Waddell & Reed Financial (WDR)

Mike Daley VP, Investor Relations
Phil Sanders Chief Executive Officer
Ben Clouse Chief Financial Officer
Brent Bloss Chief Operating Officer
Dan Hanson Chief Information Officer
Shawn Mihal President of Retail Wealth Management Business, Waddell & Reed, Inc.
Amy Scupham President of Ivy Distributors, Inc.
Dan Fannon Jefferies & Company
Sameer Murukutla Bank of America Merrill Lynch
Bill Katz Citi
Glenn Schorr Evercore ISI
Robert Lee KBW
Kenneth Lee RBC Capital Markets
Patrick Davitt Autonomous Research
Call transcript
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Good morning and welcome to the Waddell & Reed Financial Incorporated Fourth Quarter 2019 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 Mike Daley, Vice President Investor Relations. ahead. go Please

Mike Daley

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

Joining Business Brent of today Ben me Mihal, Scupham, President Hanson, call President Sanders, Retail Shawn Reed on CEO; Wealth Inc.; our our Amy Management our are CIO; Inc. Clouse, & our Ivy Bloss, Phil CFO; Distributors, of COO; Waddell Dan our our and

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

filings While on implied we materially available actual reasonable number in believe these with or statements public that could to due to to the information be based factors SEC. differ results expressed reference of currently that those a from is we us our

any financial Materials contains to to and to our the We relevant call, copy Relations section non-GAAP duty that GAAP website press supplemental on including have release of at assume these measures no forward-looking ir.waddell.com. of statements. been a posted of schedules the reconciliations Investor and description update the today's

the now over to turn call would I to Phil. like

Phil Sanders

per valuation quarter. On Thanks impairment income $XX share included last or Mike. us. per $X.XX in for Thanks quarter, $X.XX of fourth compared for charge, asset of the charge adjusted an to share per the total million and pension share a million share. reported we non-cash $XX Good favorably which severance morning $X.XX adjusted or per expense Today, all income everybody. basis, net $X.XX net an joining

share and control flow during year transition model, business we have compared million as compared compared expense the continued share, income asset operating and XXXX, to to reduced impairment. strong lower to excluding full year. controllable million year $X.XX $XXX or expenses last during targeted X% to XX% our XXXX, demonstrate per operating we another Despite having prior adjusted we generated cash the income adjusted the an net $XXX net the was For XXXX, $X.XX per for

like As recap thinking we we've to from forward would come to briefly and year, I road we're XXXX wrap where ahead. how up look about the the upcoming and

aspects of necessary improvements the company these to were foundational our would on be set For the to the business. long were our all operational that changes outlook of was improve years, spent not what couple short time success. Understanding needed term up for a and calls for we have company past highlighting process, to this structural our term doing committed we sustainable for

resulting investment and time, our During manager, this our management our leadership, significant to management, ensure transformed accountability, a competitive in and distribution fully proprietary meaningful operations clear and development, our culture continued of organizational in to efforts, streamlining lines broker people further our operations, dealer and savings. evolved advanced we cost investing resources through inclusion into agility wealth have diversity by added our structure independent talent

been have capital and exceptionally we while able sheet shareholders to dividends to maintaining Importantly, by of share do returning significant strong an repurchases. way and balance this

initiatives our reduce year in and better the lifting With million a position heavy sharpen of outstanding over much on in improvements vision. shares the alone, we foundational over returned to us, to past longer $XXX focus fact, have In now are support behind by our we shareholders XX%. our term growth and that

both with is management a evolved and model business somewhat in wealth an and asset has business. management unique Our our industry,

prospects. asset more an believe we opportunity of better in long a in this term a years. combined grow term with manager, should are manager transformation business stable our company. wealth management We result first real growth our model institutional long position business wealth the With Overtime, to a the represents for that in for with a time caliber operating now thriving

strategic several spanning products be key pricing, success. roof dislocations culture the a as across and advantage essential and effectively and our on we As wealth include organization, both overall finally that are organization, as to believe and asset competitive marketplace opportunities allocating initiatives, core through in our industries. businesses move agile future analytics the acquisition on metrics, in ability and of strategic as These technology forward our the and leverage a management management awareness a enterprise investment capital will we focus enablers, to continued focused this adding internal and asset sharpening performance more we the processes taking strong brand potential well path, on and

