Waddell & Reed Financial (WDR)

Michael Daley VP, CAO, IR & Treasurer
Philip Sanders CEO & Director
Brent Bloss President
Benjamin Clouse Waddell & Reed Financial
Shawn Mihal President & Director
Amy Scupham SVP, Distribution
Daniel Hanson SVP & CIO
Glenn Schorr Evercore ISI
Daniel Fannon Jefferies
Patrick Davitt Autonomous Research
Michael Carrier Bank of America Merrill Lynch
Kenneth Lee RBC Capital Markets
Robert Lee KBW
William Katz Citigroup
Michael Cyprys Morgan Stanley
Call transcript
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Good morning, and welcome to the Waddell & Reed First Quarter 2020 Earnings Conference Call. [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. Please go ahead.

Michael Daley

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

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

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

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

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

Philip Sanders

Thanks, joining morning, and us. Mike. Good thanks for everyone,

are Before rapid XX% in fully to human world most the moment for U.S. March. consequences currently late the stock dropped global The want in the navigating. to dramatic may from has February of we totality several economic downturns I peak tragic COVID-XX one we more the in We approximately realize a trough of the get history. months. The into to address environment take detailed discussion, financial and the caused and extraordinary pandemic not markets

moved and to allowed record the their we to had maintaining activity stop a continuity about independent full a business downtime. recession. and late our where Amid our workforce isolate the economy with company negligible indexes and proactively businesses in respond and employees, that economic March, heading volatility, relatively highs a work. Global unprecedented market uncertainty crisis adapted implemented comprehensive financial XX domestic while citizens plan employees. plans days, to and from within strong stakeholders and world as Remarkably, protect and quickly, around live We to working communities our us countries global by effectively the advisers was implemented we remotely the XX% safety clients, of of the with a

our moment. and I'll let just Brent in highlights activities give response preparation of a

despite circumstances I remain think it's that the important we our strategic and long-term positioned well to challenges, execute to as on note here plan.

Our steady of businesses and expect. and maintain has response proactive continuity management management service allowed asset wealth our that clients to access and the need our and

and strong short, our focused growth with a this disruption are profile In while remaining long-term acute position. we maintain liquidity. on significant financial We managing global actively through competitive

In addition low portfolio, significant investment the and firm to a a high level with of the debt. of level cash operates reserves

additional while opportunities us nimble on exceptionally remain and to Periods of to accelerators generate dislocation a and controlling require to balance our strategies volatility expenses. our or respond. approach, allows sheet growth long-term focus Our strong execute may prepared retaining growth that continue we

as long-term full as transformation value our we an tradition the its As growth strong realize executional well drive caliber of approach, of at to continue to continue center business the remain of strategy tenants Ivy as management asset the such, our the our as and wealth institutional potential, manager. of

I'll to more to around the certain may a planning COVID-XX forever Brent Brent? and some continues our preparation, details a of change say let steadily relay to as response ahead the take plan it normal While the impact and for look moment society, to of our elements we world, we circumstances. the pandemic some pandemic. return

Brent Bloss

everyone. morning, good and Phil, Thanks,

required environment business all extraordinary continuity the of plans company. us noted, aspects Phil in to our implement As

us proactive our like the advisers, holistic to transitioning CDC recommendations stronger and a Importantly, on of and in safe with these strategic unique come focused this leading for of best times this early has enable us allow We environment in work-from-home throughout the out company. way a our all situation in have believe We this on been independent will authorities navigate practices benefit a been employees, current clients, approach local from lockstep as and and position process. shareholders to our approach stakeholders, overall and community. March started a to the possible in

services comprehensive are capability not the support remotely. all wealth investment investment of The operating continue a and efficiently components provide environment of distribution to team service our our and to shift management work-from-home has work. We and the altered or

collaboration practices, business all tools, on defined resources. travel quarter, to potential health measures clearly in process reentry for public advising a the approval safety the stood best of up to teams have productivity social business adopted remote and governmental any quickly training via assess protocols determine enterprise adopting and implementing an place ongoing business preparedness interim guidance continuity. we preventative committee with exposure, steering to meet access basis. worksite, meetings officials, on a to including limit developments offering Early actions restricting Consistent adopting an and to address These COVID-XX and personnel team requiring and take the distancing we tools to continue remote practices, and

our ensure efficiently and In capabilities addition, continued to we to educational confidentiality, have remote continue privacy our to are and no to cybersecurity workforce function practices we our compromises monitor, and monitoring there to system enhance requirements.

trading, The to Investment and was functions. transitioned team of seamlessly expect not reporting Management preparedness, Ivy as XXX% any remote working March XX. client our impact Given we investing, significant our or servicing do

of well. to team's that Our meeting investment a They and management active as setting strong remotely in company collaborative meet collaboration, with maintaining a heritage morning we've virtual been have their teams our spirit. a to virtual daily continue and conduct teams environment with while pleased transition

they throughout this are operations beat remote largely have and during distribution missed Our transition. the a year, workers not

have our the from business, and teams remain these insight majority distribution times, management, temporary our of marketing locations. delivering independent during connected management actively updates. investment are volatile wealth working advisers partnered ongoing clients to investment Our with Within

