SEI Investments Company (SEIC) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the SEI 2022 Investor Conference. I am Lindsey Opsahl, Head of Investor Relations here at SEI. We're so happy to welcome everyone back to campus. And also happy to welcome those who are listening in remotely today. Before we get started, there are just a couple of housekeeping items I would like to review. For our guests, a copy of today's agenda can be found in the pocket of your notebook. Wi-Fi instructions are on the back of that. We will have 2 breaks built into today's presentation. For those who are listening in remotely, please listen to the queue for the start and end of those breaks. A replay of today's presentation can be found on the Events and Webcast page of our website at seic.com. We will have multiple question-and-answer sessions throughout the day. We ask that you please your questions relevant to the content presented. Our segment leaders will be available at the end for a question-and-answer panel. We also have mic runners during each of the Q&A session, so please wait for the microphone to ask your question. We'd also like to remind you that during today's presentation, many of the comments that we make will be forward-looking statements upon which you should not place undue reliance. We encourage everyone to carefully read the explanation of our forward-looking statements contained in the presentation and consider the use before making any investment decision. So without further ado, I'd like to introduce our CEO, Ryan Hicke.

Thanks, Lind. Good morning, everybody. It's great to have everybody back on campus again. We bark in the room, create a little bit of an atmosphere of drama, excitement. I have about 40 minutes. So we have 41 minutes until somebody gets ask me a question about banking margins. But really, my job here today is really to set a landscape of where SEI is going over the next 5 years, but also try to bring it down into what are we focused on right now and to set the day up for the other presenters to give you more detail and unpack more information about how is SEI changing, how are we harnessing our assets, how are we unlocking opportunities. One other note I was told to stand as still as possible because this is on a stream. And for those that know me, that is like a caged animal being told that I standstill. So I'm going to do my best today. I thought I would actually start when we look at our vision, I love to tell stories, and I like to incorporate stories about my family. And it's something I do a lot when I present, Tom and I were just having a conversation of a story I've used about my son, but my oldest son is going to play basketball at Princeton next year. And this weekend, Princeton played in the veterans classic down in Annapolis against Navy. Obviously, my sons in high school, he wasn't there. But the Princeton coach tweeted out that they had a speaker on Friday night, a gentleman named Clint Bruce, and Clint Bruce is a naval veteran and a motivational speaker. But the coach tweeted out that had the opportunity to listen to Clint Bruce tonight the most powerful presentation I've ever heard. So I thought, wow, that's interesting. I might want to go look that up. So this weekend, I had plenty of time sitting on my couch and I looked up Clint Bruce. And the first thing that came up was a video called, A Letter to my Father. So I'm sitting on my couch with my 13-year-old son. For those in the room that don't know I have 5 children. And my 13-year-old son sitting next to me, and it's a 2-minute video. And the 2-minute video was all about the lessons that Clint Bruce learned from his father. But the #1 lesson and the #1 quote and motto to this father used to always say to him, was time and tide wait for no man. His father was also a Navy veteran. And he talked all about how as he's gotten older, he's really started to understand what those words mean, that he has to act with more urgency than nobody promises you tomorrow. And it's a really, really powerful 2 minutes. So at the end of the video, I turned to my 13-year-old son, everything in life is not some philosophical life lesson. And Dennis, I have no stoicism quote to weave in here. But I turned to my 13-year old son and I said, what's the lesson you learned from that? And my 13-year-old son turn to me and he said, nobody controls time and nobody controls the oceans. I said, okay, not too bad. My 8-year-old daughter from the other room said, that's not true. Poseidon controls the oceans. And I said, all right, there's a lot of learning going on this house. And I sat and I'm always looking for inspiration about presentations and stories, and I kept coming back to that quote, the time and tide waits for no man. And I really think it's relevant to SEI right now. We are acting with a different sense of urgency. We are taking advantage of what's in front of us right now. We are building brave futures. You're going to see in a minute some of the things that we've done in the first 6 months, the first 100 days. There is an unprecedented level of change, movement engagement inside SEI and outside SEI right now, and it is really exciting. So in April, when we announced the change of CEO, one of the things that Al, Dennis and I went into a room, we did a lot of conference calls with individuals in this room. We really appreciate that engagement. One of the questions we got many times directly was, Ryan, how much opportunity are you going to have to effect change. And I believe on one of the first earnings calls in April, Owen asked the question directly to Al. Al, how much change do you think SEI needs right now? And Al answered the question and said, I think we need to make changes. That's why we made this move. I think when you look at the screen and you see how powerful what we have done right out of the gates, our ability to act and our ability to move forward and make changes that we believe put our stakeholders, put our clients, put our employees in a much better position to grow is really inspiring. Because if we keep this pace up and we take advantage of what's in front of us, our opportunity is limitless. But we refreshed our company values, and that's important as the first thing because culture is core to who we are. Culture is what drives our strategy and our culture is anchored in our values, and I'm going to put a slide in a minute to talk about these values in more detail. We address private banking leadership. Sanjay Sharma is here today. He'll be up on the panel. We understood from engagement with the community that they wanted to see some change around banking. We also had an opportunity to free up some talent and banking to go focus on some other areas that are key to SEI. But that was something we did right out of the gate, and it is already bearing fruit. We did the voluntary separation program. I think we talked about this a lot to say, this is not a cost-cutting exercise. It was an opportunity to give tenured employees a graceful and respectful way to potentially exit SEI, but to create space, to create opportunity, to drive more mobility, to bring in external talent, to harness new thinking and new ideas. These are things that we've done right out of the gates. The fourth one is really important. We spent about 3 weeks as a pretty large team, and it wasn't just the executive committee. We brought in sales leaders, we brought in solution leaders, we brought in operational leaders, technology leaders, and we address the total addressable market landscape. We looked at what is the market opportunity for each of our businesses, not just defined by pipeline, not just defined by who we're engaged with today. How big are the markets in which we operate, and then distill that down to who do we really believe would take value and what SEI brings to market? Who could we engage? How big are the markets? How big are opportunities and start aligning our capital spend there. And capital is not just R&D dollars, it's talent, it's resource, it's effort, it's marketing, it's energy. And that really laid the foundation in the summer for some of the decisions we've made in the fall and how we're rolling into 2023 and where we're focused. We align the asset management business. I'm going to save some of that for later today. I have a couple of slides to bring that to life, but I know Wayne is here, and I'm sure that will come up when we do the panel. But that's a really important move for SEI. We have a tremendous amount of opportunity in our asset management businesses. The way the market has changed over the last 5 to 7 years, SEI is better served by aligning our engineering talent and our investment management unit with our go-to-market talent and institutional and intermediaries and what we're doing in advisers and the growth of RIAs, which we're going to talk about later. J. Womack is going to present today. Becky Barker is presenting. I am extremely enthusiastic about our opportunity here. But that was a necessary and somewhat painful organizational change for us to make to put ourselves in a position to succeed and we continue to evolve leadership. These are not all easy decisions. Look, I'm an extremely optimistic positive person. But my job is also to be decisive. My job is to be collaborative with the team but we have to make bold decisions to move forward. And this is what we've done and what we will continue to do. I'm not going to go through all the values. I want to highlight a few and a couple of words that I've already used today. We think about courage. I'll tell all of us to think and act like entrepreneurs. How do we take the power of 4,500 entrepreneurs and unleash that across the market, unleash that across SEI. That is something we're challenging ourselves about every day, how do we really unlock all the assets that we have internally to give people all the tools and assets they need to bring their best selves to work every day, to become better assets for SEI. It's going to require courage. It's also going to require inclusion. It's going to require SEI to think differently about how do we think about diversity, how do we think about equity? How do we think about inclusion? And I could tell you, this is my own personal view. I've been at SEI 24 years. And it's been a phenomenal 24 years. I've been able to work in different parts of the world. I've been able to work in all of our businesses. The level of collaboration and inclusion at SEI right now is unprecedented. And we're going to maintain that because it's bringing out the best of who we are. And the last one is fun. We're going to have fun. Our clients love SEI. The market likes SEI, People love working for SEI. We need to treasure that. We need to protect that. We need to make this fun, but it's going to be more fun when we're winning. And we're going to start winning again. And we're going to start winning now. This slide, I think, oftentimes gets overlooked and people say great slide. But it is an unbelievably powerful slide because I think this slide is a manifestation of our biggest competitive advantage. We are at the epicenter of an industry, but we touch more pieces of that industry than almost any other provider. We are built on 3 foundational pillars: technology, operational excellence and asset management. And when you look around the outside of those circles and when you look around all the different segments with which SEI interacts every day, all the different types of intermediaries, all the different businesses where we are critical to their growth and their delivery. We are not exploiting this enough today. We are not taking advantage of that position in the industry. I could tell you personally, I've been on a world tour of clients, market, CEO. But if you just take the last 3 weeks, Three weeks ago, Wayne, we were down in Tampa with the top 200 advisers. It was an extremely engaging, energetic event. There's a different diversity in the types of advisers we have in the room. It's a different conversation around what we're bringing to bear, that a few of us went to London. We were in front of our whole London office, but then we did a breakfast. Phil, Sanjay and I did a breakfast with 12 CEOs from the U.K., not all clients. Three clients, 9 not clients yet, Sanjay. Then I went to Chicago to the Tiburon conference, full CEOs. We are out in front of the market. We're out in front of clients, we're out in front of executives. It's fantastic. They love SEI. There's a but, they don't have a full appreciation of all the assets that we can bring to bear. We have got to figure out how to leverage our reach more aggressively. We are going to get loud. We are going to get out there way more than we have in the past. We have too many valuable assets. We have too many services that our clients actually need to grow for us to be silent. So you are going to see SEI get louder. You are going to see SEI take more advantage of this position that we built over 54 years and really try to bring more of those partners together, take advantage of more of those segments and extend our footprint, but I can tell you personally, being in front of all of those clients, all of those employees, it's really exciting. It is really exciting to see the level of engagement, the level of respect people have for SEI and a little bit in a fun, competitive way. It's exciting seeing the reaction of some of our competitors because they're seeing SEI out in the market again. And they don't want to see SEI out in the market as much again. I remember days, we talked about this a few weeks ago. I remember days that we would walk into the lobby of a building where there be a beauty parade, a final's pitch and we would walk in, and you would see our competitors waiting in the lobby [indiscernible] everybody was on the hour for their pitch, and you would see some of their shoulders sag when they saw SEI walk in the room. I loved it. I loved it. So we're always going to have humility. That's part of our DNA. We will never be arrogant, but we are going to bring a swagger back. We are bringing a confidence back because SEI is extremely important and SEI is really well respected, and we are going to take advantage of that. So how are we going to do that? I think this is one of the slides where the words and the title are important. We're going to deliver what the market values. Somebody will say, I hope so. I think we have been victim of our own doing, of delivering what some clients value and convincing ourselves that that's what the market value. And that's what the total addressable market work really was doing for us to help validate, are the things that we're spending our money on, are the things we're spending our time on, really valuable to a broader market. What is the actual ROI on those investments? How do we hold ourselves more accountable and be more disciplined around when we're making investments of capital, and that capital is time, that capital is talent. What do we expect in return for that? And how are we measuring that? We are going to bring a much different sales culture back to SEI again, a more enterprise-wide sales culture. You're going to see a more holistic client engagement. What I mean by that is we've been out in front of a few of our larger clients. But we've been out in front of our clients in the last 6 months with multiple different SEI executives at the table, talking about the company, talking about the different services each of the units [indiscernible] as opposed to one person now talking about their unit. And I know that sounds pretty basic. That's a big change for us, but it's paying dividends. There's one large bank that we got engaged with, it's a client. We went to see them about 4 or 5 months ago. I had breakfast with their CEO. That CEO has then introduced us to some of their global leads across the U.S. and the U.K. There's been multiple meetings since then. You can see the tentacles of SEI already spreading across those organizations. That's a different sales culture. That's a different type of holistic engagement. We are going to drive organic growth. We are also going to incorporate inorganic strategies. You saw the announcement about a Head of Corporate Development. We're going to talk a little bit later. I know Dennis will have some comments on M&A. We believe that M&A will be a part of our growth moving forward. I don't know if it's going to be an enormous part. We have to build that muscle up, but we are going to look at opportunities. The dislocation in the market could create opportunity for us that we might want to take advantage of. But we feel really bullish on our organic strategies and where we're headed moving forward. And we think some smart, disciplined inorganic moves could really accelerate that. And you're going to see us continue to do that. And then we have to invest in talent and new ideas. We've got to get new growth engines moving inside of SEI. Steve Bamberger is here today. He's going to talk about Sphere. We need more of those businesses incubated. We need more of those ideas out in the market to see where we can gain traction, where we can gather momentum because I believe as we look forward, and we want to build a much bigger SEI, an SEI that lasts for the future, we need more growth engines, but it's also going to require an infusion of new talent. One of the phrases that we've been using a lot the last 6 months is we want to take the inside out and bring the outside in. And we have done a terrific job of taking the inside out. We have been out in front of so many different clients. We have done a lot of joint meetings with competitors, with their executive teams. We've met with a lot of industry executives. We've just been out trying to validate what's going on in the market, what do we see, what do they see? What are our opportunities? And I think a smart infusion of new talent across all parts of the organization is just going to make SEI better. How are we going to measure that? I believe we can double this business in the next 5 to 7 years. We can get to $4 billion in revenue. We can continue to drive sustainable profit growth. We can have great margins in our business. We can set ourselves up for continued growth beyond