SEI Investments Company (SEIC) Q2 2022 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the SEI's Second Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. Later we'll conduct a question-and-answer session instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Head of Investor Relations, Lindsey Opsahl. Please go ahead.

Welcome everyone. Thank you for joining us on today's second quarter 2022 earnings call. Joining me on today's call are Ryan Hicke, SEI's Chief Executive Officer; Dennis McGonigle, Chief Financial Officer; and the leaders of each of our business segments Phil McCabe, Sanjay Sharma, Paul Klauder and Wayne Withrow. Kathy Heilig, SEI's Controller is also with us. I've had the opportunity to connect with many of you regarding the format of this call and appreciate your input, so we're switching things up. Moving forward you'll hear opening remarks from me, Ryan will provide a business and strategy update, and Dennis will provide an overview of the company's quarterly result, including those for each of our business segments. After our prepared remarks, we'll open up the call to questions for Ryan, Dennis and the leaders of each business segment. Before we begin, I'd like to point out that our earnings press release can be found under the Investor Relations section of our website at seic.com. This call is being webcast live and a replay will be available on the Events and Webcast page of our website. We would like to remind you that during today's presentation and in our responses to your questions, we have and will make certain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our notices regarding forward-looking statements that appear in today's earnings release and in our filings with the Securities and Exchange Commission. We do not undertake to update any of our forward-looking statements. With that I'll now turn the call over to CEO, Ryan Hicke. Ryan?

