Good day, ladies and gentlemen, and welcome to the T. Rowe Price Analyst Call. At this time, all participants are in a listen only mode. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Megan You may begin.
Thank you. Good morning, everyone. My name is Megan Azevedo with T. Rowe Price Investor Relations. Thank you for joining us to discuss today's announcement of the formation of T.
Rowe Price Investment Management or TROPIM as you may hear us refer to it. For the next fifteen minutes or so, members of our management team will take you through a short slide deck. And from there, we'll have about forty five minutes for Q and A. Please note that all lines are muted and all questions for the Q and A should be submitted via the Ask a Question link located in the upper right hand corner of your screen. Questions may be submitted at any time throughout the presentation.
We will certainly do our best to answer as many as possible and may group them together if there are overlapping themes. Before we begin, I'd like to remind you that this presentation and other statements that T. Price may make may contain forward looking statements with respect to T. Rowe Price's future financial or business performance, strategies or expectations. T.
Rowe Price cautions that forward looking statements are subject to numerous assumptions, risks and uncertainties, which change over time and actual results could differ materially from the forward looking statements. We ask all investors to carefully consider the risks described in our 10 ks and our other public filings before investing. With that, I am very pleased to introduce Rob Sharp, our Head of Investments and Group CIO. Rob?
Thank you, Megan. Welcome, everyone, and thank you to you all for joining us. This morning we're pleased to discuss an exciting and important initiative that we've been hard at work against for quite some time. At this point, we're far enough along that we're comfortable sharing our plans and addressing any of your questions. This morning's presentation will feature some prepared remarks and perspectives from Steph Jackson, currently Associate Head of U.
S. Equity Eric Vile, our Co Head of Global Equity and Head of U. S. Equity and Celine Dufetel, our Chief Financial Officer. After their prepared remarks, Steph, Eric, Celine, Megan and I will take your questions.
And with that, I'd just like to kick things off at a high level and, explain what we're doing. In the 2022, pending necessary approvals, it's our plan to transition six of our existing investment strategies to a new separate but wholly owned SEC registered investment adviser that we will call T. Reprice Investment Management. We're convinced that over time having two distinct investment platforms, T. Rowe Price Investment Management and the current platform, T.
Rowe Price Associates, both with independent research teams, will put us in a position to generate new capacity while retaining our scale benefits and position our investment teams to continue to deliver investment results and succeed. Our ability to draw on deep financial resources, our long history of building high performing investment management teams leaves us confident that this move will maximize our ability to generate alpha for clients over the long term. It's important to note that we're still one T. Rowe Price. Both platforms will carry forward key aspects of T.
Rowe Price's unique culture, including a dedication to investment excellence, putting clients first, collaboration, mutual respect, and a long term orientation. Steph Jackson will be head of T. Price Investment Management and will join the T. Rowe Price Group Management Committee. Steph's leadership and experience in developing investment talent make him well positioned to lead P.
Rowe Price Investment Management in partnership with several senior portfolio managers. With that, I'd like to turn it over to Steph to share more of the details of our plans.
Thank you, Rob, and good morning to everyone. I want to share with you several aspects of the new entity, including its structure, investment capabilities, investment and organizational leadership, and other important aspects of both investment platforms, T. Rowe Price Investment Management and T. Rowe Price Associates. At the foundation of T.
Rowe Price Investment Management will be the cultural tenets that have made us successful since our firm's formation over eighty years ago. A client first mission focused on investment excellence and built on a culture of collaboration, trust and mutual respect, and a long term time horizon. We are transferring six strategies representing $167,000,000,000 in AUM and with the current PMs planning to move to TURPM. The entity will have over 100 associates, including separate investment and trading personnel and a dedicated and experienced leadership team. To ensure the independence of the investment platforms, TURPAM and TURPA will operate from separate access controlled office space within T.
Rowe Price's facilities. The teams will be co located at existing T. Rowe Price associate locations in Baltimore, New York and San Francisco and will have a small presence in both Philadelphia with our U. S. High yield capabilities and Washington D.
