Ladies and gentlemen, thank you for standing by and welcome to the SEI First Quarter 2016 Earnings Call. [Operator Instructions] And as a reminder, this conference is being recorded. I will now turn the conference over to your host, Chairman and CEO, Al West. Please go ahead, sir.

Thank you. Good afternoon, everyone and welcome. All of our segment leaders are here with me on the call as well as Dennis McGonigle SEI’s CFO, and Kathy Heilig, SEI’s Controller. I will start by recapping the first quarter 2016. I will then turn it over to Dennis to cover LSV and the investment in new business segment. After that, each of the business segment leaders will comment on the results of their segments. And then finally, Kathy Heilig will provide you with some important company-wide statistics. And as usual, we will field questions at the end of each report. So, let me start with the first quarter 2016. First quarter earnings decreased by 8% from a year ago. Diluted earnings per share for the first quarter of $0.47 represents a 6% decrease from the $0.50 reported for the first quarter of 2015. We also reported a 3% increase in revenue from first quarter of 2015 to the first quarter of 2016. Plus, during the first quarter of 2016, our non-cash asset balances under management increased by $2.7 billion and SEI assets grew by $2.7 billion and LSV assets were flat. In addition, during the first quarter of 2016, we repurchased approximately 2.1 million shares of SEI stock at an average price of $38.87 per share. That translates to over $80 million of stock repurchases during the quarter. Finally, during the first quarter, we capitalized approximately $9.5 million of new technology development, of which approximately $7.6 million was for SEI Wealth Platform development, and we amortized approximately $11 million of previously capitalized development. Now, turning to sales, our net new recurring revenue sales during the quarter were strong. Of the $38.6 million of net new sales events we generated, $33.2 million are recurring revenues. Each of the segment heads will…

Thanks, Al. Good afternoon, everyone. I will cover the first quarter results for the investments in new business segment, discuss the results of LSV asset management, and a few items of note for the company during the quarter. During the first quarter of 2016, the investments in new business segment continued its focus principally in two areas, the ultra high net worth investor segment and the development of a web-based investment services device offering coupled with the use of mobile technologies. During the quarter, the investments in new business segment incurred a loss of $3.8 million, which compares to a $4.5 million loss during the fourth quarter of 2015. There has been no material change in this segment. Regarding LSV, our earnings from LSV represent our approximate 39% ownership interest during the fourth quarter -- or first quarter. LSV contributed $29.2 million in income to SEI during the quarter. This compares to a $32.1 million contribution for the fourth quarter of 2015. Asset growth was flat during the quarter, although average assets were down approximately $5 billion. Revenue at LSV was approximately $92.7 million, of which about 1% was performance fee related. Corporately, during the quarter, our tax rate returned to the more normal 35% range compared to the approximate 29% rate experienced during the fourth quarter of 2015. We also received our final payment related to the sale of SEI Asset Korea in the amount of $2.8 million. I will now take any questions you have.

Thank you. [Operator Instructions] Our first question will come from Glenn Greene with Oppenheimer. Go ahead, please.

Thanks. Good afternoon, Dennis.

Hey, Glenn.

First question on LSV, so I heard the 1% performance fee, which was a lot lower than a year ago, is it just sort of like where the assets – the asset decline in the quarter, the average asset decline in the quarter and more importantly do we sort of step back up to sort of the normal seasonality in 2Q? That’s the first question.

Well, it’s hard to predict, because it’s performance-related. But as you know, value – the whole value space had a tough 2015 in the first quarter, particularly the first two-thirds of this year were not very accommodated to value investing. So, I think it’s more kind of indicative of that. Their overall relative performance still is good. It continues to be good. We will see what second quarter brings, but it’s because it’s performance fees and that’s specific to investment performance on specific client accounts, it’s not easy to predict.

Is it performance fees versus a benchmark or sort of how to go?

Versus client specific benchmarks, yes.

Okay. And then just broadly as it relates to the corporate expense level, obviously, you sort of incurred some incremental investment expenses this quarter and that was talked about and got a lot of focus on the fourth quarter call. Just trying to get a sense of the expense level that we are at, how indicative it is of this and reflective of the investments there are, how much more there is to go? Where are you in the sort of the incremental investment as it relates to or was alluded to on the fourth quarter earnings call?

Yes, I think first comment I would make as we talked about and probably almost everybody on the call, I spoke to some time subsequent to the call, is that although the comments on the call last quarter were focused on increased spending in the area of SWP, whether it be on the technology side or the client implementation side, the work being done to scale operations, that was kind of – that’s inclusive and that is our overall management of expenses across the rest of the company and the other things we are doing. So, I think what kind of got lost is well, we might and are going up in certain areas where there will be – what we need to do from a management standpoint to find ways to pay for that embedded within our existing expense base. Now that being said, we would expect some continued, I would say modest expense pressure in those same areas going forward. But at the same time, I would also couch it with similar to how Al just spoke about it that it’s within the context of managing expenses overall. As the year progresses, if we stay with these stronger markets, if we stay with at least our sales performance, stay strong, if our profit performance continues to pick up, we will see some incremental expenses certainly associated with personnel costs in the sales compensation, incentive compensation areas. But I think if you saw – which I would expect some expense increase, because I expect those things to be positive, the expenses will trend up slightly. I don’t see any major double-digit percentage movement.

Okay, that’s helpful. Thank you, Dennis.

