We're going to get started. Good morning, everyone, and welcome to the SEI 2019 investor conference. Welcome to all those online or listening in as well. Today, what you're going to hear thematically is driven by our what drives our strategy overall, which is 1 SEI. And you've seen those words printed outside, but it's really important for SEI to think this way.
This morning, we will give you an update on our corporate strategy. We'll expose you to a couple of new initiatives that we've launched into the market. We'll update you on our 4 principal businesses and finally convey what is driving our approach across all of these areas and in terms of how we manage our business and that's 1 SEI. 1 SEI is a mindset, 1st and foremost. It's something that over our history has been important to us and we'll as we get into the better understanding of what we mean by it, I think you all see that.
But secondly, it is what drives our strategy and how we think about things and how we approach markets, develop solutions and meet the needs of our ever widening, ever enlarging global clients. Today, we have a packed agenda. So bear with us as we kind of work through, we're trying to get across to you a lot of information and hopefully a lot of impactful updates on SCI. First, we'll start with Al, who will give us an update on our strategy. And for those of you that are relatively new to SCI, give you a little bit clearer picture of how we define ourselves and how we define ourselves in the markets we serve.
We will then move to presentations that thematically hopefully portray what we mean by 1 SCI. The first is around technology and some of our front office solution capabilities that we offer in our markets. And Jim Warren and Rob Wrzesniewski, who will from here on forward be known as Rob Rez, because we all are challenged with all those continents in that name. They'll give you that insight. Then we'll move to a similar insight driven through some of the new initiatives we're bringing to market.
1 around our IT services offering and Ryan Hickey will provide that. And Phil Masterson will present about our new platform on global regulatory compliance. And I think there you'll see this hopefully see our thought process coming together. And then finally, Kevin Barr will speak to how this same thought process impacts our approach to asset management and how we continue to think forward about ourselves as an asset manager and an investment manager to compete more effectively in the ever changing world that we all operate in, everyone in this room. Then we will move to updates on our 4 principal businesses with Steve, Wayne and Paul and then we will wrap the day up with a panel Q and A that really gives you all an opportunity to ask hopefully the breadth of questions you're capturing as we move through the morning.
So one thing we would ask you to do is keep good notes. If you have a question that pops into your head as one of the presenters presents, save that question and when we get to the panel Q and A, it will be a great opportunity to answer that. With that, we hope you'll get a lot out of today. We hope you'll leave with a positive impression about not only how SEI is well situated today for growth, but how we are also well positioned and in my view, have never been better positioned to continue the track record of long term sustainable growth that we have delivered to the markets over our history. So enjoy the day, take advantage of the demos when we have when you have the opportunity for demos.
As you know, we're a fairly informal company. Take advantage of the formal times to talk to not only the people that you normally talk to, but a lot of the other SCI employees that make it happen every day here. We bring them into this to this day to give you that opportunity. So please take advantage of it. And with that, I'll turn the mic over to Al West, our Chairman and CEO.
Thank you, Dennis. Good morning, everybody. We're going to talk a little bit about strategy, but before that, we're going to talk about a little about who we are and how that comes out. And it's really important that we start with who we are because it's the foundation for our strategy. And so and it's the stuff that doesn't change that rapidly.
And then the strategies do change. And then we'll go to the strategy. Okay. First, who we are, it's a reminder. Around here, if we scratch people, it comes out green, eagles green.
But inside here, you scratch us and we're technology and its application. And everything we do is technology. And so it's really, really important that we stay abreast of the newest technologies and we'll explain how we're going to do that. Okay, we're an outsourcer. Besides technology, we're an outsourcer.
We've been an outsourcer since 1971, actually probably down 1968, but the 1st 3 years you can was a little rough,
say the least.
But and we the clients say about us that we do the heavy lifting and heavy lifting usually means that they don't want to do it. They shouldn't do it because of good reasons and then lead SEI because they can do it better. Okay. So that's and that's why it's really important we've been an outsourcer for so long is that it continues it's now a new concept, but it's continuing and we're going to continue at it. And it allows them, allows our clients to focus on the things that are mission critical.
Well, and that's usually the sometimes it's golf, but sometimes it's what they're really trying to do as a business. Okay, we're an innovator. We invest heavily and we invest every year. So this year, we're about 10% right now and we're trying to keep at 10% of R and D. And we believe that the tie between the investment and growth is tight.
And so that's why we want to spend that kind of money. And we did not come back a bit. We did not cut our investments in a bad period of 2,007, 2,009. If you're not going to cut it, then it will never cut it. So that's how important the investments are to us to finance future growth.
Now this is
the slide we first showed you about 20 years ago. And it has we've kept adding to it as we've gone along. And covers 50 plus years. And so we're still at it and we're going to continue to do what we've been doing all of our business life. Now we have a proven business model and the business model you've seen in different probably for the last 8 years and it's been later 10 and it's been in one form or in one format or another.
And what we have now is we believe the innovations first, you gauge the clients, you grow organically and if everything works, then you have financial strength. Now, I'm not going to go over all these, but I would like to pick out 3 of them to go in a little deeper. And recurring revenue, strong cash flow and long term relationships with our clients and employees. 97 percent of revenues are recurring today, 476,000,000 dollars free cash flow last year and that equates to 3.52 earnings cash per share. And some clients have been with us over 40 years and 415 employees who've been with us more than 20 years and we've got 3040.
There's one dude that's been with us 50 years. Amazing. Okay. And we're uniquely positioned today. I mean, we're in touch with everybody.
And no matter what part of the business it seems you can get to somebody else very quickly. And it creates great possibilities for innovation and learning. We learn from them and they keep us up to date and it really is a unique positioning. And one of the reasons that Dennis is so bullish at this point is how we stand there. Now this was a slide that you saw in 2,004 and this is the business lifecycle.
So it starts at the bottom and you kind of feed in the bottom and then it starts growing and grows and grows. And then at some point, it must make the turn to head down. And when it does, you got to figure out a way to make it go up again. And so back then where we were, we had a lot of small things coming on and we had 4 things, 4 businesses that were getting close to the turn. And so it was important that we brought these in and only I think one of these didn't work and it went they got they fed different parts of the for the business and has helped us reach where we are today.
Now today, we're a little different. We got small things going over. You got small things on your left. And but some of the small things are off and running, family office, private wealth management, GRC. And then we have institutional investors foundation endowments.
Now we split that just because of the turn that you see up there with institutional investors is for define the corporate defined benefit. And that is, there's no stopping that one. But we're making it as good as we can make it as that bleeds off. And now we also have investment managers hitting their stride nicely and continuing to grow and there's got plenty of legs left on that growth. But then private banks, we've made the turn and we feel really good about that.
And in advisors, U. S. Flex stamp, we've made the turn and it's just starting. So it's like they were down here to go again. And that's right.
And so we're doing exactly what we did down in 2004, bring these on and build some of them go into the units, some of them stay independent, we're expecting. Now, we have a dynamic culture for sure. When you walk in, well, first
of all,
culture drives innovation and or it kills innovation. If you have a fear of failure in your culture, you'll never innovate anything. So we have to work real hard at that. And now space demonstrates the culture. And you feel it when you walk in here, when you walk through the doors and look at the pylons and everything that's different about our everything's on wheels.
And you know you're in a different place. And that helps our clients. It helps all of us, but it also helps us attract and retain talent. And if somebody walks in the door, their prospective employee, we know or he knows, he or she knows or we know that they get it or not. If they get it, you can't kick them out.
If they don't get it, then we don't spend the effort. And we know about it early. So that's one strong thing about space demonstrating our culture. Okay. So let's talk a little bit about strategy.
This is we showed you this slide in 2017 at a conference. And if you take a look at this, existing markets with existing platforms is the Southwest. Let me see. I want to make sure. Yes.
The Southwest quadrant and that's our existing businesses. And then we want to first go up, which is existing platforms to I'm sorry, sorry, existing platforms to new markets. Okay. So we go up to the northwest corner and then down on the southeast corner, we have existing markets, new platforms in existing markets. Okay.
And then we finally take on new markets and new platforms. And we're got we have work going on in all of that. And that's kind of our current strategy. It's not the one we're and the way I feel it, we've got a current strategy and then we've got an enhancement and the enhancement is SAI or is 1 SAI. Now one of the things that we about being a technology company and where we are, we are applying advanced technologies and investment tools.
Now if you take a look at the lower left, the front end technologies and infrastructure were there in 2017. They're not on our list now because they're pretty much all integrated into the company throughout the company. So it's not on its own anymore. But we are still we've got something going in every one of those categories and we keep moving those along nicely. And 2 of these set up our 2 new businesses that we have now.
And then the investments with technology, Kevin Barr will speak to that a little bit later. Okay. So one of the things about the strategy, we've got to confront a bunch of headwinds that are in our industry right now. The 3 top ones are these very stiffer regulatory landscape where the regulators are getting tougher and tougher, and it's a worldwide symptom. And then so that's one headwind.
The second headwind is rising the rising cost and complexity of managing IT and that is true. And then the increasing fee pressure. And the increasing fee pressure is mostly passive investing, the popularity of passive investing. And let me see what's you can tell me. The other is transparency.
So if once clients of asset management saw what they were paying and they pushed back and the industry has had well, it's happening in all of you all, I would imagine, just like it is to us. So those are the 3 headwinds that we got to deal with. And then turning the headwinds into new and existing businesses is what we're trying to do. And the 3 that I mentioned, one is GRC, which provides a solution the clients can manage a wide range of regulations. Manage is the key word there.
We don't do their compliance, but we help them manage them doing the compliance. And Phil, as Dennis mentioned, Phil will take care their care of that a little bit later with an update. And the SCI IT Services, which adds over to a bunch of components, Ryan will update you later about that. And then the third one is all about throughout the company, existing business as well as new business. We believe that the advice that we give the technology platform that we employ and the customization of the assets that are managed.
They're all value drivers today in our revenue model. So that cuts out most of what is now a commodity. And because those are the things that are valuable, not trading, not passive management. Now it's really important that we leverage our assets. We've got tons of assets, but I'll be able to show you where we are going to leverage quite a bit.
See, in the first case is we craft new offerings to the things that we do well. So if we do it well, now this is a page out of Amazon's book. Amazon, we're sitting around the table trying to figure out what to do with the cloud and the cloud and entering the cloud and managing the cloud, they were doing all that internally and realized, hey, this is an outside business and then the things have grown through the roof. And it's a case of if you do something good, maybe you can get in both GRC and SEI IT services are those examples. We were those are things that we were doing and we're doing successfully and we can then move over and put them on a map and what's we've done.
And it's quick to market because most of the heavy lifting of that is already done because we've done it for ourselves. And the risk is low because we're already doing it for so much here. When you go into the market, you kind of know what you're doing and you don't make take we don't take the kind of risk that we might from a totally de novo start. The same thing about a client, we become a client of our own platforms. Now that makes us or we try to be a super user of it.
And as results when we can anticipate and meet their needs better. And we've got a bunch of recent examples of how things were started and leveraged. Thanks. Yes. So those are the recent examples.
And it's again, it's really important that we leverage our assets and it's actually a big part of SEI 1, 1 SEI. I did it again. Okay. So then our strategy is to make all platforms that we have in the company open to all the other platforms and some external as well. And this is kind of a mindset as they talk, but it's like you are opening everything up.
And in doing so, it is a big leverage play as well because you couldn't get from here to there and so you had to build another. So just by doing that, we just expand the number of platforms that we're dealing with. And it's a very big leverage play. And we call the strategy 1 SEI. It's also the theme as you can tell of this conference.
And Steve Meyer and Rob Rez and Jim Warren will take on doing some explaining what a little bit deeper into One SEI. Now the other we do have a multitude of assets and most of them
are created
for sleeve and what one SEI will do is unlock the power of the assets. So they aren't just here, they go everywhere and it's totally opened. And the other thing, it will allow us to view clients in the markets more of an enterprise broader enterprise level and that's very important to us too. Now results, first of all, we think our belief is that that one SEI will really break everything that we're doing open. And it's very, very excuse me, second.
Okay. And the results, it's been a benefit we've been a benefit for a long time to long term investors. And we returned capital some substantial amount of capital each year to shareholders through dividends and stock buybacks. And so the return of capital in the last 5 years is over $2,000,000,000 So and we're very proud of that. It's going back to the shareholders.
And the shares outstanding were reduced by 17,000,000 shares, which is 10% of the outstanding. So both of those are really important as a result. And this one is since we went public in 1981, we have our stock price has risen 40,776 percent. And NASDAQ is 4,819 and then S and P is $5,900,000 So we've done pretty well. Now past performance is not indicative that's in there, but we can dream.
I mean, all we want is another 50 years. This wouldn't even put 50 years since the public. So anyway, we got a lot of work ahead ourselves to keep up with that, but we intend to. Now and we believe that one SEI is a game changer and it will allow us to serve clients in unparalleled ways. And we really are behind this thing.
And I hope we can demonstrate how important it is for us as we go through the day. I'm now going to turn it over to Jim Warren and Rob Rebs.
Hi, I'm Jim Warren. My role is I run the platforms and solutions for our global wealth processing group. So essentially our banking and investment management services platforms.
Robert, I'm responsible for products and solutions that we deliver out through our private banks.
So we're going to talk to you a little bit more in a little bit more depth on One SEI and essentially what it is from an overall strategy. We've mentioned it a couple of times already, it is not a platform, but rather it's an overall strategy around how we're moving forward with our platforms and technologies. What we're building out is an overall SEI ecosystem. And to do that, we're leveraging all the capabilities of all the platforms that we have internally today. So Trust 3000, SEI Wealth Platform, the Investment Manager Platform and Archway's Family Office Platform.
We're doing that by incorporating our open architecture, essentially opening taking down the walls in between our platforms and our businesses to expand our capabilities in our markets. One way that we're doing that is incorporating APIs and a lot of the development techniques that we do. If APIs are new to your vocabulary, an easy way to think about it is, it's an effective way for us to deliver information from one component of a platform to another, also from SEI to our clients and to our clients' investors. It's also a way, if you think about it around, say, Lego pieces, if you're putting together something and you want to bring them together. So the business services that we use to build an application, we can bring them together and we can create an application on one of our platforms today.
We've done this. Our clients can also do the same thing and they can leverage those same components and pieces to build applications themselves. What that does is it allows a lot more connectivity internally at SEI across business units, but more importantly with our clients, so that they are able to build and integrate with our platforms in a much more easy way. That also opens the door for us to have much more modular components. We're going to talk about this a little bit more through this presentation, but really what we're doing is looking at our clients' ability to consume pieces of our platforms and for SEI to bring pieces of our platforms together to create new opportunities.
And we're doing that internally across business units, we're also doing it with our clients. And the last part of this is the key to all of this for us is that data management is core to all that we do. We can deliver front office experiences, that's really good, but it's really important that we have good clean data and that we're bringing more and more data together to facilitate more process. And that's been a strategy of ours for a long time and we're applying it to these new technologies. So I wanted to through an example to kind of explain this in a little bit more detail.
And for the purpose of this, I think of a large global bank that has a custody business that they're providing wealth management services on and they have they grow an investment management business or an RIA that's dealing with accounts that are non custody, so custody agnostic. Really, those are 2 core capabilities that SEI has been doing for a long time with our wealth platform and with our investment manager services platform. And what we're recognizing is there's an opportunity in the market to bring these types of platforms together, and we can do that leveraging a lot of the capabilities that we already have. So we know we have a great processing platform in those two areas. We also have a data management strategy that's been in place on our IMS platform for over 15 years, which is really bringing different systems, sets of data, adding to them and delivering them for front office capabilities.
So we're doing that. We're expanding it to allow it to pull in information from all of our platforms, but then we're taking the components, the services that we provide to our clients and plugging that into that so that they can have a consistent front office experience across all that they do with SEI. And we're doing that in a modular way, which means we're providing services around prospect management, investment management, investment management reporting, so what our clients see after we do our job from an outsourcing perspective and then end client integration, so investor dashboards and delivery of information to our clients and lastly, regulatory and compliance. Each one of these bundles can be brought together in a consistent user experience, but they can also be sold modular and they can be implemented across different parts of our business. Phil is going to talk a little bit more about regulatory and compliance, but that is something that we recognize we can offer to all of our current clients today, but can stand alone as well.
And each one of these other components are the same way. Specifically around prospect management, we can help our clients better manage their investor data, onboard their clients in a more user friendly digital experience and deliver information back to them. It's part and parcel to all that we do from an outsourcing perspective, but it also allows our clients to take on that capability if they want to maintain some functionality in house as well. So what does that get us, that kind of capability? Really what we're looking at it is a way to bring all of our platforms together.
I already referenced this a little bit, but external custody processing, internal custody, so our wealth platform at Trust 3000, our family office capabilities with Archway and also in some cases, our clients where they might self administer funds or they might do some of their processing themselves, we can bring all that information together and tie it into consolidated services. So we can provide back and middle office services across multiple platforms in a consistent fashion, bringing SEI's expertise from an operational as well technology capability. We can also deliver technology services. Ryan is going to talk a little bit more about hosting, but there's other things that we do that we have of strength that our clients don't and they're looking to lean on us to bring that capability to them. So things like real time messaging, disaster recovery, where we're often an expert providing advice to them, but we also can do that capability for them and that encompasses data analytics as well.
And then lastly is really and we think the real value is the front office experience that we can deliver to our clients. We can do that across these platforms and they can have one experience for them at their firm, but also for their investors. And these are capabilities that we have and we can deliver them across our platforms, we can deliver them as components and modules across these platforms, we can also integrate. Using those APIs, our clients can build these experiences themselves and still lean on SEI, plug into SEI and use our capabilities. So Rob is going to talk to you a little bit more about some
of those front office capabilities. Thanks, Jim. So front office, if you think about what's going on in the wealth management space, specifically over the last 10 years. When you think about it, there's almost an entire category of software that's come up called FinTech. Most of that is capabilities and functions that exist in the front office space.