acknowledge this an is undertaking. easy We not

headwinds. asset asset manager managers' heritage wealth to Nevertheless, are and be we that include that dynamics we and performance factors, active flow industry now These in can headwinds continue attributed products which understand of our managers several equity facing. the to also all ahead. mix, company proprietary overcome stronger believe are we on to We challenges the as own look mindset fight and our much a to with position growth our hard Bottom our amidst and opportunities a to about is and excited and dedication backdrop. a challenging company industry line employees these deal transitioning we work and for our capitalizing repositioning the are about the of

in back was approaching XXXX, yield years in the since decade. XXXX XXXX. XX%, before well, broadly, one last year it The Index year. Bonds as of finished we near the lows on markets to ended an treasury best looking XXX as time stocks the the exceptional pushing for around Now rally world the up the XX-year year the on performance financial S&P turned X% down as its all marking over strongest note

and equity two the in improving of X gains XXXX, by continued in market have part and Together, stocks economic rate interest Reserve, reflecting market unemployment declined, cuts strong uncertainties. global low Notwithstanding by January XXXX the yields through the has consumer and their confidence Federal in healthy into bond and increased supported than outlook late volatility growth simultaneous saw early progress The levels. backdrop bonds U.S. was talks, trade China more market uptrend decades. largest

heavily products at income risk fixed weighted XXXX of markets, the flows Despite active the somewhat industry expense cautious remain investors products strong as across towards the equity averse. throughout were and

us proved Given our the asset mix, throughout year. for this challenging especially backdrop

compared sales to down enter. As significantly prior were the

for addition, equity core slightly as from had continued notably flows. and was product year. outsized compared has varying opportunities XXXX. year performance total, perspective of redemptions which by on third to flow was top This strategies, in XXXX In cap we recognized sustainable are an renewed the trend encouraged In during challenged our into year-over-year growth, consecutive interest and the international and impact by several a in improved fund the a our large

emerging bond our well core strategies. As as and market equity

investment continues cap has product garner performance generated net past our interest. in strategy flows and our distribution, trends year product flow industry better for also positive we performance execution to more and this the but diversified has mid Certainly, highlight the profile. In need have product addition, our in a flow of of The overall opportunities benefits set and year. strong income been opportunity terms over potential

cyclical was market's shorter an which impact Investment into impacted quality the value, the by low and performance had stocks, term during quarter our rotation performance. fourth outsized on

the top basis. an in X-year continued performance trailing their consistent on year trajectory respective X to of half and performance long-term the ranked improvement measured in the and was percentage X X Morningstar by weighted as show equal the assets universes. of However,

goal our As improvements technology made have performance the with staff, enhancing like detail from in reflect number the on delivering to investments of in in our a our more shareholders, we now noted all years a we payoff portfolio progress cover little in quarters, initiatives, I'd management communities. a risk clients, employees, we term serving have into of and management recent made significant a XXXX recent advisors capabilities. and believe and best research longer we teams,

to made our investments, And pleased with and focus Officer investment the with to processes. We notable IT already key the Investment of Hanson internally business, add a as improved performance we on during Within asset and partners. impact year. add experience Dan both a resources externally has Chief management Dan continue were

industry We the meaningful work made strengthen progress have our with we and also believe key consultants, during to year. relationships

and to offering diversifying vehicles existing seven strategies committed such introduced appropriate, that we expanding remain where strategy We including offering XXXX. our model clients product appealing, delivery strategies our and as of find additional as in

industry, to to pricing ensure structure ongoing platform our our competitive. narrow to are pricing product continue we review and across made our As competition in continues we

of one of our our just by Pricing assets components in the product currently investment the the on caliber servicing win institutional product in XX% and fees either While are demonstrate We is model average. industry know at build capabilities future competitors. our below more and of opportunities marketplace. or sales to to have we

progress model. a to look management at our build to technology, financial in to our proposition and Taking continue on business, service we leading wealth advisors through enhancements value products a

