Q2 2024 Silvercrest Asset Management Group Inc Earnings Call

Good morning, and welcome to the Silvercrest asset Management Group, Inc.

Operator: Good morning and welcome to the Silvercrest Asset Management Group Inc. Q2 2024 Earnings Conference Call. All participants will be in listen-only mode.

Operator: Good morning and welcome to the Silvercrest Asset Management Group Inc Q2 2024 earning conference call. All participants will be in listen-only mode.

Speaker Change: Q2, 2024 earnings conference call.

Speaker Change: All participants will be in listen only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. Before we begin, let me remind you that during today's call, certain statements made regarding our future performance are forward-looking statements. These are based on 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 made.

Operator: Should you be the assistant, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded.

Speaker Change: Basically the assistance please signal our conference specialist by pressing the star followed by zero.

Speaker Change: After todays presentation, there will be an opposite either ask questions.

Speaker Change: Please note this event is being recorded.

Operator: 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 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 made. Those factors are disclosed in our filings with the SEC under the caption Risk Factors.

Operator: Those factors are disclosed in our filings with the SEC under the caption risk factors. For all such forward-looking statements, we claim the protection provided by the Litigation Reform Act of 1995. All forward-looking statements made on this call are made as of the date hereof, and Silvercrest assumes no obligations to update them. I would now like to turn the conference over to Rick Hough, Chairman and CEO of Silvercrest. Please go ahead.

Speaker Change: Before we begin let me remind you that during today's call certain statements made regarding our future performance are forward looking statements.

Speaker Change: They are based on current expectations and projections, which are subject to a number of risks and uncertainties. Many factors could cause actual results to differ materially from the statements that are made.

Speaker Change: Those factors are disclosed in our filings with the SEC under the caption risk factors.

Operator: For all such forward-looking statements, we claim the protection provided by the Litigation Reform Act of 1995. All forward-looking statements made on this call are made as of the day hereof, and Silvercrest assumes no obligations to update them.

Speaker Change: All such forward looking statements we claim the protection provided by the litigation Reform Act of 1995.

Speaker Change: All forward looking statements made on this call are made as of the date hereof and Silvercrest assumes no obligation to update them.

Richard Hough: I would now like to turn the conference over to Rick Hough, Chairman and CEO, Silvercrest. Please go ahead.

Speaker Change: I would now like to turn the conference over to Rick Hough, Chairman and CEO of Silvercrest. Please go ahead.

Richard Hough: Thank you so much, and thank you for joining us for the second quarter earnings call of 2024. Generally supportive markets and economic conditions continue their progress since the fourth quarter of 2023, but market leadership remained unusually narrow during the second quarter. Large cap growth primarily drove higher markets. A persistent trend in the market's recovery since 2022. Other segments, including large cap value and small cap, actually declined during the second quarter, which negatively affected Silvercrest assets. It's important to note that Silvercrest's U.S. value strategies and U.S. small cap growth strategies continue to perform well on a relative basis.

Rick Hough: Thank you so much and thank you for joining us for the second quarter earnings call 2024, generally supportive markets and economic conditions continued their progress since the fourth quarter of 2023, but market leadership remained unusually narrow during the second quarter large cap growth primarily drove higher mark.

Richard Hough: Thank you so much, and thank you for joining us for this second quarter earnings call of 2024. Generally, supportive markets and economic conditions continued their progress since the fourth quarter of 2023, but market leadership remained unusually narrow during the second quarter. Large-cap growth primarily drove higher markets. However, Silvercrest's U.S. value strategies and U.S. small-cap growth strategies continue to perform well on a relative basis. Broader market participation benefits Silvercrest over the long term due to the firm's diversified wealth management business and the firm's exposure to the small-cap institutional business.

Richard Hough: The markets have recently broadened during the quarter and, if sustained, should improve Silvercrest's future assets under management and our group. However, Silvercrest discretionary AUM decreased $1.1 billion during the quarter to $21.6 billion, primarily due to the loss of institutional mandates.

Speaker Change: <unk>.

Speaker Change: Persistent trend of the market's recovery since 2022, other segments, including large cap value and small cap actually declined during the second quarter, which negatively affected silvercrest asset. It's important to note that silvercrest U S value strategies in U S. Small cap growth strategies continued to perform well on a relative basis.

Richard Hough: Brought-on market participation benefits Silvercrest's long term due to the firm's diversified wealth management business and the firm's exposure to the small cap institutional business. The markets have more recently broadened during the quarter, and if sustained, should improve Silvercrest's future assets under management and our growth. Silvercrest's discretionary AUM decreased 1.1 billion during the quarter to 21.6 billion, primarily due to the loss of institutional mandates. New client accounts and relationships during the quarter were modest but positive. Total AUM at the end of the second quarter was 33.4 billion, and increased modestly at 4.7% year-over-year from the second quarter of 2023.

Speaker Change: Broader market participation benefits silvercrest long term due to the firm's diversified wealth management business and the firm's exposure to the small cap institutional business the.

The markets have more recently broadened during the quarter and if sustained should improve silvercrest future assets under management grew up.

Speaker Change: Silvercrest discretionary AUM decreased $1 1 billion during the quarter to $21 6 billion, primarily due to the loss of institutional mandates new client accounts and relationships during the quarter were modest but positive total AUM at the end of the second quarter was $33 4 billion and increased.

Richard Hough: New client accounts and relationships during the quarter were modest but positive. Total AUM at the end of the second quarter was $33.4 billion, and it increased modestly at 4.7% year-over-year from the second quarter of 2023. Quarterly revenue increased $1.3 million or 4.2%. Silvercrest has been investing in the future growth of the business, including higher compensation. As a result, while top-line revenue has increased, most metrics of the business are down due to higher expenses.

Speaker Change: Modestly at four 7% year over year from the second quarter of 2023.

Richard Hough: Quarterly revenue year-over-year increased 1.3 million, or 4.2%. Silvercrest has been investing in the future growth of the business, including on higher compensation. As a result, while top line revenue has increased, most metrics of the business are down due to higher expenses. On our last call, I mentioned that Silvercrest's never had more business opportunities underway. We have made and will continue to make investments to drive future growth in the business, including value-added hires. During the second quarter, we announced the hiring of a high-quality, well-known global equity investment team to complement our international strategies. We are excited about the potential for significant institutional mandates in future quarters, raising Silvercrest's visibility globally with institutions and families alike.

Speaker Change: Quarterly revenue year over year increased $1 3 million or four 2% Silvercrest has been investing in the future growth of the business, including on higher compensation.

Speaker Change: As a result, while top line revenue has increased most metrics of the business are down due to higher expenses.

Richard Hough: On our last call, I mentioned that Silvercrest has never had more business opportunities underway. We have made and will continue to make investments to drive future growth in the business, including value-added hires. During the second quarter, we announced the hiring of a high-quality, well-known global equity investment team to complement our international strategy. We are excited about the potential for significant institutional mandates in future quarters, raising Silvercrest's visibility globally with institutions and families alike.

Speaker Change: Our last call I mentioned that Silvercrest has never had more business opportunities underway. We have made and will continue to make investments to drive future growth in the business, including value added hires do.

Speaker Change: During the second quarter, we announced the hiring of a high quality well known global equity investment team to complement our international strategies. We are excited about the potential for significant institutional mandates in future quarters, raising silvercrest visibility globally with institutions and families alike.

Richard Hough: We also have invested in the new business development professional and market leader in the Southeast focused on serving ultra high net worth families and family offices. We expect to make more hires to complement our outstanding professional team and to drive future growth. Silvercrest continues to accrue a higher interim percentage of revenue for compensation. We will adjust variable compensation levels to match these important investments in the business, and that will keep you informed of our plans. Silvercrest's pipeline of new institutional business opportunities decreased during the second quarter to one billion. The pipeline remains up from the fourth quarter of last year, and importantly, the firm's pipeline does not yet include potential mandates for our new global equity team, which is a high capacity for significant inflows.

We also have invested in the new business development professional and market leader in the southeast focused on serving ultra high net worth families and family offices, we expect to make more hires to complement our outstanding professional team and to drive future growth Silvercrest continues to accrue a higher interim percentage of revenue compensation, we will adjust.

