U.S. Bancorp (USB) Earnings Call Transcript & Summary

Good morning, and welcome back. Next up, shift -- changing gears a little bit, from U.S. Bancorp, I'm excited to introduce Gunjan Kedia, Vice Chair, Wealth Management and Investment Services. Gunjan has served in this position since joining USB in December 2016, and it is her first time presenting at our conference. So Gunjan, I'd like to welcome you, and thank you for joining us today and taking the time.

Thank you, Ebrahim. It's my pleasure to be here.

And maybe, Gunjan, just -- it's not a business that gets discussed a ton when you're talking to investors about USB. I thought it might be helpful to maybe kick it off with getting a little bit of a quick overview from you on the Wealth Management and Investment Services business and how it interacts with the rest of the bank?

Yes. Thank you very much. So we are Wealth Management and Investment Services. So as the name suggests, it's the investment product set for wealthy clients and corporations. So if you just think about the life cycle of an average consumer or even a corporation for that matter, we tend to see people start interacting with the financial system with some kind of a transaction product. It could be a credit card, it could be a checking account, young kids do sort of Zelle early on. And the natural course of life will take you into credit products as you're building your lives for a car, a home, a student loan. And then really, when you arrive at a stage when you have some affluence built in or some complexity like a bond issuance for a company, that's when our product sets come in. So we think of us as sort of completing the life cycle of a customer's need. So just some quick statistics to help put the business in perspective. We are today about 15% of the bank's revenue. When we presented at our Investor Day in 2016, this was just before I joined, it was 8% of the bank's revenues. So we are steadily growing. We just clocked in about $9 trillion in assets under management or administration or custody, and we are about $280-some billion in assets under management. So that's -- it's a fee business much more than -- although we have almost an $18 billion lending book, but 2/3 of the businesses see very high ROEs -- high growth or higher ROEs. So that's sort of our business.

That's helpful. And I guess maybe you are right, they are 2 distinct businesses. Maybe, we start off a little bit with the Wealth Management piece. When you think about that business, just talk to us about the opportunity set ahead of the bank, the different customer segments in which you -- sort of the lens through which you approach these customers and customer acquisition?

Okay. So Wealth Management is a relatively young experiment relative to the history of U.S. Bank. I think it was only about 12 years back when it was organized as a division. The legacy of the business is the old trust book, where trust powers of the bank are what people use for estate planning, and that's where the business stood. But we really organized around it just about 12 years back. The opportunity set is very simple, right? We have about 12 million core clients, 18 million total clients at U.S. Bank. We serve about 8% of them from the wealth standpoint. If you just look at the demographics of the country, not every American household has the opportunity to need investment services or wealth planning services. So it's not ever going to be 100% of our consumer base that we will serve. But if you just look at affluent customers and you look at those that seek advice, behaviorally, those who don't want to do it themselves, we could grow for a long time just serving our own retail customers who know us, who know the brand, who have an affectionate relationship with them. So it's a very good business. It's a business you grow steadily just by penetrating your sort of retail client base and your credit card customers over time.

Got it. And I think the one area that you stressed on, I think going back to the Investor Day and more recently as well, is that affluent customer base. And when I hear some of your peers talk about the wealth management strategy, it feels like everyone is trying to go after that segment. So talk to us in terms of what are the differentiating characteristics and just how do you sort of win against competitors when targeting that segment?

Yes. Thank you, Ebrahim. Let me just step back a little bit to just define how I think about the models of serving customers and just to put the bank model in perspective. So the reason everybody wants to go after this segment very simply is that as customer -- as people grow in life, it takes about 10 years, we think, for an average earning person to earn, have some investable assets, but then you live for decades after that. So if you really want to serve your customer fully, you have to provide this product set. So that's sort of a simple premise for why we are in the business. It's an advice-based business within the bank model. So today, we see about 4 big business models, although they are converging very rapidly. One is the self-service brokerage model. You go to Fidelity or you go to some other platform and you buy your own stocks and bonds, and you invest yourself. On the other end of the spectrum is the bank model, which is very deeply immersive of advice. We do taxes, we do insurance, we do both sides of your balance sheet. We can structure your credit. We can structure your estate plan. We can motivate your children. We can run family gatherings. So our differentiating factor is the fullness of the product suite, which, at U.S. Bank today, we provide every personal financial wealth service that you could want. And we integrate them together with teams that come together so the consumer doesn't have to do it for you. So for those people who truly like that kind of advice who either are not comfortable, don't have time or an interest in trying to do it ourselves, our value proposition becomes very good, very differentiating.