and advisors licensed advisor has network over year-end. X,XXX largely with stabilized at Our associates

place. have recruiting have boosted an efforts our recruiting expanded in and national We nationally team

teams within those relationships are management ultimately comprehensive international right business closely a attract is field with products. based offering, with leaders, tenet working the to the to and of fee having core financial network. and wealth the on add advisors recruiting experienced A of transformation wealth recruiting management Our firms external advisors product specifically

payments. from different nine XXX offer funds advisors other securities. ETF of This financial different access also a to now X,XXX mutual nearly and includes We universe products, wide general over funds advisory offering our

firm's new direct to platform, be our all On connectivity to provides technology partners. existing the to the financial several continues of WaddellONE advisors technology front centralized available technology associates, advisor This of adoption and strong. platform

We're data components models. and our also enhanced of other processing analytics, key simplified improved progressing administration business including on the business reporting, program,

launch repository, allows on the force across Specifically, are access in last month, to we initiated that organizational a more seamless sales From a allowing manner standpoint, a integrated creating and effective an new broader by conduct a business of to core data reports our structure business. focusing enterprise data competencies. us we pilot

To and and shorten of capabilities technology and for not area driven only data investment our our to but will analytics, continued important well directed the essential We technology effectively in insights leveraging towards also are efforts as remain marketplace. of more in decision culture as long-term to that agility enhance the and because time, making emphasis organizational allowing an us compete improve, company. end, success

conductivity, know will further increase we key and a building a advance our culture to by blocks people initiatives. development, initiatives. collaboration to basic and efficiency with strategic continue are strong we developing We in our through us on investing our and while efforts forward push these Similarly, culture management leadership will and allow growth diversity on talent inclusion focus to

and building headquarters details more headquarters on Then share progressive strategic the the of heart just while we'll components a moment. one in accommodate initiatives, our city. into to growth search for workforce financial by We bringing Missouri. our distinctive A new building the a our and structure consolidate downtown in an of innovative, lease City, the new signing the will also of a announced location Kansas combination sustainably of designed building new our headquarters heart

I'll XXXX discuss it the over to to now full quarterly turn Ben? and Ben results. year financial

Ben Clouse

Thank good you, morning and Phil, everyone.

Phil in was and charge reported a our income of charge corporate asset elimination an annual million control to the on revaluation last pension liability, gains per to million The and share owned unrealized noted, basis. related due per million operations. of internal primarily $X.XX related severance expense expenses million quarter million outsourcing buildings portfolio. or continued impairment net or aviation related adjusted $X.XX our operations, to As investment $XX the share the $XX.X we non-cash plan of adjusted the $X.XX included we compared per $X.XX the and This in transfer share. agency non-cash The to reported adjusted favorably to quarter, of and our $XX.X $X.X the $XX.X

to net compared The and and brokerage. to periods the year. from and increase covering with will of conclude prior partially both I'll offset start gains summary away Wealth growth the more profile asset headquarters assets administration financial under the our of and of by compared in ongoing expense compared a strong followed at XX.X quarter our detail, quarter operating to our migration I our new billion to advisory guidance by review prior ended market increased XXXX was the prior in for due results. move. XX% X% the management overall assets, components by

wealth continue the quarter we products, see result our across Ivy under investment while XX.X billion, to a newest guided the continues is from an the which strategies, to the including map see our advisory XXXX, We Net of products, assets billion prior average direct ended XX.X stronger consistent compared quarter, assets to of advisory as from X% move management year demand for in advisory, asset down adoption client products. in under to new and as momentum business. were management management our X%. our at growth, with continue grew advisory increase long-term brokerage assets in to expectations

outflows due have were most with elevated last mentioned. activity redemption In were sales the quarter, billion $XXX our significant and notably to included unaffiliated redemptions Within channel, in firm. related total both where continued channel, to quarter two to million year institutional although relationship clients the down the net compared of both Phil X.X prior as the

