept out, all right. And because we want everything to happen before it actually happens, all right. No different than when we said we invest in the business 3 years ago for the opportunities we have today. We're building the management team to run the business in their future roles today. So I'm not leaving tomorrow, but I won't be here 22 years from now, all right.
Well, maybe in any way, but certainly not standing here. But I'm highly confident and you should be highly confident based on what you saw here today that this business is well positioned to run. And let me be clear on one other thing. Beyond my family, there's nothing more important, right? This is my 3rd child.
And so regardless of what role I'm in, this team and this Board will have access to me with relatively the same ease they have today, all right. So it's not like I'm really ever going to go away from loving Broadridge, okay. But my confidence in our ability to go forward without me based on today's and other activities that have taken place without my involvement GPTM and lots of other really cool things is extraordinarily high. Thank you.
Chris Donat with Sandler O'Neill. Rich, I want to ask, I'll direct it to you, but maybe others will want to answer too. Seems very bullish about the prospects for the next 3 years and I think the plan is pretty clear. I'm just wondering what you see as the potential risks to it. And that is, as you take your view historically and having gone through the financial crisis, your revenues didn't really take any hit during the financial crisis, but even lived through some consolidation of brokers.
I'm just wondering as you think about the most challenging risks out there. Is it either bank or broker consolidation or asset manager consolidation, action with the SEC or maybe the end of new regulations? Is that I mean,
are those the sorts
of things you worry about? What does make your cardiologist worry? Well, I'll give you 2
quick views. First of all, look, truth be told, if someone had asked me, I would have passed on the financial crisis because our revenues did get hit and they were getting hit on that incremental revenue which has extraordinarily high margin, right. So if you take volume or revenue out or even when we retain the clients, all right. So in the Lehman going to Barclays, all right, that doesn't mean we had the same revenue when Lehman and Barclays were together. They are going to JP.
That didn't mean we had the same revenue and we had to work to put them together, but less revenue at the end of the transaction. So that certainly wasn't what I would call a fun period of time. When I look at where we are today, neither when Jim, Tim and I and others were discussing this Investor Day, all right, the reason that I'm so bullish, all right, is because there are going to be world events that we can't control, all right. So I'm not including world events, all right. But if I look at the events directly related to our business and events are controlled, there has never been a period of time where we've had more opportunity currently funded, opportunities in our run rate, right, and that's the key.
So digital is in our run rate, blockchain is in our run rate. They're generating very little revenue right now. Now they're generating meaningful difference in conversation with clients. We're talking to a client whether it be about normal communications, okay, or a client about what we might be doing in the processing world. The fact that we've already committed with investment, real investment to get them to the next level of efficiency, whether it be driving their ability to communicate to their customers in the cloud or having the efficiency of leveraging our investment in blockchain.
This is a meaningful difference in terms of if all things are equal go with the technology leader. 10 years ago at the Pierre Hotel and the Roadshow, I said we would invest in this business are good times or bad. I didn't know again a minute and a half after we spun the financial crisis would happen. And as you know, we invested even then, but now I believe and Jim says as well, we don't give you tracking of the investments anymore as I did earlier on because we're fully investing in the opportunities when we're there because we've created the richness in our financial structure to be able to deliver on the short term results and invest in the longer term. So the confidence about being better positioned has we know the market has needs.
We know we've funded the investments to go after those needs. We know we have the right sales organization to live on those needs. We know we have the right business leaders to execute against those leads. We know we're in real conversations with real clients, all right. And we have enough of this going on that there's multiple ways for us to deliver on this top quartile performance and multiple ways for us to deliver on our growing sales capabilities.
And the other thing that is really important to me, This is a long term play. We could have had much stronger earnings in the short term, but we wouldn't be able to be here with the confidence we have in the long term. And we don't think that's good for shareholders, all right. So my last day, I'm going to be thinking 3 to 5 years out, okay. I'm convinced because I've worked with this team so long, they're going to think 3 to 5 years out, right.
And so the confidence in Broadridge, particularly for a long term investor should be tied to even if for one reason or another there's a market blip out there, okay, or there's a really dry year and event driven. Candidly for a long term investor, it's not going to matter, okay. If you're chasing quarter to quarter, I guess it's going to matter, But we're not going to chase quarter to quarter. We're going to create sustainable growth and value over a long period of time by being indispensable in the markets we serve. And that's what this team and I'm so proud of presented today.