Got it. My kids need a lot of motivation, so I'm going to direct them to one of your wealth management officers.

I know you're being slightly funny, but it is so true. When I started in this industry, it was all investments. Like how do you invest the money today? It's like life planning. People really want to think about how do you use your money for purpose, how do you make sure your kids are motivated. And so the Wealth Management services have become sort of real-life coaching type of products at this point.

And it's interesting you say that because I'm not sure, and apologize I'm going off-script here, but I think the Wall Street Journal had an article, I think, a day or 2 ago, talking about the desire for self-directed investments, that piece of the bar had gone higher compared to 10 years ago. And when you read something like that, what do you make of it? Does it mean headwinds for this offer and advisory kind of business models?

No, I don't really. It actually makes me feel very motivated because at the fundamental level, we are trying to create good financial outcomes for our customers before we think of anything else. And more and more investors coming into the market feeling comfortable, educating themselves to investors, generally a good thing for the industry and it's a good thing for people. So that's sort of point number one. I will tell you, in the -- those months when stock markets have delivered extraordinary return, which, as you know, in the last 20 months, stock markets have delivered extremely good returns, you do get a surge in self-service investor. And it's not a bad thing because they are educating themselves. They are reading up on what stock markets are about. They are investing. As their needs go more complex, we find that they do begin to enter. When the money is not discretionary, when they're beginning to save up for a daughter's wedding or somebody's, there's a little bit more sort of need for advice. So we think of that. We have very good product sets to accommodate the first 10 years of you investing life and grow with you as you need your advice over time. So I think of it as more people coming into the industry through a different channel.

Got it. And when you think about the starting point, if you could drill into this around that wealth management client, is it an existing USB client who has a checking account or has a loan but is not on the wealth management side, and that's the lead with which you'll be going after with? Or are you independently going to nonbank customers? Like what's the mix of those 2 when you think about just adding new clients to the business?

The majority of our distribution is through the bank. It comes from someone who is familiar with our brand and our products. It could be a checking account. It could also be a credit card account. Now we have a very, very large payments business. And people who get used to sort of your brand will very naturally first see -- to see if you have some investment option. We have our digital option. We do certainly have a self-service brokerage, and that's quite popular with some people. But we also have a very nice sort of what is called robo-advisory digital platform. What's good about that is you're not picking stocks. You are actually saying what is your time horizon and what's your goal and what's your risk appetite. And we have a very elegant investment platform comprised of very cheap ETFs that can help balance your investments. And the digital front end is highly integrated with all the rest of your products with the consumer experience. And it took me about 3 minutes to open my account, and I sort of coursed my 18-year-old son to open his account because they are quite stringent in their feedback around your digital platforms. So it's a very easy-to-open platform. We're asking you intuitive questions, but then we are creating sort of discipline around adding cash to your accounts. So that's how we think an investor should start by simply reflecting on what do I want to accomplish, what's my risk tolerance and how do I create discipline around taking some money, $5, $10, it doesn't even matter how you start, and put it away so that you're building your nest egg. So that's sort of the experience by which we are helping clients move into the world of investments from whatever product they are using with us.

Got it. And you mentioned digital investments. And the more I hear digital, I think of like data analytics and the amount of data that you have. How do you use some of this in terms of informing and kind of customizing the solutions you're offering to these customers?

