From Public Finance to Higher Ed: How the Aguayo Brothers Manage Treasury Risks and Challenges

Mike Richards, CEO & Founder, The Treasury Recruitment Company: Welcome to this week’s treasury career corner podcast, where I interview treasury professionals about their treasury careers. Each and every week I’ll talk to treasurers about how they build their careers, where they are now, where they see both themselves and the treasury profession going to next.

Mike Richards: Let’s get on with the show.

Mike Richards: This week show, I’ve got a bit of a treat for you because I’m delighted to be joined by. My first ever twin brothers that I’m interviewing on the show who are both in treasury as well. I’m joined by twin brothers Arturo and Fidel Aguayo. Arturo is assistant treasurer, Californian Institute of Technology.

Mike Richards: So Caltech. Institute of technology is a world renowned science and engineering research education institution, 124 acre campus, Pasadena, California. I will get Arturo to talk a little bit more about Caltech, but Fidel is currently serving as vice president of treasury and investment at Loyola, Marymount university, the Pacific ocean and downtown LA.

Mike Richards: 60 major programs, 55 undergrad degrees, everything else. But I’m going to get the guys to explain this. I actually found these guys through an amazing article, which we’ll put a link to in the show notes about how the both Fidel and Arturo had got into treasury, which is amazing. Both doing the similar things, but different through a, an article.

Mike Richards: com. So we’ll put that in the show notes, which is great, but I’m going to hand over as always. And it’s just great having two treasurers, the twin brothers. Yeah, I couldn’t make this up. I will hand it to you guys. Arturo, the microphone is yours for now, and then you can. Rest of it later, back to Fidel, it’s over to you.

Arturo Aguayo, Assistant Treasurer at the California Institute of Technology (Caltech): Yeah, thanks for having us, Mike. One thing that I wanted to add was that not only are we in treasury, but we’re actually in the same sector, in the same industry. So we’re both in public finance and we both ended up in higher education. My career really started with a summer program that the purpose of the program was to keep young people off the streets.

Arturo Aguayo: And get that work experience. And for me, that was initially a three month internship type of summer job actually ended up being eight year stay at the organization that I worked with at the time was the city of Long Beach and in Long Beach is where I really got exposed to a lot of different things in treasury.

Arturo Aguayo: And I remember when I was asked to that summer program, I had choices to work in different departments within the city. Working at the water department, working at the oil department. And then I came across working for the city treasurer. And at the time I had no idea what that meant, but it just sounded like gold or like a lot of jewelry or something where they do that kind of got me excited about learning about money and what the city did with their funds.

Arturo Aguayo: And so I selected that specific job for this summer, and it was interesting because my life could have completely been a different out had I chosen another department and I, so I started working there and I started learning a lot about how the city operate from a financial standpoint, working closely with the CFO, working with the city treasurer, and I started learning treasurer operations, cash management, debt administration.

Arturo Aguayo: Investments and also compliance. We financed the aquarium of the Pacific and did a lot of different financing for the police station and other city, big city projects. Within those three areas, I really fell in love with debt. I just was attracted to the bankers would come in, do a sales pitch. And I just found it fascinating.

Arturo Aguayo: When I graduated from college, I was working there part time while I was going to school. And so I graduated and prior to graduating, I had already booked it to a lot of people in the industry about what it, what the industry entailed and how to be successful in that industry. Then through my network and having good people around us that were supportive, that were very interested in seeing us grow and do well and succeed in life, we were able to build nine jobs.

Arturo Aguayo: And land jobs, specifically in the midst of banking and public finance. I went to a small company based out of Chicago and actually I stayed there for a couple of months training with the Southern trading people, doing some training on different type of financing projects, like the city of Chicago. And they’re, they have a large school district.

Arturo Aguayo: They have a large park district. And then I came back and they said, okay, now you’re coming back to home where we want you to create a presence in California for our firm. And there it was. And so I was at the time I was like 25 years old. I had a company credit card had got me a BlackBerry and off I went.

Arturo Aguayo: Call on client. I was doing cold call. I was networking. I was doing all kinds of different things just to get my foot at door to me clients. So that was an amazing experience for me because I was able to really learn how the industry worked and how to get to see clients and more importantly, how to get deals, how do you get into getting deals, which is a very difficult thing about public finance, because you have to go through an RFP process.

Arturo Aguayo: And a lot of the clients already have their bankers in 2009, where as you recall, Mike, there was the economic meltdown. And in that, we remember there was a lot of folks that were losing their jobs and there was uncertainty around companies profitability. I was worried because I was the newest member of the company that I worked for.

Arturo Aguayo: So all along, when I was working at this company, I, every few months, several months, I would get calls from recruiters and different companies. And so at the time, because of that uncertainty, I said, I think I want to go into a company that’s really stable right now. So I made a move to work for a consulting, public finance consulting company.

Arturo Aguayo: That did have a compliance side of issuing debt. And that was also a great experience because I got to learn a lot of the legal aspect of public finance. I was doing a lot of reading on the trust indentures, the arbitrage certificate, all the different legal documents that go into doing a deal. And, but it was very boring, right?

Arturo Aguayo: It wasn’t what they would admit it to you that it’s not the sexiest thing to do, but. After a couple of years there, I again was recruited to go back into investment banking and did that for, for a little bit again. And then that company got bought out. Again, we’re dealing with a lot of uncertainty and a lot of changes in the industry.

Arturo Aguayo: There’s acquisitions, the consolidation of companies. I got a call from a recruiter at the university of Southern California. And that was very enticing to me because I thought to myself, this is great. Not only will I be working in what I like to do, I’ll have some purpose helping the university grow and prosper.

Arturo Aguayo: And then on top of that, I get, if I wanted to, which I did is go back to school. And so I was able to get my master’s in business administration. From the University of Southern California. Now, this is a cool story. So the way it works, when you’re a staff member of a university and not all universities have this benefit, the USC did, they have a benefit where they cover you some education or expenses.

