Q4 2024 SEI Investments Co Earnings Call
Good day and welcome to the Q4 2024 SEI Earnings Conference Call.
At this time, all participants are in a listen-only mode.
After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised.
Speaker Change: To withdraw your question, press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Brad Burke, Head of Investor Relations. Please go ahead.
Brad Burke: Thank you and welcome everyone. We appreciate you joining us today for our fourth quarter 2024 earnings call.
Speaker Change: On the call we have Ryan Hicke, SEI's Chief Executive Officer.
Brad Burke: Sean Denham, Chief Financial Officer, and members of our Executive Management Team.
Speaker Change: Jay Cipriano, Sandy Ewing, Paul Clowder, Michael Lane, Phil McCabe, Mike Peterson, Sneha Shah, and Sanjay Sharma.
Speaker Change: Before we begin, I would like to point out that our earnings press release and the presentation that will accompany today's call can be found under the investor relations section of our website at seic.com.
Speaker Change: This call is being webcast live and a replay will be available on the events and webcast page of our website.
Speaker Change: We would like to remind you that during today's presentation and in our responses to your questions We have and will make certain forward-looking statements that are subject to risks and uncertainties that may cause actual results that differ materially
Speaker Change: Please refer to our notices regarding forward-looking statements that appear in today's presentation slides and in our filings with the Securities and Exchange Commission. We do not undertake to update any of our forward-looking statements.
Speaker Change: With that, please turn to slide three as I turn the call to our CEO, Ryan Hicke. Ryan. Thank you, Brad, and good afternoon, everyone.
Speaker Change: I know you've heard me use this quote before, but it's worth repeating. Anything that happens once may never happen again, but anything that happens twice can surely happen a third time.
Speaker Change: This is the second consecutive quarter where SEI has realized significant growth in net sales events.
Speaker Change: We have made meaningful and consistent progress over the last 18 months, and we are surgically focused on maintaining and growing this momentum.
Speaker Change: For the full year, net sales events reached nearly $130 million, with nearly $100 million recurring. SEI net events for 2024 were nearly 60% higher than what we achieved in 2023, and almost double what we did in 2022.
Speaker Change: Most importantly, similar to last quarter, there isn't a single client or win driving these results. And we have not changed our pricing or value propositions. The sales are broad-based across the organization, coming from existing and new clients, both in the U.S. and globally.
Speaker Change: And while the third quarter benefited from some delays in the first half of the year, the fourth quarter did not benefit from delays or a pull forward from 2025.
Speaker Change: SEI has real momentum and increased confidence across the entire workforce.
Our 5,000 employees have embraced a true enterprise-first mindset.
putting in the time and energy to ignite our momentum.
Speaker Change: We're confident that this is a decision that is in our company's best interest.
Speaker Change: Maybe not the optimal decision if only trying to maximize earnings per share in a single quarter, but we were still able to post impressive earnings growth in the fourth quarter while rewarding our employees.
Speaker Change: EPS reached $4.41 for the full year, growing 27% versus 2023. Last quarter, we called out a handful of one-time items that benefited us.
Speaker Change: This quarter, we saw the opposite, with an approximate two-cent headwind from incentive compensation and some other items affecting comparability that Sean will talk through in greater detail.
Speaker Change: Absent these items, our EPS would have achieved solid growth against both the prior year and prior quarter. Again, the growth drivers are broad-based and every single business unit realized revenue growth, operating profit growth, and margin growth relative to the fourth quarter of last year.
Speaker Change: However, we also see, we also continue to see some challenges in the quarter.
Speaker Change: Our institutional business saw asset outflows due to some expected plan terminations and LSV also experienced net outflows due to the structural pressures facing almost every single active asset manager.
Speaker Change: The core of our business remains very strong, and we've been able to mostly offset these challenges and continue to post strong net sales and earnings growth, but we still have a lot of work to do.
Speaker Change: In total, our $1.6 trillion in assets under management and assets under administration are nearly flat with the prior quarter, despite a modest headwind from capital markets.
Speaker Change: We're continuing to see strong demand for alternative investment products, particularly in the investment managers business and our intermediary businesses.
Speaker Change: Strategically, we look to 2025 to really drive continued change across our operating model and aligning our capabilities more effectively with how clients and prospects want to engage and consume our services.