Well, in our business, we think about moments that matter because that's when someone says, I want to do something with my life. And the first time you get a job, it's a moment that matters because you're beginning to think about a different way of managing. A wedding, a child, retirement, age coming up, life injury and aspiration are all sort of moments that matters. So what our data analytics program does is either combined with a banker, who is the human touch of what we know about a customer, or just facts that we know, it helps us prompt our customers to reflect on a product that they might need. They've just bought a mortgage in a ZIP code that's different from the previous mortgage they had. We know they've moved into a new city. Perhaps they need advice. Maybe it's time for us to reach out. So our data analytics engine [ scores ] for moments that matter for customers and sometimes noncustomers and presents to them a suggestion or a free hour of advice or a product that might be sort of interesting for them just so that they could try us. And all of those go into our sort of CRM Salesforce sort of lead generation engine so that our advices can follow up even if the client doesn't choose to call us in. So that's sort of the engine behind the acquisition.

Got it. Yes. And when you think about like robo advisory, I feel like there's a big deal made about it 3 or 4 years ago when like fintechs coming up with that. Now it sounds like everyone has a robo-advisory solution. Is there a big differentiation between what the offerings are? Or everyone is kind of mark-to-market in terms of what it needs to be and has that as an option if the customer chooses to?

That's a very, very smart question, Ebrahim, because when this first broke onto the wealth industry, I think it was about 15 years back, there's some very clever products that were introduced in the market. The experience was very interesting. What 15 years has taught us is that money is an essentially very personal thing to most people, and the robo-advisory platform struggled to scale to a point of complex needs. And at some point, if you think of your own sort of experience, managing your own stock portfolio becomes a little bit lonely for many people. They want to understand how it impacts taxes. They want to start understanding how to optimize their credit side. So this notion of being able to do all of that, which, by the way, no one is going back from a digital offering because people like to be able to do these things on -- no one's calling an adviser to say, give me my investment balances anymore. But the ability to click on a button at any time and have an adviser, a licensed financial adviser pop up to just help you with 1 or 2 questions is what we are finding is a very differentiating skill. So a lot of the independent robo advisory are trying to set up that kind, and you're wading into a very different business model, which we are very comfortable with. So that's sort of how we think about a very comfortable way for us to differentiate ourselves. We don't charge by the hour. We don't -- these are clients of ours. These are very valued clients of ours. They have been banking clients for a long time. We are glad to get on the phone and answer a few questions they might have. So it's a digital-human, as you need it when you need it type of an offering with sort of the care and attention that comes from having a long relationship with the client that we've known for a while.

Understood. And I guess maybe moving from digital to humans, wage inflation has been a big topic recently. When you think about hiring, recruiting advisers, I would guess the market is pretty competitive. Just talk to us about the competitive pressures when it comes to hiring. Is there anything that allows USB to differentiate itself outside of just paying up for these advisers to bring them onboard?

Oh, my god, you are really sort of talking about something that is so top of our minds. So I'll step back a little bit and just perhaps, if you'll indulge me, spend a minute on advisory model. So we talked about the front end of the model, which is more digital and you can have an adviser pop up if you need. We then -- we find roughly around that $250,000 in investable assets. Now remember, it takes a family a lot of life effort to get to $250,000 in investable assets. That's a big number. We serve them through a team. It's not just a financial adviser. It's a financial adviser in a team with a banker. We have found that, that model has really improved our customer satisfaction, and it has really helped us retain an asset when you see attrition in an adviser, which in this industry is a real issue. So we have an unusually high number of asset retention, even if we lose an adviser, we don't lose our clients. When you go further up into a private wealth world and Ascent, which is a family office, the team becomes bigger than just an adviser and a banker. Now we are bringing in a planner. We are bringing in a trust adviser, and we are bringing in a dedicated portfolio manager because the investment strategies have become more complex. So the people side of the equation is very real. It takes a long time to have a nuanced financial adviser that can truly connect with the customer and connect with the bank's ethics. So it is a very hard recruiting thing, but our value proposition is very strong. Our compensation is not as punitive as many people in the industry. We have really migrated to the fee-based business. So if an adviser, for some reason, is having a tough year and they're not selling as much, there's a fair amount of compensation they are earning from their prior year's books. So it's a level of care and stability that is very popular in today's market. The wage inflation, now getting back to your original question, is very real, but we are observing it most in our entry-level production staff. It's the lowest end of the -- that's where -- like suddenly, the work from home, the return to office issues, the alternative roles that they can find with so many other people have suddenly sort of shifted the labor market here, not so much in the adviser market, which used to be tough to hire and continues to be tough to hire, I would say.