And one last thing, they presented it. Everyone's presentation was their presentation, right. So I enjoy hearing some of the things first time today. These are the leaders.
And then just if I can tap one in on acquisitions, DST NACC was a very large acquisition for you. As you think about your plan for the next 3 years in the $1,400,000,000 of cash you have for M and A and dividends, would you expect to do another $400,000,000 acquisition or was DST just an unusual opportunity and you don't expect one to come up again?
Why don't I let Tim address that. As President and Chief Operating Officer, He is working very, very closely with the businesses to align strategic opportunities. Yes.
Thank you, Rich. First of all, we do see M and A as an evergreen source of growth in FinTech. There are always things changing. There are always teams rolling out of a bank or an investment firm creating something, getting into a certain size and then they want to sell that product to JPMorgan and it's very difficult for them to do that, but we can. And so we've created a lot of value with that over time.
I would note that of the things that we talked about today, proxy was an acquisition, fixed income was an acquisition and international was an acquisition, all for very small dollar amounts. So buying these early stage things and growing them organically is very powerful. And so you will we should expect to see that as the core of our continued strategy. There NACC was a unique opportunity and we certainly look for those kinds of opportunities all the time. I think you are all looking at market valuations today as we are and wondering how people can deliver the kinds of 20% IRRs that we do if they're to pay market prices for something large right now.
I think it would be pretty challenging. And so we're very disciplined. We will be disciplined. And that is going to be a continued part of
our growth strategy. We
put it in context though. So in 1989 after my back end I shrewdly sold the business for $6,000,000 So somehow we got a 20% IRR or a little better out of that proxy business over the years.
So next question.
Thanks for break this is Pete Heckmann with D. A. Davidson. Thanks for breaking out the additional information on wealth management. And
I was aware of
a number of the point solutions, but can you talk a little bit about the history of how that grouping is coming together, maybe the top three products that make up Wealth Management today and then what holes are there to really fulfill that vision of One Wealth platform.
So before I turn it over to Chris, you need to go back to D. A. Davidson, Pete, and let them know it's time to convert to the future wealth management leader, just for the record.
Chris? So trying to go through the continuum, if I can, from history to present and then to answer on the gaps, if you will, or the challenges to go forward. We've acquired some assets in marketing and communications and digital capabilities to bring advisors in. We acquired 7 years ago capabilities around aggregation of data which is critically important today more than ever before because of regulatory compliance and the necessity for advisors to be accountable for all of their the assets that exist. So those are a couple of examples.
And then when you go to our back office, we have had an ability to view client holdings, books and records, what's called book management for a number of years that goes all the way back to the BPS platform and SIS platform.
So all
of those make for a set of core capabilities that existed and were often provided for in their own light at the point solution. Well, I would call them products from their inception. We've been moving them towards a solution by widening out what they solve from a client or advisor standpoint. Now what we've been doing is working on how to integrate them together because the cost of implementing into a client's environment are actually much, much more than the cost of the actual products. If you can get good integration, you increase the productivity of your advisor and that's a big deal to anybody who's running an advisor footprint.
So our activities now are about the integration what we have and also ensuring that we have a platform with APIs that allow for others to join on
to that
platform. It is nobody can do everything in wealth. We will be the market leader as we bring these capabilities together and we make available a platform for 3rd parties. Sometimes there are people in garage building things as disruptive technology right now, but they have no cyber security capabilities ISO certified and while you have an advisor community that's excited by it, they're scared to death to implement into their technology environment. So somebody like us with a proven framework with a data fabric that incorporates all the holdings can create that set up for them.
So that's what we're working on and we are in the marketplace on what I'll call some big bang there is meaning front middle and back is in one holistic efficient play for organization. There are other situations where it's one off capabilities that will be land and expand and grow. But everybody on the street has very dated architecture in their back office. So that gives you a perspective.
And then just as in terms of future M and A and adding potentially 200 basis points to annual growth, I assume some
of that will come in well. Would the company
be willing to exceed their 2, 2.1 to 1 debt to EBITDAR target for the right deal and where would you potentially be willing
to take leverage to? I'm going
to let Jim explain how the right deal is there, how we're going to do it.
I'll let you go internally. I mean, obviously, our target leverage is our target leverage. That doesn't mean that every day of the year we need to be at 2.0 times. I think it's our understanding that we would float up for a quarter or 2 if we had to or had clear plans to bring it back down. But as Rich said, in all seriousness, we're going to look at good opportunities.