that, but we need to be aggressive. When you look at the last 5 to 7 years, our growth has not been where we would want it to be. And we can double this business, but it means we need to start now, and we need to continue every day to act with urgency and stay very focused on what we are doing to continue to drive short, intermediate and long-term growth. We are never going to do anything reckless to cannibalize the long-term opportunity of SEI, but we are going to take advantage of short-term opportunities, and that is going to mean we are going to be doing some things differently. But this is a bold goal. It is an absolutely achievable goal for us. If we all work together, if we execute and if we continue to challenge our thinking on a regular basis, and we're willing to be nimble and we're willing to be bold, we will succeed. So somebody would ask, well, where is that growth going to come from? And we highlighted some key market trends here, and we'll unpack a couple of them moving forward. But the first one is outsourcing to accelerate growth, and this requires a little bit of description. At the core of almost all of SEI's businesses is outsourcing. And what I mean by that is people used to ask me a lot when I was selling for SEI, they would say, hey, Ryan, how do you describe SEI, what's the value proposition? And I would say, I believe SEI allows our clients to more intelligently deploy their capital. It allows our clients to focus on spending and doing things that they believe will grow their business and let us focus on other things that will enable that growth. And that's always been our best partnerships. Sometimes people outsource just for cost cutting. But our best clients are the ones that really outsource and look for SEI to provide that technology, that asset management, that operational excellence, but they're also looking for more assets to drive growth. And the investments we've made in the last few years, and you're going to see some of those today really position us well for that. We have extremely scalable platforms. So we can put a whole bunch of banks up on SWP. We can process more business in the operational capacity. Phil can add more clients in IMS. But we are bringing more capabilities to bear for those clients to grow their business. When you look at some of the digital collaboration tools we've rolled out an adviser, you look at some of the front office and data solutions, you look at SEI Sphere, our ability to bring more of those capabilities to bear for our clients is going to differentiate SEI. You look at the alternative space, we were talking at breakfast today, alternatives is as hot as it could be. I went to the Tiburon conference. And in the Tiburon conference, there are 3 concurrent sessions at all times. No matter what the title was of the session, the conversation got to alternative distribution to RIAs in about 3 minutes in every session. We are already heavily invested in the alternative space. We process, we administer, we are engaged in partnering with some of the largest alternative investment managers in the world. We will continue to expand that footprint. We are doing really well in that business. Phil and his team have a really great runway, a terrific group of individual service from those clients, and we have a great group of clients that are growing, we'll continue to expand that. But as we think about future growth, first, we look at alternatives today in the IMU when we distribute through institutional, we do distribute alternative asset solutions that are proprietary and on some nonproprietary to our institutional clients. We need to figure out the manufacturing side. Could SEI be leveraging our investment management strength and bringing more alternative capabilities to bear for our intermediary clients and our private clients. And then if you just think about where the market is going, on one side, you have the manufacturers, on the other side, you have the intermediaries. The manufacturers are trying to figure out how to expand their footprint of distribution to intermediaries. The intermediaries are trying to figure out how to get access to alternatives to bring those solutions to their clients. If you go back to the slide with SEI in the middle, SEI is extremely well positioned to facilitate that, to become a platform there. to provide solutions that allow for that facilitation between the manufacturer and the distributor. That is something we are looking at and exploring. It is a big space for us moving forward. Cyber and data. I won't steal any of Steve's thunder. I'll let Steve Bamberger cover where we are with Sphere. We talked about talent. The talent is an interesting trend here. And the reason we put it on this slide is everybody is competing for talent, acquiring the best talent, retaining talent is a full-time job. We all understand how the hybrid world has changed. We all understand how competitive it is. But there's an interesting dynamic here. One of the things that is actually going to work in our favor, and we're seeing it right now, is we are seeing firms that have historically said they would never outsource looking to outsource because they cannot go attract and retain the talent they need. And you know who has that talent, we do. And we have the scale and we have the credibility and we have the reputation. So we're excited about this dynamic because we think this could accelerate a greater trend of outsourcing and position SEI for more sales success moving forward in all of our businesses. And then RIA is an intermediary growth. I have 2 slides next to talk about alternatives and RIAs, but they are enormous growth areas. Last year, Wayne hired an individual to lead our RIA business. We went outside, got somebody known in the industry, challenged our own thinking and said, instead of looking within, let's go outside. They have built up the team. We announced the results in the third quarter. We are seeing great traction there. It is an extremely exciting segment for SEI. It's a segment that I believe we can be the market leader. I know that's a bold ambition, but that's what we should be striving for. We have the capabilities. We have the assets, we have the know-how to really lead in that space. Just a couple of slides here with some data. And the reason we put this up is just it's important sometimes to step back. As I mentioned with the total addressable market, we not only looked at how many firms. We looked at what were the trends, what was growing, what was shrinking. And when you look at alternatives, there's just enormous growth. And this bodes well for IMS, right? So when you look at our alternatives business, the ability of those firms to continue to launch new funds, the ability for new entrants for SEI to process, but those firms are looking for partners. And I've already mentioned the demand you're seeing on the retail side, especially through intermediaries, we absolutely see as an opportunity for SEI as we distribute some of the investment solutions on our platforms, but also working with some of our partners. And then the market trends RIA's. Again, explosive growth and growth that does not look like it's slowing down. And another interesting twist here is there's a lot of consolidation in the space. These RIAs are getting larger. There's a lot of private equity money. That is not just a U.S. dynamic, by the way, too. That is something that we are seeing significantly happened in the U.K., where firms are going out. They are rolling up IFAs equivalent in the U.K. creating much larger wealth management organizations as those wealth management organizations get bigger, they need more scalable partners, they need more credible partners. It is a great opportunity for SEI. These are 2 areas where we're going to continue to lean in. We're going to invest more dollars. It is an area where we can see real immediate growth, more sales, more opportunity and a big runway moving forward. This slide is a different view. And the reason we put this slide up is an example of how we're changing our thinking. One of the ways that I used to describe SEI, people would use the word silo, and I say, I hate that word. I don't think we're siloed. But we used to inextricably link the solution to the segment. If you said investment processing, you would say banks. If you said alternative fund administration, you would say IMS. The way we're looking at the world now is on the outside here. This is the subset of that total addressable market that we believe we can go after right now. Yes, we are building new things for the future, but we are primed right now to go out today and sell into these markets. But when you look at the size of some of these markets and then you think about if SEI brings all of its assets to bear, if we bring all of our talent and capabilities together, and we're all aligned on why we are prioritizing certain investments in certain segments over others. And if we're all aligned around the accountability, internally that we're going to have on each other around what do we expect? How are we going to measure success there? What are our KRAs to make sure that we're actually achieving the growth that we want. And then you extrapolate that out a little bit further and say, as we start to think about data, given our footprint with clients today in these segments and as we grow that footprint, what could we do with that data? What could we do with other services that are valuable to these segments. But when you just pick a few of these, 300 U.S. banks and 100 private client investment managers. Yes, we have a nice footprint there. But that is a footprint that we can significantly expand, and Sanjay and the team are working really hard on that. We talked about the RIAs. There's almost $2 trillion in assets. We don't need to go get 8,000 of those 16,000. It is a huge opportunity for us. I'm sure during the panel, somebody can ask a question about the Investment Management segment. There's 5,000 investment managers out there. We are extremely well positioned to expand our footprint there. That outsourcing trend is just accelerating. So when you look around the outside of this circle, and then you think about the assets we have and you think about the capabilities we have and the brand we have, we should be driving greater success. We will be driving greater success if we execute correctly. And that execution has to be grounded back in to what I talked about earlier around delivering what the market values because they are things that we have built today that have relevance not just to 1 of these bubbles on the outside to multiple, and we're going to figure out how to unlock that, and we're doing that right now and we're doing that in different ways. This was a cool slide that we put together. I take no credit for it. But when we're looking at trying to explain internally, some of the rationale of putting our investment management units together. And I think Paul created this slide or some on Paul's team, just to say with the addition of PWM, our private wealth management business, now in the asset management businesses with institutional, and you look at a traditional health care system investment committee. We would always have looked at that on the left-hand side, and these are the characteristics and that was -- that's why it made that a good prospect. But when you look at some of the individuals sitting around the table, they are prospects for our private wealth management business. They also may be connected to RIAs. They may be on the trustee board of a bank. You don't know. Like our ability to, again, get louder, expand our footprint. If you think about this picture and extrapolate that across multiple different boardrooms or multiple different executive suites, SEI's ability to expand our footprint is really exciting. And it's right there in front of us. And it's something we've been focused on the last 6 months of really exploiting and doing that right now. We thought it was important to continue to operate with a lot of transparency. And just like we talked about with the first 100 days, we actually shared this slide in the town hall with some employees a few weeks ago, and we got tremendous feedback. And feedback just about the transparency of where we're going next. And I do think it's important, we'll walk through some of this. This came up at breakfast. Somebody asked Jack, you asked at breakfast, why did we lose so much sales momentum in the U.K. We're aware of it. We're going to address it. The U.K. should be the basis for our global business strategy. So one of the things we are focused on in Q4 and into Q1 is making sure we are making organizational and strategic decisions in the U.K. that reignite that growth of that market, that is a great market for SEI. It is a market that has the capability to absorb and consume almost all of SEI services. But the way we go to market today is clearly not optimizing that. So we're going to address that. It's a growth engine for us in the future if we get that right, and it's an important one. We talked about the alternative solution. We are going to be bold. We are going to execute different experiments here. We are going to drive some different ideas both on the SEI manufacturing side, piloting some things on the distribution side and looking at what we can do to actually extend our footprint in the alternative space. We talked about the asset management transition. That's a lot of businesses coming together. Wayne and the team are working really hard on pulling that together and driving one cohesive strategy forward. That's going to put us in a tremendous position for 2023 and beyond. Shareholder investor engagement. I think we're just going to be out there more often in front of people, in front of yourselves, just talking, understanding, understand what's going on in the market, listening, sharing what we're doing. We are really excited about what we're doing. So we want to be out there talking about it. Private banking strategy. Sanjay and the team have done a great job of focusing on what needs to be done right now. And now he's turning in his attention and I'll let him answer the question of what is our future strategy. We've talked a lot. You've heard me say on the earnings calls, we're going to rightsize the expenses to the revenue opportunity. We've got a plan there. We are executing that plan, but then we need to get focused on the revenue opportunity and growing that revenue opportunity and it's going to require us to think differently, and we're going to challenge ourselves, and we're going to bring in different voices and different ideas around how do we build a banking strategy moving forward that everybody is excited about. And then new business M&A. We're out of the gates on the M&A with the hire. I believe we need somebody to lead new businesses. We need to build a process, a repeatable process inside SEI where we are incubating new ideas, where we are launching businesses, where we're killing businesses that don't work, but we have too many great ideas just within our 4,500 employees, our clients, our partners, we need a process to take advantage of that and to get more new businesses, new engines launched and growing outside of SEI and inside of SEI. So 2023, what are we focused on? We're going to be out there selling. We have a lot we can sell right now. We are focused. If we're going to double this business in the next 5 to 7 years, we need to get out of the gates now. We are going to be extremely focused on selling what we have into those segments, but being very aggressive and loud, and you might see more investment into marketing, more investment into sales and areas that we believe that we have opportunity. So you're going to see us go on offense here. That is what we are going to do. I talked about the new business ideas. We need to invest in the ones we believe in now, and we need to plant some seeds and getting with some new ones growing. It is really important to our long-term growth. One of the things that I want to look at when we measure success is client penetration, how many clients are really taking advantage of all the capabilities SEI has to bear? How are we exploiting some of the positions we have inside of those organizations. We have clients that love SEI, they trust SEI. They are looking for SEI to help them grow. We're looking at different ways, especially with our larger clients to expand that footprint and penetrate deeper. We're going to measure employee engagement. We care deeply about the culture. I care about employees, bringing their best selves to work every day, wanting to be at SEI, excited about SEI's future, and we're going to be very focused, as we always have been on employee engagement. And we're going to be focused on profit. We haven't built such an amazing sustainable business for 54 years by just focusing on one thing. We're going to focus on segments. We're going to focus on scalable solutions and then we will be bold. We will invest in areas that we think we can grow in the intermediate and long term, and we're going to balance those things. But that capital allocation, I think, is going to make more sense because it's going to be anchored back in market opportunity. It's going to be anchored back into the ROI we expect. I'm personally as enthusiastic about SEI's future as I've ever been. I hope that's the case as CEO. I love what we have in front of us. I love the way that everybody is working together at SEI. And if we stay focused, and we are willing to continue to challenge ourselves and we stay out in the market and listen and adapt, we will double this business in the next 5 years, but we will set it up for even bigger growth beyond that. With that, I will open up to some questions. Owen, you did say you were going to go first.

Yes. Owen Lau, Oppenheimer. So Ryan, yes, that's my first question. If you go back to Slide 7 and 8, you keep mentioning that you can double your revenue to $4 billion on Slide 8. Yes, I just want to understand if you have to put a dollar amount on each box or maybe like not talent, but 4 boxes, how would you allocate that additional $2 billion in these 4 boxes over the next 5 to 7 years?

