T. Rowe Price Group, Inc. (TROW) Earnings Call Transcript & Summary

Okay. Great. We're going to get going with our next session. Good afternoon, everybody. So next, I would like to welcome Rob Sharps, recently named CEO of T. Rowe Price, starting January 1. T. Rowe is one of the largest global asset managers, $1.6 trillion in AUM. Over the last few years, T. Rowe has been building out its success outside the U.S. and building really on a solid track record and a number of products expanding distribution and building new product capabilities. Obviously, most recently, the firm also branched out into private markets by announcing the acquisition of Oak Hill Advisors. So look, with lots of changes happening in the asset management industry, I'm looking forward to speaking with Rob about what T. Rowe is up to into 2022 and of course, spend some time on the investment landscape as well. So great to see you here in person. Thanks for being here.

Thank you. Good to be here.

I want to move my mic up because I feel like -- there we go. That's better. So Rob, first question really is around the CEO change. Obviously, earlier this year, the Board announced that you'll succeed Bill as new CEO of T. Rowe Price starting January 2022, something tells me that job has already probably started for you to some extent. But taking a step back, you spent 24 years at T. Rowe in various capacities, right, starting with an investment role first and then evolving into obviously a management role. As you look out into next year, what are your top priorities for the organization as a new CEO in 2022? And more importantly, what will be same, what will be different from the way investors got to know T. Rowe over the years?

Yes. That's a great place to start. As you might imagine, our succession planning process is designed to provide stability for our associates and for our clients. So all of the foundational elements of our culture and our strategy will remain the same. We'll continue to be an organization that has an investment-led client-first culture that really focuses on winning through investment performance and excellent client service. In order to sustain what's made us successful in the past, though, Alex, we have to adapt to a changing environment. So we need to make investments kind of simply to continue to be able to deliver against what's made us successful in the past. Things like standing up T. Rowe Price Investment Management, our separate adviser, which we can talk a little bit more about later, things like investing in our data and analytics capability, things like building a responsible investing team and pursuing ESG integration across all of our strategies. And on the client-facing side, things like developing timely, impactful content, working on our digital approach, our partnership with FIS, which kind of ultimately should translate into a better experience for plan sponsors in our record-keeping business. So there's a lot of investment and a lot of change simply to do the things that we've done in the past in the environment that the future will demand. I think we also have a very ambitious change agenda that will allow us to expand our capabilities and broaden our reach, deepen our partnerships with existing clients and do more with them, but also reach more clients. And that will involve things like building out our alternatives offerings, and you mentioned the recently announced acquisition of OHA, but we've also got a number of things that we've been doing organically in the primarily liquid alternatives arena. It will involve continuing to invest in and grow our multi-asset and solutions capability. It will involve continuing to globalize, as you mentioned, where we've had a lot of success in APAC, EMEA in Canada, but it's still a relatively small part of our business, particularly relative to our scaled peers. So we have a very ambitious change agenda. The industry is changing rapidly. And I think we've put ourselves in a position where we have a lot of opportunities that we can execute against.

Great. Well, it's a really helpful introduction. I'm sure we'll get into a lot of these topics. So maybe starting with the acquisition of Oak Hill Advisors pretty recently. I followed T. Rowe for obviously many years. And the company has obviously been the least acquisitive firm in the asset management space. So clearly, that's a big step. So the question ultimately comes down to, this is the first of many? Or this was really a unique opportunity in time because from a balance sheet capacity, you guys have plenty of opportunities and abilities to do more acquisitions if you choose to do so. The question is strategically, is that what we should be thinking about as the new T. Rowe?

Yes. I think of M&A as a tool in our toolkit in order to enable us to deliver our strategy. I don't think the strategy is dependent or reliant on M&A or focused on M&A. We're not pivoting to become a multi-boutique or to use mergers and acquisitions as a primary means of deploying excess capital. But if there are opportunities to use acquisitions, to further our strategic agenda, it's a capability that we have. And when it makes sense, we'll utilize. I would characterize our approach as one that we'll use it sparingly. We've used it very sparingly in the past, and we'll have a very high bar. I guess the first observation I'd say is we don't need to do deals for scale at this point. And I think where we would focus any acquisition that we do would have to meet 4 criteria. First, it would expand our capabilities and help us grow and diversify our business. Second, it would be consistent with our vision to be the premier active investment management firm in the world. So what does that mean? It would mean aligning ourselves with partners that are investment-driven and that have demonstrated excellent and differentiated investment results. We're not interested, as I said, in deals for scale. So we would want to minimize disruption of any potential deal. So we're not looking for things that overlap with things that we already do or do well or do at scale. And then the last criteria would simply be that it offer an attractive opportunity for our shareholders over time. I think if you look at OHA in particular, it checks all of those boxes. But kind of the most deals, if you examine them, kind of do not. So we'll be really careful.