And if that means that we go for a little bit, but have clear plans, great. But that's a discipline we don't want to lose, it's not something we view as willy nilly. But clearly we're focused on strategy and
the right opportunities to drive our business. One other thing though and I think it's worth mentioning here, for forever people have been saying, well, what about buying this and what about buying that? What I hope today convinced you of is this is not a financial engineering play. We're creating real value and we're creating sustainable value going forward. So buying an old product, buying an old product set and trying to revise it, all right, is not what we're looking to do here, all right.
And we talked about how we look out and we have we asked that question why are we a better owner, okay. Private Equity is the right owner for a lot of things that somebody is looking to revive and clean up and then push back out there again. We're looking to follow the strategy of what we're hearing from our clients, okay, to drive neutralization for them, okay, to create network value, to attack the out of pocket cost of paper and postage more importantly engage clients in a better dialogue, okay, through a digital dialogue or through a technology dialogue, all right, and enable them to run their businesses better, all right. And they just aren't a lot of large things. What you heard Tim say is, there's always somebody being spun out though and these are very talented people, all right.
And so you really should expect tuck ins to be the more norm. We'd love to find larger tuck ins, okay, because it's about the same work to do a smaller tuck in and a larger one. But for 10 years people have been saying, well, would you consider this or would you consider that? And I know there's a couple of bankers in the room. I consistently frustrate them and say why would I want that problem, all right.
So you should be thinking that what you saw here today is what you should thinking is going to better align our tuck in strategy or acquisition strategy going forward.
Hey, guys. Darren Peller from Barclays. Just a couple of first questions for on the
financial model for Jim. When considering the outlook you guys gave, I guess, first of all, fiscal year 'eighteen is still calling for a couple of percent or 2% to 3% of growth and yet your overall CAGR has a pretty steep ramp in the second part of that just to meet the 5% to 7% reported.
Maybe you
can give a little more color on that. I know you mentioned something around the timing of your backlog, right, but more color there. And then secondly, if
you can give us a
little more granularity in terms of the growth projections for the segments ICS GTO, maybe versus what they just did the last 3 years. It seems to me like GTO is actually accelerated and it looks to sustainably be accelerating versus what it would have done or did in the early part of last cycle, let's call it, whereas the ICS, we're waiting to see how things go with the RCC and can you give us some highlights?
Sure. So, Darren, the first question and I'll get to your total revenue question, but on the recurring revenue growth, we've got 4% to 6% this year is our target, good chunk of that's organic, call it 4% to 5% of that's organic. So then we'd have acceleration from 5% to 7%. Your question of total revenue, for 2% to 3% this year and looking to grow 5% to 7%, what happens? The big chunk of distribution revenue in there, which frankly in the case that we're talking about is no margin and that BRCC volumes that came down one specific client, some of the runoff depresses us this year and we start to come back up with all the sales activity.
So interesting from it gets to the total revenue growth, not so interesting from a profitability standpoint. As you look at the segments, I think really the way to think about it is, when we think about that organic part, that 5% to 7%, we really are thinking that both of the segments contribute somewhat similarly. You're right to highlight the great growth that GTOs had and has an ability to kind of be a pull up the average. But ICS, as we look at it, is very similar type of growth prospects. We look at a range of scenarios that could come out.
So this is not even if we broke it out for you, you wouldn't see widely diverging growth rates. Both have really solid track records, consistent with what we've seen in the last few years and similar track similar plans going forward. So both contributing, I'd say very equally with very similar growth rates going forward.
And then that's helpful. Thanks.
And then just a quick follow-up on CapEx.
We talked earlier about all the capital return discipline you guys have had, which has been great. But I just want to hear a little more in terms of what you expect again as a percentage of revenue and CapEx and where we would like what if you were to rank order where that money is going be going into your business. So we as investors should know what to expect in terms of your priorities.
Yes. That would be helpful. Yes. We've ticked up a little bit from 2.4% to 2.7%. In this year, I think we're calling for similar year in 2018, probably in that 2.7% to 2.8% range.
That said, we had some pretty exceptional activity going on in terms of once every 10 year, even longer facilities investments. So those are pretty unusual. But as we modeled out that next 3 years, we're certainly thinking about it and sort of hitting a peak to some degree on a ratio basis, obviously, as we grow and add more capital. So I don't see this as something that's accelerating in a big way with some pretty exceptional event. That said, we've got some pretty good investment opportunities that are going on right now.