So if you think about the technology that enables the collaboration and the work that happens between an organization and the wealth holder, the end investor, that's really where the front office shines. So the good news is, SCI has been delivering front office capability to intermediaries and wealth managers for almost 20 years at this point. So it's not new for us. It's part of our platform. It's always been part of our platform, but we are taking a different approach and a little bit different model in being able to unlock that front office functionality or those capabilities through one SCI, right.
And I'll show you a couple of examples of that. But the one thing that I think we're all probably very familiar with and I promise this isn't a walk through architecture type of slide, is what you are looking at is the SEI Wealth Platform. So if you think about, Jim had talked about the back office services that are enabled, middle office services that are enabled and most importantly, we think right now from a differentiation standpoint where the premium is, is in the front office. So if you think about front office as a category, again, it's where wealth providers and managers interact with their clients and to do things like propose alternatives, do wealth planning all the way through to implement portfolios and then ultimately service those clients, right. So a way to think about it and in many cases, our firms have set up and almost a team approach or takes a village to manage a family's wealth.
So you've got a number of different functions or teams that are involved in the day to day with making sure there's a successful outcome for the client. So you'll have the advisor involved. Obviously, if you think about front office capabilities we have in that space, things like dashboard. So it's the middle of November. We have some clients that have tens of thousands of IRA accounts.
We know what happens when you hold an IRA and you turn 70.5, there's a huge premium on making sure that from an IRS perspective, the RMD or the required minimum distribution comes out of that account. How do we as a partner provide that information out to that wealth manager to say, okay, here's everybody that is affected by this. I have a list. I know exactly how much they need to take, because we've calculated that for them. I know how much they've already taken and I know what they have to do in the last 6 weeks of this year, so that we don't have an emergency come April 15.
Similarly, if you look at the strategy manager capabilities we have, so portfolio management, right, at the end of the day, somebody has to manage that portfolio, they have to build the allocation out, so it meets the client's goals, whether that's a cash based or a goal based type of planning that takes place. So this week, Disney launched Disney plus right? And the demand was there that ultimately crashed the servers. And that's something I think about for a little bit because if it's Disney, you're pretty sure that they anticipated a high amount of demand. So wealth manager might look at that and say, that's great news.
I'm going to increase my allocation to Disney within my domestic equity portfolio. What we enable the client to do or the manager to do is to go in, increase that allocation one place in their domestic equity portfolio, which might be a component in 200 other models, right? And those 200 other models may be implemented across 3,000 different clients and they can do that in a single step, submit that out with all the proper controls and procedures and get those applied to those 3,000 accounts without having to go in and do custom level type of substitution or allocation changes. Similarly, if you look at the administrators roles in the account, so after the accounts open, the portfolio is deployed to the account, things are moving, the account needs to be managed, needs to be maintained. So the administrator's role in doing that and what kind of tools that those administrators have at their disposal become very important that this is really where a lot of the client experience comes from years one through and if you think about it, the administrator experience enables a really easy servicing type of interaction with the client.
So some examples of that are some things that we do there is the ability to go in and manage that account, manage that client in a way that's straight through, right? So rather than we are talking about at breakfast this morning, sort of the old world of doing requests, either faxing those requests in or emailing somebody a request. Within the wealth platform, those administrators can go in, look at something like, okay, we do need to take a distribution out of an IRA. I have to withhold taxes from it. I could do it right from the platform.
I could do it straight through or and this gets into Jim's discussion around how we've integrated and used APIs with the outside world, I can affect all of that from my own CRM, right. So if I'm an advisory firm and my system of record is a CRM, I can go in and I can affect those changes from that CRM, have it go through, straight through without having any kind of hand off or swivel sharing that happens across that chain, that's very powerful, right. We are asking the firm to really operate the way they have operated and not change that workflow specific to SEI as a partner. And then last but probably most important, what's the experience that front office delivers after the client. So things like how am I doing, whether that's again goal based planning or whether that's cash based planning or is it, I initiated that transfer from Schwab, has it hit my account yet.
Those are all things that the front office enabled this entire user group to go in and do seamlessly collaborate across and really use a single set of data for that, right. So, it's not the investors looking at information at the day stale and the advisors looking at actual information. This is all real time and coordinated, integrated that way. Another way to think about it is if you think about the process that wealth managers take clients through, it starts with planning, it moves into the advisor doing things like opening up the account, how to then do we go ahead and implement the portfolio, put the portfolio on the account, get that executed, things like the end client experience, how does the client track all of this and then lastly, how do we kind of close that loop and create the ability for all parties involved to collaborate on the account, make sure that things are going as expected, whether that's quarterly reviews or annual reviews, depending on the type of an account. But if you think about the power of this, basically, all of these modules or all of these components, as Jim talked about, work in concert, single set of data across all of them and are incredibly powerful and coordinated, right?
So everybody is on the same page, right. Everybody is looking at the same information and what we're doing is enabling that collaborative approach across wealth provider and the investor. One of the things though that I think has become apparent and we wanted to talk about a little bit is sometimes somebody can't adopt the entire chain, right? If you think about we go into an institution, we've got this capability for a lot of reasons. They might not be willing or able to adopt all of it.
So think about large institutions who may have spent 50 years and tens of 1,000,000 of dollars branding themselves out to the public, they may not be interested in using an SEI end client website or an end client app. That might be something that want to maintain, that they want to maintain. That's okay. Similarly, if we're going in and we're transforming an organization, they might look at the level of disruption and say, okay, I'm great. From an operational perspective.
I feel really good from a reporting and an advisor perspective. But my portfolio managers aren't there yet. I don't want to change the organization that much on day 1. Well, that's okay, because the component based approach allows us to go in and enable that same value stream, that same customer journey, but do it in a way that doesn't disrupt the firm, okay? So this type of flexibility is critical, especially as we get up market into larger institutions who have invested heavily into some of these areas, but it doesn't preclude us after day 1 from going in and potentially upselling that.
So the example that I used where a firm might come in and look at it and say, well, from an end client perspective, I'm always going to own that and we've got the data relationships, the APIs and the integration work to allow that, but we can come back day 2 plus, right, and come in and say, all right, well, we are now a couple of years in, everybody is feeling comfortable with SEI's platform. Can we go back out and have that conversation again with portfolio management people, right? And can we upsell that component and do it in a way that again doesn't disrupt workflows and doesn't disrupt the way they manage well, okay. So those are all things that in the past, if that was single stack technology to get any of it, you had to buy all of it. And what we're saying and what Jim had talked about and alluded to is, we're able to break that apart now and basically take each component as its own piece of value and deliver that in where somebody wants to buy that or somebody wants to plug that into their institution.
Couple of examples of how people have deployed this approach, If you think about on the banking side, the example we use is a large super regional bank. They came in, they basically went and looked at it and replaced their in house systems and some third party systems with a full stack type of an approach, right? So full stack meaning back office, middle office and front office. They went ahead. They really, if you think about it, transform the way that the organization in the firm work.
They were able
to redeploy operational people into other types of roles, because we were able to take that on from an SPTC perspective for them. Just as important, we were able to help them retain and retire systems that fit their infrastructure, right? So how do we go out and help them make really smart capital decisions across their technology stack? Where does SCI replace things and where can they retire, so that they are not in the business of running infrastructure just because they are in the wealth management business. And then lastly, if you think about the other thing we were able to do that gave them a significant lift is we were able to give them a single place to manage portfolios that gave them the commanding control to feel good about their wealth managers across the organization really using a single set of approved portfolios that then the organization could track and make sure that the adherence to those portfolios was there and that most importantly, everybody is managing money in a way that that's keeping the risk at a single profile.
Another example, it's our independent advisor solutions organization, so Wayne's business. And if you think about how they have deployed the wealth platform, a little bit different, right? So the entire business is now over on the wealth platform. If you think about that, it's over 350,000 accounts over $65,000,000,000 that's a large book of business being run on the wealth platform. But the platform works the way the advisors work.
And what we mean by that is, it enables the type of flexibility that the market requires. So, if a client wants to manage a client or investor out of their CRM, they can do that, that integration there, that's critically important because we can't go in and disrupt the workflows or how that advisory firm works. Another way to think about what we did there and what we moved the needle on is instead of having to have flip rate accounts across SMA and ETFs and mutual funds, advisors are now able to manage a single model that has all of those holdings in a single account, right. So much easier from a servicing perspective and it certainly makes it much more understandable by end clients who really don't understand why the portfolio that they were presented then turned into 6 or 7 different sub accounts and creates lots of confusion there. And then the sort of the last but certainly not least is the ability for the platform itself to enable what could be up to 7,000 different type of workflows, right.
So if you think about it, every firm is going to work a little bit differently. In some cases, Jim might have to approve my trades. In other cases, I might work at a firm where nobody has to approve my trades. How do we set up the platform, so we can enable those workflows and again not be disruptive to those clients? So these were a couple of use cases that we use.
Certainly, Jim is going to get into and talk about how a similar approach to One SEI is going to has worked and will continue to work for IMS. But if you think about some of the things that have happened already is the advisor space, digital account opening is utilizing some of the services that Jim built into the IMS business, right. So that's something where we are able to sort of knock down the barriers between those two pieces of software and use that component to deliver value into a different market.
So as he said, I'm going to talk a little bit more about the investment manager experience. So investment manager platform was built around providing back office services, middle office and integrating and providing front office services. These are really important for investment managers, and the one of the strengths of our platform is our ability to process complex assets across any type of vehicle, so any type of separate account or pooled vehicle as well. We do this based on our ability to have best of breed accounting engines. So it's really important for us to be able to process private equity in a certain way that's different than a mutual fund and different than a wrap account or a traditional mutual fund.
Core to all of that is we also integrating with a lot of third parties. So we're getting and providing information from 3rd party providers. One thing that's unique about our platform versus some others that you might see in the industry is that data management is at the core of that platform. Why that's meaningful is that if you have a portfolio accounting engine at the core of your platform, you're limited by the data that goes into that type of tool. You're limited in the security reference data.
You're limited in the investor as well as firm information. We built our platform out with data management at the hub, and that allows us to normalize the data out of all these different types of account processing engines, specifically around security reference data, but even more meaningful around the investor data. So what that means is we can capture a golden copy of an individual investor for one of our clients, apply to multiple funds that they or accounts that they might be invested in. We can also expand the breadth of that data to facilitate better investor reporting, better analytics and better regulatory processing. It's core to our overall platform and it is something that we're leveraging from the SEI-one perspective as well.
And then where you go from there is how we built out that platform and we built it out in a modular fashion that allows us to have really 3 main views of our overall business that are incorporated in almost all the clients that we implement, but can stand on their own as well. So specifically, the investor platform, which encompasses digital onboarding of clients, the investor data reference management and investor reporting tool is how our clients have an independent perspective to their end investors to deliver information for them. It can be things that we process, it can be things that they process and provide to us. That's all built on an API infrastructure, so that if our clients build their own investor portal or if they have integration to a CRM system, they can leverage the same APIs we use to build our technology to build their own. It is good because it creates consistency, there's a lot of controls and security around it.
It also connects them to us for a longer period of time. It's easy process to get into and it makes a lot of sense to maintain it long term. We also have similar processes around how our clients' investment managers interact with us and a lot of these are being leveraged with SEI with 1 SEI as well. So this is cash movement capabilities, manager reporting, voucher portfolios, generating client reports, performance attribution and risk around your overall business from an investment perspective, transparency into our operational processes and document management, so any information that you're storing about your business or about your clients. And this is really how our clients interact with us.
And we're starting to leverage that across the business as well. And lastly, regulatory platform. And I won't steal too much of Phil's thunder, but the one thing I want to mention about it is, we've built it out as regulatory processes that we've been doing across our business for decades and we've enhanced it based upon industry needs, but it's built on the same concept of core capabilities around processing, but data at its hub, so that we can use that data to help our clients better understand their risks and ensure that they're following all the compliance requirements that they have. So a couple of quick case studies. The first one is really around that top left hand bucket, which is our investor platform.
This was a large global bank with an investment firm whose alternative business we are providing administration on and what we did was they had a large volume of transaction activity, so client onboarding and ongoing transactions around a very labor intensive processes, which is getting into a hedge fund. You have to fill out a very large document. It's inconsistent. We digitized that process for them. So we structured the data.
We made it easy for an investor to get it into a fund and we made it faster for the money to get into that fund. And we also facilitated a better regulatory process around it and we branded it under them. And so now that they have a process that their clients feel it's easy to interact with them. We also cleaned up a lot of their data. So they had multiple sources of information.
We brought it all together in a consistent format that allowed them to integrate to other parts of their platform as well. These are through API integration. And then lastly, we delivered them an ability to interact with their clients from a reporting as Rob said, components of that can be incorporated in other parts of SEI's business, account onboarding for a trust account, integration for electronic signature for opening up an account, things of that nature. So the pieces of this puzzle can be used in a different way as well. The next was an example of a traditional asset manager that wanted to come to SEI as a partner for outsourcing.
Obviously, that's a big part of people why people want to do business with us, our expertise, our capabilities, our technology and our people, But they also recognized that this was an opportunity for them to change the way they were doing business. So they had legacy tech. They had different things that they wanted to be able to do. So along with their onboarding and their outsourcing business, they recognized as an opportunity to integrate with us. So a couple of specific examples.
I mentioned one of them in another situation, but they have sales force as a CRM. They can do API calls fully integrated into our business model so that we can manage their investor data for them and they can have full integration from client opportunities to just reporting on their clients via their CRM tool. They also have the ability they have an internally built order management system for trading and they have the ability to hit an API that does real time pull of the positions from our platform into their tool for real time trading. And again, this is really just integrating them into our overall platform, helping them manage their business better and creating a longer term relationship with them. So our goal in trying to talk to you about this was really to explain in a little bit more detail with examples about what our overall One SEI strategy is.
So we feel like we're bringing a differentiated solution. In one way, we're doing horizontal integration, if you think about that second picture I showed you. We're bringing information to the market across multiple platforms and multiple types of business, so that our clients can have one provider that provides these things to them. They can have multiple if they want, but we're giving them a consolidated solution. We're also doing vertical integration.
So historically, you might have looked at SEI as being a back office provider, be a custodian processing or investment management back office fund admin. We really have moved up through the process with our firms. So we're doing middle office processing, obviously, but more importantly, we're interacting with their front office. We're giving them solutions around investors and trading and integration, and we're giving them a core capability to interact with that as well. And very I've mentioned this a few times also, but data is quarter to all of
these parts of this platform.
There's other competitors in the market that might offer you a data aggregation front office experience, but it's not fully integrated to the back office. We feel that our expertise and capabilities across all these platforms is key to this. So that if you're looking at information in your front office, it's consistent with what you get from the back office and it benefits from that full integration. So we feel that that whole suite is really beneficial. So the summary of this is that we're using SEI's assets to deliver solutions to our clients to solve some of their biggest problems around how they do business.
And a good example of that is regulatory. And I'm going to hand it to Phil and he's going to take it from there.
Great. Thanks. Thanks, Greg. Excellent.
Yes, I think everyone in
the room can, to one degree or another, relate to how complex and burdensome the regulatory landscape has become. And this has been driven by very active regulators. And this slide demonstrates kind of the breadth and depth of that complexity, if you will. And as Al mentioned earlier, this really is a general matter, creates a headwind
in the industry in financial services.
The complexity has been driven really by 2 factors. 1, there's been a torrent of regulation adopted over the last several years. While that has slowed somewhat, it certainly continues unabated. Also global regulators have been very proactive in enforcement. So from a risk perspective, the reputational risk, the financial consequences of non compliance make compliance a must have.
It's not optional. So from a market characteristic perspective, we think that's important. This has C suite attention, because you've heard discussion also earlier today about how asset wealth management face fee pressure. So if you combine that with increasing cost compliance, it really exacerbates that margin challenge. To kind of bring that to life a little bit, one of our clients recently sharing with us this individual is with the portfolio management group, but an asset manager.
They were sharing with us that they actually are advocating for more analyst resources, which ultimately drives their investment performance success, they're having to compete with the compliance team for additional resources.
So you can get in
sort of a Faustian choice, which is not ideal because at the end of the day, as I said, the risk of noncompliance are significant. But in that asset manager's case, what drives their success is their investment performance. The good news for us is that dilemma leads to outsourcing discussions, which is reflected in the strong willingness of our clients and prospects to engage in this area and reflected in really strong sales activity in this area.
Brief kind of history on
our regulatory services. While this timeline starts in 1980, as Jim mentioned, really we've been providing regulatory services since the inception of the firm. The challenge for us historically was we typically bundled those regulatory services into a core service offering and did not charge separate fees for those. Post financial crisis though, there was inflection point that we could take advantage of. Prior to the financial crisis, private fund investment managers were either unregulated or lightly regulated.
Post financial crisis, however, global regulators in the vein of monitoring for systemic risk required private fund investment managers among other things to start filing transparency reports on a periodic basis. That gave us an opportunity to put a stake in the ground and say, look, we're providing regulatory services on a standalone unbundled basis. At that time, we made a couple of decisions. 1, we were developing our own software at that time. We were also offering kind of discrete services, not in a platform context, if you will.
Now as far as developing our own software at the time, that was a good decision because at the time, there was no industry leading software to integrate into a platform. However, today what we're doing is offering a comprehensive platform built off of data management and really looking to solve all of our clients' needs across wealth management and asset management from a regulatory perspective. If you're looking for a successful model within SEI or an analogy, really what Jim went through in the IMS construct and architecture is really what we're doing here as well. This is a snapshot of the platform. A couple of things I want to highlight.
As I mentioned, it's built off of regulatory data management foundation and it's an open platform in 2 respects. One, it's an open architecture approach. That's not to say we wouldn't have our own applications integrated with the platform at some point in the future, but fundamentally it's an open architecture approach. It's also open from the perspective of we're selling this to clients, existing clients today and net new clients. Ryan Hickey is going to speak about IT services after the break, but we see an opportunity to cross sell IT Services here, very natural cross sell evolution for us in 2 opportunities.