Great. All right. Well, we're looking forward to that, definitely a slightly different angle to what we used to. So looking forward to that.

I think that's fair.

Yes. Fun to watch. Yes. Well, let's talk about Oak Hill Advisors for a second. So one of the pillars behind the transaction has been around opportunity to expand their distribution into retail and other sort of sources where T. Rowe has been successful. So let's kind of dissect that a little bit and what sort of products that they have that you think are most likely to see a healthy uptake from your distribution footprint. Because when you look at the history of acquisitions from traditional asset managers in the alternative space, it had a mixed track record. Like it's not the first time when a traditional firm wants to do something in the old space. It was liquid-alts, maybe a decade ago, 5 years ago, whatever, private market is a little bit more of a newer thing for traditionals. But the synergies on distribution have not always panned out. So why would this be different?

Yes. Well, if you take a step back, the first thing I'd say is that I couldn't be more excited about our opportunity with OHA. They are a great cultural fit for us. They're fundamentally driven credit investors that kind of really value research and collaboration. And a lot of the language that they use is very consistent with the language that we use in our investment process. They have a very long-term orientation, and they care deeply about their clients. So I think the first element of a recipe for success in a deal is having firms that are culturally aligned and where there's a good fit. The second thing I would say is that I believe that we've designed a deal structure that will reward both sides for future success. I think it's somewhat unique that their investment team will continue to function in the same way they have in the past. So there won't be any disruption for them. There also won't be any disruption for us where we do have a limited amount of overlap. They have attractive prospects on their own. They've built a sizable business and grown pretty rapidly, primarily targeting the institutional market in the U.S. and the U.K. If you look at our relationships and our client-facing distribution reach in institutional, we can bring them more opportunity, and opportunity more broadly from a geographic perspective in the strategies and vehicles that they currently offer. There is also meaningful demand in the wealth channel for alternative credit and private credit in particular, through vehicles like private BDCs. I think Oak Hill, as I said, has a very differentiated investment capability and historical results that should be able to translate into a differentiated offering in that channel. And we have got very, very deep relationships in the intermediary distribution channel. It's our biggest channel and a channel that we've been very successful in. We didn't wake up one day and decide. We need to be in the alternative credit business or the private credit business or we need to acquire OHA. This is something that's been very deliberate. And a big part of arriving at the decision that this was right for us was observing a lot of the trends and listening to our clients, understanding where they're allocating more capital, how persistent that's likely to be, what the trade-offs are in terms of trading liquidity for return over a period of time. We received a lot of support and a lot of encouragement from our clients to really try and enter this space. Most big institutions and intermediaries are really looking for scaled investment managers to be strategic partners and to do more and more with them. So we think that there's a lot of opportunity, whether it's kind of furthering the geographic reach in the institutional opportunity or bringing Oak Hill's capabilities to the wealth channel, which is an area where they've not historically played.

Right. On that latter point around the wealth channel and the capabilities through your distribution network, will it require a different sort of product development framework. So private BDCs obviously is what's selling. Is that something that they can get off the ground fairly quickly? Or it will require like some track record, and it will take kind of a couple of years until that can come into fruition actually show up in synergies?

Launching the vehicle can happen relatively quickly. I think kind of ultimately commercial success will depend on how differentiated the offering is. And I do think that you'll need to build some track record, right? I mean different institutions take a different approach to adopting new strategies. Some like to be innovative and on the forefront and be early adopters if they do their work and decide that this is something that really is attractive and offers an attractive risk reward for our clients. Others like to be more cautious and say, look, we know that OHA has delivered great returns and are great credit investors. But we've not seen them do it in this strategy, in this vehicle in the past. So we'll want to see 1 year, or 3 years, 5 years of track record. So I think the answer is probably some of both.

