Q4 2020 Silvercrest Asset Management Group Inc Earnings Call
[music].
Good morning, and welcome to the Silvercrest asset Management Group, Inc. Fourth quarter and year end 2020 earnings conference call.
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After todays presentation, there will be an opportunity to ask questions.
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Just for a day.
Before we begin let me remind you that during today's call certain statements made regarding our future performance are forward looking statements. They are based on our current expectations and projections, which are subject to a number of risks and uncertainties and many factors could cause actual results to differ materially from the statements that are.
Right.
Those factors are disclosed in our filings with the SEC under the caption risk factors.
For all such forward looking statements we claim that the protection provided by the litigation Reform Act of 1995.
All forward looking statements made on this call are made as the date hereof and Silvercrest assumes no obligation to update them.
I would now like to turn the conference over to Rick Hough, Chairman and CEO of Silvercrest. Please go ahead.
Good morning, Thank you and welcome to our fourth quarter and year on results for 2020 Silvercrest ended the fourth quarter of 2020 and the year on a high note paving the way for a very good start to 2021 with the potential new high revenue run rate silvercrest discretionary assets under management, which drive revenue increase.
15% during the fourth quarter to reach 26 billion due to both organic as well as market growth. The firm's total assets under management grew to $27 8 billion by the end of the fourth quarter. These new AUM high watermarks for the firm represent increases of 10, 8% of total AUM of nine six.
Percentage of discretionary AUM year over year from the end of 2019 to the end of 2020 the.
The firm's financial measurements, all meaningfully improved for fiscal year 2020 over 2019 revenue increased five 7% to $108 million from 102 million firms adjusted EBITDA increased 6% to $30 million and adjusted diluted earnings per share increased nine 4% to 1.1.
<unk> 28 per share from $1 17 per share the firms for 2020, adjusted EBITDA margin was 28, 1%.
Our outsourced Chief investment Officer initiative on its first OCI O clients during the third quarter of 2019, and we ended 2019 with $300 million in OCI OE AUM that business has more than doubled during 2020 to over $700 million and we hope to cross the important $1 billion AUM threshold.
During 2021.
We're proud of building, our OCI O capability organically from scratch and our team of performance track record remains strong.
The <unk> new business pipeline has grown and we expect continued success in the OCI of business during 2021.
The strong relative performance silvercrest institutional equity new business opportunities of rebuilding of across the product suite, we expect new sub advisory relationships to continue adding new AUM and for search activity to pick up during 2021.
We've hired new high net worth portfolio management professionals during 2020, and we'll continue to add new talent both to maintain a high level of client service and to grow the business Silvercrest has a track record of growing new talent and we'll continue to do so, especially with the current M&A environment for wealth management firms remaining active and expensive we believe our <unk>.
Brand culture capabilities and technological innovation.
Silvercrest, the premier partner for select businesses and professionals, regardless of the environment Silvercrest will continue to seek to effectively deploy capital to complement our organic growth.
I'll be asking for questions after Scott charge presentation of our CFO.
Rick.
As disclosed in our earnings release for the fourth quarter discretionary AUM as of December 31, 2020 was $20 6 billion and total AUM as of the end of 2020 was $27 8 billion revenue for the quarter was $28 4 million and reported consolidated net income for the quarter.
With $3 5 million looking further into the quarter again revenue was $28 4 million, which represented approximately of 2% increase over revenue.
Of $27 8 million for the same period last year. This increase was driven by net client inflows and market appreciation and discretionary AUM.
<unk> for the fourth quarter were $25 1 million, representing approximately of 6% increase from expense of $23 7 million for the same period last year. This increase was primarily attributable to an increase in compensation and benefits expense of.
$6 million and an increase in G&A of <unk>.
$8 million.
Comp and benefits increased by $6 million or approximately 3% to $18 2 million for the three months ended December 31, 2020 from $17 6 million for the quarter ended in the prior year.
The increase was primarily attributable to increases in the accrual for bonuses.
Salary and benefits expense, primarily as a result of merit based increases and newly hired staff and equity based compensation expense due to an increase in the number of unvested restricted stock units and Unvested nonqualified stock options.