1, with the GRC clients, but also as we gain market share through the platform, regtech firms and application providers. We've actually had a few of those conversations already. The final two points I'd mention on this slide are really important. Business services for us have turned out to be a key differentiator. What we're finding is that our clients and prospects, even if they license industry leading regulatory reporting software, as an example, they're frustrated for 2 reasons.
One, they're having difficulty mapping the data into the software. And 2, they fundamentally, going back to that kind of Faustian choice I mentioned, want to outsource the service. We have a very slick client facing workflow that we use, keeps them engaged in the process, gives them ability to oversee the process, but it's a very transparent process for us. And we've got a scalable business platform that we've created for in reg reporting, for example. What's interesting about this is, we've licensed some we've partnered with a few firms for this software, if you will, that we've integrated into our platform.
Some of our competitors have recently approached us about, would you provide business services to their client base? Their client base is facing the same challenges I just mentioned as far as data mapping and wanting to outsource the service. And so we're very excited about those conversations. We had a firm like that in here just yesterday having that exact discussion about providing managed services to their client base. But what's also important about it, it really validates our open architecture approach.
The final point I would mention is in the vein of One SCI, we're leveraging existing assets in this area. So we're really excited about it. The API infrastructure that Jim walked through is really important for us because it gets us to market faster with the comprehensive platform, integrating data from multiple sources, but also integrating applications into our comprehensive platform. From a market sizing perspective, there's various studies out there that show this is a large market opportunity. There's the next slide here, we've got there's a large target rich prospect universe.
So from our perspective, there's a large market opportunity about how you slice it. Another important market characteristic, however, is a fragmented decentralized market at this point in time, but there are needs that are in common. 1st and foremost, a need for regulatory data management, also services as well as technology. And our phrase in this area is we provide technology enabled business services and are really taking our clients from doing to reviewing. Also, in light of that fragmented nature of the marketplace, there's a need for a comprehensive platform from a trusted provider.
And if you're familiar with, there's been a lot of so called regtech products flooding the market the last several years. And while that's great, there's a lot of innovation around that, those firms are sometimes challenged in 2 respects. 1, oftentimes they don't necessarily come from the regulated environment, so they're less sympathetic to some of the challenges regulated firm faces. Then almost universally, those firms are startups, so they pose high counterparty risk, and have difficulty getting through procurement processes. If you contrast that with SEI, we're a trusted partner in a couple of key regards.
1, we present low counterparty risk. As Al talked about earlier, high cash flow business, high recurring revenue, been in business for 50 years. We've been ourselves are highly regulated, have been providing regulatory services since inception. So fundamentally, we have a lot of credibility when we're selling into this market. We also importantly, as we are bringing this platform to market, have critical assets that we can leverage that a lot of our competitors do not have to get to market quickly with us.
And we have a large existing audience to sell to. We have 250 investment manager clients, 100 wealth manager clients, all highly regulated, all with regulatory needs. So again, from our perspective, no matter how you slice it, there's a large opportunity for us and we're well positioned to exploit it. So I realize we're ahead of schedule here. So I'm going to wrap up with a case study here that elicits some of the stuff that I've mentioned.
This is a client of ours we closed last year. It's a $60,000,000,000 investment manager and they offer several investment strategies and they have no prior relationship with SEI. Their challenge is that while they have a regulatory team, they're stretched incredibly thin and they were struggling with one set of reports in particular. They came to us and asked us for help on the data management side of their business. So what we're doing is we're taking in all of their raw data from 2 of their accounting systems that they maintain.
Importantly, we don't maintain that. And we're taking that in. As Jim has discussed, we're aggregating it, cleansing it, enriching it and pushing it back into 2 of their software systems that they've licensed. And fundamentally, what this does is it's significantly improved the automation of the process. It's given them much more transparency and visibility into the data.
So they feel much more confident that they have accurate, comprehensive data. From a timeliness perspective, that filing timeline has been compressed significantly. So they're not bumping up against deadlines and then having to worry about the quality of the data. And from our perspective, this was critical because it proved our data management model in this area and the fact that they didn't have a prior existing relationship with SCI and the fact that we don't maintain any of their back office systems, it's opened a whole slew of prospects for us in this area so that we don't have to have a back office relationship with them. We can deliver these services to them regardless of that.
And finally, this is the firms we're targeting are firms that have we think once we gain an entry point, we have an ability to cross sell them on various services. And so in this case, we are in fact fortunate enough to close a cross sell with them very recently. So it's somewhat up in the regulatory compliance platform. There's a large market opportunity. We're well positioned to exploit it.
And importantly, we're leveraging existing assets. Dennis, I think we're a little bit ahead of schedule.
All right.
There was a lot of pressure on the early presenters to move quick so that we so the Paul Carter didn't have 2 minutes at the end of the day because that's usually what happens to Paul at these things, but also to make sure we had enough time at the end of the day to talk about as we get updates on the business, but the Q and A. Now we are going to take a break now. There's demos out there and we have 25 minutes allotted for the break. So if we can stick to that, we'll be able to get back and start a little bit earlier. Hopefully, this morning, you got a quick insight into who we are and how we think of ourselves.
And as Al said, we bleed green technology. So somehow there's dramatically a tie into ESG there. But we do believe both. You also saw how we look at the world in terms of 1 SEI and unleashing all the assets SEI brings to bear in all of our markets, opening them up to new possibilities, new capabilities and delivering them in new bundled solutions for our clients and then the flexibility that we have been working on improving in the access to all those assets. You've heard about our technology stacks and how we work with those.
And when you think about those headwinds that Al talked about and how we flip them into tailwinds, just the topic of fee pressure. A lot of what we've done technologically and operationally is to help our clients drive greater efficiency, greater scale, improve their business performance, so they can deal with that headwind they're facing on their top line pressure and get that and let us support their infrastructure as much as possible to give them some relief and to give them help them maintain that their kind of marginal profitability and give them more capabilities to grow. So we really are kind of we face some of these headwinds because we're in the business. And to that ecosystem slide, we also take advantage of those. What we build for ourselves that deal with those Hellen's and turn them into tailwinds.
With that, enjoy the break. You'll see some of the things that Rob and Jim talked about out in the demo centers, the pressure coffee and we'll see you back here at let's shoot for 5 after 10. Okay, welcome back. Thanks for your prompt return after the break. That's usually a big risk and these things stay on time.
Next, we're going to hear from this is for the SEI people, a little bit of an audible, but next you're going to hear from Ryan Hickey, who will talk about our new offering in the IT services space. Then you'll hear from Kevin Barr and talk about our asset management side. And then we are going to move right from there to Steve Meyer talk about the Private Banking and IMS business and then we will take another break after that and then come back with Paul and Wayne and then the Q and A session. So with that, I'll hand it over to Ryan. Thanks, Dennis.
So we are ahead of schedule. So I was told to take this slow and see if I could work through the 11 waters that are up here during this presentation. I'm really going to try to cover 3 or 4 things during this presentation. One is I want to make sure I explain what is SEI IT Services, why we're excited about it. And I think part of that is going to tie back to Al West's opening comments about taking things that we do today and strengths that we already have and leveraging those strengths.
2nd, I'm going to give you some insight into the solution. And then 3rd, we'll make it real with a couple of case studies. So first off, I want to talk about the fact that we have the assets, we have the talent and we have the experience to compete in this space because we already do. So you're going to see some stats up here in terms of we've been hosting and managing client and financial data. I'm going to try to make that real.
We have over 1,000,000 end client accounts. We are responsible every day for protecting that client data, for delivering those services to those clients. This is something we've been doing since day 1 of SEI. We do that in a heavily regulated environment. So we understand financial services.
We understand what our peers, we understand what our clients are going through every day in terms of figuring out how to manage technology in a rising complex market. When we talk about operating as a regulated entity and delivering these services, I talked about the assets. We have a 16,000 square foot data center on-site. That's our cloud. So we've been delivering these services in our private cloud.
We are exploring how to deliver those capabilities through the public cloud and through hybrid means, but we've been doing this again on-site with these assets for a long time. And the reason I think it's important to emphasize that is when we talk about competition and we talk about the opportunity we see in this space, it's a very high barrier to entry
just to be able
to have the assets and have the capability. But not only from a capability perspective do we have the tools, we have the people. We have a highly, highly experienced and talented team that is doing this every day on behalf of SCI and our clients. We think we can open up those capabilities and those assets to the market and drive further business adoption. So I'm going to spend a couple of minutes now actually talking about the headwinds.
I won't go through every one of these, and you're going to see a lot of overlap between the headwinds we see in the rising cost and complexity in the IT space and what Phil Masterson presented from the regulatory and compliance space. There's a tremendous amount of overlap here, which is why we see the ability to maybe package these capabilities together in certain areas.
But I'm just going
to touch on a couple of these. I won't go through every one. Let's talk about rising and unpredictable costs. There was an article we were reading last week just talking about how it's not just the acquisition of all these new tools and technology, it's the implementation of them, the training, the ongoing maintenance and monitoring. So how are organizations equipped today to not just stay ahead of what's happening, but to actually implement that inside of their own house.
It's a hard thing to do. We do it every day. It takes a lot of orchestration. It takes a lot of coordination and it takes a lot of people. But this is something that firms are challenged with every single day.
I think everybody in the room is aware of the increasing demand on cybersecurity. The penalty for failure there is extremely severe. I think there's a misnomer that those cyber attacks are pretty much predominantly focused at larger organizations. I won't throw tons of statistics at you today, but one that is really relevant to our value proposition is 47% of cyber attacks on banks last year were on banks with less than $1,000,000,000 in AUM. So when you think about that and you think about our target market and the clients we serve and the size of those organizations, they are legitimately and literally under attack on a daily basis and they are going to have a hard time to equip themselves to be ready to not only make sure they manage and maintain that, but also deploy that resource and capital in some of the areas on the right hand side of this slide.
So then when you get to the things that Jim Warren and Rob Reis talked about and the increasing demand and need for innovation in that end client digital experience, that brand and reputational risk to make sure that you're showing you're an innovator, At the end of the day, midsize organizations are going to have to make a choice. They're going to have to decide whether they're deploying that capital across the infrastructure space or deploying that capital to try to further their end client and advisor experience and offerings. We believe that we can partner with these organizations as we partner with clients forever to bring them more capabilities and more resources to bear to free up their time to focus on what's most important to them as an organization. These themes are really relevant in the market and we get excited by them because we are dealing with them every day at SCI, but we really believe that if we can be thoughtful and deliberate about how we position these services, there's a tremendous opportunity for us to become a deeper strategic partner with existing clients and future clients. The last point I want to make here is on talent.
You'll hear a lot and we read a lot about the word for talent. But if we're just talking specifically about the technology space, everybody hears about how difficult it is to acquire and retain talent in the IT space. One of the other issues that isn't talked about enough is that talent is not really fungible. It's not portable and we live it every day. The types of talent that we hire to do the things that Jim and Rob were talking about, about building out that API infrastructure, about building out that ecosystem is very different than the talent we are hiring in our information security space.
You can't just move that person across the campus and say, okay, now get after it, start building up some APIs. It's a very different skill set. So not only is it difficult to retain and acquire that talent, you've got to make sure you're acquiring that talent across this continuum. Again, I'm not going to keep belaboring this point. That's talent we have today.
That's talent and experience that we've built up over 50 years. We have people that are really, really good at this. So what are we going to deliver to the market? What's out there now? I think consistent with this theme of modularity, I'm going to try to walk you through the anchor services that we're going to take out to market with the IT Services business.
If you go to the hosting services at the top, this is the infrastructure for us to take on the management and the hosting of the data and applications for our clients. Again, nothing new for us. We are managing and hosting over 160 applications today already in how we deliver our platforms out to our clients. We're going to extend that service to make sure that we have the ability to host and absorb more of those applications on behalf of our clients and future prospects. But if you think of this kind of in a modular nature, the clients can consume the hosting services and then they can also take our cybersecurity services and if you go to the left, the network operation services.
But by default, I don't want this to confusing, if the client is consuming the hosting services, they are within our walls. So by definition, they are going to get the same cybersecurity services and network operating services that we're delivering for ourselves and our customers today. So we really believe that we have the ability to deliver a comprehensive platform, but again, consistent with what you're hearing throughout the day with One SEI to give the clients some choice in how they want to consume or how we can deploy these services to market. On the right hand side, you've got the cybersecurity services, obviously an area of growing demand, growing need. I think one of the differentiators that SEI brings to bear here is we detect and remediate.
There are a lot of firms out in the market right now that are offering services in the former and none in the latter. So that's great for a roofer to tell you you've got a leak, but you need some help actually fixing the leak. Our entire service orientation and mindset as a strategic partner is not just to deliver services for the detection, but to help our clients remediate that and make sure that's remediated for the long term. We really believe that is a differentiator for us in this space. The enterprise services at the bottom, I would see these more akin to professional services that we deliver today in a lot of our businesses.
And I'll just give you one example, and this is a recent conversation that we had. One of the organizations that we spoke to is looking at literally moving their data center from location A to location B, and they're just asking for SEI to provide help. Could we provide some consultative services to help them make sure they manage that migration appropriately, that they're thinking through all the things that they need to think through to move their data center. How we would price that might be different. That might just be a professional services engagement.
But again, we will package these services as part of the overall offering, but we will look to deploy some of our capabilities and experience in ways that can just help our clients solve the challenges that they're faced with every day. Does that make sense? Now I'm going to try to bring it to life. We have 2 case studies here. The case studies are simple, hopefully to the point.
1 is an existing client. So the first client live on the IT Services platform is a client in Steve's business in the IMS market. That client was in the process of consuming the IMS platform. Through dialogue with the IMS sales team, it was identified that the organization was really looking to outsource as much of their investment technology as possible. The CEO of the organization believes strongly that their value proposition and focus should be on growth and where they can outsource as much as possible to one partner that is in their interest.
They believe we are the best partner to deliver those services. So this is a client live today that we are delivering the hosting services as well as the cybersecurity and the network operating center. So they have moved their applications on-site into our data center, but not only redelivering the IMS platform, but we have augmented that solution to deliver the IT services. The reason we see that as an exciting opportunity for us is, as we talked about today, our ability to take these existing clients and segments and take these new platforms to market just strengthens and furthers the story that we take out to the market about being a strategic provider, about being an outsourcer, about being that one stop shop. So this is one example, live client, existing market today.
The next example is a new prospect. It says new client will say prospects right now. What's interesting about this is this is a bank in the southern part of the United States that is looking for more services to help manage their information technology, specifically in the cybersecurity and network operations center space. And again, to bring to life the modularity of this, they will continue to maintain and manage their own data center, but we can still deliver all the services that you see in the green and the blue here. We can VPN into that data center.
We have a proof of concept going today that they can take advantage of the offering that we have while they maintain the flexibility and ownership of their own data center. What's interesting about this client is it's a community bank that does not have a wealth business. So they don't have a principal income accounting need. So typically not a bank that SEI would call on because our processing solutions to date have been targeted to those types of businesses. But this is an extremely large market that we could potentially tap into with these services, but a market that we understand.
We've been in that space for 30, 40 years. We are a known name and an extremely credible name in that space and in that segment. So I just wanted to kind of highlight another example where you can see an existing client consuming more from SCI, but a new client that their first entry into engaging with SCI could be this service, which would open up the door for us to have conversations with that firm strategically across all the platforms and capabilities that we could bring to bear. So I think overall, I try to keep that to about 10 to 15 minutes. But if I really sum it up, we're extremely excited about this opportunity.
And I think we're excited for a few reasons, and I've heard you've heard some of them today. We have the talent and we have the assets to really compete in this space. The market is extremely large. I could take Phil Masterson's slide that he had up in the target market, and we would say it's the same target market. It's regulated financial services organizations that could potentially extend beyond that.
So we have the assets and the capabilities. We have a large market and a large market that is not going to be able to solve this on their own. They are going to have to partner with somebody to figure out how to solve those headwinds that we threw up a few slides ago. And our experience and our expertise is a real differentiator. That is a legitimate and genuine differentiator for us in the market because we've been in this space for so long, our ability to really think along different lines, but also to stay abreast of what's happening and stay ahead of what's coming in some of these areas, we have to do for ourselves anyway, and our clients and partners can leverage that moving forward.
So we see this as a big growing market with an ability for us to move pretty quickly with capabilities that we have today that we will expand over time.
So I hope that gives you
a better understanding of the IT Services business. I'm going to turn over to Kevin Barr. He's going to go through the asset management platform and what we're doing in that
Thank you, Ryan. Good morning, everyone. I am going to spend the next 20 minutes, hopefully not much more than that, talking about our asset management platform.
This is
the part of the presentation in which you don't have to refer to your glossary because you're all in this industry, you know what we do. And I think what hopefully comes out of this presentation is you understand how integrated asset management is with the overall One SEI model. So to get into our platform and for those of you who don't know or just to level set, we currently have through the end of Q3, we've got about $240,000,000,000 under management. That doesn't include the LSV assets. That is representative of the assets that SEI manages directly.
So when we think about the fact that SEI is not the largest, but we're certainly not the smallest, we cover the gamut of different strategies and approaches that are used in the industry and because we are a manager of managers, we see all these different strategies on a regular basis. Because of that, we also are very cognizant, as you all are, of all the headwinds that exist in the industry. Never has there been more challenges that are facing the industry than there are today. Whether you are starting with the end investor and the knowledge base and the increased optionality they have as far as choices of how to implement goals and strategies, it's unprecedented. Similarly, on the other side, you've got a scenario where from a regulation standpoint, you're seeing increasing pressures on firms having to comply with not only U.
S. Regulations, but also globalization efforts. Then you add in the other two aspects, which is there's tremendous globalization impacts on our economy, on foreign investors, you name it. And we are only one tweet away from having a triple digit market movement and that's the way that our investors are being challenged today and it's very difficult. The result of that obviously is those headwinds can really be consolidated into a couple of key things.
