SEI Investments Company (SEIC) Earnings Call Transcript & Summary

All right. Good morning, everyone. Thank you for joining us, whether you're here in New York or whether you're joining us on our webcast, we appreciate you coming. We're going to get started in just a minute. People could find their seats, would appreciate it. Before we get started, I want to go over the legal statement. It's very important. I promise I'm not going to read this to everyone, but this is also posted on our website. We have a packed agenda for today. We're going to be taking a break around the halfway point, and then we're going to be leaving plenty of time for your questions at the end of the presentation. To get us started, I want to introduce our CEO, Ryan Hicke. Ryan?

Thanks, Brad. Welcome, everybody. Excited to have you here. It's fun to do something different, do it up in Manhattan. It's been 3 years since we've done this. I think it's fair to say a lot has changed in the last few years. I think when you focus on what we're trying to get out of the next few hours, we want you to leave with a few things. Clarity about our vision. We are really clear about where we're going and why. We want you to be convicted about SEI, about our leadership team, about why we're going to win. I want you to be a little bit enthusiastic, I have a little bit of fun. It's really exciting. We were in a very different spot 3 years ago than we were today. And I think it's really important sometimes to kind of stop and reflect. There's an investor, a mentor, a person I even consider a friend in the back of the room. I won't call him out. But he likes to remind me that in the short term, the stock market is a voting machine. In the long term, the stock market is a weighing machine. And if you think about that, what I really want you to focus on for the next few hours is we are building mass. We are building things that are truly differentiated, that are sustainable. We're not trying to maximize the return of SEI over 6 months to 9 months. We're trying to do repeatable growth in areas where we think we can continuously win and differentiate. So let's pause for a second and reflect on the last few years. 3 years ago, I was a lot younger. I was less grey and somebody said, get up there and say double the revenue. I said, "Oh, no, that's a terrible idea. And I was like, no, we said double sales events. And I was like, "Oh, right. But if you go from left to right here, sales events are the lifeblood. It starts everything. And what we have done, and Phil McCabe is up here later, IMS has led the charge. But what we have done in reigniting sales events, we are on an unbelievable trajectory there. Three of the largest sales event quarters in the history of SEI have been in the last 6 quarters. We're establishing a different baseline. We are getting contributions from multiple different engines. When we get the right sales events, and believe me, we are not just focused on quantity. We focus on quality of sales events. Winning a $50 million deal that has $60 million of development, we don't celebrate that. What we are really focused on is repeatable wins that when they get installed, we have happy clients and those sales events are accretive to the bottom line. And as you know, we really run the company with 2 metrics, the sales events and then earnings per share. But we focus on those operating margins because it provides discipline around where we can drive more leverage, where we can actually get more out of what we're doing, but also invest in areas that we think can expand our footprint and expand our margins. I hope when we're doing a 2027 or 2028 Investor Day, we're repeating these type of results, if not accelerating them. I can tell you for sure, the opportunity is there, the clarity of what we're doing is there and our ability as a leadership team to execute is real. So how have we done it the last few years? This looks like a standard blue [indiscernible] slide. It's not. I'm going to unpack each of these things. Client engagement. Our client engagement prior to 2022 was not good enough, except I would say in IMS. But in our other units, we just weren't out there. We were not in front of our clients. We were not at the right level of our clients, and that has fundamentally changed. For any SEI people watching on the webcast, get off your webcast and go out and see a client. It's about collecting the dots. You can't connect the dots if you don't collect the dots. And we are out there every day collecting the dots. It is super important, and we have barely scratched the surface of what we're going to do there. Business leadership. It really starts and ends with leadership. We made a lot of changes in leadership. I'm going to touch on that a little bit later. We have infused new talent. We have unleashed that talent to go do different things across the organization. We have approached it with humility. We don't know everything about how to do these things. You look at the acquisition of Stratos. We're not going to tell Jeff Concepcion every day how to run Stratos. We're going to learn from that executive team, and we're going to teach them how we have enabled other advisers and firms to scale. It's a partnership, but it requires leadership. We're not going to stop here. We're going to go find more talent. We're going to put that talent in the organization, and we're going to unleash that talent. And then clarity of vision. I know that sounds simplistic, but there are people I came up here a few years ago to meet in New York and just get some feedback about SEI. And I will tell you, one of the consistent points of feedback was great company, but we really don't understand where you're going. We don't understand why you're going to be differentiated and where you're placing your bets. You won't leave here at 12:00 not understanding where we're placing our bets. They say a picture is worth a thousand words. This one is worth about $250 million of revenue. We did our first ever global client executive event in March. Pause and think about that for a second. We've been around 57 years, but we always operated these events in the verticals. We would have adviser events and IMS events and banking events. This time, we went horizontal, whoever's idea that was at SEI, it was brilliant because what it did is it allowed us to actually step back. The clients all saw each other and literally didn't understand why other people were in the room. So Chip, somebody would say, why is [ Bruce Kennedy ] here and we'd say, [ Bruce Kennedy ] is a client. He would say, why are they a client? They're an investment manager. But everybody only knew SEI for the vertical which with they interacted. We had CEOs of some of the largest alternative investment managers. We had global RIAs. We had institutional clients. We had trustees. It was unbelievable. And it made SEI and all the SEI-ers really proud because we are the connective tissue that brings all of this together. And these types of events, I am telling you, fundamentally change the perception these firms have about SEI, fundamentally changes it because they see the blast radius of where we operate and what we can do. And how has it paid off? It's paid off in some of these logos. So as I mentioned around client engagement, we are really focused on our existing client relationships and growing those. But you'll hear this phrase over and over again, whether we say the phrase enterprise, whether we use the word horizontal, changing the positioning with the executives in these organizations has actually allowed us to expand our footprint. What we do with CIBC, they're a client in 3 different SEI units now. What we do with PIMCO, client in 2 different SEI units. U.S. Bank, huge client, one of our longest-standing clients. We are expanding our footprint with these clients because they don't just see us as a single threaded provider anymore. And then you look on the right, you look at some of the new logos we've added. You're going to hear a lot about this today in terms of collaboration across the executive team. We are winning these deals by partnering with each other like a team. You look at TrinityBridge in the U.K., I think 1, 2, 3, 4, 5 of the executives in this room have been to London to meet with TrinityBridge . Nobody owns TrinityBridge. It's an SEI client. It's our client. I will tell you one of the coolest examples on this slide is Vanguard. So Vanguard is about 6 miles away from SEI, has never been a client of SEI's. I never understood why. Everybody would say, well, they do their own principal and income accounting or why would they want to talk to us or they launch their own funds. And I would say, "Hey, why don't we take a ride down the street and find out. We have a lot of momentum right now. They're not going to be a massive global client for us. They're right in our backyard. We redistribute Vanguard portfolios to our advisers. They're a partner. But I'll tell you something unbelievably cool happened this week. Vanguard posted a job for a strategic enterprise relationship manager. And in the job description, they called out SEI as one of the clients as an example of who that individual will be working with. We weren't even on Vanguard's radar 3 years ago. And as you guys know me, I operate with a tremendous amount of humility. That is how I'm built. I have literally been with the CEOs of almost every single firm on this chart, not selling. I just had dinner with Salim from Vanguard the other night. Michael Lane and I just had dinner with the CEO of [ WSFS ]. Sanjay and I had dinner with the CEO of TrinityBridge, we are everywhere right now, and it is changing the momentum and it's permeating through the organization. But as I said, it all starts and ends with leadership. And I'm super proud of the leadership team we have built. And I'm not going to lie. It's been hard. Sometimes I think I'm a full-time therapist. But you're bringing in world-class talent that have big ideas and tons of experience. Sean was running a huge business for Grant Thornton, and Michael was running a huge business for BlackRock. Sneha was is running a huge business for Thomson Reuters. And then we have our internal folks. Phil McCabe has been killing it in IMS for years. Sanjay went from CTO to running banking. Sandy switched roles and took family office services, got it rolling, cleaned it up, great transaction for us, great deal for Aquiline. Everybody is clicking. But I will tell you, it's cultural. We really operate with a first team concept. It is company team self. That's how we think. That's how we operate as a leadership team. Don't underestimate the impact that's going to have. When you hear people talk today about how much they are interacting with each other, I hate to admit it that just wasn't happening at SEI years ago. Everybody got along. We just weren't collaborating and connecting in the way that we should have been. That's gone. That's gone. And that is down multiple levels right now. We have broken down the artificial and true walls inside this organization. All right. Let's switch to a little bit of strategy. I believe there's 3 ways to make money in wealth management, advice, asset management and administration. And we can come up with 100 others, and I could force fit them probably under one of those 3 umbrellas. We have built a 57-year world-class organization, Carmen, with administration and asset management platforms, predominantly enabling, in many cases, a more effective delivery and execution of advice. We believe as a leadership team and the Board was extremely supportive that we needed to expand our footprint and have a strategic hold in that advice space as well. And that was the thesis behind the acquisition of Stratos. How can we actually have an SEI asset and vehicle in that advice space while we continue to heavily invest in asset management and administration. And if we can pull those things together and if we can get that flywheel really spinning and if we are humble enough to listen and learn about what is working in all these areas and bring that knowledge back into that ecosystem, it's really powerful. You think our sales events are strong now. We get this right, it's going to significantly accelerate because don't ignore the black circles. We have the scale. These businesses are hard. You can't just wake up tomorrow and say, I want to be in the fund admin business, good luck. You can't just wake up tomorrow and say I want to build SWP. I hope you have $1 billion. These things require real scale, real infrastructure and real investment, but it requires some innovation. And Sneha is going to come up here later and talk about how we're trying to create more space and focus around the next generation of SEI and where we harness more technologies and bring that in here. But we have a foothold now in all 3 As, and I think that is differentiated, and I think that's powerful. Okay. I'm halfway done. I'm going to stay at 10,000 feet here because each of the subsequent leaders are going to unpack this in more detail. There are five clear areas where we believe we're going to drive more growth. They're all not created equal, but they are at different stages of maturity. But if you go first, reimagine asset management. And we put this in air quotes because our asset management businesses have changed. Michael Lane is going to talk about opening up the whole ecosystem, but we've got to grow the core. We have an enormous client base. We need to grow that client base. We need to add more energy and get more momentum from them. We've got to move upmarket. The enterprise RIA space is a huge opportunity for us, huge. But we have to grow our wealth management capability. The shift from mutual funds to ETFs, the introduction of alts, we have to accelerate our positioning here. We've got to get more products in the hands of our intermediaries to drive asset management growth. Michael is going to go through in a lot of detail about that. We're going to reset international. Sanjay Sharma, new CEO of International, also going to continue to run banking. He knows he has margin expansion to do. But if you look at our margin opportunity here and you look at the revenue opportunity, we've been at about 15% revenue outside the U.S. for probably the last 15 years. But we haven't taken a different approach around how we want to run it. When you think about how we run the company today, we don't run the company better. We run the company differently. We think about EVA. We think about return on invested capital. We think about where we're going to deploy our assets and where we're going to deploy our capital and what's the return profile going to be. And when you look at international, we have a great footprint in the U.K., a great footprint in Dublin, a great footprint in Ireland or Luxembourg, but it's not integrated. There's no integrated cohesive strategy around what we're trying to achieve and going to market. And I will tell you culturally, as most people know, I spent 12 years in my career in London. We put an executive committee member on the ground in London. It will change the culture overnight. People will feel that those offices are more important. People will feel more connected to Oaks, and they will feel that this is critical to our growth trajectory in the future. I would say the asset management is further down the path. Michael's got a lot of detail about what's in flight. Sanjay has been at this for about 7 days. I expect a lot more out of him in the next 2 weeks. Big opportunity for us here. I would say this slide is a great example of how SEI has changed. For right or wrong, I think we used to spread the peanut butter in terms of capital allocation. Everybody was mildly disappointed. Just enough, just enough to not make everybody too upset. We don't do that anymore. We really talk openly. We use data. We look at total addressable markets. We look at win rates. Sean has brought in a totally different discipline around how we think about revenue. It's not personal. We have four enormous opportunities on this slide. Professional services. A few years ago, I asked Sanjay to go deliver a certain sales event number. He said, I got you. He came back the next day and said, I can't get there, not just with SWP. We need more momentum. I got to get out to the clients. We have some kind of leaky holes. He said, but I can launch professional services. He's going to unpack this in a little bit more detail. Our ability to turn professional services, which is today in a vertical and run that more horizontally, really big opportunity for us. It has differentiated less in the minds of the clients. They don't think of us just as a custody platform. They think of us as a technology partner. It has allowed us to increase our ability to leverage AI and automation in things like our SEI Data Cloud. It's got a tremendous, tremendous opportunity ahead. Then you look at regional community banks, a great strategic pivot for us a few years ago. We were trying to sell to a lot of different markets. Sanjay got the group focused on regional community banks. We continue to win. We expand our footprint there. We have an awesome pipeline, but it is a segment that's pretty deep, that don't want to build their own infrastructure that need to compete in wealth, and they see us as the perfect partner. But again, our ability to add different services and capabilities into this segment just increases the value and increases the stickiness of the clients. Enterprise RIAs, Michael is going to go into a lot of detail on this. I'll also say, "Hey, we're learning things. We won the Summit deal, and we have some learning from the Summit deal. Our ability to just quickly install and move $3 billion of assets off of Schwab is not the same as moving $3 billion of assets off of a different custody platform. It's different user experiences required. It's different training required. And we're learning, we're reacting, and we're going to adopt and adapt. It's great opportunity for us. Enterprise RIAs and regional community banks are actually starting to get a little grey. What those firms need to compete are pretty similar. We are uniquely positioned, uniquely positioned to win in that space. And then you guys might have heard alternatives are kind of hot right now in the market. If you go outside, there's a few firms doing pretty well. Phil is going to talk a lot about the growth of alts. We are going to double down. We have an unbelievable moat from operational delivery to alternative and traditional investment managers. We're really good at it. We spend a lot of money on it. We put a lot of talent against it, and we service the hell out of these clients. Phil and I are on the road a lot together, and we have very happy referenceable clients that are growing pretty quickly. We're going to add more focus on the technology side. We're going to add other services that we think can help those firms grow. We are going to expand our moat in this space. Enterprise excellence. I've been trying to tell Sean for 15 months, stop indexing to yourself. He doesn't want to listen. But I think that's what we were doing from SEI for a long time. We were comparing ourselves to ourselves. And enterprise excellence is truly having the courage to run the company differently. And we care passionately about our culture. And care is a word that we use a lot with our culture. We care about our employees. We care about our clients, but we need to drive more accountability. We have to have more courage and change is hard. And we are in a relentless cycle of change right now. It's hard. I get the word exhausting text it to me about 4 times a week. It's hard. We're doing hard things. And every time people are trying to drive change, there's always passive aggressive behavior that tries to slow that down, and that's where leadership needs to knock those walls down. But when you think about the intersection of what we can do with our talent footprint, Sean is going to talk a little bit about the GCC. The GCC is not just a labor arbitrage strategy. It's a workforce strategy that not only are we going to focus on white glove service and delivery, we're going to focus on culture. But everything we're doing is to drive growth. Growth in our employees, growth of our clients, growth for our shareholders. That is where all of this comes together around changing the way we run this company. And then strategic capital allocation. I've heard from many, many people in this room over the years, are you guys ever going to do anything different than share buybacks and dividends? Well, that's been a great way to return capital to shareholders. And depending on what lens we want to use and what time frame we want to use, sometimes that's the optimal way for us to deploy our capital. But with the Board's support and the executive team support, we obviously just made a pretty big decision and deviation from that with the acquisition of Stratos. You understand why we did that. Michael will talk more about that. M&A and internal investment. So it's not just about buying things for buying things sake. It's about actually using the balance sheet to accelerate areas where we believe we can drive growth. Sneha is going to talk about ventures and partnerships. We have a lot of really good things happening there that don't require a big investment off the balance sheet or out of our cash flow. We have this unbelievable company, what AI and everybody have built for 57 years. We have this amazing balance sheet, an ecosystem of clients that is unrivaled, cash flow. And we have to think differently about where do we want to deploy that capital and how are we setting SEI up, not just for the short term, but more importantly, for the medium to long term so that we weigh more. So with 2 minutes to go. I'm really excited about where we are. I'm convicted. I'm enthusiastic. I hope that comes across. But I will tell you, what I believe pretty passionately is SEI is back. Our competitors don't want to see us right now. They weren't even worried about us a few years ago. You can feel it. You can see it in the interactions we had with executives. And we're not playing for bronze. We're not playing for silver. We're playing for gold. We have a different mindset across the organization. We are very focused on how we run this organization and run this company. We are extremely client-centric and growth-oriented, and we are willing to do things differently to drive different outcomes. The next leader that's coming up has been in the middle of the epicenter of a lot of this change. I know it's been extremely enjoyable for you the last 15 months. Sean, I appreciate everything you and the rest of the leadership team has done. I appreciate everybody in this room. We'll be back up from Q&A. You're going to see a lot of amazing content and a lot of excitement and enthusiasm over the next 2 hours. Sean?