G&A expenses increased $5 8 million or approximately 13% to $6 9 million for the fourth quarter of 2020 from $6 1 million for the fourth quarter of 2019. This was primarily attributable to increases in the fair value of contingent consider.
The ration related to the <unk> acquisition and occupancy and related expenses, partially offset by decreases in professional fees travel and entertainment expenses as a result of the pandemic and lower portfolio and systems expense.
For the consolidated net income was $3 5 million for the quarter as compared to $4 2 million in the same period last year.
Reported net income attributable to silvercrest or of the class a shareholders for the fourth quarter of 2020 was approximately $1 9 million or <unk> 20 per basic and diluted class a share.
Adjusted EBITDA, which we define as EBITDA without giving effect to equity based compensation expense and non core non recurring items was approximately $7 3 million or 25, 7% of revenue for the fourth quarter of 2020 compared to $7 3 billion or $26.
3% of revenue for the same period in 2019 of.
Adjusted net income, which we define as net income without giving effect of noncore and nonrecurring items and the income tax expense, assuming a corporate rate of 26% was approximately $4 4 million for the quarter four of <unk> 31 per adjusted basic and diluted earnings per share adjust.
Good earnings per share is equal to adjusted net income divided by the actual class a and class B shares outstanding as of the end of the reporting period for basic adjusted EPS and to the extent dilutive, we add unvested restricted stock units and nonqualified stock options to the total shares outstanding to compute diluted.
<unk> adjusted earnings per share.
Looking at the full year revenue for 2020 was approximately $108 million, representing approximately of 6% increase over revenue of $102 million for the same period in 2019.
This increase was primarily driven by net client inflows and market appreciation in discretionary assets under management, including $1 7 billion in assets under management acquired on July one of 2019 in connection with the <unk> acquisition expenses.
<unk> expenses for the year ended December 31, 2020 were <unk> 85.
7 million, representing approximately a 3% increase from the expenses of $83 3 million in 2019.
Compensation and benefits expense increased approximately $2 3 million during the year ended 2020 compared to the same period in 2019 G&A.
G&A expenses increased by approximately $1 million during 2020 compared to 2019.
Looking further into the compensation and benefit to the increased by $2 3 million or approximately 4% to $62 4 million for 2020 from 60 million for.
Our 2019.
The increase was primarily attributable to an increase in the accrual for bonuses salaries expense, primarily as a result of merit based increases and newly hired staff, including the addition of <unk> the staff and benefits costs, partially offset by a decrease in equity based compensation expense due to a decrease in.
On the number of Unvested restricted stock units and Unvested nonqualified stock options.
G&A expenses basically remained flat at $23 3 million for 2020.
The increase was attributable to increases in the fair value.
Contingent consideration related to the <unk> and the eurozone captisol, the acquisitions depreciation and amortization expense related mainly to the amortization of intangible assets related to the <unk> acquisition and to the renovation of our office space in New York City.
We saw increases in occupancy and related expenses.
Primarily due to additional cleaning due to the pandemic.
The increased portfolio of assistance expense and insurance costs.
These increases were partially offset by decreases in the fair value of contingent consideration related to the Jamison acquisition lower travel and entertainment of expense as a result of the pandemic. In addition to lower professional fees office expenses.
The storage and moving expenses, we reported consolidated net income was approximately $17 5 million for 2020 compared to $15 4 million for 2019.
The reported net income attributable to silvercrest.
Or again the class a shareholders for 2020 was approximately $10 million for $1 five per basic and diluted class a share.
<unk> EBITDA was approximately $30 3 million or 21% of revenue for 2020 compared to $28 6 million of or 28% of revenue for 2019.
Adjusted net income was approximately $18 6 million for 2020 or $1 29, and $1 28 per adjusted basic and diluted earnings per share respectively.
Looking quickly at the balance sheet total assets as of the end of 2020 were approximately $213 8 million this compared to $214 2 million at the end of 2019 cash and cash equivalents at the end of 2020 were approximately $62 5 million, which can.