You’re welcome.

Thank you. Our next question is from Tom McCrohan with CLSA. Go ahead please.

Dennis, can you just remind us the assumptions that go into the recurring revenue piece of the net new sales number?

I am sorry Tom, what goes into that number?

Yes.

So with every unit, it’s essentially new clients signed, so new contracts or cross-sells with existing clients netted against any client losses that might occur during the period that were either occurred or notified will occur. And then in the investment and advisor space, it’s really – it’s calculated based on net cash flow and the revenue expected of that net cash flow from our advisor distribution network. So, it’s all net of any losses. Is that clear, I mean does that help?

I was trying to get into the recovering part of it, but I can follow-up with you offline, the assumptions that go into that.

Recurring is revenues that we are of the nature that they were repeatable on a multi-year basis versus one-time revenue, which is more project-oriented or single transaction oriented.

Okay. Thank you.

Thank you. We have a question from Chris Shutler with William Blair. Please go ahead.

Hey Dennis. Good afternoon.

Hi Chris.

So first, could you call out the net flows for LSV in the quarter and just give us some sense of facing what you know today, what the pipeline looks like, so any sizable mandate wins or losses that you are aware of coming up?

Yes. I mean their net flows, so flows which would incorporate new cash flow from existing clients plus new clients signed, less loss cash flows from existing clients and then lost clients. The bulk of the cash just came from existing clients. There were some new client wins during the period, but they also lost cash from existing clients. So those were pretty neutral. In terms of their pipeline, the most recent conversation I had with them last week, frankly was they feel pretty good about their pipeline. They have a lot of strong interest. Their performance has been good, particularly those important 3-year -- 1-year, 3-year, 5-year numbers relative to benchmarks, value benchmarks. Particularly they are -- not just are U.S. side of things, but their non-U.S. products have done well. And as most of their – as you know, most of their business comes through kind of the consultant community, they’re -- from what I hear in pretty good stead with that community. So I think they expect to certainly win some business going forward.

Alright. Thank you.

You’re welcome.

Thank you. And our next question is from Robert Lee with KBW. Please go ahead.

Thanks. Good afternoon Dennis.

Hi Rob.

Hi. Just a quick question on LSV with performance fees, I mean I guess kind of understandable given the market backdrop, the low proportion from performance fees. But just thinking ahead to the second quarter, I mean the second quarter last year, it was a pretty big quarter for performance fees. I mean can you just remind us of any seasonality that kind of flows through performance fees from LSV’s book of business. And I mean is it fair to assume, just given where things stand today that likely to be subdued versus last year at least proportionately in terms of performance fees in Q2?

Well, I think based on the first quarter results, there is probably some – they would make some sense to be a little more subdued on second quarter versus last year, but last year was also particularly high. I mean so they did about just under $14 million last year in the second quarter. So like I said in one of the earlier questions, it’s hard to predict this. In terms of seasonality, always historically second quarter, third quarter were the stronger quarters. But last year, the second quarter was the outlier, but the other quarters were pretty consistent. And that’s really, like I said on prior call that’s really due to client calendaring or one of these things. Now in the overall context of LSV, remember that performance fees still are a relatively small portion or percentage of their total revenues. I mean it’s not as if that’s what’s driving the – ultimately driving the success of the firm.

Great. That was all I had. Thank you.

Thank you. [Operator Instructions] We have no one else in queue. Please continue.

Thank you. I am now going to turn it over to Joe Ujobai to discuss our Private Banking segment. Joe?

Thanks Al. I will start with the financial update on the first quarter for the private banking segment. First quarter revenue of $113.3 million was essentially flat to the fourth quarter. Segment revenue growth was hampered by market and currency volatility in our asset based businesses. Quarterly operating profit of $9.6 million was down from the fourth quarter. Profit was impacted by increased sales compensation costs as well as additional expense as we prepare to convert our growing backlog of SWP clients. We will continue to work hard on overall expense management as we grow the business. Total segment profit of $12.4 million includes the final gain on the sale of our Korean subsidiary. Net sales events for the quarter were $25.2 million, of which $20.7 million is recurring investment processing revenue. The remaining $4.5 million is largely one-time professional services revenue associated with SWP signings. The record sales quarter for the Private Banking segment was driven by the recently announced signing of Regions Bank, net new revenue associated with the signing of Webster Bank, a long-time SEI client converting from Trust 3000 to SWP, the signing of a new private client investment manager in the UK and newly contracted books of business for SWP at HSBC. Last year, we announced that Wells Fargo will be the first large scale U.S. wealth management firm to adopt the platform, leveraging the solution in a Software-as-a-Service or ASP delivery model. Regions [ph] wealth management will now be the first large scale U.S. wealth management firm to lever the platform in a fully integrated capacity including utilization of our wealth advisory services, end client experience and back office securities processing support. We believe that these are two milestone clients. Our total signed but not installed backlog for the SEI wealth platform is $44…

[Operator Instructions] We have a question from Chris Donat with Sandler O’Neill. Go ahead, please.

Hi, good afternoon, Joe.

Hi, Chris.

Joe, can you remind us how the – you said you had elevated commissions or sales commissions. Can you remind us how the payout works for your sales people when you have a big signing like a Regions or a Wells does it – does all the sales commission happened concurrently that quarter or is there something of a trailer there?