So I don't know if I would unpack it that way. We haven't gotten down to that level of [ granular ]. We've done it at the business segment level, and we looked at kind of organic growth opportunities. And looking at what we would need to do from new business. So we haven't kind of surgically broken it down. But if you think about the businesses, if you think of them today, and you think about wealth processing, and so that today is how we would define IMS and banking and you look at that total addressable market. And you ask yourself, is the runway there for that. It's about $1 billion in revenue today. Is the runway there for those businesses to double over the next 5 to 6 years. The answer to that is 100% yes. Because if you look at the number of investment managers today that are not outsourcing, if you look at the pipeline, if you look at the momentum we have, and you think about what Sanjay and the team can do with banking to reignite some growth there, especially in the segments where we can sell now, we could double those businesses. And then if you look at the intermediary growth opportunity and the institutional growth opportunity, our asset management businesses, Owen, is the runway there for that to grow. Yes, it is, but we're going to have to be more aggressive around, I'd say, early adoption. We have to get more success early on out of that RIA space and build that momentum for that business to go from $1 billion to $2 billion. But if you think about businesses like Sphere, some new ideas and then weave in M&A, the math hangs together, we know though what we would need to execute on as the anchors there to really drive that growth. But the market opportunity is there. I think our sales momentum is starting to be there in a couple of those areas. But I would say most importantly, Owen, we are set up organizationally now to take advantage of it. I don't think I would have been able to say that 4 or 5 months ago. I think we could have put that up and explain the math, but we weren't set up organizationally to go exploit it. We are now -- and especially, as I mentioned with the U.K., we get that U.K. right, then organizationally, we're set to just go. But I think when you look at that other slide with the addressable market, and you ascribe a reasonable percentage of success there, we can absolutely double this business.

Ryan Bailey, Goldman Sachs. Ryan, I'll ask a similar question. I think doubling the business in 5 years would be about a 15% growth rate per year. How are you thinking about the trajectory of that growth? Is that going to be something achievable in the first couple of years? Or does the growth accelerate as we get to years 4, 5, 6, 7?

Yes. And I do like that I put 5 to 7 years and everybody asked 5 already. So we know -- and so we try to do 2 things with this, Ryan. We try to make sure that it is based in reality, and it's based on something that we can hold ourselves accountable for, but it's got to be aggressive. So we don't have some big hockey stick where, hey, it's years 4 and 5. And that's why we're actually starting to redeploy some capital now in areas where we think we can have some more short-term success, but also have the intermediate and some long-term legs to them. But it also means -- that's why I put the 2023 side up. We need a great sales year in 2023. We need to set the foundation in 2023 to get those -- that sales momentum rolling to be able to bring that revenue on and that revenue to metrically. And we took the markets out of it, right? I don't know what the markets are going to do. But it means that, yes, I know the math would mean double-digit growth, and we can't backload it and say, oh, in year 5, we're going to have the 30% growth. It means in 2023 and rolling into 2024, we should expect to see great sales momentum. And if we want to start -- really believing in what this could be, we need to start seeing that sales momentum manifest itself in more diversity across our segments and maybe some new areas. And I think that's how we're going to be measuring and thinking about it.

Great. And just to confirm, is there any M&A baked into your assumptions?

There is M&A, but we just didn't unpack the math. So we're not saying, oh, $330 million of revenue. Because the one thing we're being careful about, Ryan, is when you look at something like the Novus acquisition last year, Oranj, those were acquisitions that helped some of the units accelerate their growth. So we're trying to be careful to say how much M&A is going to be something that accelerates our ability. So if we did something in IMS that could accelerate their ability to grow more aggressively that might show up under the IMS growth as opposed to M&A. So we try not to separate it yet. We just know M&A is going to be an accelerant to either what we're doing in the existing businesses or potentially create different engines. I think the other thing, Ryan, the way we think about it is when you kind of fast forward to 2027, and we've hit the goal and we're growing. It can't just be off the back of [indiscernible]. We're going to need more contributors on the growth side. That's kind of why I'm also thinking about. We need to get some of those things moving now, and they may not look extremely compelling in 2023, but if Sphere great gains momentum and something else gains momentum by '25, '26, if those were doing $50 million to $80 million to $100 million of revenue, that's going to be a meaningful contribution as then we kind of think about, could we then go from $4 billion to $8 billion. We're going to need more engines.

Pavel Gulberg, Bloomberg Intelligence. So you talked about '23 also showed the alternative numbers through the next 5 years and the data, I think it comes from Preqin and they actually pulled their numbers back a little bit from 26 numbers they had before. So we're potentially going into a more challenging economic environment next year, the AUM levels down across many asset classes. So how do you see [ presence ] into the environment were potentially weaker?

Yes, we're going to have -- there will be always kind of short-term market headwinds. I think the one difference, and we can talk about this either now or on the panel, one thing we've done a lot over the last 6 months is we've been -- Phil and I have done a lot of meetings with IMS' key clients and our larger alternative managers and our larger traditional managers, John Alshefski and Jason Brown, are in the room. They are aware of what's going on in the market. They understand the macro environment. They're also extremely bullish. So they are launching new funds. Their funds are growing. So even if that number is wrong, it's still going to be significant growth. One of the things that's exciting for us is I'm not standing up here saying, this is a space where we're just going to position SEI and we're going to succeed. We're there. It's a matter of expanding what we do there. But I think the one thing that gives me a lot of confidence is sitting in front of our top clients and their executive teams and hearing the feedback and the reliance and confidence they have on SEI as a core part of their growth moving forward, makes me confident that, that's an area that as this grows, we will grow as part of that.

Ryan Kenny, Morgan Stanley. One of the points that you mentioned earlier on was better understanding the ROI of the investments that you're making. Can you walk us through what that process looks like and what thresholds determined? What technologies get invested in, which ones don't?

Yes. I'll give you a simple one. I mean when we talk about rightsizing the expenses in banking to the revenue opportunity, Sanjay and the team and a few of us in the room have done a really great job at literally surgically going through all of those investments and looking at those, what are those R&D dollars aligned to? What is the expected return? Is that for a client? How many people would be behind that? Who would buy that solution, but then doing that together in the room to say, if Sanjay is going to pull back investments in certain areas because we don't have confidence about this, but we do have confidence in A, B and C and where all systems go there. And in many cases, we're reallocating some of that investment, and we have done that, and we've moved more technology talent over to IMS and move more investment dollars and move some talent to the advisory unit. So we've really been trying to look at it more as a team, but anchored in that total addressable market and honestly challenging ourselves in the room of saying, are we going to get the return for these investments? And then the other important thing, which I think is exciting is we -- and I keep saying this, but I think it bears repeating, we are out in front of the clients asking them for direct feedback. Dennis and I did lunch with Sanjay. We had 2 of the top executives of our largest banking client in last week. They just moved the book of business to SWP. They're in the process of moving more business to SWP. We asked them how it was going. They were extremely positive. I mean, extremely positive about the experience. So I think SEI has always had this hallmark. But when we're mobilized and focused on the right things and we're working together, there's great outcomes for the client, but it means we have to challenge ourselves on where are we investing and what do we expect in return for that. And I think we're starting to look at it more with an enterprise lens and not just a unit lens. So Sanjay can look at it and say, hey, I think I could take this $10 million and turn it into $20 million, but if somebody else in the room could take that $10 million and turn it into $30 million, that's where it should go. And the executive team is operating like that right now.

Mike Brown from KBW. Ryan, so a quick question on the outsourcing opportunity. I think outsourcing has really been a powerful trend for quite a long time, but it did sound like you really see an incremental opportunity here from your clients.

We do.

What's driving that change here or the improving outlook for outsourcing here?

So I think it -- segment by segment, it differs a little bit. The talent acquisition side for the larger investment managers is hard. So the ones that have been insourcing, it's hard for them to go attract and retain the talent they need as they're trying to grow. And 1 of the things that everything comes back to, our best clients are the ones that are trying to grow. If they're just looking at outsourced to cut costs, we're probably not the best firm. But Wayne will talk about this a little bit later. But when you look at the transformation of the adviser business the last few years, people still utilize the word TAMP. We're not a TAMP. We have moved all those client accounts on to SWP. So we have the most modern investment processing administration platform for our intermediary clients. We've opened up the investment architecture. We have provided more front office digital tools. Jay is going to talk about some of the things. So I think the trend of outsourcing is firms that are looking to grow, they basically moved away from saying, I just want to outsource to somebody who has custody or can process. They're looking at who can really provide a platform and a platform with more capabilities and applications that allowed them to really focus on what they're good at, which is acquiring and servicing clients. And that's a hard game to compete if you don't already have the pillars. And as you know, we got slowed down from -- we were stuck a while because we had to finish all the build. We had to finish all that transition and conversion. We're done with that. And I don't want to steal some of the thunder of the future presenters. But when you look at where we've been spending our money the last few years and especially the last 2 years in some of these businesses, it's all front office, it's all growth capabilities, all the back office investment processing stuff is done. We're running 1.5 million accounts every day. And people are starting to look for more credible, scalable partners. So the firms that are really getting larger, and they're looking at outsourcing. They're getting smarter about making sure they're outsourcing to a firm that can deliver day in and day out. And that positions SEI really well. It really does. So I think I turn it over to Dennis. Thank you, everybody.

Well, you got off the hook quick. We were anticipating Ryan answering questions until about lunch time. So Ryan, he spent a lot of time talking about the future of the firm and the changes we've made and the changes we're going to make and the continued evolution of the company over the next 5 to 7 years. And that's kind of a mental picture, that's the building going up and the architecture changing and the design changing. But when it comes to SEI, 1 of the key elements of SEI that I certainly take pride in is the foundation of the company in our -- oriented around our financial strength. And while the market -- we've seen competitors come and go, we see competitors enter markets, leave markets, many times, they can't sustain themselves because they haven't built their houses or their buildings on a strong financial foundation. And so this is a brief commentary on our financial strength. All of you in the room know it. That's why I think you are engaged with SEI to begin with. But it's really, really important to remind ourselves about SEI. I really want to cover 4 building blocks. And it was interesting when we were going through the presentation decks over the past few days. These concrete blocks to kind of represent a strong foundation for SEI to cover quickly the business model, why that's critical and why that continues to be critical as we go forward. Ryan spent a lot of time on capital allocation and how we continue to -- we'll continue to look and evolve our capital allocation to go after big opportunities and the opportunities that are -- that we believe we can not only win and take advantage of in the short term, but it also sustain us over longer cycles and longer business cycles. Talk about shareholder value. And that's why, again, all of you are in the room, how are we going to enhance shareholder value for you as investors or your clients who are investors and then some key financial metrics that I won't spend a lot of time on, but I'll relate it to the other building blocks. Now financial strength. One element, we have a very proven business model and going back to the days when Al started the company and became the first firm to automate the back-office and trust departments, the orientation around our business model has stayed consistent. We're very much a recurring revenue-oriented firm. We have long-term contracts. We've built solutions that are sustainable over time with clients. We've become strategically embedded in our clients and in our clients' business activities and having that recurring revenue model helps us predict the future financially in many ways with confidence, which allows us to make better business decisions that are reliant on our ability to fund them. As you all know, we maintain a strong balance sheet. That's also been a key principle of ours, but a strong balance sheet doesn't come out of thin air. It comes from that first point of a good solid business model, recurring revenue, high cash flow businesses, the businesses we tend to like are those that have the opportunity for scale and leverage as you grow them, so that you can generate higher marginal profitability therefore, convert that profitability into cash and into capital that you can reinvest in the business. So a strong balance sheet will continue to be a key element of us going forward as part of our foundation. I mentioned clients and shareholders benefit from that. I think -- I know as a shareholder, not just an employee at SEI sleep well at night knowing that the firm is very grounded financially and has that core strength. But I can tell you that our clients themselves, when they look to do business with a firm, they look to outsource, they look to move some strategic assets or business operation activities to a third party, they want to make sure that third party is going to be sustaining financially. And while we have had a pretty good run in the markets the past 10 years or so, if you -- and I've been around long enough to remember the tough markets we were in '08, '09, a little bit in 2010 but during that period, I can tell you, I feel that a lot of calls from clients who are very interested in knowing that we were going to be around the next day and that we were not in trouble and we were far from in trouble. In fact, we were leaning into our clients, investing in our service offering, investing in our clients and helping them actually stabilize their business as best we could. So it's really important to understand that our financial strength is not just about shareholder value. It's not just about SEI and what happens within our offices, it's about our clients because the types of services we sell and the strategic value we impart for our clients, they need to know we're sustaining as a partner. And then finally, financial strength ultimately allows us to return capital to shareholders, both in the form of growth and returns, but also as we'll talk in a second cash dividends and our buyback program. Capital allocation continues to evolve. Ryan spent a lot of time on this. We've been talking about this really going back to April within the company to make sure we are aligning our capital, and it's not just money, it's talent, it's our focus, it's our resources, it's our commitment individually and as teams and units within the company to growth and pointing our capital at the right opportunities at the right time. And so we are looking to be more flexible, more nimble, if you will, to move quickly, and we're seeing some of that already paying off. A quick story. Early part of this year, even before April we spent a lot -- some time with our -- Phil McCabe and his team and realized that we needed to move more quickly in some investment opportunities there in terms of some of our technology assets and some of our solution capabilities because we did not want to fall behind or get behind the market. And so we immediately said this is -- we need to move now and we did. And I think you'll see that kind of nimbleness continue to take hold at SEI. We're going to invest in growth, why also invest. I mean, that's why you invest in SEI for growth. You want to see us grow when you generate those returns from that. We spent a lot of time, and I give -- so this is the kind of the outside in. This is that Ryan talked about. The notion of rightsizing our spending to our opportunities is not a unique thought. In fact, it's something we've been hearing from some of you over the years. And that's happening as we speak. And Sanjay, the private banking business is a key example of that. And then finally, acquisitions. So we get asked a lot about M&A. We get asked a lot about are we going to be doing more transactions. And I would say we're -- it's more likely than not that you'll see us more active on the M&A front. Our financial strength actually puts us in a great position to take advantage of opportunities that present themselves to us or allows us to get more pointed in how we go to market looking for opportunities. But finding an opportunity is 1 thing, the ability to execute against that opportunity is another thing. And we're very well positioned financially to be able to take advantage of those situations. So the financial strength is really fueling the M&A. And it's another 1 of those things that if you go back a couple of years, when the pandemic hit and we had that market sell off within days, I was getting calls from a lot of investment bankers saying, hey, we got a deal for you because you guys have a great balance sheet, and you could take advantage of it. Well, those calls stopped pretty quickly after the market turned around after 30 days or so, so. But the market knows that we're well positioned to execute on the right opportunity, and I don't think we'll hesitate to do that. So M&A, you can count on that being part of our future. But our capital strength and our financial strength allows us to be an active participant there. And then finally, shareholder value. Our principles really haven't changed in terms of how we deliver shareholder value. First and foremost, it's driven by growth, grow the company, grow earnings, stock price will take care of itself, and shareholders will be rewarded. At the same time, our business model, which frees up and generates capital, frees up capital, gives us a lot of flexibility with that capital. We've used that flexibility to return significant amounts of capital back to shareholders. So when you look at our share count and the amount of stock we've been able to take out of the market, I'd like to say that we're kind of firm that you get leverage twice. Our businesses have leverage and scale attached to them. So as we grow, we capture more scale and higher profit margins. And secondly, as a shareholder, if you sustain yourself as an owner, you get leverage as well because we improve your ownership position by returning capital through buyback. So I don't see that changing. We don't see that changing. It may modify over time based on other uses of capital, but it's a key principle of how we allocate capital and hopefully increase shareholder value over time. So if there's some in the room and say, well, geez, I guess you're going down the M&A path and you're going to forget about the allocation of capital to dividends or buyback, that's not the case at all. We feel like we have the strength and the ability to access capital in the market to enable both. So they are the key elements that I want to remind everyone of that make SEI kind of the foundationally a great firm to be involved with because we can talk about all the opportunities in the world. We can talk about all the great things we want to do. We can talk about all the investments we want to make. We can build that building as high as we want because we have the financial strength to execute and that's really key. We're not up here talking about what's going on with interest rates and why our balance sheet is under pressure while we have debt holders who are imposing their will on us as an enterprise. That's not the situation we're in. We're in a much more aggressive, much more optimistic, much more position of strength to drive our own direction here. And then because I occasionally have the CFO hat on, there are a bunch of numbers out there. Someone asked Ryan, I think it was asked Ryan, about the ROI question. My perspective on metrics, and I get asked about metrics a lot is that we have good solid metrics that when you measure us over time. If you measure us in shorter periods, you might get 1 answer. The power of SEI is really the longevity of the business and the sustaining nature of our business and our ability to deliver returns over longer periods. And while we may have short 1, 2, 3-year cycles where that's a little bit more challenging when you extend it over a longer period of time, we're pretty consistent. And these metrics just up on the board, when you look at the 1-year, 3-year, 5-year 10-year, they are -- they changed a little bit, but they're pretty consistent over whatever cycle you measure us against. And I -- again, I ask what are the important metrics here, and the fact of the matter is, to me, at least, the important metrics are top line and bottom line growth and sustaining that. And then all these other metrics take care of themselves. It's not really running the company off of this. It's running the company off of opportunity and off of driving growth and let these metrics ultimately tell the story long term. So if you ask me which 1 of these is most important. I'll tell you all of them and probably none of them in terms of the day-to-day decision-making. The real important metrics are, do we have a great opportunity and can we execute and can we grow? So I am happy to take -- well, actually, I'm not going to be taking questions because I'll be on the panel leader because Lindsey probably would have come down here and grab my mic. So I'll be happy to take questions later. But right now, we are going to take a break and give you guys a chance to stretch your legs and come back in and hear some of the great things we're working on from some of the other SEIers here. Thank you very much. [Break]

