Lazard, Inc. (LAZ) Earnings Call Transcript & Summary

Okay. So before we get started, we require the big experiences about Goldman Sachs relationships to discuss. These disclosures can be found on the webcast page for your reference. So I'm delighted to introduce our next [indiscernible] Ken Jacobs, CEO and Chairman of Lazard. This is his 12th year in his job. And Ken, I think, over the last decade, has really presided over a significant expansion, both in terms of the product, but also the geographic mix of Lazard's Advisory and Asset Management business. So Ken, thank you very, very much for joining us. I know that 2020 has been a very eventful year in a lot of different ways. So I thought it would be helpful, just to start off with your view of the world and how that's changed over the last few months. And I think, linked to that, it would also be, I think, very helpful to just take a kind of temperature in terms of your strategic priorities, the areas of focus that you have and how those have evolved over the course of this year.

Okay. So that's a lot to answer in one question. But let me get started. Thank you, Richard, and thank you for the opportunity to present here at this conference, and thank you, everyone, for joining us today. Look, this has been an incredible year. It's just a lifetime in a year, I think, is a way to kind of think about it. We started this year with a great deal of optimism about both our businesses. Going at this time last year, we saw a real building pipeline in the Advisory business and a breadth of new product that we were beginning to launch or have been shepherding along in asset management. In the first couple of months, we were off to a great start. And then like everyone, we got hit in March and April by this massive pandemic, which really shifted focus pretty radically after that. The first, I'd say, April -- March and April were frightening months, I think, for everyone in the business community and the world at large, both in our professionalized and personal lives. I am shocked at how quickly the world has -- at least, the world of finance has recovered. I would never have anticipated this. In March and April, I think, largely due to kind of a mix of very quick action by governments, both in Europe and the U.S., obviously, in Asia. And then also just by the resilience of people and inductiveness of companies and everyone else. So from our standpoint, this year has unfolded, I would say, far better than we would have expected based on where we were in March and April. And frankly speaking, not entirely dissimilar to where -- it looked like it was going to be beginning in -- in the beginning of the year, particularly on the advisory side, and then increasingly so on Asset Management as well. As far as the world is concerned, we are in a very complex world at the moment. We, on one hand, have a massive health crisis in both Europe and the U.S. Europe went back into shutdowns in October. They're coming out, I think, what will turn out to be briefly in places like the U.K. and France. For the holiday season, my guess is that the rest of Europe will lag that. In terms of coming out of the shutdowns, probably be experiencing them through parts of the winter, probably January into early February. In the U.S., clearly, we have a pandemic that's out of control. We don't have the level of shutdowns that are existent in Europe, but we do have a slowing of mobility, which does slow some economic activity. That said, I don't think we're seeing anywhere near the hurt on the economy in the U.S. and Europe. Now the way we saw it in March and April, everything shut down in March and April. I think people have figured out how to kind of constrain some of their activities, but keep basic economic activity going. So the impact on the economy in the fourth and first quarter, which will be -- will have an impact from this level of cases, both Europe and U.S. won't be as severe in all likelihood as it was in the first part of the year. The vaccine is, obviously, a phenomenal development, both from a standpoint of health, obviously, but also in terms of optimism about the future. It really does give business leaders and market participants a sense that there is light at the end of the tunnel. And I think we're likely to see that in terms of the performance of the economy as we get into the second half of the first quarter and then into the spring and summer of this year. I mean the health conditions may not change as rapidly as we all hope, but I think the economic conditions probably improve a little bit quicker than people expect as a result of this kind of built up -- kind of pent-up demand for normal life and optimism that's going to come from this. So overall, for our business, this is -- portends a pretty good environment going forward. I mean I think we feel very confident about the M&A environment right now. Everybody's kind of adapted to the Zoom environment or the video environment to kind of get things done. We've seen that in financing. We've seen that in M&A. I think that's going to be something which will stick with us after the pandemic. There'll be some real efficiencies and benefits that come from that. But I think this environment we can function, actually, quite well. I think in terms of the deal environment, you've got a lot of positives out there. I can speak more about that later. And in terms of the Asset Management environment, I think, from the standpoint of valuations, this is all good for asset managers, and particularly us.

So that was actually very, very helpful answer and there's a lot of different pieces in there that I kind of want to dive in a little bit more. So maybe just start off with corporate confidence. So you obviously spend a lot of time in board rooms, spend a lot of time with management teams, lots of different industries, lots of different geographies. How would you assess corporate confidence today? And I guess, do you think corporate confidence is consistent with some of the euphoria that we're seeing in financial markets? Or do you think there's a disconnect between the two?

