Q2 2022 SEI Investments Co Earnings Call
Speaker 1: your conference will begin momentarily. Please continue to hold.
Speaker 2: Ladies and gentlemen, thank you for standing by. Welcome to the SEI second quarter, 2022 early call. At this time, all participants are in a listen-on-remote. Later, we will conduct a question and answer session. Instructions will be given at that time.
Speaker 2: If you should require assistance during the call, please press star then zero. As a reminder, this conference would be recorded. If you should require assistance during the call, please press star then zero.
Speaker 2: I would now like to turn the conference over to our host, head of investor relations, Lindsay Otsall. Please go ahead.
Speaker 3: Welcome, everyone. Thank you for joining us on today's second quarter 2022 earnings call. Joining me on today's call are Ryan Hickey, FBI's Chief Executive Officer, Dennis McGonigal, Chief Financial Officer, and the leaders of each of our business segments, Phil McCabe, Sanjay Sharma, Paul Plauter, and Wayne Withrow. Kathy Heilig, FBI's controller, is also with us.
Speaker 3: I've had the opportunity to connect with many of you regarding the format of this call and appreciate your input. So we're switching things up.
Speaker 3: Moving forward, you'll hear opening remarks from me, Ryan will provide a business and strategy update, and Dennis will provide an overview of the company's quarterly results, including those for each of our business segments.
Speaker 3: After our prepared remarks, we'll open up the call to questions for Ryan, Dennis, and the leaders of each business segment.
Speaker 3: Before we begin, I'd like to point out that our earnings press release can be found under the investor relations section of our website at SDIC.com. This call is being webcast live and a replay will be available on the events and webcast page of our website.
Speaker 3: We would like to remind you that during today's presentation and in our response to your questions, we have and will make certain board looking statements that are subject to risks and uncertainties that may cause actual results to differ materially.
Speaker 3: Please refer to our notices regarding forward-looking statements that appear in today's earnings release and in our filing with the securities and exchange commission. We do not undertake the update any of our forward-looking statements. With that, I'll turn the call over to CEO Ryan. Ryan. Thank you, Infi. Hello, everyone, and thank you for joining us today. I hope everybody is staying healthy and enjoying the summer.
Speaker 4: Since stepping into the role of CEO on June 1st, I've had the opportunity to spend time with our employees, clients, and many of you on the call. I've appreciated the engagement and insight from our investor and analyst community, and I look forward to future meetings to discuss the strategic approach we are taking, the opportunities it represents, and the progress we are making.
Speaker 4: One thing is clear, we are focused on making the necessary changes and investments to grow our great company.
Speaker 4: We are clearly focused on three key strategic areas, growth, talent and culture.
Speaker 4: Our objectives are clear. We are going to be an innovative entrepreneurial market leader in the delivery of solutions that drive change, growth, and I significant value to our client.
Speaker 4: We will be focused on strong, profitable, recurring revenues diversified across segments and markets.
Speaker 4: We will be willing to take risks to exponentially grow, and pin down and waren to carried out events taken by the Government from Syria in order to help children repent beforeANTARCAKE to any wedges.
Speaker 4: We will remain client-centric and market-aware, taking the best of FDI outside of our walls and bring fresh perspective inside our walls. We will remain client-centric and market-aware, and bring fresh perspective inside our walls.
Speaker 4: We will have a lean, nimble, diverse, and flexible workforce with an unbridled, employee-based encounter.
Speaker 4: And we will be engaged, positive and aware of nurturing and refreshing our culture constantly. Always curious and passionate about the future.
Speaker 4: We announce many important actions over the quarter, including well-fending leaking Jonathan Brasson and to our board of directors.
Speaker 4: We brought on Dennis Okema as the Director of Diversity and Inclusion at FBI to enhance our commitment to having the best workforce in the industry.
Speaker 4: We continue to execute daily, successfully in key markets, and install new clients and business.
Speaker 4: We launched programs focused on our talent, including initiating a voluntary separation program with our workforce to open opportunity while providing a positive exit process for those who helped make FBI so successful.
Speaker 4: Finally, we began to lay the groundwork for our future growth plans, including the appointment of Sanjay Sharma to lead our private banking business.
Speaker 4: Later in my remarks, I will dive further into this strategy for each of our focal areas.
Speaker 4: Now, turning to our results from the quarter. Second quarter revenues grew 1% from a year ago. Our second quarter earnings were down 17% from a year ago.
