Waddell & Reed Financial (WDR)

Nicole Russell Head of Investor Relations
Phil Sanders Chief Executive Officer and Chief Investment Officer
Brent Bloss Senior Vice President, Chief Financial Officer and Treasurer
Shawn Mihal Head of Broker/Dealer
Nikki Newton Head of Sales Distributions and Product Development Efforts
Ben Clouse Chief Accounting Officer
Chris Shutler William Blair
Craig Siegenthaler Credit Suisse
Daniel Fannon Jefferies
Glenn Schorr Evercore ISI
Bill Katz Citi
Patrick David Autonomous Research
Kenneth Lee RBC Capital Markets
Michael Carrier Bank of America Merrill Lynch
Robert Lee KBW
Mac Sykes Gabelli & Company
Call transcript
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Good morning, and welcome to the Waddell & Reed's Fourth Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Nicole Russell, Head of Investor Relations. sir. ahead, go Please

Nicole Russell

on welcome our earnings you and would conference team, like to to behalf you, management of I all. Thank our quarterly

Sanders, Sales our our on CEO, our Shawn Ben Broker/Dealer, me our Clouse, who today Chief Product leads be Joining leads Development Newton, our and call Mihal who Officer. Brent and and CFO Phil Bloss, Nikki COO Distributions ; Accounting will our Efforts,

will of I begin, remind like forward-looking our comments would responses some we Before you and to include statements. that

duty While to information we results reasonable, relevant that reference statements. no those section copy to Investor be any is differ with we our actual of schedules, that due including expressed and in materially a these the website us, We to a to public the call, believe been at the statements Materials factors based number press release have Relations our or of supplemental implied currently on available assume forward-looking could of today's on from to filing update posted SEC. ir.waddell.com.

now over turn call to the Phil me Let

Phil Sanders

everyone aggregate morning, by million million share, in and Brent $X.XX. or our in results included call. per on per financial for that Today we joining Good later income the reported of quarterly $X.XX Nicole. Thanks, which items share by several $XX reduce us. net net in income thanks earnings $XX will expand

risk made in for a company significant discussed that set made featuring focus. the to this regulatory, perspective. the morning I people, initiatives year management and significant management our primarily under our change like At the with Assets strides under of and quarter. management corporate compared remain operations, was from billion. undergoing began to in under capabilities. of investment greater we review management past we and challenges We on we’ve in developing After ended $XX calls, previous just detail a would comments operational, clarity and all complete of focus organization $XX have unchanged XXXX prior the strategic aspects quarter by close organizational largely one progress XXXX our a resources, in yesterday, were ahead. on of our and at the investing business strengthening technology, The assets billion, that my

becoming We key and and also operations enhanced to Despite progress and continued competitiveness are is management our to asset operations to clients. this are meaningful streamlined benefit more and to improving broker/dealer we that investments these both objectives. way we broker/dealer our made understand progress, offerings organization. the our to supporting on in achieving modernized efficiency make do a and is there committed our and advisors product well Operational of through more much toward

the structure In key productivity, profitability to addition we with executive developments, that changes support year initiatives. the will management expect these team and our provide growth, and greater we enter to to

expertise these us. in company’s XXXX and named his As and He our Ben Operating the filing Other Chief CFO Sales include will our stockholders as CFO. Accounting efforts. of succeed of role our Officer annual you for was will individuals our serve Broker/Dealer of as currently, responsible will operations. front appointments the report. we company, Brent as through and passion be that Nikki of challenges face Product the Newton confident be will and each Brent depth and company’s lead am the clients Bloss brings who know, management will Mihal, opportunities who Officer. Distribution recently Brent day-to-day I knowledge, that key Shawn Development the continue Clouse, will Chief while of

opportunistically the with implementing which to included repurchase intention dividend policy in of an level $XXX new greater XXXX and to million flexibility stock a our years. over Finally, the two adjustment next of return after we enter financial capital our our announcement

indicated, this provides investment and capabilities, to top balanced flexibility new fund greater provides repurchases. rate believe C growth pursue maintain accretive As return we product share policy capital opportunities, initiatives, more inorganic previously capital for

will strategy market even corporate enhancement Importantly, our us and also are times recent an execute to as on law positive Clearly, financial allow for stress. a it serve our of will our tax company changes to during flexibility. additional

improvement quarter within deterioration modest experienced and our the quarter. metrics to retail a fourth showing back of Turning unaffiliated year, redemption in After the our last the progress at meaningful sales we throughout in much channel. stalled hand,

approach opportunities a are have our and the strategies. Getting the fresh While products we investment of traditional fresh core time. equity wholesale more is closely believe remains take We remained emerging – cap everything Nikki sales products over international Realizing performance in I seeing our sales the channel at can distribution momentum strong to with right evaluating attraction sales priority. the at strategies, both beyond sales growth focus that hand-in-hand, look out develop look working right work we distribution markets essential. together with and are a channel small equity and we products and that some key the and right our fully in broadening

color incentives with within data for use consistent is and were people Sales our primary focus. direct area trends in have sales provide we some trends broker/dealer recent properly do. redemption our effort generally and a support better investment essential Additionally, here technology Shawn is and our of expectations. sales our to additional efforts more of and to our to and our will aligned here moment. strong and performance just Consistent

happens not we progress, have understand overnight. we is While made that this something clear