At the affiliated Ivy helped business management and redemption performance net of for current net and elevated same year levels distribution periods, the prior from across prior redemption sales investments improved to AUM wealth experienced outflows slightly adjustments compared stronger within our with and have similar fee network. being ago. time, rates both outflows quarter with a quarter consistent periods, our rates attention across as

slightly wealth U&D to were to by decreased to results. rate basis was stronger administration was higher lower investment Turning lower increased revenues XX.X higher were for effective management U&D revenues fee rate. increased waivers, flat. advisory effective fees, assets the offset while waiver and than expenses quarter, and shareholder Investment million were under management service investment management quarter. points prior due in quarter financial revenue fee Total prior the by fees The primarily as in fee to fund now more the offset assets higher compared our to management $XXX due lower due a partially the manager. under fees average

to a Operating the XXXX, We $XX.X to benefits elimination severance primarily to the decrease lower due the from the the the due transfer also well full compensation of and expense we're from Adjusting of fourth X% costs prior generated and decreased The $X.X included was which in full operations. XXXX. in move outsourcing. agency lower for the owned items related the our we included the asset completed late for the in headquarters primarily expenses selling targeted headcount our $X year average process X.X fee as related million in and buildings, made transfer quarter revenue quarter, of of charge, our our internal down assets billion we million quarter those of impairment as severance operation. cuts operating with impact several million expenses year transition from as in to agency aviation connection which

higher by occupancy in million impairment, after the were compensation, spending. Technology to $XXX.X from and totaled But offset estate which adjusting expenses the costs field technology, of comprised I million Controllable project are for G&A, and compensation than the asset occupancy quarter. expenses marketing, and due we're compared related $XXX.X last to mentioned lower more model. costs lower transition the ongoing real G&A

expenses million capitalized due fully to development depreciated depreciation lower were $X.X assets. Additionally,

payments ultimate in final elections, this our we cash distribution will plan later know, largely down be the process you in distribution and winding are finalized of the year. pension of participant As also on and XXXX. The expect will middle dependent be the which

year. the invest continued We've key Full to on to last in totaled and reducing year improved resources. targeted continuing decreased management and asset like investment pleased the been progress million, compared controllable X% while excluding expenses, expenses areas impairment technology $XXX with

technology As previously expense mentioned, we will we've headwinds continued while face investments. from

to to normal controllable expect efficiencies to the be to be year expect as lower We to our full range real addition estate in costs million we of the able XXXX transition, from $XXX offset In $XXX those expenses targeted currently through as field occupancy of other well for XXXX. inflation, in million.

outsourcing, for Given to also changes business, more our provide the structural XXXX. wanted some transfer detailed guidance the line of item especially in agency I

and benefits XXXX. of which flat million compensation is $XXX in the million, range with We costs $XXX expect to

savings. and will the by in transfer merit hiring offset outsourcing be key agency severance, Excluding areas as

to million expect the costs We to in and million. $XX $XX costs range $XX G&A million of technology expect around be

real to Occupancy will the also and as decrease advertising be of offices meaningfully $XX with XXXX, to in-line and we a million, field marketing XXXX. continue range $XX million to end transition to of will estate

arrange of continue as again to the arrangements. technologies meaningfully decrease we million million depreciation our $XX expect towards to year, shift to full costs we to Additionally, for $XX Software-as-a-Service

$X.X rate million. items which tax was the discrete included quarter, income effective of The for XX.X%

slightly ended rate with discrete the the impact investments and cash million. in We to to any XX%, XXXX the a non-recurring tax $XXX year additional of of range expect of or including increase We to XX% items.

of repurchase cash paid by strong During continued $XXX our million we $XX flow in million XXXX, and supported stock dividends generation.

include of As a previously and indicated, our growth. which intend the fill we outlined, strike to utilization capital continued cash balance and shareholders inorganic of enablers and funding to opportunities strong in between to potentially return organic flow strategic drive

our components. and of financial like I'd estimated the some headquarters relocation corporate planned cover details on the Finally, to

goal meets talent foremost future culture. to and that let to workforce and reiterate enables of continue evolution retain needs our attract that the our First, strategy of our a environment growth our accelerate is me and workplace the us top

and the connection we receive We local be $XX estimated benefits P&L. abatements move expense move, completion of compensation million, a and expect both in at during property the as presented earnings reduction our In XXXX. which will G&A and building with the in tax expect tax and lines to