All right. Welcome back, everybody. Fueled up and reenergized. Those of you that don't know me, I'm Steve Bomberger, I got to meet a lot of you last night. So it's wonderful to be up here today. For those of you that don't know me, I'm responsible for SEI Sphere. So the concept that Ryan introduced 3 years ago at this investor conference around IT services. This is today SEI Sphere. So we've been pretty busy over the last 3 years. We've been listening to the markets. We've been packaging and building the different solutions that we had internally and building out a team to deliver some of the solutions to the marketplace today. So if we think back to Ryan's previous slides, and he talked about outsourcing and he talked about data and security. SEI Sphere really sits at the intersection of those 2. We've been developing all different types of services that are based on the outsourcing mentality and focused in a fast-growing space of cyber and cloud. So if you think about some of the market dynamics specific to IT that are driving what we do today, the 5 in front of you here are really, really putting us in a good position to be able to capitalize on some of the growth. Digital transformation, it's something we hear about on a regular basis. Organizations are being asked to do more, get more productive, be more efficient, deliver at top end and excellent and diversified customer experience, that's really driving a lot of the cloud work that you see today. So clearly, cloud transformation, digitization, all these trends really are coming out of digital transformation. Distributed workforce, something that was starting to accelerate pre-pandemic, but certainly through 2020 and even extending into this operating environment. A lot of the work from anywhere, work from any time mentality. Distributed workforce makes it a lot more difficult for organizations to secure and to have their clients and their employees operate in an effective manner. So putting a lot of pressure on the cybersecurity space for organizations of all different shapes and sizes. Talent shortage. Ryan talked about this a little bit before, is widely recognized that in IT, all over IT, there's a vast differential between the number of jobs that are out there and the talent that is there to support it. Specifically within cybersecurity, there's about 700,000 jobs in the U.S. that are short and globally about 3 million. So clearly, cybersecurity is an area where talent is needed. It's a fast-growing and ever-changing space. And so being able to keep up with that talent shortage is going to be important for organizations going forward. Regulation. We live in it. We see it. Fortunately or unfortunately, this is 1 of the topics in cybersecurity that both sides of the aisle tend to agree on. There's going to be more regulation coming across a lot of these different types of market verticals, even the ones that aren't regulated today and especially the ones that are regulated, we saw earlier this year, the SEC came out with some new proposed legislation. So clearly, they're sending a signal as are many of the other financial regulators that there's going to be more transparency needed, more teeth to the potential fines and more onus put on organization. So there's a lot of rhetoric around the SEC jumping in and spending more time with investment advisers, wealth advisers. So that's putting a lot of pressure on the organizations as well. So what does this all really mean for SEI Sphere? Sphere sitting at the intersection of cybersecurity and cloud and outsourcing, organizations realize they can't do this on their own. They need to find partners. Now some of the really, really large organizations can do it, but most of the small- to medium-sized businesses that are out there today realize to go it alone in this sector is going to be very, very difficult. So some of these themes you might remember or some of these kind of examples of why we're in this business and why we think we can be in this business. You might have remembered from 3 years ago. If we look at the top 3 SEI Sphere is really a natural extension of things that we've done for a very, very long time. It's grown organically out of things that we've done well within our existing businesses for a number of years. It's been interesting hearing all these conversations and all the energy around how SEI has been dynamic and changed over the last 50 years. SEI Sphere has certainly been part of that organizational change, leveraging all the people and the teams and the capabilities within these walls to deliver a new service offering to the market. If we look at the top 3 protecting sensitive data and defending against cyber attacks. Obviously, SEI is a large diversified financial institution. We're in the most heavily attacked sector within the market verticals that are out there today. We deal with it every day. It's something that we've built by constitution. So when we talk about our offerings later, again, this is leveraged from the internal capabilities in our Chief Information Security Officer, who's been here for 2.5 decades and that whole team. So the engine behind it is something that's been in place for a very long time. Building and maintaining applications and networks. We maintain over 200 different network connections with a lot of our clients to deliver many of the services that we do today. We also manage global offices. So we have a big team. We have resources. We have technology around this and we've been doing it well for a very long time. Public and private clouds. I know you're all aware, we have our own data center here. So when we started this 3 years ago, we joked, we called it fintech cloud hosting. The idea was to try to monetize our data center. That's a great asset that we have, and it helps us to deploy a lot of these other capabilities that we're in market with. But certainly, people are adopting the cloud. And I think a test point for the cloud was through COVID, with everybody kind of just expanding and working from other spots and the desire to move more efficiently and quickly and be nimble. That really was a data point for cloud to really get in to the main leagues in our opinion. So last couple of years, we've been talking about not just our data center but the public cloud and what that digital transformation and movement to a public cloud looks like, something that we've done for ourselves. Those are 3 things if you look across that as you look at some of the competitors that were up against, oh, okay, we can do those 2. The bottom 2, we sort of took for granted as we've been now in the market for a couple of years, existing in a highly regulated industry, we didn't realize that would be such a differentiator as we're talking to different prospective clients. The fact that we live in the shoes of many of our clients on a daily basis, the fact that we're regulated by the same entities that many of these organizations are and that they've looked at our internal processes and capabilities has given a lot of credibility to organizations that are saying, hey, it seems like a newer offering, but I realize now why you're doing it because you've lived in it and you've been under regulation for a long time. So that's something that's really differentiated us on the market, delivering business outcomes. This is just by nature of how we started this. Again, looking internally at our capabilities, we are forced to have the outcome of cybersecurity forced to have the outcome of being able to live within a data center or migrate to a public cloud. Many of the organizations that we're up against in the industry start with the technology. They talk about a tool or they talk about integrations of systems. And then they lead to the business outcome of whatever that IT need is. We're starting the other direction. And took for granted that it's a different approach to how organizations have thought about buying technology in the past. Many of the organizations that we've talked to talk about buying a tool or trying to find talent internally to do it and realizing that integration of all of these things is a very difficult task to do on your own. Not another bubble that we have up here, but I think Dennis brought up a really interesting point that I want to add to this, stability. So if you look at the M&A activity going on right now within cybersecurity and within data privacy and within cloud, it's dramatic. Something that we took for granted was stability. Organizations that we're talking to have seen some degradation in client service, not all of them, but some of them by the nature of organic and inorganic growth. The stability of SEI as an organization, the heritage of our 54 years, the track record has given a lot of credibility and faith to our clients that we're going to be here. This is an investment that we've made, and we're going to continue to make to deliver the best cybersecurity solutions we can. So these are really good foundational elements to why we think and why we are in the market and having some success. So to give you a little bit more detail on what it is we're actually selling. Again, if you think about it, it's a cybersecurity and IT managed services business. It's a business that is founded on solutions and products, not necessarily markets, which is a bit of a differentiator for SEI as well. So if we think about the 3 core services, these are all lead strategies that can be sold standalone or paired together to deliver a more robust IT offering: cybersecurity, network operations and cloud. If we think about these, obviously, many of these are at the foundation of all IT and drive the future where organizations need to go from a growth perspective. As I've mentioned before, they're built in the SEI fashion. It's not just a piece of technology. It's not just consulting services. Yes, we're trusted advisers with all of our clients, but we're delivering a complete program with people, process and technology. I think there was a question that came up last night, David, about is this customizable. I think it's a really, really good question. This isn't customizable. We don't have the ability to say, hey, we want to walk into your organization and manage all of the cybersecurity tools or all the network tools that you have or understand where you are in the cloud and kind of help you out with where you're already going. This is configurable though, and it's flexible. So while we're not all things to all organizations, it's certainly configurable in a way where if an organization has some existing tools in place, we can certainly build around that. But we're bringing our best thinking, we're bringing the outcomes of cybersecurity, network operations and cloud to many of the organizations that we see today. As far as clients, I think the best way to paint these services is through our clients. Clients typically sign 3-year contracts with us. And the pricing has been a bit of a differentiator as well. The pricing structure for these, at least in the first 2 categories is really a simplified and predictable pricing model which our clients tend to really like. It's based upon a subscription base. So all of the services that we are bringing to bear within these different verticals here are included in a monthly fee. It allows our clients to scale up with us, scale down with us, and they can have predictability that if they're growing and expanding, they're not going to get charged in nickel and diamond to buy a lot of pay-by-the-drink type of services that come along with it. As far as clients, just to give you an idea of a few of them, we think about -- I'll give you kind of 3 different perspectives of them. One is that an East Coast-based community bank, 30-plus different locations, about 700 employees. They have IT staff and they do have cyber security maturity. They have a cybersecurity personnel on staff. They had a really forward-thinking CIO, who is preparing for the next phase of growth. I think that's something you'll hear throughout. These organizations are all preparing for the next phase of growth. But they were looking internally and saying, do we have the capabilities? Do we have the right tools and the technology stack in place? Do we have the right vendors. It was a bit of a disparate approach to cybersecurity. They went through the build and buy mentality. So that's a large organization that went through the process of saying, do I want to build this myself? Or do we want to find a partner to help us do it? The decision node for them was that they felt like they still have skin in the game. This wasn't as much as we talk about outsourcing, they were going to get the visibility within our program that they needed to see in order to feel like they had a hand in the cybersecurity. So they got rid of a couple of different vendors. They got rid of a handful of tools. They kept a couple, and we've brought a robust cybersecurity program. We've been working with them for a year now. So there's kind of the top end consuming 1 service of the 3 of these that's been going really, really well. The second 1 is another bank in the Midwest, a completely different story. The conversation did start out with security, but a lot of their services were tied to their core banking provider. So they were getting a lot of these IT capabilities from 1 vendor that they were kind of dug in with. They wanted autonomy. They wanted to talk about growth. They want to be prepared for purchasing other entities, they were in acquisition mode. So 1 of the things is we have to get autonomous. We want to rescale and build out our network. We want to think about securing that network. We want to talk about how that translates to our growth. So this was really a soup to nuts start from the beginning. We helped them break free from that core provider, re-architect their entire network. We provided the hardware and the software to do it. And then we built the security around the whole entire thing. They've been a great client since July of last year, and we're about ready to sign cloud contracts. So there's a good example of us being able to build out as we service our clients into some of these other core services. Lastly, we'll call it hyper growth mode. So this is outside of our comfort zone a little bit, which is 1 of the fun parts of SEI Sphere is that we're talking to organizations that are outside the financial services space that we haven't spoken to in the past and realizing that our services resonate well. So this is a fintech. It's actually an insurtech company in New York City that was in rapid, rapid growth mode. They had gone from 5 employees with minimal infrastructure and then personal laptops and personal devices to 80 employees to well over 100 employees now. They were looking for a starting point. So SEI was able to talk about security, but then talk about opening of their New York City office that we, again, helps with the software and hardware type of implementation. We help to connect all their developers in a secure way. We help to connect all their employees. So we continue to evolve with them. They've been a client for about a year now, and it's 1 of those that they challenged us to think differently since it was a type of client that we hadn't talked to a lot in the past, but it's been a really, really wonderful outcome for us. So that gives you a flavor of 3 or so different types of entities that we've had success working with. So this is going to steal some of Ryan's message. I think he could have delivered this slide. It's a lot of the same themes that you heard Ryan talk about. We have gone through an incubation period. We're 3 years into this now, and I think we're hitting a really exciting phase of execution at this point. So we're going to go on the offense. We have 3 services that are core to what we do that are in market with. We have 9 clients today, 2 years ago, David we talked about this last night 2 years ago when we were on the phone, we had 2 clients, and we were trying to figure out if those service offerings work for them. We have 9 happy referenceable clients right now. So seen pretty dramatic growth. We're going to accelerate that. We've done that mostly by word of mouth and organic growth. So these 4 themes really have a lot underneath them. First one, we talked about a little bit. We had a database of about 2,000 opportunities. So those are small to medium-sized businesses in banking and in the credit union space, which was also new. But we thought that fits very well with us. We focused on just those 2,000. We're expanding that to over 10,000 now. As we mentioned, these services in our mind, and at least as far as The Street is telling us right now and some of the client conversations we're having, these are -- we can be agnostic to the markets. Every market can consume these services. So going from 2,000 opportunities to 10,000 certainly a really exciting growth opportunity for us next year. If you think about rightsizing the market opportunity, which I know we're all curious about, our average client within our models is that $200,000 to $250,000 revenue range. So when you overlay that on to $2,000 and then the $10,000, it's a pretty dramatic opportunity in terms of market potential out there for these types of services. As I mentioned, they're growing at -- depending on what data you're looking at 12% to 16% a year. So a lot of compound annual growth rates within these areas. Focused on growth-oriented like everything else. We work well. And I think Ryan always said that we allow clients to work on transformational side of their business, and we do a lot of the heavy lifting behind it. These services are no different than that. So we will think about growth, and we'll focus on the segment of the market that's right on that threshold of build buy. Build buy is an important factor. We see that typically 50 to 1,000 employees. Beyond that, a lot of times, organizations want to do it on their own. There is a bit of a trend we're starting to see with larger organizations realizing that things like cybersecurity are constantly evolving, and it's tough to keep up with some of the talent shortages and a lot of the other trends that we talked about. So we're starting to see that trickle up a little bit to what organizations are saying maybe it's more cost-effective to have a program that's going to constantly evolve with us and to outsource and partner for those capabilities. Investment sales and marketing. We've been pretty much word-of-mouth in grassroots up until now, but we have significant budget hopefully, Ryan, right, significant budget through a capital allocation project. Now we're going to get loud from a sales and marketing perspective. We've certainly run a little bit of the conference circuit. We've had some speaking proposals, but we're going to put those on steroids. Part of the challenge is building a brand within this community. We have a wonderful brand within financial services, but we're not known for cybersecurity services or for taking organizations to the cloud or for managed IT services. So we're going to get really loud out in the community, not just within the markets that we think will adopt these, but also within the cybersecurity community in general as well. So we're pretty excited about the amount of growth that we're going to have within that space. We're also extending our sales team out. So we have some wonderful salespeople. We have a desk internally. We've reached out to the marketplace to try to find some seasoned cybersecurity professionals as well that know the industry. So a lot of exciting things happening in the sales and marketing space. And lastly, land and expand. I know you've heard that a lot from SEI. We're a beneficiary of the land and expand strategy in general because this is a natural extension of those businesses that we're extending into but also these services, those 3 buckets that you saw up there, 75% of our clients right now utilize more than 1 of those boxes and they all started with one. So typically, you hope that you're able to service people very, very efficiently and that you have a broad enough service offering. Part of the themes that we hear out there are vendor reduction. People don't want to work with 15 IT vendors. They want to work with a couple, 1 throat to choke in the IT world, they say. So we've been successful in expanding into some of these other opportunities that we have out there. So exciting times in front of SEI Sphere. We have a lot of energy and the team is excited to take what we've built over the last 3 years and really accelerate the go-to-market strategy. So with that, I'll be happy to take any questions. Owen going first again. Very nice.