Richard Hough: We have also invested in a new business development professional and market leader in the Southeast focused on serving ultra-high net worth families and family offices. We expect to make more hires to complement our outstanding professional team and to drive future growth. Silvercrest continues to accrue a higher interim percentage of revenue for compensation. We will adjust variable compensation levels to match these important investments in the business, and I will keep you informed of our plans.

Speaker Change: Variable compensation levels to match these important investments in the business and that will keep you informed of our plans.

Richard Hough: Silvercrest's pipeline of new institutional business opportunities decreased during the second quarter to $1 billion. However, the pipeline remains up from the fourth quarter of last year. Importantly, the firm's pipeline does not yet include potential mandates for our new global equity team, which has a high capacity for significant inflows. We continue to expect near-term positive flows to result from opportunities for both our institutional equity and OCIO capabilities in that pipeline. As a high-end wealth and asset management firm, Silvercrest serves families and institutions from across the globe.

Speaker Change: Silvercrest pipeline of new institutional business opportunities decreased during the second quarter to 1 billion. The pipeline remains up from the fourth quarter of last year and importantly, the firm's pipeline does not yet include potential mandates for our new global equity team, which is a high capacity for significant inflows.

Richard Hough: We continue to expect near-term positive flows to result from opportunities for both our institutional equity and OCIO capabilities in that pipeline. As a high-end wealth and asset management firm, Silvercrest serves families and institutions from across the globe. Despite headline news of international tensions, we see substantial new opportunities globally for a firm with our high-quality capabilities coupled with superior client service. In July 30th of this year, the company's board of directors approved an increase of approximately 5 percent of the company's quarterly dividend, rising from 19 cents per share to 20 cents per share. That dividend will be paid on or about September 20th to shareholders and record.

Speaker Change: We continue to expect near term positive flows as a result from opportunities for both our institutional equity and OCI L capabilities in that pipeline.

As a high end wealth and asset management firms Silvercrest fares families and institutions from across the globe. Despite headline news of international attention, we see substantial new opportunities globally for firm with our high quality capabilities, coupled with superior client service on.

Richard Hough: Despite the headline news of international tensions, we see substantial new opportunities globally for a firm with our high-quality capabilities coupled with superior client service. On July 30th of this year, the company's board of directors approved an increase of approximately 5% of the company's quarterly dividend, rising from $0.19 per share to $0.20 per share. That dividend will be paid on or about September 20th to shareholders of record. With that, I'll turn things over to Scott Gerard, and then we'll have questions and commentary. Thank you.

Speaker Change: On July 13th of this year, the company's board of directors approved an increase of approximately 5% of the company's quarterly dividend rising from 19 cents per share to <unk> 20 per share that dividend will be paid on or about September 20th to shareholders of record.

Scott Gerard: That'll turn things over to Scott Gerard, and then we'll have questions in commentary. Thank you.

Speaker Change: Ill turn things over to Scott Gerard and then we'll have questions and commentary. Thank you. Thanks, Brian.

Scott Gerard: Thanks for it.

Scott Gerard: Again, as disclosed in our earnings release for the second quarter, discretionary AUM as of June 30th of this year was $21.6 billion, and total AUM as of the same period was $33.4 billion. Revenue for the quarter was $31 million, and reported consolidated net income for the quarter was $4.4 million.

Scott Gerard: Again, it is disclosed in our earnings release for the second quarter. Discretionary AUM as of June 30th of this year was 21.6 billion, and total AUM as of the same period was 33.4 billion. Revenue for the quarter was 31 million, and reported consolidated that income for the quarter was 4.4 million. Looking further into the quarter, revenue increased year over year by 1.3 million or 4.2 percent, primarily driven by increased discretionary AUM, resulting from market appreciation, partially offset by net client outflows. Expenses for the quarter increased year over year by 2.5 million or 10.6 percent, primarily driven by increased compensation and benefits expense and, to a lesser extent, increased general and administrative expenses.

Scott Gerard: Again as disclosed in our earnings release for the second quarter discretionary AUM as of June 30 of this year was $21 6 billion and total AUR.

Scott Gerard: At the same period was 33 4 billion revenue for the quarter was 31 million and reported consolidated net income for the quarter was four 4 million.

Scott Gerard: Looking further into the quarter, revenue increased year-over-year by $1.3 million, or 4.2 percent, primarily driven by increased discretionary AUM, resulting from market appreciation partially offset by net client outflows. Expenses for the quarter increased year-over-year by $2.5 million, or 10.6 percent, primarily driven by increased compensation and benefits expense, and to a lesser extent, increased general and administrative expenses. Compensation and benefits expense for the quarter increased year over year by $1.7 million, or 10.4 percent, primarily due to an increase in the accrual for bonuses.

Scott Gerard: Looking further into the quarter revenue increased year over year by $1 3 million or four 2%, primarily driven by increased discretionary AUM, resulting from market appreciation, partially offset by net client outflows expenses for the quarter increased year over year by two five.

Scott Gerard: Or 10, 6%, primarily driven by increased compensation and benefits expense and to a lesser extent increased general and administrative expenses compensation and benefits expense for the quarter increased year over year by $1 7 million or 10, 4% primarily.

Scott Gerard: Compensation benefits expense for the quarter increased year over year by 1.7 million or 10.4 percent, primarily due to an increase in the accrual for bonuses. Based on the increased recurring cash compensation ratio over the past two years, due in part to the investment in the next generation of portfolio managers and other associates, we increased the amount of the interim variable compensation accrual to potentially narrow the adjustment in the fourth quarter. Also, compensation and benefits expense for the quarter increased year over year as a result of increases in salaries due to merit-based increases. General and administrative expenses increased by 0.7 million, or approximately a 1.3 percent, primarily due to increase in professional fees and recruiting expense.

Scott Gerard: Due to an increase in the accrual for bonuses based on the increased recurring cash compensation ratio over the past two years due in part to the investments in the next generation portfolio managers and other associates, we increased the amount of the interim variable compensation accrual to potentially.

Scott Gerard: Based on the increased recurring cash compensation ratio over the past two years, due in part to the investment in the next generation of portfolio managers and other associates, we increased the amount of the interim variable compensation accrual to potentially narrow the adjustment in the fourth quarter. Also, compensation and benefits expense for the quarter increased year-over-year as a result of increases in salaries due to merit-based income. General and administrative expenses increased by $0.7 million, or approximately 11.3%, primarily due to increases in professional fees and recruiting expenses, reported net income attributable to Silvercrest, or the Class A shareholders, for the second quarter was approximately $2.7 million, or $0.28 per basic and diluted Class A share, adjusted EBITDA, which we defined as EBITDA without giving effect to equity-based compensation expense and non-core and non-recurring items was approximately $7.2 million or 23.3% of revenue for the quarter.

Scott Gerard: The adjustment in the fourth quarter.

Scott Gerard: Compensation and benefits expense for the quarter increased year over year as a result of increases in salaries due to merit based increases general and administrative expenses increased $5 7 million or approximately a one 3% primarily due to increases in professional fees and recruiting.

Scott Gerard: Expenses.

Scott Gerard: Reported net income attributable to Silvercrest or the Class A shareholders for a second quarter was approximately 2.7 million, or 28 cents per basic and diluted Class A share. Adjusted EBITDA, which we defined as EBITDA without giving effect to equity-based compensation expense and non-core and non-recurring items, was approximately 7.2 million or 23.3% of revenue for the quarter. Adjusted net income, which we defined as net income without giving effect to non-core and non-recurring items and income tax expenses assuming a corporate rate of 26%, was approximately 4.4 million for the quarter or 31 cents and 30 cents per adjusted basic and diluted earnings per share, respectively.

Scott Gerard: Net income attributable to silvercrest or the class a shareholders for the second quarter was approximately $2 7 million or 20 cents per basic and diluted class a share.

Scott Gerard: Adjusted EBITDA, which we define as EBITDA without giving effect to equity based compensation expense and noncore and nonrecurring items was approximately $7 2 million or 23, 3% of revenue for the quarter.