Yes. So, we accrue all the sales commission at signing. Then we pay the salespeople a certain percentage at the signing and then a percentage when the firm converts to us.

Okay, but it’s all accrued at signing?

Absolutely, yes.

Okay. And then on the $44 million number you gave for the backlog, I just missed how you define that, was it signed but not something?

Yes. As the backlog, it will be signed, but not yet installed. So, we will be in the process of converting those clients. And I say the half we expect will convert by the end of next year and the rest will convert a few years after that.

Okay, got it. Thanks very much.

Thanks.

Thank you. We also have a question from Chris Shutler with William Blair. Go ahead, please.

Hey, Joe.

How are you, Chris?

Good. So, a couple of questions. First, can you maybe help us think about the magnitude of the sales comp that was included in Private Banks this quarter? And then secondly, maybe any commentary on the pipeline, how it’s shaping up, whether it’s weighted towards smaller banks or larger banks in the near term? Thanks.

So, it was a great quarter for sales for us. We looked at more than $20 million in recurring, which is about what we did all of last year. So, I think its terrific news. And we think we pay the salespeople a competitive rate and it’s a small percentage of, ultimately, the value of the contract. The pipeline, again, I think is strengthening. I am really trying to focus more – there is a lot of momentum. We are trying to focus more on backlog, because that’s what’s really going to really drive revenue growth and the scale we need. So, it’s strong and strengthening. The announcement of Wells and Regions certainly helps drive momentum in the marketplace and we think that’s good news for us.

Alright. And maybe one more on the AMD business, the Janney win is a nice win – just remind us how you feel about your positioning related to – in that business relative to the DOL rule, because I think you view it as a positive relative to some of the regulation out there. Maybe just remind us why and how that kind of played into Janney’s decision?

Yes, as you know, obviously, there are a lot of distributors out there who want to grow, maintain and grow their business. And so the DOL rules have been largely finalized. And as we work with our distributors either evolve their products for new distributors around the greater recognition of what the underlying fees and commissions are, those kinds of things. I think it’s a great opportunity for us and our program fits very nicely into the opportunity. And Wayne will probably go into more of that in his section.

Alright, thanks.

Thank you. We next have Glenn Greene with Oppenheimer. Please go ahead.

Thanks. Good afternoon, Joe. I guess, just a little bit more on the Regions when – just to get more some color behind it, what were they doing before? Were they sort of using an in-house solution? I guess, it’s – it was interesting to me that it was sort of a new client for you and going toward the full outsource route. So, I just want to understand a little more entirely what the process was, how this came to fruition and a little bit more, specifically, what exactly you will be doing for them?

Well, so it’s hard to talk specifically about any one client, because we have confidentiality agreements, but let me give you a little color of what I think our opportunity is in that space.

Okay.

In the large regional banks space, many of the firms had gone out and got best in breed. They had bought a number of different technology solutions and then the bank would integrate those solutions themselves. And I think there is a – the difference really between that model and our model is that what we really do is try to drive a heavily integrated sort of front, straight-through process, straight-through solution, which includes not only the technology, but also business process and then certainly processing the underlying securities. So, I think there is the real interest in a number of firms to be able to sort of lower their risk and lower their expense based on a fully integrated solution with – that uses new modern technology versus the legacy systems that many of these firms have that aren’t quite as flexible going forward. So, we are seeing a lot of interest in that type of a solution, which plays right into the value and the strengths of the SEI Wealth Platform.

Were they on an in-house solution or a competitive alternative?

I really can’t talk about what their current state is. But I mean, suffice it to say, they are on a lot of different technology platforms.

Okay, fair enough. Thanks.

Thanks.

Thank you. Our next question comes from Tom McCrohan with CLSA. Please go ahead.

Hi, Joe.

Hi, Tom.

For Websters Bank, a similar kind of question, we know they are a TRUST 3000 client, but does the opportunity there extend beyond the trust business and go into the wealth management area as well?

Yes, I think again we are – it’s hard to comment on any one organization, but I think what we are finding inside of a number of these banks in the U.S., where we historically had provided principal income accounting to the trust department, the SEI Wealth Platform lets us expand into other segments like the adviser segments that banks have either created or acquired over the years. So, that’s a big opportunity for us to grow. And again, the concept of replacing multiple technology platforms is also an opportunity for us to grow the business.

Okay. And I think prior Investor Day, you sized the pipeline as general opportunity of conversations you were having like $100 million, I believe. Can you give us an update on that?

Yes, we have that number out there for a long time. And again, I am – I would encourage you all to focus more on backlog, because that means it’s signed and it’s going to drive revenue in a reasonable period of time. But I would say that our opportunity continues to grow. Again having these early adopters, there will be significant firms in – across the industry. It’s a real positive for us. So, we are busy. We are on the road a lot and we are making good progress with our prospects. So, it’s pretty significant.

Excellent. And the last question I had was in regards to Wells and the technology changes that you are making to make that platform SaaS-based. Can you just give us a sense of the complexity to do that? How big of a technology lift is it? I am getting some questions that I just don’t know how to answer in terms of the risk of making the existing platforms SaaS-enabled, if you can just talk to that? That will be great.