So to answer your final question about where we prioritize, clearly some of the facilities type investments should come off should kind of decrease a bit. Clearly, some of the big NACC investments hopefully will crest this year. So that starts to come down. But then we see some things that could replace it. Product development, we are doing more as you heard today with all the product development.
We are we do capitalize some of our internal development for some of these newer products. That's adding a little bit of capital. That's clearly stuff I really like because that's going to have big revenue generation next to it. Clearly, technologies are going to make us more efficient and the like will always be a high percentage of our capital. But again, I think it's always hard to say capital, you've got perfect visibility on because it's naturally lumpy.
That said, when we look over the last couple of years, there are a couple of things that just don't feel like they're recurring type investment. Last quick one
is just on pricing. Where are we on that discussion in the world in terms of ICS proxies? Anything new, I mean, or latest updates on potentials, some changes on the horizon?
Thanks again, guys. I'm going to have
Bob address this. Bob was the leader of the last pricing activities and when just my view was I shared with the Board that when the committee came out with their final recommendation, I noted that if my obituary went that well, my family would really be proud. So I'm going to ask Bob to kick that off. I may say things that you folks think are crazy starting with the 22 years, but sometimes these peer reviews which could happen tomorrow, could happen 10 years from now, we don't know. But these fee reviews, just like what happened 3 years ago and I share with you some of the comments is a great opportunity for us to further educate the industry, the regulators because when they do in fact come in to better understand the first thing they typically say, I know I said this a lot is how complex this process is and it's so much more complex than it may appear from an outsider.
So it may happen. We look we engage when it happens. Our track record has been very, very strong. And I think we get new opportunities to demonstrate the value. There's so many things that they're looking for us to do differently like better disclosure, efficient disclosures and we can take a pretty good we'll have a pretty good role in doing some of that as well.
So we shall see, but once it happens, I'm sure we'll keep you posted on that. A little more color. So anybody who because it always it's a natural question an investor should and will continue to ask. And a lot of things in this business are pretty complex to understand. To go out there and read the report of the SEC and read the report of the issuer committee, the people paying the bills that they submitted to the SEC really isn't that tough to do, all right.
And you're going to hear from them their confidence and using words like we need to continue to support Broadridge because we need them to continue to invest in the technology because the process doesn't work and the cost now on the registered side that the issue is directly control is far greater than it is on the Street side per shareholder, okay, even though the average share position is ridiculously smaller. So that's one point. The next point is what Bob raised earlier about P and G, all right. So let's make this real easy. We represented 92% of the outstanding shares, all right.
And within a minute of the Pulse closing, they had a final, never to be changed independently verified vote. So the 6% of the registered shares were almost at 2 months and they're still at the table discussing whether John Doe signature is John Doe signature, whether this card is a valid card, whether that's not. Now put the entire process in that part and there would be no corporate governance in Capital Markets. So we're here because we invested over $1,000,000,000 to make corporate governance transparent and a reality. So and we will continue through Bob's leadership be able to leverage that position to generate additional value as we go forward.
And I love one of my favorite pictures in the world was this chart showing and this is lots of corporations but going from $5,000 in beneficial fees, the original business to $67,000 in wallet share by then signing off for these additional services. And just like in Capital Markets, we're making it more compelling for people to do that. So, it's a great time to be Broadridge.
Lewis Hall from Barclays Bank. Darren, I didn't actually script that we go one after the other. Questions probably more for Tom on the international side. Just curious as to what impacts on your existing pricing services across Europe that Brexit may have and what the kind of the impact if any on your strategy and growth aspirations in the region might be? Thanks.
I was actually putting an asset thing going on here that you directed right
Okay. So, generally speaking, we see Brexit as an opportunity because we like disruption. And the reality is that with Brexit in Europe, there will be more movement transactions around. So, I know your bank pretty well as to what we're doing now with them. And there'll be new entities created, there'll be new business created and there'll be more flow.
We're not highly dependent on UK banks in reality. So when you look at where we are, we are UK headquartered in quotes for international, but actually distribution of my clients globally is actually pretty distributed, U. S. Clients, Canadian clients, a lot of Japanese banks. So we expect to see more flow is the reality situation.
We suspect that our U. K. Clients will be more cautious about long term contracts. So we may see a small reduction in the contract sizes or that's for UK banks only. For European banks we actually see more business.