Arturo Aguayo: And so now the coverage is a fixed percentage and the rest you have to find out to yourself, but it’s not a hundred percent finance as a benefit. My chief financial officer that, that hired me covered the difference essentially to get my MBA. Now, this is the interesting story. So one, I get a call one day from my CFO’s office and his assistant said, Pierre Arturo, we want to pay your tuition bill.

Arturo Aguayo: And it was like some large amount of money. And she said to me, our system only allows for full numbers, but it’s X amount plus change. Yeah, that’s it. At least I’m thinking. Okay. What’s what are you trying to tell me here? I’m so sorry to ask you, but can you please pay the 50 cents? I mean, we’re not going to pay the 50 cents for 150, 000 education.

Arturo Aguayo: Yeah. You’re like, you’re right. Okay. I’ll stretch

Mike Richards: to that.

Arturo Aguayo: Yeah. So that was a big, I think it was a very big positive thing that happened in my life. Right. Getting an entire education paid for, because as you hear now with a lot of things going on in the United States with. Politics, the administration wants to forgive loans, right?

Arturo Aguayo: Because it’s a big issue, right? It’s very expensive and it continues to get more and more expensive every year. And so that, to me, that was just a life changing experience for me because I basically free of school loans and that was an awesome experience as well. I learned a lot in school, met a lot of cool people.

Arturo Aguayo: To the program get Trump at the same time.

Mike Richards: You were going into, for the listeners as well, you were working in the Central Treasury for Correct. For University of Southern California. So, correct. You weren’t, you were studying. That was great. They were paying a tuition and that’s great, but you were actually doing a treasury role as well.

Mike Richards: And then you talk there about purpose led treasury, which is. What an interesting one between that and corporate treasury. We’ve come onto this with Padela as well, and a bit later on the show, but for you rejoining university, why was that so powerful to you? Did you feel that then, or was it, Hey, but it’s all right.

Mike Richards: I’m getting my tuition. Or how did you feel about it on itself?

Arturo Aguayo: That’s the combination of all the above. YNA was a stable organization. USC is one of the largest universities and in the country. They have probably 60, 000 students plus, they have a fairly large endowment of, I think now close to 10 billion.

Arturo Aguayo: And so it’s a stability, the ability to go to school, but also we are in public finance. We could have chose corporate finance. Looking back at it, maybe that would have been interesting often too. But when we were growing up. Because of our background growing up in lower income community, we felt that it was important for us to somehow give back.

Arturo Aguayo: And so this sector, public finance is one that allows you to be involved both in the community, the communities that you serve, as well as doing pretty well for yourself, I should say, mention too, that before we got into public finance, I was interested in politics. Again, it was all a combination of all those things.

Arturo Aguayo: But all the finance allowed us to stay in touch with our communities.

Mike Richards: Yeah. So we can with that as well. And then you’re a C for seven years and then bring this up today. Cause I want to give Fidel as well. Some of them are not too long, but just give us some of the time. You’ve been with Caltech nearly five years, or how did you make that move?

Mike Richards: Or was it just a natural thing that you wanted to stay or how’s it developed?

Arturo Aguayo: Yeah, after about seven and a half years at USC, I was in a place where I felt like I had done everything I could in my role. And at the same time, there was a position that was available at Caltech. And Caltech is a world renowned research institution, not only a promotion opportunity, but for me.

Arturo Aguayo: It was a role where I can continue to learn and grow because even though it’s also an academic institution, it’s, in my opinion, primarily a research institution. And so it gave me an opportunity to learn a different type of organization. And I’ve learned a lot of different things. We manage a lot of banks here and we have eight lines of credit.

Arturo Aguayo: We have a swap in place. These are some of the things that I wanted to continue to learn and or did not have the ability to do before. I really enjoy my job here and it’s a smaller organization than it was in my prior institution, but with that, I did have a lot more flexibility to streamline things opposed to like the layers of approvals when you work for larger organization.

Mike Richards: And we’re going to come back to those of you working within institutions like you do and universities and things like that. And that’s also of interest because just talking about some of the nuances there, but we’re going to hand across to Fidel. Fidel, do you want to explain exactly?

Fidel Aguayo, Vice President of Treasury and Investment/University Treasurer at Loyola Marymount University: First of all, thank you very much, Mike, for having us.

Fidel Aguayo: We really appreciate your time, but it’s very interesting. Yes, we’re twins and we are very close and we’re always talking about. Kind of career opportunities and how we want to continue to grow as people and as professionals, but really how I started in the business is it’s very similar to Turo. Coming out of high school, I ended up applying for a position with the city of Long Beach as a recreation specialist.

Fidel Aguayo: I started doing kind of recreational programs for the youth across various parts across the city. And during that time, Arturo, as he mentioned earlier, was working as an intern for the treasurer’s office of the city within the city of Long Beach. So he would come home and he would share a lot of his experience with me.

Fidel Aguayo: He was saying how he was working on these multimillion dollar bond transactions. He was learning about cash management. He was learning about investments. And so I was very fascinated by that. And after a few years of me serving as a recursive specialist. The city went into probably the biggest budget deficit in its history.

Fidel Aguayo: I think it was something close to a hundred million dollar budget deficit. At least that was the number that was being thrown around at the time. And what ended up happening is they started cutting my hours, right? So it started affecting my paycheck. I’m still, we’re still an undergrad trying to get school out of the way.

Fidel Aguayo: So it was really positions for us to survive while we were going to school. And so when that happened to me, I said to myself, I need to get into something I can use whether I’m going to a price sector or the public sector. And I said, everybody needs their finance folks, regardless of sector, you need your finance folks.

Fidel Aguayo: And so that was the combination of everything Arturo was learning really led me and pushed me to pursue a career in finance. So that’s the story behind it. And once we graduated from undergrad, Arturo and I already knew, as he mentioned, that we wanted to pursue careers as investment bankers, specifically in public finance.

Fidel Aguayo: Before we actually graduated, we were meeting with people from the city of Los Angeles, people who were very influential in the city and the city of Los Angeles is a really a beast when it comes to finance. They issue billions and billions of dollars of debt every single year across various different credits.