It’s pretty big. Some of it is, we don’t share databases and access to some of the third-parties that we get data from. So, where we might go in sort of in an institutional wholesale way, the large firms will want access to pricing services and other third-party services based on just their firm. That investment is good, because I think it gets us into the large or the jumbo bank space. It also is going to help though our internal operations as we drive scale. So, part of it’s around scale, significant processing volume, part of it is larger firms that want their own access to third-parties and part of it is allowing the large jumbo banks to provide and to get more data out of SWP. So, it’s an investment we think is certainly worthwhile for us to be successful in the very large wealth management space, but it then also provides some progress for us as we grow the BSP business.

Okay. Thanks, Joe.

Thanks.

Thank you. And we also have a question from Robert Lee with KBW. Go ahead, please.

Thanks. Good afternoon, Joe.

Hi, Rob.

And some of these you went over in the call, but I had – and I apologize I had a bad connection, so I didn’t hear all of them, but just wanted to confirm the – it was $20 million of recurring revenue won in the quarter and then about – the balance, $5 million or so was kind of the one-time revenue?

Yes, it was $20.7 million in recurring and $4.5 million in one-time.

Alright. And that one has – did any or all that one-time flow through in the quarter or that’s kind of in quarters to come?

It’s in quarters to come.

Okay. And also just kind of clarifying the number, the cash flows in the UK, was that $2.8 billion?

That’s correct.

Okay, great.

That was largely eaten up by market volatility and currency, unfortunately.

Alright. Okay. And I guess just going back to the expense, understanding there were some sales commissions in the quarter and continued expenses, is there any reason, depending on sales activity obviously in this quarter, that current expense levels, even with some upward pressure on kind of the – at least an indicative level for the next couple of quarters, putting aside any big wins that may come on?

I think Dennis was very eloquent in his example, in his response to the question about expense. So we are working really hard to manage expense. We have ways that we can redeploy investment that we are maybe spending in other parts of the segment more and more towards the platform. We are going to keep investing. We think we have got a huge market opportunity and we will keep investing, but we will do it in a very mindful way. Currency has been hard to predict. So we will see what impact weak currency has on our business. Less of an impact in our SWP business with some of our expenses are in local currencies, for example in the UK business, maybe more of an impact in our AMD business because we have – the revenue is a variety of currencies, but expenses are usually dollar denominated. So we can’t really control that, but we got to keep investing in the right areas to grow this business and to drive more efficiency and scale.

Alright. And then maybe one last question if I could, make sure I heard it right. There was a client who converted from Trust 3000 to SWP and if I understood correctly, there were some one-time revenues around the conversion?

So there I would add – I said there is a Trust 3000 client, a long-term client of Webster Bank and Webster has decided to convert from Trust 3000 to SWP, not only for their trust accounting, but also for their some other books of business that they have. And we have signed that in the first quarter. We expect generally these smaller community banks to convert in 9 months to 12 months. So we would realize the one-time associated with that between now and the actual conversion and then the additional revenue they will pay for the SWP platform over what they pay us for Trust 3000 will kick in once they convert.

Okay, alright, now I get it. And I just had one last question for and I guess I lied, one more question, was there any one-time revenue in the quarter?

Yes, there was some one-time revenue in the quarter. As you know, we have a big one-time revenue relationship with – as we build out towards Wells. So we will realize that as we build the capabilities and help them convert. And that was I think for the quarter, was about $3 million across Wells and some other clients.

Alright, great. Thanks for taking my questions.

Thank you. We have no one else in the queue at the moment. End of Q&A:

Thank you. Our next segment is investment advisors. Wayne Withrow will cover this segment. Wayne?

Thank you, Al. The first quarter of 2016 was marked by volatile markets, which did have some impact on our financial results. Despite this market environment, we still managed to post a good quarter of growth and the strategies we continue to implement support our growth strategies going forward. Assets under management were $52.4 billion at March 31 and almost 3% increase from December 31. During the quarter, we had $850 million of positive net cash flow. Revenues for the quarter were $76.7 million. This compares to $78.6 million for the fourth quarter of last year, a 2.5% sequential decline. A decrease in market valuations during the early portion of the quarter, which resulted in lower average assets under management were the major reason for this decline. Improved yields on money market funds and positive net cash flow helped to offset some of the total decline. Expenses for the quarter decreased $1.7 million from last quarter. The major drivers of this decrease were declines in both compensation expenses and discretionary project expenses, partially offset by increasing expenses from our account growth and the SEI Wealth Platform. As I discussed in the fourth quarter, expanding our distribution footprint as well as SEI Wealth Platform development and client migration remain the strategic imperatives of this business. Expenses not related to these objectives are being closely scrutinized. On the new business front, we signed 213 new advisors. Our pipeline of prospects remains very strong. Moving on to the status of the SEI Wealth Platform, we are on track for another migration at the end of this month. This will be a migration of approximately $4.2 billion in SEI assets and will bring our total SEI assets on the wealth platform to $10 billion. We have our next migration planned for September 30 of this year. Turning to some specific sales matters, the initial Curian event is now over and in the end we acquired about $1.5 billion in assets. About $200 million of these assets moved into SEI asset management product in the first quarter of this year. While the initial focus was on the assets held by advisors at Curian custodian, we are now focusing on assets held by Curian advisors at other custodians. Additionally, we are focused on the recent DOL regulation as a catalyst for advisors to convert to SEI’s asset-based fee model. In summary, despite volatile markets, net cash flow and new advisor recruiting were positive for the quarter. The transformation of our business on to one supported by the SEI Wealth Platform remains on track and I remain optimistic about our future prospects. And I welcome any questions you may have.

