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Waddell & Reed Financial (WDR)

Participants
Nicole McIntosh-Russell Waddell & Reed Financial, Inc.
Philip James Sanders Waddell & Reed Financial, Inc.
Benjamin R. Clouse Waddell & Reed Financial, Inc.
Shawn M. Mihal Waddell & Reed, Inc.
Amy Scupham Ivy Distributors, Inc.
Robert Lee Keefe, Bruyette & Woods, Inc.
Michael Carrier Bank of America Merrill Lynch
Craig Siegenthaler Credit Suisse Securities (NYSE:USA) LLC
Daniel Thomas Fannon Jefferies LLC
Patrick Davitt Autonomous Research US LP
William Katz Citigroup Global Markets, Inc.
Kenneth S. Lee RBC Capital Markets LLC
Chris Charles Shutler William Blair & Co. LLC
Macrae Sykes Gabelli & Company
Call transcript
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Operator

Hello, and welcome to the Waddell & Reed Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Nicole Russell. ma'am. ahead, go Please

Nicole McIntosh-Russell

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

our and CFO; today Ben our Shawn Retail me on & call President of Phil Joining Reed, of Waddell Inc.; Distributors. our Mihal, President Clouse, Scupham, Bloss, Brent Sanders, our Broker-Dealer, our Amy COO; is CEO; Ivy

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

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

Philip James Sanders

Good we income $XX compared represents compared financial last an reported our results or income approximately everyone. you, net of of share share morning, quarter. or X% remarks. on to to $X.XX prior net per $X.XX following million quarter. expand This Thank million $XX Ben per Nicole. the Today my during initial increase will in

to the several to strategic over the quarter, past we respect continued initiatives During meaningful make with progress the quarters. discussed

operational broker-dealer investment outflows, overall improving the net remains evolving and implementing Our focus model. efficiencies, stemming on performance,

initiatives, all of It technology for while broker-dealer. gaining our efforts investment traction extend on in across new path These a management, giving future distribution cost we to our work our note we to areas that remain our committed efficiency position investing to and growth. top clear important to investments and As talent continues, is us company, and continue are work forward. ourselves

continue Our to deal strong financial of policy flexibility. balance great a us return afford sheet and capital

rankings in last of over We improvement for to Morningstar heels of the strategies. quarter spans of the management exception. and trend sustained of our years, on that commitment investment portfolio the improvement and no across we investment of enhanced resourcing Similar majority and over organization Lipper one-, solid improving This the investment have our management was saw past most research, three-, seen performance product a risk quarter, management. our follows couple recent across a and past line the the performance investment year, five-year much

tensions on experienced have interest largely trade of weakness could strategies volatility International Funds earlier toward Some due our see key persist, the gravitated unaffiliated Global outlook redemptions quarter channels. across Within sales did challenging institutional as a third rate remained decline but more products, outflows soft. headwinds sequential environment proved the we and distribution, fewer to investors the such unaffiliated rising for flow expense and more the international Two and at year, recently. fixed our of strength near in flow and persist products. as markets. the These of market sources challenging recent trends Equity Markets a Emerging the international in in term, trends Core defensive income given domestic couple the Equity

just the million additional had were where million QX. both on our experienced remain perspective compared outflows positioning. were line, the slight positive performance confident last strong will remains outflows $X.X $XXX Net in from $XXX the experienced with down for flows minutes. basis. Shawn we increase a Conversely, period, were channel across their in for product small- Within to and consistent for long-term QX. channel the Net and trends the channel a long-term billion, short- few affiliated mid-cap our largely reporting we broker-dealer, However, under offer we for in quarter just flow representing on quarter. this what

versus experienced quarter, in mentioned notifications channel in redemption, an quarter million institutional QX. billion redemptions about $XXX is during fourth the half net improvement million of in Our expected and in received $X.X we $XXX in totaling to we which outflows, quarter. had with forthcoming Last The included of about remainder current is the quarter net third during occurred the million. the occur $XXX

during did for international aware billion channel in an total see to are this to additional of move is international passive, of a personnel approximately redemptions challenging remain expected fourth the we vary, We million occur turnover. including the quarter. and the previously addition, quarter, redemptions $XXX to relatively in a for performance, modest In the to continue in of and $X interest our but fourth likely strategies, expressions for fund one being. time discussed mandate and small Reasons

institutional remain committed our reminder, assets assets our our channels. diversifying strategy channel currently distribution over and profile management. under We flow a under our As to across little various X% company total management comprises the of a of

and We our the positioning distribution are platform progress enhance making to efforts. of incremental

many internal distribution support resourced properly ensure growth. We to our to is of future structures have channels refined our each of