Okay. So Ryan said everything that was a 100% true other than one thing. I'm not sure it was him who says we have to stop indexing to ourselves. I don't know who it was. I'm not exactly sure, but it might not have been, Ryan. Although we have adopted that theory throughout the organization. So I have been with SEI exactly 1 year and 6 months today, exactly. I started on March 18 last year. So today, September 18. So we don't normally celebrate half birthdays in my household, but I'm celebrating my half birthday today or at least at SEI. Okay. So I want to start off with a debt of gratitude. So when I came into this role, I had a lot to learn. I had a lot to learn about SEI. I actually had a lot to learn about the financial communities and the way analysts look at businesses. The folks in this room, I see a lot of folks I've worked with over the last 18 months. You guys have done an amazing job, I think, of first off, educating me on how you think about our business, and it also has allowed me to understand how I should frame my thinking about the business. So I wanted to start with a debt of gratitude. Okay. So I know what you're thinking right now. You are thinking that is the greatest CEO opening of an Investor Day of all time. And yes, the enthusiasm was there. But you're also thinking great. So -- but can you -- I need to understand what that means for our financial performance. And that's where I'm going to jump off. So I am going to jump off of one of Ryan's later slides, and I'm going to put -- start putting some financial context around it. So the five areas that we're going to talk about today, I'm going to start with number one, we're investing in our growth engines, namely IMS. It's been our strongest growth engine. We are really, really well positioned in the market. Phil is going to talk at length about this, so I'm going to just touch on it a bit. Over 2/3 of our revenue comes from the alternative asset classes. And we expect that trend to continue. I think everyone in this room expects that trend to continue. Inside that alternative asset class, we have carved out an expertise in the fastest-growing part of the asset class, and that's private credit. We do this really, really well. In addition to that, over the last 6 to 12 months, the largest alternative managers in the world are rethinking how they should be deploying their capital. Should they continue to be in-sourcers or should they move to outsourcing. We're starting to see a trend in moving to outsourcing in some of the largest of the large that have yet to make that move. And we are really, really well positioned here. Because of those two, you could say we're lucky, you could say we're good, but we're really at the epicenter of this shift. So as a result of that, we expect to have double-digit growth in our IMS business. Number two, we are reimagining our asset management business, led by Michael Lane. Many of you know, when it comes to asset management as a whole, we've been very, very slow to pivot, especially in some of the structural market changes we've been seeing, the move from active to passive. Michael has been here about a year, and he is pivoting us very, very quickly. He's doing -- I mean, the guy is tireless. He's relentless. He's got some back pain today, probably because of, he feels like he's carrying the firm on his back, but he's done an amazing job. So we expect high digit single -- high single-digit annualized AUM growth. Yes, some of that will come from the markets, but a lot of that is going to come in our expectation from organic AUM inflows. Number three, we are going to boost international returns. So we have spent a lot of time. I've spent a lot of time analyzing the numbers, looking at our financials. And what we have noticed, what I've noticed or what the executive team has noticed is our international business has been less than stellar compared to other parts of our business. And when we started to really think about it, we actually realized that our international business looks a lot like private banking did 3.5 years ago, a lot. So what happened 3.5 years ago? We put Sanjay Sharma in charge. You know where we are in private banking today for those who know us. And we said, who would be better to help us lead us through some of this change that needs to come than Sanjay. Our margins aren't ideal, just like private banking. Our growth has been less than stellar, just like private banking. Our cost structure needs some work, just like private banking. So Sanjay, we believe, is the ideal person to lead us forward. So I want to unpack a slide that Ryan went to. So this is new information for you. I'm going to focus on the right side of the slide that Ryan put up earlier. The margins in North America are about 4x higher than our international margins. There is substantial opportunity for us from a margin standpoint and a bottom line standpoint. While 15% of our revenue comes from outside North America, the contribution to operating profit is significantly smaller because of the margin differential. So Sanjay has two mandates, two, very similar to what he did in PB. He's going to look to expand the aperture of how we view our total addressable market, including the geographies we serve. We're not here to plant flags everywhere, but we are going to look at the geographies we currently serve and where we should serve. He also has a mandate to grow the revenue and put a hard focus on cost and cost control. We are really, really excited to see what Sanjay is going to do with this business, and we are all here to support that. He's going to be working with Phil. He's going to be working with Michael Lane. He's going to be working with me. He's going to be working with Sneha, Mike Peterson, our entire leadership team and Ryan. So this is not on Sanjay, this is on us. But again, really excited to see where Sanjay is taking us. Okay. Number four, spent a lot of my time here, a lot of my time here. Enterprise excellence and expense optimization. A big part of improving our operating margins will come from the global capability center or the GCC. We opened that in May of 2025 in Hyderabad, India. This is a big part of our talent strategy. Another area for improvement is in SEI is instilling discipline. Ryan mentioned this. We need to instill discipline in the organization to spend the money, SEI's money like it's your own money. I think we, for a period of time, lost that a bit. I think over the last couple of years, we've kind of really developed that muscle again and that discipline. Maybe historically, that was led by a few. We're now instilling that should be led by all. Really, really important. We believe through disciplined cost optimization, expense management, including the GCC that we can improve operating margins by 25 to 50 basis points per year. Lastly, capital allocation. I'm not going to go into that much now. I'm going to talk about that more in just a bit, but we have rethought the way we think about leverage. Actually, some of you have helped inform some of that thinking. We're going to -- we are rethinking the way we look at leverage, the sources of capital and the amount of debt we would be comfortable maintaining, including how we would deploy that capital if we had that additional capital available to us. All right. So what's the punchline? If we can achieve these five initiatives, we can achieve double-digit annualized total shareholder return now through 2030. Okay. So let's talk about how we're shifting the operating model to effectuate these changes. This -- the next 2 slides isn't going to look like a lot. It's a lot. It is a lot. So historically, SEI has lived in silos. We have our business units. You're aware of them. Each of those over the last 55 years out of 57 years, I would say, they almost ran as independent companies tech, marketing, investment decisions, even basic things like compensation lived inside those verticals. It served us well for many, many years, but it will not serve us well going forward. This sentence is the big one. We have taken a hard shift from vertical to horizontal. That is not an ease -- those 5, 6 words, it's not easy to do, but we have done it and we are actively doing it. Mainly in our functional areas, but it's more than our functional areas. The first team concept that we talk about frequently in the boardroom is not just words. Phil is working closely with Michael Lane. Michael Lane is bringing opportunities to Phil. Sanjay and Michael Lane talk about asset management weekly. This is not just functional areas, but it goes well beyond that. We are really operating as a cohesive unit. So remember this slide, and this is what we are looking like today, right? So you'll see the verticals, you'll see the move to horizontal. It doesn't -- just 3 lines or a couple of lines. It's a lot. This shift is serving us really, really well right now, and it's going to serve us well in the future. I'm going to talk about a few examples. So I mentioned things like compensation. Every -- the majority of companies that look like just in the world, public companies, they have a horizontal compensation strategy. I know that sounds really basic. We did not. They lived in verticals. Our marketing, marketing almost autonomously lived inside the verticals. How we thought about marketing was driven by the leader of those business units. That has shifted. Again, it doesn't seem huge. It is big. The fact that we now are developing an enterprise story to tell our story is really, really important. We did not have an enterprise story. The offerings that our clients bought from us were the only offerings they knew. Ryan had gave a really good example about the enterprise conference, our client conference that we had earlier in the year. That was the first one in the history of SEI. Historically, those client conferences were inside verticals. So just being able to tell a story, a different story about how we're bringing our whole selves into the marketplace. We're a very unique company, maybe one of the most unique companies in the financial services space that serves all parts of the market. Michael Lane and Phil and Sanjay will talk more about that later. Technology. Technology lived almost autonomously inside a vertical. All priorities were thought about of what those business units needs. Not a lot of attention was thought about how we can maximize our return on those investments. It was based off of the verticals. As a result of living in those verticals, we have developed a significant amount of redundant technology. So technologies that are in each of the business units, we, over the next few years, will be sunsetting those technologies and having one technology depending on what it is. User experience, that varied on platforms depending on which business unit we're in. So again, having a horizontal technology allows us to really understand the overall user experience as opposed to the user experience that sits inside the verticals. You're seeing a theme here. Procurement, I'm going to give you a good story on procurement. Procurement was decentralized. SOWs were signed with various vendors inside each vertical. We have shifted that. We are in the early days. Centralized procurement function has been stood up in the last -- less than a year. But I want to share a very good example of as we move from vertical to horizontal. In the last month, our technology solution and operational teams were brought together, led by procurement, centralized procurement. And we talked about one vendor in particular. Here's the punch line. After a couple of weeks of working with the vendor and looking at the various SOWs and recontracting with that vendor, we were able to save $18 million over the next 7 years by recontracting, by bringing the enterprise together where they historically lived in verticals. We have 1,000 vendors. I'm not suggesting we're going to save $18 million, don't write that one down. But again, you can kind of see when we talk about running the company differently. Ryan says not necessarily better. I would argue, I think this is better, but we are running the company differently. The GCC, that's new on this slide versus this slide. I'll speak to that in a minute. AI and automation, huge, huge opportunity for us. We're probably only in the second or third inning, but automation and AI, Sneha and I work very, very closely on this. It's a massive opportunity for the organization. We have a lot of manual processes and a lot of room to reduce costs. And really, I get sometimes criticized a little bit that Sean Denham is about expense reduction, expense reduction, expense reduction. I am not. I am about optimization, optimization, optimization. There's a big difference. Okay. So as we think about AI and especially automation, it's a good lead into our global talent strategy. And let's talk about that talent strategy. We have 5,200 employees, as you know. We also have 2,000 consultants, pretty much full-time consultants. So when we think about a 5,200 number that's reported in our K, what we don't -- also don't always talk about is the other 2,000 consultants. Many of us have worked for SEI for the consulting firms for 30 years, and we've paid that premium. From 2018 to 2023, including both employees and consultants, our headcount was outpacing our revenue growth. That is an unsustainable model, as you know. We had a lack of discipline in our hiring and our use of contractors. We have gotten better over the last 2 years, putting discipline into the process. If we or when we double revenue, not giving the time line, but when we double revenue and if we were to double headcount, we have failed. We have failed. So the use of AI and automation is going to be key to our success. Sneha will speak about our AI journey in a little bit. I want to speak about our offshore strategy, which is, again, a big part of our talent strategy. In my first 1.5 years at SEI, I often got the -- still get at times the following question. What is the #1 thing that has surprised me the most about SEI? And it came on day 2, and nothing has stopped it. We are a labor-intensive organization, we are, and we did not have an offshore strategy other than consultants. That was it, for the most part. In a vertically led strategy, it would have been nearly impossible to stand up a GCC, nearly impossible. In a horizontal model, it is still going to be challenging, but it is actually very doable. I've done this in my previous employee. We will be shifting technology consultants to employees, not in a light switch, but in a very thoughtful, meaningful way. We will evaluate all new operational hires as to whether they should be onshore or offshore. There's obvious benefits to this. Number one, most obvious is salary arbitrage. Number two, equally important is access to talent, especially as we start thinking about AI and automation and other things. We need that access to talent. We believe by employing this GCC offshore strategy over the next 5 years, we'll be able to save about $40 million. The key to this, though, is we cannot affect our quality and the white glove service that our clients have become to know us for, critically important. Phil would kill me if any of that happened. So that will not take place. Let's move to our balance sheet. On this slide, you'll see how SEI compares to our peer group. You see peer A, you see peer B, you see peer C. We have taken the names out to protect the innocent. You will see that SEI is an outlier by a comfortable margin. In fact, we have a negative 1x net debt-to-EBITDA ratio. How is that's calculated? We have about $700 million of cash on our balance sheet at any given time, somewhere around there, plus or minus, and we have 0 debt. Our leverage ratio is conservative, probably too conservative. It doesn't allow us to tap into low cost of capital and limits our ability to invest and produce higher returns to our shareholders. We are targeting a positive 1x leverage. This will not compromise our fortress balance sheet, which is important to all of you, our investors, our shareholders. It's also really important to our executive team, our leadership team. It's also really important to our Board of Directors. So we are not jeopardizing that fortress balance sheet. But this does allow us to put incremental capital to work. I want to emphasize, this is a long-term target, and we anticipate it's going to take a while. But it's also contingent upon us finding attractive M&A or other external investments, including things of what Sneha does. Sneha's job, she will come up here, but we also make other investments, small investments, relatively small investments, but in future-looking interesting things, but I won't steal her thunder. This is not about forcing money out the door to achieve a leverage target. It is not. But going from negative 1x to positive 1x gives us an ability to leverage more capital. So what are we going to do with that capital? Before we go there, let's talk about what we've done in the past. You can see from this graphic that essentially all of our investments over the years from 2017 to 2022 have been funded with free cash flow, no debt. The majority of capital was returned to shareholders in the form -- as you know, as a form of stock buyback or dividends. We used a tiny, tiny, tiny sliver for M&A, all the while increasing our cash balances or cash position. Going forward, it will be more balanced, more balanced with our sources of capital and more balanced with our uses of capital. We anticipate taking the balance -- our cash balances down from about $700 million where it has floated around recently to about $300 million, and I believe we can go lower than that. Possibly using a small amount of capital for debt to get to the target I was speaking about earlier. So what are the uses of cash? We still expect to take 90% to 100% of the free cash flow and return it to shareholders. That will be mainly through repurchases. We will also continue to pay a dividend as we always have, probably with modest increases in that dividend. The incremental capital is M&A and investments. Stratos is a component of that. The biggest future component will be for Stratos as it relates to the options that we anticipate exercising over the next 6 years, which will increase our ownership interest to 100%. To a much lesser degree, we will use some capital for Stratos to roll up new advisers. They are very acquisitive. Stratos is very acquisitive. We want them to continue those acquisitions, and we will help support that. We anticipate that we could go farther -- further with our investments beyond Stratos. But I want to be very, very clear, very candid. We are 100% focused right now on the Stratos integration. We have nothing significant in the hopper as we sit here today. But if we do find attractive, sizable accretive M&A, it is possible if we do not find that, it's very possible that we do not approach that 1x leverage target that I had mentioned. This is simply a base case. Okay. Shifting to financial reporting. In my CFO role, again, especially in early days, I heard quite often from this group. I've heard it from investors and maybe more equally important from prospective investors that SEI is really difficult to understand. I agree because when I was thinking about coming to SEI, I read the 10-K 2 dozen times, 3 dozen times, and I couldn't get it. So our job, my job is help to simplify how we speak about ourselves, how we are digestible to the Street. Today, we are announcing a change in our segments. We are moving from 5 segments to 3 segments. Caveat, still subject to KPMG signing off on that, but I think we will get there. We are collapsing our Institutional segment and our Investment Advisors segment under one segment, which continue to be led by Michael Lane. Private Banking is getting a name change to better describe this segment that will continue to be led by Sanjay. Investment Managers is now Investment Manager Services continue to be led by Phil. New business ventures will disappear. The revenue that lived in ventures will now follow the client and the respective business unit. Why are we doing this? Well, number one, this is how we are going to run the business. It is also much simpler. It will allow, I believe, for us to be more easily digestible by the Street and especially prospective investors. Also, Ryan Hicke is our CEO. He's also our chief operating decision maker. That is a GAAP term, but the way he looks at the company is the way this will align. Yes, we will give you plenty of time to digest this. We will have all the required filings and you have a lot of time for you to update your models. We don't -- we would expect these changes to go into effect somewhere around 2026. As I conclude, I thought this is a really good slide for my part to end on. For those who have followed us, SEI for a while, you can appreciate there was a period of time where the performance of the business was not bad, but it was also not exciting either. We had modest success, but it did not always translate to the greatest returns for our shareholders. And for those who've followed us a while, I think you'd agree, there has been real tangible, measurable improvement over the last 2 to 3 years, like coincidentally, coincides with Ryan as CEO. The response from the investing community is one of excitement. And I will tell you, we are equally excited. Someone asked me today about this, how are you feeling? This is fun. Do you know why it's fun because we have a lot of fun things going on. We're not sitting up here giving reasons why we're not doing this, we're not doing this. We have a lot of great momentum. It's palpable. It's palpable for our -- I think, our investors. It's definitely with our executive team. It definitely is with the Board. And you know who else, our employees. We have 5,200 employees, not just in Oaks. There was a buzz. There was an excitement. Everyone wants to be with following a winner like the Philadelphia Phillies, my team. A lot of excitement, a lot of excitement and people have a little pep in their step. That's exciting for us. The ability to maintain what we've accomplished, the ability to deploy capital at very attractive returns and ultimately be able to drive double-digit annualized returns for our shareholders for the foreseeable future. A big part of our success has come from the IMS business. One analyst, not here today, we have a lot of analysts comes to Oaks. A lot of you have been with us in Oaks. This was tough for me, but said, IMS is the crown jewel of SEI. And unfortunately, Phil was in the room to hear that, and I have to live with that every single day now. But you also noticed on the leadership slide that Ryan put up there earlier, one person who's not going to -- who's speaking today was not up there, that's Phil, Phil McCabe. That's because Phil was a leader under Al West. So he's the kind of the loan holder for the most part from the business units. So you did not get to see Phil's handsome photo up there. He's done an amazing job, amazing job of leading IMS, and it truly has been the crown jewel. Sanjay and Michael are going to fight to rival that crown jewel. But at this point, I'd like to bring up Phil McCabe.