Thank you. [Operator Instructions] First, we will go to Robert Lee with KBW. Go ahead please.

Hi good afternoon Wayne.

Hi Rob.

Hi. A quick question on the DOLs, I mean I sort of can appreciate how the DOL rules are going to drive more demand for fee based products, like – and platforms like what you offer, but I am just curious within that, what kind of pressure, if at all are you seeing to – whether it’s to include more index products or somehow change kind of the fee structure, just given that – as part of the DOL’s fiduciary movement, there is this ever-present – and there has always been a focus on fee levels, but I mean do you feel like it’s accelerating and then you may have to adjust some of your offerings within your platform to accommodate that. And if you would do, how do you kind of deal with that from your own kind of revenue and margin perspectives?

Yes. I mean a lot of people talk about that way, but I think when you talk about index management and talk about asset management, but they are really two different animals. And it’s not – when you look at the DOL, it’s not 100% focused on the absolute level of fee. The real focus of DOL is really in three areas; it’s in fee transparency, fee reporting, and moving into an asset based fee model. And that’s the three things we support. And I think that’s the three things that will make us successful in this effort.

I mean do you see any, just as you can kind of work with your advisors, any incremental costs that you guys will have to incur, whether it’s doing something new functionality on SWP to deal with the changing or evolving DOL rules?

No. I mean not at all.

And just one last question, I mean some – who do you – how do you think of the competitive universe out there, I mean the other day I guess LPL announced putting in place of a BlackRock Aladdin platform and I guess you have had some competitors out there obviously in doing different aspects, I mean are you seeing the competitive landscape change, are you seeing with the changing distribution landscape, new competitors, maybe like BlackRock Solutions kind of come into the market, so I mean what changes are you seeing?

Well, I would look in two different ways. Number one, you told about people like LPL. I think you need to talk about people that have a big commission based business. And they need to change their business model. So, they have a whole different challenge ahead of them than people like us, right? When you look at SEI and we will go back to some of the Investor Day dialogue, you could talk about asset-based fee product, but that – and we do offer that. But really, when you look at SEI, we have a consultative sales process. And really, there is three aspects of our product. It’s the investments; it’s the operations and technology support; and it’s the whole practice management business consulting report. I mean, I feel we are the leading provider in helping advisers figure out and this always has been and still the strength of ours, how you convert from a commission-based business to a fee-based business. We have always done that and we still do that. And this just goes right to our wheelhouse. So, this really levers one of our major strengths, which is our whole practice management expertise.

Great. Thanks for taking my questions.

Thank you. Our next question is from Chris Donat with Sandler O’Neill. Go ahead, please.

Yes, thanks for taking my question, Wayne. I was curious to see if – with the DOL rules and if you have seen anything with adviser behavior on their decisions to work with you or really work with any other platform provider. I am just wondering if you got any sense that there is like a backlog of advisers who have been waiting for the final rule before making a decision or is that really not part of their decision-making process?

I would bifurcate the question. I think, a), it’s true. They are waiting for the final rule so the – before they took actions. And I think the other part of it, which is related is trying for – and we are doing this trying to convince adviser to get in front of this, to own it and to get in front of it, because this requires them to have a fee conversation with their clients. And as you could imagine, advisers are not all excited about going and having fee conversations with their clients. So, we are helping them get in front of it, helping them how to frame that conversation with a client. So, this is an opportunity for us, not only to support a new business model, but to help them transition to that model.

Okay. So, would it be reasonable to assume like you did 213 new advisers this quarter that we might see some pickup in the number of advisers coming on in coming quarters just as we get past DOL?

Yes.

Okay. Thanks, Wayne.

Thank you. Our next question is from Glenn Greene with Oppenheimer. Please go ahead.

Hey, Wayne. Just first question, just sort of numerically just so I understand it, but is it clear to think that the net flows, ex-Curian, were sort of in the $600 million range this quarter? And – yes and then...

About $650 million, yes.

Okay. And then is it just sort of a somewhat slower pace than we have gotten spoiled by over the last couple of years? Is it just sort of the market volatility in the early part of the year? And where I am going with this is, did you see any improvement in March and April?

Yes. I think it’s kind of hard in the short timeframe to say whether I saw an improvement or not. I think sort of the pace is about the same. The thing I would comment on Curian is that we have a certain capacity or throughput in the sales side. So, I think Curian, at one level, that improved the quality of the overall leads. It didn’t necessarily change the overall leads and we only have a certain capacity to sell new advisers. It only increased the likelihood of success with some of those sales, because we have some capacity. So, people that focused on Curian advisers are now going back to focus on what they focused on before Curian. So, that’s the way I would look at it.

Okay. Well, it’s sort of leading into my next question too as it relates to the DOL regs that are now finalized and you obviously sort of presumably are well positioned for this. But how have you positioned the sales force in advance of this? And how much incremental investment or the degree that you sort of increased the sales force and to tackle this sort of opportunity?

But as you know, this is a mass production business. And like – so I would go all the way back to the beginning with lead generation, just like we focus our lead generation machine on generating leads from Curian advisers. We focused the lead generation machine over the past 2 months to focus on areas where advisers may have issue with DOL regulations. So, we see this all the way to generating good leads for our sales force where we can help them.