We are and our of strides also data making efforts. capabilities that sales support modernizing marketing will in more and analytics terms targeted

only solid of is However, having and part the right investment equation. the distribution performance infrastructure

into initial opportunities XX our funds DCIO, adjustments on affiliated ensuring and previously we across products been are RIA, of July on then has potential on to focused feedback channels. leading equally went constructive, broker-dealer priced. discussed XX. a Fee are number the effect We which competitively The

Grant plan all those and and distribution I of the leadership our Their veteran Joe align seeking fee-sensitive named We Head we to distribution Buyers now will barriers deepen The most the Grant and and allow us to ends. continue relationships our competitively-priced Cleghorn relationships to Industry aboard additive advisor our in team team. Intermediary Group under collective Both across Distribution Joe are Head go-forward came the of explore continue strengthen channels. key was quarter, Professional leadership of diversify Amy February. be who of note experience as allow channels, like that parts will fortify with distribution our additions opportunities that certainly Scupham. with to to during joining Moran toward of products. would also down break

over of next part announced six funds we the expect product the Finally, to our merger review. as complete previously internal of week, rationalization

Let me now Ben. turn it over to

Benjamin R. Clouse

Phil, everyone. Thank good you, and morning,

prior $XX million due noted, to quarter represented approximately better during Phil today, income. As which to per per increase costs of share we quarter, share or X% reported net investment and of income compared third or primarily million the operating an $XX lower $X.XX $X.XX

Revenues unchanged sequentially as number million were XX drove assets impact of remained offset reductions effective our count in Continued the extra institutional of by $XXX share fee funds higher in under and on reductions per revenues our advisory day in during quarter. higher. one the July which XX broker-dealer became also share in the and mutual lower the the management earnings current slightly channel

to the us to while line with reductions an it's of broker-dealer paid lower the sequentially. technology fee Operating annualized employees, so early, a affiliated areas. X for basis contractors approximately costs in conversion reduction which financial effective While spend been declined far our rate fee in points. model costs expectations Distribution advisors G&A due declined revenue, cost-effective continued in by is more moved million of some have with to consulting some of and distribution our line with $X.X

costs older technology and replacing lower had also cost-effective solutions. with software systems we more as have some begun We

However, $X.X quarter. accelerated million depreciation this in also of drove the

make to our we in systems million toward and distribution and containment $XX broker-dealer. million to evidenced growth, results. changes efforts, financial and in cost pricing invest At to areas support same strategic to continue continued our product resources $XX in as on progress investment support this We focused structure underlying quarter the to improving our adding including initiatives, our time, our management team, the

focus $XXX opportunity office and occupancy marketing. savings. controllable compensation, rate. Our included expenses, part is long-term which on million $XXX are field is year-to-date of lease One $X numbers are These G&A, we quarter includes severance broker-dealer million thoughtfully million costs primary year-to-date. run approximately totaled during not the long-term These of and that addressing technology, the

driving closing for our as offices of rate. cost run total year reductions a the end a in in which model, XX move XXXX be anticipated million broker-dealer on are competitive through an will We toward sustainable realized and track we $X.X

we We to earnings within targeted as improvement range our pre-tax XXXX. continue enter realize to expect

are We continue also will to have the improved which incremental technology expected advance some next implementation to costs over XXXX, in our two investments in years. to one

by and refining that are to expectations processes. the from operating to be our Our technology technology longer-term move newer run rate will older expense moderated continuing

account our to at the January. and million. of dividends, $XXX On million while cash repayment ended paid flow debt balance million generate year-to-date repurchased Looking the cash and with we stock in investments continuing quarter into $XX a taking of after positive basis, million sheet, in $XX $XX we

enjoy and it turn to our an ample sheet flexibility and to now over to progress. broker-dealer Shawn balance we will on provide Our our to strong remains objectives. liquidity meet update I continue strategic