Thank you. Apparently, I have a face for radio, right? So anyway, start by saying thank you to the team, right? Really happy to be here. We could never be successful in IMS without all of my teammates. So Ryan is our best salesperson. Literally, I've been to 25 CEO meetings with him this year up in New York. He goes out there. He's genuine. He's on fire, he crushes it, right? Michael Lane is awesome. He'll talk a little bit about being in the front office side of these alternative managers. They all want to talk to him about wealth and getting an allocation from our funds, and he's really, really helpful. Sneha is helpful with the futures. I couldn't be out on the road doing all these things, trying to close this business without a lot of help from a lot of people. And last but not least, Michael Lane. I mean, I'm sorry, Sean Denham. Now Sean loves to tweak me with the crown jewel story, and it gives me anxiety, right? And I think in my mind, heavy lies the head that wears the crown. And I don't even know what that means. But what I do know is that we have a tremendous responsibility for our shareholders to continue to grow this business at a double-digit pace, whether it's revenue, profit, it's really, really, really important, and we take it very seriously. All right. Let's get over here. All right. So excited to be here. We very rarely get an opportunity to spend 15 minutes talking about the business, right? On an earnings call, we'll get one question. We sit there, we prepare, we wait, but nobody ask us too many questions. We have 12 slides to go through today. The first 3 are just going to level set. Where are we today? How did we get there? So we're going to start there. The next 9 are about growth, growth, growth, growth and growth. So 3 main areas that we're going to cover. The third one is like a 3A and 3B, but these are the things that are going to help us sustain that double-digit growth for years to come. And start by saying the business is extremely healthy. The clients are very happy. They're referenceable. The products and solutions are resonating in the market around the world. Our sales are great around the world. And our pipeline really has never ever, ever been bigger. So we're -- the business is in an incredible spot. So let's take a little bit of a step back in history. If you look at the slide on the left, from 2022 to 2024, revenue grew 21% and profit in that same period of time grew 26%. If you stay on the left-hand side, those numbers were driven by $250 million in net new sales from the beginning of January in 2022 all the way through June 30, 2024. So we say net, not gross. That's net of any fund launches -- I'm sorry, fund closures, liquidations if people shut down a product. So the gross number is even bigger. A new disclosure for Brad on the right, that's the breakdown of traditional alternatives and global. We have never shared that in the past. If you look on the left-hand side -- I'm sorry, the right-hand side, but the black part of the traditional sales, those sales have gone down over the last 3 years. Here's the good news. We have a new leader in place there. We have new people. We're reenergizing that business, and I expect it to go up and up and up and up. The most fun part is the global piece in the middle, the grey. Those sales started here, they're going here, they're going to here. And with Sanjay over there, we think they're going to keep growing and explode, and we're really, really excited to have him there. The blue side, the alternatives book, it just keeps going up and up and up. It's the gift that keeps on giving. Like Ryan said, Sean said, we service the crap out of these clients, and it really, really is paying off. And some of our clients are literally the best of the best. So global is growing the fastest. I look at the global business as being alternatives. The vast majority of it is alternatives. When you add all of those pieces together between the blue and the grey, it's over 70% of our entire book, and it's growing, and it's been growing every single year for years and years. We expect those percentages to grow and grow, right? So that's the first of 3 in the look back. Second, we're in a great position from a competitive perspective. Far left, Blackstone, Morgan Stanley, Fortress, Blue Owl, PIMCO, StepStone, Carlyle, those are the ones that we have permission to put in writing. If you want to know who the clients are, buy convergence data, right? Spend the money, you'll find out exactly who they are, how big our relationship is with them. You can track it year-over-year and see how we're doing. 45 of the top 100 managers, that thing said 43, 6 months ago. I wanted to say 50 or 60 or 70. 10, I think we're almost to 11 publicly traded managers. These managers are hard, right? They need -- their deliverables are super tight time frames. They expect us to be flawless, right? We can't have a single mistake and they love us. #1 in private credit globally, #1 independent third-party trust company. We'll talk about why that matters a lot later. And we're #5 global admin in the league tables. So let's move to the middle column. The middle column, if you take a look at the blue, in-sourcers are moving to outsourcing. We have 2 recent wins in the top 25. We have one in the top 5 that we're working on papering now, and we have another one in the top 25. Those clients chose us because they wanted a long-term partner, and that partner will help them scale and grow their business, right? All of these deals are bake-offs. They start with 20 or 30 admins. They get down to 5, then you do a proof of concept, they get down to 2 and then with a little bit of luck, you win it. If we can get clients to Oaks, Pennsylvania and they take a look at the team and they get to see the culture and the people, we win the vast majority of those deals. So our goal is to get them to Oaks and then we win it. So large managers are embracing outsourcing and market share, the far right-hand side, over the last several years, we've gone from about 6% to 8%. It's a pretty fragmented market. And a lot of the ones that are bigger than us have grown through inorganic growth. Everything we've done has been organically, right? We did it the hard way, right, one brick at a time. So -- and again, #4 in North America in the convergence league tables in fund admin, #5 globally, #1 in private credit globally, and we're just in a really, really good competitive position. All right. The thing on the right is an eye chart. You might not really care about it, but we really care about it. It's a fund structure chart. The more complex a fund is, the better we have a chance of outshining the competition and winning. So we'll dive a little bit deeper. We specialize in large complex multi-strategy managers. A lot of them are publicly traded, as I said, with tight deliverables. So if you have private equity, real estate, private credit, ventures, infrastructure, any other type -- if you have all of those funds together, that's our bread and butter. So our top 20 or 30 clients are absolutely massive, and we only have a fraction of their wallet share, and we are fighting every day to win more -- to earn more and more of that. Those clients are incredibly sticky. Once we have them, they tend to never go. They spend a long time picking a partner and then we continue to grow with them. We have the clients that are big and have distribution. We have medium-sized clients and small ones as well, but the big ones are really growing. We all know that LPs have not been -- had capital return to them that much over the course of the last few years or so. We're still winning and closing a lot of deals, even though on the institutional side of the business, it's been a tiny little bit slower, but not with the clients we have and not with, how well we service them. Our reputation is impeccable. It's stellar. If somebody wants to do business with us, the first thing they do is call their friend down the street, they call everybody, right? It does -- that's half the battle. The second half of the battle is winning by way of doing a proof of concept and proving you can do the work. We recently won the most complex mandate in the industry. They did a bake-off. We were the only one that could handle it. Plenty of other fund administrators said that they couldn't -- that they could handle it. We proved that we could handle it. So when it's complex, when it's really, really hard, that's where we shine the most, and that's why we're gaining market share. All right. So next 9 slides, let's talk a little bit about where we're going, right? Three primary areas. We're going to dive deeper in all 3 of them. So Sean signed us up for double-digit growth for the rest of my life. This is how we're going to get there, right? I'm going to go through them quickly here, and then we'll go deeper. International expansion. It is the smallest part of our business, less than 10% of our revenue with the largest opportunity. It's an absolutely huge, huge total addressable market. We'll go into more detail on that. Growth from land and expand. All of these large clients, the top 30 clients, we get one fund. I'm only going to say this one time. We kick the door open. We service the hell out of them. I think yesterday, I said it 4x. So if I say it, somebody please raise their hand, so I don't say it again. And -- but we get in there, we shine. We do a good job. We work really hard for them. We invest in that business, and we'll talk more about that. And then there's a massive convergence of public and private markets. All of the alternative managers want access to the traditional retail clients. All of the traditional clients are trying to buy alternative managers. The businesses are coming together incredibly quickly, and we see it in retail alts. It's only been big in the last year or so, and we're seeing it even more with private assets in 401(k) or retirement plans. So that's in the last 6 months, that's been on fire, too. So those were the three primary areas. All right. So next, international, 1/3 of all private assets are held outside of North America. So -- and think about -- it's less than 10% of our revenue, and we only have a fraction of a fraction of the opportunity over there. And so international, we entered the Lux market, which is the second largest jurisdiction for launching private funds about 4 or 5 years ago. We started from a base of 0. We are the sixth largest fund admin in Lux right now in private assets. We're incredibly proud of that. We built that one brick at a time, right? Here's another story. Saturday, I go on the world's largest -- longest, sorry, commercial flight to Singapore, 19 hours. I don't like to be alone for 15 minutes. I have no idea what I'm going to do for 19 hours. But I'm going with Bryan Astheimer, who's had the success over in Europe, who's going to be partnered with Sanjay. And Bryan and I have 15 prospect meetings set up centers, prospects, existing clients. Our clients, our largest clients have said CFOs of massive organizations, Phil, please open an office in Singapore, right? We need you, we want a single global operating model that flexes from Lux to India to Dublin to the U.S., right? They've been asking us to do it. Now we're doing it. So we're really excited about that. We hope that Singapore looks a lot like Lux from the success perspective in the next few years. So there are great things to come. This is my last flight to Singapore. My friend Sanjay, right, he is going to be on that flight hopefully, every other Saturday. And he -- and the difference between Sanjay and I used to work 7 days a week, I only work like 5.5 now. Sanjay works 7 days a week. So we're incredibly excited about it. So it should be good for all the shareholders. All right. Next, land and expand. So one fun, we do a great job. The largest clients have functionalized teams. Everything is done for the client within one team. It's our secret sauce. Nobody else does it that way. Those teams are super high quality. They're super low turnover. We've had competitors that are in the top 10 that have 50% turnover. Our turnover is a 11%, right? It's ridiculously low. Our people grow up with our clients' people. So our CFOs and controllers grow up with their controllers and they stay with them for 10 years. Then we get lucky if they go to another firm. And then we say, please, please hire us, and they usually do. So land and expand, huge opportunity. If you look on the right-hand side, out of the top 20 clients, we only have 28% wallet share in the dark blue. We don't have any more than that. We're looking to take share from in-house accounting teams, and we want to take share from third-party competitors. And so in my opinion, we do the math, it's hundreds of millions of dollars of wallet share expansion and cross-sell opportunity. It's literally the gift that keeps on giving. It's what has helped make us super successful, and it's going to continue to take us into the future. So next, we're going to go through a detailed example on land and expand and what happens when it's done the right way. So this is a perfect example. And there are some really smart analysts in this room and a couple of them could figure out who this is. Please don't blurred out the name. But it could literally be 1 of 5 clients, okay? It's literally -- we changed all the names to protect the innocent to steal Sean's term over there. But 2017, three funds. We started with one. But what really happened is in 2016, 2015 and 2014, we called on them 15 times, and we said, Mr. CFO, and I won't say the name, can you please give us a fund? And he said, Phil, you can't handle our business. And I'm like, just try us out, give us one fund. And then finally, in 2017, something happened. We called them and he said, okay, we'll give you one fund. That year, we got three funds. Between that period of time and 2025, the client grew 300%. We grew within our existing wallet share as well as getting more of the funds when they grew, right? So it kind of was the gift that kept on giving. And if you look at the blue boxes, we expanded in all around the world in a bunch of different capabilities. And this was the client that asked us to open the Singapore office, right? So -- and if you look on the three grey boxes at the right, we hope to win all of that Asia business. We're really excited about that, right? We want to win all of that business, and we want to be a bigger and better partner for that client. And they pick us -- and they picked us because we deliver and we execute and we help them scale and we keep up with their growth. So there was an analyst here that knows this particular CFO, and he said something nice and he said, "Oh, yes, we really like SEI. And I said, "Oh, great. He said, our other admin is a tornado of ours, right? So that was the comment, and we wear that like a badge of honor. We just want to do what we say we're going to do. We say we're going to deliver something on time, we want to deliver it. That's kind of what we do. It's really simple, right? Just be honorable and it pays off. So this shows the benefit of doing work with a really great alternatives manager. So it's pretty exciting. We've been working on it for years. We expect a long runway to continue for years. All right. This is motherhood and apple pie. We all know that the alternatives business is growing from the bottom left to the upper right. It's growing significantly. What you might not know is the green box -- on the green box, that's the fastest-growing part of the whole entire alternative space, private equity and private credit. It's where we excel. It's over 70% of our business. So we target every private credit manager globally. We just landed a few of them globally. So for the first time globally, we have an opportunity to cross-sell into large clients, and we were never able to do that. We didn't have enough big clients. So we're looking forward to that, too. So the segments are growing the fastest, and we're really well positioned for the future. So we'll tie back to this in a little while. Okay. Here's 3, this is 3A and then we're going to have a 3B. So retails alts, 70% growth over a 5-year period of time. That's awesome. What's even better is the right-hand side, the vehicles of choice are BDCs, business development companies and interval funds. We don't see that many tender offer funds, but those are the vehicles of choice. We see tremendous demand in our client base to launch these BDCs. We are upgrading our products to be a retail transfer agency to allow us to pick up more interval funds. That business is growing 250% over a 5-year period of time, and we expect great things to come from it. The best part of this, if you take away nothing else is that it's permanent capital. These are evergreen funds. They are the gift that keeps on giving. When we sell a closed-end product, a drawdown fund, they go like this, year 3, 4, 5, 6, and they sort of go like down the other side over some period of time. Permanent capital, we love. We pay our salespeople more money for closing those deals. Those funds go like this, right? And if it's a household name, the big distributors are going to win, right? The large names, whoever it is BlackRock, all the big names are definitely going to win here because they have brand cache and they're a household name. So -- they also look a lot -- these retail semi-liquid products look a lot like mutual funds. We've been cutting NAVs for mutual funds for 30 years. This is the part where the traditional business is actually coming together with the alternative business in a great way, right? So it's something that we're really, really good at and really, really proud of. So we're upgrading our capabilities. We're really well positioned. This is the first part on the retail alts. We expect that to sort of grow and go like this over some period of time. And we follow it closely in the market, and we want to win every single deal in this space because we want to win them now and watch them grow over a period of time. All right. The next slide is 3B. Think about retirement plans, think about your 401(k). SEI doesn't have alternatives in their 401(k) plans yet, but we hope to add them soon. As that happens around the world, there's hardly any alternatives in that $13 trillion. Right now, there's about $150 billion. If that grows to 5%, that's $650 billion of assets under administration potential for us, the wrapper of choice is a CIT, a collective investment trust. We have been in the CIT business for 30 years. We have a state chartered trust company. We have $350 billion in assets there, mostly institutional, not retail. And those assets continue to grow and grow and grow. We are the largest independent third-party trust company. Everyone else is owned by Vanguard or somebody like Merrill Lynch or whatever -- whoever it is. So we're independent. We do not have a lot of competition in this space. You don't see Citco in it, you don't see State Street, you don't see SS&C, right? They're not really in that space. We have a different couple of few competitors and we have a sales campaign where we're talking to every single large manager out there. And we're 4 for 4 right now trying to launch products with managers over $100 billion. Again, evergreen, permanent capital [indiscernible] of that. And we think it's just going to trend up over some longer period of time as it becomes more adopted out in the market. So one of the ones -- one of the four that we just won was a large publicly traded private credit shop. We could never get in on the fund admin side. And now they're talking to us, we got into the back office with the CFO. And now we're going to try to sell them fund admin on seven different funds. So we have two ways to make money. One is on the CIT fund admin itself, right? And the second one is maybe getting lucky or getting good or getting into the back office and being a fund admin for those other funds. So we are extremely excited about this business. I don't think it really existed 6 months ago, right? It's kind of brand new for us. We have a targeted sales campaign, and we're on it. So -- to wrap up, net-net, we think we're in a really, really good position to continue to grow and expand and grow double digits for a long, long time. The runway is awesome from in-sourcing to outsourcing with land and expand, retail alternatives, alts and 401(k)s and last but not least, international expansion, new products, new services, new leadership. We're just really super excited. So we love where we are. We're really, really, really excited about the future. We're very, very bullish. So thank you for the opportunity. Really appreciate it. And Brad, what is next?