C. Which will be available to both TURPAM and TURPA. In many ways, it will operate like a new investment division, leveraging shared functions. The key difference is it will generate its own investment insights, which cannot be shared with TERPA. We designed TURPAM to capture common criteria that have made T.
Rowe Price Associates successful. We chose strategies that cut across market cap and investment style to facilitate idea generation and knowledge transfer. We have built a centralized research team on each platform based upon our belief in having analysts with deep sector expertise. Importantly, we have retained our ability to collaborate with fixed income by incorporating our U. S.
High yield team. Pure price investment management will have dedicated ESG, quant and trading functions. The strategies from both entities will be supported by the same distribution team and shared value added functions including portions of our equity data insights and the corporate access team. Multi asset products will continue to be able to select strategies from both entities. Here's our leadership team.
Our team is of a diverse and seasoned group of professionals that hold the culture dear. We bring a diversity of experiences that will inform our ability to facilitate the success of the new entity, and we all have a singular focus on client outcomes and organizational excellence. Here are our investment leaders. All of these highly experienced portfolio managers plan to transition to TERPEM with their strategies. There will be no change in responsibilities.
All of these PMs are steeped in our culture of collaboration and investment excellence. And I would highlight that this outstanding group of investors includes two Morningstar Manager of the Year winners, Brian Burgis and also David Giroux, who will be the CIO of TURPA. We have constructed two platforms fit for purpose in their own rights, excellent talent, balanced, experienced,
and tenured.
We've been very thoughtful in defining the platforms and selecting the analysts. We considered the needs of the strategies and interests of the analysts. This has been a very collaborative process with the PMs, analysts, and the leadership team all working together. As far as additional hiring, this is a great environment to attract the talent we need to combine with our experienced professionals. To be clear, we are very confident in the capabilities of both entities to continue delivering on our primary imperative, strong alpha generation for clients with a long term time horizon.
And with that, I will turn it over to Eric Weil to talk about how we got here and why this decision makes sense for both TURPA and TURPA. Eric?
Thank you, Steph. While we're very excited about today's announcement, it's very much a natural next step in a long history of managing the firm's investment capacity. You know, for decades, we have taken prudent steps to close or limit flows into capacity constrained strategies, always with our clients' best interests at the heart of our decision. Going back almost twenty years, we had five strategies in U. S.
Equity with some limit on their ability to take in new assets. Throughout the half of the OOs and into the last decade, we took other actions to support our efforts, including adding dedicated small and mid cap analysts, additional associate analysts and associate portfolio managers. Currently, 10 strategies in U. S. Equity are closed or constrained, representing almost 30% of our assets under management.
We believe now is the time to take the next step to preserve our ability to generate alpha for decades to come at both entities.
Okay, Megan, please proceed.
Thank you. It sounds like we've unfortunately lost Eric some of the joys in the virtual environment. Steph or Rob, I don't know if either of you is is able to pick up where Eric left off. Apologies to everyone.
Yeah. I'm glad to pick up where Eric, dropped off if that's okay.
Yeah. Yeah. Please go ahead, Seth.
Okay. So basically, I think Eric was saying that this has been a natural next step for us in our long history of managing the firm's investment capacity. For decades, you know, we've taken prudent steps through the years to close or limit flows into capacity constrained strategies, always with our clients' best interests at heart of our decision. Going back almost twenty years, we had five strategies in U. Equity with some limit on their ability to take in new assets.
Throughout the latter half of the 2000s and into the last decade, we took other actions to support our efforts, including adding dedicated small and mid cap analysts, additional associate analysts and associate portfolio managers. Currently, 10 strategies in The US equity are closed or constrained, representing approximately 30% of our AUM. We believe now is the time to take the next step to preserve our ability to generate alpha for decades to come at both entities. The market continues to change and evolve and so do we. Factors we influence are performance, which we don't want to change.