Speaker Change: We are relentlessly focused on allocating capital where we see the strongest growth opportunities.
Speaker Change: And we have been very deliberate and consistent in where we have been investing, including expanding our global footprint of our investment managers business and focusing resources on regional and community banks in our private banking segment. We are seeing those investments pay off.
Speaker Change: We are going to continue to invest in our infrastructure, our scale, client experience, our people, and our global regulatory and compliance capabilities.
Speaker Change: Outside of the U.S., our regulated subsidiaries are subject to a high level of supervisory engagement.
Speaker Change: The momentum you've seen in the last few quarters is not just a hot hand [inaudible]
Speaker Change: We see real underlying improvement in our business, in our sales, and in the discussions we're having with our clients.
Speaker Change: As we look at our pipeline's strategic growth initiatives, we are focused on continuing these trends. With that, I'll turn the call over to Sean. Go Birds.
Sean: The fundamental earnings of the business also improved on a sequential basis.
Speaker Change: The first is a four-cent impact from the increased incentive compensation that Ryan noted earlier in recognition of our employees enabling the record results achieved in the year.
Speaker Change: We also saw a 5 cent impact from the timing around stock compensation plans.
Speaker Change: Our option plans best contingent upon achieving certain EPS thresholds. As a result of the strong EPS growth achieved during the year, we recognize an increased level of stock expense in the quarter.
Speaker Change: These are all set by a 2 cent benefit from foreign exchange gains and a 5 cent benefit from a lower tax rate from options exercised during the quarter as well as our year-end provision estimate.
Speaker Change: Absent these items, SEI would have achieved EPS growth on both an annual and sequential basis.
Speaker Change: Turning to our business unit financial performance on slide 5, each of our business units realized both revenue and operating profit growth over the prior year.
Speaker Change: both in our private banking and investment managers businesses has been supported by the strong sales events.
Speaker Change: we have achieved during the year. In addition to the new client wins, growth has become has been driven by improved client retention, especially in our private banking business and growth within our existing client base, most notably in investment managers.
Speaker Change: Results in our investment advisors business was supported by a full quarter benefit from our integrated cash program, which contributed just over $20 million to the fourth quarter and more than $10 million increase over the third quarter.
Speaker Change: We do expect the benefit from our cash program to moderate during 2025, as clients continue to explore alternative cash options we make available, and as short-term interest rates are expected to decrease.
Speaker Change: Additionally, I would highlight that our institutional team has made enormous efforts to offset the structural headwinds from our corporate DB plan terminations.
Speaker Change: We are pleased with our margin performance in Q4 compared to both the prior year and the prior quarter.
Speaker Change: The items I noted earlier had a combined 210 basis point negative impact to consolidated margins in the quarter.
Speaker Change: Across business units, the impact was nearly 3% for private banking, one and a half percent for investment managers, 1% for investment advisors, and 2% for institutional investors.
Speaker Change: Excluding these items are consolidated operating margins improved relative to the prior year and the prior quarter, reflecting SEI's continued cost discipline and cost leverage against healthy revenue growth.
Speaker Change: I want to specifically discuss private banking, where we had seen the most dramatic benefit from improving margins as of late.
Speaker Change: Recall that our third quarter private banking margins were benefited by approximately one and a half percent due to some one-time items.
Speaker Change: Combined with nearly 300 basis point impact from incentive and stock compensation in the fourth quarter, we continue to see steady profitability improvement in this business unit.
Speaker Change: Turning to slide 7, SEI had another outstanding quarter for sales events, which totaled 38 million dollars.
Speaker Change: While lower than last year's last quarter's record result, I'd remind you of the comments we made during our last earnings call.
Speaker Change: We did benefit in the third quarter with sales events that were delayed in the first half of the year. The third quarter benefited from approximately $7 million of sales events that were delayed. The fourth quarter received no such benefit, making the sales event outcome all the more impressive.
Speaker Change: Net events in the quarter were led by our private banking and investment managers businesses.
Speaker Change: Within private banking, regional and community banks were a notable contributor to fourth-quarter sales events.
Our shift toward an enterprise mindset is also demonstrating results.