Fidel Aguayo: They had their wastewater, they had their water and power department. They have the general purpose within the city of Los Angeles. Their lease revenue kind of bonds. And we started meeting people and they started introducing us to those of small to mid sized firms, investment firms. So by the time we graduated, we were already trying to line up a position within the industry.

Fidel Aguayo: And Arturo and I would go back and forth. We would sit down and first opportunity that comes, I’m going to take it. And I told him I was going to take it because I didn’t really have. Experience in finance. Okay. I had experience in when I was with the city after serving as rec, I also worked in their administration side, working with accounting and budgets, but it’s not the same thing as financing.

Fidel Aguayo: They’re two very different worlds. And we can talk a little bit about that as this conversation continues. That’s how we got the opportunity to break into the industry. We, through both, actually I and I both used to interview together for some of these small firms. And so we, I got the opportunity to join a firm.

Fidel Aguayo: I started probably, I want to say two to three months after graduate from undergrad, and then I probably took six to eight months. And then he joined an investment bank as well. So that’s how our careers evolved into the finance, financial world. And then I was with my, with the, the investment bank for almost 10 years.

Fidel Aguayo: And then there was a big reorg within the organization, there was changes with the partners of the firm. And it made me start thinking the organization was making a lot of changes. So it was really time for me to make a change. And so in that process, I ended up, I too decided to go more to the client side.

Fidel Aguayo: So you have the bankers who are the consultants, the professionals, and then you, we serve obviously all state and local governments who are looking to raise capital for the large projects. And so I ended up being deputy for a smaller city within Southern California. I was there for a little under a year before the opportunity to go back to the city of Long Beach presented itself.

Fidel Aguayo: It was the position of the debt manager for the city of Long Beach. And so I applied, I got the job, and then I was with the city for about six years. In total, and then probably five years into it, I got promoted to city treasurer. Now, just to give you a little background about the city. So the city of Long Beach happens to be the, I believe it’s the seventh largest city in the state of California, second largest city in LA County.

Fidel Aguayo: So when you talk about the amount excitement that’s behind an organization, when you talk about the volume of bond transactions, the volume of cash transactions. And their, the sophistication of the investment portfolio. It’s pretty big. It’s a large one. The on the debt side, the city had about one point when I was there, it had about $1.8 billion worth of outstanding debt, and they had probably something like 50 to 60 outstanding bond transactions on the investment side.

Fidel Aguayo: I think it was a 2 billion investment portfolio, so there was a lot going on within the city while I was there. I oversaw cash management, debt administration, and the investments. And so every single kind of function within treasury has is it’s challenges, but they’re all connected. They all impact each other.

Fidel Aguayo: You do something on one end, it’s going to impact the other. So that’s, so I was there for six years and then interesting thing occurred. Dodo and I would always go back and forth in terms of, and we would talk about this and I would ask him for advice, whether I. Should continue to stay in, in a government setting, or should I pursue a career in private higher ed?

Fidel Aguayo: And so the longer I was with the city, the more I thought that it was probably a good thing for me to do is to join a private higher ed academic institution. And I, interestingly enough, I graduated from Loyola Marymount about, I want to say 12, 13 years ago. And so when the opportunity presented itself, I was telling Arturo.

Fidel Aguayo: Actually, we talked about it, right? We always talked about it. We said, okay, if there’s a couple of positions out there that if they open up, we’re going to apply for. And so Arturo always really thought that he would be treasurer at RelamU. And so when we sat back and talked about it, I talked to Arturo, look, I graduated from RelamU, I have history there, and it’s a better opportunity for me because it opens it up for me to go into the private higher ed space.

Fidel Aguayo: So when that opportunity presented itself, I said, I’m going to apply it. You’re not going to apply. You stole his envelope away really quick. But that’s one thing. Yeah. Yeah.

Arturo Aguayo: She was afraid of me applying because I probably would have been,

Fidel Aguayo: I think, I’m pretty sure you would have. Who’s going to say no to someone who had the background of USC.

Fidel Aguayo: It’s just such a big, it’s such a big institution. It’s known across, I don’t, it’s known across the nation and it’s probably known across the world. Yeah. Because it’s so big, a lot of times employers, when they look at it, they look. They don’t only look at what you do, they look at where you did it. And so the bigger organization, the more exposure, the more experience you’re going to have.

Fidel Aguayo: So naturally he would be a front runner and he’s already in that space. So I knew that if he applied for it, even though I felt that I was more experienced. He would probably get a position and that’s the aim of my,

Mike Richards: yeah. We’ll cut this out in the edit, so don’t worry. So I’m glad you’re not in the same room.

Mike Richards: There you go, you go after arm wrestle. I just want to dive in for a moment about, you went from city financing to education and hiring, and you both got that exposure. You both talk about it and everything else. How would you, if someone’s listening today, how would you contrast them between city financing, big numbers and looking after lots of different projects?

Mike Richards: Versus education is, is how are they different? How do they differ in your mind? I

Fidel Aguayo: think for me, obviously is the service that you’re providing pretty much the big one, I would say the other thing that’s very different is the way the organizations are ran. And this is what I mean by it, at least within the academic institution here at Loyola Marymount, the organization is ran a little more like a business.

Fidel Aguayo: Opposed to a government setting where it’s really politically sensitive, right, highly politically sensitive. And so the directives come from the governing bodies and the elected officials, they decide what, how the city should be ran, what projects should be financed, that type of thing. And so I think those are probably the biggest differences.

Fidel Aguayo: They’re not so much on the financing side. One of the things that I believe is treasury, regardless of where you do it. That’s not going to change. The practices are the same, right? That’s not going to change. It’s more of how the organizations are ran. That’s my opinion.

Arturo Aguayo: Yeah. And in addition to what P.

Arturo Aguayo: Goddard mentioned. So if you think about, if you don’t mention the board members and the elected officials, you’re really working with two way different types of governing bodies. One is politicians. Elected officials. And the other one is the board of academic institutions are wealthy individuals that make millions of dollars of donations to the school.