Scott Gerard: Adjusted net income, which we defined as net income without giving effect to non-core and non-recurring items and income tax expense, assuming a corporate rate of 26%, was approximately $4.4 million for the quarter, or $0.31 and $0.30 per adjusted basic and diluted earnings per share, respectively. Adjusted earnings per share 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. Then, to the extent dilutive, we add unvested restricted stock units and non-qualified stock options to the total shares outstanding to compute diluted adjusted EPS.

Scott Gerard: Adjusted net income, which we define as net income without giving effect to noncore and nonrecurring items and income tax expense, assuming a corporate rate of 26% was approximately $4 4 million for the quarter or 31 and 30.

Scott Gerard: Per adjusted basic and diluted earnings per share respectively.

Scott Gerard: Adjusted earnings per share is equal to adjusted net income divided by the actual Class A and Class B shares outstanding as in the end of the reporting period for basic adjusted EPS. And to the extent diluted, we had invested restricted stock units and non-qualified stock options to the total shares outstanding to compute diluted adjusted EPS.

Scott Gerard: That earnings per share is equal to adjusted net income.

Scott Gerard: And 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 adjusted EPS.

Scott Gerard: Looking at the first half, revenue increased year over year by 2.1 million or 3.6%, again primarily driven by increased discretionary AUM resulting from market appreciation, partially offset by net client outflows. Expenses for the first half increased year over year by 4.2 million or 9.1%, primarily driven by increased compensation expense and, to a lesser extent, increased GNA. Compensation benefits for the first half increased year over year by 2.9 million or 8.7% percent, primarily due to an increase again in the accrual for bonuses. Compensation and benefits also increase for the first half year over year due to salary increases.

Speaker Change: Looking at the first half revenue increased year over year by $2 1 million or three 6% again, primarily driven by increased discretionary AUM, resulting from market appreciation, partially offset by net client outflows.

Scott Gerard: Looking at the first half, revenue increased year-over-year by 2.1 million, or 3.6%, again primarily driven by increased discretionary AUM resulting from market appreciation partially offset by net client outflows. Expenses for the first half increased year-over-year by $4.2 million, or 9.1%, primarily driven by increased compensation expense and, to a lesser extent, increased G&A. Compensation and benefits for the first half increased year-over-year by $2.9 million, or 8.7 percent, primarily due to an increase, again, in the accrual for bonuses. Compensation and benefits also increased for the first half year over year due to salary increases.

Expenses for the first half increase year over year by $4 2 million or nine 1%, primarily driven by increased compensation expense and to a lesser extent increased G&A comp.

Speaker Change: Compensation and benefits for the first half increase year over year by $2 9 million or eight separate expense percent, primarily due to an increase again in the accrual for bonuses.

Speaker Change: Compensation and benefits also increased for the first half year over year due to salary increases.

Scott Gerard: GNA increased by 1.3 million or approximately 9.9%, primarily due to increases in travel and entertainment expenses, occupancy expense, professional fees, and recruiting expenses. Reported net income attributable to Silvercrest for the first half was approximately 5.7 million, or 60 cents per basic and diluted Class A share. Adjusted EBITDA was approximately 14.7 million, or 24% of revenue, for the first half. Adjusted net income was approximately 9.1 million for the first half, or 65 cents and 63 cents per adjusted basic and diluted EPS, respectively.

Scott Gerard: G&A increased by 1.3 million, or approximately 9.9%, primarily due to increases in travel and entertainment expenses, occupancy expenses, professional fees, and recruiting expenses. Reported net income attributable to Silvercrest for the first half was approximately $5.7 million, or $0.60 per basic and diluted Class A share. Adjusted EBITDA was approximately $14.7 million, or 24% of revenue for the first half. Adjusted net income was approximately $9.1 million for the first half, or $0.65 and $0.63 per adjusted basic and diluted EPS, respectively.

Speaker Change: G&A increased by $1 3 billion or approximately nine 9%, primarily due to increases in travel and entertainment expenses occupancy expense professional fees and recruiting expenses.

Reported net income attributable to silvercrest for the first half was approximately $5 7 million or <unk> 60 per basic and diluted class a share adjusted EBITDA was approximately $14 7 million or 24% of revenue for the first half adjusted net.

Speaker Change: Net income was approximately $9 1 million for the first half or 65, and 63 per adjusted basic and diluted EPS, respectively.

Scott Gerard: Looking at the balance sheet, total assets were approximately 177.6 million as of June 30th of this year compared to 199.6 million as of the end of last year. Caching cash equivalents at June 30th of this year were approximately 49.9 million compared to 70.3 million at the end of last year. As of June 30th, we had no borrowings, but we did renew the term portion of our credit facility for three years. Lastly, total Class A stockholder's equity was approximately 85.3 million at June 30th of this year.

Scott Gerard: Looking at the balance sheet, total assets were approximately $177.6 million as of June 30th of this year, compared to $199.6 million as of the end of last year. Cash and cash equivalents at June 30th of this year were approximately $49.9 million, compared to $70.3 million at the end of last year. As of June 30th, we had no borrowings, but we did renew the term portion of our credit facility for three years. Lastly, total Class A stockholders' equity was approximately $85.3 million at June 30th of this year. That concludes my remarks, and we'll turn it over to the audience for a Q&A.

Speaker Change: Looking at the balance sheet total assets were approximately $177 6 million as of June 30 of this year compared to $199 6 million as of the end of last year cash and cash equivalents at June 30. This year were approximately $49 9 million compared to 70.

Speaker Change: $3 million at the end of last year as of June 30, we had no borrowings, but we did renew the term portion of our credit facility for three years Lastly, total class a stockholders equity was approximately $85 3 million at June 30 of them this year.

Scott Gerard: That concludes my remarks, and we'll turn it over for a Q&A.

Speaker Change: That concludes my remarks, and we'll turn it over for Q&A.

Richard Hough: Thank you, Scott. We're available now for questions.

Operator: Thank you, Scott. We're available now for questions. Thank you.

Speaker Change: Thank you Scott were available now for <unk>.

Speaker Change: Questions.

Operator: Thank you. If you'd like to ask a question, please press star then 1 on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the key. To withdraw your question, please press star then 2. At this time, we'll pause for just a moment to assemble our... And today's first question comes from Sandy Mehta with Evaluate Research. Please go ahead. Morning, Sandy. How are you?

Speaker Change: Thank you.

Operator: If you'd like to ask a question, please press star, then one on your telephone keypad.

Speaker Change: To ask a question. Please press Star then one on your telephone keypad.

Operator: If you're using the speaker phone, we ask that you please pick up your hands up before pressing the keys. To withdraw your question, please press star, then two.

Speaker Change: If you are using a speaker phone.

Speaker Change: Please pickup your handset before pressing the keys.

Speaker Change: To withdraw your question. Please press Star then two.

Operator: At this time, we'll pause for just a moment to assemble our roster.

Speaker Change: At this time, we'll pause for just a moment to assemble our roster.

Speaker Change: Yeah.

Sandy Mehta: So today's first question comes from Sandy Mehta with Evaluate Research. Please come ahead.

Speaker Change: And today's first question will come from Sandy Mehta with evaluate research. Please go ahead. Good morning, It's Andy how are you.

Sandy Mehta: Good morning, Sandy. There we go. Yes, good morning, Rick and Scott. You know, a relative performance has been strong.

Sandy Mehta: Relative performance has been strong, so what exactly are you hearing from consultants and institutional clients and what is causing the minor outflows?

Speaker Change: Hi, Yes, good morning Reagan Scott.

Sandy Mehta: Our relative performance has been strong so what exactly are you hearing from consultants and institutional clients and what is causing the the minor outflows.

Richard Hough: So what exactly are you hearing from consultants and institutional clients, and what is causing the minor outflows? Thank you.

Richard Hough: Thank you. So, yes, relative performance has been strong, thankfully. In particular, where we've seen some attrition in the value book, if you look at the trends over the past two years or so. Some of it is due to fully funded plans, so that's a shift in allocation. Not really something you can do about.