First is commoditization. The cost of accessing investment products is going down on a continuous basis. That marginalization means that people are creating more products, they are launching more strategies, Oftentimes those strategies reflect what worked good yesterday. It's a rearview mirror approach. But the reality is you have to continue to go ahead and reinvent products and services because the reality is prices are coming down.
That leads to this concept of product proliferation and these elements are what we're bombarding investors both institutional and retail investors on a daily basis. We look at those and rather than looking at those as headwinds, what we really see is those being tailwinds. These are opportunities for a firm like ours and the reality to steal a misquoted saying from Mark Twain oftentimes, which is basically the story of the demise of asset management industry is far from being grossly exaggerated. We don't believe that there is any reason to expect that we're not going to be able to be successful in this market. And part of that goes to the fact that Al has already mentioned, our foundation was never around creating individual products.
We are not a value shop. We are not a momentum shop. Our focus has always been on providing advice to institutional and retail investors. That's been our model. We've done that through multiple ways, which I'll talk about in a few minutes.
But that model is more relevant today than it ever has been, because of all the choices, because of all the product proliferation issues that we're seeing in the marketplace. What I think is really changing that's really important for all of you to really recognize is that while our advice has served us really well in growing those assets more than doubling since the financial crisis, the reality is the choices, the opportunities, the ability to customize for the end investor because you're all on devices, you're all having access to your portfolios, you're all customization and the quantity of information can only really be satisfied through the use of better technology. And that's where the asset management industry really has a challenge, because if you don't have the ability to couple all of these different choices with technology, you can't satisfy investor needs. And so I want to spend the next few minutes just talking about how we're going about that and then giving you a few examples.
First of all, as I
said before, we don't believe the industry is going away. A lot of conversations around the fact that passive is the only choice going forward and that there is going to be a breakdown in the industry if you are in active management. The reality is it's not true. You take a look at global assets under management, you're seeing in a situation based on this study that's represented here that global AUM is expected to
go ahead and reach $100,000,000,000,000 by next
all different asset classes in all different investment approaches. This is important because what this really illustrates is that clients want choice and they're exercising their desire for choice with these different opportunities. So the reality is, it's not one versus the other, it's all of them and choice is now in the hands of the end investor. Similar to active passive debate, one of the big issues that we're seeing is the scenario of how people consume investment products is changing. It's not just mutual funds, but the reality is, as clients in their quest to have greater levels of customization are looking at different structures, investment product structures, account structures to go ahead and exercise that level of customization.
You're seeing big growth in SMA separately managed accounts, the only acronym I try to use and you're also seeing a lot of growth around other products, collective products like ETS. Again, is one better than the other? Is one going to go away in response to the growth of another? No. This is a situation where you're seeing there's growth on all levels, again, representing the fact that investors want choice.
So you've got an industry that's growing. The industry is complicated because there's a lot more options in the marketplace. There's a lot more uncertainty on how people are going to implement their investment choices. Lowering price just increases the confusion in the marketplace because now people have a lot more opportunities to exercise their financial objectives. So what's happening?
Well, in SEI, what you've seen, our response is that we have been representative of the industry. We have continued to grow our assets under management, as I mentioned before, roughly $240,000,000 But it's also come at the results of actually the opportunities to add choices for investors and what I mean by that is that you might assume SEI to be a provider of mutual funds only. Over the last several years, we've continued to add to our choices for investors, not only in terms of investment style, but also investment structures. If you look at the graph here, you can see that we went from almost an entire structure in AUM balance within our mutual funds to a scenario now where we have a combination of mutual funds, separately managed accounts, ETF strategies, it's just continuing. It's a big opportunity for us and part of that really reflects the fact that our history, our foundation was going again back to advice.
You can't be an advice provider without collecting a significant amount of data. And one of the real core competencies of SEI is the data and the knowledge that we have on the industry. We utilized that information on asset allocation, manager research, investor profiles to go ahead and create products and those early products were multi manager mutual funds to grow the business. As we got more and more an understanding of what clients' needs are, we adapted. And on the traditional asset management side today, we cover the full range of active, passive and factor based implementations.
We have mutual funds. We have ETF strategies. We have separately managed accounts. And then we've also been a leader. We always talk about goals based.
We've been a leader in our objective based strategies. At the same time, we were building those solutions, we are also recognizing that there is new opportunities on the alternative side. And so we started building non traditional products, initially hedge fund to funds and ultimately now if you look at our catalog of offerings, we've got
a lot of products.
This looks a lot like the industry and by any stretch of success, we would say, hey, we've done pretty good. We've got over 2 50 registered vehicles. We've got $240,000,000,000 in assets under management. We've been successful. The reality is when you look at those headwinds, this is not enough.
And so if you look at where we're going and where we've been building towards, not new, this is something that we've been building towards and why we continue to stay relevant is because what we've been able to do is leverage the one SEI model to complement what our product offering and we'll continue to build out our products, but we are one of the few asset managers who are also able to go ahead and really say we are a technology company and that technology company gives us the opportunities to do implementation. In addition to that, our core value, which I started off the presentation being advice, is a key component in an environment where it's getting increasingly complex, advice becomes the key importance for the end investor. Being able to go through all the different variables, all the different options for an end investor is really the benefit and we're continuing to build on that level of advice by all of our relationships, the continued interaction with the industry of being a manager and manager, understanding opportunities associated with styles, implementation approaches, investment structures. These are things that just make us better at providing advice. Where this all wraps together is this continued evolution of technology that you're going to hear throughout today and that's really the ability to customize client portfolios.
Because customization from our perspective, the ability to drive down to the end client, identify their specific needs and address their needs with the appropriate and optimal investment strategy is what SEI is all about. It's not about individual products, it's around meeting client objectives. So if there is one slide that I would like you to take away, it would be this slide, because this really encapsulates what we're trying to do from an asset management platform and this is why we believe that the headwinds that I mentioned early in the presentation really act as tailwinds for us going forward. I want to take this and give you a couple of examples of how we frame this and generate revenue as a result. So the first is separately managed account platform.
I told you that's a big area of growth in the industry and SEI is well positioned to do Why? We do a lot of manager research. We have over 1,000 managers in our database. We're able to go ahead and provide expertise to help individual clients identify not only the type of implementation they want, active, passive, factor, the types of managers they want, but then we're able to go ahead and implement that at a security level implementation. So it's very specific.
It's very important from the standpoint of understanding the advice component for that client. Is it going to be a taxable account? Is it going to be a non taxable account? Everyone is talking about ESG. Obviously, we do a lot of business in Europe.
It's much further advanced in Europe than it is here in the United States, but it's coming. It's just another form of customization. And what we're able to do is by understanding the specific needs through the advisory process of the client, we're able to put these overlays, whether it's a tax overlay, whether it's an ESG overlay, any kind of customized implementation overlay on top of that security level client account. And because of that, it becomes a very specific, a very customized implementation. And that's how we've been implementing our mutual funds.
That's how we're able to implement our SMA relationships going forward. It's also an opportunity for us to take trends that are happening in the industry. If you look at the boomer generations and the needs of income, we are able to go ahead and say we are going to solve for income. We are not talking about individual products. We are going to solve for financial needs.
Here is a great example where we're able to go ahead and solve for the income needs of a client, actively manage those needs, not be worried about whether it's an active, passive, factor, multi manager, single manager, those are choices that SEI can implement and we have the means to implement it. Instead what we're doing is we're tagging our infrastructure on to our advice model in solving for a specific client need. That's really important in the retail market, not only here in the United States, but also global. On the institutional side, you'll hear Paul in a few minutes talking about OCIO, outsourced CIO. This is a scenario where again the same construct around one SEI, how do we bring the capabilities and the competencies of SEI to bear for a broad set of client base for a broad client base is what we do.
And if you look at OCIO, it really starts again with our data, with our knowledge on the marketplace, with our knowledge around asset allocation, capital markets, individual manager strategies, but the reality is those pieces get enhanced as we move to the right. We are looking to add value and that avoids commoditization. We are going to continue to drive home the concept of allowing clients to customize their portfolios in order to achieve their financial objectives and through the opportunities of understanding the market through the capabilities of our technology underpinnings, through the investment acumen that this organization has built over the last 30 5 years, in just being in the asset management side, we feel we are really well positioned to take on those headwinds and truly go ahead and succeed in a changing marketplace. So my hope is as you leave this, you will understand that while the industry is facing a lot of headwinds, SEI is looking to remove itself from the core challenges of the industry and really looking to go ahead and create a new category, which is basically focusing on the end client and the end client's needs. With that, I think I've made it within the timeframe.
So I'll turn it over to Steve.
All right. So for
the next 2 hours, since we have some extra time, I thought before I get into the segments today, take a little bit of a step back and talk a little bit about change we made just about a year ago. Actually, it was November 15, 2018 and I remember that date because that's when I used to sleep. I remember miraculously 1116, that's when I stopped sleeping so much. So I want to touch upon where we are, why we did that. So if you look at it and going back to a slide that Al presented, we saw convergence in our markets.
So we do feel we're uniquely positioned, where we service wealth holders, institutions and where we are kind of with custodians, technology firms, other service providers. We're right in the middle. We serve as the hub. And what we saw back then and what we still see today is this convergence of needs among most of our client bases. So specifically in the wealth processing technology, we saw from banks, wealth managers, investment managers, needs start to overlap, requests for information about some of our technology and services.
So in looking a year back and some of the activity we've had in the market and the decision we've made and some of the things we've done around it, we absolutely feel it was the best decision. It was the right move to pull all of our processing and technology business together. As a matter of fact, because where we sit and seeing those needs and convergence, this is actually where SEI won, that's what we originally call it, that's why you keep hearing people slip on it, which we now call 1 SEI, that's where it was spawned. We sold these needs and these opportunities, whether it be a bank or an investment manager, a family office, a wealth manager, a global bank, we saw these needs start to pop up that couldn't be completely filled with one platform, but looking at the assets across SEI, they could be filled. So thus, 1 SEI.
So this is so important, we decided I was going to kind of recap again just so we all get it. First of all, I dare to say this again, it is not a separate platform. It is not SWP round 2. This is utilizing all the assets we have in the company that we've invested in over the past 50 years and utilize them in a different way. Most importantly, it's a mindset change.
We have to evolve how we're looking at the markets. So we have been very successful for 50 years going to markets with a platform designed for that market and selling it. We've competed well, We've been very successful. I wouldn't change anything about it. But the times are changing, clients are changing, the markets are changing.
And now when we go with that, we saw the need, but it's usually a piece of the puzzle. So we take a step back and look at it a little differently and broader across the assets SEI has, I think we have the opportunity to solve a bigger piece of the puzzle for the whole puzzle of these wealth managers. So it's a new business strategy. So looking at these clients and looking at them more at a broader enterprise level and their broader needs requires much more of our assets across SEI. 1 of the biggest changes we've made organizationally since we combined our wealth processing technology was to take all of our platform groups and solutions that sat in IMS, Banking, Archway, and we pulled them together in a common leveraged group.
And the reason we did that and the benefits having is, we don't look at things anymore just from a one platform view to one market. We still need to retain that keen and focused market intelligence and focus because I think that's one of the things that differentiate us. We understand our markets and our clients and their emerging needs better than anybody, but we need to have a much broader skill set and look for the assets across SEI. We have a real life example of this. We recently announced the win of CIBC.
CIBC was a lead in with SWP. They needed a wealth manager platform. CIBC also has grown through acquisition and they also have a large manufacturing piece of their business. So the broader need they had was needs of the IMS platform as well. We could have gone ahead and just pushed down the SWP and we would have solved the piece of the puzzle.
Client. And we did that by pulling the assets of those platforms together. And right from the client, no one else they looked at could do that. The reason we did that deal and we were successful in that deal was because of the ability of us to pull those assets together, come up with a different strategy and a different approach. This is also a technology strategy and advancement.
It's requiring our platforms to be very open, to talk to each other, to be open to the different markets. In IMS, over the past 30 years, we've built a very open architecture platform built on data. We have that same capability across other platforms. We just have to open them up to talk to each other. So to us, besides having a new business strategy, it is also a new technology strategy and a new platform strategy for us to make sure these platforms are open to any of the markets we have currently at SEI or any new markets.
I firmly believe this will also help us look at new markets and adjacent markets, and we can attack those markets quicker than we could in the past because we have more firepower to do that. At the end of the day, it's about unlocking the power and potential of all of SCI, all of our assets and all of our capabilities in a way we have not done before. It's about harnessing the power of what if. In the CIBC case, we dared to ask ourselves what if. What if we can solve this differently?
And that paid off tremendously. And I firmly believe us embarking on this one SEI concept will allow us to change the game and service our current clients, current markets and future markets in a way that no one else can. I believe the opportunity is enormous, and that's why you're hearing a lot about it today and you'll continue to hear a lot about it. So with that as a backdrop, why don't I get into the segments. So we'll start with Global Private Banking and Trust.
What I'm going to cover here today just as far as updates, I'm going to go a little bit of a snapshot or current snapshot of the business just as background, talk a little bit about our platform SWP and its resonance in the industry, talk a little bit about some current business updates and then also talk about what our key growth initiatives are. So to start, just this current snapshot of private bank. What we do here and what we've done well for a long time is provide a full platform of front middle back ups platform for wealth managers and their clients. We're somewhat different though than a lot of our competitors. It's not just a technology offering.
We're one of the only captive outsourcers out there that provides not just the technology, but the business acumen and processing behind that. We've done it for over 50 years. We service between trust and SWP globally of $8,400,000,000,000 in assets and we have the deep domain expertise both in technology and processing service the wealth management industry. It is a tremendous amount of expertise, manpower and technology firepower that we have to service the market globally. And that word globally is key because I think there's a ton of opportunity globally for us.
So when I first took over on November 15, when I decided sleep was not that important anymore, I listed out for you all 4 strategic themes. And I just want to review them because they are at the heart of everything they do. They are the foundation of what we do. And everything we do, invest and think, we have these kind of in the back of our mind. 1, we want to grow our business globally.
2, we want to monetize our investment in SWP. 3, we want to expand our markets and solutions to drive further growth and 4, near and dear to everybody's heart, we want to drive towards sustainable and accelerating profitability. Everything we do has this mantra behind it. So before we get into our platform, we've been at this for a while, obviously, SWP, and we get asked a number of times, because you've built this technology, been out for a while, does it still stand value in the market? Does it still resonate in the market?
The answer is yes. And if you look at it, and this we try to depict what's going on in our industry. So in the wealth management industry we service is very complex. It's littered with a bunch of technology, old technology, legacy technology with bold on applications and technology to serve the end need of these wealth managers. There's not one platform out there that people have been able to utilize.
So it's become a very complex mousetrap. And as these managers now, whether it be a global bank, a UK wealth manager, a large wealth manager in the US, either acquire, to expand into new markets, to expand institutional, they typically have to add more technology, more manual process, hold on another front end system. The mousetrap becomes more and more complex. So this complexity and difficulty in industry serves as the base of the value for what we've built around SWP. And I'm happy to say at the end of the day and looking at this being the newbie to it, but looking over for the past year, SWP still resonates very, very well, both here in the U.
S. And globally because this complexity is just getting worse and worse. So if you look at our platform, and Jim and Rezz went over this a little bit, we have a full front to back, frontmiddle, back office wealth management platform. And over the years, we've added to this, we continue to add to it, continue to upgrade it, but it is the only modern architecture platform out there with the scale and breadth to handle large wealth manager institutions. We've modernized it and opened it up by adding APIs, which allows our clients to integrate with us, to access information to us, build off of us and to continue to build and simplify their organization.
The one drawback we've learned with this, it is a very powerful transformational platform. It's a large proposition for a I talked when I first took over banking, we talked to some of our prospects that both won and that we didn't And the number one competitor we lost to is Do Nothing. And the reason was no one said to me, you got to do this on your technology. We don't see it. They all saw the value proposition.
They all saw the need. They said this would solve so much. But the fear factor of this is almost like heart surgery. This is so complex. And not from a complex from a platform, but all the downstream applications, everything that touches them, what they have to do to change their own organization is a big leap.
And if you think about banks in particular, it's a big risk, and they're not the biggest risk takers in the world. So what dawned on us is we have to try to find a way to make it easier for people to do business with SEI. If we have the firepower, if we have the platform, how can we make this easier for them to adopt SEI? And this is another vein of 1 SEI. By opening up our platforms and modularizing our platforms, we can still sell SWP in the full value of the stack, but we can also allow clients and prospects to lean into it and lean into it on a journey.
So maybe they don't have to take the whole stack, maybe they believe in the whole stack and they believe in the transformation, but they can either start from the back office core and then lean into the middle and front office or they could start with the front office and lean into the middle and back office. So again, having the power of opening up our platforms, including SWP, we believe will help resonate and have people adopt SWP quicker. Combine that with what Jim Warren and Rez went through on our platforms that we have across the company, platforms that we have not just on the wealth management, the distribution side, but also on the manufacturing side. This opens up a whole new opportunity for us because literally when you take everything we have with data as the core and the ability to solve the wealth managers' needs through manufacturing, We are one of the only firms and I believe the only firm that could solve a wealth manager's issues from portfolio management through their processing, reporting, distribution, manufacturing end to end the whole lifecycle, we have the assets at SEI to solve that. Not just one piece of it, one piece of it for 1 market, but the whole value chain, whether you're talking a bank, a wealth manager, an investment manager or a family office.
That's powerful.
So if you look at banking today, I want to go through a couple of key business updates. One word describes where I think banking is today, momentum. We've been looking for it for a while. We've made a large investment, as we all know, and there's been a lot of hard work over the past several years to get us here. But I finally believe we have momentum and we have the wind at our back.
And there are some key things we have to do to keep that momentum. So 1, market and sales activity update. I think these are some of the most important things that I would ask you to focus on. 1, our backlog stands at just under $50,000,000 and growing. Our pipeline is the largest it's been in years, both US and UK globally.
We have 26 active agendas that we're working on right now, ranging from regional banks, PCIM's wealth managers to large global banks, all of them in active stages of conversation. That is driving a lot of the momentum. You've heard it with some of the sales activity we've seen this year and we've announced. We think that activity and some of those names we've announced is just the start of something we're hoping to continue that momentum on. 2, globally, when we first set off on SWP, we built it focused out of the UK.