I think there's a lag and there's some disconnect. But I think the key thing to think about in terms of confidence is not that people necessarily have to be optimistic about the future. I think, increasingly, in some industries, people are, and I think in some industries, there really is a sense that there is a light at the end of the tunnel. The key thing in confidence is the ability to have confidence in your predictions about the future. That was something that was very difficult to do, obviously, in March and April. As we got through the summer and into the fall, even though health conditions haven't improved all that much in the U.S., obviously, I think, people are starting -- most corporate leaders, CEOs, Boards across more industries now than was the case earlier in the year, I think, are having more confidence in their ability to predict the future, and that's the key to be able to price a deal and to make decisions around deal activity.

And look, the other thing I just wanted to touch on is, obviously, you got a lot of questions ahead of the election around what impact on you probably election could have. But now past the election what do you say, past the election, in the U.S., it looks like it's going to be a divided government, but obviously, a change in administration. Does that have much of an impact either for the Advisory business or the Restructuring business? Or do you think it's going to be largely a continuation of what we have seen before?

I think largely a continuation of what we saw before with some obvious things to watch. Number one is divided Congress, even a congress, which is barely democratic, is going to lead to a moderation in terms of the legislation that can get passed and the breadth of the legislation they can get pass. So from that standpoint, I think, the markets have reacted have reacted to that. That is there's the risk around dramatic legislation one way or the other is probably not that high in a divided Congress. The policy initiatives of the government are probably going to lean a little bit more towards intervention, a little bit more towards regulation, a little bit more towards initiatives around climate and green. But again, not likely to tip the balance one way or the other from a pricing or -- a pricing from a deal standpoint or a market standpoint. And then lastly, antitrust, which is always a feature that people focus on and change of administrations, I think, many, many years of experience, decades of this suggests that there's not nearly as a dramatic change in terms of antitrust policies from administration to administration on regular way M&A, where you do get some changes are on things that a particular administration wants to focus on or is -- gets a lot of attention in Congress or in the public domain. I think the areas that will attract that in this administration will probably be things around the social media platforms given the past election and some of the concerns from the past, perhaps a little bit around technology. And I expect the financial services sector will get a little bit more attention than it did under the Trump administration.

So maybe just spend a few minutes on M&A by geography because there does seem to be some bifurcation taking place. The U.S., I think, has really surprised people in terms of just the rapid pickup in terms of the large pickup deals. When you look at what you've seen, if you look at the pipelines you have, what is the assessment of this? I mean do you think that this is just deals that were put on ice back in March and April coming back online, business, new business? And are you thinking about this as the start of a new cycle? Or is this just a continuation of the old cycle that was put on pause because it won't close down and now it's real?

It's a little of everything. I would say, number one is, yes, there's some pent-up demand, meaning some of the deals that were put on hold are getting done. I think a lot of that was probably in the area of private equity, where you had a whole bunch of things that were expected to be sold this year. There was a pause until people kind of got their arms around their business, their portfolio, financing came back. And I think, largely, those things are getting pushed through the system. So that -- there may be a little bit of a bump up there. I think on the strategic activity, I think this really reflects a real shift in environment. And that's where, I think, your question is quite insightful. Is this part of the new cycle? Or is this just a continuation of the last one? I actually think this is -- the catalysts behind deal activity right now have shifted from the last cycle. And I think, again, when we think about M&A, it's kind of availability of financing, the equity valuations, confidence levels, we've touched on confidence. Equity valuation is obviously high, but maybe people use more stock as a result of that financing widely available. But the catalysts here have shifted. And they really appear to us to be two catalysts right now behind a lot of the activity and probably going to continue into the future is that, number one is the pandemic accelerated all the trends that were in place before. Things that we're probably going to happen over 5 to 10 years are now happening over 2 to 3 years. And the industry -- and in industries where you had winners, they're even stronger now. And where you had losers that have even more challenges than they did before. And the second is, is almost every industry, you can identify the companies that have implemented technology into their business models, either because they've done it organically or they've done it inorganically, seem to be winning and have advantages over the companies that haven't. And that -- those two trends are the ones that are going to really drive activity over the next cycle. And we think that's going to be quite active and quite exciting actually.