Speaker Change: Thank you so yes relative performance has been strong thankfully.

Richard Hough: So, yes, relative performance has been strong, thankfully. In particular, where we've seen some attrition in the value book, if you look at the trends over the past two years or so, some of it is due to fully funded plans. So that's a shift in allocation. Not really something you can do about. We did a great job, and that just happens. There were some long term clients with that occurred. The particular outflow that we saw in the second quarter of this year was a very large institution that consolidated their managers and removed most of them. They had done this two years ago, and we made the cut then, but they brought a lot of their money management internally to them.

Speaker Change: In particular, where we've seen some attrition in the value book.

Speaker Change: You look at the trends over the past.

Speaker Change: 022 years or so some of it is due to fully funded plans. So that's a shift in allocation.

Richard Hough: We did a great job, and that just happens. There were some long-term clients where that happened. The particular outflow that we saw in the second quarter this year was a very large institution that consolidated its managers and removed most of them. They had done this two years ago, and we made the cut then. But they brought a lot of their money management internally to them, so that was an unusual change for an institution of this type.

Speaker Change: Not really something you can do about we did a great job and that just happens there were some long term clients of that occurred.

The particular outflow that we saw in the second quarter. This year was a very large institution.

Speaker Change: That consolidated their managers and removed most of them. They had done this two years ago and we are.

Speaker Change: Made the cut then but they brought a lot of their money management internally to that so that was an unusual change for or an institution of this type.

Richard Hough: So that was an unusual change for an institution of this type. We worked with them a very long time, and as you point out, our performance for them was quite good. So look, that kind of thing is just going to happen in the business. We have had in certain places very short-term performance relative underperformance, but that's reversed. We've stayed in close touch with our institutions. And I can safely say we have not lost institutional business due to performance. We have also seen inflows, and we did last quarter; it just did not set the outflow from that institutional investor, from wealth investors, and others.

Richard Hough: We worked with them for a very long time, and as you point out, our performance for them was quite good. So look, that kind of thing is just going to happen in the business. We have had, in certain places, very short-term performance relative underperformance, but that's reversed. We've stayed in close touch with our institutions, and I can safely say we have not lost institutional business due to performance.

Speaker Change: We worked with them a very long time and as you pointed out our performance for them was quite good. So that kind of thing is just going to happen in the business.

Speaker Change:

Speaker Change: We have had in certain places very short term performance.

Speaker Change: Relative underperformance, but that's reversed.

Speaker Change: We've stayed in close touch with their institutions and I can safely say, we have not lost institutional business due to.

Speaker Change: Performance.

Richard Hough: We have also seen inflows, and we did last quarter, just did not set the outflow from that institutional investor from wealth investors and others. That has been a net positive for the firm. There is a tremendous amount of tension, as you might expect, and more so on growth, just given the momentum and growth in the market. The value pipeline is very anemic and low right now. It's just not in favor.

Speaker Change: We have also seen inflows than we did last quarter. It just didn't offset the outflow from that institutional investor from wealth investors and others.

Richard Hough: That has been a net positive for the firm. There is a tremendous amount of tension, as you might expect from more so on growth, just given the momentum and growth in the market. The value pipeline is very anemic and low right now. It's just a non-favor. That will change. These things come in cycles. There just has to be something of a regime change in the market. People do need to be allocated towards value. And you might even argue the more growth runs, the more they ought to. But of course, that hasn't been the case for a very sustained period of time, as we all know.

Speaker Change: That has been a net positive for the firm.

There is a tremendous amount of attention as you might expect a more so on growth just given the momentum and growth in the market.

Speaker Change: The value pipeline is very anemic and low right now it's just not in favor.

Richard Hough: That will change. These things come in cycles. There just has to be something of a regime change in the markets. People do need to be allocated towards value. And you might even argue that the more growth goes on, the more they ought to. But, of course, that hasn't been the case for a very sustained period of time, as we all know.

Speaker Change: That will change these things come in cycles.

Speaker Change: It just has to be something of a regime change in the in the in the market people do need to be allocated towards our value.

Speaker Change: And you might even argue the more growth runs them, where they ought to but.

Speaker Change: Of course that Hasnt been the case for a very sustained period of time as we as we all know.

Richard Hough: Small cap remains to be a very favorable asset class. Small cap value portfolio is very strong. Some of the capacity that we have can be filled with higher revenue paying clients. This small cap growth has been very strong. We have an excellent pipeline there. So that bodes well.

Richard Hough: Small cap remains to be a very favorable asset class. The small cap value portfolio is very strong. Small-cap growth has been very strong. We have an excellent pipeline there, so that bodes well. And then to finish up, I think a comprehensive answer for you: the new global equity team that I mentioned in my remarks that we hired is in the middle of some of the strongest flows that are happening right now from consultants and institutions. When you look outside the United States, that is a very strong, heavy demand for that capability.

Speaker Change: All cap remains to be a very favorable asset class of small cap.

Speaker Change: Value portfolio is very strong some of the capacity that we have can be filled with them higher revenue paying clients.

Speaker Change: Small cap growth has been very strong we have an excellent pipeline there.

Speaker Change: Yes, so so that bodes well and then to finish up I think a comprehensive answer for you.

Richard Hough: And then to finish up, I think, a comprehensive answer for you. The new global team that I, equity team that I mentioned in my remarks, that we've hired is in the middle of some of the strongest flows that are happening right now from consultants and institutions when you look outside the United States.

Speaker Change: The new global.

Speaker Change: The team that I equity team that I mentioned in my remarks that we've hired.

Speaker Change: Is in the middle of some of the strongest flows that are that are happening right now from consultants and institutions are when you look outside the.

Speaker Change: United States that is a very strong heavy demand for that capability.

Richard Hough: That is a very strong, heavy demand for that capability.

Speaker Change: Right.

Richard Hough: In terms of this new global strategy and opportunity, can you quantify, I mean, we're looking out a few years without obviously making predictions, but is this a multi-billion dollar opportunity? Any guidance you can give on that or your expectations or hope? Yeah, I'm careful with that, as you know, and pretty conservative.

Richard Hough: In terms of this new global strategy and opportunity, can you quantify? I mean, we're looking out a few years without obviously making predictions, but is this a multi-billion-dollar opportunity? Any guidance you can give on that? Or your expectations or hope? Yeah. I'm careful with that, as you know, and pretty conservative. It's definitely a multi-billion-dollar opportunity in the next few years. The very large opportunity.

Speaker Change: In terms of the this new global strategy and opportunity can you quantify I mean, we.

Speaker Change: Looking out a few years without obviously, making predictions but.

Speaker Change: Is this a multibillion dollar opportunity any any guidance you can give on that or your expectations of hope yeah, I'm careful with that as you know and pretty conservative.

Richard Hough: It's definitely a multi-billion dollar opportunity in the next few years, a very large opportunity. I would not want to get more specific than that. And if all goes well, given the potential for that capability, I think we'll be well on our way within the next few quarters, to be honest. But I have purposely not put that capability in our pipeline because it's new, and we're just developing and building that pipeline by meeting with potential allocators and consultants who would be making, you know, allocations to this mandate.

It's definitely a multibillion dollar opportunity in the next few years.

Speaker Change: A very large opportunity.

Richard Hough: I would not want to get more specific than that. And if all goes well, given potential for that capability, I think we'll be well on our way within the next few quarters, to be honest.

Speaker Change: I would not want to get more specific than that.

Speaker Change: And.

Speaker Change: If all goes well given the potential for that capability.

Speaker Change: I think it will be.

Speaker Change: Well on our way.

Speaker Change: Then the next few quarters.

Speaker Change: To be honest.

Speaker Change: But I am purposely not.

Richard Hough: But I have purposely not put that capability into our pipeline because it's new. And we're just developing and building that pipeline by meeting with potential allocators and consultants that would be making allocations to this mandate. One thing that is very encouraging to us as a firm but also for that capability is that the relationships that have come along with this team include large consultants with whom we have not done much business, and that's exciting to develop a new relationship that can not only allocate to this new capability, but would certainly find our existing value and growth capabilities as well as our international capability in emerging markets capability worthy of allocations.