We multiple set. need track a of array the to that over broader time strategies for have records our competitive translate understand of but product across with a periods, healthy number

universes. year Morningstar saw and XX Our records one strategies, respective track under of both and comprise improvement assets top in our of investment over their and seven strategies three these their of out top ten XX% an management end within year Lipper at

need encouraging, to the we is this on to front. progress drive continue While performance

Reed of & the Funds Waddell mergers into for greater Ivy will fund Next efficiency. Advisors remaining, cost leverage all providing brand holders close and Funds month, we the

Dividend the Fund Ivy complete Ivy we Equity merger month, the the Fund. Opportunities Next Income will of into also Global

introductions. continue to offerings resourced also there managed This here product we evaluate be needs. opportunities is review success is time. that our will rationalize make product firm’s long-term move new room As is product line their line-up built product around for select serves to additional The over of product and portfolios, will a our ongoing strengths client key for toward anticipate properly we and competitive to team line framework where build our our

our the Shawn over turn broker/dealer business. me it update Let now of to on for an evolution

Shawn Mihal

good morning. and Phil Thanks,

quarter distribution under assets prior X% fourth to The the compared were ended million the during with $XX X% XX% the compared XXXX. Our Underwriting third quarter. quarter increase the in billion quarter, compared a $XXX December revenues broker/dealer and to increase administration. the to increase

XX productivity prior to advisors XXXX. of Advisor year, XXXX, the compared $XXX,XXX million, Two-thirds less annual million for XX% Average $XX,XXX. ended $XXX for compared advisor XXX at XXXX, a in during month per revenues the annual productivity U&B since the the $XXX total quarter year. over approximately the December headcount to of reduction last ended months advisors the departing were at of $XX than XXXX. of up an For rose $XX,XXX December year

period corresponding discussed, continues The to as to unaffiliated average introduction to in competitive we and forth we’ll classic headcount set program a future the necessary products As channel a are our Project the and following we decline the increasing greater remain broker/dealer set two transition. of and is stands executive strategy. new which to come advisor understandably in forecasted if areas advisory increased broker/dealer key our broker/dealer lower of success. and goal decrease of we by changes previously evolution with respective evolve a have implementing. has for entity. transform most the standards have sustainable Phil revolution with and production continued in the were team associated productivity we The of advisors R&D of usage the show and stage as with E strategic are performing the the within future manifest the Changes the are profitable associated E a the visible of advisor

in from undergone they of their manager to we a products. the gives process rebranding introduced asset access programs years, strength unaffiliated of and two Over greater broker/dealer upgrade our provide We channel. receive our the greater to classic we Waddell tailoring of our approach advisory the specific to advisors of and financial a classic completed that advisors flexibility recognition last have demands We program elect the new to practice. provide of significant & transformed business services to to and Reed services

are in on focused enhancing With now the framework we the client experience. place,

and a to an with of balance evaluation savvy including that accounts, our high launching the respond needs wide services of programs begun suite touch have high-end, range clients. We tech investors end low of global of advisory

the a advisor these of continue we systems practice service ease business are seeing standard with teaming needs. and efforts to industry. advisors, change be to Among is desire their hand-in-hand, our is greatest offer model meet Going far individual delivers could the doing as we that for so tailored which drive the to and of advisors satisfaction, financial that platform to efficiency maintain the to

Our former model lower advisors with retained productivity.

self-sustaining productivity we minimum model, we to business as a industry are transition our norms. However, toward level elevating

in increase XX% under net maintain attrition associate of minimum continue attrition XX%. XXXX. advisor year, in roles advisors to XXXX Concurrent see has XXX from to us broker/dealer levels advisor assets headcount the further from has declined were move a increase our rationalization a despite XX% rise. we to led support within and December This advisor to advisors, associates licensed lead advisor the producing last administration accounts rose and and with Over expect XXX, as to to XXXX productivity advisors low headcount assets

turn to me let Brent. Now over it

Brent Bloss

Shawn, an brief would of I some my fourth by like COO. of remarks Thanks, with our overview to CFO to morning begin my quarter’s today transition results and comments from followed good everyone.