Speaker 4: Second quarter EPS of 81 cents decreased 13% from the 93 cents reported in the second quarter of 2021.
Speaker 4: In the quarter, we repurchased 2 million shares of FCI stock at a price of 55 dollars and 48 cents per share.
Speaker 4: That translates into $109.23 million of stock repurchases.
Speaker 4: Next sales event total $8.8 million.
Speaker 4: $6.5 million of which is net recurring. Dennis will go into further details on our financial results.
Speaker 4: We are acutely aware of the need to grow our revenues by driving increased sales results. I am confident we are making the right decisions to generate the sales results that we and our shareholder community expect.
Speaker 4: We will align our talent in spending to capitalize on market opportunities for both the short and medium term.
Speaker 4: The second quarter of 2022 was marked by the same market volatility and geopolitical disruption that we felt in the first quarter with an even bigger deterioration in the capital market returns.
Speaker 4: Inflation as well as changing economy also had an impact. While our results include these challenges and we expect there to be more ahead, we remain steadfast in our conviction that we are moving in the right direction.
Speaker 4: The overall market trend of outsourcing continues to increase.
Speaker 4: SEI's expertise in investment management, investment processing and operations, and financial technology and cybersecurity, position us extremely well to take advantage of this dynamic.
Speaker 4: As business challenges continue to intensify, many firms don't have all the capabilities to keep pace.
Speaker 4: We recognize the talent retention and acquisition further amplifies this need. And it reinforces the benefit of partnering with established leaders and experts like FBI. And with established leaders and experts like FBI. We recognize the talent retention and acquisition of FBI. We recognize the talent retention and acquisition We recognize the talent retention and acquisition of FBI. We recognize the talent retention and acquisition
Speaker 4: We understand the competitive landscape, and we're able to bring platforms and people to clients and prospects that help them grow in maintaining their business.
Speaker 4: Alternatively, we appreciate the impact that has on our business. We are acting appropriately to invest in our talent.
Speaker 4: Turning this in three strategic areas of focus, growth, culture, and talent. I'll start with growth.
Speaker 4: We are committed to driving greater top line revenue growth, both organically and through new engines. We are committed to driving greater top line revenue growth, both organically and through
Speaker 4: We are aggressively assessing our investment spend against the potential return. This includes keeping an eye on margins and reducing spend where necessary.
Speaker 4: However, we also recognize we have areas of strong momentum and opportunity and to increase our revenue engines there will be investments to make.
Speaker 4: This may include expanding our global footprint or using M&A to enhance an existing capability or build a new solution.
Speaker 4: We will continue to refresh our strategy in a line-up spend with market opportunity and growth.
Speaker 4: The Investment Manager segment had another strong quarter with significant implementations of our backlog, continued client delivery and strong growth process moving forward.
Speaker 4: In the alternatives market, we signed a number of new names and our cross-sale strategy continues to resonate. It's resulting in road bus sales to existing clients. A particular note, we were selected to provide fund administration for two large private equity real estate firms.
Speaker 4: In the traditional market, we continue to add new business lines in all products with new and existing clients. And in Europe , we continue to expand our ETS private equity and private debt business primarily through CrossFail with existing clients.
Speaker 4: I met with the executives of a few of our largest IMS clients in the quarter, and I am very enthusiastic about our growth opportunity in this market with continued execution, innovation, and platform delivery.
Speaker 4: Turning to the Investment Advisor's business.
Speaker 4: During the quarter, we leveraged the depth of our investment management expertise to launch SCI branded factor based ETFs.
Speaker 4: We also launched a strategic partnership with Dimensional Fund Advisors, further increasing investment solution flexibility to our visor clients. The investment solution flexibility to our visor clients.
Speaker 4: We expanded our sales capabilities with the deployment of a new RIA sales team led by industry veteran Gabe Garcia
Speaker 4: And we rolled out a beta version of FVI Connect.
Speaker 4: A digital collaboration tool built on the ARON platform, which we acquired last year.
Speaker 4: We are on track for a full launch by the end of the year.
Speaker 4: We remain excited and focused on our strategy of growing our business in the RIA market.
Speaker 4: The breadth of our technology and investment architecture combined with the market-eating capabilities of SCI's own investment management expertise makes me personally very bullish on our opportunity to expand our footprint with current advisors and why the SCI's market penetration.
Speaker 4: The institutional investors segment had a solid quarter.