Charlie beyond Brexit why don't you comment though on your client dialogues around just the difficulty whether it be staffing, budgeting and executing on what seems to be a never ending regulatory plethora of activities that they have to comply with. Let me grab that from Tom. Thank you.
I just want to add one thing to what Tom said about Brexit. We have a large U. S.-based client, which is going
to expand internationally. Originally, they're going to locate to London. They're now going to find another location. That is actually creating more demand for our service in terms of, as Tom said, how to set up the entities and how to set up the trading models because of the expertise we bring relative to that. So I do think underneath this Brexit cloud will be opportunity for us in terms of in things of disruption.
But I think the bottom line is we sit as I sit with clients and talk to clients and I think any one of us who are doing that, you find that just the continued pace of the regulatory piece is just driving from their ability to invest is having a significant impact on it. I use the example of sitting with 1 global bank and they don't have the ability to invest to transform.
They have
a 1980 ish legacy infrastructure that doesn't scale in the way they expect it to do. But the problem is funding the transformation is difficult for them. And even though the U. S. Might have lessened regulatory demand, although you make the argument with consolidated audit trail that that's going to be a pretty significant one time as well as ongoing expense.
The European European demand and outside Europe demands on the regulatory piece for Global Investment Bank are only increasing. Hence, the coder ring that I gave you earlier. So I think just what's happening with the combination of a legacy infrastructure that needs to transform, regulatory demand increasing, all the spend is going to that. There is a path that people need to find to figure out how to simplify and to mutualize and drive the cost savings.
Are we good? Yes.
Since you still have such a
large distribution revenue, I was wondering if you could talk to the longer term opportunity beyond 3 years and thinking about that being a tailwind to profit growth since you've talked a lot about transitioning that lowers revenue but increases profits. Is that an ongoing tailwind that's meaningful for a very long time or how should we
size that? What I'm going
to do is ask Doug first to comment on the strategy behind what we're looking to drive here in terms of having that tailwind be a reality by being in that hub position. What I'd like to do is then ask Michelle to talk about some specific client dialogues that she's in, okay, virtually every day, all right, with how they're looking at this challenge and why having a entity like Broadridge is doing what we do for proxy to the same thing for this versus us making the $50,000,000 investment already versus everybody having to make their own $50,000,000 investment?
Yes, it's a great point. It's the right observation around how do we turn distribution revenue into an opportunity by helping our clients migrate and make that transition from print to digital. That's exactly what we're doing. And if you're a mutual fund today, and mutual funds have traditionally very low e delivery adoption rates when they think about getting clients to go back to the website and sign up for e delivery of quarterly statements and things like that, they could be sitting at 5%. That wouldn't be untypical at all.
And they're struggling with the cost of this. And from their perspective, they have very little ability to invest in the capabilities and technology to drive that over. So when you think about big picture, what we're trying to do, we're leading to create this overall network and this network effect so that all the different institutions we do business with can benefit by being part of this network. And that's going to help these clients and I'm using a mutual fund here as an example to convert from print over to digital and electronic. So think about the role we're playing and the value that we're providing.
So we're taking what is a very low to no margin distribution revenue and we're investing heavily to help that client convert from print to digital where they don't have the ability to do it on their own. And we've created and we've led with this network and this infrastructure to do it on their behalf. There's real value there and we're going to be able to monetize that value and we talked about and I think Michelle had a slide that talked about this. We can there are many instances where we're going to make more money on overall profit basis converting from print to digital. The revenue may not be the same, right, because you've got a lot of postage costs here.
But we think about the value we're providing, that's on hold. We're going to see a lot of instances, maybe many more instances where we going to make more money converting from the physical to the digital. And that's ultimately the value of a lot of the network capabilities that we're building and helping our clients make that migration.
So I am in front of clients pretty much literally every day. And it's I would say the 2 things we see most, relief and excitement. So to Doug's point, we talked about this a little bit in our presentation, the expense whether you are a broker, a mutual fund, a credit card company, a utility, anybody sending out a biller statement, the expense in that distribution, that communication is weighs heavily upon you. And so there's not a client conversation we have where we're trying to help them solve for that. And everything we do from our patenting and our print processes, everything we do in digital is aligned to help them meet those goals.