Got it. And in terms of just the incentive for these advisers to cross-sell, how big a deal is that when they come in, in terms of cross-selling other banking products to their customers?

Well, they can pay down the entirety of the client relationship, and they have access to all kind of products. So we say, just from a culture standpoint, I don't think we'd ever get into like this is the market to sell product X. But we are -- sort of they're naturally earning if their client is growing. And so they are in tune with what is the need of the customer and deepen the relationship because you'll retain the client a little bit more, and you will help them aggregate the relationship more with us. So they get paid on all products, and they have reason to sort of offer up any product that the client needs. Including the banking side, the credit side, by the time they come to the wealth, we are sort of the face of every product of the bank.

Understood. I guess I wanted to talk a little bit about the 2 acquisitions you've done or are in the process of closing, one is PFM and then Union. Maybe if you could spend some time on both of those, Gunjan. Just one, with PFM, just talk to us about the opportunity. I think it gives you access to sort of a lot of local government and those kind of relationships, and maybe if you could start with PFM.

Yes. And perhaps if you will indulge me, I'll just step back and describe our asset management business because some of you might remember that about a decade back, we actually sold most of our asset management business to Nuveen, now TIAA-CREF. So what are we doing here is the question. Well, what we retained was a cash and very short-term cash-light equivalent model. Our belief was, at that point and continues to be, that an open architecture platform on investment types that are not sort of what I call commodity or basic foundational, like cash is, was important to our wealth investors. So we didn't want to be in an active management, equities, fixed-income type of investment style, but we did retain our cash capabilities. The bank is very good at cash, as you know. Liquidity is something we do very well, actually. U.S. Bank's balance sheet capabilities are extraordinary in my mind. So we have this cash capability and then we have a spread-out business across so many business where our community bank structure, we have a very strong government banking practice. We sell to a lot of local municipalities on our corporate trust businesses. So what we were noticing was this enormous in-house distribution, which is quite difficult for many asset managers to reach, so we wanted to build out our product capability because we have the distribution capability and we know cash already. So it gives us this outsourced CIO capabilities for small clients. It expands our suite of cash capabilities, and it completes our sort of offering on the cash liquidity side to our sort of spread out -- so the distribution advantage is very real for us, as you know. It's very difficult to hire a sales force that is calling on these tiny municipalities everywhere. So we are in these communities very naturally.

And I think that's a great point in terms of the ability and the expertise to manage the extra liquidity. When you think about just the growth of that business once -- as it becomes part of the bank, is there a ton of like hiring needed as you think about the national strategy? What sort of investments would you be undertaking to further sort of expand this business?

I don't think it needs any more investments. The products are very good. All we need to do is train our distribution force, which is quite a big distribution force. Just think about we have about 10,000 bankers that sit in branches in communities. We have our investor services business, which I know we're going to talk about in a second. So we are selling custody services, we are selling corporate trust services to these people. And our government banking group that is part of our CCB group, if you -- that's 1 of our 4 large businesses, so we're just going to train all of them. We're going to create the incentive structure, revenue-sharing mechanisms. So they are equipped to offer it, and that's sort of the growth synergy. It's a very simple, very elegant sort of growth story here.

Got it. And before we move to the investor services business, one question on Union. Early in the year, you also announced like the acquisition of the debt servicing and securities custody services business from MUFG. Just talk to us, I don't think everyone fully understands what that brings, so give us a little perspective on that. And then the larger Union deal, assuming all goes well, what opportunity does that provide for your business?