Got it. Got it. Makes sense. You made a point that OHA has had a really strong track record of growth on stand-alone, right? And most likely, that's going to continue given the fact that you're kind of letting the team operate independently. So their process is really not going to change on the back of the acquisition. There are 3 verticals that we operate in, right? So there's private markets, $11 billion in AUM. There a liquid side and then there's liquid strategy such as CLO and syndicated loans, I guess, on the more liquid side, and that's the bulk of AUM as well. How are you thinking about the growth algorithm for them on a stand-alone basis across these 3 verticals?

Yes. So we shared some data when we announced the deal on their historical growth in private credit, liquid and structured. And we basically show what their experience had been in '19, '20 and the first half of '21. And from that, you can see the private credit has been the area that's expanded the most rapidly, but they've had very healthy growth and structured as well as in their liquid strategies. To some extent, I think it will depend on the environment, right? They have capabilities from distressed to performing. And I think the opportunity will really depend on kind of really where the investment opportunity is most attractive. That said, I'm reasonably confident that they see a tremendous amount of opportunity in the private credit arena. And that hierarchy or order of growth with private credit being first, structured being next. And then their liquid strategies broadly being third, is likely to be the order on a go-forward basis.

Got it. All right. Great. Let's bring the conversation to T. Rowe as a whole and spend a couple of minutes on organic growth. So clearly, 2021, net flows are slightly negative predominantly driven by headwinds we've seen in the active equity business. Obviously, that's an area that's been challenging for the industry as a whole for quite some time. Can you unpack what's sort of been the source of pressure for T. Rowe there? Historically, you've guys done a little bit better in active equity despite industry headwinds. It's been a little bit more pressure this year. So that's kind of the first part of the question. And then secondly, thinking about your longer-term targets of 1% to 3% organic growth. What are you sort of working on to how you get back on track towards those numbers?

Yes. So you're right, the near-term flows have been soft and have underperformed our longer-term goal of 1% to 3% organic growth. And it's been driven by 2 primary factors. First is a handful of chunky institutional redemptions, which are notoriously difficult to predict. And second, as you point out, we've had a concentration of outflow in the active equity business. I think that's at least partly attributable to how strong the market's been since the lows of the pandemic, where many people added exposure to equities. We've had a number of clients that have rebalanced just based on the fact that performance has taken their exposures above what they would view as kind of neutral target for equity exposure. If you think about not only our large exposure in active U.S. equity, but where we have the most exposure in U.S. large-cap growth, that's also the part of the market that's been the best for really long period of time. And as a result of that, I think we've got clients that are looking tactically and saying, do I want to allocate outside the U.S. within my equity portfolio? Do I want to take equity dollars off the table? Do I want to go down cap to small and mid? Or do I want to think about rotating from a style perspective away from growth and towards value?

Got it. And the path to back to 1% to 3%, what are the kind of the key pillars that will kind of help you get there?

Yes. I think the 1% to 3% organic growth goal for us continues to be appropriate over a longer time horizon. So if you take a step back, I don't view that as guidance or something that we're committed to hitting year in and year out. I do it as an objective that I think we can hit more often than not on a go-forward basis that's appropriate at the scale where we are. And I continue to believe that. So kind of how can we get back to that. One, we've had a nice recovery this year in our retirement date franchise, and that continues to be a very robust opportunity set along with multi-asset and solutions globally. Two, as we mentioned earlier, we've seen nice traction in APAC, in particular, but in raising assets outside of the U.S. Three, we've got nice momentum in fixed income as a business, which is a business that's not as big for us as I would like it to be, but we've been making some real progress. And we've been growing there kind of both partly through the contribution of the multi-asset business, but also on a stand-alone basis. And we've got some meaningful momentum in a number of strategies there. I also think that OHA can be additive. And as I've said before, to the extent that we can deepen our client relationships and do more with some of our existing clients that can help us get back to that goal.

Sure. No, that makes sense. So the first point you made about this path back to kind of 1% to 3% is around retirement business and Target Date funds. So why don't we go there next. T. Rowe has a little bit over $300 billion in AUM in the targeted complex. It's an important area of organic growth for the firm, as you pointed out. We've seen you recently take strategic steps to lower pricing in that business and reposition it. I believe it's fully in the run rate at this point that happened a few months ago now. How do you think about the return on that price investment? Was that largely a move to sort of align T. Rowe with where industry pricing already is? Or do you expect the pricing change to drive a significant amount of incremental share gains in the targeted channel?