results in million as prioritizing underlying are fourth during Progress levels in share. higher or quarters created quarter business, income income $XXX way during future. quarter management due items change of quarter. required recorded due assets an rate million additional The compensation from a to aggregate, the to expense $X.XX on which to that application in during continues release Cut million well changes press million to the fourth per to In by enactment markets $X.X in year the The of of expense as share The sequentially an focus revenues morning’s our in December million a revaluation Separately, diluted X% our pretax pension prior million a efficiencies, change resulted on As share-based of million as well Phil under results. the the reflect on operating cost Operating by deferred noted, the our Tax quarter. to we during of Operating of this of accounting. $X.X add $X.X assets of pension-related secured was retrospective XXXX. cost efforts accounting $X.XX or these number in rallied financial quarter. and of the tax included runrate vesting or to our in mark-to-market to $XX revalue up goal per our in $X.X in federal have million noted lower lowered $XX during increase expenses the million the $XX adjustments, to net sequentially, to also tax $XX rose the the in we basis us back operational related items achieving in net additional an income the resulted taxes end. tax tax quarter. chop net in investments benefiting This the were to

pension approximately runrate broker/dealer organization our the froze reduced cost field have $XX the restructured million. we operating two XXXX, by plans. and steps During These for

in In will on debt continued share our depending portfolio pace weeks at half runrate needs. income the an investment paid additional two pretax of on $XX and cash addition, invest million off fixed a Waddell and ago to of collectively our to result These repurchases optimize cash. we other maturity senior the to actions return in

to initiatives to expect in fully other cost of which work we we’ll number underway a savings goals and have in runrate We towards continue our XXXX. our realize

my and initiatives. ability growth will – the potentially capital our rate in future investments a power in the of in release, leadership component Reed shareholders tax of areas our my outlined and his coming in transition place, and pursuing Board been make Board CFO leader I of pace to weeks, our with Waddell transition. maintains be enterprise to Ben I to will our income business project enhance management our has behind corporate arrival with will expect which to a opportunistic a savings balance efficient involved earnings strong As this an we significant is additional already the strategic return enhance in our aspects finance approval, seamless and organization and flexibility actively initiative. helping allocation in buybacks. turn sheet our reduction all through am at driving Ben he In the team capital gives accelerate confident since XXXX of responsibilities a corporate corporate us in and finance With a of strong him our resources. effective of operational in role ensure will Ben focus management experienced and as &

to capabilities also our future. investing and data for opportunities continue system have and allow for to a to underway to teams. future and We currently to capabilities must run seek put for our predictive operations access future. unaffiliated focused Enhancements while are that effort more analytics data We in our channel data growth. a in our and into and risk into investment the have work us do We for more distribution to compete to our projects aggregation management the efficiently, streamline new in a sales recently to CRM retention company will our better reposition converted success place

make team to also meaningful investment our We management plan throughout in investments XXXX.

strategically Our transformational of is undergoing change. period broker/dealer a and necessary

and that client As success. tuck Shawn earlier, remain our competitive how are we ensure we to in through of number making maximize we a can broker/dealer discussed business changes

to We closing committed remarks. make now will broker we’ll future. to choice back our to necessary business and to are investments Waddell of the & make continue Reed Phil fully brokerage a the for turn for I it

Phil Sanders

Thanks, Brent.

our in for year outlined a our comments, company. As XXXX of was significant change

competitive have our well a one time. and believe We is good as understand employees We built achieve as broker/dealer. asset our are that manager in our transitioning financial goals. strategy, fully around commitment progress business resources and we We making take a model process this will premier a of dedication the to

Before the Reed the Waddell questions, made to opening contributions plus during I with his XX company. the call association like for acknowledge & Hank year to Herman many would

of wish retirement. his be would the best call retiring the our will after him his in Meeting to all Hank know, his for support questions. the you over As like years We Chairman Board and the and April. annual from thank role as now we him for we Stockholder open in dedication Operator,


[Operator Blair. The with comes from first Instructions] question Shutler Chris William Please go ahead.

Chris Shutler

Hey guys, good morning.

institutionally just maybe both about what your in that view? pipeline, institutional the talk channel On a bit, have the intermediary promise inflows and most the net strategies, for

Nikki Newton

start, Chris. XXXX Nikki. I as it morning, channel, pipeline, is think was In as relatively the far This soft. Good will for institutional the I

here actually fourth Although of we have the quarter quarter. we did couple one we and opportunities which I a did fund think in the win first in

on large eight to small intermediary, to focus a international on settled caps. it with I part ranging think strategies, small relates as and for – Secondly, have the XXXX most we from

Chris Shutler

size the one of quarter relative couple first channel in How also about this ask – new for year proprietary in sales you the commissionable what much asset a I want market broker/dealer and talk appreciation? of you to can growth the that then percentage the past to can were affiliate questions And of quarter? and the net funds Okay, there.

Nikki Newton

think win. $XX the I Shawn and part second. first the answer was million the I’ll institutional Sure, will take

Chris Shutler

thanks. Okay,

Shawn Mihal

provide this Hi, question Chris, one time? you that more is Shawn. Can follow-up

Chris Shutler

sure. Yes,

how of from or at the new channel, net much channel, much and how change last the of sales the proprietary of kind – one just AUA second much if funds One you the questions. in decline commissionable the of that So, over year, asset look the was was broker/dealer couple growth how and was percentage advisor coming was markets?