Yes. We're going to take a short break. We're almost perfectly on time. If we can get everyone back into the room at 10:20 a.m., we'll stay on track. Thank you. [Break]

All right. Welcome back. I'm going to keep moving along. Next up, we have Sanjay Sharma, Global Head of the Private Banking business and as of about a 1.5 weeks ago, CEO of SEI International. Sanjay?

All right. Thank you. Good morning. My name is Sanjay Sharma, responsible for Global Private Banking business as well as the newly minted CEO of SEI International Business, just 7 days old. So today, I'm going to talk about 2 topics. The first one is our progress since 2022, last 3 years, what we have accomplished. And then second part would be what's our plan for future growth, okay? So let me start with the first one. Back in 2022, when I talked to a lot of you at that time, you highlighted a lot of issues with the business. The state of business was a bit challenging. We had issues at that time with our backlog delivery. We had signed implementations, which were not getting delivered on time. We had challenges with our margin. And we also had client retention issue. So that was starting into more of a leaky bucket. So client retention was higher than our gross sales. So that those -- that was a state of the business when I took over at that time. I can very proudly say the work we have done over the last 3-plus years. I'm very, very thankful to the executive team in the room for one, for trusting me with this responsibility where we were and Ryan asked us that, hey, can you go and fix it? And then also turn this into a growth engine for the company. I said, okay, what I'm signing for here. So we took a step back and one by one, we have addressed all those challenges. And in that process, we have created a really, really good foundation for future growth. I'll walk you through how we have done it. But I'm really, really thankful to all my colleagues back home in [ Rakes ] as well as other locations. It has been a tremendous team effort. It would not have been possible without their help. So thank you. So let's talk about how we reached here. What were the key steps, the key strategies which we executed, which really helped us to achieve these results. Number one issue we talked about was the client engagement. So when I said that we had the leaky bucket, the leaky bucket issue was because of the client engagement. So Ryan and I, we were on the role. First 6 months or so, we met with every single client of ours, and that was like a listening to us, listen to the clients and understand what was really happening. We went back to some of the clients in that leaky bucket side, and we went back to them asking them why either they left or why they had given us notices that why they're leaving. In that process, we're not only able to retain some of those clients, but we were also able to bring back some of those lost clients. But that gave us a really good insight that unless until we align with our existing clients, unless until we have that strong foundation, we will not be able to grow this business. So there was a tremendous learning. In that process, we also allocated capital so that we are helping our existing clients to grow their business and improve their operating efficiency. It sounds simple, but think about it, if your clients are happy, they are referenceable, they will buy more services from you, and they will also talk about you positively with other prospects. And in that, yes, we will be able to win more businesses. So that was one of the major strategy we worked on. The second was the -- the backlog delivery. At that time, even in my first earnings call, the first question was, okay, so what you're going to do with the backlog delivery issue. Again, we talked to all of our clients, which were in that change management cycle. Again, Ryan and I, we were -- we had a lot of good conversations with those clients. The one thing which we learned was that when the clients they were signing those contracts, the platform change contracts, they were starting that journey, they were not only signing a contract with SEI, but they were also signing other contracts, somebody to help them with operations change management, somebody to help them with the technology transformation. And in that process, what was happening, the new third-party consulting companies were coming in the mix, okay? They were learning about SEI's business, SEI's platform. They were learning about the clients' business. And that was -- those kind of learning curves were delaying the project. And at times, because that's the third-party consulting companies, their interests were not always aligned. So that's where that was a major genesis of launching the professional services. Ryan I, we thought, okay, we need to take control of the old the complete change management program. We need to help our clients. You think about when the clients they sign the contract, their journey to transformation doesn't start at that time. Their journey to transformation and realizing the benefit of that change program starts only after they go live, only when they are on the other side. And that's where we realize and our revenue is the same way. Our recurring revenue starts when they are on the other side. So we had to fix that problem. And I can very proudly say, in the last 3-plus years, we have delivered 32 such implementation events. And last 2 years, every one of them, they have been on time, within budget with very high quality. I guess very proudly say again that, that team, which we have created now for the backlog delivery is fantastic. And professional services is a very good outcome of that exercise. Through those learnings, interactions with our clients in different segments, interactions during the change managed program execution. Other thing which we learned was that our go-to-market strategy was a bit flawed. Our go-to-market strategy was one strategy fit for all the segments, irrespective whether it is a U.K. market, irrespective whether it is U.S. market, irrespective based on the size and complexity of the businesses. And that's where we really narrowed down our focus, okay, what do we need to do for each of the segments? And we created segment-specific go-to-market strategy. And that was not just a sales strategy. That was not calling the prospects. That was end-to-end, right from the first call with the prospect to the delivery and supporting those clients after going live. So we looked at the entire supply chain, entire assembly line that how we are going to work with those prospects and clients. One simple example is working with Mike Peterson, our General Counsel, that how we are going to contract with these clients. We can't have one contract process with everybody. So working with Mike and I, we spend a lot of time in standardizing the contracting process as simple as that. Back in 2022, maybe we signed 4 or 5 contracts. Today, I'm signing at least 50 to 70 SOWs and contracts. So we had to scale that process. But then again, we standardized the whole process at the segment level. You could see the result of that. In private client investment managers in U.K. or in the regional community bank segment, over the last 2-plus years, we have about $60-plus million of net new sales and also provided professional services to these clients. And some of the logos you could see, they have been fantastic wins through this strategy. And in that process, we have also created a very strong pipeline in our large segment. And you will see the results in coming quarters. So we are very proud of what we have done through this strategy. And so you could see that the previous slides, the numbers, they speak for themselves. And our go-to-market strategy, segment-specific focus, I strongly believe that we have created a really good foundation based on which we can grow further. Let me walk you through one a quick case study, which is a good win, good example of strategy in action for regional community space. WSFS Bank is a Pennsylvania-based bank. We have been working with them through our earlier platform as well. WSFS Bank, they have grown through acquisitions. So if you look at the history of how they have been growing, they have been acquiring other banks. With the Bryn Mawr Trust acquisition, they were looking at how they can consolidate and streamline their overall operating model. So technology landscape rationalization, rationalizing all the operating models they had. And they were looking for a partner who can bring all those heterogeneous operating models together and also help them with the change journey. After a very rigorous process, they selected SEI and we implemented SWP. SWP is a highly scalable, highly configurable platform, which can bring in different operating models, different platforms together and provide a seamless experience, seamless experience to the bank staff, middle office, front office as well as the end client. So in that process, now WSFS is very well positioned for their future growth. And we also took over the complete responsibility of oral change management program. And in that process, now we are their trusted partner for even future professional services. So this is a really, really good win for -- not just for the platform, but for other services as well. So with that kind of strong foundation, now let's talk about what we are going to do next, how we are going to set ourselves for the future growth. what we have done. In past, we have improved our client engagement. So our client relationships are solid, okay? We have a good foundation and capabilities in terms of backlog delivery. So now we're going to focus on, okay, how we can continue to grow with our existing clients. When you look at our existing clients, our strategy was, okay, once they have signed contract with us, SWP, okay? That's it. The journey is over. We will talk to them when the next recontract cycle comes in. That was the mindset earlier. But now we are going with enterprise mindset. What are the other services which those banks or the wealth managers they are procuring, which SEI can provide. So I strongly believe that the growth through existing clients, that would be a major pillar for growth. The second part is expanding our solutions and segments to not only continue to help our clients to grow as well as how we can win in the new segments. I'll share some examples here. So think about we have been playing in regional community bank space, PCIMs in the U.K. Now we're looking at based on the capabilities and the investments we have made in those segments, we can provide those services to small banks here. We can provide similar services to IFAs and IFA consolidators in U.K. market. Those are just some examples. And what SEI has done over the last couple of years, acquiring Life Eagle or acquiring alts capabilities, investing in data cloud, those are just certain examples that how we can further expand our capabilities through investing in our solutions segments. Now everybody's favorite topic. margin expansion, our journey is not over. I know when I took over the margin was barely single digit. Now I can see based on what we have accomplished last 7 quarters, we are continuously delivering double-digit margin growth, okay? So I'm very confident that we have the new strategy, which I'm going to walk you through, it will -- we have our path to historical margins. How we will approach there, I'll walk you through that. Okay. So let's talk about my favorite slide, by the way. This is my favorite slide of the entire deck. So let me walk you through why I'm saying this is my favorite slide. If you're existing clients, on the left side of this is how we have a strong foundation. Our existing clients, 100-plus clients globally, 120 or so with average tenure of almost 20 years. Because we have such a good engagement with those and now with the enterprise mindset, we can expand our wallet share. I think about those banks are not just buying the platform. They are outsourcing so many other services. And so we could establish ourselves as a trusted partner for providing those services as well. I'll talk about professional services in a bit. And then if you look at on the right side, how we were going to market earlier. Our total addressable market, there are 300 or so regional community banks, okay? There are 50 or so large banks. And then there are around 1,000 so small banks. We were not even active in that market earlier. Similarly, around 200 or so in our total addressable market in the U.K. But we were looking at that market only and only if those prospects were looking for a platform change. I mean think about with out of that population, maybe 5%, 7% would be looking for platform change at any point in time. So which we were narrowing down ourselves that, oh, that's the only total addressable market. But that's not true. Those clients are apart from outsourcing or looking for a platform change, larger banks, that's like once in a lifetime, once in somebody's carrier, they're not going to change the platform just like that. But then they are continuously acquiring other services. And those other services, now look at what is happening in the industry, data and AI, everybody is talking about. We have a strong foundation. We can provide those services. That's why I'm saying this is one of my -- the most favorite slide of this deck. There's so much potential for us to grow, both through existing clients and completely relooking at our go-to-market strategy in our addressable market. not just leading with the platform, but leading with SEI's enterprise capabilities. I talked about professional services a few times. Let me walk you through in detail why I'm so excited about it. If you look at this year, almost 50% of our net new sales is coming through that channel. What is happening in the industry? Every client, every prospect, every financial services institution right now, they are looking at, okay, how they can improve their operating efficiency, how they can use AI and data so that they can outpace like people -- even at the basic level, how to implement Copilot, Sneha will talk about it. But at that basic level, I feel that we are very well positioned ourselves to help all those clients to adopt SEI's professional services. We started with the backlog delivery as a big challenge, the professional services. We are trying to solve a specific problem. But in that process, we learned a lot. And the clients are not looking for -- they are asking for just the technology side. They say, hey, can you help on the operations side as well? Okay, sure. We started helping them with the operations workflow redesigns and automation and rethinking their business operating models. We did a really good job there and established credibility and now they are asking us to help on the business side. In many places, now we are helping them to even create business cases for change so that they can take it to the board and look for [indiscernible], and get the necessary capital allocation for the change management program. So we've made significant progress. We are just getting started here. I feel that what we have done in private banking space, the possibility across the company is pretty significant. We can replicate that in IMS business with Phil. We can replicate that in Michael Lane, asset management business. Sneha and I, we are spending a lot of time that how we incubate new services that okay, these services are fine. How we add more nucleuses here so that we can create additional services. We are putting ourselves in the center of a client segment and looking at all the services which they are procuring from outside. And this is how we are looking at how we can expand our portfolio. When you go to smaller bank segment, they don't even have CTO. So okay, how about we become their CTO. How about we start providing them the outsourced Chief Technology Officer services. SEI Sphere is a great example. Sneha and I, we have worked together, and I'll walk you through one such examples where we are providing the Sphere services to one large client in U.K. And we are taking care of their network operations and their data transformation -- cloud transformation services as well. So we have made really, really good progress here. Here are just a few examples. Ryan talked about Vanguard. We never did any business in our 45-plus, 47 years. And then we started engaging with them. First contract was through SWP for providing them trust company services. And in that process, we established ourselves for their professional services as well. We help them in running the overall change management program. We help them with the operations transformation, and now we are working on the business side as well. It's a great progress there. This is my second favorite slide of this deck. Trinity Bids, great example. Ryan and I, we met with the CEO, COO and CTO. For 1-hour conversation, we didn't even talk about SWP, not even once. We all talked about we wanted to understand what -- okay, what you're trying to accomplish? What's your change management program? What's your North Star? Where do you want to be? They have been going through a lot of change internally. And through that, we learned about their broader business strategy, and we shared what the SEI's enterprise capabilities are. Now Trinity Bridge, they are a client of Sneha, the client of mine. They're working with Michael Lane. And now there's a possibility that Phil will be able to provide them services as well. So this is a really good example of entire SEI capability in Excel. And they're just getting started. They're payback company, and they're just getting started. We have a really good relationship with them. But they entrusted SEI to help them managing the overall change transformation. And we can replicate this. We can replicate this places as well. Asset management, is the second such pillar when I talk about segment expansion and solution expansion. Michael Lane and I have spent a lot of time together in terms of, okay, what are the possibilities in private banking segment? How we have been leading through technology and operations. Many of our clients, they consume SEI Wealth platform just Software as a Service. Some of them, they are outsourcing middle office, back office to us. An idea there was that why we are not providing them wealth asset management services. And when you look at our total asset management on our own platform with the private banking segment, $1.3 trillion worth of assets are under direct discretionary authority of those clients, which means that the clients are managing that much money themselves. Our wallet share of that $1.3 trillion pie, barely 2%, and that's not a reflection of SEI's capabilities. I look at Michael in our entire asset management business, fantastic. He's doing really well there and has a good growth strategy. So my selfish interest was that how I can replicate that in private banking segment as well. And when you look at your wallet share barely 2%, there's so much headroom. And that's what we have been working on, working with Michael closely, the defining go-to-market strategy, investing in our technology, again, looking at the entire assembly line that what needs to be done so that we make it easy for our clients to consume this service. So I'm very excited about it. Michael will talk about it in detail as well. Your favorite slide. Margin expansion, yes, you talked about it. You -- every time in earnings call, this question comes up, what we are doing. And I'm sure you are seeing positive signs last 7-plus quarters, last quarter was 16%, and we have our path to continue to improve our margin. When you say that this question came up that what's our path to historical margin. I thought that the work what we have done over the last 2 years or so, it has really set us nicely with a good foundation that what else we should do now to improve our margin. And when you look at margin, margin is not just expense management. Sean and I, we have spent a lot of time on margin expansion. Margin is going to come through the top line growth and very efficiently managing our bottom line. So the 5-pillar strategy I'm talking about here. Number one, outsized growth through the new services I talked about, asset management, professional services, SEI Data Cloud. By the way, Ryan is the original product manager of SEI Data Cloud. Back in even 2016, Ryan and I, we talked about it. We did the market scan, and we created the Data Cloud solution way ahead of everybody else. And now every single client we are licensing now or signing now, everybody is buying that solution, by the way. And now we are replicating that in other market segments as well. So that's number one. Second, over the last 4-plus years or so, we have been investing significantly in Software as a Service readiness for SWP because we have multiple clients on our Trust 3000 platform. This is how they consume our technology services, and they have no desire to outsource operations. So in our self interest that, yes, SWP needs to be ready. We have made significant investment in that space. And now we are on the final stages of that investment. And you would see over the next 2 years or so impact of that reduction directly on our bottom line. The third one, the new business contracts, that's just a discipline. Now all the new contracts we are signing, they are with a single-mind focus that, yes, we are helping our clients to grow their business. But at the same time, we don't want to chase revenue just for the sake of changing revenue. Ryan was very clear. Very first conversation with Ryan was that you need to stay focused One was the focus and second was relentless execution. The focus was that let's define the guardrails. Okay, these are the market segments which are in our lane. Let's stay focused on that. And then let's see how we expand those guardrails. But staying there, that means we are signing new contracts without major R&D investment. Then GCC, we talked about. And again, I'm just echoing what Sean and Ryan has already said, the GCC is not just a cost reduction strategy, it's a talent strategy. And I'm really excited since I'm taking over the SEI International business, GCC is going to play a major role there, especially when you look at the global clients, they want to see one seamless follow-the-sun model, and GCC would be a big part of that. And then, of course, everybody already talked about and raised the bar so significantly about the SEI International business. On #1 focus, Jan called it out, managing our growth. Second was managing the expenses. So that's going to also help with the private banking margin expansion. So I think the combination of these 5 will lead us to our historical margins. Very briefly, I will talk about SEI International. I'm just 7 days old. I'm in the process of defining the strategy, but my strategy has 3 core pillars. One, we already have a blueprint, which we have very successfully executed in private banking and a lot of learnings over this period of time. I've been spending a lot of time in U.K. I'm going back there, not 17-hour flight, Phil. It's easy flight. So -- but you would see the number one, executing that blueprint. Second is we are not planting new flags. These are not moon landing projects. We have presence in South Africa, Luxe, Ireland and U.K. Our first goal is, okay, how we maximize opportunities for SEI Enterprise in those jurisdictions. Second, we have a lot of clients in North America today. They have global presence. So we'll go to those clients and how we help them for their growth in other jurisdictions. So those would be the highest priorities before we look at any moon landing. Singapore, yes, that's a good example. Our clients are asking us to go there. So this is how we are going to grow the international market. So to summarize and to transition to Michael Lane, 3 things I would call out. I want you to have 3 takeaways. Number one, we have a strong foundation and strong foundation in terms of client engagement, our capabilities and enterprise mindset. We have the required talent to execute on the strategy, number one. Second, I want you to focus on that. We are continuously investing in our platforms, our services so that we can outpace our competition. We are continuously expanding segments and solutions so that we can continue to help our clients grow their business. Number three, I'll be relentless on margin expansion. So trust me, we have shown it over the last 3 years or so, and we'll continue to be on that journey. Asset management would be a major pillar of that strategy. Michael and I have spent a lot of time on that. We are going to execute that strategy. You would see that in action. Michael and I have one thing in common. We are big tennis fans, both of us. The only difference is Michael is a really, really good tennis player. With that, Michael.