Yes. So a few things about the pricing moves, which were announced earlier this year. You're correct that they are fully in the run rate as of the third quarter. They went into effect the first of July. And second, I would say that I think that they have a positive net present value. So in order for that ultimately to be right, it would need to mean that as a result of the pricing changes, we either see improved retention or kind of heightened new business wins. And kind of our work suggests that that's likely to happen in time. I'd like to take a step back though and talk a little bit about our Target Date franchise because I do think that it is a really differentiated offering and among the best in the marketplace. We're the only Morningstar gold-rated active retirement A fund offering. Our performance net of fee before the fees were lowered, is among the best over almost any vintage and almost any time horizon. And it also includes a lot of alpha-rich diversifying building blocks and components, things like small and mid-cap equity, emerging markets debt and equity, noninvestment grade, so both bank loan and high yield, there are a lot of real value-added alpha-rich building blocks within our fully active Target Date offering. We've also now established a track record with a blend offering. So we can address the needs of plan sponsors and participants that are more fee sensitive and want a passive component to their Target Date offering. And we have our target series, which is a lower equity glide path. So we can meet the needs of investors that kind of ultimately have a lower risk appetite for their plan participants at certain agents. So I think it's important for us to be more deliberate in terms of highlighting how differentiated that retirement date offering is and the benefit of it. I think it was actually an extraordinary value proposition before we reduced the fee and kind of now net of that fee reduction, it should be an even better value proposition.

Got it. That makes sense. I guess sticking with the targeted business for a second, one of the phenomenon we've seen in the last couple of years now, there's been an increased pace of transfers out of targeted funds into collective trust. And that's a function of a number of different things. One of them, of course, being the fact that the clients get larger and they're qualified for perhaps a different pricing tier and they're moving into the separate structure. Is this a structural dynamics? Or in other words, do you see more of that just because asset values are up a lot, so naturally more clients are going to be hitting that? Or is that something that clients are coming to you proactively and that's a way for you to basically reduce pricing for them on the back of these shifts?

Well, I think it's a structural change in the sense that I think it's likely to be very persistent on a go-forward basis. I think the pace at which it happens though, I don't think is accelerating, right? What we've experienced so far this year is pretty consistent with what we experienced in 2017, 2018, 2019, especially when you consider the fact that our AUM is up 33%, right? So on a much larger base. Last year, the levels were lower when you think about fund to trust transfers. But I think during the pandemic, plan sponsor level activity was depressed across a number of different dimensions. And I think that's ultimately what led to the decline last year. So I would not really say that there's much of an outlier this year so much as the level in 2020. That was the real outlier there.

Got it. Got it. Okay. Makes sense. And look, now when it comes to pricing a little bit more broadly, obviously, we talked about the targeted changes you've made. You made some other pricing adjustments over the years. Looking at the product set today, what is your framework of thinking about pricing? Presumably everything is done through a lens of positive NPV. So are there other areas where you feel like you can tweak pricing to gain share and longer term on a kind of multiyear period. What role does pricing change have in kind of the revenue growth algorithm? Is that like a 1%, 2% dynamic every year or less than that, more than that? Kind of how do you think about that?

Yes. We're constantly evaluating our fees. Fees are an important element of the overall value proposition, right? I mean in time, you can only sustain a fee level to the extent that you can generate a value proposition that accommodates excess performance well over and above that fee. And kind of as markets evolve, the opportunity set changes and the competitive algorithm changes some. So it's something that we're constantly looking at. And I think are investing in sharing some of the benefits of scale with our clients. In terms of the impact on our revenue, I think you should be able to think about it as about 1% percent headwind most years. And that's a combination of vehicle transfer. So things like the fund to trust phenomenon that we just discussed and deliberate pricing changes that we take to share the benefits of scale or to be sharper from a competitive perspective. Part of the reason why we specifically called out the Target Date changes this summer is that with those changes, we're going to go through a period where it's elevated relative to that historical trend of about 1%. So for the back half of 2021 and the first half of 2022, you can basically add an amount consistent with what we disclosed in terms of the Target Date changes to that 1% to think about the headwind that we'll face over that 12-month period.

Got it. Great. All right. Let's talk about some of the other big changes...

There will be another dynamic there longer term to the extent that we're successful with things like OHA, which kind of will be richer in fee relative to our base business.

Right. Right. That's a mix dynamic, not the pricing...

Not like for -- exactly.