Even with strategies closed, our performance created the equivalent of a 2% inflow in our growth strategies over a five year period through September 2020. Beginning in 2015, outperformance has led to an increase in AUM of about $55,000,000,000 for our U. S. Equities, offsetting 45,000,000,000 flows. In our growth franchise, 26,000,000,000 of alpha has far outpaced the 7,000,000,000 in inflows or in outflows, generating a 2% organic growth rate in AUI.
The factors we don't control, the universe of investable securities is shrinking. Since 02/2006, the number of companies in the Wiltshire 5,000 with market caps of less than 9,000,000,000 has decreased by over a third. As technology and disruption increase, secular headwinds in many industries, the number of durable growth companies in which many of our PMs invest is also more limited. It's creating another factor that is shrinking the market of potential investable ideas.
What's that? What's
Aaron?
Yep. Thank you very much. So now we can say this is what happens when TRO Price does its very first ever analyst call. We get our have our first glitch. So thanks for filling in for me a little demonstration of the collaboration that makes TRO great.
Am using a landline now so we should be in great shape. I'll just bring home two final slides here. First, you know, much careful thought has gone into this decision and we are confident that creating additional capacity organically is the right next step for our clients and our firm. More capacity will give our portfolio managers over time the opportunity to continue to select the right securities in the right amounts at the right time while adhering to proper risk management and regulatory rules. Building a new research platform also capitalizes on a core competency of our firm, identifying and growing top investment talent.
Somewhat immodestly, I think this is something we do really well, and the market is rich with top talent right now. As many competitors in the sell side consolidate and or deemphasize fundamental research. By creating a second independent research platform, we'll also reduce communication complexity across a large single platform. In addition to these direct benefits to our research process, there are additional benefits. We'll preserve multi asset access to our alpha rich small and mid cap strategies.
The U. S. High yield team will get enhanced corporate access and insights from our equity team, and will increase career opportunities for investors at both facilities at both entities. Before I turn it over to Celine, let me just talk about what we expect next and what you can expect. TRO has a long history of telegraphing key decisions like portfolio manager changes or leadership transitions well in advance.
This announcement is in keeping with that tradition as we are still about eighteen months away from implementation. While we have the majority of our two platforms staffed, thanks to our deliberate two year ramp up of analyst hiring, in 2021 we'll complete that hiring. Over the course of twenty twenty one we will also finalize our technology and operations work. We anticipate requesting the necessary approvals for the advisor change in the 2021. In anticipation of these approvals, we will begin the transition to the two advisor structure, including relocating our teams and testing our processes.
During this time, will still have access to current systems and investment talent. Ultimately, we can control when we make the final decision, but we believe we are well on track to make the advisor change in the 2022. And with that, I will turn it over to Celine to close-up.
Thank you, Eric. And thank you all again for joining us today. As you heard, we are well positioned to execute this transition, and sincerely believe that this is the next logical step in enhancing our structure to best position us to continue to perform for clients over the long term. While we haven't been an acquisitive company, I'd also highlight that the acquisition of our Philly based high yield team in 2017 provided us with a critical component for TiraPrice Investment Management. Our firm, including our Board of Directors, our senior leaders, and very importantly, the portfolio managers of both TiraPrice Associates and Tiro Price Investment Management are fully committed to and enthusiastic about this effort.
Now with that said, I'm sure you're all wondering what this means for financials. So we began to incur additional expenses for this transition in 2019 and continue to do so in 2020, including compensation for incremental headcount and one time technology and recruiting costs. 2021 will be the last year of the phase in of significant additional cost, and those assumptions were factored into the expense guidance of six percent to 9% that was provided in our third quarter earnings release. The non recurring items are not material enough to make an impact on the financials when they will go away. We will continue to report our financials as one tier of price, and we will not be providing separate disclosures for AUM flows or the financials of tier of price investment management.
And I'll now turn it back to Megan to begin the Q and A.