Arturo Aguayo: So you’re talking about very successful, wealthy individuals that a lot of them are business savvy, a lot of them have different companies versus an elected body, that those are people that live in the city that are just, they run for elected office, some may be. Business people, some may be in real estate, some may be in education.

Arturo Aguayo: More they tend to be focused more on the social.

Mike Richards: Yeah, it’s more of a social career. Someone’s listening today. They go, hang on. How did you, as you’ve gone through this and you’ve your twin brothers, it was, this is why it came out. This must be really quite, it’s quite cool. Cause you can both talk about the crossover between your jobs and you’ve both got the same experiences, but also do you sometimes go, hang on, how did we end up here or what did you think as you were discussing it over the time?

Mike Richards: Yeah,

Arturo Aguayo: absolutely. Absolutely. Sometimes I think back, I’m like, how did we end up here? Remember I shared, I had three opportunities within the city, right? One was for the water department. One was for oil properties and treasurer’s office. So when you think about that, our, both our lives would have been way different because the reason Fidel knew about finance was because of me.

Arturo Aguayo: And if I don’t get that, if I don’t choose that treasure role within the city, who knows where we would have ended up. I feel fortunate sometimes because not only did we get to learn finance, but also helps in our personal life, right? How we manage our own funds. And so it’s been an unbelievable career that I feel like we’ve had an unbelievable career so far.

Arturo Aguayo: And the thing is, we’re still fairly young. Who knows where we’ll be five years from now.

Fidel Aguayo: The other thing I would add to that as well is it’s, it was a long journey, right? It was a journey of sacrifices. It was a journey of a lot of planning, a lot of discussion within our families. And it was a lot of really strategic planning.

Fidel Aguayo: When I shared that story about, okay, who’s going to apply for that and why should you apply for it opposed to me? So those types of discussions really made sure that we put, we felt either the, either one of us in front of an organization, right? We felt that it was either the right person, the best opportunity, and depending also on how, what’s going on within our current positions, right?

Fidel Aguayo: And if you’re in a great place, why leave a great place? You love it there. You work with great people. Me or on the other side, on the flip side of the coin, you could probably say, I don’t know if this place is for me anymore. Maybe you’re right. Maybe you’re right after, maybe you should go for it. So that type of thing.

Fidel Aguayo: So it was, even though it was a, a very, what felt like a long journey. You, when you look back and you reflect on every single decision that we’ve made up to this point. So far has really worked well for us, but don’t get me wrong. There was a lot of disappointments in certain parts of the decision process that we made.

Fidel Aguayo: But at the end of the day, Arturo said it best, you end up where you belong.

Mike Richards: I want to come back to something as well. You talk there about public finance and the drivers behind it with that social purpose and everything else. And now you’re both in higher education. You’re just making some notes there.

Mike Richards: So you’re in. Essentially commercial organization, even though they’re in it, but their education, they’re more correct. You’ve brought in a sense of rigor. You’ve done all that. They’re not as they were 30, 40 years ago for the greater good and everything. Now they’re very much more. You’ve got, when you go through the article, we’ll put here, you’ve got multi million pound, 500 million century bonds.

Mike Richards: You’ve got all those different things you’ve done. Which that’s not your typical university financing. These are big numbers. These are big ticket items. How do you guys feel about that? What are your thoughts? How do you see the sector changing and growing?

Arturo Aguayo: There’s so many different things that have made treasury and the industry overall very complex.

Arturo Aguayo: Some things have to do with technology. Some things have to do with the general economy and how what’s going on in the economy. There’s been a lot of things that have happened are. Life that would be considered a once in a lifetime type of experience, right? Like the mortgage crisis, the economic meltdown, right?

Arturo Aguayo: That never happened before 2008, 2009. So we experienced that as bankers. And so when you have clients calling you, Hey, look, our variable rate debt has skyrocketed. It’s we budgeted 3 percent and now it’s like a 14, 15%. We’ve got to get out, out of these variable rate debt and let’s fix them out. So that was an experience, right?

Arturo Aguayo: And then you have things that COVID, wow, where the entire country shuts down for a week or two. It’s whatever is going on in the world impacts a lot. Even let’s say the stuff that’s going on. Internationally with Russia and China and almost in the geopolitical environment. That impacts not only treasury, but the school.

Arturo Aguayo: We have international students and there’s so many things that are outside our control that have changed the way that we manage treasury. And then obviously technology with technology comes a lot of automation, a lot of streamlining efficiencies. So those two things have, that, that I can think of my head, have really changed and have also made it more complex in a lot of ways.

Arturo Aguayo: Because it’s not, like you said before, I think if you don’t mention this, we don’t work in a profession that is. Let’s just say business as usual. It’s a profession where you come in to work one day and you don’t know what what’s going to be that day. I’ve had, I’ve been in, in organizations where I come into the office and I get a phone call from our CFO, Arturo, we need 150 million.

Arturo Aguayo: We’re going to purchase that building across the street. How do we do it? How do we finance it? We can finance it a couple of ways. You can do long term debt, which takes longer to do. If you need it immediately, we can use some of our short term investments. We can do a bank loan, we can do a line of credit.

Arturo Aguayo: There’s multiple ways to do it right, but you have to do the analysis behind that. What’s the best way to finance this, and then what’s the long-term goal? Then I’ve been in organizations where our president has asked, do you want to grow? And the response is, no. We want to get better. So that’s a different way, a different strategy of managing your liquidity.

Arturo Aguayo: One is you have to be ready for those calls that they may ask you for funds to. Acquire another company or purchase land or what have you, you have to have that liquidity available. And then on the other side is what we’re not as aggressive growing. We can take some of our short term investments and really invest them a little longer in the yield curve.

Arturo Aguayo: Those are two different strategies, but you really have to understand the overall vision of our organization. And that has to be communicated very well to, to the treasury folks. Those are all things that you have to really understand in order to really manage your treasury operations effectively.

Fidel Aguayo: Yeah.