Speaker Change: Our strategic partnership with Close Brothers, which we announced in November, is an excellent example of a true enterprise-wide partnership, where we are providing our SWP platform, professional services, and IT managed services.
Speaker Change: This win was highly contested, and SEI's ability to offer the full capabilities of our firm provided me the differentiating factor in our success.
Speaker Change: Our investment managers' sales events came from a balanced mix of traditional, alternative, and global clients.
Speaker Change: The solutions and operating model are really resonating with our clients and we're seeing significant traction.
especially with our global and private credit offerings.
Speaker Change: We continue to observe a convergence between private and public markets.
Speaker Change: SEI is one of the few administrators that can effectively service both globally.
and Tim.
Speaker Change: We also continue to invest in our operational footprint with the enhancements we made to our global offering and leadership team in Luxembourg.
Speaker Change: I want to highlight that we are while our accelerating sales events in the second half of the year are an outstanding outcome for our business.
They may slightly pressure margins in the near term.
Speaker Change: As we win new business, we must augment our teams and the associated costs ahead of onboarding a client on time and on budget. As a result, the expense hits the income statement before revenue.
Speaker Change: Turning to slide 8. We had healthy growth in assets during 2024 for both AUM and AUA. In the fourth quarter, investment managers continue to realize growth in assets driven by the strength of our alternatives business as managers deploy capital.
Speaker Change: Beyond investment managers, assets declined in the fourth quarter due to a combination of market valuation and net outflows.
Speaker Change: The decline in our AUM for advisors was mostly offset by growth in platform assets.
Speaker Change: Our advisors business has been able to retain strategic oversight of client portfolios where we continue to earn an overlay fee Even if those clients migrate to third-party passive funds and ETFs
Speaker Change: Our LSV investments also experienced net outflows and, to a lesser extent, market depreciation from a decline in global value indices in the fourth quarter.
Speaker Change: Client outflows have been entirely due to changing asset allocations or active to passive transitions.
Speaker Change: We have not seen LSV losing business to other active value managers. While long-term performance from LSV remains strong on both a three-year and five-year basis, we would expect performance fees to moderate from 2024 levels, which totaled $21 million for SEI share.
Speaker Change: Before concluding, I want to touch on capital allocation on slide 9.
Speaker Change: During the fourth quarter, SEI repurchased $259 million in stock and increased our semiannual dividend by $0.03, representing a 6.5% increase.
Speaker Change: Total capital returns to shareholders through either share repurchases or dividends totaled $620 million for the full year, representing nearly 6% of our year-end market cap.
Speaker Change: We also announced the acquisition of Whitefield in December for approximately $29 million in cash plus a contingent earning.
Speaker Change: The integration of Lightfield's TACSmart technology with our investment, technology, and evolving multi-custody capabilities will deliver the industry's first fully bundled UMH solution.
Speaker Change: Notwithstanding our significant capital deployment during the year, SEI ended the fourth quarter with a pristine balance sheet, no long-term debt, and a significant liquidity in the form of $840 million cash balance and $325 million undrawn revolver.
Pass.
Speaker Change: Before turning the call over for questions, I want to reiterate Ryan's opening comments.
Speaker Change: We are running this company and showing up in the market differently. We're investing in the areas of our business that are core to the best in class products and services we provide our clients.
Speaker Change: And we are driving the next level of momentum that we believe is unleashing long-lasting growth potential.
Speaker Change: The shift to an enterprise mindset is powerful, and we're excited for what's ahead in 2025. With that, Operator, please open the call for questions.
Speaker Change: And our first question will come from the line of Owen Lau with Oppenheimer. Your line is open.
Owen Lau: Good afternoon. Thank you for taking my question. So first of all, thank you for creating the slide. It helps investors understand the story better. So I really appreciate.
Hey Owen, Happy New Year, my friend.
Owen Lau: So, if you look at the sales events in Q4, we had a really nice mix of new logos and new names and continued growth from existing clients. But I think even more exciting, as Sean mentioned, it was broad-based across the units, but also broad-based domestically and globally. We saw some nice traction in our non-U.S. markets, especially in I.M.S. and banking.
Owen Lau: I mean, I can't reiterate this any more clearly than I have in the last two calls. We're not changing our pricing, Owen. We have remained extremely consistent, confident, and convicted about the value proposition.