Wonderful. So I'll just describe our Investment Services business here. It's a very sort of cryptic business, not everybody understands it. But if you cover the big trust banks, we have 2 large businesses in our IS businesses. One is our corporate trust business where, across the board, we have about 30% to 50% market share. Yes, so we are very large. And this business truly provides the services that are mandatory if a company is doing a bond issuance. You need a trustee. Or if you are a CLO manager, which is just on fire, as you know, from an investment class standpoint, you need a trustee to be a -- so we are sort of required services around being a custodian or a trustee for asset managers. So we know the space very well. The operational underpinnings of the investment side is very similar to the wealth management side. And the regulatory infrastructure is very similar, but the client base is different. So that's our Investment Services business. It's a very, very big deposit gatherer. We are now getting on to about $100 billion in deposits from this business. That's like a bank, $100 billion in deposits is a very big deposit base. So a lot of liquidity sloshes around because of that business because we're handling a lot of transactions on behalf of our customers. So 10 -- $9 trillion now in assets under administration. That business has been built up through about 20 to 22 acquisitions over the last decade. We have this ability to roll out acquisitions, gosh, more efficiently and effectively than I've ever seen done before we acquired Union. And 3 months after we had closed the deal, we have fully converged it onto our platform. So it's a skill. We know how to do it. We are very prudent about how we do it. We don't wander off to client bases. We don't know. We are very focused on a very specific type of a niche client. This is our second acquisition of that type of business from Union in the last, like, 5 or 6 years. And this broader Union deal will bring the last piece of that together. So there's a little piece of investor services in Union, too. So think about simply as a scale roll-up play, that was the Union deal. We literally took the entirety of their customers and products that [indiscernible] onto our platform.

And you mentioned, Gunjan, about 20 acquisitions over the last several years. As you look forward, are there additional opportunities like that to do and keep acquiring assets and capabilities? Or how does that -- what does that look like?

I believe so. So for those of your audience who might be covering trust banks, the question that might be there, it's a consolidated -- it looks like a consolidated industry. So where is your opportunity would be the logical question to ask. So I'll describe where we play in this space and compare it to the space itself. Asset management is a consolidating industry, but still globally quite a fragmented, but a fast-growing pool. Even good days, bad days, that pool grows by about 7% to 8%. So there is such wonderful sort of underlying growth trajectory built into financial assets globally. Now if our client is a U.S. asset manager, we still benefit from global growth simply because U.S. asset managers are investing in every market there is. So if India deepens because that financial market is deepening, we are going to benefit because one of our clients is going to be investing in China or India or Egypt or whatever their growth markets are. So we like that business because it has just fundamental growth rates built in. And our revenue model is largely a basis point of assets under management, custody or administration. So we grow with that, obviously not at the same level because of -- we are very focused on complexity, especially complexity around the credit side of the investment management world. So those clients that are doing strategies that require real technically specialized knowledge from our teams prefer our model to some of the larger global models. We are possibly not a great fit for a manager of like plain equities that are globally spread out in the trillions of dollars because that's not our niche here. But the -- if you look at sort of the other side of the barbell, not the passive side, but the real alpha generating side where you're providing highly differentiated strategies, very specific structures, that's where our value proposition is very, very strong. And so there's a lot of growth in that. There are a lot of niche players that administer that world, and we see a lot of deals come through. So I would say that -- I don't know if there's 20 per year, but there's a fair amount of sort of niche players that benefit from our scale over time. So I would expect that there will be more opportunities for M&A. Sorry, that was a long answer, but it's a slightly esoteric space, and I wanted to make sure that I was sort of defining it before I answer the M&A question.

No, that was helpful. So I think it's good to understand in terms of that business, just go head to head with the other 3 trust banks who are kind of focused on there. And a few follow-up questions. One, you mentioned the market still is very fragmented. When you think about future opportunities, it feels like, from what I understand, Europe is a lot more fragmented than the U.S. is. Should we expect that USB probably will be doing a lot more in Europe even when it comes to M&A and enrolling some of these companies?