In $XX compensation and These including be tax and employment state various million addition, time taxes. subjects in to incentives both savings be receive benefits are future of targets. expect over of and to and earned certain obligations, income of satisfaction we periods will realized compensation

the expect current term an lease headquarters over other the After do rate. accounting increase impacts our new terms run we various estimated for our compared the costs incentives, in move, related as lease and to to not

questions. open now would to for like the call Operator, we


will first Dan now with Instructions] comes session. ahead. go We Fannon question Jefferies Please Company. from & [Operator begin the Our question-and-answer

Dan Fannon

us what to backdrops ranges? give hit revenue on kind could XX to XX detailed those occupancy, in to the the no-change then was maybe sense forecasting? just run clarify, that XXXX of for you I rate, the the next that are appreciate is expense the based on assuming And a million to guidance you hoping So, year. of you're

Ben Clouse

We but could expectations I as there. significant again, at pricing have that more well and Ben. It's dependent looking revenue. competitively what Phil that's occurs no be any we'll with highly particular could provide of we ensure continue there. Obviously, guidance, but Dan. particular there. Sure, looking or Amy to upon the are at changes to significant don't start change market we're positioned,

those our the we an the In an field which transition, to well are loaded in as we this so of caveat being year. estate reduction XXXX. is with there as conclude advisors them facility, the rate to leased There run transition for those back as are many of completed real our impact by we on XXXX, that their leases space, to that's regard exiting incremental many one accurate those own will largely or being finding as

be pieces all there, an Think rate in got XX. but… impact there'll run I the So,

Dan Fannon

highlighted Okay. guess on Yes, remarks helpful. just the the your in that's being, And the changes made. then, pricing the for I redemptions prepared pricing, you've and part of clarification of just think slowing that of you've I some

a about behavior? on change a think how we using basis, more go-forward in think you should price I as of means So,

Phil Sanders

start a is high can. I and Phil. she at level This jump might wants if in, Amy to

that I think, I of the ongoing outlined and which ensuring more with in now, review more comprehensive key competitive we was on look are I strategies think that strategies. through it but made indicated we an like significant and that likely of type some thing. a kind of cycling XX be review also it's past kind we're We as a adjustments, process did to awhile and back, believe forward, we we've across

our going more to there basis, off good a in can this and think of ongoing be It'll moving you is you you're an industry, type adjustments as be know, deals go. like, make target one of isn't forward. few but a So, I it'll in our a then


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

Sameer Murukutla

This is for on actually Murukutla Michael. for Thanks Sameer the taking question.

addition being advisor I know saw inflection call, that maybe you an I point. last talked quick advisors. of And about a one, an there XXXX Just in the accounts, in was five January, just

Is XQ can this inflection detail, down the or that provide to something will as happen? be just on something some you that's going happening later line? in you more So when think

Shawn Mihal

building go the we're looking over This certainly headcounts fill is the I'll and and and the to question. and Shawn advisor at Yes, backdrop XXXX. and XXXX really XXXX ahead that wealth much course spend didn't watch We time of the model. continuing really advisor business heading support of continued focused into we from our our efforts out a front and on recruiting inside really management technology on XXXX.

during the call. the All value the comments of proposition things were discussed on that

building those recruiting country focused recruiting XXXX, those with out directors. Through departments supporting specialists, recruiting the adding we efforts with and our directors recruiting across really on

into So, advisors with as we competitive XXXX recruiting an as we activities market well national & which for increasing, on Waddell we've from comprehensive packages, that through feel recruiting XXXX, we're Reed. of attracting that turn through a putting more as to the emphasis are the very created

We with we increasing the believe XXXX in with happening, start shifts to will that some see headcount.

in So, to we feel continuing work see with and will moving the there five we month there. pipeline. to those the confident growth recruiting announce January, advisors efforts forward, we're did expectations we of recruiting our continue We that add -- did


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

Bill Katz

to apologize, the What's phase back Just timeline I is. to reiterate opportunity, in please the headquarter that coming component savings? bigger but those missed the two question I pieces, the relocation

Ben Clouse

asking if wrong. I'm think the I Bill, you're So, Correct about incentive me, component.