Yes. Very nice question as well. Thank you, Steve. I'm not super familiar with this space. Maybe could you just please talk about the value proposition of SEI Sphere? Who your major competitors are? And how do you plan to take market shares? And do you have any goal to get to -- you mentioned 10,000 clients. And you said you have 9 clients right now? And do you have any goal to reach to whatever, 5%, 10% penetration?

Yes. It's a pretty large market right now. So some of the big name competitors that you'll see out there are big audit firms. So the Accenture's, the Deloitte's, then you'll see -- we've got to throw a buzzword out an acronym here. So the space that kind of lives within this is called MSSPs, it's managed security service providers. So if you look at that space in general, it's about a $20 billion global market. It is competitive right now. There's a lot of people entering the space. Most of those organizations are -- come from, as I mentioned before, kind of that technology background. So they're saying, hey, let us come in and make all the stuff that you already have. Our differentiation, as I mentioned a little bit previously, Owen, is we're coming from the perspective of -- we've lived this by constitution for 2.5 decades. So these services are embedded in everything that we've done. Yes, the challenge is the brand because we're newer to the space, but the maturity of the product itself is something that's really, really important to the people that we're selling against. Also the consolidation we're seeing it. And in some of the market dynamics that we're seeing right now, a lot of the firms that were out there really accelerating through vast marketing. There's organizations called Arctic Wolf is 1 that Ryan likes to throw out. They've put a ton of money into marketing and deliver similar type of services. We differentiate well against those firms. Our value proposition as we've been regulated. We've lived it. It's constantly evolving. And we're delivering a full stack approach to an outcome of cybersecurity. That hit all of them for you, Owen?

Any goal for your penetration?

Yes, it's a hard number to peg because it's so vast right now. I think the takeaway is we're going to accelerate a lot of our energy and expect this thing to be a good growth engine for SEI in the future. Thank you.

Mike Brown from KBW. Could you just give us a little bit more insight into the business and how quickly it can scale? So what is your growth constraint today? So if you talk about your non-clients today, and there's an opportunity set of 10,000 or so. How quickly can you scale up? How long is like an implementation cycle? And then maybe just 1 more follow-on there. Do you have the capabilities today that you -- that Sphere needs at this point? Is there some white space opportunities that perhaps M&A could fill?

Yes, obviously, you can always enhance things through M&A. We do have what we need right now to sell, and we're active in the markets with what we have out there, well received. Certainly, we're not kind of resting on that. There's constant innovation in this and SEI is internally looking at that innovation. Any opportunity to either enhance what we have right now that's working well or sort of bolt-on additional capabilities is something that we're constantly looking at. And we have a road map for that going into next year. As far as scale, I mean that's a great [indiscernible] We started this and said if we can't scale this business and scale it rapidly, we're not going to do SEI any favors here. So everything that we've done has been from a mindset of scale, a typical implementation on the security side is 30 days. And we've worked a lot over the last 6 months to really actually be able to go downstream to a sort of lighter version of this and shrink that time table to a day or 2 for some smaller organizations. So it's something we realized within the idea of configurable versus customizable, everybody is going to be a little bit unique, but if we try to be all things to everybody, that's going to extend that cycle as well. We want to realize revenue as quickly as possible. So we think through our 9, the average, I would say, transition is 60 days, but we're at a good spot with about 30 days right now. And that's for network and for cybersecurity. Now cloud is a different story. We're just really starting to enter some of those right now. And that's based upon a lot of different dynamics based on the organization, what their infrastructure looks like, what kind of data they have, what they want to move. So those can be really customer dependent. But I would say, typically, it's usually a quarter to migrate somebody effectively into the cloud.

Ryan Bailey, Goldman Sachs. I was just wondering, as you think about your sales approach, is there an ability to cross-sell across the other divisions of SEI? How are you thinking about that? What sort of conversations are you having there?

Yes, we're thinking a lot about it. It's exciting to be at a point where we have active conversations within all of our different market units right now. So that kind of goes to the land and expand strategy. We took this out and we found some new name clients to SEI. We validated it. We have happy clients. Now it's exciting to turn back internally here and work with some of the market units to really expand this solution offering through those market channels. So yes, there's a large agenda for that in 2023.

Steve, I would just add to Ryan's question there. That was also a conscious decision we made a few years ago to target non-SEI clients initially, Ryan, because we really wanted to prove out to validate to ourselves that the value proposition stood on its own 2 feet and wasn't going to be kind of bundled in and commoditizing maybe what else we were doing. So I'd say in the last 6 to 8 months, we've really started to look at how can we actually partner with some of the other units and segments I think there's actually an SEI client on site today with your team, but it was a conscious decision we may start to not target SEI clients right out of the gates.

Ryan Kenny, Morgan Stanley. Just a follow-up on the clients that opportunity. So most of SEI's, well, I guess all of SEI's historical segments have focused on the financial services industry and the Sphere solution seems like it has implications for other industries. So what's the opportunity set you target from clients outside of financial services? And could that become a meaningful component of the Sphere solution in the future?

Yes, absolutely. We hope it can be. Part of that 2,000 to 10,000 is us extending out into some of those newer spaces. So we've added in professional services. There's technology companies that are in there. Obviously, we've had some success with fintech and even health care. And there's active conversations going on right now within all those segments. So certainly, we think the applicability and really, the kind of the selling point, we joked about extending beyond and why we think we can do this, I joked and said, the fact that we've developed these services within the financial services landscape under regulation gives us kind of that instant street cred to be able to go talk to other organizations. They say, hey, we know you've lived in the most heavily regulated and attacked space in the world. So certainly, your cybersecurity program is going to be good enough for us. So yes, we have high expectations to be able to certainly sell within our core segments, but be able to extend out into some of those other markets that I mentioned.

And does the extending out to other industries come later? Or is that equally distributed now?

I mean we're going to focus on where we're having success right now. But part of that growth for next year is we're going to accelerate into these spaces. We've been passively looking at them and learning about them over the last 1.5 years or so, but we're going to aggressively with both sales and marketing pursue those tactics or pursue those via multiple tactics next year. So yes, we're going to go after them, not just passively.

Sorry, 1 follow-up. Just as you're thinking about the existing clients and sort of turning internally, is that an incremental revenue opportunity? So would it be additional revenues that you would generate from those existing clients? And then how do you think about that changing sort of -- maybe this is a question for Ryan but how do you think about that changing the retention for a file of existing clients if you're offering these services as well?

The first answer is yes, additional revenue opportunities. Feel free. Yes, I think any time you can deliver more value-added services to a client. The stickiness of that relationship is in place. So again, we feel pretty good about what we have in market right now and clients are sort of validating the way we do it and how we do it and the value that the services are bringing. So yes, I would expect us to add some differentiation, some stickiness to existing client relationships. I don't know if any of the others want to comment on internally here. All right. Thank you very much. Appreciate it.