We bring this network that they can't achieve on their own to help them do that faster. That's all really compelling. And I would say to bookend that, if we slide all the way from sort of core wealth and banking financial services and look at some of the most successful digital adopters in telco and credit card, we see real genuine enthusiasm and excitement for being able to make those sort of required communications, something that can become engaging to consumers. And so I think it is particularly powerful that we're in market being able to address both of those opportunities. So we sort of look at both the upside and sort of protect their downside in those digital conversations.
Sorry, just one more thing to add on and we're talking about taking that postage and distribution revenue and converting it to digital. The odds are, we talked about 80% of consumers and households in the U. S. And Canada are getting distributions from Broadridge. The likelihood is you're getting many, many, many distributions coming from Broadridge.
So how do we accelerate this? Okay. What Michelle showed on some of the slides in there, which were up on the screen, they weren't in
the handout. If you were to sign up
for the service, 1st because you saw it was promoted by your utility company, okay, but then you see the availability of the content from the fund, your broker, your credit card, your bank, your telco. That mutual fund is benefiting because that same consumer who is in broader ecosystem is getting multiple forms of content. So we've helped the mutual fund gain digital delivery in a digital client relationship with that consumer, because that consumer was somebody else in the broader network. And that's a network matching. We've got a lot of data and analysis and algorithms to enable to do that.
Something we spend a lot of time and investment on and frankly and we've patented. And the data matching from a consumer perspective across multiple sources of content is one of the ways that we're going to help accelerate that physical adoption to digital adoption. And it's not only powered the network across all the brands that we have, but the fact that you all as consumers are getting content from multiple providers right now in the broader network. I'm going to
make before I ask Bob to comment specifically on mutual funds, I'm going to make a comment here and this goes to the core of who we are, right. Leaders lead, right. And the answer is going to be technology, okay. I don't care what question is here today or what question is here 3 years today, 5 years today, from 10 years today. The answer is going to be technology, right.
And I remember being on the road show 10 years ago and notice and access had just been announced and people were saying, well, that could be really bad for the new Broadridge. And I was with a very large investor, a potential large investor and he said, look, you guys are going to be out of business.
What do you mean we're going to be out of business?
He's going to be out of business because this stuff is all going to go away. I said, okay, how are you going to do? Well, I
don't know. They'll come up
with an answer, but you're not going to do it. And it was like, what are you talking about? This is getting more complicated, less complicated. My original business plan talked about putting stuff in an envelope, okay, and getting it back. That was the original business plan.
And you could have written it on a postcard. The business plan today has 10,000,000 lines of code. That was not in my original business plan, all right. So the technology is going to continue to get more complex, which makes our role more meaningful and the ability to somebody to get to where we are is just more difficult naturally by the complexity that we have, all right. So technology has enabled us at the benefit of our clients and the benefit of our shareholders to take huge cost out.
The post office is lost and the paper and print companies have lost, right. So even when we do more physically, we're doing it to convert it to digital. We have no desire to stay in any of the physical activities, but it's a great feeder to get more digital. I'm going to ask Bob specifically to talk about with mutual funds, okay, where with technology the opportunities we have for them. Sure.
So the certainly funds are under a lot of cost pressure right now. And so one of the things that being looked at as you probably know is some sort of notice for funds, which we have come up with a solution that we expect the Investor Advisory Committee of the SEC to recommend our solution on a going forward basis. It's not a guarantee, but that's what their recommendation is, which does what I probably articulated before, which is more streamlined disclosure, lower cost, better disclosure, what the SEC is clearly looking for. And there's also been a consortium that has been formed that we are participating in by the mutual fund industries being led by Putnam. And we call it the reimagine email.
And by virtue of this, what we have discovered is the communications on the registered side, just like when we did notice and access and Rich referred to this, on the equity side some years ago, it created huge opportunity for us on the registered side because they had difficulty trying to implement it with providers that they had at the time. Today, we think some sort of evolution of what will be communicated in the front space gives us another significant opportunity to get more done with the registered side of business because what we hear from them directly now is how much of a struggle it is for them to get e adoption, digital adoption and we created this reimagine email with them. A test was done by Putnam of just a month or 2 ago And we're already seeing huge increase in uptick from their customers who've been asked a whole host of times to convert to digital by them directly. Now that we are getting involved creating some new different more interactive ways for them to look at this information and the ultimate information, we're getting some really good traction. So I think the opportunities that are in front of us by Rich's point applying more technology, being more creative about disclosure is going to take hold once again in this space.
The answer will continue to be technology. Any other questions, comments? Hi. And this is on? You are.
