Ladies and gentlemen, thank you for standing by. Welcome to the SEI Call with Analysts Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Instructions will be given at that time.
As a reminder, this conference is being recorded. I would now like to read a forward looking statement disclosure. Many of the comments on today's calls are forward looking statements. These forward looking statements include the company's expectations as discussions about future operations, strategies and opportunities for growth. You should not place undue reliance on any forward looking statements as they are based on the current beliefs and expectations of the company's management and are subject to significant risks and uncertainties, many of which are beyond the company's control and are subject to change.
Although the company believes the assumptions upon which basis its forward looking statements are reasonable, they could be inaccurate. Some of the risks and important factors that could cause actual results to differ from those described in the forward looking statements can be found in the Risk Factors section of the company's annual report on Form 10 ks the year end December 31, 2017, filed with the Securities and Exchange Commission. With that, I would like to turn the conference over to Chairman and CEO, Al West. Please go ahead.
Good morning, everybody, and thank you for joining us. I'm on the call with Dennis McGonigle, SAI's CFO and Steve Maher, Head of our Investment Manager Services Unit. About a year ago, at our investor conference, we presented our long term strategy for growth. This was both reflective of our current opportunities as well as how we expected to broaden those opportunities into the future. At its core, our strategy for long term growth had 4 components.
First, maximize the opportunity in our current businesses with our current capabilities and in particular monetize our investment in the SEI Wealth Platform. 2nd, expand our REITs into new adjacent markets. 3rd, invest in and bring to market new platforms and solutions that will be additive to our growth over time and finally, to overcome headwinds our industries are facing and take full advantage of tailwinds in our markets. To better align our organization to our long term strategy and position us for stronger growth, we announced yesterday that we have consolidated leadership of our Private Banks and Investment Management Services segments under Steve Meyer, Executive Vice President of SAI. This better aligns our multiple platforms and solutions in the wealth processing and investment administration space for broader distribution and overall growth.
The areas consolidated under Steve will maintain their market orientation and make all that SEI has to offer those markets accessible and more tightly integrated. I'm excited for Steve and his broadened role at SEI and his combined business, Private Banking and IMS. Steve leads a group of teammates committed to our client and SEI. SEI's 50 year history of long term performance has been possible through continuous innovation and the effective management of constant change that includes organizational alignment for the future. We also as also, we are committed to delivering long term sustainable growth in our company.
I believe that this change that we're making puts us in the best position to do that. We'll now take questions.
And our first question goes to the line of Andrew Nichols from William Blair. Please go ahead.
Hi, guys. Good morning. I just wanted to first ask if
you could
talk a little bit more about kind of the level of integration between private banks and IMS now. And if there's anything additional in terms of integrations or overlap you plan to build over the coming months with the segments now being combined at least in terms of strategy?
Sure, Andrew. This is Steve. Good morning, by the way. So currently, I'd say there's a strong level of collaboration between IMS and Private Banking. I think there's a lot for us to look at as we go forward.
But the main thing we see is there and Al mentioned this, we're seeing certainly a convergence of the needs of our clients and the client needs within SWP and IMS. And what that means is we have very strong platforms across the company that service our processing and technology businesses. And the integration that we see kind of 1st and foremost that we're going to push is the ability to take our platforms, not just FWP, but our platforms around IMS, Archway, Trust 3000 and our other processing technology platforms and offer them in a kind of integrated fashion to our clients. As we see these needs from distributors, manufacturers kind of converge, we're seeing certainly an opportunity to provide much more services or many more services to these clients. So I think that's kind of the initial push that you'll see.
Certainly, we see the ability for leverage from all the way back from winning a client deal to implementations through client delivery. I'll give you an example of one client that Joe actually mentioned on the last earnings call. Cornerstone, who's a West Coast $3,000,000,000 wealth manager, was a client of IMS. We serviced them on the mutual fund side. Over the past 12 months, we've also then gone and expanded our relationship and won their private funds.
But during that process of winning their private funds processing, we saw the need and opportunity that they were looking at their wealth platform that they were currently using to service their advisory business. We coordinated with private banking and we actually now signed them as an SWP client. So there you see 3 separate platforms that we're serving 1 client. This is just one example, we have many others. And we think that there is that opportunity to grow that and provide those platforms and a wider scale solution on an integrated basis is immense in our marketplace.
Great. Thank you. That's helpful. And then as a just a quick follow-up, just trying to better understand why right now was the time to make this change? Was there any specific client event or catalyst outside of some of those market dynamics you're talking about that led to this change or was this something that was kind of in the works for some time?