Speaker Change: Put that capability into our pipeline because it's new and we're just developing and building that pipeline by meeting with potential allocators and consultants.

Speaker Change: That would be making you know allocations to this mandate of one thing that is very encouraging to us as a firm, but also for that capability.

Richard Hough: One thing that is very encouraging to us as a firm but also for that capability is that the relationships that have come along with this team include large consultants with whom we have not done much business, and it's exciting to develop new relationships that can not only allocate to this new capability but would certainly find our existing value and growth capabilities as well as our international capability and emerging markets capability worthy of allocation. We are out of the incubation period for the international and emerging markets capabilities we already had.

Speaker Change: Is that the relationships that have come along.

Speaker Change: With this team include.

Speaker Change: Large consultants with whom we have not done much business and.

Speaker Change: That's exciting to develop a new relationships they cannot only allocate to this new capability, but would certainly find our existing value and growth.

Speaker Change: Capabilities as well as our international capability in emerging markets capability.

Speaker Change: Worthy of allocations.

Richard Hough: We're out of the incubation period for the international and emerging markets capabilities we already had. This team complements that, and those strategies have excellent long-term track records. In fact, one of them was just awarded one of the top performance awards in PSN for the last three rolling periods. So that all looks pretty positive.

Speaker Change: We're out of the incubation period for the international and emerging markets capabilities. We already had this team complements that.

Richard Hough: This team complements that, and those strategies have excellent long-term track records. In fact, one of them was just awarded one of the top performance awards in PSN for the last three rolling periods. So that all looks pretty positive.

Speaker Change: Those strategies have excellent long term track records.

Speaker Change: In fact, one of them was just just awarded.

Speaker Change: You know what are there what are the top.

One of the top performance awards and PSN for the last three rolling periods.

Speaker Change: So that all looks pretty positive.

Richard Hough: Okay, okay. And where are you in terms of OCIO assets now?

Speaker Change: Okay, Okay, and where are you in terms of OCC I O assets now.

Richard Hough: Where are you in terms of OCIO assets now? OCIO is about a billion and a half. Some of that has come down a bit. The pipeline is pretty strong there. I think it's about, it's almost 600 million; it's just under that, I believe. The good news about the OCIO pipeline is that it has been bigger, but it was dominated by a couple of very large potential mandates. The pipeline now is comprised of more variety of institutions. So, it's a little bit more reliable before I would say when it was dominated by some bigger opportunities. It was either you got in the pipeline crash or you didn't, and it looked great.

Richard Hough: OCIO is about a billion and a half. Some of that's come down a bit. The pipeline is pretty strong there. I think it's about, it's almost 600 million. It's just under that, I believe.

Speaker Change: <unk> is about 1 billion and a half.

Speaker Change: Some of that has come down a bit.

Speaker Change: The pipeline is pretty strong there I think it's about <unk>.

Speaker Change: Almost $600 million just under that I believe.

Speaker Change: The good news about the OCI O pipeline is that it has been bigger but it was dominated by a couple of very large potential mandates.

Richard Hough: The good news about the OCIO pipeline is that it has been bigger, but it was dominated by a couple of very large potential mandates. The pipeline now is comprised of more variety of institutions. So it's a little bit more reliable. Before, I would say, when it was dominated by some bigger opportunities, it was either you got it in a pipeline crash, or you didn't, and it looked great. Here, there's a little more diversification, so it'll be a little bit more dependable.

Speaker Change: The pipeline now is comprised of more variety of institutions. So.

Speaker Change: It's a little bit more reliable before I would say when it was dominated by some bigger opportunities.

Speaker Change: It was either he got it in the pipeline crashed parish, where you didnt and it looks great.

Richard Hough: Here, there's a little more diversification.

Speaker Change: Theres, a little more diversification, so it'll be a little bit more dependable going forward I think.

Richard Hough: So, it will be a little bit more dependable going forward, I think.

Speaker Change: Okay and one final question. The are you you talked about higher compensation expenses and some of the the.

Scott Gerard: In one final question, you talked about higher compensation expenses and some of the key new hires.

Richard Hough: One final question. You talked about higher compensation expenses and some of the key new hires. Is that something for modeling purposes?

Speaker Change: The key new hires is that something for modeling purposes Army, we're looking at sort of higher compensation and normally you would guide us to.

Scott Gerard: Is that something for modeling purposes? Are we looking at higher compensation than normally you would guide us to this year or next year? Yeah, absolutely.

Richard Hough: Are we looking at higher compensation than normally you would guide us to this year and next year? Absolutely. Let's just stick to this year. I'll mention next year, but I've been very clear the past two or three years that we were going to be making investments in the business, both in technology as well as in new talent portfolio management teams, business development, and, of course, I've hired this new global equity team.

Speaker Change: You are absolutely in next year.

Speaker Change: Yeah absolutely.

Richard Hough: Let's stick to this here. I'll mention next year, but I've been very clear in the past two or three years that we were going to be making investments in the business, both in technology as well as in new talent portfolio management teams, business development, and of course, I've hired this new global equity team. It's required to grow the company, and so that's definitely above the sort of target 55% as a percentage of revenue that we've had for a very long time and have been right covering around, often under in years of stronger growth. That is still my long-term target for the business, but while we make these investments and before we get flows that justify those investments, we're going to be running 57-58% which we have there.

Speaker Change: Let's just stick to this year I'll talk.

Speaker Change: I mentioned next year, but I've been very clear in the past two or three years that we were going to be making investments in the business both in technology.

Speaker Change: As well as in new talent portfolio management teams business development and of course I've hired this new global equity team.

Speaker Change: It's required to grow the company.

Richard Hough: It's required to grow the company, and so that's definitely above the sort of target 55% as a percentage of revenue that we've had for a very long time and have been hovering around off and under in years of stronger growth. That is still my long-term target for the business, but while we make these investments and before we get flows that justify those investments, we're going to be running 57%, 58%, which we have been.

Speaker Change: And so that's definitely above.

Speaker Change: That sort of target 55%.

Speaker Change: As a percentage of revenue that we've had for very long time and had been right hovering around often under in years of stronger growth that is still my long term target for the business, but while we make these investments and before we get flows.

Speaker Change: That debt.

Speaker Change: That justify those investments.

Speaker Change: Be running 50, 758%, which we have that and.

Richard Hough: And one reason I want to be clear about it is because we also want to avoid, to the extent we can, a large adjustment in the fourth quarter. As you know, we're accruing towards year-end compensation, and we don't have control over the markets and some other things. And then we have to true up, and there was a large one, as you will know. In other years, there have been large adjustments that were very favorable. Most years, there isn't much of an adjustment at all. So I've tried to be clear about that.

Speaker Change: One reason I want to be clear about it is because we also want to avoid to the extent we can.

Richard Hough: One reason I want to be clear about it is because we also want to avoid, to the extent we can, a large adjustment in the fourth quarter. As you know, we're accruing. We are working towards year-end compensation. However, we don't have control over the markets and some other things. And then we have to true up. And there was a large one, as you well know. In other years, there have been large adjustments that have been very favorable. However, most years, there isn't much of an adjustment at all.

Speaker Change: A large adjustment in the fourth quarter as you know we're accruing.

Speaker Change:

Speaker Change: Towards year end compensation, and we don't have control over the markets and some other things and then we have to we have to true up and there was a large one as you as you well know and other years have been large adjustments that were very favorable most years.

Speaker Change: There isn't much of an adjustment at all so.

Speaker Change: So I've tried to be clear about that that's where we are I will update those numbers if justified.

Richard Hough: That's where we are. I will update those numbers if justified. So that you will all have some visibility into the future. As for next year, it kind of depends where we see we are with the current investments. But it also depends on some of these flows that I expect to come in. Keep in mind I can be hiring and grow faster than those compensation expenses. We actually did that just prior to the COVID periods and into it, and we grew right through those expenses.

Richard Hough: So I've tried to be clear about that. That's where we are. I will update those numbers if justified so that you will all have some visibility into the future. As for next year, it kind of depends where we see ourselves with the current investments, but it also depends on some of these flows that I expect to come in.