All right. Thank you very much. And I will be talking a little bit about banking and the opportunities that exist within the asset management side of combining the banking opportunity with asset management opportunity. I just wanted to say one quick thing. So Phil shared a story about a firm from 2017 to 2025, the growth of that firm with us. Interestingly, and Phil knows this, after 1 week of being at SEI, I was at a college event with a fraternity brother of mine. who we pledged together, we live next to each other. And he happens to be the President of that firm. And I didn't know the substance of how big of a client they were at the time. But I asked them like, what's your experience been with SEI because I have a lot of friends in leadership positions at private markets companies before I actually say anything about Phil's business to any of them and risk my reputation with them, what's your thoughts? And the quote that he shared with you that SEI has been a joy and it was a tornado of errors before was from that individual. And so that -- what Phil said is absolutely true. That came from my discussion with the President of that firm that said at that point, the next thing he said is if anybody at SEI ever wants to come talk to me, sign them up. I'll talk to anybody at SEI. So the work that's being done across this firm, whether it's in Phil's business with IMS, whether it's in Sanjay's business, as you've seen the success, the trending in the right direction is phenomenal. Now for the asset management business, I'd say we're more like Project Apollo. Anybody remember the 1962 speech of Kennedy at Rice University. He talked about that they were going to go to the moon, not because it was easy, but because it was hard, because it would galvanize America. It would pull everybody together because they would have a common vision, a common goal. It wasn't because NASA wasn't doing a good job. It wasn't because NASA had failed. It was because there was more that could be done. And I shared that speech with the team about 10, 11 months ago, and one of the leaders gave me a card that he had found with that speech on the card and a picture of the moon. So it resonated with them. And that's what we're doing in the investment management, the asset management part of the business. As an example of that, what would be easy is what somebody came to me when I first started. said, "Hey, I have a great idea, great opportunity in a market that we could be incredibly successful in, state-registered RIAs. Okay. For those who don't know, state-registered RIAs are the smallest of that market segment, $70 million and under. So why do you think that that's a great opportunity? Because no one else is talking to them. Okay. So that's easy. It's not hard. But it's not scalable, it's not repeatable, and it will not be profitable. There's a reason that nobody was calling on them. So what we're going to talk today, we're going to talk a little bit first about a couple of industry trends that would suggest that isn't the path we should take, but it was the path we were taking. Again, it was a strategy. It's just when you look at what's happening in the industry, there's probably an improved and evolved strategy that would be more successful, more scalable, more repeatable, more profitable. We'll talk about the current business because we can't talk about where we're going until we have a better understanding of where we are. So we'll talk about it a couple of things. I was home a rare weekend one day, about, I'd say, 2 months after I had begun, and I went into a room and I listed all of the different client segments we could potentially talk to on the horizontal and on the vertical, every revenue source that could be had within everything we could bring, every body of the apple that we could bring at SEI and then targeted where we could win, where we could be successful. And that started with clients. Clients were across the horizontal products and services were the vertical, and then we looked at where the revenue potential was. And that's what we did then as a team. I brought that back to the team, and that's what's created our evolved asset management strategy. So we'll talk about that. That's where we'll spend most of our time. So the quick review of what's happening, particularly in the RIA segment. Now why do we talk about the RIA segment so much? Well, if you think about RIAs, RIAs basically are very similar to regional community bank structure, very, very similar to multifamily offices. And even if you look at the independent broker-dealer business, if you were to talk to people at L-POs, XERRA, any of those, they would prefer you refer to them as an RIA than even an independent broker-dealer now. So the RIA segment is important. The current RIA segment, by the way, just the RIA segment in America is bigger than the entire wealth business in EMEA. So that also suggests the addressable market is massive for us. And we have not really participated well in that space. We'll talk about how we will. The growth in the RA space is highly fragmented between sort of the haves and have-nots. The top performers are scaled. They're growing. They're growing through organic and inorganic growth, and they're using that growth. They're using that scale to market more, to bring on more clients. They're getting preferred treatment at custodians. They're getting referrals. That scale is driving a big dispersion between the large and the small. That consolidation is not ending. It's not slowing down. We look at '24, almost 400 acquisitions that took place. And in '25, we participated. We brought long-term capital, not private equity. We brought long-term capital to the RIA business with our Stratos deal. So that consolidation is also causing one other thing, fee compression. With consolidation, with scale, now we're talking about -- I mean, I started working with RIAs in 1994. There were like 5. The biggest one was -- literally, the biggest one was like $100 million. Now you have $500 billion RIAs. Now it's going to get confusing of what's really in RIA because anybody who read the creative planning announcement of SageView, if you really dig into that, only $13 billion of those $269 billion of assets are actually wealth. The other is institutional consulting. That's happening a lot more. Cerity buys Agility. They're buying SageView. All of these acquisitions are starting to look almost institutional as much as RIA, which will actually lend itself well to who we are. So that's going to drive fee compression. It's one of the reasons that we wanted to work with Stratos, and we'll talk about that at the end. But the only area of the market, ops, admin, investment management, all of the different segments of this market are all under fee compression, except one, wealth. If you look at the fees, it's actually gone up 1 basis point over the last 10 years. Everything else, and this is a conservative example using Morningstar. You can build a diversified portfolio of passive funds now for 6 basis points. Back when I started in the business, that would have been like 180. I've been doing this for 37 years. So those are the basic parameters that we now have to work within to create a strategy. So who are the clients? Most of you will know this, independent broker-dealer clients, that's where we got 33 years ago, we were the leading what we call TAM. -- which is basically for a fee, we created model portfolios for advisers who wanted to outsource, a big part of our business. Our institutional, and we still call it institutional OCIO. We will not in the future. It will be institutional. We just won a mandate for $2 billion that has -- that is not OCIO. That's an institution that's hiring us for investment management only. So our institutional business will continue to grow and diversify. RIAs, we only started working with RIAs about 4 years ago. The growth opportunity in that space is massive for us, but we have to have a strategy that we can win. And we'll talk about why we would have lost in a strategy in the past, but why we won it now. And that's about the ecosystem. And banks, you heard from Sanjay, huge opportunity, margin expansion, growth, leveraging our relationships. We have not done a great job over the years of bringing asset management, bringing investment management into banks, but Sanjay and I are going to solve that. We're actually going to bring people in that have done it, that know how to do it, that have raised tens of billions of dollars of bringing investments into the bank market. And advice, our fifth point up there, you can see a fraction. We have a small private wealth business, contributes a fraction of the revenues from asset management, but that will change when we include Stratos. And now, number five, we'll move up the ranks pretty quickly, and that's a good thing because that's very stable revenue. It's very stable growth opportunity. And as you heard from Sean, we will continue to invest in that business. So then we look at the drivers of revenue, the products. What we have been selling, and we will continue to round this out, and this will grow as we have more of these discussions, you'll see this chart grow. Cash, obviously, from the delta between the first half of this year and the second half of last year, cash revenue is the largest driver of net new revenue, followed by SMA ETFs, which is very good and very surprising, if you -- which you'll see how few ETFs we actually have, which is going to change. And then other is largely life yield. But you see this big drag on the business, which is the mutual fund business. We're not alone in that. Anybody who looks at the data would know that about $742 billion has moved out of equity mutual funds this year alone. That's like $5 trillion, $6 trillion has moved out now in the last few years. That's a drag. Good news is slowly declining to be less of a drag. And we will look at where we have great track record, great opportunity to convert those assets to something in a different structure, an ETF structure. We will be looking at where we can make additional conversions. We just launched one a couple of weeks ago, QALT. That was one of our first conversions, and you'll see more of those in the future. So we'll take those mutual fund assets, move them into ETF. It will make them a more attractive vehicle for the market. So where are we going? What's the evolved asset management strategy? How are we going to get to the moon? So first, we've got to grow the core. Now as I mentioned with the Creative SageView announcement, growing the core, you'll hear is largely about bringing our adviser business and our institutional business together, which we've begun. That's not a theory. That's actually something we're already doing and practicing. We talk about moving up market. You heard Ryan say in his earlier remarks that we would talk about that. Why are we moving upmarket? How are we moving up market? Why would we win? Very easy for people to say, "Oh, we can't win there. We don't have a reputation there. Nobody knows who we are. You absolutely can win. There is a phrase that is used by almost everybody I know in the business now that the RIA community, and I'd say more than just the RIA community, banking, multifamily office, they want to do more with fewer. So if you can do more for them, that decreases their complexity. And that is one of the things we focus on, scalable, repeatable, profitable, simplifying the complexity. If we can bring more capabilities and price holistically and sell the ecosystem, we can win, and we'll explain how we'll do that. And then product development activation. There are certain fees that we have that are flexible. One that is not is 40 Act products. We can't flex on those. But we need more of those so we can flex more in other areas and retain the margins but bring more into the ecosystem. And then the last thing I'll talk about in our time is the Stratos partnership. So talk a little bit about this. This is where I think there is tremendous opportunity for us. We have already brought the advice units together. When I joined the firm a year ago from BlackRock, I walked around, I asked people what they did. And I heard 5 different times from 5 different people on 5 different floors or 3 different floors that they were leading the advice business. I like, that's great. We have 5 disparate groups leading advice. So we brought them together under one person, and that will now be the advice unit for all, for institutions, for financial advisers, they'll share resources. They were all disparate technologies, as Sean was talking about, easy improvement. It's a very important business, $377 million of earnings. And everybody knows, Jay is in the back of the room, he was part of institutional for a while. They didn't even talk to each other. They didn't have meetings together. Now they sit on the same floor. They sit next to each other. We actually mix them up. And now what you're seeing in the RIA space where the RIAs, the largest, most successful, are buying up institutional businesses. We have both of those. Every adviser that gets to a certain scale, $500 million, let's call it, which is still relatively small. When they get to $500 million, they don't want to buy a model off the shelf. The models business we -- I'm sure you all hear about it every day. It's a huge discussion point. Everybody wants to me the models business. We're the third largest model provider behind BlackRock and Capital Group. We're the third largest. We've been doing it for 33 years. And we haven't been using the institutional business to create custom models. Now we're a co-CIO. Anybody that's greater than $500 million, what do they want? They want a custom model. They don't want a shelf model. There's 4,000 models on Morningstar. They don't want that. They want something that is more aligned with their needs, their wants, their philosophies for clients. And so we're bringing that together, and we now have a co-CIO capability, which is a custom model capability, which is using our institutional resources to drive better behavior and better capabilities within the advisory business. So we will grow the core by bringing these capabilities together. It gets better. You don't have to leave. Just k. And then the -- we talk about engaging larger RIAs. Why do we want to engage larger RIAs? Well, look at where the growth is. The growth is with these hybrid RIAs. That is Stratos. Stratos classifies as a hybrid RIA. The growth is in the independent RIA business. So RIAs, you put the 2 together, everything else pales in comparison in terms of growth. Although retail bank, broker-dealer isn't a -- it isn't far off unless you combine those 2, it isn't the highest growth, but we have a foothold there in technology that we've never leveraged to do anything in the investment side. That's why that is going to be a critical element. We have been playing for the last 4 years that we've been in the RIA business in the under 250 category. When I asked my first day, could you send me -- I asked somebody to send me the list of all of the adviser firms that we have brought on for the last 12 months. The average was around $30 million, really small. Now if you look at our pipeline, the average is closer to $300 million to $400 million and growing. So we're not where we want to be yet, but we have closed our first multibillion. And we learned a lot, as Ryan said, from that, that will help us for the next multibillion and the next multibillion. And so we are going to move upstream. The $250 million to $5 billion is a real sweet spot for us, but we can do more. We've had multiple interesting summits with very large. The one that comes to mind, $140 billion RIA. Some of you have heard me say this before, but we sat down. I don't think anybody on either side of the table thought it was a good use of time. They looked like why am I here? And my team was like, why are we here? And after 2 hours, we had 7 opportunities. that we could work on together. And we've been working on those and meeting routinely ever since. We're doing that with large firms as well, large asset managers. We're getting summits together, and we find all sorts of opportunities. I met with Carlyle last week, and we're working on wealth opportunities. So we're going to move upstream, and we're going to sell the ecosystem. One thing is for certain. If you look at this, there's 5 pieces. Ryan picked up a quote yesterday. You can't connect the dots unless you collect the dots. Our ecosystem goes one step further. We can connect the dots because we own the dots. We own these 5 dots, and we need to use those 5 dots together. If you think about custody, that multibillion-dollar firm that came to us, that's what they were looking for. They were looking for a custody partner. They were breaking away. If we had tried to sell one piece, which is what the land and expand in the adviser market, which is very different than Phil's, land and expand. His land and expand is very successful because he's a major player, and he is the world-class leader in the private business. So he can do that. In our business, if we had tried to land and expand, I guarantee you would have lost within the first 20 minutes. And we didn't. Before the meeting started, I told the team, we're selling the ecosystem. This is our opportunity to try it. Come along. It will be -- let's do this together, let's sell the ecosystem, and we sold the ecosystem and they came on board about 3 months ago. And that was a signal to the market, and it was a signal to everybody that works in the asset management business that we can do that. And so that was important. So let's talk about the ecosystem. There's 3 components. First is custody. 2 big behemoths on the custody side. We all know 2/3 or more of the assets at Schwab and Fidelity. But there's not a leader to be the third player in that. By selling the ecosystem, I am very confident we can be that third player. We have the scale. We have the experience. We have a unique characteristic that we are a trust base instead of a brokerage base that particularly is valuable for the upmarket RIAs who have higher net worth clients. You get to hold the assets in the individual's name instead of the brokerage name. They can't securities lend against your assets. Like those are really important characteristics for a high net worth investor. So I believe we have incredible opportunity to break in as the third player. We're not going to compete head-to-head one-on-one, hand-to-hand combat against Fidelity and Schwab, but bringing the ecosystem, we've proven we can win. The second part of the technology ecosystem, SWP aside, because we're all familiar with SWP, is the alternatives platform via Access, which is an acquisition that we made of Vaultigo and then turned that into more of a marketplace called Access. Why is that important? Well, as you heard multiple times and Bill shared, alternatives is a big thing and linking this into a system and integrating this into the entire ecosystem, the custody, the wealth tech and the alts and the investment management, we'll talk about in a bit. Linking that all together, again, creates an easier tech stack for a financial adviser. So Access is an important part of that. And then LifeYield. LifeYield is differentiated. There is nobody in the market. Major players have come to us and said, everybody we ask who can do householding, who can do householding at a multi-account level, who can truly do tax optimization across an entirety of a portfolio regardless whether it's held at Schwab, Fidelity, Merrill, SWP, SEI, who can do that? LifeYield. LifeYield is being integrated into the system right now to be able to do tax management across the entirety of the portfolio and asset location and tax managed withdrawals. So you can extend -- General Counsel in the room, you have the opportunity to extend the length of your distributions in retirement. That doesn't exist anywhere else. So that's a differentiated dot that we own, that we're incorporating into that ecosystem. Now we think about the asset management, the investment management component of our business. We have an investment management department, manages a couple of hundred billion. We have an advice business. Now we've consolidated. We have a very sophisticated and very well-run operations and trading. We're going to continue to do value engineering, and we're hiring a company to help us with value engineering in that space. But we had those things, but they were order takers. There wasn't a strategy. And when I say they're order takers, that was the CIO telling me, we're order takers. So I'm not saying anything that would be offensive to our team. That's what they told me. We don't have a strategy. We don't have a product development team. We don't have governance. like this was told to me when I arrived. And so what have we done? We've created a product development team on the investment side. We hired Bob Humm from BlackRock. He started a month ago. He already has a 46-page road map, which he has shared with the fund Board. He has shared with the Executive Committee, and he is executing it already. We are in discussions to bring that out, to roll that out and to start bringing new product to market, and we'll have a pricing governance, so we price the products across the continuum of exposure, liquidity and opportunity. so that we have logic behind the pricing of these products as well. And we're looking at every product we have, what could be converted and what should just stay where it is and continue to run off due to attrition. So that is a different investment team. Now why do we think that we can be competitive in the investment world? Where are we going to be competitive in the investment world? We have a very successful $30 billion quant business. We manage in-house. Most everything we do, I think, reputationally is fund to funds, manager managers. That in the public markets, we'll talk about, is a declining value proposition, to be honest. We're bringing more in-house that gives us more control over fees and pricing. It also gives better margin accretion over time because you don't have to pay sort of fixed cost to sub-advisers. But we will create partnerships. I think one-on-one partnerships like we just converted a mutual fund to an ETF with DBI called QALT. We just did that like 2 weeks ago. I love that strategy, sort of the Vanguard Wellington strategy, where you have expertise in areas we don't have a partnership where they have an incentive to sell that fund as much as we do. And the person who runs QALT is out there probably more than anybody even at SEI out selling that fund right now. And then we have about $14 billion, $15 billion in alternative strategies, which $99.998 billion of that is in institutional. I think we only have like $34 million and it's mostly seed investment in the adviser space. So untapped opportunity for us to bring our history, our focus of being a fund-to-fund manager into the alternative space. Why is that important? Biggest thing you will hear from advisers who are uncertain whether they want to use alternatives is because they are afraid of not liquidity. They'll say, well, the liquidity thing concerns me. What about liquidity concerns you for 5% to 10% of the portfolio? Do you really think there's going to be a run where somebody is going to need that 5% to 10% Well, no, it's not really about liquidity per se. It's made a bad decision. I bought the wrong alternative strategy or private market strategy, and now I'm illiquid. Now I can't get out. Okay. That makes more sense. So there's a way for us to participate. We have 30 people in our market research team, our managed research. We can reallocate many of these people who do very good work and have done really good work in the public market space, bring them into the private market space. and use our history and our capabilities of being a manager of managers, bring that more into the -- and not with adding on hundreds of basis points, but bring that into the alternative space so that we can bring a better solution within the ecosystem in the alternative space, where even if we just treated it almost like an index where you get more sort of median returns, that will get more peace of mind. I think with manager research and with the work that they've done in the past, hopefully, we will do better than that. But that eases that concern that I'm going to be on the bottom of the dispersion table, which is huge, as you can see some of these areas like private equity, 20% variance over this period of time, like that is a concern and then you tied in. So I think we have opportunity to bring our investment capability into the alternative space into wealth and work with those clients to do that. So that's another way that we will bring a horizontal approach. Lastly, on this before I get to Stratos, we had a little problem also. Anybody who knows the historical TAM business, advisers would work with you until they got to a certain size and then they leave and they go independence and they wouldn't work with you anymore. And that was largely driven because there was not a pricing mechanism to keep them with you. In fact, when I asked for the pricing mechanism, it ended at $125 million. So once you hit $125 million, you paid the same prices if somebody had $5 billion with us. That's not how the world works anymore. Scale that gets fee reduction. That doesn't necessarily mean margin reduction because you also get reductions in fixed costs. But we have this chart as an indicative of what was missing, but it was even worse than this chart. It was $125 million. Now we have a chart that still needs to continue to go to the right and lower, but at least it goes to $5 billion. And as we continue to grow and move upstream, we will continue to move those pricing benefits further and further to the right. And as the size of the clients continue to increase, one of the firms that we met with, 33% of their clients were 0 to $5 million, $33 million were $5 million to $25 million, 33% were $25 million and up. So it's not just about the size of the firm, it's about the size of the clients. We will continue to round that out and price holistically. And that is going to be a competitive differentiator when you think about that ecosystem. Okay, Stratos. So Stratos, for those that don't know Jeff Conceion, the CEO of Stratos, he wishes he could be here. He is hosting his national conference for Stratos. It's hundreds of people together in Dallas. I will be flying in 3 hours to join him down there in Dallas to speak to all of his advisers. Stratos represents what we talked about before, a way to hedge a little bit of the fee compression. There's also some ancillary benefits that are coming from that partnership. But if you look at what's happening in the market, you have this trend of people wanting more advice. And if you read the McKinsey study, there will be 100,000 less financial advisers over the next few years. So supply and demand would suggest that you should have fee stability. Now what is hitting the adviser business is margin compression because of what we talked about earlier. If you look at that ecosystem slide, right now, if they don't come to us, custody, they have to go to Schwab or Fidelity. You go to the next phase, which is the wealth platform to help run the business. You go to SWP, Investnet or Orion. Then you go to the next part, which is somebody that can create custom models for you. You go to BlackRock Capital Group or us. You go to the next thing, which is you need alts, now you go to Case Capital or us. And then you have -- you want householding. You want tax management across the entirety of the portfolio. can only come to us. That is such a challenge for the operations of an advisory firm. And that is where we think over time, with Stratos, we can improve not just the top line by continuing to invest and grow together, but bring a more, I would say, operational efficiency, which should be a solution to that margin compression over time for the adviser business. So a lot going on in that world. What are the benefits of Stratos and SEI together? A few of those, I will share that our concepts. We haven't closed yet with Stratos. So what I'm sharing are just concepts of what could be very interesting, and I'd say just thought-provoking. One of the reasons that the OCIO business, the growth of the OCIO business for many is difficult is -- the clients you win are in areas where maybe you have one client. And so it's expensive to serve them. You have to fly, you see one client, then you fly to another city, you see another client. Stratos has 356 advisers. Let's say, 20% of those are interested in being institutionally minded as well. We could bring of our 400 institutional clients, we could bring to start, let's say, 60 out, 1 each for those 60, 70 advisers and teach them how to serve that business. And we can share in how we are compensated for that. And then we teach them how to go get more. And now in that local community where they have a reputation where they're there every day, they can take that learning of how to be a consultant within the OCIO business and take that to 9 or 10 more. If they only did 1 a year and you did it with 50 advisers, that would be an 8% improvement organic growth in the OCIO business. We just 1 each for the entirety of the year. So there's interesting opportunities in the OCIO business or in the institutional business. If you think about our private wealth business, which is $5.5 billion to $6 billion of assets, but very skilled at communicating with clients from $10 million to $1 billion. That's the range of the clients that fall within the private wealth business. If you take those capabilities, the technologies we use and the improvements we continue to make in the goals-based approach that we bring into the private wealth business, and that becomes a co-adviser to the people at Stratos, the advisers of Stratos, who don't have experience with the $5 million, the $10 million, the $20 million, the $500 million. That becomes another interesting synergy. What happens in these deals too often is the word synergy refers only to cutting costs. How can we strip out fees because we've got synergies. What we're looking at when it comes to Stratos is how do we make it an accretive business for both sides, which since we will have mutual interest in that is good for everyone. So how do we make it an accretive business? How do we make it -- how do we take these synergies, whether it's in the private wealth and the mainstream wealth, whether it's in institutional. And then you look at the fact that Stratos has their own -- they have their own investment management called SIM, Stratos Investment Management. We can help scale that. It's mandatory to use that as advisers come into Stratos. We can help scale that with the capabilities that we're developing under Bob Humm from BlackRock, who has moved over a month ago. So there are synergies that go far beyond overlapping capabilities where you would cut and try to validate a purchase price through reductions of overhead. We have synergies where we can scale, improve, optimize and create a more lucrative environment for Stratos and for SEI. So is it working? So far, so good, but we're very early. When you think about Phil's business, he's rolling. Think about Sanjay's, we're on the move. We are executing. This is not conceptual other than what I just shared about Stratos. Everything else is not conceptual. It is executing. We are in process. Things are getting better, but I really won't get too excited about this chart until we have another year or 2 under our belt. We are winning, we are improving, but we haven't scaled that yet. So we have to show that we can do it over and over and over again, and that's when I'll have a little bit more comfort as well Sean and Ryan. So we've got more work to do, but it's a good indicator that we can move upstream and we can serve larger clients. So the last thing I'll leave you with one more time is the ecosystem. We aren't collecting dots. We're owning dots. We're looking at ways to improve the ecosystem. We're looking at ways to improve the capabilities to bring SEI into the wealth business, into the institutional business, merging these businesses together, improving our investment department. And the next speaker has an interesting job at SEI because one of her jobs is to look internally and externally at adding dots, where are there extra dots that we can collect or own or invest in, be strategic about. Some of those will be improvements internally. Some of those will be improvements externally. And so what Sneha focuses on is what's next for SEI. And so with that, I'll turn it over to SEI's -- the Head of SEI Next, Sneha.