Yes, perfect. Yes, makes sense. All right. Let's talk a little bit about some of the strategic moves you guys have made also with really the split of T. Rowe into 2 investment managers, there's T. Rowe Price Invest Management there is T. Rowe Price Associates. How are you progressing towards these plans? I think the goal is to kind of get everything completed by second quarter of '22, maybe a little bit earlier? So maybe where are you in the process of adding resources to kind of properly fund both organizations? And I guess, more importantly, what are the implications for both revenue growth that we should expect from the split?

Yes. In terms of the progress, I think things are unfolding pretty consistently with the way we discussed them when we announced this initiative about a year ago. The hiring is complete at this point. The investment teams on the strategies that are moving to T. Rowe Price Investment Management are now kind of working in separate locations. We are working on the infrastructure from an operations and technology perspective to make sure that we're in a position to execute flawlessly once they're stand-alone and put us in a position ultimately to disaggregate our filings and the AUM. And we're on track for a midyear 2022 separation. In terms of the revenue impact over time, I think it's important to understand what we're trying to achieve by standing up to them, right? We're really trying to put our portfolio managers and analysts in the best position they can to continue to deliver excellent investment returns for our clients, right, by freeing them up to make the bets that they want to and the size that they want to and by reducing complexity and allowing tighter integration between the PMs and the analysts, both at TRPIM and at the remaining TRPA platform. To the extent that we're successful with that, it will extend our ability to generate great results, which will mean we'll keep our client assets longer. It will mean that we're able to compound those assets at a more rapid rate. And it will mean that for those strategies that have the capacity to take on additional AUM, we should have the ability to bring in new business. Again, both at TRPIM and TRPA. But the last point was secondary to the goal of really kind of putting those PMs and analysts in a position to execute against the existing business. It really was an initiative that was designed. We have a number of different things that are designed to aid our organic growth. TRPIM was not necessarily one of them.

Got it. Okay. Well, so more of an internal organic initiative kind of bubbled out in a way to expand the capability as supposed to anything more explicit from the organic growth, I guess. All right. Let's talk a little bit about the expanded reach you guys have seen. A big focus area for the firm for multiple years now, both in EMEA and APAC. You highlighted that as an area of success, and you've seen good traction there. So spend maybe a couple of minutes on the products that are resonating most there, any additional resources you feel like you need to add to those regions to continue to drive distribution and ultimately, maybe frame what kind of organic growth you're seeing out of those markets?

Yes. APAC, in particular, has been a meaningful contributor. I expect that EMEA will be increasingly consistent contributor on a go-forward basis. Within APAC, we've had particular success in Japan, both on the institutional separate account side, but also on the ITM side and partner with a number of intermediary partners. And I think there likely is more opportunity on a go-forward basis there, although maybe not at the same pace that we've experienced over the course of the last couple of years. But our Japan team is very strong, and we continue to add resources there. Outside of Japan, we've had some success in the Hong Kong market, some success in Singapore, some meaningful success with global equity and global dynamic bond in the Australia market, again, both institutional and intermediary. Australia is an intensely competitive market, but a market where we've experienced some success. So I would think about the contribution from that area growing at a steady pace as a percent of our flow, such that our percent of AUM increase over time. It's still a single-digit number. It's been hard to keep pace though with the appreciation of the U.S. equity exposure. So it's really been hard to bend the curve there. In EMEA, I think we have a very focused strategy, really by end market. And I think that's one that over the course of the next couple of years really should start to bear some fruit.

Great. Okay. Let's shift gears from revenues to talk about expenses and margins for a couple of minutes for you guys. Wrapping up the second day of the conference, not surprisingly, inflationary pressures have been coming up in almost all of the presentations, asset managers, banks, you name it. So clearly, T. Rowe on top of that has been investing in the business pretty aggressively as your -- for things we just discussed earlier today. I guess how is this dynamic playing out for 2022 expense growth relative to last year, so I think you've guided for '21, so years -- now it's a 13% to 15% guide that you guided to for this year. How are you thinking about '22? And then maybe -- taking a step back, as far as I remember, T. Rowe is operating kind of in the 40-ish-percent plus operating margin. Right now, you guys are running north of 50%, which is great. Part of the benefit of strong equity markets, how sustainable is that, right? So is 50-plus kind of the new norm or eventually you expect it to still normalize somewhere in the 40s?