I know you talked about Al talked about in his opening remarks that this is part of the long term plan at Analyst Day, but if you could provide any color on that, that would be helpful.
Right. It's really all about growth. And that's what we laid out with the strategy for growth, but now we're implementing it. And this is a big piece of the implementation. And we really do feel that we've got some great growth opportunity if we line them up right.
And I think that's what we're trying to do.
But there wasn't any specific client event or client occurrence or demand in terms of what they could need from a technology perspective or in combining those segments, it was more of a long term decision?
Yes. But it was I mean, we saw a lot of this kind of thing happening in our marketplace. And more and more, we would find out that IMS is providing services to the same bank that are the same money manager that private banking was more serving. And it's just as soon as you start looking at that, we really were sort of enamored with the what's taking place in our industry. And so with all the fee compression and whatnot, all of this, they're more and more of their needs are coming together and very similar.
Great. Thank you.
Thank you. And next we'll go to the line of Tom Makarhan from Mizuho.
What's the impact on the current projects underway? And what will be Joe's job and function going forward?
Joe
is now helping us on the transition of private banking and at the same time exploring a move into a role to lead our new business initiative. And our strategy requires that we have a number of new business initiatives and we would look for Joe to handle that.
And Tom, regarding impact on business, there's no impact on current business. It's business as usual. As you know, Joe and his teammates have done a great job of building a super foundation and one that we can continue to grow from. So the focus is business as usual and keep executing. We have a year to finish and set up 2019.
So that's our focus.
And Steve, in terms of the kind of the pipeline, converting the pipeline, it sounds do you need is there a period of time where you kind of need to kind of reassess things in terms of attacking the pipeline? Should we expect the sales cycles to extend as you get familiar with the pipeline or are you already kind of hitting the ground running here in terms of attacking those opportunities?
Well, I'd say this, Tom. First of all, I've been here 26 years. Obviously, I'm very well versed in the strategies of all our businesses, especially private banking. So I don't see any delay happening from our sales standpoint. I am focused in digging in on the day to day, but at the end of the day, sales is near and dear to all of our hearts, and that's one thing we're going to keep the accelerator on and pushing.
I think we're all frustrated by the fact that as we get to these larger deals, quite frankly, the reality is it does take longer. But again, I think Joe and his team, being the pioneers with this transformative platform, have done a great job of navigating that lengthy sales cycle by the deals they brought in, the different parts of the market they brought in and they've established quite a healthy pipeline. And our number one mission is to install the backlog of deals we've already sold and are waiting to be installed and 2, to continue sales and push on the sales.
Okay, great. Thank you. Sure.
Thank you. And next, we'll go to the line of Robert Lee from KBW. Please go ahead.
Thanks. Thank you. Thanks for taking my questions and congratulations, Steve.
Thanks, Rob.
I mean, with the kind of organizational change, I mean, understanding the segments are staying reporting staying the same, but are there other changes kind of underneath to that you're making to on maybe it's on the marketing teams and things have to be undertaken as well? Or is this really just kind of more, Steve, you're kind of going to sit over both of them and kind of make sure that independent marketing teams are kind of connecting the dots? Or is there actually kind of some real organizational change underneath?
Well, what I'd say, Rob, is, first of all, as I said, it's business as usual. And obviously, private banking and IMS have their own identity and certainly their own markets. However, the push is really for us to drive leverage and more firepower to each market. And my goal is to provide all SEI has to offer across all of our platforms to these markets. I think there's some wood to chop as far as me looking at how best to do that and set up the organization and that will happen as naturally any organization change happens.
But I think the real benefit here is the ability for us to bring these platforms together in an integrated fashion and provide more capability to our clients and to our sales force to go sell to our clients and prospects. And I think that will give us an opportunity to look at where we can leverage, drive scale and where it can be more efficient in delivery of our services from winning a client all the way back client delivery. So some of that will happen over time. But I think the real thing we're focused on is how we can really in a more integrated fashion provide the power of these solutions and platforms we have to the broader market of both PB and T and IMS.
And maybe as a follow-up, I mean, understanding that this well, it seems to be very much driven from a marketing and sales kind of perspective in trying to maximize opportunities. But is part of your mandate or thought process also maybe sometimes it's also good just to have a second another set of eyes or a new set of eyes that kind of looks at how maybe a segment has operated from whether it's from an expense expected or anything like that?
Well, there's a couple of things wrapped up in that one. So first, I think it's always good, no matter what business you have, to always have a fresh perspective to look at things. But again, as I said, I think Joe has built a great foundation for us to build off of. We're not going into this as a cost cutting exercise. I'm going to be clear on that.