Speaker 4: During the quarter of large global investors selected at CI, for a combination of our outsource CIO and enhanced the IO platforms.
Speaker 4: This signing aligns with our committed strategy of expanding our footprint into sophisticated allocators on a global scale, showcasing the OCIO to ECIO continuum to large investors.
Speaker 4: leveraging our proprietary portfolio intelligence technology, FCI Novus, which we acquired in the fall of last year.
Speaker 4: increasing our UK Master Trust business, as well as growing our traditional markets.
Speaker 4: In the quarter, we also announced Sanjay Sharma, a 15-year FBI veteran, and his appointment to lead the private banking segment.
Speaker 4: Sanjay's expertise in the technology and wealth management landscape will be invaluable to progressing our business strategy and driving future growth.
Speaker 4: I am confident that not only will Sanjay create a revenue and growth plan that will succeed, he will also drive discipline and efficiency on the expense and profit side of our business.
Speaker 4: His fresh perspective is already having a positive impact.
Speaker 4: In the private bank business, we signed an agreement with the current trust 3000 clients to move to the SEI well platform.
Speaker 4: We also successfully migrated another client from Trust 3000 to SWP and installed a new client from a competitor platform. We additionally re-contracted two clients in the quarter.
Speaker 4: Working with Sanjay, we are making efforts to right-size the expenses in this segment as we accelerate sales activity.
Speaker 4: To do so, we are working to improve operating efficiency, but also consolidating teams across our business, and operations and technology platforms.
Speaker 4: Additionally, we are focused on improving client engagement to create more cross-stale opportunities to cross our enterprise.
Speaker 4: While we continue to have good success in the regional community bank space,
Speaker 4: We will work with our Jumbo clients and prospects to grow that important segment. We also remain committed to building a pipeline for clients globally.
Speaker 4: I'd like to take a minute to highlight some positive traction in growth areas in our investments in new business statements.
Speaker 4: One of those investments is SDI sphere. Representing a new growth engine to drive diversified revenue stream.
Speaker 4: Spheres situated in the fast-growing space of cybersecurity and cloud.
Speaker 4: We have signed clients in both existing and new market verticals and we are excited about the potential for this business.
Speaker 4: Our private wealth management business is also growing. This quarter, we achieved increasing sales as our business strategy gains momentum with our target market.
Speaker 4: Our pipeline remains healthy.
Speaker 4: We also continue to explore new markets where we can successfully meet client needs.
Speaker 4: Finally, an investment in new business, our partnership with Allos V remains very strong. Dennis will report on their financial results your confidence and confidence you are at a loss from your start is strong.
Speaker 4: As part of my opening comments, I mentioned that talent is one of our key strategic focal areas. In the quarter, we announced the Voluntary Separation Program.
Speaker 4: This program was not designed to reduce expenses or remove a specific demographic from our workforce. I want to be very clear on that.
Speaker 4: It was designed to create an opportunity for tenured SEI employees to have an option to explore their life ambitions and concurrently create space for internal mobility, fresh perspective, diversity, and external experience.
Speaker 4: We believe creating opportunities for diverse perspectives and talent inside and outside of SEI will position us for growth and in fact accelerate our growth as we challenge and refresh our strategy.
Speaker 4: We are committed to our employees bringing their best selves to SCI every day.
Speaker 4: We will embrace internal mobility and diversity and inclusion in our talent and leadership development.
Speaker 4: We are investing in programs and initiatives focused on future skills, rotating talent, idea sharing, and professional development.
Speaker 4: SEI has a global pool of talent to unlock a limited amount of potential.
Speaker 4: The final strategic area focus is culture.
Speaker 4: We believe culture drives a company forward and plays an integral part in its success.
Speaker 4: You can deliver something similar to competitors product or playbook, but you can't copy a culture. And SEI's culture is unique and valuable, and we are going to continue to invest in making it a huge differentiator. And we are going to continue to invest in making it a huge differentiator.
Speaker 4: We recently refreshed our corporate values, examining them to cultivate an environment where our behavior aligns with those values.
Speaker 4: We will be nimble, maintain focus and attention on our clients and opportunities.
Speaker 4: We are also looking at the future of our workforce. As the pandemic has shown us all, the traditional work model is shifting and it's permanently disrupted.
Speaker 4: In June , our workforce returned to our global offices.
Speaker 4: Adopting a hybrid working model that will play a key part and reignite in our culture and bring our teams back together.