Thank you, Lindsey. Hello everyone and thank you for joining us today. I hope everybody is staying healthy and enjoying the summer. Since stepping into the role of CEO on June 1st, I've had the opportunity to spend time with our employees, clients, and many of you on the call. I've appreciated the engagement and insight from our investor and analyst community and I look forward to future meetings to discuss the strategic approach we are taking, the opportunities it represents and the progress we are making. One thing is clear. We are focused on making the necessary changes in investments to grow our great company. We are clearly focused on three key strategic areas: growth, talent and culture. Our objectives are clear. We are going to be an innovative entrepreneurial market leader in the delivery of solutions that drive change, growth and add significant value to our clients. We will be focused on strong profitable recurring revenues diversified across segments and markets. We will be willing to take risks to exponentially grow existing and new revenue engines. We will remain client centric and market aware, taking the best of SEI outside of our walls and bringing fresh perspective inside our walls. We will have a lean, nimble, diverse, and flexible workforce with an unrivaled employee base of talent. And we will be engaged positive and aware of nurturing and refreshing our culture constantly, always curious and passionate about the future. We announced many important actions over the quarter, including welcome and bringing Jonathan Brassington into our board of directors. We brought on Denis Okema as a Director of Diversity and Inclusion at SEI to enhance our commitment to having the best workforce in the industry. We continue to execute daily successfully in key markets and installed new clients and business. We launched programs focused on our talent, including initiating a voluntary separation program with our workforce to open opportunity while providing a positive exit process for those who helped make SEI so successful. Finally, we began to lay the groundwork for our future growth plans, including the appointment of Sanjay Sharman to lead our Private Banking business. Later in my remarks, I will dive further into this strategy for each of our focal areas. Now turning to our results from the quarter. Second quarter revenues grew 1% from a year ago. Our second quarter earnings were down 17% from a year ago. Second quarter EPS of $0.81 decreased 13% from the $0.93 reported in the second quarter of 2021. In the quarter, we repurchased two million shares of SEI stock at a price of $55.48 per share. That translates into $109.3 million of stock repurchases. Net sales events totaled $8.8 million, $6.5 million of which is net recurring. Dennis will go into further details on our financial results. We are acutely aware of the need to grow our revenues by driving increased sales results. I am confident we are making the right decisions to generate the sales results that we and our shareholder community expect. We will align our talent and spending to capitalize on market opportunities for both the short and medium term. The second quarter of 2022 was marked by the same market volatility and geopolitical disruption that we felt in the first quarter with an even bigger deterioration of capital market returns. Inflation, as well as changing economy, also had an impact. While our results include these challenges and we expect there to be more ahead, we remain steadfast in our conviction that we are moving in the right direction. The overall market trend of outsourcing continues to increase. SEI's expertise in investment management, investment processing, and operations and financial technology and cybersecurity position us extremely well to take advantage of this dynamic. As business challenges continue to intensify, many firms, don't have all the capabilities to keep pace. We recognize that talent retention and acquisition further amplifies this need, and it reinforces the benefit of partnering with established leaders and experts like FBI. We understand the competitive landscape and we're able to bring platforms and people to clients and prospects that help them grow and maintain their business. Alternatively, we appreciate the impact that has on our business and we are acting appropriately to invest in our talent. Turning the three strategic areas of focus, growth, culture, and talent, I'll start with growth. We are committed to driving greater top line revenue growth, both organically and through new engines. We are aggressively assessing our investments, spend against the potential return. This includes keeping an eye on margins and reducing spend where necessary. However, we also recognize we have areas of strong momentum and opportunity. And to increase our revenue engines there will be investments to make. This may include expanding our global footprint or using M&A to enhance an existing capability or build a new solution. We will continue to refresh our strategy and align our spend with market opportunity and growth. The Investment Managers segment had another strong quarter with significant implementations of our backlog, continued client delivery and strong growth prospects moving forward. In the alternatives market, we signed a number of new names and our cross-sale strategy continues to resonate. It's resulting in robust sales to existing clients. A particular note, we were selected to provide fund administration for two large private equity real estate firms. In the traditional market we continue to add new business lines in all products with new and existing clients. And in Europe, we continue to expand our ETF, private equity and private debt business, primarily through cross sales with existing clients. I met with the executives of a few of our largest IMS clients in the quarter, and I am very enthusiastic about our growth opportunity in this market with continued execution, innovation and platform delivery. Turning to the Investment Advisors business. During the quarter, we leveraged the depth of our investment management expertise to launch SEI branded factor based ETF. We also launched a strategic partnership with dimensional fund advisors, further increasing investment solution flexibility to our advisor