Shawn Mihal

go have of and number me, we’ll and to get in it’s don’t that front you. but I that pull something ahead back

Chris Shutler

Okay, thank you.


comes with Please next from go question The Suisse. Siegenthaler Craig ahead. Credit

Craig Siegenthaler

are Thanks, well. good doing you Phil, guys Hope Brent. morning,

Phil Sanders

Good morning.

Brent Bloss

Craig. Good morning,

Craig Siegenthaler

about moved in channel, Waddell wondering, the off, ticked are about platform? around down to start your to XX.X product XX.X. share just of you from the just the calculating I talk lower broker/dealer we in So, what Funds proprietary can – percentage am it broker/dealer

Shawn Mihal

Shawn. Craig, this morning, is Good

within the As we’ve and over our offerings MAP channel. proprietary to funds products, our primarily unaffiliate new advisory moving associated unaffiliated couple our asset commissionable program with the program base, course of of with in seen in our we’ve from within with exposure and last expansion the classic our reporting channel the moving been of some classic that quarters, products into are the advisory flows

management. there under with that So to flows reduction assets see continuing proprietary the that, some precipitating are overall in are we

Craig Siegenthaler

think fee-based driving basis for of and channel, are imply they your way, of Got points. that with by it. broker/dealer this that underlying of almost the in if of Waddell grew I sort that & Funds? kind sort about growth programs same it could other talk you Can about And the the accounts Reed channel, share XXX what also

Shawn Mihal

Sure, inside inside our we additional we we classic MAP flowing seeing into advisory where program of from we sources positive year of launch are as a seeing the well. where monies last channel, that are seeing growth that are other Navigator

So programs. overall an inside in in of uptick our AUA advisory are we total seeing

and of that We acquisition additional has AUA of of before. MAP using to have to allowed as another gather Latitude some available as well them had classic have didn’t some that regard advisory some exposure advisors program the assets they also opportunities with limited under some to management them

inside the broker/dealer collectively are in things driving two overall the those AUA channel. So, increase

Craig Siegenthaler

Thanks Great. guys.


go Dan from comes Fannon question next The Please Jefferies. with ahead.

Daniel Fannon

of you if base about the could we the point made just us Brent, XXXX? of of is in the kind parts, you of rate fixed expenses, an of of from there synergies, into ending growth of base as you’ve can cost about talk the well XXXX kind give terms goals first, talk a some starting guess, underlying obviously can progress in can give but fixed numbers kind a cost of think I actual your you we and moving Thanks. think of kind about on lot but about us update, can like and XXXX also

Brent Bloss

Yes, good morning, Dan.

In there past is base, disclosed guided that because probably fourth would XXXX about the that mark-to-market, the of the million But, about quarter the last $XX were would terms million is about in million. recast. that of in $XXX of cost - number credit fixed in think that in in I base you’ve that come $XX – I’ve than because as items. that financials pension, about seen in the special quarter, the a higher the was I

ended at that’s about the we So, still so $XXX, base.

We are working of. off

So with and the some of our us reduction field as that made million well we’ve $XX of other as the plan, disclosed. pension and expense changes we our $XX in the broker/dealer million, in structure,

do get by base that So, XXXX. – to guide that decline of for to or cost going around to we have give fixed that fixed million on million million cost look at to $XXX with We want updates better disclosed we we as runrate to $XX helpful? because initiatives Is range at I those are $XX we by XXXX. base achieve hope some to we $XX hope here hoping that even to go $XX we’ll and going million than that a forward, million, but to

Daniel Fannon

for an including perspective, growth but thinking that because we that are initiatives? plus core being that’s XXXX that just there expense still you I markets Is might tracking is from these think right? guess Yes, it, – constructive about a all income in I sort discretionary you is just if should have obviously whatever about all to of guess, are

Brent Bloss

Craig. into our Right, that’s built forecast,

Daniel Fannon

that you in of for about into your Is that? coming potential fee And contemplating guys coming XXXX comment that and that side, that or Is also disclosed, in evaluate go also did in of some you on line-up. something partially be fourth Has Was Okay. that terms will management changes kind mergers thinking was product of XXXX when will be also you’ve there the we just management latter – fee should it out. effect? fund as a the part other beyond of then, that be the all things the quarter?