Good morning, everyone. My name is Kevin Crowe. I'm responsible for the advisor -- Investment Advisor Solutions, so product services platforms, the like. And we're going to talk to you today about SEI Connect, which is our digital engagement with our advisers and our investors. Becky Barker is with me. She is the person that led part of the project, and she's going to give you some details further on in the presentation. So capitalize on demand and the demands that have changed, right, because reporting is not a new demand. The difference with what people are asking today with what they were asking years ago is, I need transparency not only at the client level, but I need it at a business level. So I'm an investment adviser. I need to see what my clients see, but I also need to understand how that's impacting my business and see the health of my business. Transactions. So it's easy to do a transaction for an individual account. It's difficult to give an adviser the scale to manage an investment program across all their accounts so that they don't have to do transactions at each individual account level. Client acquisition. For a long time that was opened an investment account. What they're asking us now is engage my prospects to engage a client before they ever open an investment account, so you could help my business grow. Digital collaboration is think about the planning process. So how can you assist me in collecting the information that's important to that client, so I can define the goals and get to the point to open the accounts and do the implementation of that investment policy. And last, personalization. Surround the client with all the pertinent information to validate the decisions they're making and then measure the results of that financial plan. Those are the demands we were looking at. So when you think about personal, what is personal in a very short sentence, it is talking to 1 person, right? They have marketing concept, the audience of one, you always have to be speaking to 1 person. So on a financial construct, you're in a relatively complex decision, understanding the preferences of that individual client, understanding the risk they're willing to take, how they make decisions and then helping them implement those decisions and making the best choice is what we're talking about. Ultimately, they can come in kind of a few different ways. It can be done in the human to human interaction that an adviser has with an investor in a very traditional sense in setting a financial plan, figuring out their goals and executing upon that plan. But we can also have a personal digital relationship with all those clients. Surrounding them with the information at the time they choose to look at it to help the confidence in what the decisions they've made and the decisions they have to make. Jay will also come up later. We can also demonstrate for you the ability to personalize the investment solution to each individual clients. We can make those preferences not only carry through human interaction and a digital interaction, but it can also be resident in an investment solution. Delivering personalized experience. Now think about digital for a second. A digital experience should be as specific and tailored as a personal experience. It's easy saying, very tough to do. But that picture up there just as easily could have been Ryan Hicke, right? Because a busy person waiting for you with the water in your mouth before I said that -- a busy person with 5 kids and his biggest limitation is time, right? So how do you engage a person to help them sort out their financial life, knowing that the construct of their decision is based on the time they can allocate to it. And the adviser today could have 5 different generations of people in their business. And that -- while all generations don't act the exact same way, if you're new to working or you are a person with a bunch of young children or retired, you have a very different way to interact with this action and you have a very different time frame. So our goal is to not only help you make those right decisions, but it's to give you the chance to visualize all those choices, right, not just a conversation, not just words, but visualize all those choices you're making. And then the biggest issue with financial planning for years has been make it actionable. Don't just make it a document that I look at with a plan that I had to figure out how to do, how to then translate that to actions with goals that I can see that I'm actually making progress to where I need to be to meet my goal. So SEI Connect. SEI Connect is the digital interaction that we have with advisers and investors. There's 5 different services up there. it can be also the digital presence of an adviser's business to all their clients. They can service their clients at all times, all at the same time if they need to, right? The other important part about this slide is we had this meeting a year ago, Four of these 5 services hadn't yet been rolled out. So when Ryan asked, what are we doing? These are the kind of things we're getting done and getting into market. I'm going to start at the top right with the proposal builder. The job of the proposal builder is to highlight the value of the investor adviser relationship and then make that decision actionable. So we rolled these -- this tool out in the first quarter, up through 10/31. We have about 4,600 proposals run through this new tool. Adoption is never easy, change is never easy. Our client base sees the value and has adopted it. When you think about digital account open, we inextricably link these 2 things together, roll them out at about the same time again in the first quarter, up through 10/31, we have about 11,800 accounts opened using this tool. The goal of this tool is open accounts easy, as easy as 3 minutes. Open it up, get it ready to go, engage the client. And the last piece that utilizes a lot of the same leverage technologies, then how do you manage those accounts. And model management, the goal of model management has always been to make a unified managed account any security as easy to manage as a bunch of mutual funds because for years, we've been able to manage models around mutual funds. All those other securities has caused the industry lots of headaches. In that case, we have about [indiscernible] transactions initiated and through 10/31 when we rolled this out in the quarter. So all 3 of those midware clients have a heavy adoption fee -- and Pete is the adviser desktop. And I mentioned in that report, this is the reporting started for us with the vouchers what are the account clients, what the old look like? And eventually, how the business is or question like -- could you tell me every client that has neither a contribution, which is just revenue in their world, there are distributions because that would cause a problem for them. We can present all that improvement in 1 spot and close things out and help them by the actions needed to be taken to close those transactions up to 10/31 about 300,000 different actions our clients initiated for that. And I save the portal for last. The portal is an example of an M&A project that we worked on here at SEI. The March 31 of last year, we acquired a firm called Oranj. Ryan mentioned it. The reason we like that firm is that technology was outstanding and the people were really impressive, right? That was the 2 reasons. Notice, I didn't say the client base, right? We actually didn't bring the client base over. We wanted to integrate that into what we have. The goal of -- so we acquired that, we're going to talk more about the time lines, et cetera, in 1 second. But the goal of the addition of Oranj was to advance our digital collaboration and our personalization agendas. And what we did has moved a whole lot faster by bringing in an organization, and we'll show you what we mean in terms of a whole lot faster. Now I am going to turn it over to Becky in 1 second, but she knows always to steal a little bit extra time, so I'm super shock. One of the things we have to think about is investment companies don't frequently look at the market through the eyes of an adviser, right? And what I mean by that to make it real tangible is when we looked at SEI Connect, which is the aggregation and within SEI Connect there's an investment portal, we wanted to be able to reach out not just to their clients, but their prospects, right? Something very different than what the rest of the world is doing today. I'm going to ask Becky to hit on the details of what we've done here, the time line and the client feedback.

So we'll kind of focus on the whole suite of adviser technology. I'm really going to focus on specifically the investor portal. If you look at the slide up here, everything on the right, so everything in blue, these are capabilities that we've offered to our investors for decades. Everything our investors expect to see on their investment account, their account details, their holdings, their transactions, ability to access statements and tax forms, account performance and access all that information regardless of the device, whether it's a tablet, laptop or a phone. But what we heard and where the demand was in the market, was there's a set of capabilities that we could add to deliver more value, they wanted work from their technology. And this created a unique opportunity for SEI to meet those needs and really be a full-service provider investor portal. So these capabilities are things like the ability for the adviser to white label their portal. So rather than an adviser giving their investor SEI's website, they're now giving them their website, so the extension of their firm. It's account aggregation. So the investor can add an outside account to their view. So they have 1 place to see their total net worth, and that also benefits the adviser so they can deliver the best advice possible because they have visibility and transparency into the clients' complete financial picture and they can really personalize that plan based on that information. There's also collaboration tools, so a document thought. Messaging. So the adviser and investor can share documents and communicate through technology. And this is where the acquisition of Oranj came in. So by acquiring the technology and the talented team in Chicago, it accelerated our speed to market to deliver these capabilities to our clients. So let's talk about that time line. The acquisition was finalized in April of last year from April through December, we worked on the integration, so integrating the technology into SEI's infrastructure and also the data integrated inside this technology. And in December of last year, we launched a beta program to early adopter advisers. So it means 8 months with our time to market to deliver all of those capabilities that were on the left side of the last slide. Through June, we worked closely with those early adopter advisers. We continue to expand our beta group, collect feedback, more importantly, react to that feedback, ensure that what we're providing for our advisers added the most value and delivered value to advisers as well as to their clients. Then in September of this year, we started making SEI Connect's investor portal available to every newly onboarded RIA. So they were able to use SEI's investor portal within their suite of adviser technology. We then shifted our focus to broker-dealer affiliated advisers. They're a little bit more complex in their roles as RIAs. So in November. So just this month, all broker-dealer affiliate advisers can now use SEI Connect's investor portal. I mean every new adviser onboarded on to SEI has this in their suite of technology to use. The rest of the year is focused on our existing client base and making it available to all of our clients by the end of the year. So all 8,500 advisers will have SEI Connect's investor portal by the end of this year. Just to highlight some of the feedback. And it's really around 2 key themes that we heard. The first was the client onboarding process and how this has streamlined their process. So previously, many times, the investor wasn't introduced technology until they open their first accounted SEI. This allowed us to bring that process forward to that prospect fee. So with tenant as the adviser and investor meet, they can introduce the technology, start to collect all of the information that they need through aggregation, through the document ball to really personalize our financial plan for the investor. So clearly that streamlined process within the client within the advisory firm, which also benefits the investor to make that a good first experience between their relationship. The second key theme was around their ability to consolidate their tech stack. So oftentimes, advisers would use a third-party investor portal or a document vault have a stand-alone document vault to meet this need. This allows the adviser to use the technology and consolidate it all within SEI's suite of technology. So that is only -- not only a cost savings for the adviser, it's also streamlines their ability to maintain their technology. It makes the clients stickier. It allows the adviser to spend time growing their business and focusing on their clients. So look forward to the end of the year continuing to roll it out for the rest of our client base, continue to hear the feedback, react to that feedback and also deliver the best value we can with that product. With that, and I'll hand it back to Kevin, and then we'll open up for questions.

So what's the what? Why do we do this? So 3 primary reasons. One, to enable clients to better engage with their clients and their process. So they allow advisers to better engage with clients and prospects to grow their business. The second is to power our advisers with a scalable platform that can compete against anybody. And then last is to stay aligned with our clients. So our success and their success are 100% aligned. With that, I'll open up to questions. With that being said, do we even have a break or Jay, you're up next? So Jay Womack is going to talk about personalization from an investment perspective. Thank you for your time.