Thank you, Celine. We have a number of questions here in the queue, but as a reminder, if you are interested in submitting a question, please do so via the Ask a Question link, which is located in the upper right hand corner of your screen for those on the webcast. So lots of great questions here. Our first question, Rob, I'll throw this one to you. Does this announcement in some way validate kind of the affiliate or boutique model?
Can you talk a little bit about that?
Yes. Thank you, Megan. I certainly don't think You know, as I said at the outset, we're still one tier price. It is the same comp model, the same culture, the same key tenants. And I'd also draw the distinction that key reprice investment management will be leveraging a central research model, serving multiple different strategies across the market cap spectrum and across the style spectrum.
So I don't think in any way, shape, or form, this is the formation of of a stand alone boutique. I think this is the replication of something that we already do within tRPA and really should serve to extend our ability to generate alpha and deliver excellent investment performance over time by continuing to do much of what we've done in the past.
Great. Thank you, Rob. A couple of questions here on the compensation structure and how that will work for the investment professionals within TERPAM. Eric, do you want to answer that one?
Sure thing, Megan. Happy to do it. We were very careful and deliberate in designing TERPA and TERPA to have identical incentive structures, identical performance evaluation metrics for analysts, for portfolio managers, for leadership. Aligning incentives across the organizations to be equal was a critical part of the work that we did, and is something that we believe strongly in.
Great. Thank you. Let's talk a little bit more about capacity. Definitely a lot of questions here, kind of twofold. The first is, how does this decision and this move unlock additional capacity for both advisers?
And kind of what does that look like? And what are some of the things we're able to unlock as a result of this decision? And then secondly is how does that impact kind of the organic growth outlook for the firm over time?
Megan, this is Rob. Do you want me to take a stab at that?
Sure, Rob. That'd be great. Thanks.
So in terms of how it creates capacity, I'd say at the outset, it's simply arithmetic. By disaggregating holdings, we eliminate overlap in terms of calculating the position size limits, whether they're internally imposed position size limits from a risk management perspective or externally imposed position size limits from a regulatory perspective. I'd also point out that the platforms will have separate trading desks, so they won't have to share liquidity, which, is helpful from a capacity perspective. And in time, having two separate research platforms should help with diverse idea generation. So kind of ultimately, we should be able to generate more and unique investment ideas.
So the differentiated thinking coming from each investment platform, I think, would also kind of extend capacity.
That's great. And I'll piggyback one on that really quick. Do you think that this will give us the ability to reopen certain strategies that have previously been closed?
That's not the objective of the creation of T. Rowe Price Investment Management. The goal here is to allow us to continue to generate excellent investment results and extend the ability to deliver those results. We have no plans to reopen strategies, at the outset. We'll use the same framework that we've always used in evaluating whether or not a strategy should be open or closed to new investors.
I wouldn't rule out at some point in the future that, that framework might permit us to evaluate reopening one of the existing strategies, but it's not what's behind this. And again, we don't have any expectation that we would reopen any of those strategies kind of out of the gate.
Thanks, Rob. Will the new investment adviser have a different focus from the legacy adviser, such as value versus growth, non U. S. Or small caps, as an example?
Megan, this is Eric. I can take that one first.
Then That's great, Eric.
Steph wants to add in, please. So, we purposely designed TURPM so that it would have the ability to present strategies up and down the market cap structure and across the style box. We are very much creating a replica of ourselves, which we think is unique in the market and something that's different than what anybody else has done before. We're really proud of culture that we have, and we've purposely staffed the new entity with a mix of obviously very senior portfolio managers, senior analysts, as well as top lateral talent and top MBA talent. So we think it will be, very much in keeping with what has made T.
Rowe Price Associates successful for all these years.
And nothing to add.
Fantastic. Awesome. Thanks, Steph and Eric. That's great. Celine, one for you.
How does this, if in any way, kind of change our outlook on M and A? Or would this position us to potentially be able to do deals differently in the future?