Owen Lau: But equally said, we're continuing to really lean into two fundamental areas that I think are driving continued sales. One, making sure we are meeting and exceeding client expectations wherever possible. And also, one thing we believe is a competitive differentiator for us.
Owen Lau: is when these firms are making these decisions, these are critical strategic decisions for their business growth.
and they're reliant on us, relying on us.
Owen Lau: to deliver on time on budget. And that is a hallmark and a principle that we hold really dear. And I think the blast radius of that reputation,
Owen Lau: is continuing to expand and firms are looking to engage with us.
Owen Lau: I would also say, you know, the reason I opened the call with the way I opened the call, we don't give guidance, as you know, but we feel really, really positive about the level of engagement we have in the market, the breadth of activity we have in the market.
Owen Lau: our sales pipelines, and we mentioned in the call last time with Michael Lane joining, kind of a reignite and, you know, re-ignition, if you will, of our asset management-based businesses. So, that's a lot for one question. All the unit leads are in the room, though, if you want to, you know, unpack any of that.
Speaker Change: And that will come from the line of Aiden Hall with KBW. Your line is open.
Great. Good afternoon. Thanks for taking my questions.
Speaker Change: Maybe just want to start, Sean, on the near-term margin comment.
Speaker Change: about the pressure expected associated with obviously strong net sales events. It's a good problem to have.
Speaker Change: How long, you know, before the upfront associated expenses kind of lap the revenue associated with that business coming in, just trying to think about the margin profile in 25 as it relates to 24.
Aiden Hall: Sure. Nice to hear from you, Aiden. Thanks for the question.
Aiden Hall: So, you know, we need to make certain investments in costs prior to onboarding those clients.
Aiden Hall: I know you're aware of that. We are still very, very confident in our margins to continue margin expansion.
Aiden Hall: In 25, just like every year, we are not making short term decisions. We're making investments for the long term. We're not here just to hit certain earnings targets that may be external or, you know, for that matter. So
Aiden Hall: sales typically, depending on the business, from a sales event in Sanjay's business will take anywhere from three months to 18 months, or probably closer to six months to 18 months to bring that revenue online. With that comes
you know.
Speaker Change: upfront costs that we have to get to onboard those clients. Same with Phil's business. Phil's business is more from three, three months, it can go all the way up to 18 months, but maybe think closer to a year.
Speaker Change: So increasing headcount, making sure we have the right quality in place.
Speaker Change: the right leverage in place to onboard that client. We don't build massive teams.
Speaker Change: We try to do more of a little bit more of a just-in-time, if you think about that model.
Speaker Change: Keep up with our infrastructure. So, you know, that's how I think I would answer that question.
Speaker Change: Okay, now that's that's helpful. Maybe just one for Michael. I know last earnings call caught you only a month or two into the job and give some high level thoughts about the opportunity and the
Speaker Change: asset management based businesses. Just curious if you had any more tangible takeaways now a quarter further into the seat about how you're thinking about the largest opportunities for these segments.
Absolutely. In the last earnings call,
Speaker Change: come back with proposals for areas that we have overlapped between different business units.
Speaker Change: We are now in the process of exploring how we're going to repurpose those areas of savings into new markets. And when you look at the business that we have,
Speaker Change: available to us with the existing product line and the existing people that we have within the organization. We believe that there are tremendous opportunities for us to use the scale of our banking business, you know, where we have $7 trillion running on our wealth platform, and bringing that to the most scaled
Speaker Change: being the largest, most successful firms out there that we have not actually brought that to both from a technology custody and an investment perspective, whether that be in a model allocation, or even in some, in some of those relationships, it'll be in an individual fund opportunity for us.
Speaker Change: And so we are deep in that process right now of looking at the areas of consolidation, looking at areas of new investment in new businesses, using the areas of consolidation to fund that. And what I've been very impressed with, to be quite honest with you, is the collaboration across the different business units to bring that all together.
I appreciate the color. Thanks for taking my questions.
Thank you. One moment for our next question.
Speaker Change: And that will come from the line of Jeff Schmidt with William Blair. Your line is open.
I thank you.