Good morning, everyone. Thank you. Thank you. It's a pleasure to be here in front of all of you today. Hopefully, you're as excited as we all are about the prospects for SEI and our future. I'm here to talk to you a little bit about investment personalization and some of the things that we're doing to bring investment personalization to life across segments. You've heard it multiple times today. SEI is really well positioned in the ecosystem in which we operate. We sit across different segments, and that gives us a lot of insights that we can bring to bear to deliver solutions to clients that really solve problems for them. When it comes to personalization, personalization is all about understanding the individual or individuals sitting across from you, so to speak. And there's a certain promise that comes with personalization. It's that you'll understand who I am, you will understand my preferences and that you will operate in a way that evidences those things to me, both in the investment implementation, the way that you report personalization back to me. Kevin and Becky talked to you a little bit about how technology is enabling personalization in the area of digital collaboration between advisers and clients. I'm going to talk to you about how we're eliminating the line between technology and investments. And that's important because I think SEI is uniquely positioned to be a leader in this space, specifically as it relates to bringing in investment personalization to life. Market leaders in this area are going to be the ones that can deliver on the promise, true personalization and you're going to learn more about what that means over the next couple of minutes. Ryan talked about this. It's something that we do consistently. We're in market talking to clients, really trying to understand the things that they care about. And we're also identifying trends that we think represent big opportunities for us. And there are a handful, I'm going to talk about each of them. We know this intuitively, I think there are lessons that we're now learning again. New investors are learning new lessons. Experienced investors are being reminded of lessons maybe that they've forgotten and that's that volatility and inflation are incredibly important considerations when it comes to investing over time. Volatility can cause drawdowns. Drawdowns can be detrimental to the achievement of objectives. And that's important to both individual investors as well as institutional investors. Inflation erodes purchasing power. So these are topics that are top of mind, particularly now where a lot of investors feel differently than they did during the drawdowns of 2020 with COVID, there are secular shifts that I think investors are paying attention to. And so they're really digging back in and trying to understand portfolio structure and solutions that may be available to address these issues in their portfolios. We've got capability that we've brought to market, and we'll continue to explore opportunities in this area. I'm going to talk about 1 example of that a little bit later with our Vista Fund. The next 2 are near and dear to my heart because they really represent tangible ways that we can deliver investment personalization kind of across the continuum. It's really about engagement. Implementation. That's the investment component and reporting. And I'll bring this to life a little bit in a moment. Tax management is an incredibly important capability, particularly for individual investors, but anyone who pays taxes sort of cares about those taxes. A tax dollar saved is a dollar that could be further invested and compounded, which is a benefit both to clients and to SEI. And that's something that clients understand intuitively. When you look at what we're doing in the area of direct indexing, which is really about eliminating again that line between technology and investments, tax management is 1 of the real ways that you can evidence value to clients. It's also 1 of the ways that advisers can evidence their value proposition and their advice to clients. If I can demonstrate or we can demonstrate to client savings and the dollars that are being put back into their pockets, it's an incredibly powerful message and it's something that we're really excited about being able to bring to market in more complex ways than we even do today. And again, we've got really sophisticated capability there are additional problems that clients have that we know that we can solve by bringing technology to bear on those solutions, and we're making investments in those areas to achieve that objective. Sustainable investing is a hot topic, if you will. Media coverage, ebbs and flows, but client interest continues to grow. And that's true not just in the U.S. but globally, particularly globally, where regulations are driving a lot of activity. When we think about sustainable investments, the general solutions in the marketplace today really don't meet the needs of clients that sometimes have very sophisticated preferences. So yes, you do need those off-the-shelf solutions that are kind of a shotgun approach to addressing preferences. But as we engage sophisticated clients across the wealth continuum from institutions to high net worth investors, bringing technology to bear that allows us to understand their preferences through engagement that allows us to elicit those preferences, if you will, configure their investments, leveraging technology. And then on the back end, really evidencing what we've implemented on the investment side through reporting that continuum, that experience overall is something that we're particularly excited about and sustainable investment opportunities are areas where we think that we really have an advantage just given the ecosystem that we operate in and the capabilities that we have under 1 roof. Ryan talked about it. I talked about also some of you at dinner last night. Access to alts for the masses is a big trend. And there are a couple of drivers that we are hearing from clients for that. There are a couple of things that we've identified as really key drivers of that trend. One is just capital formation has changed in globally. When you look at the number of companies that are public, the number is much smaller than it was in the early '80s going into the '90s. Companies are staying private longer. They're very well formed networks of capital -- of private equity investors from seed stage to growth stage equity. And so individual investors aren't able to participate in that capital formation and the wealth creation that occurs now that they're locked out of. By bringing alternatives to bear for the masses, we can reintroduce access to that early-stage capital growth for individual investors and really deliver them better outcomes in their portfolios. There's diversification benefit. There's wealth creation benefit. We have a lot of experience from our time working with institutional investors. In many ways, just like direct indexing is breaking capability down market bringing all that market represents a significant opportunity for SEI. And that's across a few dimensions. And so we're really excited about that as well. Finally, income. With a secular shift in inflation and interest rates, income is top of mind for all of our clients. We've got capability internally to deliver income from investments. We have solutions that provide distribution for those investors that are drawing down their assets. So we're really excited about what we can do here in the space of income. I think more importantly, when you consider the capability that we've got supporting institutional and individual investors, there are different sources of income that investors are now comfortable with if you think about multi-asset implementations. And we've got those capabilities resident inside SEI and product that we make available today. But the technology investments that we're making and the way that we're thinking about talent in our investment management unit we believe is going to give us the ability to unlock additional opportunities for growth here. So again, these are major trends that we've heard from clients. We're out there listening. We're trying to understand the market and where opportunity is and we're aligning resources to take advantage of those opportunities. To leverage these opportunities, we've really had to evolve our approach. It's not about products. It's not about portfolios. It's really about people. And you heard this earlier. I think, Paul, that slide that you saw where you had the investment committee sitting around the table, and you had individual wealthy investors making decisions on pools of capital. At the end of the day, it's all about people. And people have goals. They've got preferences and constraints. And if you think about that intuitively, for individual investors, they engage advisers to try to unpack that household balance sheet problem, if you will. But institutional and ultra-high net worth investors have had access to customization and the ability to create alignment across those 3 areas for a very long time. They're almost 2 different worlds that have existed historically, and technology is fundamentally altering that proposition. Ultra-high net worth and institutional investors are clients that we've served for a long time, and they've had access to this customization. Technology is creating the ability for us to bring the things that were once reserved for the ultra-high net worth and institutional investors down market. As you heard from Kevin and Becky, it's also changing consumer perception about client experience across all aspects of their lives, and we're seeing that in financial services as well. SEI is uniquely positioned to capitalize on this trend for a few reasons. One, collectively, we're taking that outside-in approach. And it comes to the solutions that we're building, about listening to clients and really delivering solutions that solve the problems that they're communicating to us. Number two, we live in a really interesting ecosystem, and we can bring all of those capabilities to bear. We've been serving institutional and ultra-high net worth investors for a long time. We understand their needs. We understand that balance sheet problem intuitively. It's expertise that we can bring to bear to solve the same problem for individual investors. And we -- Ryan talked about the chart earlier, you see asset management technology and operations. Because we've got expertise across the continuum of capabilities that you need across all workflows, we really think that we're well-positioned to leverage technology to deliver these solutions at scale across these segments. The other thing that's going to enable us to take advantage of these opportunities is the shift in perspective when it comes to how we think about delivering our investment capability. And you see the evidence of the benefits of this change in focus in some of the things that we've been able to do an adviser. Wayne talks a lot about our unbundled solutions, but what sits behind that is really a shift in how we think of capability. There are really 3 things that we do to deliver value to clients. And we think that these are valuable because each of these existing services in the marketplace that people are more than willing to pay for. So there's a price associated with all of them. First, we design asset allocations. We help investors understand the best structure for their portfolios, and that's just traditional kind of asset allocation parlance, but also in glide path design. And we do that across segments. We construct portfolios. So once you decide where you want to invest, the different component parts that can make up that portfolio that you're investing in are something that we have done for a very long time, identifying those components and giving that advice and implementation to our clients. Again, something we've done for a long time, but a distinct way that we can deliver value. The final piece is managing investments. We've been a manager of managers pretty much since our inception of managing money. So we select and manage sub-advisers. But over time, we've also built out additional capability. We directly manage assets. We invest in underlying securities across a couple of solutions, some that are more technology-oriented like our direct indexing capability and others like our factor-based ETFs. That really represent our delivery of an investment expertise derived from learnings internally from academic exploration and from our continual investment in quantitative investment resources that sit globally inside of SEI. The place that we're particularly excited about as well is in the area of overlays. So if you think about value-added overlays, beta is very commoditized. We think about alpha sources is the systematic components to drive active return. That's what sits behind our factor-based solutions. In a world where things are commoditized in their fee compression, clients really value, we believe, personalization. And that's evidenced by surveys that we've done with clients that demonstrate willingness to pay for more sophisticated solutions, specifically related to tax management, the management of ESG overlays and things like factor tilts. There are different value points across those, but we have capability across the continuum that we've rolled out over the past couple of years, and I'll talk to you a little bit about some of those solutions that we've brought to bear in the market. To deliver on capturing those trends and meeting the expectations of clients and the needs that come along with delivering hyper-personalized experiences, we're well-positioned. We've got over 3 decades of experience evaluating investment managers across asset classes. So there's a lot of expertise that's resident inside SEI, given the talent that we've got in our investment management unit. For about the same amount of time we've been managing money internally, starting with cash products, but extending now into multiple areas, traditional equity strategies, and we also directly manage assets and alternatives. So when you think about some of those trends or growth opportunities that are in front of us, literally next year, we have capability internally to deliver on those things. Finally, and this is really the exciting part, we've got clients across the wealth continuum. And we're able to identify trends across those clients and to really consolidate needs and deliver solutions in a very scaled way. An institutional investor will not consume it all the same way a retail investor will. But the underlying products, the underlying risk profile, the underlying expertise required to deliver really an elevated client experience, I would call it as resident in SEI from a technology and a manufacturing perspective. So it's all about bringing those assets together and delivering them at scale to clients again across our asset management segments. Some examples of what we've done are shown here. If you look at our systematic core strategies, this really represents our bringing technology to bear to deliver beta solutions that are configurable and personalizable. The level of personalization will change as we continue to make investments in technology, but we're really excited about these. Since launching those in early 2021, we've seen asset flows that are encouraging and consistent with what our expectations have been. But the really encouraging part when we think about the implementation of adviser specifically is that funding has come from 70% outside sources, so it's assets that weren't at SEI that have come to SEI. That's incredibly validating for a few reasons. When you think about the classic players in the space like Parametric, Aperio, Natixis and others, it's evidencing that clients believe that we can deliver this capability, and we're delivering differentiated experience, and they're actually voting with their dollars. So it's allowing us to capture additional market share and wallet share of clients, which we think is really attractive. It also captures some of those trends that we talked about earlier. So when we think about tax management and advanced tax management capabilities were really bringing sustainable investing to life, specifically representing ESG preference in an investment context for clients and reporting against it. This is a key enabler. It's all about providing transparency to clients that are consuming these solutions. The Vista Fund represents another product that we've launched. We launched this in early 2021. It's an alternative product that's really designed to benefit from dislocations that create volatility. And when you think about that theme, I talked about volatility and inflation, a product like this that's designed to take advantage of those things directly aligns with some of the concerns that we're hearing about from institutional investors. And more importantly, it represents an area that we may be able to bring capability down market to individual investors. This is kind of a classic global macro fund, but with a specific focus on taking advantage of dislocations, which makes it a little bit unique. Finally, we launched factor-based ETFs last year. That represents our packaging, our insights around alpha sources into a vehicle that is very much aligned with how advisers and really the industry at large is consuming equity investments. These are really exciting from an evolutionary standpoint for us. We did a lot of research trying to understand the space. More importantly, we did a lot of research trying to understand the specific portfolio problems that we're solving for clients and bringing these to bear in the marketplace. You may ask how these things tied to personalization. At the end of the day, personalization is about connecting client preferences and their needs, right? That idea of preference is an objective alignment. And these do that. They give advisers the flexibility to really tailor the experience, the investment experience clients are going to have over time. So we're excited about the capability we have. We think we're uniquely positioned, given our expertise in technology, investments in processing to aggressively go after delivering personalized investment experiences across segments. And we think those growth opportunities are clear and present. It's a 2023 phenomenon, not something that's [ future ] state, although there is opportunity for us to grow incrementally in the future as we bring these capabilities to bear. So with that, I'll take questions.

It's probably not a surprise. I'm going to ask you a question on retail alts. Each of the major public players has already launched or is in the process of launching some sort of products? It feels like the market is moving very quickly here. What's the window for SEI to achieve relevance in this space? And what is the priority to make sure you are relevant here.

It's a great question. I think the window is probably larger than it may appear, in large part because there is not necessarily a final answer on kind of the totality of how alts are going to enter into client portfolios. So non-daily-traded REITs and BDCs represent significant growth areas. You've seen growth in the adoption of interval funds, in particular, over the past couple of years at a rate that I think is really interesting. And that represents a vehicle that potentially is -- can be leveraged to bring more types of alternative strategies to bear in the retail marketplace. Dennis alluded to it earlier. I think we have patient capital. I mean we have clients that really trust us and come to us for advice. So I talked about that advise layer, if you will, at the top designing portfolios and then implementing those portfolios. A good portion of the clients in our adviser segment are outsourcers. The same thing exists in our institutional segment. Clients are coming to us for advice. So specifically on the retail side, I think it's the expertise from the institutional segment and the credibility that we've got because we manage several billion in alts today that I think give us an opportunity to really grow with those clients who are trying to better understand alts. In the retail space really estimates that there's 2% allocation to alts in client portfolios. That's not going to change overnight. And if that doubles, I think that represents pretty significant growth. So I think there's a window for us to take advantage of growth. And I think we can be patient so that we make sure we do the right things at the right time given the capability that we've got.

Ryan Kenny, Morgan Stanley. On the direct indexing side, what do you think differentiates SEI there versus some of the other providers out there? And what has the uptake been from end clients?

Sure. It's a great question. I think there are a couple of things to differentiate us. One, we operate in all of kind of the primary verticals that you need to really make that experience work the way in a way that will allow you to deliver an evidence personalization and deliver transparency to clients. We've got operational processing expertise. We've got our trust company. So we understand the custody side of the business. We've got investment manufacturing. So we understand the investment operational part of the business. And then you saw SEI Connect. We've got a front-end client experience that's going to allow us to create engagement between clients to configure, if you will, that direct indexing offering and then to really, in a very transparent way, evidence of what we've been told, right? That configuration back to clients, particularly in the area of tax management and sustainable investing. So I think we've got expertise across the entire value chain of what's necessary to deliver. Uptake has been positive, I'll say, in our business. I think if you look at adoption overall, advisers are very clearly demonstrating that there's value in that solution. And I think there's additional room for us to run as we further expand our capabilities there. With that, if there are no additional questions, after this is a break. It's a 20-minute break. So if everyone could come back around 11:35, I think it would be fantastic. And I just really appreciate your engagement today, the time that you're investing with us. And I hope that you are as excited as I am about what's in front of us because there is significant opportunity in front of us that we are more than capable of taking advantage of. [Break]

Okay. I think we're going to kick off the panel portion today to close up. So I think this is an open Q&A for [indiscernible] and his leadership team up in the front. Or there's lunch.

Do you plan any questions?

The people down here are wondering why Phil got to sit next to you, Ryan, just FYI. Little controversy going already.

I don't know if that's a short straw, though.

I was on it. But if I get sick, I'll be sick right on Thanksgiving, I believe, right? It will be helpful.

Mike Brown, KBW. I just wanted to start with a question on the margin expectations as we look out over the next few years. So you've laid out the plans for revenue to double within the next 5 to 7 years. How should we think about the other elements of that and what that profitability profile could look like between now and then and then maybe some thoughts on an end game once we get to that timeframe.

Yes, I'll start and then I'll let some other people comment. I mean we're always going to be focused on margins. And I think when Dennis put that slide up there and you look at some of those metrics and you look at operating income and earnings per share. So it's never going to be a model for us where it's revenue at any cost. That's just not the way we're built. It's not the way we're interested in. I think you're going to see a different dynamic over time as some units and businesses start to increase their margin. In other units, we start to invest differently. I think we've talked a lot -- or maybe I'll let Wayne talk about this for a second. We've talked as we as we see the mix of business as we've unbundled our adviser business, we expect to see more take-up and consumption of our services, but that will change the margin profile because you're going to have investment consumption as well as technology and administration. And maybe I'll let each of the leaders speak to their business and what they see from a margin perspective. Wayne, you want to go first?

Thanks, Ryan. I mean, I was hoping I would get the easier question starting there. The echo what Ryan said-- I would just take the inverse of his answer. And it's not revenue at any cost, but it's, I think, the way we're thinking about it now is it's not margin at any cost either. So it's how do you strike the balance. Because I mean we need to generate profits, but we need to grow. So how do we grow and how we balance the 2 successfully. And it's not margin at any cost. It's not revenue at any cost, but how do we strike the balance to take advantage of both, that's the way I would look at it. And if you can grow, you can drop more profits to the bottom line. And that's what we're trying to do.

Yes, I would say the same for my business. At one point, we hit 56% margins. It's hard to sustain that, especially with some of the headwinds of the business. But what we've really done is look at where strategically we want to be, what are the growth markets we want to be and what are the investments we want to make. And we think we're on a good trajectory to get back, hopefully, somewhat closer to 50% at some point, but recognize that it's also about revenue growth. It's about accretive markets. That's why we're excited about the Novus transaction, ECIO, Master Trust and what we're doing with alternative investments. Those are all really profitable segments for us. So that's how I kind of think about margins from my perspective.

On the IMS side, we've settled in around 35% or so. We don't target a particular margin, but we're very focused on investing in our people and technology platforms in order to stay ahead of the competition. So we're right in that range. It could bounce around a little bit, but we're consistently right in there.

So I'll not do any number about -- It's just that Ryan has declared a note staff, as part of the double the revenue at the same time, okay, we need to rightsize expenses for -- banking and that would help with the margin as well. So that's my primary focus. If you look at last 5-plus months, that's what we have been focusing on, and that would reflect in the upcoming quarterly results as well.

If you could -- Sanjay, if you could just maybe narrow in a little bit more there. You kind of alluded to some potential margin improvement in your business. But what have you identified as the true opportunity set? And what can we expect? Again, not specific. It sounds like you don't have a specific target, but in terms of how that could progress from here.

So if you look at the Private Banking segment, what we have done is that we look at the overall business out there, what is the total adjustable market for private banking. We looked at that for the U.K. market as well as the U.S. We looked at our existing client base. And then we look at, okay, how we can grow the business as well as rightsize our expenses. So that's what we have been focusing on, as I said, last 5-plus months, rightsizing the expenses, creating a blueprint that as we enter the next year that what is the baseline we will be entering with. And then quarterly basis, every quarter, how we are going to further rightsize the expenses? So that's what we have created the blueprint. And the teams, they are executing on that. The second part is around growth. So looking at the total addressable market, creating a gate 0 pipeline based on that and then creating a sprint level, okay, how we are going to turn that into gate 1, gate 2, gate 3? So I'm changing both the aspects here. Okay, how I reduced my expense in any quarter, at the same time, how you start growing the revenue, okay? At the same time, the third pillar is, okay, how we have the 100% existing clients, how we can grow through our existing clients? So these are like a 3-pronged strategies. That is our expenses. And Ryan, you called it out, okay, there are certain areas where we have been spending money based on our best thinking, which are not resulting in the ROI, which could be in other market units much higher. So that's how we are calibrating and reducing our expenses in private banking. So to say that I'm not 56% margin, I'm not 35% margin today, but my target is how I can be on the double-digit margin growth.