Shawn M. Mihal

everyone. Ben, you, good Thank and morning,

quarter Assets a continue billion. revenues, are Advisory quarter recurring year-over-year. asset stable $XX products, under which drive $XX X% up of and billion, the second compared ended administration X% the to rose growth, at to source to

and strategic we executed to in This As expand is financial available make we of the priorities advisory our quarter, an is flexibility well key to one we area choices products QX. where last discussed advisors. within

tactical allocation. will quarter of to coordination client two review expanded three the unaffiliated XXXX. of during choices for product investment also additional portfolios financial unaffiliated multiple consultant. of manufacturers. managers. of continue of to from to addition seeking focusing by a families in new choices existing relationships institutional well of to an fund choice investment We're was of on launch offer anticipating We both product list advisory more outsource offering separate asset with strategic, selection was strategic advisors Our additional the and partners as with with in mutual as the a new thus through unaffiliated The early further in ETF-based spend portfolios intend investment time product offer more investment family. advisors portfolios product investment dynamic the quarter independent fund-based a funds ongoing fund relationships. from funds will new of the advisory third allowing all The provide management, consisting and options first We're quarter an introduction This

from through more type Our early client ongoing to goal advisory service products high-net effectively accumulators them the offer every of individuals. all to worth to that way is access allow advisors

we continue a reason, We and in ago this that a offerings past through our unaffiliated year. offerings investment product expanded new year-and-a-half have the will advisory advisory expansion XXXX. launched over of For product

continue our legacy billion basis. the since transfers of we total and product resources of had strategy, with quarter. products our products, annual to and assets outflows our and in While recruiting new change approximately efforts remain from X,XXX recruiting lower, model, advisory our the net the $X.X legacy line in product our from of at offsetting advisors. experience these We the This turnover associates. expectations Total advisors $X launched alignment September has count recruiting high-performing financial Due with billion at we product the advisor assets our XXX an for in to on of In with advisor May third our X,XXX is were this ended which led discontinuation additional new consistent our to an a in focus associates, XXXX. activity to significant in the legacy on and we expectations. model, at growth in close with advisors this

XX, experienced XXXX. at $XXX,XXX trailing the which stood As desired, improvement in September months further XX average for we've ended productivity,

of it success, now I'd to the vital about in as in future. our role the in Lastly, role the a and like broader talk plays technology effort

of by establish portfolio process through selection This vendor of our in and repository technology, advisors work support for business of program. broker-dealer us the between our clients. will experience a providing the we've systems an thereby significant our designed progress driving support and in Given to streamlined clients, integrated connections investing data the the to importance simplified projects business made advisors administration efficient both

Business we be new Six business year, instrumental processes. of this in a individuals During Design of Department and the implementation Process Lean design Sigma-certified who'll established technology hiring three related

expect we technology new by make offerings like we We rollouts have of a to the year-end, open I would final now and decision questions. XXXX. pursue incremental to Operator, the list narrowed of through call vendors as to

Nicole McIntosh-Russell

questions. for ready we're Operator,

Operator

you. Thank Yes.

are question-and-answer the And We first ready KBW. question to Robert from with session. the now Lee begin comes

Robert Lee

kind much – I think Maybe some of out to taking believe get of in for really the bottom as initiatives, questions. one how you fall of – a of a Thanks expect about $XX starting kind to the kind initiatives $XX Thanks. I of XXXX. So, how to in the different to see trying how the the about, should clearer was the – just how roughly all that hiring million expense Great. with may be on million we going versus continued way broker-dealer plans? that I'm the talked But some channel, kind really we just get sense line is have of through thinking to you run basis, initiatives? reduction line in it bottom versus you fall rate absorbed other net the of of my is day,

Benjamin R. Clouse

this So, Ben. is Rob,

remaining the As a a couple of the pension freeze half We well in $XX enhancement to field broker-dealer level drive about that. a organization. set, goal goal then, we of half specifically ago of to year, we as achieved And last million established that as years through earnings. a of had restructuring to million pre-tax some $XX

$XX to to million rate. XXXX our $XX in run in realize be to XXXX, recognize and poised million So,

million So, made progress this million significant remaining We've year. $XX on we're seeking $XX that. to the

I'm particular as and personnel to in the technology efforts, that, real be that I some quite I mentioned. as last think I would repeat on well estate call line they'll where guidance initiatives likely concentrated not you'll the of although our the in items -- just ready provide find

Robert Lee

And update is as products, broker-dealer own get the some how what you of fee-based products, us currently I follow-up, And for over introduce programs, third-party Okay. are it's kind sales new an seeing otherwise? you the going or could update going platform What these just -- of proprietary just migrate programs mix? introduce maybe year? that think more we a of a the you kind as you're you can expectations mean, in in or to that's new channel your into currently as whether coming retail