clients. We expanded our sales capabilities with the deployment of a new RIA sales team led by industry veteran, Gabe Garcia. And we rolled out a beta version of SEI Connect, a digital collaboration tool built on the Orange platform, which we acquired last year. We are on track for a full launch by the end of the year. We remain excited and focused on our strategy of growing our business in the RIA market. The breadth of our technology and investment architecture combined with the market leading capabilities of SEI’s own investment management expertise makes me personally very bullish on our opportunity to expand our footprint with current advisors and widen SEI's market penetration. The Institutional Investors segment had a solid quarter, during the quarter, a large global investor selected SEI for a combination of our outsourced CIO and enhanced CIO platforms. This signing aligns with our committed strategy of expanding our footprint into sophisticated allocators on a global scale, showcasing the OCIO to ECIO continuum to large investors, leveraging our proprietary portfolio intelligence technology, SEI Novus, which we acquired in the fall of last year, increasing our UK Master Trust business, as well as growing our traditional markets. In the quarter, we also announced Sanjay Sharma, a 15 year SEI veteran and his appointment to lead the private banking segment. Sanjay's expertise in the technology and wealth management landscape will be invaluable to progressing our business strategy and driving future growth. I’m confident that not only will Sanjay create a revenue and growth plan that will succeed. He will also drive discipline and efficiency on the expense and profit side of our business. His fresh perspective is already having a positive impact. In the private bank business, we signed an agreement with the current Trust 3000 clients to move to the SEI Wealth Platform. We also successfully migrated another client from Trust 3000 to SWP and installed a new client from a competitor platform. We additionally re-contracted two clients in the quarter. Working with Sanjay, we are making efforts to rightsize the expenses in this segment as we accelerate sales activity. To do so, we are working to improve operating efficiency, but also consolidating teams across our business, operations and technology platforms. Additionally, we are focused on improving client engagement to create more cross sale opportunities across our enterprise. While we continue to have good success in the regional and community bank space, we will work with our jumbo clients and prospects to grow that important segment. We also remain committed to building a pipeline of clients globally. I'd like to take a minute to highlight some positive traction and growth areas in our investments in new business segments. One of those investments is SEI Sphere, representing a new growth engine to drive diversified revenue streams. Sphere is situated in the fast growing space of cyber security and cloud. We have signed clients in both existing and new market verticals, and we are excited about the potential for this business. Our private wealth management business is also growing. This quarter, we achieved increasing sales as our business strategy gains momentum with our target market. Our pipeline remains healthy. We also continue to explore new markets where we can successfully meet client needs. Finally, in investments new business, our partnership with LSV remains very strong. Dennis will report on their financial results for the quarter. As part of my opening comments, I mentioned the talent is one of our key strategic focal areas. In the quarter, we announced the voluntary separation program. This program was not designed to reduce expenses or remove a specific demographic from our workforce. I want to be very clear on that. It was designed to create an opportunity for tenured SEI employees to have an option, to explore their life ambitions and concurrently create space for internal mobility, fresh perspectives, diversity and external experience. We believe creating opportunities for diverse perspectives in talent inside and outside of SEI will position us for growth. And in fact, accelerate our growth as we challenge and refresh our strategy. We are committed to our employees bringing their best sales to SEI every day. We will embrace internal mobility and diversity and inclusion in our talent and leadership development. We are investing in programs and initiatives focused on future skills, rotating talent, idea sharing and professional development. SEI has a global pool of talent to unlock an unlimited amount of potential. The final strategic area of focus is culture. We believe culture drives a company forward and plays an integral part in its success. You can deliver something similar a competitor’s product or playbook, but you can’t copy a culture. An SEI’s culture is unique and valuable, and we are going to continue to invest in making it a huge differentiator. We recently refreshed our corporate values, examining them to cultivate an environment where our behavior aligns with those values. We will be nimble maintaining focus and attention on our clients and opportunities. We are also looking at the future of our workforce. As the pandemic has shown us all the traditional work model is shifting and it’s permanently disrupted. In June, our workforce returned to our global offices, adopting a hybrid working model that will play a key part in reigniting our culture and bringing our teams back together. We have always understood the importance of integrating work and life because finding harmony in your professional and personal activities is key to achieving fulfillment. As the year progresses, we will continue our efforts to make changes that truly capitalize on our opportunities. We will remain focus on maintaining and accelerating growth in existing businesses, expanding our focus on new growth engines and reinvigorating our current talent and culture strategies across the company. In future calls, we will continue to share our progress on these initiatives as well as provide additional clarity on our evolving strategy. This concludes my prepared remarks. I will now turn it over to Dennis to discuss our financial results to the – for the quarter. Dennis?