However, growth is the number one priority. But however, we will take the opportunity to look at where we can leverage and drive scale. And certainly, if we can reduce our expenses, we will do that in a smart fashion. At the end of the day, the overall goal is for every new dollar revenue we bring in, we want to find the best way to make it most accretive to the company.
Great. Thank you for taking my questions.
Sure.
Thank you. And next we'll go to the line of Chris Donat from Sandler O'Neill. Please go ahead.
Good morning. Thanks for taking my questions and congratulations, Steve. Good morning, Chris.
I just wanted to ask
on if I'm connecting the dots here or listening correctly, is there some sort of change broadly speaking in client behavior as you think of these growth opportunities? Or is something showing up in terms of a willingness to outsource or a, like a generational shift in technology? Or is there something that these opportunities have existed for a while, but you hadn't really seen them until recently? Just trying to figure out something sort of changed in the market.
No. I think, listen, the market and the wealth management marketplace in itself is going through a lot of changes. And we've mentioned it from time to time and you're seeing it, certainly you guys see it from compression to people changing, our clients looking at their strategy, how better to upgrade their technology. I think that all that has been there and that has driven their needs. I think what we're seeing is this opportunity has been there and we have executed on that opportunity.
I guess the best way to say it is we've executed it within our own different market segments. We're seeing an opportunity, especially at the larger side of the market, but even as you go downstream, and Cornerstone is a great example, but there's other large banks. Wells Fargo is obviously a large bank client of ours, but we also process them and their alternative business out of their asset management unit. We're seeing obviously a huge opportunity for us to connect the power of our platforms and provide this opportunity and drive more growth. Quite frankly, when you look at what we've invested in and we've always been an innovative company and technology based company, what we've invested in our platforms across our processing technology, we have a very unique ecosystem.
We get to see everything from kind of end investor and we deal with clients from end investor, high net worth investor to intermediary to distributor to manufacturer. The power of the platforms and the investments we made over the past years, us pulling them together, I firmly believe puts us in a very unique category and allows us to compete unlike anybody else. And I quite frankly think we have the opportunity in pulling these assets together to provide a solution and platform to the market that no one else has. So that's what's driving.
Okay. And then, Al, just a question about sort of other assignments. And I guess Steve mentioned what Joe is looking to do in addition to the transition. But is that part of the Investments in New Business segment that he's exploring or is that distinct from that investment to new businesses segment?
Yes, there are elements of it that will be in the segment. And then the rest of it is actually outside the segment. So we'll be figuring that out as we go. This is a new position and we don't have as much activity going there as we'd like.
Understood. Chris, this is Dennis. I would maybe this for everyone really. I would draw your attention back to our Investor Day presentation last year where we had the one picture of all the dots and the vertical markets and the horizontal I'm sorry, the horizontal markets and the vertical platforms. And if you look at that, the 4 quadrants represented there, what Steve is talking about and what this is all about is pulling together the integration of those vertical platforms and taking advantage of the opportunity present in those horizontal markets.
And on some of the newer things that we identified on that picture and in that conversation last year are some of these newer items that we need to free up some resource to go after and be more, I'd say put a little bit more into it. So, there's a as I'll talk about, there's these 4 tenants of growth that that 3rd tenant of new things is really important.
Okay. So I've got your Investor Day presentation from a year ago open up. So it's the SEI plan summary with the existing platforms and new platforms on? Okay.
Correct. So this is us moving the organization in a direction that is aligned with that picture and that strategy.
Great. Okay. Thanks very much, Dennis.
You're welcome.
Thank you. And our next question comes from the line of Josh Schwartz from CJE Investments. Please go ahead.
Hi. You said hedge fund clients, that is an example, Cornerstone could be on IMS and SWP. Right now, you said it's not. Let's just say that they did come on IMS and they also would show in that segment and then the processing that was on SWP, would you would show in that segment and then the processing that was on SWP, would you show it through that segment?
Josh, yes. But just to clarify, Cornerstone is not a hedge fund client. They're actually a wealth manager that actually holds would this change over time like with the two platforms
SWP and IMS, get more integrated where eventually we might not even be able to see the difference? Or is this something planned that it would be continued to be sort of separate platforms, but that there's just synergies between the two platforms?
Yes. I mean, our plans are to maintain the current segment reporting that you've seen historically. If we ever got to a point where that had to change, you would still have transparency through the revenue recognition, footnote disclosures. That's where you would it would be broken out anyway.
Okay. No, that's good. I do like the segment reporting for comparison purposes.
Okay, great.
And currently, we have no further questions. Please continue.
Thank you for joining us on the call and have a great day.
Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT and T teleconference. You may now disconnect.