Thank you, Michael. So I have a little story about Michael. When he joined last year, I -- of course, you call up people that you know that might know him to find out what he's like because I'm like I'm going to be working with him. So I wonder what he's about. And the colleague said to me, the thing about Michael is he's got a huge vision and a really good heart. And I have to say like it's been true, you see it when he presents, but you see it every day the way he shows up. And it's actually true about everyone that I work with on the leadership team. And when Ryan talked about, it's fun to be here, that's why it's fun to be here because when you work with people who have bold ambition, but are just good people who want to like work together, it is fun to show up every day. And so I'm like privileged to be here, and thank you to all of you for like working with me. So what is SEI Next? Everyone else talked about what's happened in that business over the last 3 years. My role didn't exist 3 years ago. So I've been here 2 years. And SEI Next, I struggle sometimes to explain to people because people are like, are you an incubation lab? Are you a venture studio? Like what do you do? And I don't like those terms necessarily because for me, they feel trendy and cute, and we're not here to be a trendy or cute, right? Like we're here to be the tip of the spear for what SEI is doing in the industry and how we're going to be relevant, scalable, profitable and high growth over the next few decades. So really, what we are, yes, we do venture. We do innovate. We do all of those things. What we are is a way for SEI to look around the corner and see what's coming next, find out what's relevant and bring it into the whole business. So my team is really small, but we work across the business with everybody to figure out how to scale innovation. And why do we need this? Because you've just heard from everybody. They've all got great strategies. They've had a track record of execution. You can see here, we have a history of innovating in our market. Why do we now need a separate capability that does that? It's because the market has changed and the pace of change in the market is just really accelerating. And so if you see what's happening with AI, if you see what's happening with blockchain and tokenization and how it's affecting markets, it's really noisy out there. And we talked a lot about relentless focus and execution in our businesses. It's really hard to be a leader of SEI now when you also have to think about every little like start-up out there that's trying to disrupt your space. And so what my team does is we help make sense of that noise, and we help bring that in and we help make it relevant to each of the businesses. And then we experiment and then we figure out how to scale. And so that's really what we do. We're here because we know that the pace of scale, the pace of change is going to require people who can take that stuff figure out how to make it relevant and how to scale. And we also know that organizations that are going to win in the next 10 to 20 years with the pace of a disruption now are going to be the ones that can learn and adapt the fastest. And so that's what we're helping SEI to do is to learn and adapt at a faster pace. So how do we do that? We have -- Michael talked about connecting the dots and so did Ryan. We have a lot of dots that we have to connect. We have capabilities that we need to have in order to like win the future. And we also have communities that we need to work with to win the future. And so the capabilities are our capability to build. So I have a small team that knows how to incubate new business ideas. We work very much like a lean start-up mentality. We go out, we do market validation, we test, we do research, and then we figure out if this is something that SEI should get involved in, and we test with clients. We've got investment capability. So we've got a CVC arm or corporate venture arm. What we don't do is place lots of small bets on things that we think are cool. What we do is invest strategically in start-ups that we think have the ability to scale with our business and are going to be where the client and where the market is going next. So we are really strategic investors. The average size of our investments are between $1 million and $10 million, so not huge. But what we really give those start-ups beyond the money and what they really need and what our clients need is we give them technology, we give them talent and we give them distribution. And that's how we actually take something that's a very start-up investment type of focus and make it into much more of a strategic focus. And then the third thing we do, the capability we have is the ability to partner. We know that a lot of the big technology companies are trying to get into financial services. We know that they have a point of view about cloud, about AI, about tokenization, about quantum. And we know that we can learn from them as well as they can learn from us. We know that a lot of our clients can learn from us as well, and we can learn from them. And so we've created an SEI Next Council, which is basically an innovation council that is comprised of some of our start-ups, VCs, partners and clients. And we talk about some of these big topics that are going to affect the industry. And then beyond that, we also allow them to come in and see under the hood of what we're building. So we don't just share the success stories. We actually share the building process. We allow them to come in and see like how do you adopt AI at scale? What are the challenges of thinking about tokenization in the industry? What are potentially the disruptive parts of that? And they get to come in and build with us but they also get to go in and we do externships with our start-ups. So one of the unique opportunities we provide to our clients and partners is they can go to some of our start-up portfolio and spend with their talent, spend a week or 2 learning about what's happening in the market. And so it's accelerating everybody by linking these capabilities and the communities together. And that's really how we build. So what are we focused on? When I think about change and what's next, I think in 4 horizons, right? For me, Horizon 1 is kind of what's now, what are we working on in the next 12 months. For me, then Horizon 2 is about what's coming around the corner, where are the opportunities for us to expand in our current markets. Horizon 3 is about what are the potential transformations we can start thinking about in our industry. And then Horizon 4 is about exploring things that are just potentially nascent, but we're not sure yet how they're going to affect us. And so if you can imagine what my relationship is with the rest of the business on all of these, Copilot, we were one of the first companies to take Microsoft Copilot and deploy it across our whole company. That's not the remarkable thing. The remarkable thing is the adoption rate we've got is one of the highest rates in the industries. And the reason why is because we worked with every single business unit to get champions from each business unit who wanted to be the adoption champions. We went through workflows and we said, how can we make your day-to-day better? How do we get the humans in our building to understand the value of what this stuff can actually bring. And one of the communities we leverage within our company is we've got a community called SEIsmic, which is every employee in SEI can join SEIsmic. It's an innovation community. And so no matter what your job is, you can put your hand up to be part of it. We will give you access to some of the projects we're working on. We'll give you access to training and design thinking on AI, on all of these things, but also your ideas get to filter up, and we'll evaluate those ideas. And if they're sound, we'll actually build out on those ideas. And so we leverage SEIsmic for Copilot. And that's where the adoption rate is so high. And we're seeing already value created with things like not just can I prepare better for my client meetings, but actually, can I collaborate better? Because if I'm not in a specific meeting, I can still learn about what's there because I'm able to like collaborate with the team using AI. Can I improve the way that I do market research? We're seeing massive, massive gains in the most dull administrative tasks, spreadsheet processing and things like that. And so these are the ways in which we're bringing it to life. And as you go further out into the horizon, we get into more debate sort of realm. So it will be like Ryan and I will debate is quantum really a thing? What's actually going on? Should we spend time on it? I'll talk to Phil like several times a week about tokenization and how it's going to affect his business. And so it really becomes how do we make it relevant. And then as it comes in, these things become real. So where are we focused? Where do we think all these things are going to have commercial value? 3 major areas. One is the user experience because we know that AI and automation and tokenization, all these things can drastically change the end user experience. And in financial services, the end users of all of these services have been like frogs in boiling water for a long time. We've just made do with these subpar experiences that are not connected. And the same thing has happened with financial advisers and wealth managers. They're not able to connect all the dots in their organization. And you know what, with AI, you can now create frictionless experiences that are beautiful and seamless. And the power of those is about retaining your users and making them delighted. But actually, the commercial power of those is the data that you collect from the users and the way that you understand their workflow. And the power of that for us in SEI and for our clients is that in the world of AI, the moat is data. You hear that from so many people. It is all about can you capture proprietary data? Can you capture workflow in a way that nobody else can? Can you capture insights? And so that's why user experience matters, and that's why we are relentlessly focused on that. The second thing is operational scale. And we all talk about margin, but it's not -- as Sean said, it's not margin for margin's sake. It's really about can we find better ways to scale? Can we find ways to double revenue without doubling headcount? Can we find ways to access markets that we never would have been able to access? And so absolutely, tokenization is in there. AI is in there. Robotic process automation is in there and every other technology on the planet that's going to come and make us better is in that bucket. And the third area is really growth. And for us, growth is not just about growing our existing businesses. I do a lot of work working with the business units about expanding existing businesses, and Sanjay talked about a couple of examples, and I'll share a few more shortly. But growth for me is also about how can you access markets that people thought were inaccessible. The thing we hear a lot from wealth managers and advisers is everybody wants to go after the mass affluent. But you know what, it's hard. It's hard because you can't service those people in an accessible way at the same margin. But now you can because using some of these leverageable technologies, you actually can service the mass affluent market. You can onboard assets in a way that you've never done before. And so that's really where the growth is going to come from, from thinking differently and reimagining the way that we do our current business. And so let's make it real now. So let's look at real examples of things that we've invested in and that we're actively working on that are driving those. So on user experience, Michael Lane and I speak on a constant basis about what is the user experience that he's going to need to service the large RIAs. What is the way in which his team can be leveraged in a way that allows them to focus on higher-value things like alternatives. And so we've got an investment in a company called TIFIN. TIFIN, you'll hear about a lot of AI start-ups in our space. And most of them are features, like they're note-taking apps. They're like they do one little thing. They do calendaring. TIFIN is interesting, and the reason we invested in them is they're a wealth platform. And what that means is they think about the end-to-end workflow of the adviser. They're not just thinking about one little piece of the day. And so what we're thinking about here is can you create like really seamless AI-driven user experiences for advisers because you know what, they're not going to give those things to their clients, unless they understand them themselves. We're also thinking about multimodal ways of delivering AI because people have been talking about text-driven AI. We're already thinking about video-driven AI. So thinking about what's next and how do we actually help educate and inform and empower advisers so that they don't want to do the same thing with their customers. And so that's one area that we're working with TIFIN. Another, Michael mentioned the manager research team. We're actually automating a lot of their work using AI and TIFIN so that they can then focus on higher-value work. And so we're seeing results both internally and externally around this idea of user experience. Under operational scale, I mentioned Phil. Phil and I talk a lot about tokenization. I think I get like, I don't know, like 4 or 5 times a week, I get a text from Phil, like either a new start-up that he's seen or like can you think about this or how do we talk to this client about what we think is going to happen to the industry. The potential for tokenization to really impact the operational efficiency of the market is huge. But the reality is that until the regulator gets on board and until all market participants are on board, it's actually not going to get to scale. And so what are we doing? We invested in a company called Ctrl Alt. It's based in the U.K. So talking about our international strategy, too, we're very aware of the start-up seen overseas. And there, what we're doing, Ctrl Alt is embedded with us with a Digital Security Sandbox at the Bank of England, and we are actually working on tokenizing a fund with them there. And so that is an exploratory thing that we're doing, not just off on the side, but with the regulator, with the market in a market that we think is a high-growth market for us. And something else interesting about Ctrl Alt that we're learning from, they've just won the contract to tokenize the real estate in Dubai. And so us and our clients are learning from that. We've actually got a client externship that's going to go and work with the team at Ctrl Alt so that they can understand what the future of tokenization is. And that's really the potential. And then if you think about like growth, Sanjay talked about how he's driving growth in his business. And we've got another example here of both international growth and growth in the banking unit. We've been talking about the fact that banking struggles to serve the sub-billion client because it's not efficient and we want to increase margin. So we found a company called Graphene in the U.K. And Graphene serves that mid-market really, really well. So we invested in them. And this year alone, we're going to get billions of dollars of new assets onto our wealth platform because of Graphene. And so these aren't like just ideas. They aren't just like cool things or cool technologies. We don't get sort of sucked into the glamor of the new tech. We really think about how to make it tangible and real and scalable. And so I'm really excited about what's next at SEI, and I hope that you are, too. I believe that we are now going to move to Q&A. So I will turn it over to you, Brad.