Yes. Thanks, Megan. I mean, this really has no impact on our perspective on M and A. We've shared in the past that we've been building our capability to analyze potential deals should they become available, looking at opportunities that would advance our strategy with new additive capabilities. But we have a very high bar for performance and culture and minimizing disruption and all those things we've talked about over time.
So really, formation of Cural Price Investment Management really is in no way a change relative to that position.
Great. Thank you. Eric, can you talk a little bit about just kind of what this means from a different from a distribution perspective? How we'll differentiate between the brands in the marketplace and kind of how it will work from a product development standpoint as well?
Yes, happy to, Megan. To be very clear, we are going to market with one brand. This is T. Rowe Price. As Rob talked about at the beginning, we continue to be one company.
So there won't be differentiation amongst the brands. The capital appreciation strategy continues to be the T. Rowe Price capital appreciation strategy as an example. We're also being very purposeful about product development on a go forward basis. That will continue to be well coordinated and centralized.
As we find a new opportunity in the market that we think has a good outcome for clients and has commercial viability, our product team will work with the investment leadership, including Steph and myself, to decide which entity has the best capabilities to deliver that strategy for our clients. We think it's really important to remain very coordinated and centralized around all of those aspects. Again, we are still one zero price.
Fantastic. Thank you. Steph, can you talk a little bit about precedent here? Obviously, some questions this morning around, is this similar to what Capital and Fidelity have done in the past? And also, can you talk about kind of client reaction, distribution reactions from our distribution partners and kind of how we work with them to potentially get out in front of their reaction?
Sure. Thanks, Megan. Well, first and foremost, we we obviously have studied what our competitors have done. We're not particularly comfortable, in a in a public setting talking specifically about what we think about how they did what they did, but we would say that we learned, from how they chose to make these decisions. In all of those learnings, what effectively we ended up doing is returning to our core and our base capabilities, which is creating, we we felt very comfortable creating an additional platform with the same cultural, imperatives that we mentioned earlier around, you know, investment excellence, collaboration, deep industry knowledge, and feel very comfortable that we've set up two separate platforms that we'll be able to deliver at a very high level for the strategies that they're mapped to.
In terms of our distribution partners, we have selectively gone out to a few, ahead of this call just to make sure that they are aware of what we're doing, and the early signs seem to be fairly constructive is what we would say. They understand what we're doing. And as Eric mentioned, this is really organic and very much a part of our longer term tradition of trying to manage capacity and trying to do it trying to get out way ahead of of potential issues down the road. So so far, fairly well received, we would say.
Fantastic. Thank you. Eric, can you talk a little bit about the strategies within TURPM? So and a couple layers there. You know, how was it decided which strategies would make the move to TURPM?
And then how should people think about kind of that expansion going forward? And can people expect for there to be more strategies either launched from TURPM or moved to TURPM over time?
Yep, happy to take it, Megan. We spent a lot of time thinking about which strategies to use to create the formation of TERPAM. And broadly speaking, we thought about it along two dimensions. The first dimension is really just math, right? Which strategies, if we moved into a separate legal entity, would free up the most capacity, as Rob described it earlier?
And we looked at lots of different permutations on, you know, the math aspect of it. Then there's the what is the more important part of it, which is the cultural aspect, and making sure that the mix of strategies that we moved to TURPM still provided the portfolio managers and the analysts there with the combination of strategies that allows them to generate investment insights in the same way that we've been doing at T. Rowe Price Associates for these many, many decades. And so that's what led us to move the strategies that we did to make sure that we had very seasoned portfolio managers that can that provide strategies up and down market cap across Stylebox as well as leadership and analysts that are a strong mix for those. And what we also are very purposeful of what does that leave at T.
Rowe Price Associates. And at T. Rowe Price Associates, we continue to have a strong commitment to both large cap investing, but also small and mid cap investing. We have very important and large small and mid cap strategies remaining at T. Rowe Price Associates.