Shawn M. Mihal

Overall, The some we inside moved commented, Hi. but But expansion affiliated expand And we in those the remaining total, consistent expectations we in offerings I forecasted the XX% those started those from is to ratio that inside and quarter, funds through also do past that unaffiliated of This the broker-dealer, that the flow advisory funds see billion. broaden funds product diminishment our growth into into a we've billion. expect relatively remained non-affiliated affiliated unaffiliated to to about to inside as legacy is over products of as of past year. net ratio about of inside progress had of of overall seen we inside Yes. continued out added exposure product new to we're affiliated values $X of asset we've In Good morning, as funds has overall expectations additional unaffiliated new we partners products program about continuing the out the this the we're continues, the of some what funds. as Shawn. overall XXXX, Robert. and $X.X the we've products, funds. as offerings with

expansion sales is continuing be be advisory where area we of new the relatively where are would programs, we're going. thought to the with remaining consistent we So, with which

don't advisory what experienced materially course continue XXXX, of although to the from we've together anything of throughout expect to will we programs the bring we XXXX. moving change year, into over last additional balance So,

Robert Lee

update through the weeks kind far of quarter, you're you to odd I any of seeing so of Great. for start slow, continued one Could four or to And activity? patience. question. kind thanks could kind the three everyone. helpful. or the us maybe So, more slowdown any of what for kind Obviously, investor update kind three quarter on just if rough in a maybe of would first additional be experiencing And – indulge of your weeks

Philip James Sanders

up. What of just if month a also redemptions in and wants couple we've else of picked morning, Yes. stepped have comments, high-level I'd lot they channels a our is This Rob. that expand, to anybody kind the bit, it's a October, have been Phil. of of a obviously. sales definitely, is terms can. say, rough but volatility in Maybe market of actually Good up seen unaffiliated little start

rate, So, lot markets. from side a that the by international the is quarter in deteriorating particular the the and volatility run is But the think of first flow third in in I net the outlook month that here where, in comments, for were some the us funds the markets. as volatility market international year, I had sources mentioned opening the we given strength the international but they've my early in of driven have headwinds in

has a see we can to it that definitely the plays of change when little but a quarter. we're how that's So, environment been of how Things bit kind a it But we'll given in start heartbeat see right rough out. now. in, the

Robert Lee

Okay.

Operator

with question the comes Carrier of Bank And you. next Michael from Thank America.

Michael Carrier

just little bit first just clients? seeing shift of side, faces the maybe resonating Thanks, the interest the that when seeing on mentioned versus – that you're wanted the interest? to – the whole channel, the may challenges is headwinds? the the to guys. and performance, more the at in And other one, you then just you terms maybe look Amy, up the picking broker-dealer sense, how other be we're some So, like much those sales some you that of of just like in industry how and traction a your passive improvement improving like unaffiliated given performance if get with force,

Amy Scupham

we see Hi, the start reductions fee with end say industry and this Amy. of to we of regardless definitely definitely you to headwinds even starting screens. When at a some improving take July, are would I of helps performance is the the that the we lot it is clear the a that as combine interest of that pickup you made facing. more

across inclusive definitely we've so buyer broker-dealers, wouldn't in insurance some to the quarter seen lists we've course DCIO from distribution unaffiliated in over we and to be RIA, some several look our quarter as additions and move banks, professional we of addition rec into to hope RIA distribution, we our seeing groups, third of start professional the of channel, had In fourth the the buyer additions and approved fruition list third As quarter the the channel. across XXXX. which into which

re-reviewed well block course partners picking funds at having placement rationalization As definitely channel far distribution and have standpoint, DCIO space, couple been the as broker-dealer quarter. and platform gotten the on as might in the chopping we've funds a over up as in the from of some potentially more a of the had added that

Philip James Sanders

just and can – these the doubt But add contingent no that. that investment predicted right in obviously think long-term things product, never upon might our the timing that, competitive can having the right be that of pricing of stuff. kind all I be I there's success and performance,

So, improves, the And that the for optimistic we performance that that success. are control. focused foundation been really we've things on and as will controlling can that longer we lay term hope

Michael Carrier

Okay. one the just That's And helpful. expense maybe then side. on

performance there the I or different to near the the more rate? million the the about some guess you look, I of challenging maybe have market additional given income costs, guess, bit run partially how back the in of volatile with headwinds, a it's backdrop. on and little And $XX areas just in term Are guys improvement of kind in initiatives, the the that I a then $XX variable the pull some technology to the the maybe – that are So place million market of that. is dynamics? achieve some operating once and thinking more on core understand initiatives to by guys seeing on you driven