Fidel Aguayo: In addition to what Arturo just said, cause he’s absolutely right on, on every kind of point he mentioned. I would say some of the challenges I think that Treasury is going to be facing in the future has to do a lot with fraud. A lot of people who kind of focus on trying to steal money from organizations have gotten really sophisticated in their ways, whether it’s through email, click on this link, you, it, the email looks like it’s coming from the president’s office or the president himself.

Fidel Aguayo: And they say, Hey, click on this link. You need to send us a million dollars today. So that’s one of the concerns that are right. The scammers are getting a lot more sophisticated. And also the other part of it is artificial intelligence. So now you have people, when you pick up the phone, somebody could be recording your voice and now they can use AI to translate your voice and probably write and try to get into your bank accounts.

Fidel Aguayo: So that’s another kind of challenge that I think treasury is going to be facing. I think that one’s going to be something that people are going to need to start talking about more and certainly have to start addressing it because I think that’s probably going to be one of the biggest ones. The other one that I think that in, in more current challenge that I think treasury is facing is certainly the economic conditions, specifically the high interest rate.

Fidel Aguayo: As Arturo mentioned, part of what we do is we raise capital for projects. And in that process, the interest of an environment is so high right now that a lot of institutions, what they’re doing is they’re either holding off on projects that they were looking to finance, or they’re not doing their projects at all because it’s too expensive to borrow money.

Fidel Aguayo: Now, it’s not a good time to borrow money. But it’s a great time to invest because now the, on the investment side, you have more opportunity to invest in private debt because a lot of organizations, their lines of credits are not being renewed because of the high interest rate that the banks are providing.

Fidel Aguayo: So now there’s opportunities for organizations to invest in, in private debt. I think those two are some of the challenges that are, that Trey’s going to be facing is in addition to what Arturo mentioned, and then there’s also opportunity. Yeah. It’s that’s generally how it works. There’s a kind of indirect relationship with borrowing and investing.

Fidel Aguayo: So if one costs more, if it costs more to borrow money, it’s probably a good time to invest. Yeah. Generally speaking. And I

Arturo Aguayo: would add one more thing, Mike, if I can on the challenges, I think one of the most challenging aspects of treasury is finding good talent. And you probably know this better than I do, Mike, finding people.

Arturo Aguayo: That have the critical thinking aspect, the analytical background. We work in a very, a highly technical field. And if you work for a bigger organization, you get more and more specialized. So like the bigger organization that you work for, the more specialized you get into like cash management, or you get into a debt, or you get into investments, and those are all highly technical, so finding good talent.

Arturo Aguayo: Finding people that have a certain level of experience is very, it could be challenging.

Mike Richards: That’s very easy to say.

Fidel Aguayo: I want to add to this, cause I think after all he’s absolutely 100%, but here’s the other question. I want to post to you, Mike. I don’t know why, for some reason. Every organization, when you look at their finance department, their treasury operations is usually very small.

Fidel Aguayo: It’s not as big as their accounting foe. It’s not as big as their budget foe. Those two other functions within finance, their staffing levels are significantly higher than treasury, usually. Okay. From my experiences. Now, the question I would ask is why is that? Right. When you look at the level of responsibility of.

Fidel Aguayo: Those functions within treasury. Okay. I always share this with people. Not that I’m being biased. Obviously I am in treasury, but if I ask you, Mike, specifically, if I ask you, Mike, if you make a mistake in a, when accounting and in the entry, booking an entry, Mike, how do you fix

Mike Richards: that problem? You go back and the thing is, sorry, just to go back and the answer to the question is, and in the nicest way, it’s your fault.

Mike Richards: New treasurer is not the accounting entry that you, that’s about, you can fix that. It’s not a biggie. It’s backwards and everything else. If you get something wrong on your FX can have a massive.

Fidel Aguayo: And that’s exactly where I’m going with there. If you make a mistake, I’ll tell this before.

Mike Richards: Yeah.

Fidel Aguayo: So if you make a mistake in accounting, you’re just going to reverse the transaction.

Fidel Aguayo: Yeah.

Mike Richards: You can just

Fidel Aguayo: back it out. You make a mistake in budget, you’ll do a budget adjustment. Okay. You make a mistake in treasury. There’s chances that somebody is going to lose their job because we are doing the. We are making real time decisions. We are actually moving cash in and out of the organization on a day to day basis, millions of dollars.

Fidel Aguayo: I remember when I was at the city of Long Beach and this always made me very nervous come May and come November, we had the largest debt payment that we had to make, imagine hitting the inter to send a hundred million dollars out of your organization’s bank account, 100 million. Okay. I don’t understand why the staffing levels in treasury are always small.

Mike Richards: I can answer it. So there are three points and I’ve had this before as well. Number one, you’re a niche because that’s why this is niche podcast or niche as you might call it, because it’s a small niche, it’s not as recognized, but it is becoming more recognized. So that recognition is growing. And actually that’s one of the reasons why.

Mike Richards: This podcast is popular despite my good looks and everything else. We know this airbrush can do, but actually taking forward the word of treasury, going out there, doing the conferences, doing this, that’s why the podcast has grown in its popularity. And it’s not just me. Going on, look at this and everything else.

Mike Richards: 20 years ago, we faced this situation where treasurers were, Hey, look at us. We’re the specialists. And they were getting an enhanced, the premium rate of their salary, which was higher, maybe there’s other people in treasury, other people in finance rather, and that was great. And they were like, yeah, but then they got put in the corner office.

Mike Richards: And I’ve seen for the past 20 years, treasurers battling their way back out of the corner office to go, guys, we want to work with a business. Now, whether you’re in an FMCG or in education or wherever you might be, it’s now slow. I would say that trend is reversing, I think, AI coming back to that. I think that is an opportunity for a number of treasuries as well to do more with less.

Mike Richards: I think the role of treasurers. It’s becoming more strategic. Everyone said, Oh, all of the junior treasury guys, they’re all going to be replaced by robots. They’re not all of the junior treasury guys are going to be replaced by Python programmers. They are being replaced, but they’re going to supplement it as well.

