Kate Burke of AllianceBernstein Holding LP is part of a growing group of executives who lead not only their companies’ finances but also operations, a trend that comes as companies look to retain top talent by expanding their roles and tasking them. additional.
Ms. Burke assumed the responsibilities of chief financial officer this summer, after becoming the finance company’s chief operations officer in July 2020. This is the reverse order of how most dual-role executives get to those positions, with many having held the role of CFO before branching out into COO duties.
WSJ’s CFO Journal spoke with Ms. Burke about her dual role, the outlook for the company’s business and the impact of higher interest rates on markets. Her responses have been edited for length and clarity.
WSJ: You lead both operations and finance. Is it an advantage?
Mrs. Burke: I think it is unique in many ways. Understanding the organisation’s operational infrastructure, combined with financial acumen and what we are attempting to do strategically, combined with cost initiatives, positions you well. You really understand both sides of the organization on a much deeper level.
My background as COO has really given me an expertise. I’ve been heavily involved in managing our compensation process, which is the number one variable expense we have and something we always want to get right. But it’s also where we need to make sure we’re balancing and making the right investments in terms of the people that we’re bringing on board and the level of growth in the number of people that we have.
WSJ: How are you dividing your time between the two roles?
SM. Burke: I’m still evolving in terms of which division is right for me. I’ve always worked closely with the finance team, so I knew everyone well, definitely on the controller side and on the financial planning and analytics side. I found that I needed to know more about taxes and treasury than I had because those weren’t areas I’d spent a significant amount of time in. It’s hard for me to say if it’s 50/50, because every day can be a little different, but it’s probably pretty close.
WSJ: Where do you see the company headcount going?
Mrs. Burke: We slowed down our hiring in the second half of the year. The headcount growth that we’ve had has been around taking on ongoing strategic initiatives versus building more capabilities in our current organization. I don’t think we’re looking at a year where you’re going to see the kind of growth in headcount that we’ve had over the last couple of years.
[Note: AllianceBernstein had more than 4,200 employees in December. It declined to specify how much its head count changed in 2022.]
WSJ: What do you mean by hiring for strategic initiatives?
Mrs. Burke: The AB India initiative [which involves opening an office in Pune, India] it’s about promoting overall efficiency and should ultimately be useful on our side. We will continue to look at private markets, building our alternatives, our private credit offers. And CarVal [a private alternatives investment manager that AB acquired in July 2022] he filled in a big shot for us this year.
WSJ: What do you think 2023 will be like?
Mrs. Burke: With higher interest rates, people will look to income-oriented fixed income products that will help them [improve] their overall return profile in the coming years. One question we often discuss here is when and how you’ll see customer appetite for stock return. I think there is still an inflationary environment. People will be looking to grow their portfolios, and stocks have a history of providing that kind of investment return over time.
WSJ: The Federal Reserve raised interest rates for the seventh consecutive time in December. What metrics are you tracking as you plan for 2023?
“People still have pretty healthy balance sheets overall, but they’ve been impacted by inflation and therefore are less healthy than they were a year ago.“
Mrs. Burke: We are like others in that we are looking to the Fed to help provide us with signals about their comfort level in the actions they have taken and trying to moderate inflation. We certainly continue to look at employment. And, despite headlines of some cuts to come, the employment numbers are still very strong. It’s hard to predict how this enters the Fed’s thinking, as well as the impact supply chains are having on inflation.
WSJ: How concerned are you about financial risks in a potential recession?
Mrs. Burke: People still have pretty healthy balance sheets overall, but they’ve been impacted by inflation and therefore are less healthy than they were a year ago. On the corporate side, the investment hurdle rate is now higher and the cost of capital is different. I think that’s where you’re going to see some financial risk happening where [companies] they have not been prudent in their financial management, which will create more stressful situations over time. We haven’t seen it yet, but one could argue that it will come as funding sources are re-evaluated.
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