We have nice businesses in Dublin, U.K. and Luxembourg, which are the 3 jurisdictions that really most asset managers administer from. I -- we think of being in those jurisdictions because the clients ask us to go there. They like our service, and they wanted to expand. So it is -- think of it as a largely U.S. business, but serving our U.S. clients in Europe as they need. Every once in a while, they'll ask us to go to Asia, which we don't want to do because that becomes a level of sort of complexity and fragmentation that we would not logically think of wandering into. But our Luxembourg franchise, which we launched only like in the middle of COVID, about a year exactly, has just been popular. I mean there is sort of need for a high-quality player with low turnover, continuity of teams. And what I hear from our clients simply is that they want to train their teams to do what they want. And they want us to train them on the large administrative capabilities, wires, trades, balance sheet movements, money movements, which we know we as a bank do very naturally. It's a -- that's a powerful value proposition for managers. So that's sort of our European point of view.

Got it. Got it. And you mentioned, Gunjan, about there's a -- like underpinning all of this is like a 7% to 8% organic growth rate. What's driving that? Like is it GDP growth? Is it the supply of money? Like what's the driver of that growth as we think about it from the outside?

Yes. So most banking businesses, as you know, Ebrahim, sort of are anchored around something. You think a core banking product is population growth or GDP growth for credit growth rate. So almost every product that has sort of underlying peer investments, so our underlying products, that is markets. What has propelled market return is GDP and then deepening of financial markets and deepening of capital pools over time. And bond issuances have grown about 7%, outpacing sort of bank loans. So the use of capital markets to raise equity or capital for companies has taken off. And of course, the investors are growing. I mean I have heard a statistic that just in the last year, 10 million new investors or 12 million new investors have joined the U.S. investing market. This capital coming into this market, it's creating cost effectiveness for equity capital for new innovation in the industry, and that's what I call deepening of financial markets globally.

Got it. Got it. I know we have about 7 minutes left and 15 more questions to go through. So the one -- but -- also I want to touch on a few topics. One, I think I hosted a panel last Friday on digital asset custody with some of the pure-play players like Fireblocks and Copper, et cetera. USB recently announced an entry there, a partnership with NYDIG, I believe, around some of the digital capabilities. Just talk to us about digital assets, how you're approaching them and what is it that you're trying to achieve?

So I would describe digital assets in 2 buckets: one of them is currency replacing the U.S. data; other is a financial investment assets for investors. Our focus is on the latter because about a year back, the OCC released a white paper that says banks could provide custody services or cryptocurrency as an investment class. So we started our work to introduce their offer because the customers were very interested. All asset managers at some point, whether they choose to offer this as a product, are at least thinking about it. And they want a high-quality bank custody model underpinning their investments. They don't want it to be sort of a brokerage model of custody. So that is what prompted us to look for the right set of partnerships to offer the service, and we were able to partner with NYDIG and offer bitcoin custody, which is the biggest asset class last month. And we were just a little bit taken aback by the level of interest we have had suddenly in the market. So it's on top of our investors' mind, and we are staying right there with our clients.

And then USB is providing custody services. They're actually holding the digital asset for the customer. Is that right?

NYDIG actually holds the private key. That's [ the custody ]. So they are our sub-custodian. What we do is if a fund -- if a private fund is holding 3% in cryptocurrency, but they have fixed income assets, equity assets, we put the umbrella together and we provide all other custodian classes. So for them, they have somebody custodying their entire fund administering it. So that's the value we are providing.

That's interesting. And I think it's interesting you mentioned about the level of interest. I see it internally here as well in terms of just retail brokers at the firm getting interested in digital assets and all things digital. But a couple of other things. One, before we end, I did want to talk about just your personal journey. I think it's been remarkable. I think you went to -- you grew up in India, came here to pursue your grad studies. Just talk to us a little bit about how that's been right from starting out in India to this point in your current role. And I think, if I have this right, I think American Banker had you as one of the most powerful women in finance last month. So would just love to hear about your personal journey.