We to with and our are our communications model well navigate delivering additional as adviser help resources as by client-focused support independent advisers and service continuing these differentiated XXX demonstrating over times. regular unique

independent For work processing. temporary operations remote advisers, we assistance office for closures, delivered and business

In and CARES and industry addition, rolled blogs the practice and out around developments, we've webinars Act market development.

customizable we media furloughs financial supporting and employees commitment planning reduced layoffs, are hours. to e-mail or any respect resources offering such to also volatility. outreach not market our initiated as as as our and social client With messaging We well and client-focused have local community, for

their certain work we continuity continuity certain as schedule, to personnel our in support specific and fact, our to operations, spot implemented bonuses pay wealth all employees organizations and community. support temporary to have paid for regular In in practices we recoveries implemented plans, a our increased benefit on hourly both increase treatments designated management business COVID-XX-related intentionally the through COVID-XX May responses our our employees, help local based upon management our asset service client wage maintained for have increased philanthropic for

have our improve certainly ability continued employees, thing of summary, the responded There shareholders the these our do learnings challenges and communities. continuity helped circumstances. to advisers, to we clients, right extremely our going but In our these and has process proud for I'm along independent entire were confident company in our forward, way, the way local unprecedented are

Philip Sanders

Thanks, Brent.

our have teams tremendous Our have operate ensure done a work tremendous done to -- seamlessly. to continues business

it and turn management over to Let provide discuss asset businesses before to me our I results. management now of wealth a our financial few highlights Ben

model to a this significant a to With more with relationships research in enterprise have and shared the capable, highly change has This enterprise. platform asset services operations open the ensuring evolving by a the operating of functions solid across supported model both of is distinct architecture, recent years, groups. in the and from both manager enables -- in while wealth industry financially due have a a the the holistically while active we unique manager required we shared a amount time, combination client amount last services deeper and been fully reinvigorated of operations, platforms enterprise with enterprise-wide overall and leveraging recent future. fundamental short based in The environment X the foundation grow over business operational business

Having for a enables a asset broader opportunities. acquisition our of open over institutional distribution and Investments recruiting wealth well. adviser model management work architecture as Through enhanced fully and caliber and retention capabilities hard meaningfully time Ivy lot increased and for investment we've investment,

evidence seeing well most positions progress enterprise future. of feel our strategic for already of and the We position, and our robust strongly us the our people capital resilience the positioning, across in importantly, growth are that

X-year as respective improving funds the the measured by periods, of improvements pleased were percentage to assets, to and improved, trailing turning Now universes, the performance. X, small in measured half and see percentage slightly. across by records ranked X- trends Performance, the our declined as of investment X-year Morningstar while was X X-year their by of led performance performance mixed top mid-cap and franchises. in We as

key Broadly perform in delivering of than this speaking, group we have franchise benchmarks of see and performance better peer our volatility, relative strategies. during seen improved managers many active slightly period we our

X record for featured As creation top long-term our to years. as our a managed an been outperformed we actively example, fundamental quartile large-cap consecutive current delivered for environment approach. funds adding investment of the XX% results, see growth clients. by This track and active market category, U.S. And continued has as sustainable fund strategy in growth value fund benchmarks Ivy large-cap the a top opportunities for providing Barron's of

through success we insights We to many long-term our have focus through our delivering and cycles. clients market continue to fundamental on research as

industry prior money quarter shifted fixed to of income the sidelines, investors as the amounts reversing strong of products. move Flows the the across during into significant trend inflows sharply

improvement, broader year quarter been while compared sales the the to fourth improved quarter. volatility the year overall, it an point actually the market Ivy at perspective, they has impact compared a this significant redemptions suggest. we compared And to Investments, to that to saw flows first last magnitude of the is than compared XXXX. might the For notable quarter, increased prior less and of both fourth From

While only ago. we that new market some there the we pleased to implemented fact model were disruptions is a the quarter, light increase, the of certainly and broader coverage first in sales months XX sales seasonality especially in see

as of encouraging future, is flows in The positive diversification large-cap investment look types and sales coming the value an increased we strategies, channels multiple and modest from client to sales in with our of increase including franchise. the breadth

April We an of in continued with have improvement date moderation a sales redemptions. seen momentum and flows to

these helped our year. volatility, of periods transitioning of and within improved last tends redemptions wealth in sales management dynamics. Historically, business work resilient Additionally, the the compared has to our this done during more part to business model business, and certainly both be we've

we adviser network and adviser the growth inflection to quarter with our we notably, this XX advisers continues this some Our point quarter. to Most stabilize, of closer moved network experienced added successes. to recruiting

our pipeline. service and well product clearly these differentiated package resonating support model our as combined in other recruiting with technology suite newly advisers and are Our added as advisers with full

to trend continued see quarter. the also productivity We adviser versus upward prior

the a simplified business on our components front, enhanced remaining program, administration the data On including progress processing management of model. technology and reporting, continues improved wealth business analytics

quarter, first repository, the reports launch we the data business. new pilot the access Salesforce to completed seamless data allowing During of and integrated a across

is the data advisers our times, actions have the results about see strategic company These network repository, full of from lot we but quarter. be integrated to to WaddellONE I as some the introduce challenging the that excited weather will and second the prepared we source, of start to a feel early turbulence, certainly in emerge. our short-term confident are to beginning We

is forward its model synergies wealth and asset of we're The business to it power generating across in of both the that looking management growth combination And and our drives. businesses.