Thanks, Ryan. With our new format, I plan to cover financial information related to the quarter for the company and our business units. As Ryan mentioned, EPS for the quarter was $0.81 per share. This compares to $0.93 during second quarter 2021 and $1.36 for the first quarter of 2022. A reminder that the first quarter reflected a one-time event that equated to approximately $0.47 per share in earnings. Revenue for the quarter was $482 million, compared to $476 million in 2021 and $581 million in first quarter of 2022. First quarter reflected an $88 million one-time event. Total expenses for the quarter were $366 million, which compares to $340 million last year and $367 million in the first quarter. Revenues from Asset Management and Administration were impacted by lower capital markets during the quarter. Processing revenues remained relatively flat from first quarter. There were no unusual revenue items during the quarter. Expenses increased year-over-year and we’re essentially flat from first quarter. The main drivers of expense growth continues to be compensation inflation and talent growth to support our growing business lines. We have also seen inflationary pressures impacting some of our third party service costs and in professional fees related to the growing regulatory environment we operate in. We do not see these inflationary pressures abating. As Ryan mentioned, rightsizing our expenses to business growth and allocating spending to areas of accelerated growth are priority. On the sales front, in our processing businesses of private banking and IMS, net sales events totaled $7.9 million and are expected to generate $5.6 million in recurring revenue. In our asset management related businesses, net sales were just under $1 million. Private banking net processing sales were negative $3.7 million. This reflects one new SWP sale to a current TRUST 3000 client. Sales were offset by three TRUST 3000 client losses. We recontracted two clients during the quarter and installed two new clients on SWP. The current backlog of sold, but expected to be installed revenue in the next 18 months is $38.9 million. This backlog does not reflect any revenue from Wells Fargo. Wells continues to assess its own strategy, which has led to some business divestment. We continue to service them on TRUST 3000 and are working closely with them to be ready to move when they are. In addition to current quarter sales activity, we have two clients that are involved in M&A activity, State Street and Union Bank of California. Both firms have been acquired, State Street by FNZ and UBOC by U.S. Bank, a client. We are working closely with all organizations as a move to consolidate. The total revenue represented by State Street and UBOC is approximately $15 million. Profits and private banking reflect the impact of capital markets on its asset under management related revenues. While net revenue from sales was a positive $1 million, lower capital markets resulted in reduced revenues for the first – from the first quarter. We are seeing good adoption of our asset management offering globally. Expenses in a quarter were down from the first quarter of 2022. This was partly due to direct costs associated with asset management, along with a concentrated effort on spending. We expect this effort to continue and grow an emphasis as we move forward under Sanjay’s leadership. On the IMS front, net sales for the quarter were $11.6 million, $10.2 million of which is recurring. The quarter sales activity remains robust, reflecting an active market. Sales during the quarter should be considered in concert with the strong sales we had in first quarter leading to one of the best first six months of any year. Revenue for the quarter was down slightly from first quarter, reflecting the impact of capital markets. Expenses grew slightly directly related to the addition of talent tied to our growth and the continued inflation pressures. Our backlog of sold but expected to install in the next 18 months, recurring revenue is $29 million in this segment. Margins, while strong particularly in light of the market environment, reflect both the movement of revenue for market activity and our spending on attracting and retaining talent. Investment advisors experience essentially net flat cash flows during the quarter. Revenues for the quarter were down slightly from the first quarter as a direct result of capital market pressures and portfolio de-risking. Expenses were down slightly for the same period, helping margins hold in the mid 40s. We recruited 57 new advisors during the quarter and reengaged 13 existing advisory firms. Advisor activity remains strong, but we are seeing a slowdown in market activity on the part of both advisors and their clients. As a reminder, during the quarter we prepared for the departure of Retirement Planners of America. This was addressed in an 8-K filed last November. At that time, the departure was planned for May 15. The actual deconversion of these assets was in early July and their accounts were fully invested in money market funds at the end of the second quarter. You will see this move in assets reflected in the Q3 asset balances. While this loss will be felt, one of the original five partners decided to move his business out of Retirement Planners and to continue to rely on us. We are thankful for this vote of confidence in our vision. In the Institutional Investor segment OCIO net sales events for the second quarter were a positive $2.8 billion in assets. Gross sales were $3.2 billion and client losses totaled $400 million. Second quarter new sales were diversified across U.S. and dominant foundations, governmental and healthcare clients. Additionally, a large global investor selected SEI for a combination of our outsourced CIO and enhanced CIO platforms. Sales for the quarter equated to $3.3 million in new recurring revenue when implemented. The unfunded client backlog of gross sales at quarter end was $3.2 billion. Revenues for the quarter were down from first quarter due to capital market activity, offset by slightly positive client flows. Expenses were also down reflecting reduced costs as well as general expense management. In the Investments in New Business segment revenues were flat to first quarter. Expenses in this segment were up slightly due to investments in our SEI Sphere initiative. Spending on our One SEI was up slightly also to first quarter due to a $900,000 write-down of a third-party software asset. We expect expenses in this segment, while shifting to new initiatives to remain relatively flat to first quarter. LSV produced $29.8 million in profit during the quarter, this compares to $32.5 million during the first quarter of 2022. Revenues for LSV were $99.8 million compared to $108.5 million in the first quarter. LSV recorded performance fees of $4.3 million during the quarter, reflecting improved relative performance. The reduction in revenues as a result of capital markets declining and the impact of net client flows, net sales were essentially flat, while net flows from existing clients due to de-risking and reallocation were a negative $3 billion. Market depreciation was approximately $12 billion. The outlook for LSV is brightening as value investing continues to gain favor. Our tax rate for the quarter was 23.1% consistent with first quarter. As we look forward, we are finalizing the financial impact related to our voluntary separation program we announced in June. Our initial assessment or that the cost associated with that program will approximate $54 million to $58 million. The majority of this will be booked in the third quarter as a reserve. Most of those employees participating in the program are expected to leave by the end of 2022. While we do not or while we do expect to capture recurring expense reductions, the main purpose of the program is Ryan’s discussed is to enhance talent attraction and development to drive future growth. Finally, while capital markets are difficult to predict. A reminder that we are starting the third quarter with lower asset balances, which will put pressure on asset-based revenues, the matriculation of our backlog will help us move through this. On the expense front, the continued pressure on cost of talent and business overall seems to be moderating slightly, but still present. As Ryan said, we will manage through the current environment as we work on resetting our spending. That concludes my remarks. As a reminder, all of our unit heads are on the call, and we will now take questions. Thank you.