Bill Katz

to moving Well, headquarters, the you're right. out get going you've savings laid by some

pieces. I apologize. just think component in abatement you that's GA. the going up to tax I missed that said two show some I comp and

just be get that. I frame? and the that with XXXX? period numbers again So Was in ratable that something to want associated those phase Would overtime

Ben Clouse

a We conjunction is begin on and results tax the that and lease beliefs here two facility. In related there the term well of local million. There's components, not line. our all incentive other over periods our Both impacting which in and different XXXX. costs impacts various as expect comment, of that's is the time a of take this which state incentives we opposition new Well, we account, property span those tax $XX run to do of million, increase And earnings and terms our Bill. at move. in in are abatement, lease estimate in would $XX of incentive with Sure. compared there move once to into the as our rate term my an those the repeat over current

Bill Katz

question, look sort of growth little of about ratio on flows? increase financial you talk and And the how a give now the Can on you update to, as see picture in us wealth in January sort way business payout the so speaking can management advisors bit forth. migrating? bigger Maybe the you another one, any an

Shawn Mihal

now this Yes, think ratio, Shawn, asking the just is I payout you're to I what is want advisor clarify.

Bill Katz

On correct. Yes, financial channel?

Shawn Mihal


advisor various made ranges, advisor for at XX%. teaming with payout estate, to advisors XXXX we with changes We've has which to we some the the currently, overall both which XXXX. seen going advisors So, increase payout average grid impact real moving arrangements, advisor existing the to from our the tops different that out grid

the we to think continue along with modest I changes, something up teaming range. in could an that watch. to average certain payout we that's certainly to We that XX% we levelized teaming arrangements, aspects, with extent, advisor payout a range increase to although, and in saw those with XX% advisor some So, see some think

Amy Scupham

around January improvement quarter-over-quarter same the slight XQ at have net you answer overall, seen And sales That like to a in continuing uptick. this question right slight your you XQ, a When in flows January then rate I'll Amy. being Bill, as with we said, redemptions as look the January. is from are on flows.

we're I an pipeline. think seeing positive on what improving a note, is

whether none consultant sentiments and opportunity that industry throughout So, something came that we we large overseas of or fruition, XXXX, had in, as multiple nice is a certainly or final is which getting thing. a presentation to look key of the start partners opportunities, turn it's distribution but sort

plus large a cap we're core as improvement in categories So, space. our core in and such seeing there's nice category and where securing growth flow large bond opportunity interest the pickup a or


Glenn The with next Evercore ISI. question is from Schorr

Glenn Schorr

models strategies other to in produce are I'm which are not the there channel? fees funds, seven on your over the I'm and underlying through if XXXX. in what curious curious flows to experience time for of existing as on sure motion relative the on but SMEs in the comments 'XX, period retail and any delivered

Amy Scupham

opportunities distribution have The them conversations the we start phases have with couple point we're is or partners. Glenn, I of at We May getting so investment further the been what pipeline XXXX, in other of platform, they're Hi, small ready this recall on started to and able contract the those in a finals. to do startup to very whether located Amy. flows having far of in final phase go negotiation which

opportunity nice increased space. some seeing having we're in So, and particularly conversations, our RIA

Do So more there's this yes, in more at. time. up discussions have always then model starting them And at are we're a to in we come couple market, in appropriate the as or we at we looking look delivery on that. available SME is general, the strategies? So

Glenn Schorr

curious in your I'm prepared And Okay. remarks.

allocation. what could and in comment seen type the that We've You things wealth industry. wealth Or the management management else augment theoretically on the I'm grow a deals of had channel? curious, are RIA across those some space, capital fit?

