‘Say’ Helping Investors Be Heard

July 25, 2019

Alex LebowAlex Lebow is co-founder of Say, a New York City-based technology company hoping to disrupt investor communications. Say serves millions of investors as a full-service proxy processing and shareholder communications provider in partnership with leading broker-dealers and custodians. It’s also pioneering new modes of shareholder engagement between investors and the companies, the ETFs and mutual funds they own. The two-year-old firm went public facing this year with its platform, Say.com. ETF.com spoke with Lebow on what his firm’s trying to do.

ETF.com: Speaking to our audience—financial advisors and investors—what’s Say.com about? And why should people care?

Alex Lebow: We go by just “Say,” although “Say.com” helps people distinguish us from just the general word. The basic concept is connecting investors to the companies and funds they own. Most investors, other than the largest institutional investors, don’t really have any connection with the companies and funds they own, other than through the proxy voting system, the formal regulated plumbing, as it’s known.

We took a look at this system and said, “There's a tremendous opportunity here to connect shareholders with what they own, in new ways, using technology.” It’s a corner of the financial system that’s been pretty much not touched by technology, other than the transition from physical postage, which still takes place quite a bit, to email. The movement of proxy materials to email is kind of billed as the great technological advancement of shareholder communication system.

ETF.com: When you say “connect,” what do you mean? Beyond proxies?

Lebow: We break the world down into two areas. There's the regulated system, which is proxy voting, which is very important. The legitimacy, the directors, and whether it’s the fund board or a corporate derived from the votes or the shareholders, that’s an important system.

But outside that, there's a world of shareholder engagement of interactions between companies and shareholders that can be fit into the bucket of stewardship, or marketing; and in the case of funds, fund managers, asset managers, building a deeper relationship with their clients to better serve them.

ETF issuers don’t know who the vast majority of their shareholders are. They can send materials to them—like marketing materials—but it doesn’t really make sense from an economic perspective. It’s done as little as possible, only in connection with a fund solicitation when they need to, legally.

If you could—on a regular basis in an electronic, low-cost way—talk to your fund holders and have them talk to you about what they care about and what they're most interested in, that’s a revolution in the product.

That doesn’t fundamentally change the portfolio. It’s kind of distinct from portfolio management. Economically, everything is the same. There's a new layer on top of that ownership that’s turning a passive product, adding active engagement to a passive product—that’s the way we like to talk about it.

ETF.com: How does that work when it comes to ETFs, that, say, own shares of Apple, in a third-party way?

Lebow: [ETF shareholders] are not direct legal owners of Apple. As part of a fund’s fiduciary responsibility, the fund’s board votes on the Apple proxies, and engages with a company, depending on the fund.

We do a few different things. One of the things we do is on our shareholder engagement platform, not the formal proxy voting business. If you own an ETF that owns Apple, you can take part in the Apple engagement for the pro rata amount of Apple that you're exposed to through your fund, and which—in many cases—is quite small.

But we do the math, we have all the back-end data. But it’s as if you own Apple directly for purposes of engagement.

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