<unk> to $52 8 million at the end of the 2019.
As of December 31, 2020, total borrowings were $12 6 million.
And as of the end of 2020 of total class a stockholders equity was approximately $77 million that concludes my remarks, and I'll turn it over to Rick for Q&A, great. Thanks for the ready to take questions at this time about the core.
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First question is from Mani <unk> with Piper Sandler. Please go ahead.
Thanks, Good morning, guys. Good morning, Good morning wanted to start on the institutional business, maybe you could provide an update on the current six months of actionable pipeline between value of growth I know performance levels remained strong across the board.
Wondering where you're seeing the demand kind of most.
Al.
So.
The the pipeline is rebuilding which is nice our total of six months kind of institutional.
Pipeline is currently at about 134 billion.
Got.
It should be noted those are those are.
That's not a dream pipeline that is where we've been invited our in finals.
And.
<unk> had pretty good prospects.
Looking strong and it seems to be growing.
As you would expect given the bulk of.
Our asset and value and the fact that it has long been established in the marketplace at Silvercrest.
More assets they are done in growth, but the growth pipeline is growing which is nice too to report.
As is the <unk>.
Our pipeline in fact the.
<unk> pipeline is getting close to 340 <unk>.
And as I mentioned in my opening remarks, the total of <unk> AUM is now over 700 million. So we get some of those wins of that pipeline growth, we will cross the $1 billion threshold.
All of which we view is really important for shopping.
Establishing ourselves in the marketplace.
And growing that and growing that business.
On the growth strategies had absolutely incredible.
<unk>, we are just so proud of that team.
It did extremely well relative to benchmarks as you noted all of our strategies are doing.
Well and we spent a lot of time, introducing the strategies and.
It can take some time, but that pipeline is building and we're excited about the possibilities and now that they've got some performance at silvercrest under their belt.
Great. Thanks, Rick.
Yes.
And Thats.
I'm not exactly sure what that pipeline is but I think it's definitely grow and it's probably closer to $1 50 right now.
Okay, great thanks for that color.
I just wanted to shift focus to the kind of inorganic growth front.
So all of the commentary around prices remaining elevated for targets, but can you talk about what kind of growth youre looking for on the asset management side is it more scale focused and are there certain products youre looking for in particular that you are trying to diversify into and would it be fair to assume on kind of the high net worth side of the business would be more kind of individual hiring a team lift outs as opposed to acquisitions.
Yes, we pivoted and I talked about this on the call really more to looking at and potentially hiring talent to.
To drive organic growth rather than acquired growth.
At the firm.
We've done that successfully we care a tremendous amount about our culture, we know how to cultivate talent and and and bring them in and it's also really helpful too dealing.
Dealing with potential transitions, whether thats, what the family or are folks who have been at the firm a long time, so it's an important emphasis and.
He is a little harder in some respects because.
Affects your earnings and EBITDA right away right, there's no tax.
Benefits.
But it's.
It's worked for us and we're excited about the possibilities there on the acquisition front I'm not really looking to add to my product suite.
What we were able to do in 2019 with the growth of colleagues.
Does the balance out our value equity exposure and to grow in another direction.
In a way that was desirable for the clients as well as the firm we're not looking to be financial supermarket, and I think we've got enough to grow there with the with a lot of runaway Im actually very excited about what we can do with the growth in institutional asset so.
Not really looking for for much in that space with regard to firms.
It's a very expensive market driven by by a lot of factors.
I don't need to comment on it here, we're going to put a premium on not just.
Desirable firms that have a good business, but on the professionals and how they fit into this firm there.
Their geography and.
More than one way that we can see growing them organically. We don't think it's good enough just to just the merged with another firm to get the size, we want to be accretive as early as we can and have a vision and path for for how to grow it.
Yeah.
We are always in different discussions with folks and because I think this is such a desirable firm in a variety of ways I mentioned that in my early remarks, we're going to get good looks at some of the premier properties that were most interested in.
Great. Thanks.
And then just one last one for me before I kind of hop back in the queue, but.
The recurring cash comp ratio ended the year of 56, 7% for about 120 basis points above last year.