Jeff Schmidt: So private banks obviously continues to do really well. Do you think you can keep growing that business in the double digits? I guess now that comparisons are going to be a lot tougher.
Jeff Schmidt: and any details you can give on client retention improvements in that business over the last year or two would be helpful too.
Speaker Change: Hey, Jeff, I hope you're doing well. I'll turn that one over to Sanjay. I think the good news is I hope we answer this question consistently every quarter. So I'll let Sanjay continue to unpack what we're doing with banking and why we expect to maintain that momentum.
Speaker Change: I think, first of all, that's a great question. Thank you, Jeff.
Speaker Change: If you look at private banking, our strategy has been very consistent over the last eight plus quarters. We have seen the growth through existing clients that happens by improving our engagement with the clients. So our clients, they are trusting on us.
Speaker Change: and they are outsourcing their technology in our basis. In that process, we are building good credibility with our client base and you have seen consistently our client retention is very high.
Speaker Change: and that is enabling us to grow through our existing client base. And that's where you're seeing that the new services or new segments, expansion initiatives we announced. For example, SAE Data Cloud, SAE Professional Services.
Speaker Change: Digital Onboarding now. Through those, we are able to grow our footprint for the existing client base. So that's a really good growth engine. The second part, if you look at, then we focused on segment-specific growth initiative, being on our global markets.
Speaker Change: been on the regional community bank segment, and then we started small bank initiative as well. And there is a very laser-focused initiative in terms of what solution is needed for those segments.
Speaker Change: And we have invested significantly in terms of, as Ryan called out earlier, that we are absolutely certain about that we have to make sure we don't
provide adverse experience on
Speaker Change: or impact our client's business as part of their own boarding process.
Speaker Change: So delivery certainty, delivery experience, delivery excellence, those are absolute requirements for us. So that's where you could see that we are going through those segment specific sales strategies. So those two, I would say, those two core pillars, they are really helping us. And as I, as I called out,
Speaker Change: The reason why I invested in professional services was so that we can help our clients to focus on growing their business, while they can rely on us to manage that overall transformation journey.
Speaker Change: Ryan, Sean, do you want to go ahead, Dennis? That's great.
Speaker Change: Okay, great. And then a question on capital management, share buybacks, I think were record in the quarter.
Speaker Change: Yeah, so I was expecting that question, especially after the buybacks and repurchases in Q4. So, I mean, how we're thinking about it, we are just like we have every single quarter. We're looking at what our cash balance is, what available cash is or free cash flow is.
Speaker Change: And in Q4, we saw a significant increase in Q4, especially early Q4. A lot of these repurchases occurred more in the December timeframe.
Unknown Speaker . .
Speaker Change: I've done an analysis in Q1 on what we think the buyback will be on it for Q1.
and so.
Speaker Change: I don't think we're taking a long term view of this. We do see a very good return on our capital. When we think about economic value added and return on invested capital, we do believe this is a good use of our capital.
Speaker Change: And as a result, will we accelerate that? Maybe. But, you know, I think we continue to look at what our cash needs, our capital needs are. And it really is more on a quarter by quarter decision.
Got it. Okay. Thank you.
Thank you. One moment for our next question.
Speaker Change: And that will come from the line of Ryan Kenney with Morgan Stanley. Your line is open.
Hi, thanks for taking my question.
Speaker Change: So first, just on the incentive comp, appreciate you breaking it out in terms of the impact by segment. Should we think of that as a one-off or if we get strong net sales next year as well, could that also come with elevated incentive comp in 4Q25?
Speaker Change: So, Ryan, we are, we're thinking about that currently as a one-off.
Speaker Change: The shift from going to a vertical strategy to a horizontal strategy is something the entire organization embraced.
Speaker Change: The great fiscal year that we had as a leadership team, as Ryan mentioned, the board unanimously approved that. But we are thinking about that really as a one-off. And so we will look at that on a year-by-year basis, but we're not expecting really a shift.
or a recurrence of that necessarily.
Speaker Change: But I would add to that, Ryan, Sean's absolutely right. It's certainly a one-off in respect to expense, but we hope it's not a one-off in terms of the board and executive management team feeling empowered and compelled to reward the workforce for record sales and record earnings results.