[Operator Instructions] And the first question from Ryan Kenny with Morgan Stanley. Please go ahead.

Hey, good afternoon.

Good afternoon, Ryan.

So question for Ryan. You mentioned that one of your key priorities is delivering growth while keeping an eye on margins. Could you just give a bit more color on how you’re thinking about delivering growth versus delivering margin and are you willing to let the pretax margin run a little bit lower now to get growth later?

Yes, Ryan, I think, one of that Ryan, the thing that we’ve been really focused on right out of the gates is looking at our investment spend aligned with our short and medium term revenue opportunities. So, we’re definitely going to keep a close eye on margin, but I think as we’ve said in kind of previous conversation, one of the first things you’re going to see us do is really look to right size expenses or realign expenses relative to the opportunity. So, you might see a shift in some of our investments spend from current allocations to one unit to another where we believe the market opportunity and revenue opportunity is greater. So, I think corporately we’ll have the same focus on margins, you just may see some differences within the segments.

And then just a follow-up on the backlog, heard the comment that Wells Fargo goes no longer in there. I’m just wondering if you could give us any color on what’s currently in the backlog and the timing that we should expect it to start to come through? Thanks.

Sure. So, I try to be clear that the backlog, that number we put out there is that that is revenue that’s going to matriculate in the next 18 months. So while Wells Fargo is still under contract and we’re still working closely with Wells Fargo, there’s still a big client. And we’re very engaged with them. It’s not, we’re not – there’s no plan right now for them to move anytime in the next 18 months. So that’s why they’re not in that backlog number. So the banking backlog number if you needed again, was $38.9 million and the backlog number under that same time period, 18 months for the IMS segment was $29 million. So, we’re really trying to get the back as we go forward, the backlog numbers we’re going to provide are those within that 18 months window, because they’re much more predictable. We know we’re highly confident they’re going to occur on time. And I think that helps everybody better kind of predict the future, if you will.

Thank you.

You are welcome.

And next we'll go line of Robert Lee with KBW. Please go ahead.