Ben Clouse

in looking going and space keen that's escalations Hi, are that of certainly the price observers there. Glenn, We're multiple and Ben. we it's on

driving business wealth As management there. about really and we think M&A our scale. opportunities It's about

we We have scale grid the today. infrastructure do larger the and we're on have have the technology the to and support than platform believe we building much we

And looking we're larger today. it but is become in to so than business space, really certainly strategy again, is to scale that up our that


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

Robert Lee

you've management. target. kind you've the capital on million original XXX -- through one first of the Phil, Maybe worked

like and quarter X You said it that ago looks you that. to had this actually quarters exactly how ago long exceeded X

XXX% should we of we use kind of it think being share thinking So it of of? you're we forward? purchase and there of target how of think should another how kind Is should be income? net dollar Or So of about? thinking a returning capital as going

Phil Sanders

and is Well, in motion potential differentiator respect here. of in I the our lot strength dislocations things with a how balance definitely sheet opportunities and to think a key this industry

said in our we've like that well, can opportunities the feel in repurchasing active these that that words, are exclusive. is be way. active enjoy. opportunities not So think something be also in we past, other In I I flexibility but I come expect, we mutually shares potential And

I has our our Ben grow. really think highlighted cash past in balance see the not intention that to is

be we So the pending that anticipate likely in bit real but price something we're way. find to our and really pretty pretty attractive come little behavior, the market, that active we've more on on in a purchase obviously been investment so I to opportunities our share opportunities, changes persistent aggressive extent forth, don't unique and transformational and depending the any don't significant

Ben Clouse

XX.X it's for Ben. little XX just other said, in might third little We be we'll context. in to just think opportunistic factor spent the to One buybacks relatively bit a and versus that. Phil over with I I continue quarter on bear consistent but income, net so million flow quarter a referenced really as there. add have a as Robert, significant and differences between cash flow us flexibility my some on in free basis we even net said about allows in cash which more mind is I it that, well, do we're and income as you comments, so thinking million

Robert Lee

couldn't the what just as but just for frankly, G&A fast then possible mean I refresh, were be if then comp And it detailed up, quite follow that write guidance maybe G&A and appreciate that but Sure. Ben, would a comments appreciate expense? you the your expense

Ben Clouse

be would to. happy I Sure.

flat million XXX, is approximately, down technology XX range expected we at to down compensation XXX XX XX. come guidance's to range to a a XX, to generally to our consistent, which G&A a a of to XX a XX, of range to about excluding be I XXXX, for to we and expect the X expect and benefits depreciation and So believe occupancy come severance, marketing XX, to range then significantly to XX


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

Kenneth Lee

Just focus it's wealth on of and It the this restructuring at sounds point like one the sounds more curious profitability? you management just is done terms it now growth lifting achieving this in prepared your it's But standalone at business, a mentioned of on business a lot remarks in point that. opportunities. heavy of

Ben Clouse

We add. number anything, we maybe our don't modified I'll as disclosures. the do operating external segment have let are add the And Kenneth, certainly evolutions to it's of Currently, we wanted Ben. we've Shawn done of you way disclosures business. a

future. we'll point to get beyond --beyond U&D the disclose don't But somewhere our think our we of detail breakdown. today that likely in that level I

Kenneth Lee

just the And whether portion also you just the if investments quantify within upon Got this in that expense may, are or and expected terms two I just over much how a technology. ongoing continued the a investments go needed sense us one of the item of line the evolution a you. touched is whether of the is Thanks. years to give one of cost. roughly within trajectory -- Understood. or follow-up Could technology you whether, next

Ben Clouse

really with help to and technology transitions. those are Those in resourcing it G&A through concentrated us of really most additional G&A Sure. through in being

talked our and about that for the best We during comments and we have transition deliver some best class plans that technology you we've trying and our us on focused platform most management talk continuing experience specific XXXX processing efficient we're ongoing very to can. advisors in publicly, through to to have wealth experience as the about be to be heard that

of continue firmed dollar but Beyond generic that, have we're little I and of of haven't piece bit is it just a XXXX, beyond saying the or component a ranges more or up would significant plans significant technology investment will we're expect investment doing to be amounts that leave say be I'll certainly business. particular be it there. continue making to forward, think -- it and in I going we'll a I by the going what to will that our probably strategy to We


ahead. The is go from Please Research. Autonomous Patrick next with question Davitt

Patrick Davitt

square you that. no increase don't all over on cost occupancy you is abatements the to When in just the guidance. term, lease offset in the there an Just expect be HQ I operating follow-up have margin? increase say a being increase that is is the the Or meaning additive by will actually abatements? the that the straight trying to