financials. it to go turn to over now Ben the over I'll

Benjamin Clouse

Phil, you, everyone. Thank morning, and good

our in we $XX per release, of saw net quarter. reported million share income or you As $X.XX this

in the market average the that volatility outlook later for significantly revenues as and of quarter, the will which Given remainder as shortly. I assets occurred impacted the the cover year, not were

our $XX compared portfolio of for to million income our operating investment did in year-end. was the inside gains unrealized on quarter at we expectations, losses record unrealized largely While

Wealth addition, prior to tax at additional In administration expense rate. ended decreased the which the assets quarter increased XX% management tax the billion under included and $X.X of $XX.X million, quarter. our quarter compared effective reported

assets under decreased period. same the only over average X% While administration

clearly, Phil revenues of remainder from quarter, asset for redemptions levels the improved asset market the details on the down net again well. $XX losses, assets covered from the Ivy ended billion absolute average XX% the decrease flows, and X%. this once new advisory were under our quarter but projected billion, prior grew declines year. assets while of as at While a management under the management quarter, decreased the impact slightly $XX.X of will assets

Turning now results. to the financial

going an of during from swap and in investment unrealized our due modestly we to share the our Given these our due maturities our Within balance and balances the increase seed total, approximately repurchases quarter. cash quarter decrease Investment I'm the maturities, partially some last times, income and share attributable with and quarter position combined cash around to the with first and provide in that primarily increased in of We investment offset $XX unprecedented balances statement. additional investment share sheet color balance that to portfolio ended $XXX incremental investment before $XX dividends. covering redeployed collateral repurchases. on losses portfolio million to declines million, $XX repurchases million by decreased into million

During share the We repurchased repurchased our outstanding shares. of we've shareholders of the capital $XX returned trailing dividends of and XX over repurchases. XX% we months, during shares million to quarter, our X.X% and outstanding over the through quarter,

Our totaling capital million $XXX asset is investment $XXX A and as balance part key end. of course, capital million, our is, totaling reminder to management which portfolio comprised the seed strategic business. of investment of that and corporate incubation our a process, seed development our product portfolio quarter of is

We conservative which seed have hedging majority partially mentioned losses the the offset unrealized of I with portfolio a hedged, previously. program the

issuance bonds, size of corporate and U.S. commercial $X is X.X the years. with of duration average a investment investment-grade it of treasuries, million for an comprised As and paper, portfolio, corporate entirely

the strength We in without is key flexibility take to sheet significant these us continue balance financial in believe differentiator any of to a industry, the current especially our which markets and bring. leverage advantage other this environment, dislocations opportunities affords

prior quarter We fee effective The the March as The X% a retail waivers turning fund day basis large-cap less was of fee management due our decreased income asset majority compared statement. on and favorable mix X. levels and core bond XX quarter. sequential sharply, in decreased fees. decrease million and the our shift products. which improved did institutional April for products quarter. shareholder investment fee to growth to to the and was add quarter revenue revenue X between There the new in rate waivers points were lower the during actually the period management and some fees Now Total impacting $XXX.X to occurred service also

X We expect where position reductions $X.XX a products. to annualized on these for fee have competitive to opportunities we products these $X.XX impact asset categories and in earnings have per distribution large share

prior Underwriting higher billed revenues they the $XX.X so and which by expenses compared U&D now of comprised products, to actually on the quarter. market advisory totaled March slightly as $XXX distribution based are Operating not our half revenues of assets beginning-of-month were decreased over and downturn. impacted were million are million

compensation decline Compensation the limits and was lower lower and annual increase. However, to lower to decrease $XX.X slight remaining due the in G&A impairment prior an despite incentives lower headcount a tax The quarter due included resetting merit of charge. million a was and asset expenses.

and most across to decreased to due formats. a shifting notably G&A number travel categories, of virtual meetings

our was controllable In transactional be prior below uncertainty in processing light the from XXXX the shift expenses market addition, expect there we agency a pandemic, technology of costs our COVID-XX the to line. caused transfer by In guidance.

management contractors positions. effectiveness project for for been We the alignment year. evaluating our related and remainder teams, evaluating ongoing assessing modeling controllable expenses scenarios strategic actions opportunities, have consultants all savings of and open the various the actions include the of for and and These financial projects

will continue want to our continue I will take view. clear, to be we long-term expenses, but prudently a manage to We

that those best and will it believe to focus organic on success decisions will long-term we sustainability, and that we projects especially Our as believe enable inorganic actions relates those growth. future drive

take we're of necessary, be levels long-term will thing XXXX. as all maintaining by the the focus our decline timing asset market our for response of stakeholders. actions and and doing prepared of Our further, magnitude determined to the right in performance balance Should while additional

quarter. additional But rate it XX.X%. income the mentioned, Finally, was $X.X expense million. items, the of included Without was the tax I as for XX% tax those effective items tax rate

higher or We any nonrecurring expect impact excluding between the relationship unfavorable pretax of to due the nondeductible tax income, rate items discrete to an remain and additional items.