Speaker 4: We have always understood the importance of integrating work and life because finding harmony in your professional and personal activities is key to achieving fulfillment.
Speaker 4: As the year progresses, we will continue our efforts to make changes that truly capitalize on our opportunities.
Speaker 4: We will remain focused on maintaining and accelerating growth in existing businesses, expanding our focus on new growth engines, and reinvigorating our current talent and culture strategies across the company.
Speaker 4: In future calls, we will continue to share our progress on these initiatives, as well as provide additional clarity in our evolving strategy.
Speaker 4: This concludes my prepared remarks. I will now turn it over to Dennis to discuss our financial results to the further quarter. Dennis, thank you.
Speaker 2: Thanks Ryan. With our new format, I plan to cover financial information related to the quarter for the company in our business unit. And our business unit. Thank you. Thank you. Thank you. Thank you. Thank you.
Speaker 2: As Ryan mentioned, DPS for the quarter was 81 cents per share. This comparison 93 cents storing second quarter 2021, and $1.36 for the first quarter of 2022. And $1.36 for the first quarter of 2022.
Speaker 2: A reminder that the first quarter reflected a one-time event that equated to approximately 47 cents per share in earnings.
Speaker 2: Revenue for the quarter was $482 million compared to $476 million in 2021 and $581 million in the first quarter of 2022.
Speaker 5: First quarter reflected in $88 million one time of death.
Speaker 5: Total expenses for the quarter were $366 million, which compares to $340 million last year and $367 million in the first quarter.
Speaker 5: Revenues for Massive Management and Administration were impacted by lower capital markets during the quarter.
Speaker 5: Processing revenues remain relatively flat from first quarter. There were no unusual revenue items or in the quarter.
Speaker 5: Expensive increase year by year and we're essentially flat from first quarter.
Speaker 5: The main drivers of expense growth continues to be compensation inflation and talent growth to support our growing business lines.
Speaker 5: We have also seen inflationary pressures impacting some of our third party service costs and in professional fees related to the growing regulatory environment we operate in.
Speaker 5: We do not see these inflationary pressures of beating.
Speaker 5: As Ryan mentioned, right-sizing our expenses to business growth and allocating spending to areas of accelerated growth are a priority.
Speaker 5: On the sales side,
Speaker 5: in our processing businesses of private banking and IMS.
Speaker 5: Net sales events total $7.9 million, and are expected to generate $5.6 million in recurring revenue. Net sales events total $7.9 million, and are expected to generate $5.9 million, and are expected to generate $5.9 million, and are expected to generate $5.9 million, and are expected to generate $5.9 million,
Speaker 5: In our asset management related businesses, net sales were just under $1 million.
Speaker 5: Private banking net processing sales were negative 3.7 million.
Speaker 5: This reflects one new SWP sale to a current trust 3000 client.
Speaker 5: Sales were offset by three trust-retails and client losses.
Speaker 5: We re-contracted two clients during the quarter and installed two new clients on SWFP.
Speaker 5: The current backlog of sold but expected to be installed revenue in the next 18 months.
Speaker 5: is $38.9 million.
Speaker 5: This backlog does not reflect any revenue from Wells Fargo.
Speaker 5: Wells continues to assess its own strategy which has led to some business divestment.
Speaker 5: We continue to service them on TRUST 3000 and are working closely with them to be ready to move when they are.
Speaker 5: In addition to current quarter sales activity, we have two clients that are involved in M&A activity.
Speaker 5: State Street, and Union Bank of California.
Speaker 5: Both firms have been acquired, State Street by F&Z and UBOC by U.S. Bank, a client.
Speaker 5: We are working closely with all organizations as they move to consolidate.
Speaker 5: The total revenue represented by State Street and UBOC is approximately $15 million.
Speaker 5: Profits and private banking reflect the impact of capital markets on its asset under management-related revenues.
Speaker 5: While net revenue from sales was a positive 1 million, lower capital markets resulted in reduced revenues from the first quarter.
Speaker 5: We are seeing good adoption of our asset management offering globally.
Speaker 5: Expenses in the quarter were down from the first quarter of 2022. This was partly due to direct costs associated with asset management.
Speaker 5: along with a concentrated effort on spending.
Speaker 5: We expect this effort to continue and grow in emphasis as we move forward under Sanjay's leadership. As we move forward under Sanjay's leadership.
Speaker 5: On the IMS front, net sales for the quarter were 11.6 million, 10.2 million of which is recurring.