So let's talk a little bit about Europe. And Europe has actually seen a pretty steady stream of smaller deals, but it hasn't seen quite the same in terms of the large deals that we've seen in the U.S. Could you talk a little bit about why that is the case? And it does feel as there's things like Brexit keep on dragging on. I mean is your sense that there's a lot of pent-up demand when certain [indiscernible] get past certain catalysts? Or is Europe just going to be a structurally smaller M&A market than, perhaps, it's been historically?

Well, it actually became a structurally smaller M&A market after the financial crisis or during the financial crisis. So you never really saw the rebound in activity in Europe after the financial crisis that you saw in the U.S. The U.S. quickly rebounded to -- or quickly, it rebounded to 2007, '06, '07 levels, I guess, in '17, '18, and Europe has never really quite gotten back to those kind of levels. That said, though, what we've seen in Europe is a pickup in sort of what I call medium-sized deal activity, a lot of financial sponsor activity more so than we would have guessed coming out of the pandemic and kind of regular way M&A on the part of strategic, medium-sized deals and such. Where you haven't seen a big pickup, you're right, it's on the big strategic deals. I think some of that is inhibited by concerns around employment, that is companies are loathe to take on a big transaction in Europe right now, where you're going to be laying off a lot of people, given the support that governments have given companies directly in terms of keeping people employed. That support starts to wear off over the course of the next year. And our sense is, there is a pent-up demand around larger deals in Europe, some consolidating deals in Europe across the boarders, across certain industries, and we're likely to see that pick up in '21 into '22.

Okay. So let's talk briefly about the Restructuring business before we kind of go into your strategy and talk about Asset Management. Obviously, very, very [indiscernible] has done very well [indiscernible]. How has the pipeline progressed over the course of the quarter? Has there been a significant change in terms of finance or public financing available to distressed companies? And has that impacted your view in terms of either the magnitude of the restructuring opportunity or the timing, over which you think some of these mandates [indiscernible]?

Okay. So we obviously had a great run this year in restructuring. Part of it was driven -- a large part of it was driven by companies that were in trouble before the pandemic hit, that probably would have been able to manage their way through kind of exchange offers and refinancings and bought time, but when the pandemic hit, couldn't do that. These are a number of the big retail restructurings that were engaged in plus some of the oil -- in the oil patch. That was a large part of our activity in the first part of this year. Over the course of the year, obviously, because of the intervention of governments and the wide availability of financing, things tone down a little bit, but we still have a pretty robust pipeline of activity going into '21 probably better than I would have anticipated a couple of months ago. And I expect as we get into the end of this year and to the beginning of next year, depending on how patterns around Christmas shopping unfold, and also the degree to which -- and how the stimulus is designed, we're likely to see some pickup in activity in the beginning of next year. And then on top of that, you've got a lot of companies that have just taken on much more debt than they can handle, and the pandemic has lasted a lot longer, and there's a reckoning that's going to come at some point, probably in '21 or into '22. So I expect that this business is going to stay above the levels you would expect in an improving economic environment, which is likely to be the case into '21, into '22. And strong second wave, hard to predict unless you see a real downturn in the economy, but it's still a pretty good business for us into '21, '22. And I think we're going to have one of those years not dissimilar to 2010, where you have both a good M&A year and potentially a pretty good restructuring year.

And would you say that the competitive dynamic within the Restructuring business has been rational over the course of the year?

Yes.

If you think about...

Yes. I mean you have players that have changed. You have new entrants, you have people have exited. I think generally speaking, it's been pretty rational from the players, from the pricing, from activities, how deals organized, it's actually been okay.

Okay. So before we segue to the Asset Management business...

And one more point on restructuring, where we didn't see any restructuring activity at all. A real pickup at all this year was in Europe. And I expect into '21, we'll start to see a pickup in Europe because much of the support that was put in place will start to wear off, and many of these companies are going to have to restructure their balance sheets. And so that's an area where we expect some pick up in '21 as well.

Okay. So maybe we can just talk a little bit about the strategy within the Advisory business. And you sit here in December and you digest everything you've learned from this year. Did it highlight either product expertise that you wished that you were stronger in or that you had a great capability in? Did it highlight industry verticals that you want to strengthen? Or did it, in any way, lead to you to rethink what the overall strategy in terms of growing the Advisory business should be?

