The following is an edited interview with Steve Lipiner, CFO, BNY Mellon Asset Management:

BF: Tell us how your finance organization inside BNY Mellon Asset Management operates today …

Lipiner: The organization has about 135 people today. There are 15 investment management boutiques under the BNY Mellon umbrella, and our team is spread out globally to support each of these boutiques. From early on, the philosophy has been to get as close to the customer as possible, and when I say “customer,” from a finance perspective I mean our internal customers, individuals who run our lines of businesses.

Many of these boutiques came on through acquisition, and each is different from the next. Each of the 15 boutiques has a different asset class. Each has a different customer set. We don’t have a cookie-cutter format in any way. These boutiques have different product lines, some maybe specializing in equities, others in fixed income, currency strategies, and global tactical asset allocation, among others.

There are different products, different regulations as a result of the overseas jurisdictions that we deal with.

BF: What lessons have you learned over the past 18 months, and how did finance respond to the business climate?

Lipiner: I would say that more than anything over the past 18 months we’ve challenged ourselves to focus on our core businesses and our core strengths. We like to say that we have no time for hobbies. We focus on where we’re strong, and from an asset management perspective, what we do well. Over the past 18 months, which actually might be called the post-Lehman period, we have focused a lot of our effort on investment and growth.

That growth over the past few years has been from acquisitions done outside the United States. One great example is our acquisition of an investment management boutique in London that we closed in November 2009. That acquisition of Insight Investment Management added $135 billion in assets and actually took us over the $1 trillion mark in assets under management. Meanwhile, we’re also now focused on growing outside the United States in places like China, India, Latin America. In China, we hope to shortly go live with a joint venture in Shanghai, where we’re now waiting only on regulatory approval. Our local partner is Western Securities, and they will be the 51 percent owner. China’s demographics speak to such a huge opportunity, but you do have to be patient. We’ve been waiting for regulatory approval for about 12 months or so.

BF: Certainly, you have worked to remove extra leverage and better manage the firm’s costs. What key metrics are important to understand what has been accomplished?

Lipiner: Well, we’ve been deleveraging our balance sheet, and it’s fair to say that we’re there. Over the past few quarters there have been some write-downs, so there was a key quest, and the bulk — if not all — of our write-downs have been taken at this point.

Inside what had been a challenged market environment — and I’m talking about equity markets — there’s only so much you can do on the revenue side. Having said that, there is a lot that you can do on the expense side. You can cut expenses, and certainly we did a lot of that and our competitors did a lot of that. We developed a lot of metrics to ensure that we were keeping our costs base in check, but there’s only so much that you can do with expense levels. The long-term prospects of the financial services business are about growing the top line. So finally there seems to be a return to normalcy about growing that top line and putting in the right the metrics to do so.

But it’s not just about equity markets — it’s certainly about the low interest rate environment. Given that a fair amount of our mix of assets under management is tied to the cash business, there have been significant fee waivers, and we expect that this will mitigate over time as rates rise. ###