Ben Clouse

are gets that are a abatements run rate things going described. into an there on we some facility, we focused consistent facility couple a component a important and that, facilities or us few it factor we a may operationally group will as move that lead to of that's Patrick, like efficient our are to aspects I on is significantly One pieces of a of and there where Well, new modeling efficiency be older there, versus into those as more today. factored certainly on are design other those be that is of

constraints our Second, and anybody again overcome that on will have environment facility significantly it be us our through new collaboration drive an retain efficient layout all than what really and and you've and to talent heard do, create we and going allow is communication. actual in today. and that can us older our better helps facility and We, an attract say, space like helps some utilization course, of as will the forward of agility strategy of more

just have agent last reduction And our related we then a employee outsourcing. piece one count, would had to be, transfer we lower will XX%-ish head

on will physically than we this have have we fewer employees historically So campus. here had

incentive call of the kind that of factors they component, XXXX where today. our them are there versus will in -- be to number I efficiency addition in those state So significantly are a different

Patrick Davitt


absolute the will about the up, not? but fair offsets. Is go occupancy way So it that there's all or think cost then these to probably

Ben Clouse

the but close. first agree kind that's in all weighing part absolute, are about that wouldn't of I there think things with I math. those together the

Patrick Davitt

you any XQ? Okay. are And known in quickly, then last like out the called there redemptions couple

Amy Scupham

in comment say sales made, QX. from that environment would versus fourth from, and an are just I the flat redemptions, previous up, a I creating get up No, January January on there's improved clarification are no for in reductions net which quarter, sales is further to

to wanted redemption we And any make just no large then clarification. have that notifications I coming. So of


follow-up is Merrill from Please Bank Instructions] [Operator next ahead. Michael of a Carrier go with America question Lynch. The

Sameer Murukutla

just the Sameer, discretionary to to it's Hey, I back come again. want expense guide.

if Given expected. the takes discretionary flex built kind came the on that worse? the the a XQ Can just some environment you expenses better for the turn in color of as into than give

Ben Clouse

make base, flexibility move and our to of some directly that would expense have significant to movement. are Sure. things course, levels. and certainly in asset and had cognizant have would We we relation a respond of in that do our that market also We if some do we and when

earlier, that, that for we line are we to continue will said very that be investing the can drivers savings we and I ensuring that of as are some to those long we focused the believe that growth bottom things to term. as efficiently addition continuing we we're on when ensure operating also taking to in In as can, but

us I short see the believe in overreact You -- term. won't

long-term that. very I Company a if our our as think taking to we operations cost base and are we definitely about to are view We don't and add there. know what of want doing you

Okay, thank you.


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

Bill Katz

extra Okay. coming same Thanks to and taking keep the to the questions back for topic. sorry

you XXXX. to then, guidance So discussion. back to as that savings, guide a be XXXX XXXX -- for exiting to you'll get relative as are effective And gave year into they occupancy look they or you the apologize. you XXXX expense these out moment, think coming you platform compensation the savings I your you in just be are mentioned the there right-size When as on incremental about had as further for would effective this

Phil Sanders

we real complete complete in Hi, regard the won't vast, as vast XXX% majority to which but -- complete In transition, XXXX, be is our XXXX. in will Bill. be estate,

some realized will have XXXX. incremental in that will We be savings

that would line that's a there $X think year. range I or impact our in occupancy that million of in $X million

think there more impact on at to you obviously, There had regard the all; is In the the other your focused in asset headquarters. no were the impairment. -- we near-term on question, I

Aside the couple rate, from that, XXXX. believe will next post no years move we our again impact be in consistent run and overall there in is of

Bill Katz

questions. the thank Okay. last with and And me you one just one for taking all

month some January versus you bit would in How that. stack month. ago? seasonality I improvement You guess to up year mentioned little of a a there's

Amy Scupham

versus ago. slightly a but year a down, are sale are about January redemptions January equal year of to ago


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

Phil Sanders

Thanks up and appreciate Okay. We interest Thank to certainly catching your you with soon. you. everybody. forward look


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

You may now disconnect.