Have you – beyond sort of the lead generation, have you sort of ramped up your sales force, maybe resegmented your regions or anything like that in front of this?

We absolutely have done that. And I think we talked about that via phone call before, where we have expanded into more sales territories. We started the third quarter. And actually, I thought I would get a question about this. So, I am actually happy to report that we have completed the – completed filling out – substantially completed the filling out of the enlarged distribution footprint during the first quarter. So, I would like to tell you I was smart enough to do this in anticipation of DOL regulation, but we did it in anticipation of the opportunity in general of which this is just one.

Okay, great. Thanks, Wayne.

Thank you. Our next question is from Chris Shutler with William Blair. Go ahead, please.

Hey, Wayne. Just curious what your expectation is when investors are looking for the – at your numbers. When should we begin to notice the benefits of advisers moving outside assets over to SWP, so should that be noticeable this year or next year, what should we be thinking?

Yes. I mean, we anticipate starting to see some impact from that next year.

Okay, so 2017.

Yes.

Okay.

I mean, it’s going to ramp. I mean, it’s not instantaneous.

Understood, understood. And then one question on the DOL, so broker dealers are kind of the ones that I think most of us think are going to be under some pressure as a result of the fiduciary rule and that is a big part of your client base in the segment. So, I guess on one hand I would think it would be good for outsourcing investment management, but on the other hand, I could see some broker dealers try to rollout more proprietary asset allocation models and other things to try to offset some of that revenue they are losing elsewhere. So, I know it’s early, but help us think through kind of that dynamic.

I would say it’s no different than Curian. I think when Curian announced they were going out of business, the largest of the broker dealers trying to capture those assets in proprietary programs and there is hundreds of broker dealers. Once you get outside of the top few, they have limited capacity to do some of that. So, I think that as you move out – we can help all broker dealers, but as you move out of the top few, there really is a big line of people like us to help them.

Got it. Okay, thank you.

Thank you. We will go next to Tom McCrohan with CLSA. Go ahead, please.

Hi, Wayne. How are you?

I am doing great.

Good. In terms of converting the legacy advisers to SWP, what proportion of the base – can you update us on that – do you expect to be converted by the end of this year? And when do you expect to get them all converted on to SWP?

Yes. I mean, I think at – by the end of this year we will probably have a third of them done. I think our goal is to have them converted at the end of 2018. I will say that as an aggressive goal. So, don’t mark the day on your calendar and have a party, but that’s certainly what we are shooting for.

And for those that you have converted thus far, are there any learnings you can share with us as – now that they have been on the platform for a couple of months?

I think they are learning it a lot. The degree of acceptance of the platform varies across clients. Some clients – the clients that totally embrace the platform really like it. I think for some clients that aren’t as receptive of change, the change management process is a little harder than we thought, but we are getting there and I think it’s no different than we anticipated and it’s nothing we can’t manage too.

Okay, thank you.

Thank you. And we have a question from Patrick O’Shaughnessy with Raymond James. Please go ahead. Q - Patrick O’Shaughnessy: So, there has been some discussion about how advisers are kind of in a holding pattern because of market volatility and because some of these DOL rules, but what are we seeing about advisers’ clients and about advisers’ ability to grow their businesses in this market environment? And I ask because just the other day, Ameritrade was talking about with its IRA custodian business, it wasn’t seeing its advisers grow their businesses as it was fast. I think they chalked it up to market volatility. Are you seeing something similar in your business?

Yes, I think that’s true. I think it’s not the adviser so much as the end investor, but the end investor is a little bit hesitant trying to decide what to do. Q - Patrick O’Shaughnessy: Got it. So, what sort of market environment do you think brings the end investor back and starting to sign up with advisers more, just a lower volatility more calm environment?

Just more stability, yes. And I have always said, we don’t necessarily need a raging bull market, but we do need some stability. Q - Patrick O’Shaughnessy: Got it. Thank you.

Yes, thank you. And we have a follow-up from Robert Lee with KBW. Go ahead please.

Thanks again Wayne. One last question, maybe kind of related to the previous one on kind of investor behavior. I mean you have seen kind of the fee rate kind of migrate down and I know you – obviously, some of that’s related to maybe some less risk taking among clients, are you seeing any change in that behavior, is there anything else going on that can be influencing the fee rate?

No. I think that’s primarily it, I mean we are seeing a little more fixed income migration. I think that’s the big impact on fees right now.

Okay, great. That was it. Thank you.

Thank you. We have a follow-up from Chris Shutler with William Blair. Go ahead please.

Wayne, sorry for wanting to sneak one more in here. The...

That’s Rob’s job, you know.

What’s that?

That’s okay. Go ahead.

Alright. On the expenses in the segment, the – is there a much expense that occurred in Q1 that is going to kind of fall out of the P&L due to the Curian opportunity going away?

Not in a material nature.

Okay. Thanks.

Thank you. Then we have no further questions. End of Q&A:

Thank you. Our next segment is the Institutional Investors segment. I am going to turn it over to Paul Klauder to discuss this segment. Paul now runs this segment and was introduced to you on our last call.