Brent Bloss

reduced Yes, there mergers are fees runrate that. fund are year mergers management in are currently, that first those will be the in to take hitting February but we $XX the sticking most guidance some funds. million once from merge I’ll million up we we Yes, fees management significant by part the the of breakpoints – and were coming of still here in prior $XX and our

in $XX XXXX you’ll So know, $XX of have other then, don’t talk if And want in million. million I you about a Phil, that to mergers? revenue decline range to

Phil Sanders

of operate be those just think but as reviewed basis. of across I we don’t We products in of realities thing, offerings critical an morning, viability, in kind of their will announce in and and of their evaluating always the acceptance are the type and anything part consolidation our the ongoing mass to industry Well, of terms of we platforms that kind in have this the marketplace.

more be would don’t investment on of current dynamics. what with consistent just shattering anticipate So the firms basis. industry terms I evolution anything – in in are this other of doing It’s that an a be quarter-by-quarter will dramatic or

So will time. and more t hose evolve incremental over be

Daniel Fannon

it. Got you. Thank

Phil Sanders



from muted. Please perhaps line Instructions] your your is or phone Glenn next comes [Operator question Mr. Schorr is go ahead. with open Evercore The ISI. Schorr,

Glenn Schorr

distributors. what’s on largest the some Curious with of going Apologies. on

quarter I them terms more broker/dealers seems you think in things list. general their on be in the just all? it details quarter seen what of calling some in a might the gave as two product calling most It and ago, news Curious how prior, recent comment. you a you’ve some us impacting

Nikki Newton

Good is think I much Distributors don’t this different – think else’s. calling. don’t is expense Glenn, our Nikki. are morning, than anyone we I

Certainly our movement and with announced. Stanley recently of I assets. not Morgan fourth the for it’s a that meaningful the even been don’t Fortunately in us, percent think

meaningful a point. not So, this impact at

Glenn Schorr

the quick made a comment guys just you And on made, earlier. Okay. you follow-up

you looks markets? positive far pretty end Is just in billion like Do yesterday, that’s about as tell it could could so anything you of think at said, I flows? for have possibly the the of where went it versus mostly under out flow that us $XX you good year. you

Phil Sanders

Well, been this strong. bulk are Equity say, equity-driven. generally Phil. know is you The I’d as have assets our market-driven. markets it’s of

flows, only early of a metrics. part improvement of and year might in is the sales with respect think, redemption some are to color In sequential maybe perspective, terms we we’ve I experiencing, that what the the the wholesale from offer I seen

so, I quarter mentioned, improved been the And versus are for little of as in the too experiencing still consistent outflow bit metrics But bit little fourth a with to quarter. mode. Broker/dealer third sequentially relative us dramatic trends we’ve was institutional. the nothing a are We setback a the fourth in quarter. what

So, still month the the of bottom-line, driven the management assets total the of improvement I’d in say, market. outflow by January, most under in

Glenn Schorr

thanks right, much, Phil. All very

Phil Sanders



Katz comes question Please ahead. The Citi. next from go Bill with

Bill Katz

Okay, excuse thank you much. very me,

lower Just repurchase it you about and we here $XX the the your taxes, think capital, earnings about few do of different – program, in the initial things like from the of you started to through capital obviously how looks on of terms million should capital inorganic timing go for repurchase? management, enhancement growth, how management think between C the

Phil Sanders

Okay, Bill. is Phil. This

fair I flexibility. have amount financial of think, a we

the of any you repurchase can – those But at end announced to of of October. in mutually of I share – them end all on us terms towards the don’t the be of are persistent count things So think we and active think of exclusive. I kind are

remains market a do or basis. given tax law price we’ll again, Inorganic selective stepped that see The up consistent will other are opportunities over we there investments has as But share are on changes we something as do next to if if Obviously, committed sheet active that’s is expect move of growth we our opportunities, volatility, that be we be back, kind So, of type the that strong. years. thing, pull year, to positive. opportunities through well. balance the we very we can a to couple

So, position act things I when these all in to accordingly will we think be present the opportunities of themselves. a

any And as but predict exclusive. view mutually these just it’s think happen, I so, don’t hard when them things I of to

Bill Katz

then, the you And I the end follow-ups in low so talk of you the you more are model, some high-end I of it charging more and a how little the the Okay. be advisory the process? nature, little your saw broker/dealer mentioned key Can pricing will about net a time, think at my bit a base. market within and at think targeted you trends to segmentation and that – relative retail fee potential, client bit sort about things trying to looks average impact thinking off to over price on just peers us of be that segmentation bit of economic to

Shawn Mihal

good Bill, is this morning, Shawn. Yes,

overall with of just first So, is suite as regard advisory that part the to of outlook programs.

E of We it’s around enable some been and there robust for to accounts significant priced are to spectrum platforms and suite type accounts we’ve in programs lower we programs out as looking to try We space program the in accounts. be going looking the the some type continues with that at more want available come broaden to expansion opportunities in which today for to advisory rollout opportunities fees, around variety has those advisory in as currently viable that MAP feel has the seen uptake that advisory different extremely end for provide able SPA used have lower can With to done higher additional not regard initiative shift taking some we balance on offer We’ve our are that a programs with that the that But, fees, are the past we program. and for announced and that then Project what to that we’ve part that of and to estimates so programs look with we end seen higher We’ve as balance the respect well. competitively And and other advisory management net economically to the future balance an model we of market. a we being to with market space. market offerings find to have reviews base. a net, is services. invest SMAs. regard We’ve for greater for across which low a our invest launched that are certainly platforms advisory but it in to currently some those to of

Our advisors tier and their to clients fees point. negotiate have certain ability to up a those

program with of functions different those programs. associated So had some the features each and pricing

clients. space look reviewed aware as drives from think are the continue the likely to advisory respective available schedule. a groups, last more peer those of to natures with programs be to fee you negotiated in what’s to market in our at did continue representative competitive competitive open market a obviously we’ve our year We and competitive we of fees natures We and advisory to having But fees.

did associated are we negotiated with schedule. fee with clients. historically, fee a now So schedules our The are advisory programs preset have that

So will adjustments advisors there we competing around business those anticipate are as that has being and the continue for made been some into future.