Mike Richards: Cause you’re still going to need treasury. Yeah, our treasury is going to slim down. No, but are they going to get more strategic and get more involved with the business? Yeah, that’s exactly. And that’s what I’ve seen. Certainly. And I, so I totally agree with what you said. And actually I’ll make a point on AI because when this comes out, we will have produced a feature episode on AI.

Mike Richards: What I did it to the manufacturers Alliance association a while ago, but actually we’re bringing together lots of clips. From different previous podcasts where different are implementing AI or using it and I was there were saying oh AI bots and it wasn’t about that it was about processing automation where people are actually using it Dana from NASDAQ She they use it to scrape their FX exposures a job that used to take people days now takes seconds And they do it and they can iterate it and they can get it better and stuff like that.

Mike Richards: But I don’t want to lose track. And we’re not that far off the end of the show. Cause you guys are busy guys and things, but I wanted to come back to a talent. That was brilliant. Both of you think I, I didn’t even set them up. Everyone. That was one of the cool things. Attracting talent. I just wanted to ask both of you and go to LinkedIn profiles.

Mike Richards: And yeah, we’re not quite there yet. Attracting talent. Come and join us. We’re an FMCG. We do really cool products. We’re an Apple or something like that, or, and you can see it, you can touch it, you can feel it and everything else with you guys and both being in high in education and things. Now, maybe you could say your product is the safety, the progression of the university, the research, students, their progress, or how do each of you look at the jobs you do?

Mike Richards: Is it the mission to give back to the university and to grow it and to? That to be custodians, or how do you see each of your roles as treasurers within your organizations? Who wants to go with that monkey?

Arturo Aguayo: The way that my mind works is basically in three different things. When it comes to my role in treasury one, how can I generate revenue?

Arturo Aguayo: Two, how can I say costs? And three, how can we be more efficient? Total of the three, that’s how I see my role here. But as far as the bigger picture, I would say we just have to do what’s best for the business. And so whatever that strategy is that the executive leadership wants to implement, we have, we help them implement that vision in a way where it has to be what’s best for the business.

Arturo Aguayo: I deal with a lot of banks and banks were constantly negotiating on different things, on pricing, on terms and conditions, on documents. And a lot of times you may have a, your relationship with a bank and you think to yourself, I would like to give you business. The truth is when you look at the overall banking relationships, this bank over here doesn’t have a lot of business, but they provide, let’s say, for example, credit and credit is hard to come by at times.

Arturo Aguayo: So during COVID, credit got really tight. Banks just focused on their top tier clients, right? Because that, that, they get a lot of business from them. And so credit has always been like a loss leader for banks, generally speaking. That’s what all the banks at least indicate to us. So a company like Child Tech that has eight lines of credit, we got to make sure that we partner up with the different banks outside of the credit.

Arturo Aguayo: So that they feel like it’s a partnership.

Mike Richards: Yeah. So they get some different parts of business.

Arturo Aguayo: It’s spreading the wealth. It is very important to, and having those relationships. That’s what our challenge is out here, actually, because we’re not like a super large organization, but trying to share the wealth and find different ways to partner with banks can sometimes get a little bit challenging, but at the end of the day, you do what’s best for the business.

Mike Richards: But when you’re then trying to attract staff and you’re talking there about talent and things like that, when you’re bringing someone in, how are you then presenting why they would come and work for you guys? Cause Or work for the organization, is it they’re giving back or what are the reasons? And then we’ll come to it.

Mike Richards: I

Arturo Aguayo: would say the combination of a couple of things. One is you get to be part of, at least for CapTech, you get to be part of an organization that is doing so many amazing things. We send robots to outer space. Okay. We do research on so many different things. You get to support researchers that are Nobel prize winners.

Arturo Aguayo: And on top of that, it’s also an academic institution. If you’re looking for a place that is world renowned, recognized, and also gives you a very collaborative teamwork type of environment, this is a good place for you. And on top of that, it’s. Really stable. And when I first got here, I was being introduced to so many people and it was like, okay, how long have you been here?

Arturo Aguayo: I’ve been here 25 years. I’ve been here 30 years. I’ve been here 35 years. So the stability here of the leadership and the people

Fidel Aguayo: here is also an important thing. When Arturo was referring to the, when the pandemic kind of started and how credit got tight. I think it’s very important for people to understand that every bank that you talk to, when.

Fidel Aguayo: Economic conditions are great. They’re going to say that they can do every single thing that you need. Every single bank says that, right? Exactly. My philosophy for hiring banks, I don’t hire banks to work during great economic conditions. I hire banks who are going to produce when things get tough. Okay.

Fidel Aguayo: And so there’s banks out there that say, Oh, we have, our bank has 20 billion in capital. I can tell you that money is not going to be used for your organization. Okay. When things get tough, when things get tough, that 20 billion, 40 billion, it’s to 1 billion.

Mike Richards: Yeah. It’s locked in the ship. And

Fidel Aguayo: that billion dollars, it’s going to go to their top tier clients as Afton mentioned.

Fidel Aguayo: Okay. So that’s important to mention. Yeah. In terms of talent, I will tell you that it is really difficult to find talent. I went through a process. About five months ago of actually longer than that, I hired someone about five months ago, but it took me a year to find him. Yeah. Okay. Because of the skillset that we always look for, and I feel like I’ve touched on it, we are looking for someone who can adapt, someone who can take initiative, someone who’s willing to work hard, someone who doesn’t need someone to hold their hand in order to get things done.

Fidel Aguayo: That’s really part of, in terms of the soft skills, the technical skills, you want somebody who’s really good on Excel. You want somebody who’s going to know the banking online platforms, because that’s something that we use frequently. And then lastly, going back to soft skills, you want somebody who’s really going to work well with others because our roles are really university wide.

Fidel Aguayo: So we actually engage from everyone, from the faculty member to the president’s office. And everybody in between is who we serve. So I think that’s very important in terms of how I see the treasurer role, not only in, in my prior experience and in my current experience, I would say that we are problem solvers.