So maybe a question for Bob on the note of technology. Could you maybe upgrade us, I mean, mention just maybe give us an update on the developments on blockchain technology, especially on the proxy side? We've seen NASDAQ entering smaller markets. I just wanted to see where you guys are on what does that do to your business model, maybe timing? And also as well, if you can have any applications on the other on the GTO side on the processing.
So where we started, it was last proxy season where we did utilize blockchain for Santander Bank Annual Meeting. We had several large global custodians participate in that process. So we did a parallel to our current process, which worked out extraordinarily well. Next, we're now looking to do some more of that again in the international markets this year as well as bringing it to the U. S.
Market so that we'll have more of a proof of concept. We learn how to utilize this technology and the benefits. And then of great interest, when I talk about potential new opportunities, there are other companies that are looking to us even in the transfer agency space where we provide transfer agency services for issuers directly, we have companies talking to us about implementing blockchain in that environment as well. So there is a whole host of, I'll say, proof points that are taking place. We're obviously going to look to aggressively expand on that in the very near term.
And again, there is when we look at it, we think, Rich said it, leaders lead. So we need to lead in that space. We need to become increasingly more educated and look at the benefits that that could bring and looking for the new opportunities that we believe a blockchain environment could bring to some of the newer environments that we are looking to engage in.
So, I'm just going to build on what Bob was saying to give a little bit of additional context that may be helpful for folks that are not as familiar with the business. The what NASDAQ announced in Estonia and then in South Africa is a front to back global proxy front to back proxy voting solution based on blockchain. And those are both local market solutions doing voting in market. Our global proxy business is a cross border market. So, about half the shares globally are held cross market and are voted cross market.
And we don't participate in local market solutions as of now in those markets. So that's there's no direct impact of those just because of the nature of the business. But what both those examples do point out is the power of network for blockchain solutions, because the institutional arrangements are quite different across different countries. So in those countries, the exchange is also the CSD. So basically, the exchange in DTCC in this country would be the same and it's a registered approach.
So there's no beneficial ownership. So that person is right in the middle of that whole thing and it's a pretty straightforward exercise to bring everyone together. As we translate that to this market and think about who would be in a position to have that network to bring that kind of solution to the U. S. If that were to occur, we don't see any natural actor besides ourselves, which is why we're making a very significant investments in this that we have and that we've talked about.
So that's I think just some context that makes that helpful.
And I'm going to conclude with given the importance of Bob's business, my original baby, the Broadridge overall, we're going to have the answer before the market is ready to implement it. Meaning we'll be in both globally and in North America, we'll have the answer in calendar 'eighteen done, okay. So that when the world is ready to implement it, okay, we'll be in a position to align with that, right. And what the point what Tim pointed out is the difference between doing something locally on a TA basis versus doing it internationally on a street ownership type basis is a night and day difference, all right. And so you should fully expect us to then be pushing for this solution to be taken advantage of by the people who want it.
What do I mean by that? The key to blockchain is everybody has to be on the chain, right. Now there are very few things that everyone's at the same place. Proxy for us happens to be pretty darn close to that. So if IBM wanted to get their voting updates via blockchain as an example and ABC Small Company didn't, we could give IBM instantaneous updates to the chain and leave ABC where they are right now.
But being the hub puts us in that unique position. The takeaway from this though is of course everything we said today, we're looking out at our businesses not saying gee it feels great today, I hope it's great tomorrow. Looking at our business and saying it feels great today, what do we need to make sure given the evolution of technology, okay, that we're still going to be the leader tomorrow. And so the investments that you've heard across the board here, globally GPTM, digital, blockchain, proxy back office, all right, well, it just continues on, all right. And that ties to and I know you don't look taglines are taglines, but I hope the people in this room today, I hope you really do leave here with a high level of confidence that Broadridge truly is ready for next because we're looking for what that next play is going to be out there, that next level of technology and we're not waiting for someone else to do it.
We're actually putting far more pressure on the in house players and our competitors by being the one to do it. So it really is a cool time to be at Broadridge. Any other questions? I think that's a good place to end. We really thank you for your participation.
There's only one guarantee I can give you, okay. We will do everything we can to deliver what we presented today. And you saw this team, you saw what this team delivered and you saw what this team delivered under far more difficult circumstances. This commitment is real and every individual and the rest of our executive committee members are in this room. Thanks for your participation and we look forward to 2020 and talking about how great it is again.
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