And in fact, the amount of AUM in the SMID area that we manage at the two entities is almost even with in fact T. Rowe Price Associates still having a little bit more SMID AUM than T. Rowe Price Investment Management. So we were very purposeful around both of those dimensions. In terms of new strategies, similar to what Rob said about reopening existing strategies, it's absolutely something that we will be working on over time.
But the core mission of what we are doing today is to ensure that we are providing our clients with the investment performance that they expect and they deserve. So that's job one. We do think that over time there will be opportunities to launch new strategies at both TURPAM and TURPA. And we've got a very professional and well run product function and capability here at T. Rowe Price Group that we will use to develop those strategies and then ultimately decide which entity has the right capabilities to execute on them.
Hey, Eric, this is Rob. I would add that it's important to note that our multi asset division and our target date funds will have the ability to leverage strategies from both PRPIM and TRPA as building blocks for kind of all of their strategies.
Great. Thank you, both. Celine, a couple of questions in here about financials. Obviously, you touched on the impact to expense guidance, which for 2021, which you commented was already in the guidance that was provided in our Q3 earnings release. Is there any way for people to think about margins kind of going forward as a result of this decision or any other financial highlights that would be worth calling out?
Sure. I mean, I think I shared in my remarks most of what's relevant from an expense and a margin perspective. As I mentioned, we started to incur additional expense in 2019 as well as in 2020. And the expense related to 2021 was factored into the guidance that was given in the third quarter of this year. As you think about 2022 and beyond, what I would say from a material price investment management perspective is that most of the additional hiring and transition costs, we expect to complete in 2021.
And of course, there are many other factors that play into our margin. As we've talked to, there are many other strategic initiatives that we continue to pursue as a firm as you think about overall expense growth rate, but also obviously what's happening from a market perspective, which factors into how we think about at what pace to execute on our projects and on expense growth rate.
I'd add to that, that while a number of our competitors are consolidating kind of in an effort to achieve scale, we're really investing in ourselves behind this initiative and are confident that we end up with two very, very well resourced platforms. We are committed to doing this right. And kind of ultimately, we'll invest what we need to invest in order to make sure that we deliver and execute against this.
Thank you both. Additional questions in here around kind of pricing and fees and how people should think about that. Rob, do you want to talk a little bit about kind of how people should think about that going forward?
Yeah, Megan. I'll be brief on that one. We don't anticipate the creation of TURPM or the migration of these strategies to TURPM will have any impact on underlying fees or pricing.
Great. Eric, I'm going to come to you with this next one. One question here. Will the new entity have any greater capability to invest in private companies? And how are we thinking about that?
Yes, we're spending a lot of time thinking on that. Both entities will continue to invest in private securities as we feel that they're appropriate at the individual portfolio level. We can share some of that functionality, especially in the early stages of identifying opportunities. But ultimately, each investment team will make its own decision specific to private securities. We have capability assigned at both entities to be expert in private securities, both on the assessment and the security analysis side.
And then we can share a lot of the important work that needs to be done from a legal and a structuring perspective, which is very helpful to us, and will allow us to be more efficient in our use of private securities in both portfolios. So, bottom line is both can do it and both plan to do it.
Great. Thank you. And Eric, if you want to or Rob, actually, can you talk a little bit about separate distribution between the two advisers and what that will look like?
Yes,
you. While all of the investment decision making functions, research, portfolio management, trading will be entirely separate, there are a number of different things that kind of will be shared across the two investment advisers, things like HR, legal and compliance, middle office, back office, but also distribution and client service. So kind of our current distribution will represent both investment adviser platforms. So there will be no separate or targeted or focused distribution around TRPIM.
Got it. Thank you. Eric, I'll direct this one to you. We mentioned that this will impact our ability to enlarge position sizes for the strategy and the firm. Are you able to give us a real life example of kind of what was happening before and what would be able to happen now or in 2022 once this goes into effect?