we based expect on shortfall the prices, of In of the current in $X.X restricted for an share million. do addition, tax additional charge second from quarter vesting shares approximately

all over we mentioned, the Phil the best our for company as of benefit leading key We are stakeholders. and success Overall, of believe will Brent time. that this enable

liquidity growth strong now have sheet deliver Operator, as specifically, call we will like ample we to we long-term our the continue balance to open key believe which shareholders, value. for invest you For to and heard, questions. in shareholder opportunities, utilize would


Instructions]. [Operator

question with Evercore. comes Schorr first from Our Glenn

Glenn Schorr

that you if -- about there I'm are interesting. talking when just find in investments a remarks, I -- the you new thinking on could your curious are growth So pre-pipeline, that distribution? about you're talked accelerants about if bit? new that unpack prepared wonder that in products I curious that's little if

Philip Sanders

this is Glenn, Okay. Phil.

on primarily marketplace. market want or we've a past liquidity dislocations, -- side. be see management differentiator what seeing I the we side talked I think opportunistic, the of sheet is, poised we company to and see to we're wealth when our in to think be I the asset be balance this And in real management whether about it's our

well. in investments or product thinking opportunities could of or areas terms accelerate new development So in to as acquisition it primarily be abilities

are things So the to others it opportunistic all heels on It kind bit and some maybe really being above. at when a time are speaks little a dicey. of encompasses a of their little of

balance advantage of wherever opportunities and the opportunity see take conservative really lots have liquidity of them. we to We a sheet,

Glenn Schorr

on comments. your just waiver Okay. a follow-up fee And maybe

to how case it feedback the from if as out for about get meeting help how works. I'm retail I'm you talk reduction that some seek much wondering how the and below -- could go growth. peer to Do Just channels? that but past things assuming or of you you the best-performing more on that be Does done competitive works. that to this the a like You've come funds? curious that out the basically again, drive is in

Philip Sanders

take Sure. you that to want one? Amy, do

Amy Scupham

Sure. Yes. Glenn, question. thanks the for

competitiveness our effort we when drive the piece are our of continued to evaluating So it's of products. really fees, a our

to marketplace. We versus at the look fee looking we is. And So in strategy. specifically at of we and well, But our fee a where the look different we're look relates really reductions the it that these the did on and as Morningstar their reductions mid-XXXX in a at below-average it the who's their as from few then standpoints. then also group peer assets what are management winning take X the we competitors category and fees median under take a at

so to marketplace, take the combine like of them and approval. And executive our out feel in suggestion all opportunity we things, team and we what take together we Board is that those with for the

Glenn Schorr

the around? How go this much reduction was products, those in

Amy Scupham

X on also And -- because a only the point and in was security share of it reduction mid-July. expense part ratio then basis N points believe was classes. share basis reduction original There growth classes core the in that around I large-cap X I bond and was I in

Glenn Schorr


Amy Scupham

and shares. And the Yes. that's from N I

Philip Sanders

ahead. question. one add Ben think Go prior to to thing your I wanted Glenn,

Benjamin Clouse

Shawn that add Phil. to of are Also, we're we remarks, and to very you, our of line organic that pieces. of about in to provide we're and Glenn, heard stand up growth. Phil's to our invest we recruiting in about and opportunities, mention business Thank you some manager, inorganic continuing really beginning additional aggressively Organically, thinking terms as efforts which wanted on. the just think continuing color technology in wealth I could that us

through As you And look growth. his and obviously in continue you we our arise comments to as in that Phil the our opportunities would heard to marketplace, heard at use inorganically, remarks, this continuing us be, other for say capital then for may that will about opportunities year. the piece are


with Dan from next Fannon question is Jefferies. The

Daniel Fannon

Just follow-up wanted the on expense to commentary.

we below going be you terms you if or bit specific could run is expenses? in your more think guidance. terms rate previous talked about in You about kind range I was the into of controllable how coming wondering a of next think the of what those quarter in new

Philip Sanders

Okay. take you Ben, do want to that?

Benjamin Clouse

expense that actions to constantly of looking obviously Sure. the assessing do we be taken the continue ways seen about business, number we've we couple we're and last a going Dan, years. base and of we're And that. at our over think prudent to as you've

magnitude the we mentioned. mentioned progress in we magnitude as particular, items are to that we the determine in in I balance -- Generally, don't prior answer, going I base, about take. our levels to As the we intend of expense my the think of strategic have of those and year asset ultimately interrupt if actions underway, timing of I in that will some the

in think I I certainly of As that's you'll variable. our about make is lot where most to. cost base, referred compensation, the the of us strategic movement composition lot are marketing as and see don't a I spending that that G&A a technology of think

relates QX, comp As component. rest some mark-to-market of just such deferred to the year, that in equity items were and our naturally a it have as plans lower the

regard in continuing to strategy that in think filling a on invest case-by-case We forward. about to areas that those also judicious we our in move very important and to thinking vacancies But been it's again, talent have basis.

