SEIC
#<UNK>, my replacement loves to answer questions.
So just write them down throughout the quarter.
Okay.
Thank you very much.
Thank you, Rob.
Sure, sure.
Well, I guess from our perspective where we see managers trying to position themselves as glide path managers, many of those are in the DB space where they are trying to help a client with a less aggressive asset allocation as they get better funded.
In the DC space, the opportunity that we see is that there is a fair amount of visibility about fiduciary responsibility in the DC space, because unlike the DB space there can be a lot more lawsuits.
Some of them are real, some of them are frivolous, because they are brought by participants.
So the more that the whole idea of a who-is-the-fiduciary is a question that has to be answered, I think then there is a need for service.
What we see and we certainly have ---+ we have target date funds that have a glide path that are age-appropriate, but we see a bigger opportunity for us to be able to create custom target date funds for the clients and custom-wrapped simpler solutions ---+ a US equity or a global equity kind of a selection for a participant that has combined US, large and small, international emerging markets.
So it's one selection, but we would still serve as a fiduciary for that.
So we have the glide path covered in both of those particular areas.
I wouldn't say that's the positioning.
I think the positioning is more we are going to stand as a fiduciary.
DB results have always done better than DC results because those plans ---+ the DB plans are better diversified and they are a longer-term type of an investor, and so they have had better results.
So as a fiduciary, we would strive for that.
Thank you.
Thank you, <UNK>; that was terrific, as usual.
<UNK>'s successor is <UNK> <UNK>.
<UNK> has been with SEI for 22 years, and 20 of those years he has been in the Institutional Investors segment, where he has been an important contributor to the success over the years.
Most recently he's been ---+ served as Head of Sales, and he is an able successor to <UNK>.
<UNK> is with us today and ---+ <UNK>.
Good afternoon, everyone.
I am <UNK> <UNK>, and I have some big shoes to fill, but I look forward to expanding on the success that <UNK> has brought this segment for so many years.
I also look forward to meeting you and working with you in the coming quarters and coming years.
Thank you.
No more questions for <UNK>.
(laughter) our final segment today is Investment Managers.
I'm going to turn it over to <UNK> <UNK> to discuss this segment.
<UNK>.
Thanks, <UNK>.
Not sure how to follow that; but good afternoon, everyone.
For the fourth quarter of 2015, revenues for the segment totaled $68.2 million, which was $1 million or 1.5% higher as compared to our revenue in the third quarter of 2015.
This quarter-over-quarter increase in revenue was primarily due to new client fundings and implementation fees.
For the full year of 2015, revenues for the segment totaled $268 million, which was $16.7 million or 6.6% higher as compared to our revenue for the year-ago period.
Our quarterly profit for the segment of $22.7 million was approximately $500,000 or 2.3% lower than the third quarter of 2015.
This decrease in quarter-over-quarter profit was primarily driven by an increase in sales compensation for the fourth quarter as well as an increase in our operational investment expense.
Our full-year profit for the segment of $95.9 million was approximately $3.7 million or 4.1% higher than the annual profit of 2014.
From a profit perspective, expense increased ahead of revenue expansion this year to support both current growth and increased investment to support future growth opportunities.
Third-party asset balances at the end of the fourth quarter of 2015 were $390.3 billion, approximately $14.1 billion or 3.8% higher as compared to our asset balances at the end of the third-quarter 2015.
The increase in assets was primarily due to market appreciation of $13.5 billion and new client fundings of $600 million.
In turning to market activity, during the fourth quarter of 2015, despite market volatility we had a strong sales quarter.
Net new business sales events totaled $12 million in annualized revenue.
These events include new name wins across all our market segments, including a large alternative manager takeaway from a competitor and several private equity outsourcing mandates won in a competitive process.
Additionally, we secured a full middle and back office outsourcing mandate from an international manager who previously performed these functions internally.
As we enter 2016 we will look to focus on several key areas.
First, we will focus on continuing our sales momentum with new name sales and growth of existing clients.
Additionally, we will look to continue our success with the larger end of the market.
Second, we will focus on implementing the new business that we have won and look for opportunities to grow with these clients.
Third, we will look to further expand our market segments and opportunity for growth.
We have seen early success in a few new markets and believe there are additional opportunities to expand our reach.
Fourth, we will continue to invest in and expand upon our solutions.
For example, we continue to see expanding opportunity in our global regulatory and compliance platform as well as the private equity markets.
We will aggressively pursue these opportunities.
In summary, while 2015 was marked by a volatile market and increased expenses ahead of revenue, we continued our growth momentum, especially with new sales.
We look to carry that momentum into 2016 while continuing to build out for the future.
Despite the market challenges, we see steady demand for our solutions and we remain optimistic on the opportunity for future growth.
That concludes my prepared remarks, and I will now turn it over for any questions you have.
You don't disappoint me, <UNK>.
So, yes, I would consider with the sales we had we would expect, all things being equal, for revenue to increase.
I'd say one of the things that when we look back 2015, <UNK>, that hurt us a little bit, there were a number of liquidations in especially the alternative side of the market.
And the unfortunate thing with liquidations, you have funds closing or large redemptions out of funds; they tend to happen right away.
So the net effect to revenue and the negative effect happens immediately.
The new sales, as we've talked about and as you know, tends to take a longer time to bring in.
So obviously that gave us a little bit of headwind last year.
Hoping that headwind dies down this year and, with looking at the sales success, all things being equal, I would look for revenue to increase.
On the margin question, what I would say is I still feel comfortable looking at the long term.
As I said before, this business should be in the mid-30%s margin.
However, I'm not managing it for that quarter-over-quarter.
We're making investments which we believe are important for the long-term and long-term sustainable growth.
And we're not going to dissuade from those investments we feel is best for the long term.
I would now like <UNK> <UNK> to give us a few Company-wide statistics.
<UNK>.
Thank you.
So, ladies and gentlemen, we feel that 2015 was a solid year created by concentrating our efforts on maintaining highly satisfied clients, and growing new business events, and investing in products critical to our future.
Looking ahead, we intend to keep our focus on long-term growth and revenues and profits.
I want to end this call by thanking <UNK> <UNK> for his 36 years of significant contribution to SEI's success and the success of the Institutional Investors segment.
I look forward to working with <UNK> to continue the successful tradition set by <UNK>.
From the bottom of our hearts, thank you, <UNK>.
Good afternoon, everybody, and I hope you have a good one.