Yeah, sure. Happy to do it because it's an important part of why we're doing this. So, for example, if you had a 5,000,000,000 to $10,000,000,000 market cap company that our portfolio managers all really liked and wanted to make a sizable position in their portfolios, we wouldn't be able to all necessarily take a full size position because we would own too much of that company from either an SEC perspective to maintain our status as a passive investor or in some cases there are other entities that put limits on the amount that you can own if it's a bank or a utility or a gaming company or something like that, there are other entities that limit it. In this new structure, when the SEC limit is the binding constraint, we can now own more of certain securities. Again, investment decisions would be reached independently and autonomously, but now our portfolio managers would be able to own more of those certain securities if they choose to do so, obviously keeping within each individual strategy's risk management framework.
So it's a really important rationale for doing this, and it actually is going to lead to, we think, continued ability to generate alpha for our clients over time.
Thank you, Eric. Rob, I'll direct this next one to you. Can you talk about how you plan how we plan to maintain cultural and compensation equity if the two entities enjoy different levels of success in the market?
Sure, Megan. From a cultural perspective, I think it's reasonably straightforward. We have a number of key role price veterans that I think will carry forth the culture, both in terms of investment leadership with Steph and Tom Watson and Steven, but, you know, kind of also with portfolio managers like David Giroux and Brian Burkheiss. I mean, you have, you know, kind of decades of of zero price culture embedded in these people. And there's no question in my mind that they will carry that forward.
From a compensation perspective, we'll handle it very similarly to the way we handle our investment divisions today. We operate out of one bonus pool, and we differentiate the allocation of that based on the performance of the various divisions. So if you have one division that collectively is meeting with greater success than others, it will get allocated a more meaningful portion of the bonus pool.
That's great, Rob. Thank you. And I'm going to piggyback on that a little bit with my next question. Can you talk about how you plan to allocate resources between the two entities?
Is that for me as well?
Yes. I'm sorry.
Yeah. Look. I mean, we we basically when we talk about things like a commitment to investment excellence and client first, it's basically been been it it means that we invest what we need to invest in order to deliver on behalf of our clients. And I think in this instance, we've been very, very thoughtful with regard to making sure that we have the depth and breadth of investment talent to continue to deliver. I think that will be the case on a go forward basis.
So we've basically put in place what we think both platforms need to succeed, and that's the that will be our North Star. Ultimately, we'll take care of the needs of both divisions. From an allocation perspective, I think that will be the primary consideration.
Great. Thank you, Rob. Eric, I'm going to come to you with this next one. How should financial advisers who invest client assets in P. Rowe priced funds view this change?
What will change for them if they use funds or strategies on the TURPA platform and on the upcoming TERPA platform? And does that add any complications on that end?
So there's really no change for the financial advisers and the financial advisory community. You'll continue to have a single T. Rowe price point of contact in terms of your relationship manager. You'll continue to get the same portfolio managers on these strategies that you have today. Those portfolio managers will be supported by a central research model that is steeped with industry expertise and strong trading and other functionality including ESG and quantitative resources as used.
So for financial advisors, this is really no change. We're very purposeful in how we designed it to make sure that that was the case.
Thank you. Celine, can you talk a little bit about what this move means on the balance sheet, particularly in terms of seed capital, and how how the money will be split up, between the two advisers?
Yeah. There's really no change. Right? So as I mentioned earlier, we'll continue to report, our the financials of the firm overall. We will not be reporting separate financials for a TIER price investment management from TIER price associate, and the seed capital, you know, portfolio of the firm will remain as it is today and reported as it is today.
Fantastic. In looking through all the questions, I just I wanna be sensitive to everyone's time as a number of them are redundant to to things that we've already answered today. So I think we're actually good to wrap here. Thank you all for joining us for our first ever analyst call, as Eric noted. We are very enthusiastic about this decision, as I'm sure you've heard today.
We certainly look forward to continuing the dialogue in the coming months as we approach implementation. Thank you again for all of your questions. And with that, operator, I will turn it back over to you.
Thank you. Ladies and gentlemen, thank you for participating in today's program. This does conclude today's conference. You may now disconnect.