Speaker Change: So that you will have some visibility into the future as for next year.

Speaker Change: It kind of depends where where we see we are with.

Speaker Change: The current investments, but it also depends on some of these flows that I expect to come in.

Speaker Change: Keep in mind, I can be hiring and grow faster than than those compensation expenses, we actually did that just prior to the COVID-19 periods and Intuit and we grew right through those expenses.

Richard Hough: Keep in mind, I can be hiring and growing faster than those compensation expenses. We actually did that just prior to the COVID periods. Had we not grown, you would have seen higher compensation expenses as a percentage of revenue higher than what we're running right now with these investments. We just happened to grow faster than we were making the investments, so it was a bit hidden for our investors. That was great, but that's not the situation we're in right now, especially when you're talking about such narrow leadership in climbing markets.

Richard Hough: Have we not grown? You would have seen higher compensation expenses as a percentage of revenue. Higher than what we're running right now with these investments. We just happen to grow faster than we were making the investment. So it was a bit hidden for our investors. That was great. But that's not the situation we're in right now, especially when you're talking about such narrow leadership in climbing markets. So it will be more evident that we need to grow into these compensation expenses. I hope that's very clear. Happy to talk more about it or as much as you need.

Speaker Change: Had we not grown you would've seen higher compensation expenses as a percentage of revenue.

Higher than what we're running right now with these investments we just happened to grow faster than we were making the investments. So it was it was a bit hidden for our investors that was great, but that's not the situation. We're in right now, especially when you're talking about such a narrow leadership inclining markets.

Richard Hough: So, you know, it will be more evident that we need to grow into these compensation expenses. I hope that's very clear. Happy to talk more about it or as much as you need. Great. Thank you so much.

Speaker Change: So it'll.

Speaker Change: It will be more evident.

Speaker Change: We need to grow into into these compensation expenses I hope, that's very clear happy to talk more about it or as much as you need.

Speaker Change: Alright, great. Thank you so much.

Scott Gerard: Great, thank you so much. You're welcome.

Speaker Change: Youre welcome.

Speaker Change: Thank you.

Operator: Thank you. And as a reminder, if you'd like to ask a question, please press star then one. Our next question today comes from Christopher Marinac with Jannie Montgomery Scott.

Operator: Thank you. And, as a reminder, if you'd like to ask a question, please press star, then one.

Speaker Change: Or if you'd like to ask a question. Please press Star then one.

Christopher Marinac: Our next question today comes from Christopher Marinac with Jenny Montgomery Scott. Please go ahead.

Christopher <unk>: The next question today comes from Christopher <unk> with Janney Montgomery Scott. Please go.

Speaker Change: Go ahead.

Christopher Marinac: Christopher, how are you? I'm good Rick. How are you?

Christopher <unk>: Christopher.

Christopher Marinac: Christopher, how are you? I'm good to record you. Thanks for taking the questions this morning for everybody.

Christopher <unk>: Hey, Rick how are you. Thanks for taking the questions. This morning for everybody.

Richard Hough: Thanks for taking the questions this morning for everybody. Just to go on to the last question, just to go one step further, so is it unusual to accrue extra salary and bonuses this time of year, or is it normal, and you're just doing a higher amount? It's, I would say, it's normal. We, I think, in the last earnings call, certainly the ones before that, certainly the ones before that, I certainly mentioned I'd be doing this at some point and hit earnings in this way.

Scott Gerard: Just to go on to the last question, just to go one step further.

Speaker Change: Just to go onto the last question just to go one step further so is it unusual to accrue extra.

Richard Hough: So is it unusual to a crew extra salary and bonuses this time of year, or is it normal when you're just doing a higher amount? I would say it's normal. I think last earnings call, certainly the ones before that. The ones before that I certainly mentioned I'd be doing this at some point in hit earnings in this way. I think I've talked about it for a couple of years, but I believe our last earnings call, Christopher, maybe it was the one before that. I specifically mentioned a crew more at this level. It is, I would say, it's not unusual.

Speaker Change: Salary and bonuses this time of year or is it normal and you're just doing a higher amount.

Rick Hough: I would say it's normal.

Rick Hough: I think last earnings call certainly the ones before that the ones before that I certainly mentioned I'd be doing this at some point you hit earnings in this way.

Rick Hough: I think I've talked about it for a couple of years, but I believe our last earning call Christopher maybe it was the one before that I, specifically mentioned accruing more at this level.

Richard Hough: I think I've talked about it for a couple years, but I believe our last earnings call, Christopher, maybe it was the one before that, I specifically mentioned accruing more at this level. It is, I would say, it's not unusual. We kind of set the standard, and we want to make the adjustment as we hire now instead of a big adjustment later in the year. I'd rather you all see what is happening than stick to our standard 55% and then get to the fourth quarter and say, oh, oops, we made these investments we've been talking about.

Rick Hough: It is I would say, it's not unusual we kind of set the standard and we want to make the adjustments as we hire now instead of a big adjustment later in the year I'd, rather you will see what is happening then.

Scott Gerard: We kind of set the standard, and we want to make the adjustment as we hire now instead of a big adjustment later in the year. I'd rather you all see what is happening, then. Then stick to our standard 55% and then get to the fourth quarters. Oh oops, we made these investments. We've been talking about it's actually 58. Whatever. So no, I don't think it's unusual.

Speaker Change: And stick to our stated 55% and then get into the fourth quarter and say Oh Whoops. We made these investments we've been talking about it's actually 58 whatever.

Richard Hough: It's actually 58, whatever. So, no, I don't think it's unusual. Scott will have a little more detail from his perspective, but I would also point out that, look, if I'm going to be off the mark with some other hires, I'm going to let everyone know. Go ahead, Scott. It's always been our policy and it's the, you know, prudent, you know, approach that, based on estimates that we have, we monitor the variable comp adjustment accordingly. Given that we are in this, Silvercrest Asset Management Group, www.silvercrest.com

Speaker Change: So no I don't think it's unusual Scott Scott will have a little more detail.

Scott Gerard: Scott will have a little more detail from his perspective, but I would also point out that, look, if I'm going to be off the mark with some other iris, I'm going to let everyone know. Go ahead, Scott. Yeah, Chris, you know, basically we, you know, it's always been our policy and it's the, you know, proven, you know, approach at based on estimates that we have, you know, monitor the variable complex adjustment accordingly. Given that we are in this mode of hiring and it's a little bit more dynamic, is required us to take a more introspective look and, you know, evaluate that ratio.

Speaker Change: His perspective, but I would also point out that look if I'm going to be off the mark with some other hires.

Speaker Change: Let everyone know go ahead, Scott, Yes, Chris basically.

Scott Gerard: It's always been our policy.

Scott Gerard: Prudent approach that based on.

Scott Gerard: <unk> estimates that we have.

Speaker Change: We monitor.

Speaker Change: The variable comp adjustment accordingly.

Speaker Change: Given that we are.

Speaker Change: We are in this.

Mode of hiring it is a little bit more dynamic has required us to take a more introspective look and evaluate that ratio.

Scott Gerard: So, you know, certainly this environment is further to you know, adjust accordingly.

Speaker Change: Certainly in this environment, it's prudent to adjust accordingly.

Speaker Change: No that all makes sense. Thank you for that background just wanted to go back through the pipeline changing from March to June It feels like you had maybe an unusually strong first quarter and so you get that back but in the Big picture you still have a pipeline, it's still going to contribute positively. So I guess I just wanted to put the weight or maybe not as much weight on.

Christopher Marinac: No, that all makes sense.

Richard Hough: Nope, that all makes sense. Thank you for that background.

Christopher Marinac: Thank you for that background.

Christopher Marinac: Just want to go back through the pipeline, changing from March to June. It feels like you had maybe an unusually strong first quarter, and so you give that back. But in the big picture, you still have a pipeline. It's still going to contribute positively.

Richard Hough: So I guess I just want to put the weight, or maybe not as much weight, on this pipeline change. Just want to kind of talk through that.

This pipeline changed just wanted to kind of talk through that.