Speaker 5: The quarter sales activity remains robust, reflecting an active market.
Speaker 5: Sales during the quarter should be considered in concert with the strong sales we had in first quarter, leading to one of the best first six months of any year.
Speaker 5: Revenue for the quarter was down slightly from first quarter, reflecting the impact of capital markets.
Speaker 5: Expenses grew slightly directly related to the addition of talent tied to our growth.
Speaker 5: and you can continue to inflate some pressures.
Speaker 5: Our backlog of sold but expected to install in the next 18 months, recurring revenue is $29 million in a second.
Speaker 5: margins, while strong particularly in light of the market environment, reflect both the movement of revenue for market activity and are spending on attracting and retaining talent.
Speaker 5: Investment advisors experience essentially net flat cash flows during the quarter.
Speaker 5: Revenues for the quarter were down slightly from the first quarter as a direct result of capital market pressures and portfolio de-risking.
Speaker 5: Expenses were down slightly for the same period, and the property margins hold in the mid-40s.
Speaker 5: We recruited 57 new advisors during the quarter and re-engaged 13 existing advisory firms.
Speaker 5: Advisor activity remains strong, but we are seeing a slowdown in market activity on the part of both advisors and their clients.
Speaker 5: As a reminder, during the quarter we prepared for the departure of retirement planners of America.
Speaker 5: This was addressed in an AK file last November .
Speaker 5: At that time, the departure was planned for May 15.
Speaker 5: The actual deconversion of these assets was in early July .
Speaker 5: and their accounts will fully invest in the money market fund at the end of the second quarter.
Speaker 5: You will see this move in access reflected in the Q3 asset balances.
Speaker 5: While this law is fully spelled, one of the original five partners.
Speaker 5: decided to move his business out of retirement planners and to continue to rely on us.
Speaker 5: We are thankful for this vote of confidence in our vision.
Speaker 5: In the institutional investor segment, OCIO net sales events for the second quarter were a positive 2.8 billion in assets. We are a positive 2.8 billion in assets.
Speaker 5: Growth sales were 3.2 billion and client losses total 400 million.
Speaker 5: Second quarter, new sales were diversified across U.S. endowment foundations, governmental, and healthcare clients.
Speaker 5: Additionally, a large global investor selected SEI for a combination of our outsourced CIO and enhanced CIO platforms.
Speaker 5: Sales for the quarter equated to $3.3 million in new recurring revenue when implemented.
Speaker 5: The unfunded client backlog of gross sales at quarter end was $3.2 billion.
Speaker 5: Revenues for the quarter were down from first quarter due to capital market activity.
Speaker 5: Bye.
Speaker 5: Slightly positive client flows.
Speaker 5: Expenses were also down reflecting reduced costs as well as general expense management.
Speaker 5: In the investments and new business segment, revenues were flat to first quarter.
Speaker 5: Expenses in this segment were up slightly due to investments in our SEI SPEAR initiative.
Speaker 5: Spending on our one SEI work was up slightly also the first quarter due to a $900,000 write-down of a third-party software asset.
Speaker 5: We expect expenses in this segment while shifting to new initiatives to remain relatively flat to first quarter.
Speaker 5: LSV produced $29.8 million in profit during the quarter. This compares to $32.5 million during the first quarter of 2022.
Speaker 5: Revenues for LSV were $99.8 million compared to $108.5 million in the first quarter.
Speaker 5: LSB recorded performance fees of $4.3 million during the quarter, reflecting improved relative performance.
Speaker 5: The reduction in revenues is a result of capital markets declining and the impact of net client flows.
Speaker 5: Net sales were essentially flat, while net flows from existing clients due to de-risking and reallocation were a negative 3 billion.
Speaker 5: Market depreciation was approximately 12 billion.
Speaker 5: The outlook for LSD is brightening as value investing continues to gain favor.
Speaker 5: Our tax rate for the quarter was 23.1% consistent with first quarter.
Speaker 5: As we look forward, we are finalizing the financial impact related to our voluntary separation program we announced in June .
Speaker 5: Our initial assessment or that the cost associated with that program will approximate 54 to 58 million dollars.
Speaker 5: The majority of this will be booked in the third quarter as a reserve.
Speaker 5: Most of those employees participating in the program are expected to leave by the end of 2022.
Speaker 5: While we do not, or while we do expect to capture recurring expense reduction, the main purpose of the program is Ryan's.