Speaker Change: Thanks, that's helpful. And then separately on alternative servicing, I know it's a growth area for you, and you laid that out in the prepared remarks.
Yeah, I can take that. So,
Thanks, Ryan.
Speaker Change: A couple things real quick. Normally, the alternatives business, if you include the global component of it, is about 70% of our revenue.
Speaker Change: So it's a pretty significant and growing component of that business.
Speaker Change: But we expect the traditional side to grow as well as those as we are, as they launch alternative products and as alternative clients are going in traditional market for distribution. So hopefully that answers your question. Anything to add?
Thank you.
Speaker Change: I think the only thing to add, Phil, which we called out in the call is that we made investments in 2023 and 2024 to expand our footprint.
with Frontline.
talent globally, especially in the European markets.
Speaker Change: And as we have spoken about before, we will continue to invest. And to Jeff's question on the M&A front, there are areas we're always kind of considering and contemplating strategically to expand our footprint to service U.S. and non-U.S. clients that are growing their footprint. And I'll add something to that very quickly. So our international team had the best quarter that they've ever had and the best year that they've ever had. So the investments that we made over the last couple of years are bearing fruit.
Speaker Change: We're getting larger clients over there, which should lead to more future cross sales. So it's really looking bright over there. And it was something we focused on over the last couple of years. And our Lux offering is really strong. I think we're the seventh largest private asset administrator in that space. And we've only been there for two or three years.
Thank you.
Thank you. One moment for our next question.
Speaker Change: and we do have a follow-up from Owen Lau with Oppenheimer. Your line is open.
Owen Lau: Thank you for taking my follow-up. Could you please talk about the progress of your integrated cash program?
Speaker Change: I think the balance and at around 2.4 billion dollars in the fourth quarter. Is there any room to expand it further? And again, what is your outlook for this program in 2025? Thanks.
Speaker Change: It's Paul. How are you? So we entered the quarter at about 2.4 billion. We we exited the quarter just a little shy of 2.4 billion.
Speaker Change: are the fees that we pay to advisors, which average about $180 million per quarter, and any disbursement. So the average balance during the quarter was about $2.18 billion. And we think as we move into 2025,
Speaker Change: something closer to around 2, maybe 2.1 as a more realistic target on a normalized run rate. As we get cash flow into the business, cash flow will matriculate to the FDIC program.
Speaker Change: But we don't see another kind of conversion that we're going to be doing. We think we have an appropriate level of diversification with the other money fund options that advisors have.
Speaker Change: and the right disclosures in place. So we think if from a modeling perspective, somewhere between two to 2.1 is probably a fair number to model on a go for basis. And we saw the race did move today. So our net yield is about 380 basis points presently on the program.
Got it. That's very helpful.
Speaker Change: And then on institutional investors, could you please talk about the unusually but expected large impact on determinations? What were the drivers of that? And is it one-off or something that could happen more frequently in the future? Thanks.
Hey Owen, this is Jay. Thanks for the question.
Speaker Change: with as we've talked about the headwinds with in the defined benefits space.
Speaker Change: Currently, we talk quite a bit with our clients, and when we're over that 110, 115 percent funding rate, some clients make the decision to annuitize.
in this case.
Speaker Change: A client did. Clients did decide to annuitize at that time and it hits in the fourth quarter. We'd expect the headwinds and the fine benefit space to persist through 2025. Rates.
continue to be elevated.
Speaker Change: and based off of recent comments, we don't know when they'll fall and
Speaker Change: It's advantageous to the plans in these higher rate environments to hit a higher funding status and explore opportunities to move that liability off their balance sheet. So it's difficult to predict the timing when a plan will do it. But in this environment, we do expect to continue to hit those headwinds.
in 2025.
and the next episode.
Thank you. One moment for our next question.
Speaker Change: And that will come from the line of Patrick O'Shaughnessy with Raymond James. Your line is open.
Speaker Change: Hey, good afternoon. Just one question from me. I want to follow up on the discussion around retention within private banks. One of the historical challenges in that segment was big negative events from client cancellations or recontracting events. We haven't seen a lot of those big downside risks or downside events in recent quarters. Have you guys been lucky or have you been good?
Go ahead, Ryan.