Richard Hough: Okay, so are you? Do you mean the fact that it decreased, or I couldn't want to be? Yes, okay. Yeah, you know, it's, it's there have been times when we adjusted it downward, not just because we have won or lost a mandate, but we're very rigorous about how we manage and measure it. And sometimes something that we're actively working on falls outside the six-month window where we think the action will occur, and we'll take it out of the pipeline. This is a pipeline meant to be things that are, you know, very strong for the next six months, and so it can, it can come down for that alone.

Speaker Change: Okay. So do.

Speaker Change: Do you mean, the fact that a decrease or.

Speaker Change: B, yes, okay yeah.

Speaker Change: It is.

Speaker Change: There have been times when we adjusted downward not just because we have won or lost a mandate.

Speaker Change: But we're very rigorous about how we manage and measure it and sometimes something that we're actively working on falls outside the six month window.

Richard Hough: Just want to go back through the pipeline changing from March to June. It feels like you had maybe an unusually strong first quarter. And so you give that back. But in the big picture, you still have a pipeline, and it's still going to contribute positively. So I guess I just want to put the weight, or maybe not as much weight on this pipeline change. Just want to kind of talk through that.

Speaker Change: We think the action will occur and we will take it out of the pipeline. This is the pipeline meant to be.

Speaker Change: Things that are very.

Speaker Change: Strong.

Speaker Change: For the next six months and so it can it can come down for that alone. The real reason that came down not only did we get a couple of mandates.

Richard Hough: The real reason that came down not only did we get a couple of mandates, but it, it also had a really chunky one in there too, and so you had a little more variation or variability in not getting one of them, which in fact happens, I believe in the OCIO book. So it just, you know, if that was not successful, came out of the pipeline, that that's why it was commenting on the fact that the pipeline now is a little more diversified, is not going to be kind of on or off, if you will, right.

Speaker Change: But it.

Speaker Change: It also had a really chunky one in there too and so you had a little more.

Speaker Change: Variation or variability.

Speaker Change: Not getting one of them, which in fact happened I believe in the Oc Io book.

Speaker Change: So it just.

Speaker Change: That was not successful came out of the pipeline.

Speaker Change: That's why I was commenting on the fact that the pipeline now is a little more diversified it's not going to be kind of.

Speaker Change: On or off if you will right.

Speaker Change: Hot or cold, it's a little more dependable if we win some.

Speaker Change: And lose some it's not it's not going to dramatically move the pipeline it quite in quite the same way.

Speaker Change: It is higher than the fourth quarter and of course, we've seen it much lower than that so it's a pretty stable strong one the only thing I would note about it that's a little unusual is that there really isn't anything in the value pipeline right now.

Richard Hough: And of course we've seen it much lower than that, so it's a pretty stable, strong one.

Richard Hough: The only thing I would note about it, that's a little unusual, is that there really isn't anything in the value pipeline right now. That's usually a significant contributor to the overall pipeline. What we're really seeing it in is OCIO and growth as well as international and emerging markets.

Speaker Change: That's.

Speaker Change: Usually a significant contributor to the overall pipeline, what we're really seeing it in his <unk> and growth as well as international and emerging markets.

Richard Hough: What I did not include, just to be clear again, is the potential in the global equity strategy for this team that we've just hired. The performance that was reported over to Silvercrest is excellent; the conversations and out with allocators has been superb. In fact, we just had marketing people come back from almost two weeks in Australia. As you know, there's a very substantial pool of capital that is potentially interested in this kind of capability. I just don't want to put it into a pipeline until we get more of a feel of how that's developing. But overall, I would say to give put more color on it.

Speaker Change: What I did not include just to be clear again is the potential in the global equity strategy for this team that we've just hired.

Speaker Change: The performance that was a ported over to Silvercrest is excellent the conversations and out with allocators has been superb.

Speaker Change: In fact, we just had marketing people come back from from almost two weeks in Australia. As you know there is a very substantial pools of capital that are potentially interested in this kind of capability.

Speaker Change: I just.

Speaker Change: Don't want to put it into our pipeline until we get more of a feel of how that's developing but overall I would say eight to give more color on it. It is a strong pipeline, it's up from fourth quarter of last year very nicely and it is a little more diversified in terms of the size of the mandates, which is which is actually helpful.

Richard Hough: It's a strong pipeline. It's up from what quarter of last year very nicely. And it's a little more diversified in terms of the size of the mandates, which is actually helpful.

Christopher Marinac: No, understood, and that's, that's great. Thank you for that.

Speaker Change: No understood and that's that's great. Thank you for that last question from me just goes back to <unk>.

Christopher Marinac: Last question from me just goes back to sort of the changes in the equity market the last sort of four or five weeks. So we've seen post June 30th. It has any of that sort of resonated. And I know it's probably early to comment, but just kind of curious on how you have interpreted that here recent weeks.

Speaker Change: The changes in the equity market the last sort of four or five weeks that we've seen post June 30, if it has any of that sort of resonated and I know, it's probably early to comment, but just kind of curious on how you have interpreted that here in recent weeks Oh, yeah. It's resonated I think it was running around the halls here.

Richard Hough: Oh, yeah, it's resonated. I think I was, you know, running around the halls here.

Speaker Change: It's you know.

Richard Hough: It's, you know, it's very frustrating to see so-called strong markets and have such narrow leadership in a recovery after a weak equity year of 2022. And we can build a great business, have wonderful intellectual capital. But, you know, at a meaningful size of assets, capital gain or loss in a given quarter a year, you know, has a big effect on our revenue. And frankly, it's really frustrating when, like last year, you're talking about seven stocks; the market broadens out the fourth quarter. Okay, that's great. We went through it. And then it narrows back down again.

Speaker Change: It's very frustrating to see so called strong markets and has such narrow leadership in a recovery. After after a weak equity here of 2022, and we can build a great business have wonderful intellectual capital.

Speaker Change: But you know at a meaningful size of assets capital gain or loss in a given quarter or year has a big effect on our on our revenue and frankly, it's really frustrating when like last year, you are talking about seven stocks.

Speaker Change: The market broadens out in the fourth quarter. Okay. That's great. We went through it and then it narrows back down again, so the broadening out that we've seen with really welcome. It's very helpful that we've seen in the third quarter and then of course, the other thing is to see small cap <unk>.

Richard Hough: So the broadening out that we've seen was really welcome. It's very helpful that we've seen in the third quarter. And then, of course, the other thing is to see small cap. I'll finally get it to do. Hopefully, that can stick. That's really important for our institutional business. We have superb small cap capabilities across international growth and value. They maintain really good relative performance. It's capacity constrained.

Speaker Change: Finally get it do hopefully that can stack and that's really important for our institutional business, we have superb small cap capabilities across international growth and value. They maintain really good relative performance it's capacity constrained.

Richard Hough: That's I'd mention that in my opening remarks. Those are very important to this firm from existing AUM and the revenue effect to potential future mandates. So seeing that regime change is really welcome. It's very good for our business. Your guess is as good as mine, and whether or not that can be sustained. We've been waiting for small caps to catch up and improve their word for a very long time. We can get into why that may be in our economy with interest rates and all the rest. But the regime change, at least that we've seen recently, has been very welcome.

Speaker Change: I had mentioned that in my opening remarks, those are very important to this firm.

Richard Hough: Okay, so are you referring to the fact that it decreased, or do you just want me to be, yes, okay, yes, yeah, there have been times when we have adjusted it downward, not just because we have won or lost a mandate, but we're very rigorous about how we manage, manage, and measure it, and sometimes something that we're actively working on falls outside the six-month window where we think the action will occur, and we'll This is a pipeline meant to be things that are, you know, very strong for the next six months, and so it can, it can come down for that alone.

Richard Hough: The real reason it came down is that not only did we get a couple mandates, but it also had a really chunky one in there, too. And so you had a little more variation or variability in not getting one of them, which in fact happened, I believe, in the OCIO book.

Richard Hough: So that was not successful, came out of the pipeline. That's why I was commenting on the fact that the pipeline now is a little more diversified. It's not going to be kind of on or off, if you will, right? Hot or cold; it's a little more dependable.