Thanks Al. Good afternoon everyone. I am going to discuss the financial results for the first quarter of 2016 for the Institutional Investors segment. First quarter revenues of $72.9 million decreased 1% compared to the first – fourth quarter of 2015. Capital markets’ performance during January and February and currency translations negatively impacted revenue for the first quarter of 2016 compared to the fourth quarter of 2015. Quarter end asset balances of $76 billion reflect a $700 million increase compared to the fourth quarter. Net new client fundings of $550 million helped to overcome the drag of negative market performance and currency translations during the quarter. The unfunded client backlog at quarter end was $1.1 billion. First quarter of 2016 operating profit of $37.5 million increased 3% compared to the fourth quarter of 2015. First quarter of 2016 margins were 51.5%, a 2% increase from the fourth quarter of 2015. Client signings for the first quarter of 2016 were $900 million. We are pleased with the continued growth of our Fiduciary Management/OCIO business across our focused market segments and we continue to see an increased appetite for delegation by institutional investors. Our focus for 2016 is in three areas; continue to build a globally diversified institutional client base, continue to provide clients with value added advice in discretionary services and placed increased sales emphasis on defined contribution, Fiduciary Management, larger endowments and foundations and mega-plan investors looking for standalone investment strategies. Now I am happy to entertain any questions you may have.

Thank you. [Operator Instructions] And we do have a question from Glenn Greene with Oppenheimer. Go ahead please.

Thanks. Maybe just a little bit on the client signing for $900 million, is it a – which is a little bit subdued relative to what it’s been in the last few quarters, is it similar to what a – sort of Wayne saw in his business, the market volatility sort of caused somewhat of a pause in signings or some other factor there?

We did see a little bit of slowdown in decisions, given the dramatic market volatility in January and February. We are seeing a slowdown on defined benefit corporate decisions as clients put more focus on DC. So we are ramping up our efforts and putting more efforts around these growth markets that are really critical and we have a very good track record with, most notably other defined benefit plans, such as governmental, UK defined benefit, multiemployer, foundations and endowments, hospitals have all been real great markets for us. So we are putting more emphasis of our sales resources around those growth markets.

And then the margins look tremendous, sort of getting close to records I guess, but the sustainability of the margins or is there anything that sort of give us pause as we think going forward, maybe some expense ramp or anything we should just be thinking about in terms of the level of profitability?

Well, we were able to take Ed’s salary out of the first quarter. So that’s...

That’s a huge factor.

50.5 51.5% 0531:

Okay, great. Thanks a lot.

Thank you.

Our next question is from Chris Shutler with William Blair. Go ahead please.

Hey Paul. Similar to last question, I just wanted to clarify on the expenses, they were pretty flat year-over-year, just remind us how we should think about the trajectory over the course of the year, is this segment looks like it’s one that historically the expenses are lowest in Q1 and it builds over time, would you expect the same kind of trajectory this year?

I think we would have a little bit of trajectory out as we have more signings come on. Obviously, we have sales comp that ties to the signing period. Again, we have been very smart about our traveling. And one of the things that we have done is a lot of the client meetings we have – if we can have people participate instead of setting multiple resources, participate with one resource that’s on the phone, that’s been very effective for us. But as signings do come on, we will have incremental – we have associated sales comp to those signings and we should see some increase of that in Q2 and Q3 around the sales comp side.

Okay. Thank you.

Thank you. And next we have Robert Lee with KBW. Please go ahead.

Great. Thanks. And thanks for taking my question.

Thanks.

Just want to drill down a little bit into the Fiduciary DC business and maybe just trying to better understand how that differs from some of the other offerings out there and I am thinking specifically of different firms that specifically offer things like glide path management and whatnot as opposed to kind of just the turnkey target date, but how should we think of what your offering is, maybe it’s not different or how it may be different from what others are doing?

Sure. That’s a great question. I think for years, we saw in 401(k), most plans would hire a record keeper and would give the majority of assets to the record keeper. And now what’s happening is there is a segregation of investment management from administration. Because of that, plan sponsors are also pausing and saying, am I offering too much choice and is there just too much volume out there of menu options that my participants are getting overwhelmed and do I need a custom target date. When those decision trees happen, organizations are going to look for firms that have qualified capabilities around DB because they are almost DB-ing the DC. The same practices that have been applied to the DB for years are now being applied to DC. Plans are moving to white label. They are moving to custom target date, as you noted. There is move into simplified choice. And firms like an SEI are in a great position to be able to capture that investment business, given our vast heritage on the DB side. So that’s why we are quite excited about it and we are putting a lot of energy and emphasis around it.

And maybe just some follow-up, I mean it’s really the same question I asked Wayne about kind of pressures you are seeing from clients to offer lower-cost options. And obviously in the DC world, one of the things any fiduciary has to look at is – it’s not the only thing, but certainly it seems to get at least, it gets a lot of press is fee structure. And obviously, you are bringing more to the table than just low costs, but are you seeing that get – as you look into fiduciary DC, are you starting to see that, gee in those types of situations we have to offer lower cost options and can you – do you offset that, because you are charging kind of like the glide path management as the way to think about it, just try to get a sense of the pressures in your – in that market?

We understand the need for passive management and we include that as part of our offering. We combine it with active management, where active management net of fees has added value. But being able to incorporate that as part of the target date glide path or standalone options, it is important. It will lower the total cost I mean that’s being a prudent fiduciary, we are going to be able to offer that and have offer that to our clientele. If a plan wants to make a decision around 100% passive management, that’s more of a philosophical decision. So that probably would not be where we would play, but we see many clients who have a hybrid approach, incorporate passive in asset classes that are more challenging and use active management in asset classes that have worked, in that way they can offer the best options to their participants. And it’s no different than how they have managed their DB plans over years or adopting those same precepts and same practices and applying it to the DC world.