Yes. Thank you very much, Sneha. So as we get everyone set up in the front, just for the Q&A protocol, I'm going to be walking around with a handheld microphone if you have a question. We want to take as much time as is needed to answer questions from this group, either flag down myself or I think many of you know Leslie Wojcik, who runs Global Communications for SEI. We're happy to take your questions.

Brad, before we start, I'd like to take a brief moment and give you a shout out. You got us really prepared for today. It's your idea to do it in Manhattan. I think another great example of us being willing to bring in really, really talented leaders from outside the organization and listen to their ideas. So on behalf of all of us boss man, thank you.

I appreciate it. Thank you.

Crispin Love, Piper Sandler. International was a key theme throughout the day. And with Sanjay now running international, has done a fantastic job with banks, can you just Talk a little bit about the biggest opportunities there, 15% of revenue now, lower on an operating income basis. How could that ramp low-hanging fruit? And just where you're excited about most internationally and then also how M&A could fit in the equation there?

So I'll go first, Crispin. If you think about, again, kind of this constant concept of creating an integrated enterprise strategy. So Phil sent Bryan Astheimer over there a few years ago because we wanted to send a seasoned leader who understood growth to get IMS sales moving. Bryan has done a spectacular job. Sanjay and I spent years over in London. SWP had a lot of momentum. We have started to get more aggressive in terms of taking asset management out to intermediaries in the U.K. But there's no integrated plan around how are we going to market in all of these areas? What's the branding? How are we leveraging our workforce footprint? Everybody still feels that they are part of their kind of team and not part of the office or offices. So I think -- and I'll turn to Sanjay. I think when you look at our opportunity, it's to get really, really disciplined around where do we want to go to market with what capabilities, but then leverage the footprint that we have in Dublin, Luxembourg, the U.K. and other areas to really deliver a superior client experience. Do I think we have $1 billion of latent revenue sitting under a rock over there? No, I don't. Do I believe we have a lot of upside potential because the other thing, Crispin, you got to remember, the difference between there and if you take London, we can go over to London and see everybody we want to see in 72 hours because it's geographically, the U.K. is the size of Florida, that's true fact. So I think it makes 0 sense to go to market in those markets as 5 disparate entities. Sanjay?

Two things I would call out. In the international markets, as I was saying earlier, our existing clients in North America, they have presence in other jurisdictions. So we are going to look at how we maximize our wallet share in other jurisdictions with existing client. I think because we have trusted partnerships, that's why we are starting Singapore office, for example. And we have those relationships already established. Second part is that if you look at our Dublin office or you look at our Lux office, those are like IMS offices today. South Africa, that's asset management office. U.K., that's asset management and private banking office. We want to change that. These are all SEI offices. And we want to change that mindset and replicate what we have done here in North America over those jurisdictions.

And there's a cost structure component, obviously, to it. I think what we've done really, really well over the last couple of years from a cost optimization, again, not expense reduction, but cost optimization in the U.S., I think we can -- I don't think we've done as good of a job over there, and I think we have an opportunity to do that.

Patrick O'Shaughnessy, with Raymond James. Sean, you talked about capital allocation and willingness to take out debt. Would you contemplate taking out debt to accelerate share repurchases? Or is it only for strategic growth?

No. We're -- Brad prepped this well. He thought that might have been a question, and it was. Well done, Bradley. No. So we're not going to draw down on our revolver for stock repurchases.

Pavel Gulberg, Bloomberg Intelligence. A question on digital assets and integration across different businesses. Obviously, we just heard about tokenization, some of the opportunities you see in there. But broader, we're hearing from institutional investors, from retail investors, they're looking for ways to integrate it in their portfolios. We hear from a lot of CIOs for the businesses that you actually see in a percentage allocation into this. We haven't heard as much during the last 3 hours. What's the broader digital asset strategy?

Yes. I think we're just getting going in terms of like our overall digital asset strategy. I think we're really focused on the efficiency gains around tokenization because that's where the regulator is moving faster. And so that's where our experiments have been, but we're absolutely involved with conversations with start-ups in this space and also with a couple of interesting experiments with regulators in the U.K. and the U.S. as well. So we're in the early stages, but yes, you'll expect to see more of it. And we definitely are seeing demand and interest from our clients.

Jeffrey Schmitt, with William Blair. Could you maybe talk about some of the revenue synergies that you see with Stratos? I know you talked about greater opportunities there than cost synergies. So what are you thinking there and maybe the timing of that?

Yes. I'll go first and Michael, you go. I mean I think Michael highlighted 3 major ones, Jeff. If you think about the $37 billion under management, they have a really, really disciplined value proposition when they're bringing on new advisers who need to adopt their centralized investment management. So our ability to supplement and augment their centralized investment management group is certainly something we've been talking to the team about. If you look at their platform, the non-brokerage assets find themselves in 2 or 3 different wealth platforms. So we absolutely have SWP opportunities there, especially as new advisers come on board. And then I think the third, and Michael highlighted, is our ability to kind of cross-sell our OCIO capabilities and help them go upmarket and actually go after either foundations, endowments or also ultra-high net worth clients. And then I would flip that around, Jeff, and say, we have so many opportunities that we can learn from 356 advisers, what's winning and what's resonating with end clients that we can be quickly turning around and putting that in the hands of our banking clients and our adviser clients to grow our revenue as well. Mike, do you want to...