Great, thanks. Good afternoon, everyone. Maybe Dennis, first question is just on the voluntary separation. I mean, I know it's about being done to drive cost savings per se, but you did mention there could be some recurring expense reductions. I mean, is there any way of kind of helping us think about how that would flow through? Is it – should we be thinking that maybe that just kind of mid with the inflation pressures that kind of helps mitigate it to some degree, or is it really just, you kind of expect whatever savings you have, that's going be reinvesting the business kind of over the next year or so. Just trying to get a sense of how to think about that?

Yeah. I mean, it's hard to – a year from now, it'll be hard to me separate spending in July of 2023 relative to that particular program. So I think that's a little bit further out. I think the – our expectations are that there's a program we're trying to be not only smart with and about because some of our longstanding really valued employees are involved. But also as Ryan discussed, we wanted to reset a little bit the workforce, open up opportunity, create more mobility, bring in some external talent uses an opportunity where we have gaps to get some talent outside the company that enhances our current talent. Along the way particularly with timing of things, there's a good chance that some of the roles we won't specifically backfill and we'll get some benefit there, but I also have mentioned that most of those involved in the program will, we would expect would be moving on from SEI before the end of the year. So the timing has also kind of laddered out over the next, I'd say four months or so, five months or so, then some folks will extend into next year. So while we do, and I do expect that we'll get some recurring savings specific to this event. It's not the driver, but it would certainly help us if we did get that. The other thing that we have talked about is now the markets are tough right now. So we will be discerning and as Ryan kind of sorts through in team and all the sort through strategy and how we're going to continue to go forward and changes, Ryan he can speak to this, but might would consider – continue to consider, we'll take that into account as well. But we still are going through the details of the individuals involved the roles, how we would – or whether we would backfill those roles, who we would backfill them with to the extent we did, and then what things will change and then we'll have a better feel for kind of the economics over time.

Okay. Fair enough. And maybe in the Investment Advisors segment, I think Dennis, you mentioned relatively flat flows overall, but could you maybe give us some color because, it's kind of the mix between advisory – AUA assets flows into kind of administrative assets versus flows into asset managing programs, trying maybe the progress in each?

Hey, Rob. Well, Wayne's in the room. Turn out one to Wayne.

Yes.

Hey, Wayne.

Hi. Hey Rob. Yes, really that comment was basically a comment on what would traditionally we call AUM for the assets we manage. If you wanted to look at platform-only assets or assets that we just administered, actually the quarter was pretty good. I mean, I think when you looked at, it was down from first quarter flows while we were getting more and more momentum on sort of our platform strategy, but actually the second quarter flows were strong compared to what we had last year, but that's not. So the comments on essentially flat were really around assets under management.

Okay, great. That's helpful. Then one last one, maybe back to Dennis, I apologize for going back and forth with the new format. But in the private bank segment, I think you talked about two banks that the pluses [ph] of being acquired. I guess the 15 million you pointed out that they generate in revenue between the two, I guess the right way to think about just to make sure I'm on the right page is that you would consider that to be kind of at risk, depending on how those mergers shake out and whether you retain the business or not I just want to make sure that's how you're thinking of it?

Yes. That was really the purpose of putting that number out there Rob, was that just to lay out that those, that's what's at risk. And like I said, and Sanjay is here, he can comment is that we are working with the – both those clients as well as at least in one case the buyer to see how things go forward from there, but that is what's at risk. Sanjay, if you may.

Great.

No. I agree with that Dennis.

Great. I'll get back in the queue. Thanks for taking my questions.

Thanks, Rob.

And next we'll go to the line of Owen Lau with Oppenheimer. Please go ahead.

Good afternoon and thank you for taking my questions. So even though the market was quite challenging in the second quarter, and I think your average asset under management excluding LSV was down about low teens quarter-over-quarter. But your revenue was only down by about low single digit or so based on my math. I'm just wondering how you can manage to do that? Your revenue seems to outperform your AUM decline. So it'll be great if you can unpack a little bit more on that. Thanks.