Well, I think the key thing to look at Lazard is, is that, generally speaking, we have periods where you have market dynamics change. During that period of time, we have been pretty good about making significant investments. And then you see a spurt in growth in our business plateauing, again, a change in dynamic investments spurt in growth, plateauing, and it's just sort of the nature of the way the business works. And any given year up and down in terms of deals is sort of what creates that plateau. I mean you hit a a good M&A market. You have a great year of a good year, an average year, a great year or good year average year, and then you have a change in market dynamic and it starts over again. We're in one of those shifts right now. This is an opportunity to invest akin to what happened around the financial crisis, what happened after 201, 202, what happened after the late '90s -- I mean, the early '90s. This is a really interesting period for our business. This is this inflection point I described before about the catalyst. There's a change in the way that companies are forming, going public, growing, and we see an enormous opportunity in our business right now. And I think you're going to see us make some much more aggressive moves in terms of investing in people and capabilities over the course of the next couple of years or so. This year was a year of actually significant growth for us. I think we've added something like a dozen MDs this year into our platform. Again, contrary to cycle, that's when we find is the best time to be doing this. And we see certain areas where there's just going to be explosive growth. I mean one in particular is in biopharma. That's an area where Lazard is already very strong. And I think there's going to be a real focus on doubling and tripling down there. We think that there's just an enormous amount of innovation that's going to take place there as well as across health care services. Obviously, renewables is an area, and alternative energy and the green economy and the hydrogen economy are all areas where I think there's going to be a lot of focus. The introduction of data analytics into our business and the use of it to support the analysis and the advice that we give to clients is going to become much more feature of our business and probably of our competitors as well, and it's going to be necessary. But I think we've done quite a bit of investing there and have started to implement a lot of new capabilities into our business around that. The things we've done around shareholder advisory, really understanding and decoding the behavior of shareholders as a shareholder universes change because of what's happening in the Asset Management world. It has become a very important feature of the advice we give. And what's happening in the stack market is fascinating because potentially, that is a displacement of the traditional IPO business and creates a lot of interesting avenues for dealmaking as well as organizing the whole structure of going public going forward. And so these are all areas that, I think, are exciting. The other part of this business is, we've been under-indexed to private equity in the United States in particular. That's an area that we've done much better in this year, and I think you're going to continue to see us continue to invest around that. And all of the services that support private equity. That's been something that's been a strong area for us, particularly in the -- what we call the Private Capital Advisory business, where we're one of the leaders in the secondaries that are getting done in the marketplace. But it's -- I think this is one of the most exciting periods around. I mean we've gone through real change in terms of the economy, a real shift in the way people go about doing their work. I think that the video technology and the way it's implemented in our business has made our business a lot easier to do physically, and then frankly, mentally for people. I mean I don't think we'll ever go back to the level of travel that we had before, which creates enormous efficiencies in the way we go about doing our business. And I think there's a lot of excitement around that here.

So that's -- I think, that's a really interesting answer. So let me ask, on the capital raising side, both debt and equity, [indiscernible] potential magnitude of disruption from boutiques and firms like yours that we've seen in the traditional Advisory business over the last decade as a result of some of the changes, as a result of the shift to the Zoom economy? Or even that's too much of a stretch?

It's a couple of different things at work there. I mean I don't -- I think, that what you saw in terms of the Advisory business was really a shift of people that were at larger firms that had strong global Advisory businesses that, over time, became less competitive, moving to independent advisers. That process is probably over. I mean the firms that -- obviously, the independents benefited from that move and the firms that suffered were largely the European investment banks that had global advisory platforms, which are nowhere near as strong today as they were pre '07. And the shift of talent there to the independents largely accounts for a lot of the market share gains that the independents have seen. The shift, going forward, it's not going to be as great. I mean you have -- if you're going to grow the same way as you did in the past, you're going to have to take it from the firms that are reasonably successful, Goldman Sachs, Morgan Stanley, JPMorgan, Lazard, Rocha, the sort of city, BofA, who now has restrengthened, reinvigorated their franchise. It gets harder. So I think the growth in the Advisory business, going, forward is largely going to be driven by your ability to grow your own people, which is one of the great strengths of a firm like Lazard. And I think it's going to come from adding new capabilities in new areas. The equity business, which is, I think, where your question was directed to, can you do the same thing for the equity business? I'm not sure. I mean, first of all, equity tends to be a bit more capital intensive. It's not as capital intensive, obviously, it's fixed income, but a bit more capital intensive. Second is a large part depends on whether or not we really see a sustained ability for the stack market to develop as an alternative to a regular way IPO. That's uncertain. I mean the stack market obviously has taken off. All it really is, is just a different form of taking a company public, more structured form. Advantages are, you have more information, you can have -- you can do confident, inflation, you can negotiate in private. But the robustness of that market needs to be tested by time and probably a change in the rate structure in the market, and we'll see. But it's an interesting development, and it does pose some threats to incumbents.