Ryan: Sanjay has not just been personally present his entire team. I think it's just extremely active in the market I think we are leveling up at a higher level of Organizations and engaging more of the executives and decision makers of those firms
Ryan: We are expanding and exposing, I think, a broader set of capabilities from SEI beyond just like our solutions and products. I think they get access more to our people and our culture and that resonates.
Ryan: But I'll let Sanjay provide a little more color, but this is one I would say definitely not been luck. This has been real hard work and something we think is sustainable.
Ryan: They are consuming many, many services, not just what we are providing in our banking unit. So that's what we expose to our client base.
Ryan: And that really helped us with the retention strategy. Another thing is when you look at the retention strategy, our engagement at the...
Ryan: We are on the table when they are defining their next year's strategy. The questions we are exchanging now is, okay, where do you want to see your business in the next three to five years timeframe? But think about many of these banks, they are going through M&As.
Ryan: and we are helping them to onboard that business very efficiently. So they are truly now experiencing the power of SCI Enterprise and that has been a major game changer.
Ryan: Another thing which again I'm going to call out is the professional services. SCI professional services are really helping our existing client base, because they are reaching out to some other third-party consulting companies.
Ryan: And they're teaching them their business, they're teaching them our platforms and our capabilities to deliver those services. That's what was happening in prior time. But now they are relying more and more on SEI to deliver those services. And that is really helping us to grow our footprint to existing client base and improve retention.
Speaker Change: I think the only thing I'd add, and maybe it's a great way to almost close. There's two positions you can occupy with your client base. You can be a vendor or a strategic partner.
Speaker Change: I would love to tell you we occupy the ladder with every single one of our clients, but that's our aspiration.
Speaker Change: And I think we allowed ourselves to get put in the vendor bucket for a lot of our banking clients for many years, and Sanjay and the team have done a marvelous job of repositioning and moving SEI from that space, Patrick, into more of that strategic partner category.
Thank you. One moment for our next question.
Speaker Change: And that will come from the line of Aiden Hall with KBW. Your line is open.
Aiden Hall: Great. Thanks for taking my follow-up. Maybe just staying on that topic, Sanjay, I wanted to get your thoughts on how you think SCI is positioned for Bank M&A or the potential consolidation of banks here in the U.S. over the next couple of years.
Aiden Hall: I see some puts and takes with the opportunity for new business as some of your larger regional banking clients acquire.
down cap for scale, but
Aiden Hall: at that smaller cap level or the relationships there, it seems like potentially more of a risk or maybe opportunity for investment contracts coming under a few. So how would you kind of characterize that, that trend over the next couple of years?
Aiden Hall: No, that's a great question. If you look at it in the industry right now, I see that M&A traffic is increasing.
Aiden Hall: And that is presenting two opportunities for us. Let's take an opportunity which is our existing client is acquiring somebody else. Great opportunity for us. We are helping, we have done many such projects in the past.
Aiden Hall: and we are helping in terms of overall technology transformation, operational specialization and onboarding that business to our platform. We have really good experience in that.
Aiden Hall: and we are seeing many such opportunities in play as we speak. The second opportunity is that our existing client is getting acquired by somebody else who is not on our platform.
Speaker Change: I like that opportunity because now I can further grow our business. I'm thinking about a scenario because our existing client base is solid, they're referenceable, they like the partnership.
Speaker Change: And now when they're moving and getting acquired by somebody else, that presents an opportunity that I can go now and convince the acquiring party to come on our platform. So I see this as a very positive thing for SEI. Sean, Ryan, do you want to add anything further?
Speaker Change: I like losing gracefully so that we can go back to the client and bring them back. I mean, a 1% attrition rate is amazing in my mind.
Thank you, Sean.
Speaker Change: Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call over to management for any closing remarks.
Speaker Change: I just want to thank everybody for taking the time and actually the level of engagement today has been fantastic. We really appreciate it.
Speaker Change: the breadth of the questions. We enjoy it and it does feel like, you know, the SEI momentum and story is resonating and we're focused on what we need to do to continue maintain and grow that. You know, belated Happy New Year to everybody. Look forward to seeing everyone in person and wish you a good evening.
Speaker Change: Thank you all for participating. This concludes today's program. You may now disconnect.