Sure. I mean, there's a couple reasons for cash flow timing is everything too in the business. So that has an impact. The institutional business is not a business where we book revenues based on average assets during the period that revenue is booked based on ending assets over the prior four-month periods. So second quarter would be March, April, May and June ending assets, and while June things kind of fell off a cliff a little bit, we did have the benefit of March in the revenue calculations. So there's – some of it's also just the timing and then the – if you're including in your revenue calculation Owen, the IMS assets under administration side of things. They're the book of businesses so diversified that market – there's really not a correlation – direct correlation between market performance and ultimately asset performance. And they're also cash flows, meaning client implementations and no clients maybe that are shutting down a fund or leaving – it's a little more choppy. But there the diversification of business really helps us in down markets because it doesn't correlate to the equity and fixed income markets.

Got it. That's very helpful. And then a question about the strategy, Ryan, we appreciate your comment about your overall strategy. In terms of your – the growth one – the growth strategy, could you please talk about whether you have any aspirational medium to longer term target of the top line growth and margin expansion and things like that, and how should investors think about your growth strategy quantitatively? Thank you.

Hey Owen thanks for the question. As far as the growth strategy is concerned we're absolutely working on some more tangible kind of quantitative targets. We're not kind of the point where we'll be sharing that yet, but we're really looking at it through a few different lenses. Once as we talked about last time looking at the organic growth potential of our existing businesses and our existing engines, looking at some of the new ideas and incubation ideas that we have underway and what their potential is. And then as we saw last year with SEI with the acquisitions we've made, where does M&A play a role in that? I do think that over time we're going to be a little bit clearer around what our aspirations are. But I think you can progress assured our plan is to exponentially grow the top line revenue and maintain margins.

Got it. Thank you very much.

Thank you.

And the next questioner is Robert Lee with KBW. Please go ahead.

Great. Thanks for taking my follow up. This is probably a little bit of semantics or geography on the asset balances, but just kind of curious and investment managers. I mean, I know you called out winning a couple of big real estate mandates from some real estate managers in the quarter, but just kind of curious why that would all, mean the collective investment trust fund programs jumped, what like $60 billion and just kind of tiers, why that would fall under AUM and not AUA, and maybe it's causes in collective trust. You're technically the manager, but just kind of curious, why it falls there and as opposed to AUA.

Yes, sure. Hey Rob, this is Phil McCabe. How are you?

Good, Phil. How are you?

Great, thank you. Yes, as then it said before the balances sort of ebb and flow a little bit. If you look on the traditional side, some of the long only managers struggled a little bit in June on the alternative side. Some of them did much better, if you point to your question on CITs in particular, the client that we referenced in the last quarter. It's all spring capital. I'm not sure if we mentioned that name before with that being said, they did fund at the very end of this quarter and those balances are reflected in the particular number that you're looking at.

Okay, great. Okay. That was it. Simple enough. Thank you.

Thanks Rob.

And at this time, that's all the questions. We'll turn it back over to CEO, Ryan Hicke. Please go ahead.

Thanks everyone. In closing SEI's future is bright. We will remain vigilant about how we deploy capital and we will make the changes. We believe are necessary to improve our results. Keeping that in mind, we will look for ways we can redirect some discretionary investments that best align with revenue opportunities. We have the people, the platforms and the assets to exploit the growing demand in wealth management for organizations to partner with credible and strategic leaders like SEI. As Philadelphia native Noam Chomsky once said, “Optimism is a strategy for making a better future. Because unless you believe that the future can be better, you are unlikely to step up and take responsibility for making it so.” make no mistake, we are optimistic. In the fourth quarter, we'll be hosting an Investor Day. It's been a number of years since we hosted this community on our Oaks campus. And we look forward to welcoming you all back. Additional details we provided in the coming months. Thank you for attending our call today.

That does conclude our conference for today. Thank you for your participation and for using AT&T Conferencing Services. You may now disconnect.