Benjamin R. Clouse

really our term, I to G&A is guidance about planning believe to on mentioned, our Well depreciation might the the a new anticipate down for continue focused the costs, clarify may in add on controllable part to those and we're of that about. comp, run reset that next we'll Ben, rate, bit to think quarter line. Phil call, talked better early but regard don't be longer maybe strategic this our on that don't would spike any core we're we We're – particular, I to we little focused this start, getting the to level want as that on we're and but changes. in XXXX areas run this. XXXX, I I rate. the and investment, on be of stages course to major In in for going have and

Philip James Sanders

Yeah.

Michael Carrier

Okay.

Philip James Sanders

obviously might though, over a don't pull we just I long that. the bit and back if sustained to that that expenses little that positioning manage the through game, have market, our long on while I improve say, will cut term. in we're playing will on experience we the back to headwinds the we things I add think want and ability

about a and strength distribution, success, our we support and form how gives So that. for long-term things I when manage through investment of really sheet services liquidity flexibility us balance think that think and will management, our in we lot

we the know, us capital help and execute ago you over our long time some manage strategies on the return through As adjusted to term. policy

mindful obviously environment current make to and be success. sure we'll of and while our regard, that we the term for the longer So be flexibility financial that groundwork the laying have in we're prudent building

Michael Carrier

Thanks lot. Okay. a

Operator

Thank the question with - Craig Siegenthaler (USA) Good Credit Securities you. comes Credit LLC next Suisse. Phil. Siegenthaler morning, Craig Suisse from And

Philip James Sanders

for advisors was how also product perspective level your and of of morning. your on of Craig compare the press, – LLC Suisse - an competitors does So, announced of this last Good LPL two one wanted open or in the to as the then Securities architecture but availability the Ameriprise? drivers third-party technology exit. that your technology larger referenced your week just some like of And Credit departure their (USA) and Siegenthaler I

Philip James Sanders

Shawn have. I'll address any follow ahead, Go up I Shawn. if that now. there's thoughts let additional might I

Shawn M. Mihal

channel. years respect primarily the few of overhaul then really classic a opening our technology the Sure. also was Craig. of to which which the led Good with to architecture Yeah, certainly a E major initiatives over Yeah. Project the we've so Hi, the morning. course in done lot and last

XX past So Pershing. just over for brokerage reference clearing purposes, always years we've through the with had architectures open

and LPL an self-clearing we're So broker-dealer. firms, bit introducing Ameriprise that are an or a different little than

do packages in regard. a technology differ bit little that the So,

of overall year we open open variety offer new channel. channel platform we've advisory expanded further then opening classic with products an different Pershing a couple that an with respect existing to to also classic and launch were a architecture to from been advisory last products the which product solutions standpoint, architecture the able our of So that to

we've of moving that see expansion open the We to had regard, this in are more quite an of of from firms. So different competitiveness variety architecture. from packages do available bit technology which a of a

We our a as to have technology, we're and of the continuing to in some to substantially comparison in report overhauling overall is we through advisors. component. make that technology to invested make offer selections self-clearing the use improve then platform But some our into of little initiatives of introducing further the that the a we and progress. with a it a hope bit And the between regard we package we quarters vendor future technology to disparate platforms

business components been of are XXXX. And have financial technology. from into the we'll clearing limitations along to move further to with technology we we there do to but expansions that as we technology it, have certain respect enhancing that submission planning So look

there Craig practice like I do for effort you a the amounts with the LLC it is of need picture move distribution to certainly your Suisse scale, a when question and especially that follow some Henderson as are big like just a Credit us growing we putting one to a there And for dollar firm Phil, so considerable Phil. to have So for Janus up Shawn. in or - see Securities these sizable analysts recruiting, seat competitive signal my another, Invesco-Oppenheimer, there some or firms there respect front. is nature well. made. our there's to are that (USA) amount being is on out Thanks, deals Siegenthaler up, those We headwinds combating are know out

you're what thought that smaller these trend? is firms, this Given on your than

Philip James Sanders

the the with. establishing I XX faced Think I and ahead control. lot and going made term addressing a of we're obviously last we've on can Yeah, like we us a we on framework that months lot focused we been of for to progress we've think mean, of success of X opportunity what's a longer in back feel lot years, the see issues