We did that for the primary reason of we knew that was the way we were sure making this was a true global system, and it is. There is a huge opportunity in the UK, one that I think we're positioned to capitalize on. We announced earlier this year the Fusion Schroeders deal, which we think is going to be a great opportunity for us to grow. It has a lot of noise and good vibe in the UK around it. But we also are in talks with a lot of PCIMs, wealth managers and some large global banks that are looking to make sense of their disparate, if you remember back to that slide, complex operating model.
We feel there's a lot of Trust 3000, so there's been a lot of talk in Trust 3000 and I think I want to take today to reset our lens a little bit on it. So one of the things that has been remarkable to me over the past year is I get this question every time I meet with 1 of you or I go out and talk in the industry, when we shut down Trust 3000 or decommission, that will be a positive step forward. That will be a great sign and Flexion Point for SWP. Why? It is a powerful active asset that is still useful and capable in the industry today.
There might be a time as we move and we are very focused on our Trust 3000 clients and moving the clients that are in the best shape, best need to SWP and that's resonating very well. However,
we still
have clients that are utilizing Trust 3000 and growing on it. And at the end of the day, there might be a time where as we move the bulk of business over, maybe it makes sense that Trust 3000 should be decommissioned. But that day is not today, and that day is not in the near future. I believe, again in the vein of 1 SEI, Trust 3000 is an active asset. Trust 3000 is an asset that we can continue to grow and start to morph down the path, the transformation path to SWP.
But today, it gives us flexibility and opportunity. And that's highly important. It's not that they don't believe in SWP. SWP is definitely in the future. But they want lack of disruption in the business they've just acquired.
They see the core capability, and that's what they want to lean into. Again, in the vein of 1 SEI, utilizing the assets we have and taking advantage of it to build the plan and the best process for the client. So to me, Trust 3000 is an active asset that we're going to look to grow and then eventually we'll have the conversation around does it make sense to migrate. Who knows, it could be that for a certain portion of those clients, Trust 3000 combined with some of our other platforms maybe part's way is a better opportunity. It's something that we will look at with the One SEI.
And then lastly, growing through headwinds. While all this is about driving momentum, we do have some headwinds that I sound like a squeaky wheel, but I want to constantly remind people. While I'm sure about our momentum and I'm confident in the momentum continuing, we are going to have some headwinds that put some financial pressure on us over the next year, primarily the loss business that we announced that still has to come off. We announced the federal contract Office of the Special Trustee OST that had left. I framed that on the last call, dollars 4,500,000 top line that has gone as of Q4.
Unfortunately, the majority of that also hits the bottom line. Now, while that will put headwind pressure that I just want people to make sure they know of, that's our job to manage through it and it does not mute the fact that we still have great growth momentum. It's just going to dampen the financials a little bit. But at the end of the day, it's our plan to go through that and what we're hoping is can get through that in 2020. And as we exit the year, we can get to that 4th pillar that I've talked about previously, sustainable and accelerating profitability.
And this has turned out to be a very good complement to our investment processing and technology business. So that business really is about and Kevin did a great job of framing it, us providing very value added customized advice and investment solutions to our clients, who are usually large banks, large wealth management organizations, to use as an aside or an add on to their internal products. It has been a great, great business for us and has grown substantially over the past 10 years. It stands now at $22,500,000,000 and more importantly, we have over 290 global relationships. So for us going forward, and if you look, we've more than doubled this business over the past several years.
For us, we want to take advantage going forward of those 2 90 relationships. How can we maximize those relationships? We want to expand the product that we go through and expand the geographies. And if you think about some of those relationships, especially some of the large ones with large distribution, us providing this add on from an investment product standpoint to their internal products is a great, great addition and one that they are taking advantage of. So it's a very good, in our mind, growth addition to our investment processing and technology.
So if you look at private banking and the key growth initiatives we have going forward, what's going to maintain our momentum? So first, we want to grow and install our current backlog. Sales and us growing and capturing the opportunity we have in the market is near and dear number 1 in our heart because that will help drive scale and that will keep the momentum going and that will keep the buzz in the market. We feel very well positioned to do that. We also want to continue to expand on the lean in strategy, so making it easier, simplifying the complex for clients to do business with us.
2, we want to fully push on the 1 SEI because we think that opens up a number of opportunities for us. So like the CIBC example, we think it expands the opportunities for us to grow, expands the platforms and solutions and things we can solve for clients. SWP is still a key part of that. But think about what we can add to SWP to expand the footprint and expand the capabilities we can provide to clients to solve their needs globally. We want to open these platforms Some of the key platforms that we have in IMS, SCI Trade, which is all about digitized account opening Archway Family Office, which most of our large regional banks and large global banks have family office practices.
Many of them have already talked to us about how they can adopt that platform in with SWP. All these provide growth pillars for us to start to expand on. And then as I said, the modularization, I believe, will help us speed acceptance and delivery of SWP. We also want to continue to focus on growing globally. We made a huge investment starting globally, building this platform for a global nature, and we do think that we see that opportunity out there.
We have large global banks that we're talking to as I said and I do believe the market especially right now we continue to be focused in the UK. There will be a time where we start to expand beyond the UK. But in the UK right now, it's a very fragmented market. There's different capability service providers over there solving one piece of one puzzle. I think we have the opportunity to solve a bigger puzzle with the power of SWP.
I think there's an opportunity to take advantage of some of the weaknesses of some of these competitors we see to push more on SWP. So it's one that we're going to look to push on. Additionally, we have some large global clients. One of the hallmarks of our success of SEI over 50 years has been to grow with our clients. As they expand into different markets, as they expand into different product sets, as they expand globally, we've gone with them.
I think that will be our key, especially as I mentioned earlier, will be a time when we start to branch out past the UK. I believe the best way for us to do that is to do that with clients and with clients to support them as they have expanded beyond the UK. And then lastly, a hallmark of what we've done in other businesses like IMS, we want to expand our markets and solutions. So I talked about expanding our platforms and leveraging opportunities like Archway, GRC, SEITrade, IT Services, but we also want to expand into adjacent markets. One thing that surprised me when I started to ingrain myself in private banking, while the market is diverse, in the US, depending on where a bank is in their decision cycle, because you usually get them every 3 to 5 years, depending where they are in their own contract cycle or where they are in their budgeting cycle.
The market really is anywhere from 200 to 300 given time. It's a little smaller, a little bit more concise in the U. S. From a banking standpoint than I was used to with IMS where you're talking about 4,000 investment managers that we target. So to me, one of the things we needed to do was look at how can we get more at bat.
So one of the ways to get more at bat was expanding our solutions, opening up the platform. The other way is we have a great powerful wealth management system here. How can we open up new adjacent markets? One of the markets we're looking at is what we're calling large RAA. So Wayne has built a great business in Advisor looking at RAs, but there are RAs that kind of more look for a bundled solution.
We're talking about RAs that typically are around $2,000,000,000 $3,000,000,000 dollars are looking more for an outsourcing technology solution. If you look at that market, there's a number of prospects. I think at last look, there was 400, 500 prospects we saw within a certain period, I think it was $2,000,000,000 to $5,000,000,000 that we could go after and that would be open to a wealth management technology processing solution. I think we have to open that up. Small banks, while we have a core of small banks, there's a whole layer of small banks that we've not gone to.
And a lot of it is, well, maybe we don't have they don't have as much trust processing or wealth management processing needs. But you know what they do need? They need infrastructure needs. They do need technology needs, as we've seen with the one example Ryan gave. And there's a whole bunch of other needs that our platforms offer.
So for us, this is a way for us to expand and really build out a different market with the power of SEI behind it. So these are the initiatives we're really going to drive and we focus on right now to continue that momentum in growth in private banking. So with that, last piece I'll put is the other part to that last pillar about driving accelerating or sustainable and accelerating profitability, we also need we're at the point now as we continue to grow and we continue to put that backlog on SWP, we have to continually focus on driving scale. There's a couple of areas where we're driving scale. So we're doing that in operations, looking at how we can have more efficiency, automation, robotic process automation, so how we can drive our cost there and doing the back and middle office, but we're also looking at because one of the biggest expenses we still have is technology and development and support of that.
And it's needed, but I think there's ways, and Ryan and I have talked about this at nauseam, for us to look at it a little differently. How can we scale that technology a little better? How can we leverage assets better across SEI? And how we can deploy different development models and technology models to bring that cost down? So part of this is us finding a way to drive more scale to help us get to that accelerating and sustainable profit.
So with that, and I'm hoping I know we're going to be asking questions later. So hopefully, I know we covered a lot, but you'll have a chance to ask me for clarifying questions later. I'll turn it over to investment managers. And in turning to investment managers, I think the key for investment managers and us going forward is to maintain the growth and the momentum we've had. We've done a good job of that and we still have a ton of opportunity in front of us and to us it's capitalizing on that and continuing to capitalize on that.
So for investment managers, similar to banking, what I'll cover a little bit is current snapshot of the business. I want to cover our evolution, which we've gone over before, but I
think it's
keenly important for a couple of reasons. 1, it shows you how we grew this business. 2, it's a blueprint for how we continue to grow the business. And 3, I think it's a blueprint for how we can grow our other businesses, including banking, because in there was a lot of expansion of markets and solutions, which I'll talk about. I'll also go over kind of what's working for us now, what's driving the growth, where we see the growth coming from, and then like banking, I'll go over key growth initiatives.
So Snapshot, I think most people know again here and again some of the similarities between banking, we provide a full front, middle, back office platform for investment managers. Key to it is we handle any asset class, any type of investment product packaging you have from SMAs to private equity to hedge funds, mutual funds, ETFs, SMA, you name it, we can do it in our platform. Many of our competitors, while they everyone has flocked to alternatives because it's been such a growth engine, can't do the SMA side, can't do the CIT side. They've not been able to handle the full array of asset classes or product packaging. We thought it was very important for us to be able to handle that breadth across the business.
We've been doing this for over 30 years. And most importantly, and I think the biggest achievement we have on this slide, dollars 1,000,000,000,000 of asset service. That puts us in the top level of servicers in this business. But different than many of our competitors that is all organically. The only acquisition we've done as you know is Archway, those assets are not in there.
That $1,000,000,000,000 has been gained by going all organically and growing organically. Also key is, as we've grown, we've expanded out the domiciles we service as well as the operational centers we have, which obviously gives us a lot of capability and a lot of resource to draw from. As I talked about, I wanted to go through our evolution a little bit because I think it tells a story and it's an important story for the future. So way back when, over 30 years ago, we did one thing for one market segment, one actually fragment of a segment. We did fund accounting for bank sponsored mutual funds.
Now think about if we just had stayed doing that. I don't think we'd be talking about IMS today. Instead, what we did was we realized we had a capability, but we needed to broaden that solution. We needed to broaden it into much more than just a back office fund accounting approach. So from there, we grew.
We started to expand our solution, expanded and built our platform, and we started to either we went global and we expanded out into full fund administration and then we expanded out into hedge fund to funds and then we expanded out into full alternatives and we continued through private equity. And as we did that, as we expanded our markets that we attacked, our market segments, and as we expanded our solutions and went deep from back office to middle office to front office, our revenue grew and our profit grew. And along there, while we started on kind of the small end of the market, we started to gain credibility and then we started to attack the top level of the market, which is where we're at now. And along the way, we've built a pretty extensive platform that now we service everywhere from the small startup investment manager to firms like PIMCO, Angela Gordon, Goldman Sachs. I believe this is key because I think in here, it's a little bit of the secret of why we've been successful in IMS, and this is a blueprint how we're going to continue the success and how we can expand this to other groups within wealth management, processing and technology.
So Jim touched upon our IS platform, so I won't go into detail, but I think there's a couple of important things. Our platform, unlike many of our competitors, was built with data at mind. We started talking about data and the ability and importance of data over a decade ago, before people start talking about data and analytics. Unlike many of the people in this industry that take a portfolio accounting system and use that as the brain and build everything off of it, which if you think about it seemingly sounds a great idea if you want to stay in the backspace. But if you're going to use that as your core of data, how do you start to tap in the middle office and front office for that?
We built and spent our money building the data layer, building the data warehouse and building that as a central hub. We then expanded and brought in the best of breed accounting engines, processing engines, reporting engines, and we aggregated them, but using data as the key. We then expanded out the top and said, we need to provide a valuable service for this information and data to the back office, to the CFO of these organizations, to the COO of these organizations, to the CEO, to the front office. And as we did that, we started to realize there's a capability for us to build out the platforms and the components of these actually take them separate and solve different needs and a broader set of needs. Key to this platform is and where it has resonated, we're the integrator at most of these clients.
So if you think about this, this platform serves as the integration for all their processing, from front, middle to back office. We are the hub, we are the network. So one of the paths we want to follow is, if we are that hub and network, and as these clients and as the market starts to bring in more capability, whether it be CRM systems, PAC systems, we wanted to go through our platform to be that hub and to add another layer of growth of this. So currently what's working well for investment managers, what is driving the growth? First, alternative assets.
As we all know, the alternative side of the business is growing. It still continues to grow. It's been called by many people the new active management or the new face of active management. It's a $10,000,000,000,000 market. The business dynamics are opening up more and more opportunities for us.
So if you look at the growth in alternative assets, and this goes from hedge all the way through private equity, Private equity is now kind of in that new realm of growing. We see a lot of the growth coming from there. This is driving a lot of the activity we're seeing today. But it's also opening up other opportunities. Private equity, like Hedge started, is still majority in sourced market.
But most of the CEOs and executives of those firms are saying, I do not want to spend my time and money worrying about the back office and middle office. I want to spend my time managing money and dealing with my clients. So it gives us an opportunity to move from that in source model to outsource model to us. Also, in listening to some of the new platforms, GRC, that's really where GRC was founded. We saw a need.
We saw a need from clients. It was a headwind. A lot of times clients say to us, hey, we can't get around this decision about outsourcing because they've got all this compliance issue in words. We saw an opportunity to provide a platform to help them with that. IT services, same thing.
I can tell you many of the large alternative managers out there have built quite extensive technology teams and now they're rethinking it, saying why do I have 120 people in my technology department when I only have 32 portfolio managers? Why am I spending all my time and money worrying about this? Again, it gives us another opportunity, a new business dynamic to grow from. Additionally, our traditional market. Now a lot of our growth in IMS over the past probably 5, 6, 7, maybe 10 years has been from the alternative side.
And there was a time where traditional, which really was a lot in the early days around mutual funds, went by the wayside and kind of was stagnant, but still a good part of our business. It's now resurging and it's an equal part of our growth. As a matter of fact, in some of the quarters we've announced recently, we've had more traditional wins than we've had alternatives. And what's driving that? Well, market dynamics again.
ETF assets are growing. We service ETFs. Retirement assets are growing and one of the new products and faces of retirement assets are collective investment trust, which again, we're one of the only servicers that does a full service from trust fee to back office, middle office, front office on collective investment They are 2 areas as well as middle office and traditional managers that are providing another layer of growth. So we have 2 sides of segments here that are now actively growing and that's providing a good bit of momentum for us. Innovation in new solutions, as I explained in our evolution, part of us growing and part of the success we had was expanding our markets, but also equally important, expanding out our solution and platform.
As we went from back office to middle office to front office, that spurred a lot of new growth. We see that same opportunity today and we not only see it in IMS, we see it across all the wealth management processing business. Primarily in the front office platform, GRC, IT hosting and SEI trade. The front office platform, and I've talked about it before, that is to me an untapped area. So specifically, the front office platform I'm talking about is around the end investor.
In our belief, there's 2 sides to a front office and an investment manager. There's the portfolio management side, which I have no desire to play in, in the investment side, like them trying to get an investment manager to change their portfolio management system is like you need an act of God and sometimes if you change it, it's an act of war. We were there in the beginning, we tried to mess around with that, we decided that is a lost leader. The front office we're talking about revolves around their investor servicing and It has been the most under invested in, under focused in area of an investment Badger that now they are all turning their attention to. And they're turning their attention to it because of market dynamics.
15 years ago, an alternative manager, if they had a track record, business would come in, they would keep the investors come out, they certainly want to put them into a new product, but that's investors come out, they certainly want to put them into a new product, but that's no guarantee. The market is bigger. A lot of these firms have not in understanding their end investor, having a complete capability around that end investor and having it digitized full from client application all the way through client lifecycle. That is the platform we have started to work on and build over the past 3 years and now engaged in the market with. No one else is there.
People will be there. We will have competition, but we think this is a new area that we'll be able to execute on aggressively and will provide another leg of growth. And current clients, as we've grown and our clients have gotten larger and we've been upscale larger part of the market, these clients are much bigger and have much more opportunity to grow with. As a matter of fact, over the past two quarters, while we certainly focus on new business and getting new names, half of our wins over the past two quarters have been from existing clients, expansion of wallet share. And that's important for a couple of different reasons.
First, it's obviously easier to grow with a warm, great relationship client than it is going out and trying to win and compete for a new piece of business, but that does not mean I'm reducing new business quota JIC out there. 2, it's obviously better for us to grow and expand our relationships with clients And we think we have the capability and the firepower to do that. And the benefit of that is those new assets that come from existing clients, the revenue matriculates faster. So if you think about a new business, a new client, we have to go through an implementation or conversion that can take anywhere from to 12 months. Typically with a client, we're waiting and taking over a new piece of business that they're starting and it starts right away or they're moving something internally or from another provider to us and it happens faster.
As a matter of fact, I believe it was in Q2. By the time we did the call, I think almost 3 quarters of the business that was from clients had already matriculated in and we were already gaining revenue on. So obviously that's a key area for us to continue to exploit and grow it. Additionally, Archway, the first acquisition we've done in a while, turned out to be very successful for us, successful for us. And it points out it's a very good it was a very good acquisition from a standpoint of getting into a new market and gaining capability that we did not have.