Speaker 5: Discuss to enhance town attraction and development to drive future growth.
Speaker 5: Finally, while capital markets are difficult to predict.
Speaker 5: A reminder that we are starting the third quarter with lower asset balances which will put pressure on asset-based revenues.
Speaker 5: The matriculation of our back log will help us move through this.
Speaker 5: On the expense front, the continued pressure on cost of talent and business overall seems to be moderating slightly, but still present. As Ryan said, we will manage through the current environment as we work on resetting our spending.
Speaker 5: That concludes my remarks.
Speaker 5: As a reminder, all of our unit heads are on the call, and we will now take questions. Thank you.
Speaker 5: We will now take questions. Thank you.
Speaker 2: Ladies and gentlemen, if you wish to ask a question, please press one then zero on your telephone keypad. You may withdraw your question at any time by repeating the one zero command. If you're using a speaker phone, please take a preference that before press the numbers. Once again, if you have a question, please press one zero at this time.
Speaker 2: And the first question from Ryan Kinney with Morgan Stanley . Please go ahead.
Speaker 6: Hey, good afternoon.
Speaker 7: How do you run?
Speaker 6: So question for Ryan.
Speaker 6: You mentioned that one of your key priorities is delivering growth while keeping an eye on margins. Could you just give a bit more color on how you're thinking about delivering growth versus delivering margin? Are you willing to let the pre-text margin run a little bit lower now to get growth later?
Speaker 4: Yeah, Ryan, I think one of the, Ryan, the thing that we've been really focused on right out of the gates is looking at our investment spend aligned with our short and medium term revenue opportunities.
Speaker 4: So we're definitely going to keep a close eye on margin, but I think as we've said in kind of previous conversation, one of the first things you're going to see us do is really look to right side expenses, or real line expenses relative to the opportunity. So you might see a shift in some of our investments spend from current allocations to one unit to another where we believe the market opportunity and revenue opportunity is greater. So I think corporately we'll have the same focus on margins. We just made some differences within the cycle.
Speaker 6: And then just a follow-up on the backlog, heard the comment that Wells Fargo is no longer in there. I'm just wondering if you could give us any color on what's currently in the backlog and the timing that we should expect it to start to come through. Thanks.
Speaker 5: Sure, so I try to be clear that the backlog number we put out there is that that is revenue that is going to matriculate in the next 18 months.
Speaker 5: So while Wells Fargo is still under contract and we're still working closely with Wells Fargo, they're still a big client and we're very engaged with them. You know what I thought?
Speaker 5: We're not, they're no plan right now for them to move anytime in the next 18 months.
Speaker 5: So that's why they're not in that backlog number.
Speaker 5: So the banking backlog number.
Speaker 5: If you need it again.
Speaker 8: 38 was.
Speaker 5: 38.9 million.
Speaker 5: And the backlog number on there that same time period 18 months where the IMS segment was 29 million. The IMS segment was 29 million.
Speaker 5: So we're really trying to get the back of the, as we go forward, the backlog numbers we're gonna provide are those within that 18 month window because they're much more predictable. We know we're highly confident that we're gonna occur all in time.
Speaker 5: I think that helps everybody better.
Speaker 5: No
Speaker 5: You gotta predict the future if you will.
Speaker 8: Thank you. Thank you.
Speaker 2: And next we're going to line up Robert Lee with KBW. Please go ahead.
Speaker 9: Great, thanks. Good afternoon, everyone. Maybe Dennis's first question is just on the voluntary separation. I mean, I know it's not being done to drive cost savings per se, but you did mention it could be some recurring expense reductions. Is there any way of kind of helping us think about how that would flow through? Should we be thinking that maybe that just kind of midded with the inflation pressures that kind of helps mitigate it or?
Speaker 9: to some degree or is it really just the kind of you expect whatever savings you have is going to have.
Speaker 9: be reinvesting the business kind of over next.
Speaker 9: You know, you're so. Just try to get a something out of it. Think about that.
Speaker 5: Yeah, I mean, it's hard to, a year from now, it'll be hard to me.
Speaker 5: separate spending in July of 2023 to that particular program, so that I think that's a little bit further around. I think that...
Speaker 5: Our expectations are that...
Speaker 5: Now this is a program we're trying to be.
Speaker 5: And not only
Speaker 5: smart with and about because some of our long standing really value employees are involved.