Bill Katz

Okay. you. Thank


with Patrick comes question Please from next The ahead. go Research. Autonomous David

Patrick David

Thanks for taking my questions.

loss architecture. estimate you if have through I Is shakes think through the mentioned How number, proprietary where the back that guess, talking now? So, broad that going a you opening out? to up about earlier, much that that – are billion the do do billion been And proprietary same? you $X you still think XX.X% of whole stabilizes process when we to that assets $X of

Shawn Mihal

Yes, and Patrick, that’s of architecture the XX think We’ve billion this XX program. to $X the Navigator over range to is $X months discussed Shawn. primarily previously we been about I the broadens through course tracking. Yes, billion MAP as are a

that’s with the of towards we $X.X and respect about some of that, are eight But about billion we since products program transferred. neighborhood over seen launched course of of that we’ve tracking inside program. was think navigator still so that months into or rationalized affiliated so that has And in of the

model assets MAP while those affiliated offering of seen from the So we’ve has moving movement other that’s into been proprietary that programs and also funds. Navigator

So we’ve $XXX inside seen of been that’s affiliated retained about funds. million

we forecasted. tracking what that, with So that’s are we previously to seeing

inclusive being with there We to be unaffiliated as into channel exposure the continue and been what there. we’ve will is in proprietary respect of we inside broker expand the to broker/dealer expect a The future channel. modeling our product decline products inside that assets offerings modest

continue tracking estimates provided will we we as have the on target we forward. that we monitor So But that previously. think are with been to go

Patrick David

you. Thank


The go comes ahead. Please RBC with Lee next from Markets. Kenneth question Capital

Kenneth Lee

taking for my Thanks question.

get broadening are proprietary or be of – sort terms largely of what the And initial As about categories in overtime or are introduced potential in thoughts, that more sub-advice potentially some then products could the products? mix of as Thanks. products introductions, you what terms products rationalizing new asset kind or these and some product think some well, rationalized? with your at of

Phil Sanders

Phil. is This

we’re we it combination existing a think, strategies, equity – do credit core the as think, well over that to think that organic of Obviously, that side core broad new and our think continued relationships, strong I the markets and with reputation maybe the built level fixed international above of do in income relationships be would within opportunity. on we some strategies focused with growth-oriented time, lot market. partners, that, product when I expanding a introductions likely some have think quite a Also, we introductions, of and will a and a I core kind key sub-advisory as funds. our emerging we fit far new well has expertise franchise potential we that’s do things have with of about the things I

those would think focus. of a lot of complementary competencies probably I areas So, core with products associated

I thing, aren’t to type mass see platform real over access got critical opportunity with gets it if challenging. potential – think that can’t get at to don’t I that want time them into of them, Nikki and grow the to think the question you’ve and consistent and time, expand was about was referring products you over specifics, what products rationalization, I or that just and earlier generally don’t speaking

to want our products constantly So and sure we opportunities and allocation make reviewing in and always of terms we are directing growth resources potential. strengthen to our opportunities resource our

always it’s that at where but difficult, opportunities predict I are exactly think will we to be, So are constantly it complementary. looking

Kenneth Lee

of bit one Got Thanks. housekeeping. And just you.

around that’s the probably what was change, it the be to then In sure make less the Just accounting want if disclosed a pension for sounds the XXXX expense, if thanks. pension terms little case, that to there bit going quarters? is volatility of

Ben Clouse

in midst volatility derisking the as Ben. the this in assets, that That’s planned the Ken, are exactly any forward case, expect we significant for Hi, we of assets. would planned is going the

Kenneth Lee

Okay, great. Thanks.