Yes. There's a couple of things. One I didn't mention during my discussion, which I think is important is we will now have the opportunity to go in sit in Stratos' office in Cleveland and learn about every technology that they use, which are every one of the ones I used as competitors in all 5 of those dots -- or 4 of those 5, they use competitors. We will learn about them. We will see how they use them. We'll see where they're better or worse than us. We'll know where to more strategically align investment dollars with capabilities and needs instead of improving something we're already a leader in, improve where we're not so that we have a better platform. For advisers, we don't have an ownership interest in. And so our independent adviser business is critical, and they're going to help us grow that faster by learning from them sitting in their office, learning how they actually do business. That's one. And then I think the investment opportunity is -- the investment management opportunity is absolutely untapped in that area because they have a very disparate way of how they have historically worked on an investment from an investment perspective. SIEM is relatively new. It's getting traction. I think there's lots of work we can do to have a more disciplined investment approach within the Stratos family.

And SIEM has little to no exposure to alts. And I think to your timing question, Jeff, it's going to be ready, aim, fire. We're going to be really thoughtful, like -- and these guys have been amazing. Like Jeff and the team want the same things we want. So it will definitely happen. But we're not going to go in and force something down the throats of a firm that we need to go really understand why they continue to win and go accelerate that.

But to Ryan's point, when we talk about alts and wealth, that's going to be obviously a great place to build product together that can be expanded in other words.

Jeff, on aside, we wanted Jeff here, Concepcion here today. He couldn't be here. He had a previous engagement. Actually, Michael is going out to, I think, spend time with at a conference that he is at. Just an FYI.

My name is Jeff Nathan, at Rockefeller Asset Management. Building on this last discussion, your strategy around alternative assets, you're clearly doing well in investment management with alts and exciting growth prospects in fund admin. But the rest of SEI, it seems like a bit of a missed opportunity. Competitors at the intersection of wealth and alts such as, say, iCapital are taking share. And I think they recently raised at a valuation nearly equal to your market cap. Two questions. It seems like you have the infrastructure for this market. Alts are all upside. Why aren't you going after this market far more aggressively? And then secondly, what KPIs should we track for your opportunity here outside of investment management?

And so when you speak about -- when you asked the question about going after the marketplace in alts, so are you speaking about the platform or the product?

Platform.

Platform. So the platform, when we acquired Altigo less than 2 years ago, it was more of -- think of almost like subscribe, where it was more of a technology for subaccount -- for subdoc processing more than a platform that would be in the realm of, say, an iCapital or case. And that's why earlier this year, when we rolled out Access and rebranded and created a marketplace, it will be something that we will be definitely putting more resources behind to use that. We are right now -- we have signed on several broker-dealers who are going to use Access as their alts platform. That's one of the strategies will be to become the Intel Inside a lot of the broker-dealer community as well as within the adviser community to have a discussion around where they are today and where we can go. iCapital and [ Case ] are great companies. They're clients of ours as well as they're going to be companies that we think we will complement well in the marketplace from a platform perspective.

And the other thing I'll keep harping on this enterprise concept. So Jeff, you're suggesting you're surprised that when we power 11 of the top 12 publicly traded alternative investment managers, we haven't done more to harness that on the retail side? Yes, I agree. But with the collaboration, like Michael was just saying, Carlyle is a great client of SEI. Michael was just up at Carlyle with some of Phil's team members also talking about what we could do. I think this idea of co-creating things with our clients and not overcomplicating it, it doesn't all have to be invented here at the front of this room. We power some of the world-class players in this area, and we understand the fund structure. So that's a super fair question, Jeff, but also one that I think the approach we take and what Sean went through earlier around the pain of running the company differently, the benefits of that have barely, barely manifested themselves yet in sales results.

And what we have not talked about at all today, which aligns with your question, both from a platform and a product perspective, is what everybody wants to talk about is alts and models and alts and custom models. That is a massive opportunity to be more systematic about the use of alternatives within portfolios. And that is something that is 100% in the top of our priority list for development to not just do it in an Excel spreadsheet, which is what a lot of the people are doing right now if they have alts and models. We can hold an alt and model right now. That is 100% capable on our platform. If you want to have an alternative product in the model, in the portfolio, you can do that. The problem is that we -- nobody really has automated how to trade around the subscription windows for liquidity. So how do you rebalance the alt? Is a subscription liquidity window issue or it's a proxy window? And so we and everyone else that is in this business in terms of being a wealth tech provider, we are all racing to make that capability reality while not taking on tremendous amount of manual spreadsheeting to make that work. We don't want to go there yet, ever.

Patrick, you've another one?

Patrick O'Shaughnessy again. How durable of a revenue stream is professional services revenue?

Sanjay?

Yes. So think about every new client we are signing, every new client we are signing right now, they -- we are also providing the professional services. And with that process, we are establishing good relationship with them. They are trusting us. So the clients we signed last year, now we are providing them more professional services after they went live. So it is turning into a repeatable business after they are live. I think about -- I think Michael, he called this out. Most of these large institutions, they are looking at fewer trusting partners, fewer partners to outsource. And that's how we're establishing ourselves. We are already providing them technology and operations. And now we are positioning ourselves as professional services as well. And if you look at what is happening in the industry right now, as I was calling out, data and AI those are the current challenges. Think about in future, quantum, yes, that means that, yes, people would be looking for cybersecurity as #1 concern. We are already working on that. What would that mean? So we are keeping ourselves ahead of that. And one thing which I called out outsourced CTU. Once you establish yourself as a trusted partner, that's a durable relationship.

The only point I would add to that is that Sean talked about our 2,000 consultants that we have, and those consultants have been with us for 30 years. So it's been pretty durable for them, and I'm sure it could be pretty durable for us. So...

Great point.

And I think a tactical example of this, Patrick, is we're starting to win some professional services SOWs from non-platform clients. So historically, at SEI, if Bank ABC decided to run their platform on FIS, somebody would say, okay, well, they're off the prospect list. No, they're not. They may be off the prospect list for SWP. They're not off SEI's prospect list. So we should be in there talking about asset management, talking about professional services. We have an example that I'm sure we're going to talk about next year around a firm that was struggling to install a competitor. We went in to help, and that's going to result in a really, really good outcome for SEI in that firm. But we went in with some class, too, to say, "Hey, we'll help you out of this." So I think it also has just broadened the aperture of what we're able to go talk to these organizations about.

I'll take it a click further. So we bring in kind of behind the curtain here a little bit. I mean we are talking in earnest about how we professionalize professional services and actually stand it up. A lot of the things that I spoke about today, we're making massive progress on, whether it's procurement, whether RPA, I think we've got to be a lot further along. I spent a lot of my time there. AI, again, early days. Professional services is one of those. I believe it can be significant. What that time frame looks like, how much that is. Sanjay has done an amazing job, a little serendipitous of how he started creating this and looking around. We're starting to look in Phil's business. We're looking at Michael Lane's business to say, what are the other offerings that are being purchased by those clients of ours and nonclients of ours that we can do. That's very complementary. I don't think we want to go become a McKinsey and a strategy consulting firm. That's not what we do. So we're actually -- I mean, we had a meeting as early or as late as Monday or Tuesday on this very topic. So again, a lot of what we're talking is early days, but hopefully, you're getting the sense that we're trying to build something in professional service, I'm really, really bullish on. It's just now how do we stand it up, how do we get the services, who's the leader, how do we get the right workforce. Margins are dynamite in that space, as you're aware. Our clients are buying tremendous amount of services, tremendous. Our wallet share is almost 0.00001 in some of these clients. I think there's an opportunity there.

And we've taken it through our EBA process. We've taken it through comparing that to other uses of capital, and it's got real legs.

I'd love for it to be, not tomorrow, a segment someday. I'd love it to be a stand-alone segment. Not there yet.

Connell Schmitz, with Morgan Stanley. So thinking more high level here, just thinking back to the 2022 Investor Day, you put out the target of doubling revenues. Do you have an updated time line as to when you think you can get there versus 2022?

No, I learned my last one on that. I think we've got a really clear path around growth. Embedded in that -- like we've done a lot of work on that. Embedded in that, I think I'll be on, like I underestimated where we were on asset management and just the pure kind of flight out of mutual funds into ETFs. We -- as Sean mentioned, we're not an extremely acquisitive company, but we are going to use the balance sheet in other ways. But I think my opening slide, to be honest, when you look at -- if we continue to do what we're doing on that opening slide around the right sort of sales events, like if you think our old baseline for sales events for a quarter was $20 million, $22 million. We did $47 million in Q1. We did $30 million in Q2. We like the way our pipelines look right now, but it's the right sort of sales event. So I'm not sidestepping your question. If I could go back and maybe give a different metric. I follow the sales, I follow the EPS, and we will continue to expand margins and drive the shareholder return that Sean laid out.

Got it. Sticking high level on...

I was 90 days into the job, too. Right, Todd? Come on, man.

So we see the chart on de-siloing the firm. Can you just give an update on where you are on this de-siloing journey and how we can see that...

That's an awesome question. Mike Peterson and I were having this conversation as a sidebar. I think, Sean, and I'll turn it to you, but what you were going through there, some of those are kind of done and some of those aren't. So it isn't as though we're in any one of all of those areas. And what you didn't see on the chart is -- and I'm sure you saw today is there are very little silos that exist at the leadership level right now, but if you want to...

I think -- so, again, we just stood up procurement. We are real time, this entire executive team, Mike Peterson, we are working through a shift in where technology lives in the organization. It's going to be a major shift for us. It probably won't be as visible to the Street and outside, but it is a shift, all of these things. I would say GCC, I mean, early -- again, GCC, we stood up in May. AI and automation. I mentioned second or third inning. Automation, RPA is a massive opportunity. We still are a very manual organization, really almost across the organization. There's an opportunity there. So I'd say maybe second or third inning across all of this. Change management is hard, really hard. When I retire someday and look back, this journey from a shift from vertical to horizontal will go down as one of the hardest things I've ever done in my career.

But we're making incredible progress. When we met with one of the largest RIAs, and I said earlier, 7 opportunities were uncovered that we could work together on, 2 of those are in Phil's business. And nobody from Phil's business was even in the room. We know what Phil's business does now. they didn't before. We had people in one building on 3 different floors that had never even met in a building and didn't communicate. That doesn't happen anymore. I walk into the New York office here, and I know everybody in that office, and they work across every business. And so it is going to take time to go fully horizontal and to break down barriers across technology, operations, things like that. It's going to take time. But the people are thinking broadly now and not just narrow in what they do every day, they're thinking broadly of how we can bring the enterprise to a client.

And coming back to your doubling revenue question, not justify, I owned it. Don't underestimate the power that had internally. It basically -- when you're trying to drive large-scale change across 5,200 people, you need to change their mindset around what is acceptable and what we can be. And we got so much positive momentum and mobilization around when we explained internally why that opportunity existed and the math behind it. That's super different in terms of how we operate. Just like one of the first meetings we had a few years ago where I said I think we need to do $100 million in sales, and we told we can't do $100 million in sales. Well, now we're talking about $300 million in sales, $400 million in sales. And I say this a lot to the team. They're very -- the group up here loves SEI. And one of the major changes we made was we were finishing too many sentences a few years ago with a period, and I tell people to bring the comma back. So well, we had $1 billion in outflows from our mutual funds. That's not a period. That's a comma. So what are we doing about it? And what are the options? We have $700 million. We have talent. So part of the doubling revenue was to kind of scare some people and actually let the company know we were running this company differently and our expectations around winning were very different.

Another way of saying it is we have a lot of people that will tell you why still within the firm, why we can't do things. It will happen. So my response is we could, if fill in the blank. What would we have to do to do it? I brought up a $10 billion opportunity the other day for people in the room. Whether it will ever come to fruition or not, we'll see. But the first reaction was, no, we can't do that. Okay. We could if what's missing that we couldn't do it. And it turned out nothing. There was nothing missing. But it was just a reaction. Oh, we've never done it, so we can't. Now you can't. You don't experience in that business, we can do it. So I think it's just changing that mentality around the if, the comma, whatever it may be. It's a cultural change.

And bringing back the entrepreneurial spirit of SEI. Sanjay's first presentation about what he -- first meeting he and I had about Patrick around he wanted to launch professional services to increase net sales SEI, I was like, cool, go ahead. And instead of litigating that for days upon, go get out there, try it, what's the cost of failure and then let's figure out how to methodically scale this.

Yes. And I think we shouldn't underestimate like the little changes that have happened in the culture, too. Like so I was talking about SEIsmic earlier, right? The fact that all of our employees can join projects that aren't just even in their space. that somebody has an idea that can help another part of the business, they can actually go work on that part of the business now, and that wasn't possible 3 years ago. And so the talent mobility that's happening and the learning that's happening across the organization is driving a massive culture shift as well.

The greatest strength we have at SEI is the longevity of our employees. One of the biggest curses is the longevity of our employees. And so I mean, when I got there, I'm like, oh, how long have you been here? I haven't been here that long. I've been here 11 years. I mean that's literally a common state. I've only been here 11 years.

I've been here 27.

That's a long time, buddy. But anyway, I mean, that's the thinking. So kind of changing that thinking to Michael's point -- I think Michael's example is perfect one.

I do, too.

One more?

Jeff Nathan, at Rockefeller. my question is on your operating margins, 25 to 50 basis point operating margin expansion per year, pretty moderate relative to the last 2 years relative to improving mix, efficiency, new wins. I think it's really wise to be prudent on your guidance. But what do you see as the swing factors?

So Brad had that question as well, Jeff. Well done, Brad. So yes, I think if you look at the numbers and even some of the examples I gave around procurement, some of the things that we did not necessarily talk about tech synergies and redundant technologies, it could be, could be higher than that. And I think everyone out here is like, these numbers seem kind of low. We also have a lot of investments to make. So when Michael is building, Michael, I don't want to say Michael has a blank check because he does not. But Michael has a lot of things he needs to build to go get asset management to where we need to be. Phil has a laundry list of things, Phil. We need to continue to scale IMS as he grows that costs money. Sanjay has a lot of things that he wants to do. We need to keep up with our competitors around tech. Sneha has a lot of things. So I get a lot of requests for capital allocation. We're doing a much better job. We've put that discipline in place. Could it be higher? Yes, it could be higher. But we didn't want to come out here and say we're going to give 200 basis points in margin appreciation for the next 5 years. So there is a give and take. Some we want to give to EPS and to the bottom line, and we also want to make sure we're investing for the future.

And coming from where I came from, one of the art forms even more than a science is the reallocation of resources. I think what -- I don't think I would speak out of turn, and Ryan, I think you would agree, historically, SEI has just hired more. The key is to look at areas that you shouldn't be investing in anymore, areas that 100% aren't going to be the future, and you have to reallocate those resources. That could be reallocate the bodies, it could be reallocate the positions. But you've got to look at reallocating every day. And I don't think that was the strength of SEI in the past that we are bringing that discipline, reallocation of resources, not just more. And when somebody comes to us and now I'd say our natural discussion is different than it used to be. Somebody comes and says, I need 5 more people. Great. What 5 are you going to eliminate? Because obviously, there's got to be 5 on the bottom if you think you need to bring 5 at the top. So keep top grading, don't just hire 5 more. And so we have to have that discipline where we reallocate and be more disciplined about constantly improving the workforce, not just adding to the workforce.

Last call. Last call for questions?

I mean on behalf of all of us up here, thank you. I mean it's 4 hours. It's a lot of time. People are busy. So we appreciate you taking the time. We appreciate your support of SEI. We hope you walked away with that kind of conviction and enthusiasm that we hope we really have planned and intended. Come down to Oaks, come spend some more time with us. We can go into greater detail. We're in a really good spot. We're going to execute.

If there's any specific follow-ups on question, Brad, you can reach out to Brad. We'll be happy to answer those questions.

Thanks, everybody.

Thank you.

Thank you.