Prior year can you talk about the drivers of that increase net that kind of leads into the the EBITDA margin a little bit revenue set a record for the quarter, but you guys are sort of managing for the lower low end of that range on 25% EBITDA margin. So is that kind of due to the pick up of hiring in the quarter or do you think.
If you do pick up hiring from here, where do you see that margin kind of going throughout 2021, yes really really good question I think it's an important one I wouldn't look at our EBITDA margins on a quarterly basis, when youre talking about the comp ratio.
Yes, we did push it down but really what's happening in the fourth quarter.
You look at our history of the fourth quarter tends to be a little more volatile so you're getting something of a true up with regards to comp once all of the performance is in for the year.
And.
And how that affects the current so on a on an annual basis. It was 28, just over 28% which is in line with our high EBITDA margins I've often said on these costs of once we're hitting 29, 30%, maybe even a little over we're probably not investing in the business or not.
The other thing I pointed out the previous cost is that when we do aggressively grow the.
The business.
We.
Could get down to that 25, even 24% of of EBITDA, because we are investing in future growth and when we when we have done that we have successfully grown the business.
The fact is we made some hires in 2020 of pretty early in 2020, which means we had of full year of comp.
And and we came out with 28 so.
I intend to do more we could hit that EBITDA to what extent honestly I don't know because you have to keep in mind that the people. We hire also grow the business which growth the topline.
Second thing that ratio of that 28%.
Is also on very substantially lower revenue that we experienced for Q2 due to the selloff in the markets in the early part of the year. So a lot of the year was was was digging out of that hole and of course, you know where we ended up so.
Even though we did some hiring.
A substantial.
There wasn't the hires it was it was top line revenue that we faced in the early part of the year that drove that margin down a bit.
The the final point is that.
The compensation for the growth equity team was much higher than expected.
Super High class problem, we didn't mind that at all.
They're very performance oriented they're paid on performance and.
That's a really great day.
Because they did so well.
A bit unexpected, but the kind of happy thing to happen. That's the only good for our clients the investors as well as shareholders.
So that's the.
A bit of a complicated mix, but that's how it works out.
I would say on the steady state basis, where we're either at or below.
Kind of our general target of 55%.
But I have to say, we've got to invest in the business to grow it and I'm not afraid to hit it to do that.
Great. Thanks, Rick.
Youre welcome. Our next question is from Sandy Mehta with evaluate research. Please go ahead.
Yes, good morning and.
And congratulations on the strong <unk> investment performance.
Just following up on the previous question most of my questions were answered but.
So for modeling purposes, I mean, you explained how the comp at 64% of revenue was late.
Similar to the 63% last year, but for modeling purposes. The other quarters of the year. I think you said that we should still used 55% to 56% of revenue sort of the targeted level of comp to revenue.
Yes, I think I'd go ahead, yes, hi, Savi, yes.
Yes, so we've talked at.
We've talked about 55% as being somewhat of the target and of course it depends on the climate as we've discussed previously to the extent that we're making investments of the business where individuals will be hired and revenue will follow later on as there.
Integrating and building up their respective books of business.
Maybe that May drive the compensation ratio higher looked in prior periods. We've also come in under.
As opposed to just saying alright, lets just where under but we've talked about a 55% target. So.
In addition, as Rick mentioned with the lower revenue in Q2 that obviously put pressure.
On the comp ratio as a whole so.
It's something that we think about again the fourth quarter, usually represents the true up because of certain things don't crystallize till the end of the year and so it's something that we will continue to evaluate as the business grows and changes in the mix of compensation changes.
But.
Like I said, we'll continue to use that as somewhat of a soft tool.
It is subject to change depending on what happens.
So again, we ended the year at 56, 7% of fourth quarter ratio is artificially higher because of the true up we made so you really have to look at it on.
Full year basis to get a fair comparison I'm going to add one thing to this.
I don't think it's productive to focus too much on the quarter, especially that last one for comp purposes. This is a business, where we make investments and we may not have growth.
Right away.
And then of catches up but if we don't make the investment we could be well under 55.