Bank Lynch. comes ahead. America Merrill of go question Carrier with The Please from next Michael

Michael Carrier

XQ the understanding runrate million think I charges that there the you I Hey, mentioned. kind runrate mostly you maybe then separate are were quarter, pension good All an that clarification that Brent, last repositioning that in to around mentioned the these in $XX the is or right, to thanks, some other on quarter a would if pretty one-time try that’s X.X savings being the of – in of some lot of a guys. wanted of be pension, And changes, like, with factored the items is just get don’t platform runrate? just kind there like of that you mentioned just and there? from things But, the the know the fourth it of broker/dealer

Brent Bloss

been that’s Those in the included runrate, items have correct. would fourth quarter

Michael Carrier

what right, And of about have you when and all I there the lot the sheet got a Phil, just with think made side, capital it. return. progress efficiency Okay, balance done you guys then, on

kind repositioned there. of You’ve

industry how get from expense you that it’s repositioning, when Just maybe at XXXX about years transitioning whether you of platform, whether or capital is sense, XXXX of to of a an the few look a focus over there the wanted some or and maybe, growth benefit lot tax past you opportunities guys from it’s get standpoint standpoint, the a shifting do think the and challenges. more where the versus to because

your for you you to time some think Just do Waddell? see opportunities going spend are and where you

Phil Sanders

I that earlier. the tailors to Yes, little think a question bit

have period, a of flexibility. and I we think, through strong a balance fortunately lot sheet transition financial this

the means how initiatives. terms we to a are for manage opportunities are for we we’ve to company will offense So, begin and that internally upon strategic our I think constantly fundamentally how in what flexibility benefit provides additional plans what lot certainly and But we really looking don’t and the talked it tax it execute our of think I change growth us. initiatives.

I respect been mentioned and that and with remains that on we’ve in – think we to capabilities XXXX priority. see we’ll add the management bring But spent research our opportunities to in a do heavily continue have pretty within staff investment investing to our investment that’s we’ll building have past as to We we a anything the But or and what can acquisitions see are looking offense, definitely those our an ignite just just that we timing capabilities on or to play in things. something bit difficult small are It’s little open growth, happens. anticipate we us and to. opportunity give if of

Michael Carrier

lot. Okay, thanks a


The is go KBW. with Please next question from Robert ahead. Lee

Robert Lee

Great, mean, you analytics, Thank reducing expense need to question, cost trouble thanks. data with investment all the $XX am quite having staff, squaring that. of of goal and kind investment for Maybe the I frankly technology the fixed back questions. spending another million with the taking invest I and my on in to going and

and fixed mean, be but how to next helpful items, of So, assume of maybe – pattern to – the flat, and kind compensation would up, it’d some to on expenses you if not should other everything. cost, were go we year, fees expense expect go just take expense impact out market your really be thinking your you down, we flat markets of so movements be I

making. think you with and million given all investments really that’s struggling I things going are the incremental the on have you the decline $XX talking about

Brent Bloss

had on, – I the think strategic broker/dealer initiatives I you with lot, will know in a such think Well, mean, Brent. Rob, and we’ve as and I on lots in we’ve this continue into DOL, those XXXX lot is expenses. going of XXXX,

XXXX. mean, resources company on we forecast execute we flat going our and out, so to those expenses many fairly be initiatives as we I the only in So have think will into forward

look which plan. Again, part initiatives investment others XXXX. as and to are also we in built of some Phil plan other we’ve make capabilities our enhancing and efficiencies looking at at the is management of we’ll investments Now, offset in to mentioned, there those we the

day, cost what like $XXX estimate is So, the in the end the in here. still ballpark XXXX I stable at looks am of that market comfortable a of fixed million

Robert Lee

line the and look If we then – follow-up, a as of pension good if cuts broadly, with And at certain I’ll given out in we on operating XXXX? it of items? squeeze and your – tax maybe part those the runrate that steps in impact up is line to in to should would taken the of indicative in make or you’ve that markets tend is A should excluding and so, so and investments share staff, in. more you making investment two-parts a million to expecting are third quarter, separately, staff looking know expense, be staff, the make don’t rise back compensation, going expenses $XXX Okay, an for I compensation the that some we be if this I’ll the

Brent Bloss

at those not as with it’s markets consistent the still are mean, although other line, move we we we XXXX. throughout are think the runrate, I I mean, quarter well fairly on fourth with is, looking initiatives as expenses with stable I – stable I would as that update initiatives, the which pretty you have we’ll will comp say going here, runrate, move, on given the

of hit end hit committed to to but million $XX million to still we are XXXX. $XX million expect the million, We’ve We $XX $XX to million $XX reduction.

Robert Lee

Okay, thank you for questions. my your patience with


next from Citi. a go question Please Bill follow-up Katz is The with ahead.

Bill Katz

Okay, excuse was beat Thank on here much. horse but equally I me. expenses, to dead a little you here on. very hate going I baffled

hear the point, So, the the the just I Brent, a is that ratio am item. little comp? XX% runrate way I’d is flat, line is XX.X, just so last about of XX.X a for revenue Or then the X exactly right confused the I number on comp less and on the didn’t about dynamics is quite still that pension there? it think of that that

Brent Bloss

it less pension the Yes, Bill. expense, be would

Bill Katz

is think assuming sense flat you number in absolute markets? that So, stable

Brent Bloss


Bill Katz

just, a the bunch you to are million be on $XX seem of cycle. things Okay, follow-up $XX thank And spending that. of the million, aggregate that does then investment you for sort range, doing

business you put through versus million, so an you the So think $XX what $XX $XX here? as incremental an from would million about million incremental the