Daniel Fannon

then sheet just around balance the And Okay. and a dividend. follow-up question the

in dividend that these highlighted And the about from that assuming versus you, strength guess, terms the the flow, of are would to flow dividend taking willing levels ongoing be little But liquidity obviously the bit cash to business? are cash you thinking a cash out the excess and have your markets committed, worse, guys down? pay of in I that, provides at flexibility. how You dividend how

Philip Sanders

I'll and -- level and a this start comment, is maybe Phil, with high I'll let Well, follow-up. Ben

we difference between at elaborate income. we feel generate through the about little want a very respect ago with dividend, that. and reported feel flows comfortable current of there. how comfortable we if years our point, this level you Ben, to level I'll to pretty bit when the return program, quite we of And the net I a with the wanted of versus we There's think we -- the dividend thought few adjusted this proceed, we sustainability a you point. cash quite extensively add let that to at this Maybe, something capital

Benjamin Clouse

would. Sure. Phil. I you, Thank Yes,

we other strategic room based to opportunities needs opportunistic cash were on as M&A that but flexibility Just you've to remind that have that beyond And for through add investments said, point, gives there time or of to the level, fourth beyond other the seen we with was flexibility a just as about us the obviously, quarter, Phil's level you, share or continue time, going buyback components prior since our adjusted capital that which take dividend, income you it have return that's actually reiterate or buybacks, might at moderated be talking like level Phil capital, mentioned can us earlier. capital other pure at significant down our as and We're flow and to net dividend amount shareholders market up some program on then well continuing we additional share in together. And well. structure. move to buybacks advantage I XXXX do our obviously the dividend those doing we to provide when much more whether we allocation as of that


from The with Autonomous Patrick Research. is Davitt next question

Patrick Davitt

the where a prepared came the But the rate the think you on give waivers when this us of in on versus what is at bit hinted that the kind XQ? in more plus level that remarks. ended You think XQ, could AUM waivers kind XQ, specificity revenue XQ you on little of run off in about XQ you beginning of came

Philip Sanders

take one? you Ben, want do to that

Benjamin Clouse

both Patrick. continue work is team Patrick, a we we our a those issue not to believe that we sure I within deliberate earlier our movement was positioned related to goes strategy believe Amy's to -- our market, pricing we where asset as range on, on that portfolio to the comments categories on or $X.XX market adding expiration are in timing and just products have there, work on $X.XX the are a about to Again, are some mentioned, think, thinking off, Amy's waivers distribution of impact, and waivers pricing coming inhibitor, on is action product Sure. to well opportunity. to making regard distribution. as more In coming composition the and an versus in

Patrick Davitt

So where taking revenue about guess baseline the we really together, question -- think should run is XQ your all total is where the kind for I level we it versus should of right rate like what now?

Benjamin Clouse

But Yes. Taking I have are moving. effective a fee and in significant don't moved our change assets together, it the fee I expect there. are all a rate. Obviously, -- rate, anticipate don't change significant

Patrick Davitt

run the of AUM just kind through. So


Benjamin Clouse


to $X.XX mentioned I impact on the waivers, new $X.XX. the again, With


is of Carrier with Bank America. next Mike from The question

Michael Carrier

realized like and on environment just color was down ahead maybe you that gauge the guess, provide previously an base, think either low somewhere volatile question, I expenses, some can XX%, a XXXs? it's market backdrop, First flexibility on the and on the where to I color but being any or expense controllable a flat the level just like backdrop up which in we're or maybe

Philip Sanders

Ben, do you want to that one? take

Benjamin Clouse

Sure. Mike, you are correct.

Our of first expense so in to $XXX for in a at We significantly million, $XX $XXX controllable came of guidance base. was below. quarter million a that million prior range level

up in I for that of -- to finalized saw believe in have challenge, intention in maybe early our balance our to spend, I I expenditure and expenses. intentions color us yet that to like can in and would of the The will quite the of that volatility we look do ultimate would will that well be, will our year, a the give that I As as level. we of regard our here determined imagine, subsequent the is our made think strategic could levels what continue March other on factors, balance asset the be absent in the do slightly amount what not as believe, to our project we've plans. But for latter year. that formulate April additional response by rate The controllable regard drive extreme about And controllable mentioned, actually ultimately quarters. in as half we others other you you

Michael Carrier

contribute And fee follow-up in at waivers fee that, decrease going in waivers guess, not can like those Meaning, quarter? look around waivers, of more fee rate things but on and understand amount? I'm gauge in April some kind from it. either just around the or waivers I Got of or forward, one I -- an increase just if quarter, like shift the guess, that quarter-to-quarter? fee trying then how what a decreasing. I much the more Is move can significant these given or just fee the to and

Philip Sanders

to Dan, add you to -- want there? anything

Daniel Hanson

would is and primary was in that, I the primary just think, quarter. I thing which add is the driver the one sequential driver product composition,

institutional moved the AUM is have bit. shifts far assets both assets, actions set. experienced our investors was in as quarter had our obviously product which So a around the will in driver, where but base we Again, composition more rate assets -- going between regard also also and in to of retail and some composition we primary taken, weighted toward not of that the impact the particular, within are for