It's important to look at it on a rolling basis over time.
It was it was despite the investments pretty good year.
Yes.
Great.
One other question.
As you mentioned Youre, a small cap performance was just the sort of out of out of the ballpark very very good.
Are there any thoughts of the.
Launching some more small cap strategies organically and then the other thing too is that small cap performance in general of the small cap equity markets have been very strong since December and you talked about the institutional pipe pipeline, but.
Are you seeing more interest in your strategies, just because there's more interest in small cap.
The equity indices have done really well, particularly in the last few months.
Yes, the pipeline is growing for the institutional business and we do have an expertise in small cap I don't see us launching additional small cap strategies.
The firm has remained disciplined about where it focuses and how it pursues growth.
We want to be successful at the things, we started and and not try to over diversify our efforts.
That's for sure way to kind of tap growth and perhaps lose lose our focus on what we're doing here. So we're going to stick with what we have and make what we have work.
The the turned towards small cap, which is helpful.
Indeed, only only provides a bit of a tailwind for us.
That pipeline and succeeding so that's that's really how we view it.
Great. Thank you.
Youre welcome. Thanks.
Again, if you have a question. Please press Star then one the next question comes from Christopher <unk> with Janney Montgomery Scott. Please go ahead.
Hey, Thanks, Good morning, I wanted to ask about the <unk>.
AUM growth excluding market appreciation. So it will slip out six 5% year over year and I was curious Rick or Scott that is a reasonable goal in general for this coming year or looking out in the future and is that something that you manage to as well.
We don't manage to it because on the high net worth side, which is 75 for the business, it's really lumpy and hard to predict and.
You have multiple leaks in the bucket that youre trying to overcome one big one that we face every year for us of taxes and and that can vary quite a bit.
We were hit last.
For the third quarter of.
Of last year with.
With some very significant taxes, because they were double whammy there of people were playing in the third quarter, but also as you know taxes for delayed from from the normal peak period due to Corona virus earlier in the year.
So.
What we really do is manage try to manage the the.
The company and looking at potential growth from the very high level and.
Make sure our professionals have the tools to grow and see where it falls out to be honest on.
On the institutional side again, I'm quite bullish as you could tell for my commentary earlier on.
I think the well site produced quite well in 2020, the organic growth ex markets.
For the year of was one of our better recent years just as an example, just on new accounts alone before additional cash into those accounts, but just opening day one opening.
We had $614 million.
In new open accounts of 2020.
2018, it was 300.
<unk> 96, or so in 2017. It was 360 it was a little higher in 2016 about the same. So it was the best kind of new account opening organic growth year for years.
And overall, a very good year once you're counting on some of the closed accounts and outflows it was pretty moderate compared to past years.
For example, outflows net outflows that is the additions minus the <unk>.
Plus the subtraction of existing accounts was a negative $70 million for the year.
<unk>.
That was the.
It was $625 million in 2018. It was it was 300 negative $306 million in 2019 negative $1 73 in 2016 negative $2 45 in 2015. So so quite strong that shows a lot of additional inflows. Despite the natural leak in the bucket at a firm like ours.
So pretty strong organically.
And 6% is.
If you look at a lot of firms like ours, that's that's strong.
It may or may even be on the high side, but I.
I think we can I think we can.
We can do that it's just hard to assess on the line our site, which is 70% of the asset.
That's all very helpful. Thank you for the color and then just two quick follow ups as the.
The OCI or business grows as the margin on that business is going to be different than the overall firm I'm. Just curious can help that will shape up over time, yes, too early to say the.
Way, we run it its looking pretty similar.
But we made investments in that team and.
<unk> got to reach a certain level of AUM.
As we organize that group to make sure it's profitable.
If we were talking about comp.
We made debt the investments to grow that team over other prior years.
And and really finished it out by 2019 and.
So we're set there, but our modeling shows that it will be similar and profitability to the rest of the firm.
Great. Thanks, Rick and then the last one is just on G&A does the ratio of G&A kind of fall further over time of scale or is it just.
Latest quarter kind of a good benchmark.