So Archway still is and was when we acquired them a leader in the family office, single family office and multi office space. They provide just like in banking and IMS, a full front, middle, back office platform for family offices. They have over $335,000,000,000 of assets on that platform and they have 8 of the top 15 wealthiest families. Now this has all been U. S.-based, U.
S.-focused. There is an opportunity for us to start to look globally at family office and expand that market more. Additionally, in the vein of 1 SEI, we've already started to implement with some of our banking clients and with our IMS practices that they want to expand. We've already started to pull that capability in that practices that they want to expand, we've already started to pull that capability and that platform to service them and we have opportunity to do that and continue that. Additionally, again in the vein of One SEI, the Archway platform had a number of assets and a number of processing assets that we felt were better than some of the processing assets we had in our platform in IMS.
So specifically around some of the partnership accounting and some of the allocation accounting that you have with some of these complex alternative products, while we license third party product now, we're in a process of moving the Archway asset over to utilize that for our own internal processing. So that way we'll then cut down the number of third party applications we have and have a more powerful owned asset to do this processing. But again, in the vein of 1 SEI, not only gives us more capability to use internally, but externally to expand across our markets. So going forward for key growth initiatives for investment managers, you're going to see a little bit more of the same. So continue our current momentum.
Our pipeline is the biggest it's been in IMS in a long time And we've been having a conversation lately over the past 4 or 5 months, we've seen more activity in the market than we've probably seen in the past 5 I don't know what it is, but I'm not complaining. There is a lot of activity both in the alternative market and the traditional market. We need to continue to execute on that. And we need to continue to execute across all of our segments. We see the opportunity in alternatives obviously, but also traditional, global and Archway.
We also want to continue our market expansion. So private equity we've leaned into, but private equity is a very large market with large segments to it. So we've done very well tapping into private equity, the credit side. Now we're starting to look at infrastructure, debt, real estate. They are all new silos that are starting to grow and have heavy, heavy outsourcing opportunity.
With that, there are services within private equity, limited partnership services, general partner services that many of these managers look to for us to solve, and we have that capability. So it will give us a new capability within private equity to expand out our solution. And lastly, this is a big global opportunity. Especially with some of the large clients we have, when they launch a fund over here, they're also launching a fund globally, either domiciled in Luxembourg or Dublin. That business comes to us as well.
And as we start to look at non U. S. Managers, we're still seeing private equity. That's probably one of the areas that still continue to grow. We want to execute on that as well.
As I mentioned, front office platform, that to us is the new frontier and we believe that's going to position us differently. It's going to help us grow and I do believe over time, and we've seen that across all of our market silos, typically the back office in the processing businesses, that's the first thing to get commoditized. This is a very competitive market. We already see competitors out there that do not the capability we have that will compete with price. Back office will get tighter in the fee side.
We see it. We see it from the fee pressure managers are getting. We believe that it still gives us an opportunity to charge premium and have a premium fee service in the middle office and the front office. So us expanding to the front office, one, gives us a new area to grow, but we also think will help protect us from commoditization because I can guarantee you one thing managers and wealth managers alike do not commoditize is their front office and their investors. Additionally with this, we're wrapping this with data and analytics, and that's key.
I mentioned before, over 10 years ago, we started and built on the premise of having open data and open architecture. That remains very key and very important today. Some of the things we're doing around the front office platform is we're doing at risk scenarios for clients, showing them the likelihood that out of their clients, who's likely to partially redeem or fully redeem, not only giving that information, but giving them actual insight and suggestions on what to do. We're building that across the whole front office platform, and again, that's something we can leverage across the businesses. And lastly, maximize our client relationships.
Our clients are over 250 investment managers, many of them in the upper tier of asset managers, are a huge asset to us. They continue to grow. They continue to add product. And as they do, it gives us an opportunity to grow with them. Additionally, one of the things you'll hear if you talk to any of the sales folks in wealth processing and technology, we have a land and expand strategy.
So we're very big on going in and earning the capability and ability either through one product or through the back office or front office, but then expanding our capability and our service from there. We think we have that opportunity with the client base we have globally. And lastly, as I mentioned, we want to use our platform. One thing key if you think back for 50 years that SEI has done in every business, We've been an outsourcer, we're a technology firm, but we're an integrator. And there is power in integration.
And if you remember back to the platform we have both here, in SWP, in Archway, that is the hub that people come in and use for their wealth management processing for their business. We believe we can use that as the integration for much more of their business. And that to me is the next leg of our growth. And opening up 1 SEI to open up the power of SEI across that to pull into that integration play, to me, has high opportunity for us. So with that, I'm sure there's going to be tons of questions, but I will turn it over to Wayne who's getting mic'd up.
Sorry, we
did an audible. We're going to take a break, 15 minute break, 11:45 please be back here and Wayne will take the helm. That's okay. Wayne is going to talk about a lot of growth.
Okay. We're going to get started again if you can get settled. We don't want to lose that 5 minutes that Phil Masterson gave us. So along with our schedule you'll now hear from Wayne Withrow and an update on the Investment Advisor
So I'm going to give you an update on the Investment Advisory business. Just a little bit of the statistics, over $67,000,000,000 in assets, over 340,000 accounts and 7,400 advisers. So this is a pretty significant business in the industry and for SEI. So if you look at some of our key themes, the first is we're focusing on regaining momentum. As you know, we've been going through a migration the past 5 years.
It's been challenging. It's been disruptive, and I want to talk a little bit about why we went through it. And it's hurt us a little bit from sort of a momentum perspective. And since we have a little extra time, I'll tell you the story. So it's kind of like you go to Thanksgiving dinner, you set the table, you buy the wine, you put the food out, everybody's ready to go, you're ready to eat and drunk off, Eddie comes in and trips and falls from the table and the food goes all over the place and the wine goes all over the place and now you have to scramble and put it all back together for dinner.
Well, that's kind of what it's like doing a migration. Everything's going kind of great and you're talking to your clients and you're running your operation and then you migrate. And then you recover over the next month or 2 because I'd like to tell you that going through a migration, nothing ever goes wrong, but that wouldn't be truthful. We try to mitigate all that and I think we did a really good job doing it, but it is disruptive and we're trying to regain some of the momentum we lost through that disruption. Secondly, we're trying to capitalize on the SWP investment.
We've made this investment. We're through the migration. Now as I'm sure you're all interested, how are we going to monetize that and capitalize that? And then finally, we need to work on sort of the evolution of our business model. The SWP migration using SWP is not just a technical conversion, it represents the migration of our entire business model.
And I think that's an important point to understand. This is the familiar slide or a different version of the familiar slide. You see where the headwinds and tailwinds. Yes, we have passive and aggressive. Yes, we have fee pressure.
Regulation is tough. For us, since we touch the end consumer pretty closely, the whole concept of consumer empowerment, transparency is a big issue for us. The benefit for us is the growth of fee based investment and the demise of commissions. We've never been commission based. We've always been fee based, So that's sort of a tailwind for us and that's very beneficial.
And rather than talk about these, you'll see how I weave them into some of the other parts of my presentation. So where were we? Let's go back sort of the very early parts of the migration. If I looked at the business, we were all about selling time to our advisors. We went out to advisors and say you need to outsource to us in order to have more time to prospect for new clients and service your existing clients.
So how are you going to do that? When you come to us, we're a world class manager of managers that's supported by robust technology. We took the data we have from our Capital Resources Consulting business where we were the largest manager search firm in the United States. We built our institutional fund offering and then we took that institutional fund offering and we moved it downstream into the advisor marketplace to take that off the plate of the advisors. At the same time, we took sort of the processing capabilities we had in Trust 3,000.
We took that where we provided to some of the bigger banks and again, we moved that downstream into the Advisor marketplace. We combined the 2 of those together. We built we wrapped it around with practice management to show how that would all work together so you had more time to service your client. And we were kind of a world class manager manager supported by technology and that's what we sold to Advise. And it really resonated.
It helped our advisors grow. If you look at Advise on our platform as opposed to other platforms, they had higher margins and they grew faster than other advisors. Like everything else changed, so we are world class manager to manager supported by technology. We're sort of changing. So I look at it now where we're world class technology supporting the types of investments clients want and need in today's world.
So we had to migrate out of our 2015 strength into what I would call our 2019 strength, but it required us to do something. We had a $400,000,000 legacy business. How are we going to migrate First of all, we had to rebuild the technology platform. And I get a lot of questions about, you rebuild the technology platform, did it cost more than you thought, did it take longer, why do you do it. I just sort of remind you all that it's been around 51 years, there's only one of you, but for those of you who've been around less than 51 years, I'll give you a history lesson.
This is the 4th time, the 4th time we view it in the technology platform, right? It was a Sperry based platform when the company started. Whoever made that decision wasn't very good, but we won't say that. We moved it over to a prime based platform, was based on a prime computer, rewrote the code, migrate the entire business onto a prime based platform. In the '80s, rewrote the platform again to a mainframe based IBM platform, Trust 3000, rewrote the platform.
Everybody sort of knows where Sperry is, where Prime is, kind of what the mainframe world is and what's going on with servers and the cloud and everything else. 4th time, we wrote the platform on SWT. So this isn't something new to us. This is part of the continued innovation and evolution in SEI. We had to rewrite how to create the wealth platform.
Now we have the platform, what we got to do, we got to migrate the business. We had to go through the account migration to move the existing business over to that new business platform and the new business model so that we could accelerate growth. And that's what we've been doing and that's what we've done successfully. And then finally, the change in consumer preferences, we had to change the business model. We were primarily a closed architecture.
Any investment you want as long as it's an SCI investment, and we moved to what we term the flexible TAM. So you can have SEI investments, but we'll accommodate other outside investments if you so choose, if your clients want outside investments. Sort of takes on the theme of transparency through the Internet, consumer empowerment. If you're an advisor and you're in Houston, Texas and your client just doesn't understand why you don't have an oil and gas limited partnership in your asset allocation, we can accommodate that now. So we had to change our business model.
And what that means, if we open up the investment platform, we need to get revenue from that. So what we have to do, we allow outside investments, we start to change our model to allow for platform fees for those non SEI assets. We have to get revenue somehow. The revenue is not embedded in our product, We have to we charge platform fees. It's not commissions.
We don't charge commissions, right? When you look at sort of the change in the regulatory environment to fee transparency, asset based fees, not hidden fees, we charge platform based fees. It's a continuation of our fee based model and sort of it's not really sort of starting with commissions. A lot of people will sort of go, if you're going to allow outside investments, you charge assets for trading assets trading those investments. That's not what we do.
We charge platform based fees on those assets. This required a change in the way the advisors thought. It sounds easy to say the model changed, good for us. Advisor maybe bought us for something different, we had to sell that to our existing client base. So if you look at the world class technology, just some examples of what it means, digital signatures, everything that your signatures are on now is digitized.
You don't have to send me a wet signature anymore. Online transaction processing. Online model management, if you want to someone mentioned it earlier, you don't have to change the account, change the asset allocation account by account. You can change a model. Then you can do what if.
What if I do this? What's my tax implication? What's the implication on all my clients? And you can do all this online, you can do what if and you can decide how it's going to work before you hit the button real time. You're not doing it on spreadsheets, you're not doing it in the backroom, you're not asking us.
You could do it real time on your desktop. We need to sort of relook at how we did investments. When you look at pass through investments, I always get the push, what are you doing with pass through investments? Well, we offer ETF strategies. They're not SEI managed ETF strategies.
We tax manage the strategies. We manage about the liquidity tracking around the strategies. We tried to overlay fees to put together these portfolios for people. ETF strategies right now are over 10% of our asset base. I mean, we've had these for over 5 years.
Like I said, it's over 10% of our managed assets right now. This was a change. If you look at the growth of SMA, we have a big SMA program. We've continued to grow that SMA program. SMAs are more advice centric, more transparent to advisors.
Again, SMAs are over 10% of the asset base now, moving away from sort of the mutual fund model. At the same time, we saw the need to say it's more than just sort of alpha generation through active funds. It's some of the intellectual capital and some of the overlay that sits on top of these products. So for example, tax overlay. How do you take an asset allocation?
How do you put a tax overlay on it? So it's not just about the theoretical return, it's what's the absolute return. How do you keep the money in your pocket? It's like one of the advisors said to me, he goes, you could talk to me all you want about alpha. He goes, and I can go to my clients and I could talk to all I want about Alpha.
But when I can say, hey, I just saved you $2,000 in taxes for the $500,000 RIA client, that hits home. They understand that, the importance of tax overlay sitting on top of the strategies. Income overlay, now you've read the book, ultimate question, do I have enough? If you put an income overlay, we could charge separately. We do charge separately for tax overlay.
We do charge separately for income overlay. Well, we have an income overlay that sits on top of the portfolio and we can tell you with 95% degree confidence you're going to receive this much of a monthly paycheck. The underlying investments, it could be our active mutual funds, it could be ETFs, who cares? It's the income overlay that's important to the client, that's valuable to the clients and we can charge for that value. That's sort of what I would call today's investment needs, and that's an offering we have today that we actively sell out in the marketplace.
And then finally, sort of the third part of the stool is practice management. We teach our clients what's the best practices, how do you grow your fund. Remember, these are smaller businesses. They're not SEI. They're out there on an island.
They need help with best practices. They need help with workflow. How does my CRM, how does my financial planning tool, how does all these tools I have work together? What's the workflow? What's the best way to do a client review?
That's sort of where we are today, and that's sort of the power of what our offering is when we go out to talk to advisors. But we're just getting started. So how are we going to take this up to the next level? Number 1, we really sort of need to enhance the end client omni experience. What I mean by that is the digital experience is not just paper, it's not just phone, what's the whole omnichannel experience?
How does the end client want to deal with the advisor? How do they want to deal with us? I'll give you some examples of this in the next slide. How are we going to take that technology investment and how are we going to emphasize more technology enabled investments? We look at advice over on the right, advice can no longer be just in the practice management area.
The advice component needs to be in the investment area, and we have to disaggregate that advice, show the value for that advice and charge separately for that advice. So when you look at advice on tax management, and like I said, we charge separately for that, we need to expand that concept before so we're kind of agnostic to the underlying investments. Sure, we'd love for you to use SEI investments. We think they're pretty good. But if you disagree with us, you'd be wrong.
But if you do disagree, you could you still would like to use perhaps the tax management advice. So how can we have more advice based investments or more technology enabled investments, the technology enables e device to distribute out to our clients, okay? And then finally, practice management. Our practice management needs to be much, much more advice centric, even though it's advice based now, but even more so than it is today, and we have to broaden what it is. So what does that mean?
What does that mean? Integrated proposal generation and account open online. So you don't tell the client, sit down, tell me about yourself, you go back to your offers, you write down something on your pay, you send out a financial proposal to the client, then the client sends back some data and you type in some data and you open an account. How about you sit down in an iPad and you hear all about your client and as you're doing it real time, you come up with some type of proposal for the client and you're doing that real time with the client. And the client says, yes, that's kind of now you've got I don't like this, I like and you work through it together.
And then the client says yes. So what do you do? You go away and say, I'll get back to you in a week and I'll open an account? No, no. You hit the button and the account opens, right?
You hit the wire transfer, the money comes in. You're like done. Go home, you're done. Not only the efficiency, so you could talk about the efficiency, reduces costs, all that kind of good stuff, maybe it helps you be more successful in closing new business. But think about it for the experience for the client.
How many of you like to go and meet 3 or 4 times with someone to get to achieve the one thing you tried to do? So how do I increase that omnichannel? How do I increase sort of that digital experience? We talked about online model management. How about online unified managed accounts?
We have the ability in the Global Wealth Platform now. We can hold individual securities. We can hold individual bonds. We can hold ETFs. We can hold actively managed mutual funds.
We can hold SMA mutual funds in a single account. We don't have to have multiple accounts anymore. So you say that, oh, that's easy, everybody can do that. Well, yes, so let me give you this example. You hold an SMA and the SMA has these 20 secondurity.
What happens to include Google? The client has Google outside of what that manager owns. So then they say, all right, rebalance my SMA account, and you rebalance it and the Google allocation goes from 5 to 10. But it has to ignore that other piece of Google that's in the account. So how does the technology smart enough to know that isn't the SMA manager can't touch that position?
Maybe it sounds simple to you. Let me tell you in practice, it's not that easy to do across 350,000 accounts. That's what about that's just an example of what online UMA means. And then again, enhanced end client digital experience, things like digital vaults, we have aggregation, how do we enhance that end client experience, again, trying to make our advisors more successful with their clients. It's no longer enough for us to help our advisors be successful and then leave it completely to them to be successful with their end clients or we take over how they can be successful from the investment side, how can we help them be successful from the technology side too.
Next, when you look at this advice component and we need to take our investment products
and how
can we make it more advice centric and how can we disaggregate it, the charge fees where the value is. We talked about tax management. We talked about income strategies. So how about something like ESG? Institutional investors all use ESG, I know.
You guys all say, well, let's show everybody ESG. You have an institutional investor. We sell it. Paul sells it. And I have this now.
But how can you incorporate BSG into $100,000
IRA,
how can you effectively do that at scale? That's the question. How do you enhance the issues, not just to say don't buy thin stocks, but I want to buy stocks that make a difference? Or how do you incorporate the intellectual capital in the investment group to say, well, I want to put this ESG overlay and potentially not impact my performance. If you can do that, you can charge separately for that.
You can charge that as an overlay. And then finally, direct indexing. So this is kind of the latest trend everybody talks about direct indexing. You can go out, you can buy an S and P 500 fund and you can own the fund and that's great. You have a passive investment, you own the S and P 500.
But you own the fund. You own all the securities as a pool. How about you say, I don't want to have I want to put an ESG overlay in the S and P 500 index. You could buy the fund, but it's a single flavor that has to fit everybody. It can't be customized for you.
Using technology, you could have different variations of what that word means to you. And if you could directly index the underlying security in only individual positions at lower account levels, how can you do this with $100,000 account? It's something different than what's out there today and people will pay you for that. But you need to build the technology. This is not we know how to do it from an investment perspective, but we don't know how to do it at scale for smaller accounts.