The is Kenneth from next question RBC. with Lee

Kenneth Lee

one. Just

latest cash well the XXX -- of million the $XXX mentioned sheet You and and capital. on as balance seed securities liquid

deployable the best if needs seed current as capital cash the capital? on to the your what's excess exclude balance working or wondering, Just you well as capital sense sheet, were of

Philip Sanders

that? Ben, you want address to

Benjamin Clouse

capital the anything wealth our be not or nature. would I capital I significant a In to maintain our need do business. management Kenneth, We mentioned for before, primary happy Sure. or minimal. working seed maintain of is or business, have needs in that to I've think go. -- asset management quite it's portfolio regulatory as the

So changes to our base working simply anticipate way and in to fully once portfolio business. the assess evaluating are of have continue enough capital seed have to don't we to our then on term. opportunities products product their becomes mature begin out needs running its as I we We always into be the near will make a then has pull we seed in And do portfolio, own. seed the that function the would a that capital And marketplace. significant

certainly impacting seed we clients that products about or of are cognizant as We not capital. impacting think

cognizant seed in see and opportunities changes balance capital we're way then, we'll opportunities those of of present inorganic portfolio. I our in may as will themselves then the marketplace. be capital talked buybacks for well return, that thinking as the term, don't about believe near course, about as that in and the growth The shareholder But potential the of factors. of dividends significant for continued So I in utilized

Kenneth Lee

just And may. follow-up, if I one

by to Just in driven retention want of wealth the being improvement? Or terms within that this Is any the and productivity management. within there focus are of on -- advisers? producing adviser the just that's continued factors continued still the other metrics, productivity higher improvement recruitment driving

Philip Sanders

Okay. Shawn, that address do you question? want to

Shawn Mihal

our as productive Shawn Kenneth, advisers as sure. has focus those Yes, off well been those change advisers. Yes, recruiting more really of of this that more on retention primarily, experienced Mihal. scope and driven highly of

as average productivity been we our in $XXX,XXX have that overall momentum advisers respect been range targeting efforts, around have we recruiting been with we've to that So gathering onboarding. the

So primarily the that. that's drivers I combination behind think


KBW. Lee question is next Robert with from The

Robert Lee

guess I at or flowing you whether of as What us it's on platform? question that, wealth proportion is products of a be Waddell-managed if first strategy? across you within the to management, my or product into can a opposed -- update actually kind fee-based look otherwise would third-party sales

Philip Sanders


your first, that address to kind then want add Ivy maybe as you well. and perspective Shawn, the from on might maybe, perspective, Amy of So from

Shawn Mihal

again. are programs most the on side of are the we actively where going of our advisory concentration it's primarily, overall the Shawn we watching when this, Yes, today. look ratios flows -- at Yes.

ended a programs our this as of the those at business seeing And those the wealth we to going assets general, affiliated we're inside too. being of of So move overall programs, and programs of reduction broader business. our flows business. little a inside Most management In we advisory assets products. business. is we're ratio see with non-advisory overall look XX% have at see into XX.X%. into advisory open driven flows about inside architecture about of in affiliated The programs, our the that ongoing bit overall of and scope those overall of by from continuing We're continuing to still positive advisory our the totality concentration ratio funds

concentration of those type assets and overall fund XX% we're about mutual Our seeing inside those programs that advisory ratio is programs.

So that's about of about advisory depending the program. of assets ranges on the of to XX% on the side we're that seeing concentration flows type of XX% around

Robert Lee

sorry, then And Great. go -- ahead. Okay.

Philip Sanders

something add you know, do to that? don't Amy, want to out I

Amy Scupham

on And Waddell just I of team. we adviser at $X.X to outflows individuals kind going add, an have a out for level, have from were $X.X channel. average our a channel billion billion Reed and we service net that's down focus last sales out to billion around that seen our of net And quarter & higher year. Robert, the was of that $X of right

sales -- and a from both Waddell. we see redemptions we're to So stabilization, nice continue of

Robert Lee

for mean, Okay. Great. made too. and pivots maybe you your a this to the targeting. follow-up as sure. you're -- you segments guess, the there -- that, And But to channel, unaffiliated -- you've strategic some know look I to is that not as I I in maybe, I'm

unaffiliated, asset can one, of just at segments? kind And there channels? update some on billion given number or at $XX I some there, see it opportunity? third-party least do certain us us like you whatnot on the you point, of Or mean, scale may update mean, at the subscale kind be, feel for the those it's and the of maybe where wirehouses in be strategy would that -- I of this are some So you kind

Amy Scupham

and Robert, I'll add... ahead Sure. go Yes.

Philip Sanders

to want you that? do Amy, take Yes.