Yes, Scott Scott this yes on the.
G&A side Theres, not theres not a lot of variability.
Within G&A.
Of this past year, there were some items that were like travel and entertainment of expense and office expenses, which were artificially lower because of the pandemic our consumption is less than obviously.
People are not traveling for business.
But yes, most of our G&A.
There is.
Not a lot of variability in it.
Got it. Thank you for all of the color I appreciate it yes, I want to address one other thing on the <unk> I should have mentioned.
And why I think that could be of business. That's very similar on profitability to the rest of the business a lot of OCI of offerings in the marketplace are.
Consultant, driven and our consultant like relationships.
And that's a perfectly fine way to approach the business and its very dominant in the marketplace as the new entrant entrant. What we are doing is offering our discretionary asset management capabilities.
In building portfolios for institutions as the CIO. So it looks much more like one of our wealth management relationships in terms of how we are doing business and partnering with the clients. We have on the discretionary basis that tends to have different fee levels and has staffing requirements that looks more like.
Well.
So it is a distinguishing characteristic but it also means that at least so far we see that being a business that looks similar to the rest of the business.
Great. Thanks, again, Rick I appreciate it yes youre welcome.
The next question is from Robert Maltbie with singular research. Please go ahead.
Good morning.
Yes.
Good morning.
Good morning.
Congratulate you on executing in a very difficult environment.
In terms of the.
Year of Covid in the.
The restrictions on.
Face to face types of meetings.
Probably very.
Tim do you shift the growing relationships more quickly so to graduations on.
Positive above industry average AUM growth one day.
Thank you.
Thank you Quinn who regarding.
Your dividend policy and your continued growth do you see the prospects for increased dividends. This year of next year and secondly on the on the M&A landscape I know you have been involved with.
Yes.
And some acquisitions in the past I was wondering if you're finding it a fertile environment.
So look at targets, maybe from the evaluation perspective.
So it's.
That's a funny phrasing of fertile environment from a valuation perspective.
I think the market is expensive I've said that for quite some time.
A lot of the firms that are selling at multiples don't don't have the organic growth day. They should have the transition plans they should have.
And diversity of.
The revenue that they should have.
Capital.
In the business that they should have in order to justify those things and.
So.
I just don't think it's great for a firm like ours for the use of shareholder capital.
We always have had an organic growth strategy under what we're doing I think you absolutely must and we have been very successful not just at doing a deal accretively. When we do them I think that's very important but we have an organic growth plan underneath everything we do.
And when when things change you cant necessarily rely on acquired growth.
No.
When that environment, if that environment changes, we'll be ready that set.
There are any number of premier type firms.
In geographies that we like that we know extremely well and remain close to and have conversations with so you never you never know, but just speaking very broadly those are those are my views.
On the market.
We've got capital the put to work, we're ready and willing but it has to be the right partner and we have to have the right organic growth plan on underneath it.
And we've been successful debt at that that is why we have been able to compound earnings per share or even on a diluted basis for a sustained period of time.
And have organically primarily organically growing this company.
We're just looking for acquisitions to enhance that ability.
Number two you asked about dividends dividends of really important, especially for such a small company as ours in order to pay shareholders return.
Some capital to them and have them realize of very steady.
Yield on their investment and as you know, we've got a pretty premier nice one.
We did not choose to raise the dividend most recently as you probably saw.
We have been doing so consistently we think it's very important to support it we have obviously plenty of cash to do that.
<unk> generated by the business and we have the posture of supporting that dividend and periodically raising it on a steady basis.
We chose not to most recently because we think the yield is high enough and we're looking at other potential uses for our capital to enhance shareholder.
The value and perhaps have a more rational balance sheet. So we're taking all of those options.
Into consideration.
In particular as you noted because we did not raise the dividend.
Thank you.
Youre welcome.
The next question.
So up from Marni with Piper Sandler. Please go ahead of time.
Sumit.
Thanks, guys just a couple of quick clean up questions here, but just a follow up on the non comp maybe for Scott.
I've seen a lot of peers take some lessons learned around kind of the non comp ratio of trying to run a leaner business post pandemic.