So, and a fit We we're our from with what do where and standpoint I stuff has it of type we now. do culturally can in both be the to right see it there's opportunities own to really from focused think lot and that's a right time time, that's that but control, product things. of

LLC of our Suisse there. in not I we much Siegenthaler Credit more the that on in are we there's on out Craig have on own Thank kind So we of strategies. on active we And environment can It's we'll control plenty say I they basis. as ability to and that's the to a we're opportunities can the that fiduciary what our regard present - have meantime, if obviously things now. public execute to in grow address said have a themselves, we But as daily responsibility. and But and doing Phil. we're come a And that. in really focus just you, past, what company can (USA) – own right it's control us. And we're an focused them Securities

Operator

Thank you. & And Jefferies the Company. Fannon from with next question Dan comes

Daniel Thomas Fannon

Good Thanks. morning.

Just the that looking a of head the kind when we is terms profile about as a looking a in level to think adding the should about? a of new of at stable advisors target highlighted head you're happening. that you in kind within of hit to I your trends, there for, advisor as this you – kind and terms count thinking advisor be and count of curious within you're think just guess you that going what's expectations is

Shawn M. Mihal

organization. again. is the we've, had strategy, direction Shawn morning. on the of to we're that the inexperienced but will in inside go. focus in a And which Yes, experienced advisors lot away advisors, continuing with with the And substantially and good from also something advisors broker-dealer. model, change overall that It's equal communicated before higher-performing And had continue experienced to activity activity we've it's to hi yes, past, advisors certainly moving we departing of the more legacy generated recruiting this recruiting

lot to So, upped there production competitiveness a But and activity we taking levels. moving as a recruiting more direction where and overall of our was with strategy around overall firm we're place. we've headed our minimum that changed broker-dealer, as changed the

So, we've that year years – still we under to this a do just have $XXX,XXX work that upped for advisors through a level production over to point, five for $XXX,XXX. five. minimum as XXX At time that they service, have little their length we have up those advisors, length those population below levels, approximately of but of production. service smaller way to they work But still are are

So, the broker-dealer. we high also, recruiting off align see the back And number with into up continue to we've more broker-dealer, continuing do continuing respect this to we forward we're the make model overall to press advisors investments advisors. in experienced to the as recruiting expect decline as of service do constructed that the pick and here to initiatives performing inside that leveling

Daniel Thomas Fannon

this to as numbers quarter, U&D is there there in follow my drive of think outside – terms up or AUM the will about kind down for of up, that we a inputs revenues, sequential those increase. And of just was the that

understand we an outside aggregate levels sure make kind there. to that just of have of of will parts moving AUM the want Just kind input

Benjamin R. Clouse

indicative is run I be outside rate. The think Ben, the pretty last U&D levels This moves, I impact quarter, the AUM would of of might start. the

that services. item line charging converted begun and programs remember, grid as different we've we've level to incrementally and As added advisors for you our to a probably

part moving that's aside the probably from So, other changes. period only asset to there really period

Daniel Thomas Fannon

you. Thank

Operator

Davitt Thank you. next with Patrick the question comes Research. And from Autonomous

Patrick Davitt

But pointed sales morning, the a see bit if you are has I'm that fee you. starting any guys. curious which good helping hey, cuts particular products. Thank you're tough Obviously, evidence the anecdotal market to any to. Well, gotten for gross

Amy Scupham

Hi, some Yes, is Patrick. Amy. but period time, here, been This of obviously a certainly months have couple we short anecdotal of it's evidence. only a seen

it I some RIA in by relates our a is growth what of the re-review a before, And nice of seeing had gatekeepers like our wins we're in the We have firm and to mid-cap to space. of as fairly that, in sized of reductions. fee couple said addition strategies then,

it's short constructive in very and So, positive I term, move. been would a say

Patrick Davitt

leadership conversations institutional you've on talking And in about related update to what are that? to change any that been Ivy the extent around and the vein, distribution outflows

Amy Scupham

Patrick, not sorry, the question. I I'm sure I'm understand

Patrick Davitt

in distribution year. change Ivy in the earlier The leadership

on Just led outflows to increased curious side? the that's institutional if

Philip James Sanders

Yes, this Phil. is

know, departures you early several key they had and As year the in we related. were

manager we've fourth last touched also we've several and the primarily departures. quarters – or I sales we of certainly help these into the of institutional those that had reinforce for to the But So, going headwinds and experience some doesn't on, been portfolio battling to quarter the we're leadership think side related they're aftereffects that on matter.