Brent Bloss

we and entity that looking the an there make he looking opening – of structure we company is there at, looking that are – in at think I that those to the standalone is that, mentioned active enterprise. guess, throughout are broker/dealer taking as I are I initiatives and look Well, the a well, remarks that still at Shawn his

And so, we at are opportunities several looking there. different

as to that most So in But more think continue think, our we evaluation. you front see will the future. the come I from broker/dealer there is on come I that of

Bill Katz

that or is embedded that’s But $XX million incremental million, the offset in $XX the…

Brent Bloss

in embedded million. the It’s to $XX $XX million

Bill Katz

thank you the Okay. very much. All for patience. Thank right. Also you

to Sorry be so pesky.

Brent Bloss

No, you are fine.


question next ahead. Company. go & comes Please The with Gabelli from Sykes Mac

Mac Sykes

repurchase of Great. comments, I Bill’s earlier but Phil, very probably Good or sort the focused pretty Maybe of want to gentlemen. analyst given focused about you your investment the background, community maybe of current on just dynamics flows, is way intrinsic Obviously, then you I would follow-up. flow one could morning, think just, and expand the activity? current on how this how into value Waddell’s exogenous

Phil Sanders

an balance opportunity accretive think Well, about it yes, cash given question. is, But an exoteric where repurchase I to the way I think, opportunistically of it’s our time. we shares kind think, have over I be to here

our respect – positioning, our to flexibility present opportunities us do investment long long-term enhance have the – We will with we to that also as that. grow to have opportunities

So, the capital. the all we are with evaluating constantly we time and trade-offs every respect to that how quarter allocate

that quarter basis. really ongoing have on I competitive current shareholders is last adjusted We dividend return we an that level to think a

opportunity incremental have plenty repurchases enhance we opportunistically. some – plenty of our the And accretive time over invest have that will We do of growth. time to to share resources can

the at how we of I we this are into looking with terms don’t move So, detail, always to but Board get think and want in of I great allocate capital forward. is discussion our along something

this things of we over of flexibility have kind types time. do pivot value enhance different shareholder period, and the is, through news to do good the to So, transition

Mac Sykes

advisors or would that And the you’re did item, is about then, maybe, mentioned different it than Okay. standalone How my the a be follow-up, today? that being you talking broker/dealer what

Phil Sanders

make one brought company there would anything, broker/dealer, and and gatherer the an just existed the from manager and add comment assets Well, basically then fees. that, I asset our broker/dealer in historically, to think total be benefit wants as just I our comment management if our Shawn the asset and

more and in a and advisors made self-sustaining. options, in make words, commitment evolve on a other it of to think, world to I standalone basis, more profitable broker/dealer want clients today’s where kind choice a the we’ve

our that of to to terms commitment strongly that. don’t broker/dealer misinterpret because committed we So, in the are

just today’s We and to anything be it that. add where choice and have in of opportunity. clients to you trying don’t to to if world are get want Shawn, more advisors more a competitive I know,

Shawn Mihal

comments such advisors to Phil’s with look with programs the well. and we perspective program, there from that advisors as of product based regard shelf the seen product with then agree and evolve client a the strategic launch the I competitive available. broker/dealer as at had we’ve we’ve the for Phil. through the the thanks, be Yes, client respect would some that Navigator the is to retention to the acquisition to to programs advisors, of That’s broker/dealer of also prior makeup demand demand the of with to and and our are looking continuing MAP year as focus and shelf upon add experience more

asset from transition order types to services regard in to to capabilities. the from as to self-sustaining to things, are as we they an those profit looking to but of look those with certainly do at broker/dealer starts an advisors to are the of this shift So gather aspect we look also its to things, we have and we the overall inside offering broker/dealer a types And loss dynamics of do entity. of services, clients, these and sustain everything that the provide

So that on expand things appropriate able be the we putting competitive the sense the things natures. investments out broker/dealer, offerings where to into makes to focusing those are in be will drive to those those

to which on certainly, is, transition this the focusing the the we’ve advisors comes drive channel, performing able that we we We align that productivity. at past, the discussed support performing cost are also so and to in been inside prior have on higher advisor as we’ve advisors look to to self-sustaining calls, and and entity, as to broker/dealer advisors also lower that the move a call,

with working drive also high broker/dealer productivity be the advisors help advisors that broker/dealer performing to the advisors performing recruit those our the So and high with in retain and into look future. we’ll to

Mac Sykes

Great. over coffees you Thank him best few a buy time. Hank, you and did the to

you. So appreciate it. Thank

Shawn Mihal

right. All


session. our question Phil would over and to the to any back turn concludes This conference Sanders remarks. I for answer like closing

Phil Sanders

Thank you us thank with everybody we appreciate you. next interest well, up catching you forward joining the and Okay, look to for and quarter.


you Thank concluded. now attending today’s has for conference The presentation.

disconnect. now may You