Amy Scupham

that. Yes. will to Yes. I add

probably about we we the buyer in So & the wirehouses, this we channel. and Waddell the force national primary as reminder, we national channels, through focus other that's one institutional But channel, the group. And and are divided Reed. just distribution our the ago. X.X then which insurance or into as is our partners, years and In a which on the sales to have independents broker-dealer professional our X and retirement distribution where channel refer professional walked we we buyer, --

have then teams. We have RIA institutional we our team, our and

that I the reasons, ourselves of about what the of we that Robert, what we're process where marketplace everywhere, buying of channel we going when more in much structured of of one way was how seeing that's type think So on institutional it an there's because traction, saw regardless is. coming from

can I placement of in the There's I'm X And platforms, see being different There's where platforms know look those there's improvements, quarter the that that having institutional could client incremental corporate intermediary start and institutional at so plan it opportunities, retailer it public on plan, the either the third-party foundation, and recommended we be have more getting or really some be marketplace. institutional, as seeing it upgraded overlaid the endowment of, standard on all be part kind like also an select areas. to consultants of the of to list. or

pipeline places. up in And really we all traction channel. see are our in and see starting wins to new but our picking strategy, we're starting sales It's of those across still early to

a May it introduced signed beginning series contract on of be thing of have that something other thought that replacement, XX say recently to large conversation you'll we a I first months and We recall opportunity in the our last tick think would to and delivery is, a I portfolios. around X model would on in year, we space.

in big nondiscretionary nonetheless, and win are assets, but distribution So so us the channel. a -- those assets, for

pause, if anything has with to that, So he'd add. I our I'll Dan I'll Hanson, see like and CIO, think

Daniel Hanson

Well, just thanks, -- in I Amy. think general

is build -- key small-cap are also think for about, the I strengths These global. platform to growth, our the it's Ivy go. we're core And of traction where all is quality heritage a Ivy are, and is we what going to strength. market is platform playing the Just a on comment really feeling. think, to It's our about we and for that

the at you spots If think, the saw we change is on across going be large-cap we're the their and what XX% management, first board realize look book. market active quarter, outperformed in the I of the quickly. U.S. want in terms where and we -- of worst the But managers was tentative to quarter, picking can in seeing puck it's it

best a how that active who clients you've but active quarter with our DNA in the the well are and which managers our -- just which We for not the and spot the to So around we've in think everything aligns -- doing active Star or fundamentally for Ivy. bottom-up at everyone, pretty define mix managers core work North our to everything with franchises, that are be trying home spots. active that. is in for do a broader management diligence deep we and got the is and picking is dozen That years, what role comfortable portfolio, our in getting managers franchise increasingly got per

the that's comment make. I'd So


The next question is from Citigroup. Bill with Katz

William Katz

some to you at reset today? back coming sort had are look market sort just median, flat volumes? sort you sort that are line. your your residual XX you of risk is here sort of pattern pricing terms If there be as cuts the it of ongoing where mentioned. It pricing? you of benchmark, Where at the Just And and of be fee seems look of to an product to XX relative jump-start in to median you a and or below to try pressure funds, largest funds top-selling whether any of of other maybe

Philip Sanders

end. across product it we for and kind through and remember be This cycled kind something of we've is be, pricing level, nature we more a Phil. we turn implemented start Maybe we it's specifics. Maybe it that, need the move more view going to to But exactly product-specific, and incremental remember, But I And was you our extensive going But as when that Amy over don't high line. clearly, it's more to it recall. probably will as we're that. it industry. Amy I'll And is. of tactical as described, can and I It's broad-based. never our the be think, comprehensive evaluating. some be It Bill, going -- did a to I'll just of was product-specific. ongoing constantly and where more forward, it of forward will But competitive.

little think a talk and stand where bit kind we and the this to we want it? of about relative rankings you to go do Amy, about process we about So how how

Amy Scupham

sure. Sure,

better about When focus Bill, assets refer that out what quintile range the at Morningstar as our are might of X to funds as family it of our funds we're is of for those from at a pricing. relates median XX% we sitting in sitting on, management standpoint. that So to below-average a our median our XX now XX today, right top or or under we look of

that one median. sitting than the and well, a little around isn't right pretty doing we're more So median, just bit

than Phil strategic August was of smaller XXXX, get we've where said, couple we today. that standpoint, drilled where Phil it nature we and in July That's XXXX. forward, could that there'll And these That's And of have like in the products incremental I felt we or feel those moves. strategic going as moves. reduction more like a do it maybe of like were tactical really that made from believe where probably traction effective larger said in be said, big a fee from So did, believe I we we competitive strategic.

William Katz

of for X-part, that. bit I apologize then just so is helpful. a And a my follow-up Okay. That's little

then had you Just in management the door changes? as that's think that, out going And how that better I had you're speaking think what bit the what's the door, section, the do to about coming the fee you trends secondly, to, you I that all in product date. of gotten rate versus mentioned affects think think what's net wealth quarter these a

Just stepping complex in April? wondering in maybe verify what talk of the that. you you're could bit seeing little flows if about broadly, for a then more And terms could net you back

Philip Sanders

and of then part that Amy, if, Or to think Ben, about But you Okay. Maybe, if to the first maybe you fee respect thing? Bill's issue? and fees? of flow the want certainly think I type comment address the what's I don't be helpful. question of that thoughts have a on with flow going you leaving why any differentiation in And Amy, don't know would --