And portfolio hard of So, bulk but there in we can as what impact in quarter flows, we're is sometimes that spot we institutional and the can said good reasons exactly will of the an our our management it's change a with enter can a we Hopefully, leadership. teams, earlier, control. as more controlling we're be associate move focused any But have are, distribution on linkage in the or terms in management the portfolio where pretty channel then of leadership personnel. to XXXX, effective forward. why especially fourth direct on I

of we a improved we've XXXX. out good team And given performance, job As Amy's we're – now. mentioned, more optimistic that done I enter the building as

Patrick Davitt

Thank you.

Operator

Bill question Thank Katz you. And Citigroup. comes from with the next

William Katz

much. Okay. Thanks very

confirm Just something. wanted to

you're that cost mentioned with savings had your into next pace You year. on

savings that year. I mentioned think you identified also of a into you've end the the more bit

upside? of off apples-to-apples there (XX:XX). sort end that you. Just of get for I'm the is here to the on next working year So sure could what rates broader number is is year? maybe that a Thank set sort – make trying you or is, number, Or level question net incremental

Benjamin R. Clouse

continue the expect we that Bill, in to million pre-tax earnings. range million be impact $XX to to $XX to net

William Katz

for of Broader more apologize other who broker-dealer hiring on talk the versus could wasn't follow? apologize, you're on retail it those you but side, a distribution I more trends me between about exploring Okay. may the And to opportunity to that mentioned market based maybe commentary. the outs wasn't bit pricing Is It – cuts asset I had two seeing incremental who a on just your think been I ins product attrition regrettable that on side clear question, or then that you you're of model, parts and pricing. sort have you're transfer the or leaving. share that that, one. of the little that

Shawn M. Mihal

I can numbers. and I part attrition So, the some count first take to had is do take Shawn, the this question which can – of that of head the with broker-dealer

numbers the of reported of are were uptick quarter. the during advisors It a bit, organization. yes, what had bringing couple carefully that little departure those for groups productivity departed did we've in a few So, a past we with larger third watching the quarters very and

some So, uptick our did experience advisors. of productivity we bring to loss average

productivity organization have for the was So, rolling that year-to-date. the average on basis, $XXX,XXX XX-month departed a on their advisors

had we the to our of that that of productivity see are lower-producing overall into to advisors some large alignment with that with levels fall under see we've did about the that last that minimum regard So, advisors groups quarter that before, the in continuing bucket we $XXX,XXX. uptick departure from talked increases was to production But the to three lost departed quarter this organization. the

move we're on focusing with throughout advisors focus the higher-performing and that as to broker-dealer, XXXX. efforts we continuing and continuing work of and respect advisors retain this to the to efforts to with So, course year recruiting on

Philip James Sanders

but necessary indicated this adjustments we the was see exactly think understood we July maintain strategies of Phil. pricing report we to these we moment. as indicated in in at just I I'm in the review what respect not and introduced to order Bill, question, with would is across XX, have it your of But this about And obviously nothing I XX second that sure the all competitiveness. we to adjustments continue make funds to effective part pricing periodically but if past is pricing,

William Katz

Okay. Thank you.

Operator

Thank you. And Markets. the next with question RBC Capital Kenneth comes from Lee

Kenneth S. Lee

Hi. Thanks my for taking question.

the would impacted Project how see spend. my you it's technology it early, maybe realize maybe does still which on but sharpen understanding? clarify I any And E Thanks. could follow-up likely initiative? previous be a and way areas incremental just Just differ from the

Benjamin R. Clouse

expect still start. of in Shawn here Shawn, can previously Ben, think that couple I and to working And help might selection. we occur out. months. you is next I the that toward me vendor indicated has This We're

associated firm implementation be costs our of and certainly we'll some have a what up, will that lot with idea of we plan the As that. and better transition

analysis regard that. although don't in Shawn, and are have in And know, efficient to to As yet. over or some we I is I to some we of we data more systems in to the be more what today dated have my be technology expect And the replace directionally, to indicated broker-dealer, expect regard cite we incremental would to you continuing know other some comments, But only using as that that incurred longer The implementation we to add we in shape to years. then, range that expect to as work. area, I that to move changes don't size that? analytics noteworthy run moderate we solutions. similar would particular modern of cost into don't some work anticipate item next to that rate I we're I the distribution if couple do the with exactly think term, I will what a want

