Focus on Finance: Bringing Private Sector Experience to Philadelphia

Nancy Winkler is a nationally recognized expert in public and not for profit finance with over 30 years of experience. She had worked for Public Financial Management for 28 years when she left in 2011 to become Treasurer of the City of Philadelphia. She led the City’s effort to obtain two bond rating upgrades from Standard & Poor’s. Ms. Winkler is a graduate of Georgetown University and the London School of Economics.

Philadelphia’s bond rating has gone up twice during your tenure as Treasurer. Tell us about your investor relations strategies and how have they paid off.

When municipalities communicate with the market they have an obligation to provide information that is complete, is not misleading, and does not omit anything that would be material. For a long time, Philadelphia rotated people with different qualifications through the Treasurer’s office, and, at the same time, rotated bond professionals, making it practically difficult to be as thoughtful with financial disclosure and investor communications. While the City did meet the requirements, the disclosure needed a rewrite to meet the growing demand for disclosure from investors.

In order to improve investor relations, you begin with re-writing your written disclosure because you can’t speak to investors outside of what is disclosed in written form. We spent a huge amount of time rewriting our disclosure; it took two years and many, many, many drafts. Many iterations became public, and then each time it became public we would try to improve it.

Also, the City used to change lawyers every time we changed our disclosure. That made it challenging to be as thoughtful. Since joining as Treasurer, the City has changed our relationship with our legal counsel, keeping the same firm through the whole process.

Another change was to how we do a bond issue. Now we prepare an investor net roadshow. We actually record a presentation, and investors can dial in at any time. Also, I have made presentations to investor groups. We held a large day and a half long investor conference where we invited people into the city for presentations and tours. It’s a pretty multifaceted approach. You have to be strategic about investor communications and consistent in everything you do, from the written communication to the way you interact when you are selling the bonds themselves to making information available off-cycle.

Did you get those ideas from working at a private consulting firm, or are these tactics regularly practiced by a city?

I had the great good fortune of working for PFM, a financial advisor with a huge portfolio of municipal issuers as clients. Because I ran the New York office, I had the opportunity to work for some of the most sophisticated municipal issuers in the country. New York City and New York State were both my clients, and I studied how they approached these issues and was part of their level of performance. In general, New York issuers are very sophisticated in how they interface with the market. Philadelphia has gone from having no investor relations program to having a good investor communication program.

I also want to institutionalize change by empowering others within the organization through transparency. There is power in transparency, especially in an environment where people are not used to sharing. That means being willing and brave enough to share and teach. We’ve created a debt database system that is collaborative across accounting, finance, and all of our users – airport, water, etc. So instead of everyone keeping their own information, everybody has the same information. Everyone is getting trained, and the departments are sharing the cost of the new software systems and training. We are forming user groups across departments to train staff to use the software at a sophisticated level. That kind of private sector behavior is uncommon to the public sector culture.

How did working in the private sector consulting for governments prepare you to work for the city of Philadelphia, and what are the differences between those two spaces?

I spent almost all my career in the private sector – over 28 years. My focus was to become an expert in municipal finance and to build a business. I also learned skills that are highly valued in the business world: management, teamwork, and effective communication skills, including marketing. To rise up in for-profit organizations, the ability to be a rainmaker is essential. Being a rainmaker means being able to think and act strategically and ultimately establish successful relationships that lead to being hired and hopefully being retained.

It can take years to establish a relationship that leads to revenue. And then once you have put in all those years of work, you want to retain that client. How do you retain the client? By giving them good service. How do you give them good service while you’re trying to get the next client and grow your business? You do that by training your staff and running a cohesive team that is collectively motivated. In the private sector, if you are successful as a leader and your staff is successful at their roles, the profit incentive is very helpful because you can reward your staff through compensation. In the public sector you have to motivate staff by getting them the resources they need to do their jobs, celebrating their accomplishments, and acknowledging their contributions to the group’s success.

At the same time, you need to establish expertise in the industry. So there was a need for constant learning because the municipal finance industry is constantly changing.

In addition to subject expertise, I would say my private sector work prepared me in terms of personal skills. Managing outside contractors is a large part of what of I have to do: all of our investment banking, our investment managers, our pension fund relationships, and all the law firms that work for us. Those kinds of skills have translated very well from the private sector to the public sector. Communications skills and the willingness to work across departments are also important for successfully working internally.