Speaker 5: but also
Speaker 5: as Ryan had discussed.
Speaker 5: We wanted to reset a little bit the workforce, open up opportunity, create more mobility.
Speaker 5: Bringing some external talent uses an opportunity where we have gaps to get some talent outside the company that enhances our current talent.
Speaker 5: along the way there, particularly with timing of things.
Speaker 5: You know, the good chance in some of the roles we most specifically back to and we'll get some benefit there.
Speaker 5: But I also mentioned that most of those involved in the program will we would expect would be.
Speaker 5: moving on from SCI before the end of the year. So the timing is also kind of laddered out.
Speaker 5: over the next, I'd say, four months or so, five months or so. Some folks will extend into next year.
Speaker 5: So while we do, and I do expect that we'll get some recurring savings specific to
Speaker 5: this event, it's not the driver, but it would certainly help us if we did get that.
Speaker 5: The other thing that we have talked about is
Speaker 5: Now the market is tough right now so we will be...
Speaker 5: Now, discerning and...
Speaker 5: as Ryan kind of sorts through and all the sort through strategy and how we're going to continue to go forward. It changes Ryan, you know, he can speak to this, but Mike, you know, would consider continue to consider you know, we'll take that into account as well.
Speaker 5: We still are going through the details of the individuals involved, the roles.
Speaker 5: how we would, how, why do we would backfill those roles?
Speaker 5: who we would backfill them with to the extent we did, and then what things will change, and then we'll have a better feel for the economics. And then we'll have a better feel for the economics.
Speaker 5: did and then what things will change and then we'll have a better feel for kind of the economics over time.
Speaker 9: Okay, fair enough. And maybe in the investment advisors segment, I think Dennis you mentioned.
Speaker 9: relatively flat flows overall, but could you maybe...
Speaker 9: give us some color because it's kind of the mix between advisory, you know, AUA assets flows into kind of administrative assets versus flows into asset management programs. Just trying to, you know, maybe progress in each.
Speaker 10: Hey, Rob. We'll wane the number of them. Turn out one the way.
Speaker 11: Hey Rob, yeah really that comment was basically a comment on what traditionally we called AUM, so the assets we manage. If you wanted to look at...
Speaker 11: Platform only assets or assets that we just administer. Actually, the quota was pretty good. I mean, I think when you looked at, it was down from the first quarter flows, why we were getting more and more momentum on sort of our platform strategy, but actually the second quarter flows were strong compared to what we have left here, but that's not.
Speaker 11: So the comments on essentially flat were really around.
Speaker 11: that were really around assets under management.
Speaker 9: Okay, great. That's helpful. And then one last one, maybe back to Dennis. I apologize for going back and forth with the new format. In the private bank segment, I think you talked about…
Speaker 9: two banks, you know, the pluses of being acquired, you know, I guess the 15 million you pointed out, you know, that they generate and revenue between it to it. I guess the right way to think about, just make sure I'm on the right page, is that you would consider that to be kind of at risk, you know, depending on how those mergers shake out and whether you, you know, retain the business or not. So make sure that you're thinking of it.
Speaker 5: Yeah, that was really the purpose of putting that number out there, I was just a lay out that does.
Speaker 5: You know, that's what's at risk.
Speaker 5: You know, like I said, in front of you here, you can comment that we are working with.
Speaker 5: both of those clients.
Speaker 5: as well as at least in one case the buyer to
Speaker 5: and see how things go forward from there. So that is what's at risk.
Speaker 5: I'm gonna find you if you need, great.
Speaker 12: Now, I'll give that to you.
Speaker 9: Great, I'll get back in the queue. Thanks for taking my questions.
Speaker 12: Thanks, Mr. Rob.
Speaker 2: And next we'll go to line of Owen Lau with Oppenheimer. Please go ahead.
Speaker 13: Good afternoon and thank you for taking my questions. So even though the market was quite challenging in the second quarter and I think your average asset and the management excluding LSD was down about a low teens quarter to quarter but your revenue was only down by about a low single digit or so based on my math. I'm just wondering how you can manage to do that your revenue seems to all perform.
Speaker 5: your AUM decline. So it'll be great if you can unpack a little bit more on that, thanks. Sure, I mean, there's a couple reasons for, cash flow timing is everything too in the business. So.
Speaker 5: And that has an impact. The institutional business is not a business where we book revenues based on average assets during the period.