So let's talk about the Asset Management business. And let me start again with a broader question, which is we've obviously seen enormous [indiscernible]

Yes.

[indiscernible] markets. Though we're anticipating very high note, it seems. How are clients thinking about asset allocation at this point? Because it doesn't [indiscernible] it's not as straightforward as it was earlier in the year.

No. You have a lot of things going on right now. I mean the first is, is you've had some sentiment shift from passives to actives, particularly on growth in the first part of this year. So the active managers that were growth-oriented, obviously, benefited from that in the earlier part of this year. Now you're sort of seeing some sentiment shift towards more traditional value. I wouldn't say we're quite there yet, but you're starting to see some signals around that. Obviously, you've seen a decline in the dollar, pretty precipitous move in the dollar from the beginning of the year, which shift investment patterns, tend to shift outside of the United States at that point. So you've got a lot of crosscurrents going on here in terms of asset allocation. Generally speaking, it's been pretty favorable to us, the second half of this year, this move towards the weakening of the dollar, which is -- I mean, a strong dollar is just an enormous headwind to Lazard's Asset Management business because we generally raise our money in dollars, and, to some extent, [ Tyco ] generally, and invest it abroad. And so when you have a strong dollar, assets are coming into the United States. Obviously, AUM gets revalued at a lower level and also our performance tends to lag outside of the U.S. when that happens. When you get a reverse all of that, it becomes a tailwind, and that's what we're starting to experience right now. So that's a good feature. And asset allocation, obviously, passes have done well, ETFs have done pretty well over a long period of time. And I think it's been a better picture for active management over the course of the last few months or so than it has been for a while, but it needs to be sustained, I think, with performance.

So your Asset Management business has actually seen some really good [indiscernible] a little bit about describing that? And whether do you actually see a potential for that to accelerate having [indiscernible]?

Yes, it should accelerate over time. I mean there are going to be some ups and downs here because you -- institutional business is a lumpy business, so you can have 3 months up and then 1 month down because some client comes in and says they are going to do a reversal. That tends to accelerate towards the end of the year a little bit. But also, you get surprised with mandates at the end of the year and the beginning of the year. So there's a lumpiness to this. But generally speaking, the trends have been really pretty favorable for us for the last period of time. And this really is a reflection of a bunch of the new initiatives that we've undertaken in the Asset Management over the course of the last couple of years or so. We've had a real success in our quant business, even during this period of time, where quant was under a lot of pressure. We've launched sustainability products that seem to be gaining traction. We've developed, basically, a new thematics business to complement the old thematics business we've had that has done quite well. We have, as you've probably seen, accelerated, bringing on small alternative teams because we see an enormous opportunity because of the uncertainty on all of the change that's going on in the Asset Management business there. And we think there's a great opportunity to put together a pretty compelling alternatives platform around that. And then, finally, our traditional products, particularly the ones that are more global in nature, have done pretty well in this particular environment. So it's an improving environment for us. I mean, obviously, we're facing the same pressures around consolidation of managers and same pressures around fees that everyone is -- everyone is experienced right now in part because it's the market, and that's what's driving a lot of consolidation at this point in time, but I think we're pretty well positioned right now.

When you -- I know you get this question a lot, but when you look at the consolidation that's happening around you, what's your response to it? How does it -- is it changing your view in terms of what to find scale within the business? Does it make you feel that you should be a more active participant in the substitution, either as a buyer or seller? Or you think it largely doesn't impact your business at all?