Amy Scupham


of question that move very we and April. winning I'll our we first, bit the into address your and a distribution quarter, strategy. look then to large strategies first increase In the -- we quarter per Bill, allocations as I'll a into saw large quarter So be in were what a first first would the in consider little breadth the

formally So board. the across been strategy, strategy. had a in moved And the less what we selling highest international our has concentration definitely saw of core it

from So the to side. small- on large-cap growth

emerging is Our positive. Morningstar a patterns continues Mid-cap quite opportunities, small-cap net strong good core held our as which And has time, seen traction. market a income performance flow flow X-star that's continues some portfolio nice for to rating then well. to some and equity have

it's which that out in, performance a have and both coming high income, of a of to what's what's from So suffered core going tends bit international be disruption. our

see And so in those we outflows to continue areas. X

we're we telling think than slight seasonality But complex. the reduction is As to more the I reduction from which substantial seeing across in a attribute look we're at redemptions gross March, when basis, I April, at a would sales point fairly anything. more a seeing we that look

well and we've -- as seen across that to primarily and where business. that's start so in And redemptions slow those core high-income international our X in institutional as space spaces

Philip Sanders

or Amy there? it rate sure. not Ben, fee there anything to covered I if I'm on was if the don't know add

Benjamin Clouse

Phil, did have Amy well. add. don't I to I think anything

Philip Sanders



The next question Morgan Stanley. is from Michael with Cyprys

Michael Cyprys

I $XX that just circle came million expenses on around the in back in the wanted to controllable or so. quarter

so little coming move second and XX%. project accelerating as second have of the Also, into into takes But move puts the we we about about upward how we through how about markets here. sounds quarter the year, quarter? the should like think arguably curious think out drives of that recovered expenses some should a Just much bit some pressure. as seasonal It spend we

of how portion can the are of you comp that upward how what does that driving the variable? think as and expenses expenses we So -- here? market-sensitive about would line on that you of any us describe Maybe of should pressure sort remind also portion

Philip Sanders

question? to context around that Okay. offer Ben, you want some

Benjamin Clouse

some mentioned. fourth I lower we some did largely In driven Sure. to positions Sure. judicious delaying have as first or savings we're, open the as as that. deferral headcount a by or bit through hiring, reduction slowing course, not on well some being strategic in thought about we Again, that. very any quarter, we're compensation, quarter but little of regard of versus was And that as

about impacts year, planning travel and the things think saw lower the as the some expenses quarter as back to work. balance first meeting into from to of also as lower well We that for already of formats we beginning slow ramp-up even some into a move some costs, in virtual some

overall in mentioned line of And those the strategic in up fully remarks is that. increase think we business those of projects, our year, wealth prepared project some our I bit the to expect of have do variability, regard as items investment and model. as some -- I continued a some regard fixed I technology In certainly our the a rollout platform. are ramp the about In really centered particular, in around management and earlier, varies big of we'll more spending flows levels the our are cost of to heard with asset base in we you portion see our the and through rest in thinking year, distribution

the in move item us which can and view forward, as us as we a past certainly particular, taking done course, that had. more is in corporation move to bit for although will you little have management As work we is cost a we continue a in through Compensation, wealth we're, has you've flexible. and flexibility making this allows of long-term to business, good strategically to mentioned, number interruption believe pay heard that, again, sustainable have in sure our that to some variable people the lot of a more of operations continue one fixed quarters, we significant even we more into say structures, be

Michael Cyprys

needed guess, sort that sort do of environment what outcome? or I -- think Or guidance. a would is think X% so And that you prior around think be reduction? your prior you $XXX optimistic I million, if do just expenses, look see consensus guidance I of follow-up, the about that's to of controllable $XXX at sort below the as on million, to the X%

Benjamin Clouse

said, is ultimate million. that in like Yes, you're for the million Obviously, prior will guidance, I to the start on balance our what of in And definitely levels look determined on really which of year. below be correct $XXX asset $XX million believe I as trend. at will actions range our quarter demonstrates $XXX come that we the based first the

in seen, of looks recovery of be in our of like the course, determined will have We rest and April, markets by what the that response some year.


The Research. next with a question follow-up is from Davitt Patrick Autonomous

Patrick Davitt

I hear the April on thank -- how of the looks. you for guidance kind

anyone it's that and relative better to probably February? it to frame maybe but think could I January you March, not surprising than

Philip Sanders

want one? you that to take Amy,

Amy Scupham

Sure. the The Yes. very and would depending about standpoint, similar which months maybe are, and in growth January Relative from a line, comments. I say just to less, to sales slightly on redemptions February, improve. continue talking we're

a is from April basis, net So better. looking


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

Philip Sanders

proud our this and interest type dialing the the in core certainly but really and for in work balancing of I'm collaboration are of everybody everybody's of terms together together clients, thanks appreciate to these in and together and terms hard shareholders, their our in obviously, And I communities. done demonstrating It's just company, want really and of pulled interest values really employees, Listen, really pulled work-from-home how of I'm advisers, Obviously, kind your and you. really -- been we proud the focusing it's all whether how Thank of that today. managing on coming challenging to say everybody stakeholders, part the times, client of thing. of transitioned the organization times. environment, Okay. and challenging

anyway, lot of of but how least challenging, So certainly everybody's the proud it's together. in pulled say respects, a been to

your interest, Thank few much. So with with very thanks, forward up right. that, for in look a months. you and everybody, to All catching you


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

now disconnect. may You