Well, thank you, Ebrahim. Very kind of you to put a little personal face on it. So I grew up in India, and my background is engineering. I came to do an MBA and really spent some early years of my career. I was a partner at McKinsey in technology. Just got very interested in banking at some point, and the combination of the 2 has been a very powerful set of capability in this industry, as you know, and did progressively operating roles. I've sort of meandered through almost all product sets within a bank, just you do that within consulting, you see everything. But for the last few years, I have had roles at Bank of New York and State Street, so I've been on the institutional side. And then U.S. Bank, of course, 5 years' back, brings me back to some of my old roots in wealth management. So the interplay of product sets, which are described separately, but from a buyer standpoint, they work together is an important concept for us to make it all work for a customer together. Digital capabilities are truly helping us do that in a way that doesn't require you to teach a person like 9 different products. So you've heard Andy, you've heard me, you've heard Dominic, we are very much about manage all of the customers' need across their life cycle and help them knit it all together so that they are not having to do it, deliver it seamlessly through digital means, but be human as they need. So that's sort of my story. That's what we are trying to accomplish with this business, and U.S. Bank certainly sort of has all of the pieces that come together serving the client well. Thank you for asking about me personally. I have 2 boys. My older one is 18. And since he's 18, he's buying all kind of very suspicious-sounding cryptocurrency and absolutely fancies himself the next greatest portfolio manager. So that's sort of the young generation of investors I am paying attention to.

Yes. And there's your next client for the Wealth Management business...

Or my employee, yes.

But another question, just a big picture. I think 2 -- sort of a couple of emerging big themes in your business. I guess one is just the generational transfer. We talk about baby boomers retiring. Just talk to us about how impactful that's going to be. And the other piece is just around going after the underserved market, so women as a category, as you pursue clients. I would love to hear your thoughts on both of those.

Thank you for asking. Generational transfer is very real. Although more and more millennials, as they come into money, are showing the same kind of investment needs and financial advice needs. So I don't know whether it will be a massive shift, but it is certainly important for us to sort of be there for the younger generation. I think what is more startling is whose assets are growing? And the multicultural demographic shift is very real. We do -- we have just, this morning, released a very good work on building black wealth and understanding how the black community think of growing affluence. Asians think about it differently. And what I would say is some part of it is, are the products different? And I would say, not really. But boy, the way they consume advice, the chemistry factors become very important in our business as we think about the underserved. The other trend that I think we were joking about a little bit is the wealth management industry used to be the investment industry at one point. It's not anymore. It's truly advice for your whole life. And when I say we have like the psychologists on our payroll, we have people who can literally help you with your sort of very, very tough issues around how do you manage your health care, how are you going to age, how will you keep yourself active and busy in retirement. So it's moving to a real advisory business, but it's underpinned by a whole array of financial products that need to come together for a client. So it is a different business, not from a revolution standpoint, but certainly very real evolving needs, I would say.

Got it. Got it. One last one. I think when we started, you had mentioned the business contributed about 8% to USB's revenues back in 2016. It's nearly -- it's close to doubled to 15% today. As you fast forward the next 3 to 5 years, just talk to us in terms of big picture, your view around how much this business could grow.

It's like a steady growth engine for the bank, so I would expect it to be bigger and bigger. It may not be as a percentage, but we are very -- it's a really high-return business, very effortless operating leverage in the business because it's just a scalable business. We don't need to -- and especially with the new trends around digital, especially the adoption of digital with COVID, it's just sort of a very good business model if you're looking at it technically. And so shame on us if we don't grow. We have 12 million clients to serve and a very talented team that provides the services to them. On the other side, we get a lot of distribution support from our corporate and commercial business. And as you know, in this industry, products are easy, distribution is tough. So when you have privileged distribution with your colleagues, who truly put effort into sort of scaling you, you grow your business. So I would expect -- 6% to 8% is what I think Terry has indicated, and there's a lot of thought that has gone into that number. So I think of that across business unit cycles. And obviously, if you're growing very rapidly in the last year, but across business cycles, I think of that as being partly the underlying growth rates of the assets. So you grow with the assets, partly new product introduction and partly market share gains. And the combination of those sort of gives you a 6% to 8% revenue growth with effort -- with quite comfortable operating leverage. So that's what you should expect from our business.

Got it. With that, I think we've gone over time. So Gunjan, thank you so much for joining us. This was a pleasure.

It was a pleasure. Thank you, Ebrahim.