That's driven by the technology. And then finally, taking the advice component and expanding beyond our traditional, what I would call, processing type activities, workflows, best practices you're advising, how do we expand it in other areas we've talked a little bit about today, How do we expand it to areas like how do you handle your regulatory challenges? You look at a little RA, how do you handle the human resources challenge? Think about it. You all belong you all have big mother ships at home.
So you know how to hire, you know how to fire, you know how to structure compensation programs. Did you ever ask how do you do the payroll at the firm? But if you're a 3 person shop, you don't know. I mean, how can you get rid of all those activities and AppSource had to sum it up as part of what we're terming now the total business platform, not just the accounting investment platform, but the total business platform. Think about it like I want to leave a firm and I want to start a practice with all the stuff I need to do to be an independent advisor, okay?
And then finally, part of that would be this is sort of a variation of what we do in the institution of the outsourced CIO. In keeping with the theme, it doesn't have to potentially be our investments. We'd love for it to be. But if it's not, we can help you through capital market We can help you through all the things you need to structure and build portfolios. The underlying products, we could be agnostic to the underlying products, but you charge us for the value we add in populating those underlying products.
So these are all things we're kind of working on. We think it's sort of where the future is going. Stay tuned. So when you look at what we're working on, we're focused on growth. We're absolutely focused on growth and how we're going to grow.
We talked about giving advisors more time. We talked about them outsourcing the whole accounting, the back office, the investments. We're looking for advisors now that want a customizable, open architecture turnkey solution. You don't just want, you want a turnkey solution. You don't want to have to buy a separate performance measurement system, a separate rebalancing system.
You don't have to buy a separate aggregation system. What's a turnkey technology platform that I can run my business on? That's sort of one bedrock, okay? Then how can we offer unbundled technology or advice centric investments? If we're going to unbundle it into its various components, how can we show the value and then charge fees associated with those values?
We've already proven we can do it. We have separate fees we charge in our income strategy. We have separate fees we charge in our tax overlay strategy. We have separate fees we charge in sort of our ETF strategies. How do we take that to the next level?
We've proven people will pay. We've proven that we can do it. How do we take it to the next level? And how do we expand into the more categories in furthering disaggregating and amandel those solutions, okay? And both of those are like really, really powerful, I think.
But the real Holy Grail, and this goes back to that we're uniquely positioned in the portfolio of assets that SEI has. How do we capture the share from the advisors that kind of want both of those? How do people want both of those? And maybe they want different variations of it, where before it's like Ford. You can have any color you want as long as it's black.
That was the old SEI. Now it's tell us how you want it and we can vary 1 to 10 what options you want. You want 1, 3 and 5, you want 2, 6 and 4, we can assemble it in any way you want and we can assemble it at scale. As long as you have the components and each one of the individual components are scalable, We'd still have the flexibility on top. And then finally, we need to make number 3, we need to make this bundled solution more attractive to larger advisors.
For those of you who have followed us for a while, you remember the slide I used to do as we walked down the SWP implementation. We talked about sort of TAMP. You remember the 3 little bar charts for those of you remember. On the left, we talked about we were sort of going after the small advisors, so say the sub-seven fifty time of advisor. We were going after them and they wanted kind of a totally bundled solution, so they could do what I said, prospect for new clients, serve their existing clients.
And on the right side, you had the do it yourself guys and they went to Schwab, they went to Fidelity, they went to TD and they were do it yourself. They were kind of going to build it their own. They had complete flexibility. They had customized it however they wanted. The problem was they had to customize themselves.
So they lost some scale because they had to do it all themselves. If you remember, we talked about we want to occupy the middle ground. We want to be able to move up beyond that 7.52 person so they don't have to make the jump from the total bundle to the totally do it yourself. We can allow them to semi customize, if you will, in between. And that's still part of the strategy and that's still where we're going.
The one variation I would say to that, and this is sort of in the One SEI theme, as you move into that center strategy, a guy that's $1,000,000,000 maybe the majority of them can take a bundled solution with only 10% customization. Maybe when you get to $150,000,000 $1,500,000,000 they want to customize a little bit more. And then when you get all the way maybe you get to $2,000,000,000 well less and less want sort of starting with starting with standard and just customized. They customize more and more, so now it looks like it's that right box that's completely uncustomized. And that's kind of the One SEI solution.
So how do we take them as they grow through that? And they said, no, I just need a totally customized technology based solution. How do you pass that off as part of One SEI and sell that through the investment processing platform through Steve? How do we have them grow organically through that and move them into the new technology platform? So that's where we are.
We're going to take questions a little bit later. And for now, I want to turn it over to Paul. Thank you.
Thank you, Wayne. Good afternoon. It's exciting to be here. It's exciting to start on Slide 107. It's a good spot, good spot for me to be.
Also a good spot is I am the 9th presenter. So I was thinking, in a lineup, where have I been 9th before? And of course, my Little League Baseball team. I was batting 9th and the coach would yell out, don't swing at the ball, try to get a walk or claw or get hit by a pitch. So I'm going to try not to get hit by a pitch today.
I'll try to walk today. So let's talk about where we are from a business perspective. We are the leading provider, our leading provider of OCIO fiduciary management globally. This is $89,000,000,000 that represents 480 institutional clients. We have diversified the business away from U.
S. Corporate defined benefit into some very large markets, whether they're foundations and endowments, whether they're hospitals, whether they're governments and unions, whether they're insurance companies, whether they're defined contribution or global markets. This is really critical to what we've done for the last 4 years and to our growth going forward. That does not mean USDV is dead. It does not mean it's on life support, but it is dying over time.
So any kind of prudency in looking at the business, we need to have this diversification. We will win U. S. Defined benefit clients, but we will lose more than we will win over time. So one stat I wanted to show you is that while total growth has been a challenge over the last 5 years, we have had sizable growth in the U.
S. Not for profit business. So if you look at the chart, our U. S. Defined benefit business from Oneonetwenty fifteen through ninethirtytwenty 19 grew at 4%.
If you invested in a capital markets portfolio, a sixty-forty portfolio, that would have grown by 32%. So the markets have given us 32%. The U. S. Non for profit business has grown 73%, almost double what a capital markets portfolio has done.
And if I give you the math around that, the U. S. Non for profit business has gone from $17,000,000,000 to 30,000,000,000 dollars while the U. S. Defined benefit business has that 4% from $33,000,000,000 to $34,000,000,000 Again, we're going to try to keep this and monetize and work through the USD beef business over time, while exploiting this business and these other businesses and then some other things I'm going to show you about the future.
So what are the headwinds and tailwinds? Kind of message this on past calls. You've heard about acquisitions and mergers. You've heard about DV lump sums or curtailments. So that's where they take a portion of the defined benefit plan and annuitize it.
We've heard about increased competition that leads to lower OCIO fees. We have seen the emergence of this new cottage industry of OCIO search consultants. So now where we sold to an investor for years, oftentimes we have to foot into somebody else's buying process by having a third party consultant. So that's changed some of the dynamics. As far as the tailwinds, we have very referenceable clients.
We have that 89,000,000,000 dollars over 480 clients and by the way, 210 of those have been with us for 10 years or greater. That is a great testament. When you read the Scarino letter and you look at 84 OCIO firms, I'm telling you right now, there's only 20 of them that were actually around 10 years ago. So having that capability and approved statement is really important to our future prospects. We are pivoting the long term markets.
We spend a lot of time with referrals and getting leverage out of our existing clients, and we are starting to see the Canadian market embrace the OCIO solution. This has not been a strong growth market, but we're seeing cracks and we're seeing a market that's about $600,000,000,000 in total assets that are embracing this and we are well positioned in that marketplace. As far as the EMEA and Asia business, we have similar headwinds in the sense that we have fee compression, we have these search consultants, we have instead of DB lump ins and lump outs, they call them buy ins and buy outs, acquisition mergers. There is not a healthcare market in the UK, not that they don't provide healthcare to people in the UK, but there's not an asset management opportunity in the healthcare market. And the E and F market is much smaller than the US.
But the tailwinds are referenceable clients, U. K. Fiduciary Management moving upstream, and this is bolstered by the CMA review, the Competitiveness Markets Authority review, that is pushing organizations to make sure they did proper due diligence. So a lot of the fiduciary management deals that were won were either Mercer, Aon Hewitt or Wills Towers Watson where they just slid over. This is going to push those deals to go out to bid and we're going to get a fair number of these to be able to bid on.
Not going to win all of them, but they're also bigger deals that we're going to be able to go upstream in the marketplace. UK Endowment and Foundation, and we're starting to see the insurance market embracing OCIO or partial delegation, specifically in the UK, but we think that dimension will also follow here in the U. S. So let's talk about the future a little bit. And focusing on delivering combined SCI platforms, and we're really going to focus either platform focus, segment focus or geography focus.
And you're going to see some of these treatments have all 3 of them that are going to come in. I'm going to speak in one more slide about large endowments and foundations. This is most notably colleges and universities over 300,000,000 dollars and a specific focus we're going to have there. We're seeing the 1 SEI play out in a multi platform mega investor solution. So what is that code for?
Those are investors that are $5,000,000,000 and greater. Those are investors that are not going to delegate and pick OCIO. What they will pick and what they do need is a lot of the technology that we provide to investment managers, institutional asset management, meaning where we're managing components of the investment portfolio, and then manager research. So harnessing those capabilities is really going to be a point of difference, and we're going to see that both in the U. S, Europe and Asia.
We talked about Kevin spent time on sustainable investing in ESG. This is going to become more and more part of our process and being able to have that customization be able to operationalize it on behalf of our clients. We're going to think about private labeling the OCIO solution. Wayne talked about it and Steve talked about it going to hire advisors and moderate banks that actually may want to get in the OCIO space but don't have the capability. And this would be looking at strategic alliances with organizations where we can be their back office.
We can teach them how to sell OCIO, how to service OCIO and how to be able to do the overall asset allocation. So this is another incremental thing that we can bring to the table. And our new global markets, we talked about. This is another example of 1 SEI. So in the large single family office space, we have seen an emergence of organizations that are looking for technology, OCIO and custom asset allocation, the three capabilities we have here as a firm between Private Wealth Management, between the OCIO solution and between Archway.
So coming to the table with these 3 is really differentiated and it's going to be much more sticky. We're in 3 deals already that are using these words in their RFPs. So that's exciting for us. They may not consume all 3, but the fact that we can bring all 3 to the table is definitely a point of difference. Talked about potential crisis for DC, which is another area that we're going to focus on and really provide some thought leadership about now that we've gotten rid of everybody's defined benefit plan, what does DC look like in the future?
I've met with a number of you and have noted that there are components of the Australia marketplace, the superannuation marketplace that may come here to the U. S, this is going to take some time, but being able to be at the forefront of this really could catapult us into a $6,000,000,000,000 marketplace. And then employee financial wellness dashboard. So part of being able to accomplish this is I am taking a team of individuals outside of our solutions group that are only going to focus on growth. That is going to be 100% their focus going forward and that's going to be announced Friday to our group.
So we're really excited about that. So just real quickly on the large endowment and foundation, we have a formal market review that is currently in process in this competitive market segment. There is an emerging trend of OCIO being consumed by $300,000,000 to $3,000,000,000 universities. They tend to like bespoke or boutique, those that are just focused in that market. If you're familiar with Investiture, that's one out of the University of Virginia, they built their business by just catering and selling to large universities and foundations.
However, size, scale, resources and track record still matter and are important criteria. So in this process, some outcomes that could come. We can simply just change our positioning. We can look to hire industry focused talent. We can evaluate a lift out of joint venture or assess competitors.
But what we will do through this process is we are looking to improve our diversity, our investment talent over time and the ESG sustainable investment capabilities that we bring to the table. So more news to come on this, but this is one of those examples of a growth initiative that's already in flight. So in closing, we are effectively managing through the decline of the USDB market. I don't anticipate 53.6 percent profit margins going forward. Chris asked me that last night.
I think that's a high hurdle to expect because we are going to make investments. But we really manage the business in a very judicious fashion and make sure that we spend appropriately and we get payoffs appropriately where we do spend. We're going to position a new business focused on growth markets. Consolidation or going concern questions are real in this crowded space. So there's 84 competitors.
There's actually 83 now because Tia just announced for an $11,500,000,000 OCIO firm, they're closing their doors. They're getting out of the business. And that's important. That's important tactically in the fact that we can go after their 27 clients. But strategically, it shows that size, scale, resources do matter, and not all these pretenders can be contenders in the future.
So that consolidation, we think, is going to happen over time. And we're diversifying the business outside of OCIO and integrating this one SCI mindset. So I think that's it from my standpoint. We have the wonderful panel discussion now where we get to answer all of your questions. You're the we don't really need this right.
So the moment you've all been patiently waiting for the ability to ask questions. So if all the panels would come up, take their seats. My job is not allow chaos to ensue. So who would like to go first?
Chris?
So, Dennis, I don't know well, I'll start with you, I think I'll attribute the comment to you. But for the Private Bank segment, this will bring you in, Steve, there's been kind of a view for years that the margins within the segment could get to sort of mid-30s sort of like what IMS is right now. And I had thought one of the paths to getting there would involve eliminating costs associated with Cross 3000 or other things. Can you give us a sense of what you think it would take to get to mid-30s margins for the Private Bank segment? Is it more of a revenue issue or an expense issue coming years?
Yes.
And I'll let Steve comment too. But I mean, all along, it's been a revenue issue. So I think from the get go we have said that we are not going to get back to that kind of mid-30s range which we expect of ourselves in these technology oriented, operationally oriented businesses without significant top line growth. And this business is a scale business. So as we grow, we expect to capture scale and the economic benefits from scale.
And I have no doubt I certainly still believe that and everybody up here still believes that. I don't know, Steve, you want to?
Yes, I think you captured that. So what I'd say, it's definitely a revenue issue first and foremost. So as we grow, driving that and driving scale down to the bottom line. There are expenses we can look at. I would tell you on my list, the takedown cost of Trust 3,000 is not going to move it will move the needle a little bit, but not to the extent that some of our other expenses and some of the other things we're doing around development operations driving scale there can do.
Okay. And then since I have my hand on the microphone, I'll ask a follow-up. More for Paul, with the competitive dynamic change in the landscape with TIAA, what do you think of is a reasonable expectation for those $11,000,000,000 of assets that are with them and the 27 clients? I mean, what would you hope to get of those? Would you hope to get one eighty 4th of them or 1 83rd or would you think if you're in the top?
10,000,000. Sorry. I hate I
hope more than 1 of you there. I don't even know what that number is. 3 of their 27 we competed in. So we are already in contact directly with either the buyer or the search consultant. So, I would say 3 we're definitely going to get a shot on and maybe probably another 3 that we would have a competitive situation.
We have a relationship at FCI with TIA and we're trying to leverage that, meaning on the banking side, to see whether they are interested in introducing us. The people that we have the relationship with aren't on the institutional side. So we're kind of working through those channels. But I would say 3 to 6 are legitimate ones we're going to compete against and hopefully we win 2 or 3 of those. Okay.
And do these come up sort of in the next 9 to 12 months? I think that's what Yes.
Okay.
Yes. They're formally exiting the business at the end of 2020.
Okay.
But and quite candidly, 2 or 3 of the accounts that they won, they had just onboarded. And the institutional investors are pretty upset that they just onboarded with this firm, and now they're going to have to pick somebody else.
I guess, two questions. With the one SCI and I guess the way at least I perceive it is taking a lot of your platforms, breaking them down into different modules and having them talk to each other maybe more than they do. Can you talk a little bit about the any cost expense, where you feel like you are in that process of kind of setting the base for this strategy? And then as part of that, it would also seem that would change how you go to market, how your various sales and marketing people have to kind of go to their end markets, a lot more products to sell platforms to kind of think about. So if you could talk about how maybe that's changed and how that affects how they get compensated and paid?
So Rob, why don't you start and then talk about the technology side?
Yes, I would say Rob, from the technology side, we started this process few years ago in terms of, for lack of a better term, modernization. So we adopted more of a service oriented architecture and things that we were building new, making sure we had APIs enabled. So I would say things that we have built new over the last few years had that mindset, had that modularity kind of already baked in. And then I think we work pretty closely as we do across SEI with the business units to say, one of our existing assets have value
and what
would it take to actually unlock that value either technologically or in some cases just from a packaging perspective. So I would say it's kind of embedded in everything we're doing today and how we build moving forward. But I wouldn't say there's a discrete expense associated with us going back and having to refactor application to open it up. It's more of a mindset of how we build things moving forward and connect.
And Steve, maybe you want to talk about how in the market that plays out with our sales force and approach to clients?
Yes. So I think there's 2 sides of the coin. 1, we're still selling broader platforms. At the end of the day, SWP, we still believe the power is in that transformation platform. But at the end of the day, this is a way that they can lean into it, make it a little bit easier.
There are firms that might just buy components of it. And I'd say from the sales force and educating sales and our service, they're very well aware of the components of that platform. I think where we need education and where we've started, we actually pulled the entire, what we're calling Wealth Management Services team from IMS, Archway, Banking together, all the sales, solution, technology folks to start to engrain and do that education. We're following up on that a much more individual basis on educating across platforms. So the folks in banking getting a crash course and make sure they understand the breadth of IMS, Archway, GRC and the same with IMS, making sure they understand it because all of them are able to articulate the clients' needs, I think, and have a sense, hey, we have something that can solve that, but getting that down through the teams is what we're focused on right now.
But we're in the early stages of that, but the opportunity and the conversations are promising. Thank you.
Wayne, did you want to spend just a minute on how you're doing it in terms of the new world versus what
you're doing? Yes. I mean, I think
it's more of an evolution for us. And I sort of have 2 comments. So you go to Ryan's comment, at least from my sales force going out to advisors, if they want to buy a sausage, they're not asking me how the sausage is made, right? Can it do this? Can it do that?