Speaker 5: That revenue is booked based on ending assets over the prior four month periods. So
Speaker 5: Second quarter would be March, April , May and June ending assets.
Speaker 5: And while June , you know, things kind of fell off a cliff a little bit, you know, we did have the benefit of
Speaker 2: March.
Speaker 5: in the revenue calculations.
Speaker 5: So there's, you know, some of it's also just,
Speaker 5: You know the timing and then the...
Speaker 5: You know, if you're including in your revenue calculation, Owen, the IMS assets under administration side of things. You know, if you're including in your revenue calculation, Owen, the IMS assets under administration
Speaker 5: They're the book of businesses so diversified that there's really not a direct correlation between market performance and...
Speaker 5: and ultimately asset performance and they're also...
Speaker 5: cash flows, meaning client implementations in clients, maybe that are shutting out a fund or leaving.
Speaker 5: Now it's a little more choppy, but they are the diversification of business.
Speaker 5: really helps us in down markets.
Speaker 5: because of it doesn't correlate to the equity and fixed income markets.
Speaker 13: God, it's very helpful. And then a question about the strategy, Ryan. We appreciate your comment about your overall strategy. In terms of your growth, one, the growth strategy, could you please talk about whether you have any aspirational medium to longer term target of the top-line growth and margin expansion and things like that, and how should investors think about your growth strategy quantitatively?
Speaker 4: Thank you. Hey, Owen, thanks for the question. As far as the growth strategy is concerned, we're absolutely working on some more tangible kind of quantitative targets. We're not kind of the point where we'll be sharing that yet, but we're really looking at it through a few different lenses. One, as we talked about last time, looking at the organic growth potential of our existing businesses and our existing engines, looking at some of the new ideas and incubation ideas that we have underway and what their potential is.
Speaker 4: And then as you saw last year with SEI with the acquisitions we've made, you know, where does M&A play a role in that? I do think that over time we're going to be a little bit clearer around what our aspirations are, but I think we can rest assured our plan is to exponentially grow the top-line revenue and maintain margins.
Speaker 13: Got it. Thank you very much. Thank you.
Speaker 2: And the next questioner is Robert Lee with KBW. Please go ahead.
Speaker 9: Great, thanks like my follow up. This would probably live in semantics or geography on the astabounds, but just kind of curious and best of managers. I mean, I know you've called out winning a couple of big real estate mandates from some real estate managers in the quarter, but... I'm not sure if you're going to be able to see what's going to happen in some real estate managers in the quarter, but...
Speaker 9: It's kind of curious why that would all.
Speaker 9: kind of curious why that would all mean that
Speaker 9: Collective investment trust fund programs jumped, you know, what like 60 billion And this kind of cares why that would fall under AUM and not AUA and maybe it's closer to the collective trust You're technically the manager, but this
Speaker 9: kind of curious you know why falls there and as opposed to AUA.
Speaker 14: Yeah, sure. Hey Rob, this is Filmicabe, how are you?
Speaker 14: Good for you. Great, thank you. Yeah, as that said before, the balance is sort of ebb and flow a little bit. If you look on the traditional side, some of the long-only managers struggled a little bit in June on the alternative side, some of them did much better. If you point to your question on CITs in particular, the client that we referenced in the last quarter, was all spring capital, I'm not sure if we mentioned that name before, with that being said, they did fund at the very end of the time.
Speaker 4: In closing, SEI's future is bright. We will remain vigilant about how we deploy capital, and we will make the changes we believe are necessary to improve our results. Keeping that in mind, we will look for ways we can redirect some discretionary investments that best align with revenue opportunities.
Speaker 4: We have the people, the platforms, and the asset to exploit the growing demand and wealth management for organizations to partner with credible strategic leaders like FBI.
Speaker 4: As Philadelphia made it know a Chomsky once said, optimism is a strategy for making a better future. Because unless you believe that the future can be better, you are unlikely to step up and take responsibility for making it so. Make no mistake, we are optimistic.
Speaker 4: In the fourth quarter, we will be hosting an investor day. It's been a number of years since we hosted this community on our OBE's campus, and we look forward to welcoming you all back.
Speaker 4: Additional details we provided in the coming month. Thank you for attending our call today.
Speaker 15: Thank you.
Speaker 2: That does conclude our conference for today. Thank you for your participation and for using AT&T conferencing services. And may now disconnect.
Speaker 1: Thank you.
Speaker 16: We're sorry. Your conference is ending now. Please hang up.
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