Speaker Change: Existing.

Speaker Change: AUM and the revenue effect to potential future mandates. So seeing that regime change is really welcome it's very good for our business.

Richard Hough: If we win some and lose some, it's not going to dramatically move the pipeline in quite the same way. It is higher than the fourth quarter, and, of course, we've seen it much lower than this. So it's a pretty stable, strong one. The only thing I would note about it that's a little unusual is that there really isn't anything in the value pipeline right now that's usually a significant contributor to the overall pipeline.

Speaker Change: Your guess is as good as.

Speaker Change: As mine and whether or not that can be sustained right. We've been waiting for small caps to.

Speaker Change: Two.

Speaker Change: To catch up and improve their word for a very long time, we can get into.

Speaker Change: Why that may be in our economy.

Speaker Change: With interest rates and all the rest but.

Speaker Change: The regime change at least that we've seen recently has been has been very welcome.

Richard Hough: I will say just one more comment, Chris. It's a little tiresome for there to be so much focus on the Fed instead of on fundamental businesses and earnings of companies and small cap companies. That's ultimately what has to happen. The Fed matters, of course. But it can't be all about that for a healthy economy and market. It's got to be ultimately about a growing economy and earnings. And we've just been in such an unusual period. I would argue, even since the financial crisis. where certain values in the market I would argue have been somewhat distorted and inverted whether that's capital allocation or the nature of what asset classes are in favor.

Speaker Change: I will say just one more comment Chris its a little tiresome for there to be so much focus on the debt instead of on fundamental businesses and earnings of companies and small cap companies. That's ultimately what has to happen and yes.

The fed matters of course.

Speaker Change: But it cant be all about that for a healthy economy and market. It's gotta be it's gotta be ultimately that a growing economy.

Speaker Change: And earnings and we've just been such an unusual period I would argue even since the financial crisis.

Speaker Change: We're certain values in the market I would argue have been somewhat distorted and invert it whether that's capital allocation or the nature what asset classes are.

Speaker Change: In favor, but that's enough of me MISO box.

Christopher Marinac: But that's enough of me on my soapbox. I hope that answers your question. Oh, it does. Thank you, Scott. I appreciate it. You're welcome, Chris. Good to hear from you. Yeah, two characters.

Speaker Change: I hope that answers your question.

Speaker Change: Oh it does thank you.

Scott Gerard: Scott I appreciate it.

Scott Gerard: Youre welcome Chris Good to hear from you take characteristic.

Scott Gerard: Thank you and ladies and gentlemen. This concludes our question and answer session I'd like to turn the conference back over to Rick Hough for any closing remarks.

Operator: Thank you.

Operator: And ladies and gentlemen, this concludes our question-and-answer session.

Richard Hough: I'd like to turn the conference back over to Rick Hough for any closing remarks. Great. Thanks so much. Thanks for joining us. Look forward to updating you at the end of the third quarter. As I mentioned, we've got a very nice pipeline that's well diversified. And we're really excited about the new intellectual capital. We've attracted to this firm. It's top tier. It's compatible and complementary to the capabilities we already have here at the firm. Opens up new opportunities for us in terms of visibility with significant asset allocators and families. And I'm generally excited about these investments, whether that's business development in the Southeast or this new equity team, or some of the others to potentially calm as we grow.

Rick Hough: Great. Thanks, so much thanks for joining us.

Speaker Change: I look forward to updating you at the at the end of the third quarter as I mentioned, we've got a very nice pipeline that is well diversified and we're really excited about the new intellectual capital. We've attracted to this firm its top tier it's compatible and complementary to the capabilities. We already have here at the firm opens up new.

Richard Hough: What we're really seeing is OCIO and growth, as well as international and emerging markets. What I did not include, just to be clear again, is the potential in the global equity strategy for this team that we've just hired; the performance that was imported over to Silvercrest is excellent. The conversations with allocators have been superb. In fact, we just had marketing people come back from almost two weeks in Australia. As you know, those are very substantial pools of capital that are potentially interested in this kind of capability.

Richard Hough: I just don't want to put it into a pipeline until we get more of a feel for how that's developing. But overall, I would say, to put more color on it, it's a strong pipeline. It's up from the fourth quarter of last year very nicely, and it's a little more diversified in terms of the size of the mandates, which is actually helpful.

Richard Hough: Nope, understood. And that's, that's great. Thank you for that. Last question for me just goes back to sort of the changes in the equity market over the last sort of four or five weeks that we've seen post June 30. Has any of that sort of resonated? And I know it's probably early to comment, but just kind of curious about how you have interpreted that here in recent weeks.

Richard Hough: Oh yeah, it's resonated. I think I was, you know, running around the halls here.

Richard Hough: Thanks for joining us; I look forward to updating you at the end of the third quarter. As I mentioned, we've got a very nice pipeline that's well diversified, and we're really excited about the new intellectual capital we've attracted to this firm. It's top tier, it's compatible and complementary to the capabilities we already have here at the firm, and it opens up new opportunities for us in terms of visibility with significant asset allocators and families, and I'm generally excited about these investments, whether that's business development in the southeast or this new equity team or some of the others to potentially come as we grow. So stay tuned, and I look forward to updating you next quarter. Thanks so much.

Richard Hough: It's, you know, it's very frustrating to see so-called strong markets and to have such narrow leadership in a recovery after a weak equity year of 2022. And we can build a great business, have wonderful intellectual capital, but, you know, at a meaningful size of assets, capital gain or loss in a given quarter or year has a big effect on our revenue. And frankly, it's really frustrating when, like last year, you're talking about seven stocks. The market broadens out in the fourth quarter. Okay, that's great.

Richard Hough: We went through it. And then it narrows back down again. So the broadening out that we've seen was really welcome. It's very helpful that we saw in the third quarter. And then, of course, the other thing is to see small cap finally get its due. Hopefully, that can stick.

Richard Hough: That's really important for our institutional business. We have superb small cap capabilities across international growth and value. They maintain really good relative performance.

Richard Hough: It's capacity constrained. I mentioned that in my opening remarks. These are very important to this firm from an existing AUM and the revenue effect on potential future mandates. So seeing that regime change is really welcome. It's very good for our business. If your guess is as good as mine and whether or not that can be sustained, right, we've been waiting for small caps to catch up and improve their work for a very long time.

Richard Hough: We can get into, you know, why that may be in our economy with interest rates and all the rest, but the regime change, at least that we've seen recently, has been very welcome. I will say, just one more comment, Chris.

Richard Hough: It's a little tiresome for there to be so much focus on the Fed instead of on fundamental businesses and earnings of companies and small cap companies. But that's ultimately what has to happen. And yeah, the Fed matters, of course, but it can't be all about that for a healthy economy and market. It's got to be ultimately about a growing economy and earnings. And we've just been in such an unusual period, I would argue, even since the financial crisis, where, you know, certain values in the market have been somewhat distorted and inverted, whether that's capital allocation or the nature of, you know, what asset classes are in favor. But that's enough of me on my soapbox. I hope that answers your question.

Richard Hough: Oh, it does. Thank you, and Scott. I appreciate it.

Richard Hough: You're welcome, Chris. Good to hear from you. Yeah. Take care, Chris.

Richard Hough: Thank you. And, ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to Rick Hough for any closing remarks.

Richard Hough: Great. Thanks so much.

<unk> for us in terms of visibility with significant asset allocators and families.

Speaker Change: And I'm generally excited about these investments whether that's business development in the southeast or this new equity team or or some of the others to potentially comments, we grow so stay tuned and look forward to updating you next quarter. Thanks, so much.

Operator: So stay tuned. Look forward to updating you next quarter. Thanks so much.

Operator: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful weekend.

Operator: Thank you.

Speaker Change: Thank you. This concludes today's conference call. We thank you all for attending today's presentation.

Operator: This concludes today's conference call. We thank you all for attending today's presentation.

Operator: You may now disconnect your lines and have a wonderful weekend.

Speaker Change: May now disconnect your lines and have a wonderful weekend.

Speaker Change: Yeah.