Shawn M. Mihal

In vendor the we've really larger administration touched a the as the regard, and focused coming data. make the so is work just we integration initiative that Yeah, working is of program. well Ben couple to quarters selections with last here on in That final some that to business what which on months. commented we're on we're – obviously looking over a on continuing, been regard

a But our that that and is to really of at and really to through being processes advisors place the of efficient build consolidation we'll focused incremental the how here the through data Project really improvements way business we more would that as I make that enhancing enhancing advisors our initiatives our processes technology overall that connects So, – basis. and the advisors on as for the to look custodians. number business aggregation with that we're use. technology an efforts to for and E data took well way to our efforts and advisors transmit on continue that us to respect connect business ongoing and clients interface as underlying this

we're those all of we launching as used once, is we But legacy at this to that, down. repositories as on, advisors. and enhance not is continuing to the the technology we data we some what So commented the that platforms instead our do Ben and have will offerings be something in consolidate that that past we've but discontinuing those

applications. while that is putting would expectation of way legacy investments So some in we're technology, be into address finding we're efficiencies the also the the we that,

Kenneth S. Lee

And you. Great. product Thank development updates on more what's Okay. follow-up. pipeline? just new Any one the in

Philip James Sanders

new important to would think proper to I in likely the that lot products, that on products seed as But of I just important mention Yeah, vehicles new report the obviously something just of might maybe and existing our that exploring more us strategies. here, gives products, new I core that anything nothing consistent and speaking or organically say past. maybe that to not side, distribution would are probably area short possibly in – focused balance are acquisition opportunities. that. be new product be importantly sure the or we competencies respect. have potentially versions I products, in opportunities she's also international But think updates. mention like specific about with with probably Amy development that what working as active I'm than and do including or more on our our something might taken either right I of concentrated through They're in existing is share as full complementary that's time. this equally in strength core that, and sheet would a we higher but let an moment of no haven't which making using advantage we respect likely capital of perhaps at –

Amy Scupham

especially consuming delivery on very, channel. currently working clients I in Yeah, equity broker-dealer in that very be a relates that strategies long-only so will we're model of series to portfolios think our launching it the beneficial channel way as are that currently

defined the broaden now to trust in available contributions the years a money. of And review investment available vehicle or a the out qualified be had for adding five we've certain period a four a line strategies for done we'll a that, of for daily trust, qualified of subset product collective defined we've is valued order our market. contribution to in that and and to the to which addition In products

Kenneth S. Lee

Okay. helpful. Very Thank you.

Operator

Thank you. Blair. comes And Chris William next the with Shutler from question

Chris Charles Shutler

Hey. morning. Good

Just quick one one.

million that cost savings You into was planning talked run rate going much million for XXXX. of million $XX of the $XX about for to the that to How QX? $XX million XXXX you're $XX in

Benjamin R. Clouse

in don't million number but $X in here have achieved was rate. be will exact Chris, of that an Most the of fourth less quarter. that run or the you, I for

Chris Charles Shutler

a lot. Thanks Okay.

Operator

will And you. this Thank morning, from the last come with question Sykes Mac Gabelli.

Macrae Sykes

Good morning, everyone.

we should Given the level year-over-year, or the in levels kind activity? nice in increase of expect change we should of think cash repurchase any

Philip James Sanders

been the we've Obviously, ago Mac. think we we've be repurchase and the I allocation think. capital with working is active or outlined This active the Phil. market and move year in Hey, as and and program we've Look, board in made not in going work of But things looks been pretty I about forward, a something that forward. share address board will some in approval program whether ongoing a on. conjunction terms – how of we'll that's pretty this with conjunction

or current term shares. that respect say and repurchasing company balance have in spending situation is, grow nice not thing longer incremental with also capital active to with I'd idea strength the exclusive we liquidity, the acquisitions of being market our sheet really about is mutually to the the – to Although our

So, through we're flexibility. challenging financial that to have times, these fortunate

Macrae Sykes

Thank you.

Operator

Sanders I any this at comments. the would time, And you. to for to Phil return closing like conference Thank

Philip James Sanders

Okay. you. Thank

we us for And to for to Thank attention. say look and you. everybody time joining months. All appreciate to you thanks and in want up few forward Just catching a your right.

Operator

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

now your You disconnect may lines.