Just a reminder on what Sanjay said is we have a pretty healthy backlog of sold and uninstalled revenue that will -- is installing kind of as we speak. But at the same time, we have some negative washout that still has to occur that -- what we've talked about on the earnings call. So I would -- in the short-term, we have to cycle through that. And then we'll be in good shape kind of on the back end. So -- but the backlog is really critical and the ability to execute and its whole clients is critical.

Ryan Bailey, Goldman Sachs. It's clearly been a very challenging year from a market perspective, very volatile. I was wondering how that's impacted. And it seems, thus far, it's impacted each of the different business units differently in terms of organic growth. But how long do you think that impact might lead to a slowdown in organic growth for each of your respective businesses, if you're seeing it at all?

Phil, do you want to start?

Sure. I think, on the IMS side, our traditional side of the business is a little bit more tied to the market and sort of goes up and down based upon that. The alternative side is a little bit less tied to the market. There are a lot more breakpoints and basis points and sort of things that mitigate a lot of the private equity funds around committed capital, and you don't have the upticks and downticks as much. But going into the year prior to the markets doing what they did, we thought our numbers were going to be higher on the revenue side, but I think -- we've worked hard to maintain the profit. And I think there's only upside from here. We've continued to convert clients as quickly as possible. We're closing new business. At some point, that's kind of when the markets turn around. That's going to be really helpful for the overall financials.

And in the private banking space, if you look at the -- 2 things. One, of course, our pricing model is partly based on assets under management, assets under administration. So that definitely gets impacted based on the market fluctuation. But at the same time, what we are seeing is that, especially on the mid- to lower-tier segments of the -- my segment, there, the decision-making is moving at a faster pace. The clients -- the prospects we are engaging with, we are seeing -- they are planning more towards outsourcing. So that definitely is helping us towards our growth objectives.

I should have sat down there. When the current environment will change, I really don't know. And hopefully, you all can tell me that. There's a lot more smarter people in here. I guess, how it affects the advisers, I would say, is more so than any other business that SEI were exposed to the end consumer, right? Because we're going through intermediaries to the end consumer, and they're sometimes slow to react and then they kind of hang in there because they're scared. And until things recover, I think they're going to be scared and they'll be very hesitant to make any moves. That having been said, that is primarily an investment decision. And I think you saw this in the third quarter numbers. As we've launched sort of our [ RIA ] product and as we sort of unbundle the platform from the investments, if you -- again, you go to the third quarter, the sales of assets, the positive flow of assets on to our platform, without a change of investment, it outweighed the change in investments. Because we're winning new business because of the strength of the platform, which is not so sensitive to I'm worried about investing in equities and moving into the market. So in a way, kind of the move into the [ RIA ] and moving to the platform only, this has kind of diversified our exposure to the market. But we really need some certainty in the markets to really get to robust growth in my market at least.

Yes. I would say, in my market, new business decisions have been measured. People are taking longer time. On the existing clients side, even though markets have been down, volatility, we're doing awesome with new clients. We have a $150 million client here spending 7 hours with us today, and they really want to delve into the details of the risk management, the asset allocation, confirm the investment policy statement. So we're getting really, really high marks from our clients. Our best sales years were '03 and '04, after '01 and '02, and 2011 and 2012 after 2008, 2009 and 2010. So my perspective, there's no way this market could continue to have 90 different choices for OCIO. You're going to see some fallout. You're going to see some consolidation. Size and scale is going to matter. We have size and scale. We are in a good position. We have an aggressive sales force, so I'm bullish about our opportunities while we manage the headwinds of the defined benefit plan that are naturally just going to kind of ebb out over time.

Got it. And maybe a question for Sanjay. As you're thinking about the implementation of the backlog and working through that, how do you -- how are you thinking about making sure your attention remains high on existing clients? Is there anything specific you're doing there or thinking about so that way it can help us get to profitability in that business, to double-digit profitability in that business also?

That's a great question. So I would echo what Dennis said in terms of signed backlog. That's very important that delivering that backlog on a consistent basis and helping our clients to go through that transformation. That's important for us. And you'd see that, that's where we have consolidated the overall organization. We used to have different sets of teams. That was one of the major initiatives where we consolidated teams like business operations and technology, creating one transformation team and working very actively with our clients. So that would help us fast tracking our backlog realization. At the same time, what we did is we looked at, okay, let's look at all the clients who are coming up for a contract extension or renewal over next 3-year cycle. Then working with our relationship management team, we classified them in terms of red, amber, green. And we look at, okay, why somebody's red why somebody would not -- why they could be at a high risk for recontract. And then we account for the client-specific, account-specific plans in how we can retain those clients. So I'm on the road. I'm literally -- I was talking to -- I had a town hall other day, and I told, okay, guys, I missed dinner with my wife for the last 3 weeks. That's where I am right now. So my team were as we are consistently on the road meeting with our clients. And clients mandate is to improve the client engagement. It's not client retention. Ryan's focus is how we engage our clients and turning our clients into more of an SEI enterprise clients, not just private banking or trusted SWP clients. We are changing that paradigm. They don't know completely about SEI, and that's on us. That's on us to educate our clients and showcase our capabilities -- so that's how we are approaching. And this would be a rolling cycle, okay? Let's look at, okay, who are the next set of clients who are coming up for renewal. And rather than waiting till last moment and then -- we are in trouble, we would be with the clients. We would be handholding them and going to the transformation. We're very, very active on that front.

And I think what we talked about earlier, too, there's just been a significant increase in engagement from our leadership across all of SEI in front of clients, not just at the unit level. So there's banking clients or other clients where a lot of us have been in front of those clients in the last 6 months, and we're making sure that they understand the totality of what SEI can bring. We're just in there to listen and understand what challenges are they facing, where are they headed strategically. And they've been extremely receptive to that, and it's encouraging. We're much more aggressive right now. We're out -- I lost all my flight status during COVID, I was back to Executive Platinum in about 3 weeks. That's nice. But that's a true story, too. But I think it's actually rare to everybody here. We're just out in front of the clients and out in the market more.

Ryan Kenny with Morgan Stanley. A couple of questions. First one on the M&A strategy. It came up several times in the presentation that SEI is willing to engage in M&A, and you clearly have a very strong balance sheet and capability to do more. So how should we think about your framework at -- looking at M&A opportunities? Is the goal to continue to do smaller transactions in order to get access to better talent? Or would SEI be willing to do a larger, more transformative deal?

So I think when we think about it, we think about a couple of lenses. We've been working on establishing that frameworking criteria. That's how we put a leader in charge of that. Mike Peterson is also in the room today that's who [ our peers ] -- is reporting to. I don't know what definition of larger is. We did 4 transactions last year, and I think we used this concept to kind of building up our muscle and getting really good at figuring out how not just to identify and acquire, but integrate and also making sure that we're measuring post-integration. Did we achieve the results that we intended to achieve when we made the acquisition? I think when we look at it today, we're really thinking about creating, I think, clarity in that criteria to say, as we lay out our growth strategy and we lay out where we're headed moving forward, if there are assets and capabilities that we believe could accelerate that, both on a top line perspective, where it could bring talent and assets that we think could be leveraged or also could drive increased efficiency and productivity for us, there are areas we would intend to be aggressive. I don't have a definition of what larger would mean. But I mean, Dennis has been saying for the last few years, I mean, we're open for business. And if the right opportunity came along and it fit with our culture and fit within our strategy, we would move forward.

And then just a follow-up on capital return. When we think about how you're distributing capital to shareholders, SEI has historically done more on the buyback side versus the dividend side. Does higher interest rates but more emphasis on yield and maybe more opportunity to do more with the dividend? Or does your strategy balancing buybacks and dividend look more stable?

It looks more consistent with how we have allocated capital historically. I've tried to always say we have no expectation or no desire to be a yield play. So we'll maintain both programs. But certainly, the weighting will fall towards the buyback side as it always has.

And then a question for Paul. Can you just give us an update on how higher rates is impacting the DB side of the business?

Not great. Higher rates really kind of decreased the liabilities, increased the funded status, specifically in the U.K. market. The Gilt has blown out in the U.K. market. So that's a more of a near-term headwind on the business. We're managing through every client. Every client has kind of idiosyncratic glide path that we look at, but it has definitely become more front and center than it was in the past. Most of our clients are still weighted average in the 90%, 95% funded status ratio. What that means is if somebody wanted to annuitize, they probably need 110% of the assets relative to the liabilities. They'd have to make a onetime check. So the question is whether they still want to make that onetime check. But we're on it. We know it, know about it, but it's certainly something that's become more front and center than it was when interest rates were lower.

Does the growth in OCIO and ECIO offset that eventually? Or...

Yes. Yes, eventually, yes. Yes, I think we're going to see some pressure in 2023, but we're actively focused on growth markets. We're actively focused on ECIO. We would pick up the right DB opportunities if it was something that had a time horizon greater than 5 years. So we're not interested in getting a new DB plan that's going to turn around and leave 18 months later. But not all DB plans are at the same trajectory or inflection point. And there are some industries that are actually a little bit more committed to DB plans in the U.S., specifically the utility industry. So DB is not out of play. It's just the right DB plans while we still manage the headwinds of the existing DB book.

Pavel Gulberg, Bloomberg Intelligence. So you talked about up-selling alternatives, and we understand the growth is much faster. In terms of the pricing for the products that you can sell to that segment, is there any premium versus the rest of the company on average?

Absolutely.

Yes. Go ahead, Paul.

Yes. So my group has most of the alts right now, we have $10 billion of $85 billion. We make 3 or 4x on the alts side of it relative to the public market, fully disclosed by the client and agreed upon by the client, we waive our OCIC, and we get a product wrappers. And so we've done that in the context of a total portfolio, which is exactly what Jay is hitting on for the adviser market in the context of the total portfolio. We're going to continue to see lift in that as we bring more alts to marketplace. The second component now working with Wayne that I'm really excited about is selling all stand-alone to certain sophisticated larger investors that won't consume OCIO. So think of [ Villanova ] University now $1.2 billion. They don't want to have OCIO, but they may need -- have a need for $120 million of alternatives in the context of their portfolio. So that's a new incremental opportunity for us, not the least of which is being able to sell in ECIO and the SEI Novus platform to a prospect like that. So now we have a lot more that we can talk about with these larger sophisticated investors outside of just the OCIO tool kit. I don't know if you want to add.

Yes. I mean, what I would do is try to tie 2 things together. So I would try to tie together alternatives, and everyone wants to talk about alternatives. I think, as Ryan said earlier, the tip when everybody as everybody and tell us an alternative, but then tie that into kind of personalization. There is no doubt that alternatives are a more expensive product, and there's no doubt a higher margin. Everything is good from a financial perspective of alternatives provided you can manage it, and we manage right now. So we have some of the capabilities to be able to do that. But when you look at putting alternatives in a portfolio and in the adviser structure. You're basically giving people the choice do you want to personalize -- are you making the choice that I'm willing to pay a little more for either the diversification, the risk modification or the return of alternatives. And you can make that choice. But if you make that choice, you're making a -- I'm willing to pay more. I want to pay more because I see the value of that. And I think when you look at the market I think, by and large, consumers are saying yes to that question. So it is a higher margin, but it's going to be a higher margin. We're going to get people to it because some people may say, "I want to buy the Walmart shirt. I don't want to have the better product." So that's a long-winded way of saying yes.

But I think it's an important point, though, Wayne, because I think the other thing that Jay touched on is when you think again about where SEI could be positioned differently, it's not just on that asset management element of it. It was when it's incorporated on the operational and technology side our ability, whatever that product structure could be to incorporate that into a portfolio and that portfolio rebalances easily because of SWP, and we know how to price those things because we do that today. We have more of those weapons at our disposal today. We have to figure out how to bring more of that to bear.

And if I could just chime in on that, all the news you see about retail alts are selling retail alt products, correct, incorporating it into a robust technology that does all of that and managing the experience is a more complicated part, and that's what we're working on.

That's right. All right. Exactly at noon. Okay. All right. Yes. Thank you. Thank you all. So I think as a close, we have a slide up and people are going to move around. I want to thank everybody for coming today. It's a big investment of time, and we really do sincerely appreciate, and we appreciate the engagement and the questions and the interaction that's important to us. It helps us kind of think through our strategy, helps to validate some things and put some energy into the room. I hope what you leave with today, you can see the bullets on the screen on the side of what we've talked about. We are really going to continue to get loud we're going to get more aggressive. We're going to go on offense. We're going to be smart. We're going to be disciplined. We'll be ruthless about certain decisions. We're going to execute on what we talked about moving forward. I hope what actually came across today is a genuine kind of widespread enthusiasm that resides across SEI right now about our opportunity moving forward. It's in our hands. It's up to us to execute, but we feel really strong about the work we've done in the last few years, especially the last 12 months to put us in the position that we're in today, and we're really excited about it. And I'll close with what I opened with, and I open with that story on purpose. That concept of time and time waits for no man. We are going to operate with a different sense of urgency. We're not going to wait for everything to happen. We're going to go create a lot of that opportunity, and that's going to be exciting. We do have lunch in the same place we had breakfast. Thank you again, on behalf of all of us at SEI, for your interaction. We really appreciate it.