Fidel Aguayo: That’s what I would say. We find ways to finance or raise capital or finance projects. That is what we do. And I can tell you that being in treasury for, I should say finance, cause that was always part of treasury. For the better part of the last 20 plus years, people always come to treasury with their hands out.

Fidel Aguayo: We’re trying to find, we’re trying to fund a program. We’re trying to fund a project and all those things we certainly can raise money for. Sometimes people don’t understand that if we fund one thing, we’re not going to be able to fund under the others. Yeah. So that’s the other second part that comes into play as a treasurer or an organization is the long term capital financing plan that you have to establish.

Fidel Aguayo: Okay. Okay. Give me a list of projects. Give me the amount of those projects and tell me when you need the money and then get out of our way. We’re going to make this happen. So that’s what I would add.

Mike Richards: Hello, it’s Mike here from the treasury of grooming company. You’ve just been hearing my voice here talking to another amazing guest, but I just want to jump in.

Mike Richards: I hope we’re linked on LinkedIn at LinkedIn. com forward slash M R treasury, Mr. Treasury, you and I, that means that then I can share our latest video blogs. I do them each and every week where I talk about how to get your next pay rise, how to improve your career, how to find your next role. If you’re looking to recruit, I’m here to help.

Mike Richards: Connect to me on LinkedIn. I’ll be looking forward to it. Just say, Mike heard your message on the podcast, thought we’d connect. Let’s get on with the show. So I just, and I want to come back to, often we don’t talk recruitment on the podcast, although it’s up here and we, cause we don’t make it, that’s not the be all and end all, it’s one of the reasons I changed the outro, which people are hearing a minute that some people said, do you just do the podcast?

Mike Richards: I said, no, we’re recruiters. We find people. So in a similar situation, you don’t have to look for a year to find that person. But then people ask us a lot of the time, hang on, I can just go on LinkedIn. And we’re good luck with that because they go on LinkedIn and they said, why doesn’t LinkedIn work? I said, LinkedIn does work for general jobs.

Mike Richards: It doesn’t work for, that’s why I’ve been doing this 25 years. This is one of the bits. And again, I was talking to two or three clients recently, and they were like, and I said, look, you can go on LinkedIn. And what you will do is you’ll get unhappy people. They said, Oh, when I said no. They might have a happy demeanor, but I said that people are unhappy where they are.

Mike Richards: They’re leaving a bad situation. They want to get out of their role. They don’t care about your job. They’re coming to join you maybe because they don’t like their boss. Sometimes they don’t like the salary, but actually salary is not down there. It’s actually about progression. It’s about balance of all that stuff.

Mike Richards: So that was one of the key things. And then people have said to me, how do you get them? I said, I’d get them through the podcast and getting us through all the other things. That’s why I go and do all the conferences. That’s why I reach out to people like yourselves and connect. Because I’m talking to the pool of people that aren’t necessarily actively seeking a role, but they’ll find a role through me.

Mike Richards: That’s where Headhunters exists, that’s where we exist by talking to amazing people like yourself, and then we bring your stories to life, and that’s how we then expand the talent pool as well, which is where we talked about attracting people into the sector. You guys have been amazing, and I can’t wait to see you.

Mike Richards: But what we’re going to do as we wrap up each week’s show, we’re going to put your LinkedIn details in the show notes. So now I’m going to takeaways. These are the people earlier on in their careers, maybe looking for the next role or looking at how do they develop themselves and, or maybe people like yourselves, other treasurers, some of the advice you’d give to them as they listen to today, they’re commuting or whatever.

Mike Richards: And literally we’re in their ears now. Weird actually, when you think about it, Arturo, what are you, what are the takeaways you’re going to give to the audience today?

Arturo Aguayo: When you work in treasury, obviously we discussed it’s a very technical field. Right. But I want to put that aside. That’s already something that’s a given, right?

Arturo Aguayo: We have, we know that treasury is a technical field and that you have to have a certain skillset to be in this field. But I think I want to take a second to talk about leadership. And that’s a very important thing for us. We’ve got people that have been very instrumental in our career that have helped us a lot.

Arturo Aguayo: And it’s not. Often that we get a chance to recognize people. And I think I’m going to, I’m going to just go ahead and do it now. But I want to say that you’ve come across certain people in life, in leadership role that really enjoy seeing other success. Those people are rare. And I think when you talk about leadership, it’s a very important thing to also recognize that.

Arturo Aguayo: And so I think for me, we came across one person who is that special person who really went out of his way to help us and really make sure that we were going to succeed very early on where a lot of people did it. So I’m going to, I want to just do a shout out to someone and I want to recognize this person.

Arturo Aguayo: And his name is Tony Cardenas, who is a U. S. Congressman who really did that for us. And I want to recognize that because. It’s not often that we get a chance to recognize people that do so much good work for people and really support people. And like I said, leaders that enjoy seeing others succeed as much as they enjoy seeing their success.

Arturo Aguayo: It’s very rare. It’s very rare. And so, I just wanted to take a moment to make sure that we recognize those people that do

Mike Richards: it again. We’ll put a link to him in the show notes. We’ll look at his background as well. I think, as you say, it’s important to shout about that as well.

Arturo Aguayo: Yeah. And Tommy, if you’re listening, thank you for everything.

Mike Richards: They will. And we’ll send them a link to it. There you go. How do I follow him after saying that? Just say, all you need to do is say, thank you to myself. I’ve been brilliant. I did my, I made it all without the help of my brother.

Arturo Aguayo: Believe me, Mike, I’ve heard that plenty of times.

Mike Richards: Believe me, we, you told me this before the show, you said it was all about bananas.

Mike Richards: But yeah, and now I think it

Fidel Aguayo: is a discussion. What I would say is I obviously, I also want to thank Tony for really taking the time to, to nurture us. For all his advice, for all his guidance, for all the introductions that he made when we were bankers to try to help us grow within our careers. Arturo is absolutely right.