You can't -- I mean, you'd have to be blind not to -- or want to be willfully blind not to pay attention to what's going on, and that's not our style. Obviously, there's a lot going on. I mean the changes in the Asset Management business today, the consolidation, all of the -- all of the tumult we're seeing right now is really a function of what's taken place over the last decade. You've had -- I mean, personally, I think, a lot of it is just technology. A lot of the technology that was unique to long-only all through the '80s and into the '90s, so the advent of spreadsheets, the ability to use online data and all that became highly democratized. So a lot of the edge, particularly in developed markets like the United States, went away a decade ago. I mean so the tools that a long-only manager was using in 2010 was no different than tools that anybody sitting at home could use effectively. And so that edge you had from that extra piece of analysis just wasn't that great. And I think that is at the core of a lot of the issues in a place like the -- in a developed, very efficient market where there's a very low tracking area like the U.S. Where we've been kind of fortunate is, most of our business is outside of the U.S. where there's higher tracking errors, same pressure on fees, same pressure on consolidation, but performance issue shouldn't be as challenging because of this and haven't been necessarily in all of our strategies. That's one factor, the passivization of the market as a result of that and also low rates is another. And the advent of just new capabilities in other funds, helps as well and also the move towards alternatives to good pressure. That's creating this landscape of change. There are clearly a lot of companies that are never going to recover from this. I mean firms that are under scale, particularly in retail, and have really high exposure to domestic U.S. markets or markets where there's a low tracking, I think, are just going to have a very difficult time recovering form this. Those platforms, I don't think for us are really that attractive. Scale in our business is an interesting question. There probably isn't a lot of scale benefits to the institutional side of the business. And the question is, on the retail side, where it's essentially a professional retail approach. We're not going to the end customer. We're going to the platforms at the advisers. There, there's probably some benefit to being larger, but it's not entirely clear to us yet and the businesses we're in that you need enormous scale to win in that particular business. And there are disadvantages to scale in the Asset Management business, which isn't too different from the Advisory businesses, which is there's a certain attraction to being in places that can be flexible, where you, as an individual, but you as a strategy and even for the firmest strategy can make a difference. You can still kind of steer the ship pretty agilely and quickly when you see market changes. When you get so big in the Asset Management business, it's very difficult to do that. And so that's something that we think is a potential advantage for our business right now. And yes, there are potentially some scale issues on the retail side that we're thinking about. But all in all, where we kind of sit in the landscape, there's probably more opportunity than we've ever seen to add new capabilities to the business. And this isn't through large inorganic deals. This is probably through kind of all the disarray that's been created at the smaller asset managers that some of the individual managers that are out there that just have a very difficult time getting traction because you really need to have much higher degrees of compliance, much higher degrees of cyber capabilities, you need to have scale in terms of getting resource -- and also some of the end managers are not giving you money if you're not big enough. And so that's a great opportunity for us. And as you've seen, we've really accelerated the pace of lift-outs and additions of small teams. And we're finding it that we've got more than we can handle at the moment -- more opportunity than we can handle at the moment there. All of this, I think, is just good for the business, makes it better and just improves it value, both in terms of our ability to run it, but also the value in the market to anybody else.

So we've got a couple of minutes left. So let me ask you about the operating margin. And obviously, again, we've seen this very rapid rebound in the second half. So I guess a shorter-term question or longer-term question. So on the shorter term, how is your thought process around the operating -- the potential for the operating margin this year evolve just given the dramatic pickup in activity? And then on the longer term, just given the change in business mix, given how scale is getting redefined, given the growth opportunity, what potential do you think there is for a longer-term improvement in the operation?

Well, look, margin -- longer term in this business, margin is really a function of revenue. So if you get revenue growth, you're going to get margin improvement. If you have fall-in revenue or flat revenue, you can have margin pressure because what always happens in the GAAP P&L, flat revenue means declining margin just because every year that you're -- if you had a better year in the past, just the charges from that go through. So you're always going to be -- so you're always going to have some pressure on margin when you have flat to down revenues in these businesses. When you have growing revenues, we're obviously going to see margin improvement. And I think we've proven our ability to get that at both non-comp and at the comp line. And that, my guess, is the model going forward. The only thing I would say is that what we'd like to do is accelerate growth, which may put more pressure on a flat-to-down year in terms of margin than it would in an up year, but the benefits of that are enormous if you actually get that growth, which, I think, we're pretty confident that we can do going forward. This year, look, the challenge -- this year, we've -- until the year ends, this is a business where you really don't know anything about where you're going to end up until the year ends. How the Advisory business ends up, where performance fees come out in Asset Management, where the overall AUM is at end of year determines where you come out. And so we put out a goal of 60%. I mean that's what we've targeted so far for this year on comp. I don't expect it -- we'll miss that. And I expect that, around the non-comp line, we've had some benefits this year because of the lack of less travel and some efficiencies around that. So I think this is an okay year. A lot depends on how the year ends. And I think, going into the future, we're -- our goal is to, on one hand, be absolutely disciplined around margin like we've been in the past, but we're going to pick up -- we're going to really try to drive revenue growth in the future as well more aggressively than I think we've seen in the past.

Okay, Ken. So we're actually out of time, but that was, I think, a really, really helpful conversation. So thank you very, very much. And hopefully, we get to see you in downtown Manhattan in person next year. So...

Well, you can come to midtown, too.

Thank you for joining.

Thank you, Richard. Take care.

Bye-bye.

Bye-bye.