Yes, it's a strange dynamic that we've been investing aggressively. We have expense growth at a rate that's more rapid than we've historically had, but, at the same time, have record operating margins and profitability. As you said, some of that's really driven by asset appreciation and strength in the markets. I don't think 50% or 50-plus percent operating margins are sustainable in our business in the long run. There are some pressures on costs. I think we are going to continue to invest against all of these initiatives. I think it's the right thing to do for the business over the long term. And when we start to think about '22 as we transition, hopefully from pandemic to endemic, we're going to have some return of travel and entertainment expense. So we'll model kind of ultimately some of that -- much of that coming back next year. And you're right that there is pressure from a talent perspective in certain parts of the organization that will drive some expense growth. So we're not right now in a position to give people perspective on what 2022 expense growth looks like. Our plan will be to give our outlook combined with OHA when we file our 10-K for 2021.

Got it. All right. Makes sense. All right. Last question for me before we can turn over to the group if we have time left is around capital management. So T. Rowe obviously continues to have an incredibly strong balance sheet like we talked about in the beginning, lots of capacity due to more deals and acquisitions -- acquisitions if the opportunities present themselves. Talk to us a little bit about the share repurchase dynamic for the company from here versus dividend growth. You guys have consistently been returning kind of in the 90-plus percent range of your earnings. What does that look like for you over the next 12 to 18 months?

Yes. So OHA shouldn't really impact our approach to share buyback. Longer term, we'll think of it as a primary tool to opportunistically return excess capital. We've pretty consistently reduced our share count. And when we filed our September 30 10-Q, gave the share count at that time toward the end of October, which showed that we were down 3 million shares from year-end 2020. So we continue to have the capacity to repurchase shares and the interest in doing it opportunistically when we think the shares are attractive or it's our most attractive alternative from a capital deployment perspective. If you think about OHA, the cash required to close is only about 3/4 of cash flow. And we'll fund that off of the balance sheet and still be in a strong -- a very strong net cash balance sheet position post-close. So given that we will have a very high bar for future acquisitions, we'll be in a position to continue to raise a regular dividend on a regular basis, and to opportunistically repurchase shares as well as evaluate M&A, again, to the extent that it advances our strategic agenda.

Got it. All right. Well, I think we actually -- one question up here with the mic and then we'll wrap it up.

Is it on?

Yes. Go ahead.

Just 2 quick questions. One, you mentioned the importance of scale. You made this acquisition. I mean, in the world of alts, it's not scale, it's $50 billion. So don't you inherently have to continue to either do M&A to build out the alts size to make sure you've got the scale? And then secondly, when you talk about net flows, and the fact that active equity, it's negative. I mean is -- do you worry about maintaining talent if you're not one of the growth areas and you're in active equity and flows are potentially just 0 to negative. What -- how do you keep and how do you attract people in that area?

Yes, I'll take the second question first. I think we have -- we're a destination of choice for equity talent. We don't necessarily take that for granted. But if you look at our experience in elevating our hiring to prepare to launch TRPIM, I think it validated the fact that people want to come and work for us. I think people see that we're an investment-driven culture. They see that we're committed to active management, and we have been -- if you look at our behavior through COVID, before that through the global financial crisis during periods of time where many of our peers have backed off from investing in their talent. So I think it's something that we need to be focused on, but it's not something that I'm worried about. Even if, ultimately, there's not a lot of net new flow in our equity business. If you look at the size and scale of that business, there's a tremendous amount of opportunity for our people to have an impact on clients. And I think people want to be part of our culture. And I have a lot of our investment division leaders and senior PMs to thank for that in terms of building and extending that culture. In terms of scale around alternatives, I think $50 billion in alternative credit is a pretty attractive size business. It's a business that is big enough to move the needle for us. We're interested in having OHA grow, but we want to grow them in a measured way. We want to grow them in a way that allows them to continue to deliver investment performance. And we think we can be additive to that growth with some distribution synergy. I mean it clearly has the potential to be a much bigger business and a much bigger part of our business over time, just in the strategies that they have. We've looked pretty carefully at what the capacity for that is, and we're pretty comfortable that there's a lot of potential growth there. That said, we are interested in and that team is interested in looking at adjacencies, whether it's real estate, whether it's infrastructure. So in time, we'll look at either organically or through lift outs or small acquisitions. The opportunity to get into other parts of the private alternative market and to build out that capability. It's not something we're in a huge rush to do, but I think it's something with a longer time horizon that is a big opportunity for us.

Great. All right, Rob. Well, I think we're at time. Thank you very much for doing this.

Happy to.

Great to see you. Great to see you in person.

Good to see you.

We'll do it again next year, I hope.

All right.