Fidel Aguayo: It’s rare that you find good people that are willing to help you specifically in the area of finance. You don’t find those type of individuals. Now he’s not in finance. He was at the time he was a council member for the city of Los Angeles. I certainly want to thank him for everything he’s done for us.

Fidel Aguayo: And so the other thing I would add to what we’ve just said is don’t be afraid to take advantage of opportunities. What we do, as I mentioned early on, it’s technical, it’s very technical. And whether you’re talking about cash management, which is more on the operational side and forecasting cash and so forth.

Fidel Aguayo: Whether you’re talking about investments, depending on the type of investments that can be very technical as well, depending on the type of investments and the number of asset classes that you’re investing in, whether it’s hedge funds, whether it’s us equities, public equities, real estate, private debt, there’s so many avenues and investing, or whether you’re talking about debt, which is really what I think is probably the most difficult part of treasury.

Fidel Aguayo: And I say that because. When you into, when you enter into a legal binding agreement, they will sometimes, most of the times there are covenants in those documents that reduce your financial flexibility for the next 30 years. When you’re talking about that, you’re really talking about the legal aspect and how the documents will put together.

Fidel Aguayo: Very important. Having said that, the fact that it’s, it is a very highly technical field. Don’t be afraid of it. I would say find people within the industry that you can ask questions of, use them as resources, and then work hard at learning as much as you can about every single function within treasury.

Fidel Aguayo: And it’s not going to happen overnight. It’s going to take many years because each single function within treasury has its processes and complications. Associated with them. I know we talk a lot about debt and that’s because I truly do feel it’s the most complicated part of treasury. But when you look at issuing a long term bond and the number of things that go into it from the financial analysis, the long term financial planning, and how that fits to your overall debt, how much is that going to increase your annual debt service payments?

Fidel Aguayo: You look at rating agencies and then you look at the post compliance portion of it. Especially if you issue tax exempt bonds, there are IRS rules that you have to follow and ensure that you are in compliance or you would have to pay down bonds. And depending on how much you issue, it could be a million or it could be 20 million.

Fidel Aguayo: It just depends. Be resourceful. Talk to people, ask questions, and don’t be afraid of the challenge.

Mike Richards: Yeah, exactly as you said, and that’s what I was screaming to here, the art for the challenge and don’t be afraid for it. Embrace it. Yeah, and I think you guys both exemplify this, so amazing. We’ll put your LinkedIn details in the show notes.

Mike Richards: You’ve both been superstars. Thank you very much for your loads of time there. It’s brilliant. I know this will be a popular one and Yeah. And can’t wait to see you both when I’m at next on the West Coast as well.

Fidel Aguayo: Thank you very much,

Mike Richards: so I hope you enjoyed that conversation with Agua Brothers. It was amazing talking to them.

Mike Richards: I remember recording on a Friday afternoon, having the best time with them, just talking treasury about their brotherly rivalry and everything else. And then I went to Nashville for the A FP conference and who was there? It was them. I caught up with them. We had a nice conversation. They actually came across to the stand.

Mike Richards: It was interesting. I tried to do a number of different interviews, but the audio just didn’t come out as well as I’ve managed to recover most of it. So apologies for the audio quality. It’s not the best, but you get to hear me. Catching up and finally meeting face to face with Arturo and Fidel, uh, amazing treasurers, the two of them in higher education and everything else that enjoy the rest of it.

Mike Richards: And yeah, again, I would love to have you on the podcast. If you want to be a guest, let me know. Uh, we’re getting more and more amazing guests. So come and join us. Anyway, enjoy the rest of the episode and speak to you soon. I’m joined by my first ever interview with twin, with two guys that have made amazing careers.

Mike Richards: Just one of my funnest Friday afternoons. Which one of these guys? Yeah, at the bottom of the AFP. How’s it been so far?

Aguayo Brothers: It’s been a great experience. I really enjoyed it. I think what the AFP does is bring, brings together people from all over the world, thousands of treasury professionals. Or related to treasury and just being able to tap into their minds and learn about how they approach certain things and being able to really learn on how they also manage all their challenges as well. All very similar to what we’re going through, although they’re different industries and different sectors. We have very similar challenges and so that’s been really great.

Mike Richards: I think. Oh, that you, we were just talking then about, and I was asked yesterday, they said, how come you managed to do 350 podcasts when you guys were about 10 episodes ago?

Mike Richards: With it, I’ve said this so many times that Ken Treasurer’s been, right? And I said, they all do the same job. Exactly the same way. No, different. Exactly that. Have you had a similar experience?

Aguayo Brothers: I think it’s, I think it’s a great experience. I think the AFP is a younger quality expert. Uh, within our within our field, and it’s really good to hear from other people as well.

The speakers are top notch. I would say from a technical perspective, from a linking perspective, I think the AFP has really brought together just a bunch of great people all around.

Mike Richards:And when I thought earlier on in the podcast, I had Dan Ferguson, who may have been on the podcast a few times. He, he said to me, on his schedule, he’d put AI, anything AI he was going to, but it was also a shifting process.

Mike Richards: He said, he went to some of them, they were great, some of them were a bit Yeah, is that what you guys have been looking at or what are the things that are top of mind for you coming here?

Aguayo Brothers: If I picture me, like I said earlier, every single trade operation has a similar concept. Yeah. It depends on the industry and the sector, but everyone has similar challenges.

For example, right now, what really, I enjoyed the session on cybersecurity. Right. And how that impacts and the policies you can put in place and things you can do to really mitigate the risk. And so that is universal and all across all industries. So again, even though it’s treasury, that’s very similar across all industries and sectors.

Mike Richards: For me, um, I really enjoy, uh, the clarity portion of a, the, um, the session, uh, really looking at how they go about investing their short term. I think that people in the podcast, right? If we all do the same thing, what I found is that. In this case, from short to mid to long investing, they just label it a little differently, but the principles are all generally all the same.

Mike Richards: That’s I’m gonna take for you guys. I, I get to meet you in real life. Pleasure meeting you mate there.