And that's kind of what they need to know. And that's not quite nearly as detailed as some of the presentations you saw or that Ryan's people understand. And then I think the other part of it is some of it is a reaction to sort of the marketplace. So the device is, well, can I do this, can I do that, can you do that? And the answer was no.
Now the answer is yes. So how you do it, they're not really as interested in it. It's just can you do
it.
Thanks. A couple of questions. I'll start with Steve. Obviously, I had a hell of a lot of momentum with IMS for a while, sort of taking over PB and T in the last year. It sounds like things are starting to percolate, at least you feel like you've got momentum.
What are your sort of observations in the last year? What were sort of the 2 or 3 moments? What could we be doing differently? What have you changed that sort of stimulating momentum? Any of the learnings you've had from IMS that you've taken over to PB and T?
Well, I think I'll touch upon it, but I'll summarize. 1, first and foremost, I think one of the biggest moments was looking at our number one competitor that won out was do nothing. Combined with the fact that folks would say, we believe in the technology, it's the best we see out there. You go through all the RFP process, we're clearly ranked number 1. So to me, that was number 1.
And what that really dawned on, we have to find a way to make it easier for people to do business with us, make it easier, make the complex easier. 2,
this is
a different market, especially in banking. The process to sell is longer. The process to engage and get them to contract is much longer. They have this and I've talked about this before, they have this group called procurement, who I firmly believe their job is to come in and renegotiate the deal you just spent a year agreeing to. It's a masterful kind of process.
So that's a little bit different than what we're dealing with in IMS. And 2, a follow-up to that is, I think the way we've evolved IMS expanding the markets and solutions is something we need to do and we're kind of focused on in banking. I think that will open up more opportunities and to the key that I said in there, more at bats. One of the key things we have to do from a market segment, expanding out markets and a solution is to increase our bats. And if we do that, I believe the opportunities will come.
Okay. And then a little bit more granular, the 26 active agendas, can you frame that? Like what does how does that compare to a year ago? If you signed them all, how would that compare to the SWP revenue base that you have today?
I love you, Glenn, but I'm not going to answer that. What I would say is, it is more activity than we've seen in a while and it spans the market globally. So from the small size of the bank to Trust 3,000 flips to large global banks.
Okay. I think I would add those, Steve. I think when you took over the one of the early things you did was meet with those
prospects and kind of understand how real were they.
So you kind of did helped clarify for yourself at least and for us as a business kind of exactly where we were kind of level setting.
Last question and Steve can't answer it. Actually to Al and Dennis, but is Steve stretched too thin? And that's a serious question. It's he's representing over 50% of the company.
Did you say thin?
Woah, woah, woah, woah, woah, woah. I like to use the word svelte. Yes.
I mean too far maybe. I'll let Al
add that one.
And what was the question?
Do you like my exercise routine?
Does Steve stretch to thin? Thin? Thin. Yes, that's exactly what I said. Really?
What do you think?
I don't think so.
He's got a lot of
help on IMS with Phil. He's got a good set of people in banking to help. He spends
you spend most of your time
on banking right now. But right now, no, I'd say He's not.
Glenn, I know you didn't want me to answer, but let me weigh in.
Yes. There wasn't just one switch too. I think Steve has added talent to the team, kind of expanded the talent set, combined teams, which helps capture more value out of the talent we have across both businesses. And we have a very deep bench as an organization.
That's what I was going to say. Phil McCabe in the back is doing a great job taking the helmet IMS day to day and helping us strategically. Al Tiradona, Sandy, Brett Williams in the UK are great executives helping running banking. So the one thing I've learned in this, we've I always knew we had a deep bench, but I also have to let them run their business and come up to speed. While I'm involved in this and I tend sometimes to be over involved, I've realized I can't do that.
So I'm focused mostly on the strategic side. I want to meet with clients. I want to be involved in our key agendas, but we have a great talented group, a deep bench of people that are stepping up and running this. So I don't want you to think that Steve Myers back there doing this. Quite frankly, I believe I'm the least important person in this chain.
The people doing this day to day, the people underneath them are talented sales force, are talented service people, are talented operations. They're the ones making this happen. So it's not about Steve Meyer. Chris?
All right. One for Steve. Steve, is the right expectation that we should expect more wins, but they will be smaller on average initially? No. Okay.
And then No,
let me clarify that. I think you should expect continued momentum in sales. Would not say they're
smaller. And then of your top 10 clients or so that are on Trust 3000, within a reasonable period of time, so over the medium term, define that as you wish, 3 to 5 years, how many of those do you think realistically move to SWP?
I think all 10 could move over the next 5 years. I think could. Will they be ready? Should we push them? Should we force them?
No. We still have a valuable asset, but we're obviously in conversation with a number of them. And when the time makes sense for them, we line them up, they will move. But in the interim, we're recontracting them. They're staying on trust and we continue to grow with them.
And then lastly, just with all the focus on one SCI that we've been hearing today, has there been any thought to kind of restructuring the way that the management team is organized? Not and by that, I mean, the segments structures.
In terms
of how we report?
Yes, exactly.
No, I think we've kind of felt it's important to stay with our current reporting structure. You could make the argument that with Steve overseeing 2 of our reported businesses, we can combine them somehow. But we think you're still going to ask us to break them apart anyway. So we'll leave them apart and sustain that. So now there's no discussion really about changing things.
We won't force on you a change you having to change your models. How's that? Help us help you. Is that what that question was, Chris?
Hey, Rob.
Thanks again. Steve, I had a question for you. You talked a little bit more today about the global opportunity in, I think, private banks. And clearly, SWP started there and then came to the U. S.
And it feels like it's been pretty quiet on the global front in the private bank segment for a while. So can you talk about, I mean, a little bit of kind of why now, what's changed that makes you feel better about the opportunity there than maybe it's been for the last several
years? Yes. So I think the opportunity has been there. I think we lost focus a little bit because there was a lot of focus and a lot of activity here in the U. S.
I think we need to gear up on the sales side over there. We've talked about this over the past year when I've met with a number of you, and we've done that now. And I think the opportunity is there. It's a very fragmented market. One thing that worries me about the market over there, there's a number of smaller and midsized players.
Some of them are looking to already have exit plans, I believe. So they're more interested in growing the revenue side of their business than having a profitable business, which makes things a little tough when you're competing. But I do believe there is a need for capability that we can fight through. And I also believe with some of the deals we've announced, including the Fusion Schroeders, that gives us a little bit of wind at our back and a little bit of noise in the market that I think hopefully you'll see the fruits of over the next couple of
quarters. Kevin, do you want to use this talk a little bit about what you see globally outside the U. S. In terms of the asset management distribution side and how things are developing there as well?
Yes, sure. So from an asset management perspective, we've seen quite a bit of opportunity globally, primarily because in the U. S, the strongest asset class has been U. S. Equity large cap and the cheapest implementation has been passive.
And quite honestly, investors have had little reason to rethink their portfolios. That's not been the case globally. And the competition in the global private banking world has really forced people to rethink how they are going to reposition advice. They are behind in general what we do here in the last couple of years, the bulk of that AUM is outside of the United States. The growth has principally been global and we don't expect that to change.
We have a number of really good opportunities with very large global private banks. SEI's largest asset management relationship is a global private bank. And back to the entire theme of the conference, the opportunity is that oftentimes a global bank can implement an SEI asset management solution much quicker, but it oftentimes creates gateways for us to go ahead and sell other services. And one of the things that we've seen is there is a great opportunity to cross sell and to increase penetration into these really large organizations when we might have an opportunity to initiate that
relationship with asset management. And Paul, you
touched on Canada and
the U. K.
Clearly looking at and we're doing this in combination with asset management distribution are the Asian markets, both from a fiduciary management OCIO standpoint, but also about that platform, the One SEI platform of combining just specific asset management, manager research and then IMS technology. So, I think you're going to see as we look at markets, we're going to figure out how we leverage across multiple distributions to be able to be as effective as possible in those marketplaces.
Just big picture and Rob touched on it before, but on the one SCI sort of strategy game plan, have you sort of rolled this out across the employee base? Have you done anything to change incentive compensation to drive this forward? Just trying to get a sense for how far along it is across the employee base?
Well, I think the key first bullet point when we were describing 1 SCI was mindset. So making sure that we're driving through our workforce a mindset that everything is open to them to deploy in
the work they do every day.
And that's something that we are kind of in a continuous motion with now. Clearly, that's occurred in the technology teams. And Ryan, maybe you can comment on that. It certainly occurred in our we have different operational teams, but they're in terms of them coming together and working on how to take expertise in different areas and get more scale out of that and leverage out of that, that's occurring. But we will definitely come out of this, even this springboard for broad based communication.
But it's that mindset that's really what we're Has
there been like broad communication to cross the employee base?
I'd say it's more been by doing. It's by living it and that's how that changed the mindset more effectively than just saying it. But now that we're living it, we're going to use this presentation to kind of say, here's how we all should come together around this as an organization. So Ryan, maybe you want
to talk about? I agree. We've done nothing formal in terms of communication. What I would say is when it was set up earlier, kind of the 3 pillars of One SEI was the mindset change, the business strategy and the technology strategy. I would just say there is a significant increase in collaboration between the business and technology strategies.
You just see a lot more people kind of making sure they understand both sides of that equation, technology understanding what we could be doing differently to alter the development model to enable more capabilities in the business. But I think as you walk around and you see people meeting, there just seems to be a lot more collaboration and more people meeting together across the company, as opposed to inside their vertical, for lack of a better term. And people feel that, Glenn.
I mean, nothing crystallizes more than a client. So Steve talked about CIBC, maybe you want to go a little bit further on.
Yes. And I think, listen, we've been talking about this and really put this into play over a year ago, as we've been talking to CIBC for a little bit. What I would say is this really grabbed fruits in the wealth processing technology and there we have made a bigger kind of formal announcement of this. We talked about it at our town halls. The platform and solution groups have taken hold.
There's actually teams geared up underneath 1 SEI unbundling the platforms. And really for us, the way things take off at SEI, it's more grassroots and it spreads out. So it started and spread from wealth processing and technology, now spreading out through the rest of the company. And for us, what's key is we're not very good about flashbang, here's the message and then we're done and then you forget about it. It's going to be a constant reminder, constant campaign.
So we're kind of in the early stages of that, but it's one we're taking root. And to Dennis' point, CIBC with the path forward with them over the next 12 months to 16 months is a key rallying cry around doing this and we're firmly down a path on
it.
I just had a quick one on Trust 3000. So, Ken, as we're thinking about that as a product that has more of a kind of going concern to it going forward, I think previously you thought about converting clients to SWP and potentially enhancing the revenue opportunity there maybe 20%, 30%. Does now that we're thinking about them staying untrusted, does that open up opportunity for you to kind of reengage them from a sales perspective on maybe a more modular type of product going forward and increase maybe selling opportunities there?
Yes, I'd say 2 things. So first of all, our plans have not changed. We're still engaging clients and to the extent we can move them and they're ready to move, we're going to do that because again, SMB platform has a wider opportunity, more power to it, especially for wealth managers. And we do think there is that premium uptick we'll get. But for the clients who are not ready or do not have the internal resources to start to do this, That's where I think the modularization of SWP, but also with Trust 3000, that is an asset that we still are growing today and I think there is an opportunity.
We mentioned Archway. Archway is a platform that we can open up capability. So it's not so much about adding investment or expanding Trust 3000 as it is opening up and possibly putting other platforms and capabilities with it to increase market share and increase Watshare with clients.
And I had a quick follow-up on globalization. So in U. K. Being one of the key markets there, obviously, with a lot going on in that market, Brexit macro related, are there any kind of more macro elements you look at right now that provide opportunities, maybe discussion points for clients? Or is it more kind of wait and see in some of those areas and maybe the opportunity set becomes a lot better as those things move through some of those issues?
On the asset management side or kind of across the board maybe?
Across one SEI.
Kevin or Paul, you want
to talk about asset management and then we'll
I'd say just from my perspective on the asset management side, one of the things that's probably a major driver is the complete democratization of investment. So you're getting an opportunity on a global scale for global investors to access broader markets, broader product types. The cost of acquisition for those products are coming down. And as a result, consistent with regulation, you are also seeing the regulatory environments opening the doors for more globalized investing. And they recognize that because there's been a tremendous amount of wealth creation and there's a lot of risk with just home country bias based portfolios.
So the fact that wealth creation is happening at such a pace on a global scale, I think is forcing the regulatory burden that we've traditionally and the barriers that we've traditionally had to deal with. Those have really come down quite quickly and firms who are able to respond to that have been able to go ahead and grow assets offshore that in the past weren't available to them.
And I think from the processing side from my standpoint, there's a lot of disruption in the UK, but as history has shown us, disruption provides opportunity. And I think we're seeing more opportunity based on some of that disruption. As firms look and say how the Brexit going to impact them, what are their plans for the future, how are they going to grow, where are they going to grow, I think this provides opportunities for us. I do think we have plans and again going back to the presentation for us to expand beyond the UK. I see that most readily expanding with clients and current prospects we're talking to.
But I think for right now, we want to gain a pretty strong foundation and foothold and bring back that focus and that capture that opportunity in the UK.
Global apps, doing business outside North America has been a strategic theme of the company now for over 20 years at this point. And when we launched down the path of what is now known as SWP, Al was very specific about we're going to do that outside the U. S. First. And the reason for that was to build a global after we build it.
And that after we build it. And that's going back to the mindset question about 1 SEI, if you will. The mindset around global was set. We have this is what we need to do for this company, for the next 25 years to have and take advantage of the opportunities that present themselves. It has to be not just North America, but certainly beyond.
I don't know whether you want
to? No. You said that. I would say there are a lot of people wondered and I'm being one of them, we did make the decision. We got into it and it was tougher, much tougher than we thought and it caused us a lot of problem.
And then we had HSBC, PBGB was our first client and that was a very difficult client to build for. And so we probably made it. So but I think now we can at least say that we have a global system and we can take advantage of it. It was rough going there for a while.
I want to ask a follow-up on 1 SEI sales compensation. I'll direct it at Steve. Because it seems to me that there might be a need well, first, can you remind us basically the philosophy on sales compensation now? And it seems to me that there might be a need for a change if people had been selling the platform before. Now you're talking about a smaller ticket.
Does something need to change in that sales compensation structure to keep people incentivized? And I recognize that SEI has a little different culture than a lot of Wall Street and collegiality isn't just a buzzword here. But it takes a little bit of a leap of faith to imagine everyone's cooperating when somebody wants to get paid and someone might come. Well, first
of all, you do realize I have a number of our sales leads in the room right now. They're putting me on the spot. No, but this is something we've talked about first. I think the opportunity is standing out to us and to them, because what this means is there's more opportunity, more at bats, more potential to sell components and or the overall platform. 2, when you look across the wealth processing technology business, we did have different sales compensation plans, actually we do this year.
Now we've done very well in trying to work together when we've had deals that were brought 2 platforms together or 3 platforms together and how we work through that. But what we are working on right now is unifying those sales compensation plans to go into 2020 with one broad sales compensation plan that covers all of wealth processing technology. And being that we realize how important sales is, we will make sure there's adequate incentive to drive the one SEI mentality as well as continuing to sell the larger platforms as
well. Before they ask Wayne, do you want to talk about Advisor because given the change in the openness of the platform and we're selling a much different solution today, the business model shift, talk about how your sales force is?
Yes. I mean, I think that at its heart, sales compensation is a reflection of the revenue you own from whatever you get from whatever you're selling, and we need to sort of modify that based upon the importance of the product, if you will. I think there's sort of an overlay, if you will, where we would incentivize conduct where there's some strategic importance to the selling activity. And the beauty of a sales plan is people will do what you incentivize them to do. So if you have something that's strategically important to you and you incentivize people to do it, you're going to achieve that.
And then the final thing I'd say is, I think that and again, this may be a little bit unique to our culture. Even in the sales force, we've always had kind of the concept of profitability. So it's not any deal is good for us. We want deals that kind of make sense for us that fit into the bigger picture. So even when you think about a traditional sales force, I mean, that sales force had
a little longer term view
of the world than you might otherwise see out there.
Okay.
And then just a separate question for you Wayne. You talked in your presentation about the overlays for tax and income. One of the things that's been impressive to me about your business over the years is we haven't really seen decompression, at least as we calculate revenue over assets for you. Is the are the overlays one way that you're able to offset some fee compression? Or am I misunderstanding maybe how they fit in with revenue because you said you get paid additionally for the income and tax overlays?
Yes, I think fee compression is very real and I think we've reduced fees in a bunch of areas. We try to manage some expenses to do that. I think as we went through the migration, we were very, very focused on trying to maintain our margins and our profitability as we migrated to business and as we manage the existing client base. And then as we going forward, we're going to maybe be a little bit more growth focused. That maybe means we may introduce some products that are perhaps have less embedded margin in them as we grow.
And I think that's true going forward. So if you look at our number one seller, been our number one seller for the past couple of years, it's been kind of our ETF overlay product. Well, that's a much it's a lower margin product than our existing product. And what you see in the financial results includes that in there. And I think we'll continue to do that going forward.
But we have this giant embedded base of high margin in there that we will and we will continue to add to that and we will continue to introduce product, which maybe, like I said, maybe has lower margins. It's going to help us to grow, and I think that's a lot of our focus right now. So we have
time for about one more. There's the proverbial forward looking statements. Mike, do you want
to read it? As quickly as possible.
There's nothing in the small print there that would surprise you. And then finally, we just want to thank you all for both attending last night. I thought last night was a terrific event and then certainly your time and attention today. And hopefully your takeaway about from today is that not only are we positioned really well today for the near term, but we are extremely well positioned today for the long term. And as you all know, we are a long term strategically oriented firm and that hasn't changed.
That hasn't changed since the only guy that's been employed here for 50 years and started this place. But we are very much working around the long term. And again, I'll emphasize my belief that we've never been in a better position for long term sustainable growth than we have today with all the assets we have to work with and the size of all the markets we see and the opportunity they present. But thank you all again for attending. And lunch is down the hallway to the left, back, I think, where we have breakfast.
So please join us for lunch and continue the conversation.