I know you guys back out some of the costs and the adjusted number but do you think youll be able to run sort of a lower run rate. After the pandemic from kind of what you learn what's the any kind of a normalized.
Yes.
One of the things on want to highlight is and it represents an adjustment that we disclosed as part of our G&A on a GAAP basis includes the effect of the fair value of our various earn out of arrangements. So if you're looking at it on an actual reported basis.
That tends to.
Artificially impact our G&A because that stuff is those valuation adjustments are non cash now there are there are some.
Areas that we do a good job of trying to negotiate with a lot of our service providers, where we negotiate annual fee cap increases so that we can.
Our G&A not only more predictable, but also to align.
The benefits of the services with reasonable increases.
But in any.
The situation because of lot of our G&A is fixed.
In periods, where revenue might be lower your revenue is going to drop the sooner than you can renegotiate some of your fixed costs.
So some of some of our actual expenses will.
On really focusing more now on the cash flow basis will go up as the pandemic and zing.
Such as travel entertainment of expense and all kinds of expenses those will normalize more but on the cash flow basis. There are other expenses that will go down.
Primarily you referred to the adjustments for Covid employees that normally you would be able to learn of hand documents to somebody on your floor on another for new office, you know Fedex ing between.
Employees, so those type of costs will go down.
In general we've done a good job of controlling our G&A and absent some of those unusually lower items in the.
These extra of Fedex costs, or some extra equipment for individuals' homes.
On that type of stuff will adjust out and at the end of the day the.
The pandemic related costs that we have added back has not been overly compelling is significant.
I want to add.
Non non financial color to this but I think debt debt paint a bit of a picture that we're interested in which is number one our people. We're just raring to get back on the road, especially our institutional marketing folks it's still the people business zoom is okay, but.
Everyone's sick of it so.
I expect <unk> to go up will ever be as high as it was before I don't know it remains to be seen but all I know is it's important for us to be seeing our clients and getting out there.
One thing I do think and this is more of a long term issue.
But it is helpful to the company.
Is I do think that the need to expand into office space.
We'll be the.
Less.
Important as we grow with personnel.
<unk>.
This is a people business the culture here is extremely important.
We visit offices and meet and talk on the phone of course, but.
I just feel Theres a lot lost in a firm like this with a completely virtual environment. However.
I think there will be a lot more flexibility and in particular with some folks who who currently.
Half of footprint physical footprint I think they can become a lot more.
Flexible, which means I can hire people and grow the business and not have to expand into space as quickly which.
Overall, as we grow over time lowers lowers that expense compared to the revenue as a whole.
Great. Thanks for that color Rick.
The last one for me just on the fee rate.
Well the volatile throughout the year, but ended up pretty much in line with 2019 or are there any considerations for 2021 between kind of the expected growth of the asset management and high net worth businesses.
Yes.
Well.
High net worth kind of took the in OCI, Oh really OCI or brought in a couple of the two biggest accounts last year.
And that kind of just in terms of it's the way it looks sort of sits between pure equity institutional relationships and wealth relationships given the nature of boards and the institutions youre dealing with.
I don't I don't have an expectation for one of the other but I would suspect the institutional growth will outstrip.
Our high net worth growth in the coming.
Year, just because of the size of the pipeline in its growth.
And.
And what I see as the opportunity but.
The <unk>.
Really no way to to it would be force.
Precision for for for me to tell you what I actually expect for share.
Okay, great. Thanks.
Youre welcome.
This concludes our question and answer session I would like to turn the conference back over to Rick Hough for any closing remarks.
Great. Thank you very much I appreciate everyone's support for taking the time to ask so many good questions today.
About our fourth quarter and the year of 2020 was it was a good year we saw some.
Other than industry average organic growth saw great search with the markets as well that really supported us coming into 2021.
At an all time high in discretionary assets and total assets with the with growing pipelines on the business. So we look forward to reporting to you about that first quarter.
As soon as that information is available and I appreciate you joining us thanks, so much.
The conference is now concluded. Thank you for attending today's presentation you may now disconnect.