Great, thanks.

Thank you.

Thank you. And we have no further questions. End of Q&A:

Thank you. Our final segment today is Investment Managers. I am going to turn it over to Steve Meyer to discuss this segment. Steve?

Thanks, Al. Good afternoon, everyone. For the first quarter of 2016, revenues for the segment totaled $69.9 million, which was $1.8 million or 2.6% higher as compared to our revenue in the fourth quarter of 2015. This quarter-over-quarter increase in revenue was primarily due to new client fundings and implementation fees. Our quarterly profit for the segment of $24.6 million was approximately $1.9 million or 8.4% higher than the fourth quarter of 2015. This increase in profit quarter-over-quarter was primarily driven by the increase in revenue offset by slightly lower expenses this quarter. The primary expense declines in the quarter were compensation expense and reduced discretionary project spending. While we continue to invest in our implementations and solutions, we will also aggressively manage all other non-priority expenses. Third-party asset balances at the end of the first quarter of 2016 were $400.6 billion, approximately $10.3 billion or 2.6% higher as compared to asset balances at the end of the fourth quarter 2015. The increase in assets was primarily due to net new client fundings of $18.3 billion offset by market depreciation of $8 billion. Turning to market activity, during the first quarter of 2016, we had another strong sales quarter. Net new business sales events totaled $10.1 million in annualized revenue. These events were comprised of new name alternative business, including competitive wins of several private equity outsourcing deals and expansion of existing business with current clients across all our segments. During the quarter, we announced the win of Centerbridge Partners. Centerbridge is a large, well-known manager in the alternative space and we are proud to be selected to provide a comprehensive outsourcing solution and platform for them. This sales event was included in our Q4 sales announcements and will be implemented in phases over the next 12 months. We continue to see strong opportunity and momentum in the market. We are focused on selling and implementing larger deals, expanding our business with current clients, expanding our solutions and entering new markets. As mentioned last year, we continue to invest ahead of these new sales and this has positioned us well in the market. We remain optimistic about our growth opportunity. I will now turn it over for any questions you may have.

Thank you. [Operator Instructions] And first we have Glenn Greene with Oppenheimer. Go ahead, please.

Hey, Glenn. How are you?

Good. So, in Al’s opening remarks, you talked I think specifically about your segment having a lot of large conversions in the backlog?

Yes.

So, I was wondering if you could provide a statistic similar to what Joe provided a sort of an unconverted backlog?

Well, I think our backlog right now is around $35 million. So, Q4 spiked up a little bit. And then due to implementations, etcetera, it’s come back down to about $35 million.

Yes. And sort of the timing when we should be thinking about when this would be converted?

Over the next hopefully 12 to 14 months, sometimes, you have delays with certain deals. But really, I think that we are looking at backlog, the majority will be within the next 12 to 14 months.

And when you sort of think about your pipeline and new activity going forward or – you obviously talked about a few key wins. Are you seeing any noticeable change in the skew or the mix of prospects?

No. I think right now we see a strong surge continuing in alternative, especially in private equity and what we would call hybrid managers, which are managers similar to Centerbridge, which have both the private equity and hedge funds. It might have a hedge product in a private equity structure. So, we are seeing the strong opportunity there, but we are also seeing good momentum in our traditional business as well. I think that’s just been a little longer and the market has been impacting that a little bit more. What I would tell you is the pipeline remains at the highest it’s been in years that I can remember.

You got a figure for that?

It’s in excess of $150 million.

Okay, great. Thank you very much.

Thank you. And our next question is from Chris Shutler with William Blair. Please go ahead.

Hey, Steve. How are you?

Good. How are you?

Good. So I guess curious just given the market volatility happening over the course of the quarter and I guess late last year as well how has attrition in the business been trending?

Define attrition, attrition among client assets or among clients themselves?

Both. I guess I am curious on both. The assets, it’s a little bit more self-explanatory, but...

I guess I handed you that one, didn’t I?

Yes.

So what I would say is we saw this last year with our first client assets. I think we are still seeing – and I think if you look at the headlines, Q1 was a tough quarter for the hedge and alternative place. So, we are still seeing redemptions and liquidations out of clients’ books of business. We are seeing new funding, but I think we are seeing a heavier pace of the redemptions. On the client stickiness that we have, we are still seeing a pretty solid and very high retention rate among them.

Okay. And there is two other ones. First on the – since you just gave the pipeline number, you said in excess of $150 million. I mean, how do you define pipeline? Is that just – I guess how do you define it?

These are deals that we have in a process that we have started the sales process with and are engaged in an active sales process. We have certain gates. Typically, these are somewhere in the gate two or above.

Got it, okay. And I guess lastly, could you just give us the latest stat on what part of your assets are traditional managers, hedge funds and PE?

So right now, I think it’s trending right around 53%, 54% of our business is alternative versus traditional side.

Okay, thank you.

Sure.

Thank you. [Operator Instructions] Okay. We have no one queuing up. End of Q&A:

Thank you, Steve. I would now like Kathy Heilig to give you a few companywide statistics. Kathy?

Thanks, Al. Good afternoon, everyone. I have some additional corporate information about this quarter. The first quarter cash flow from operations was $78 million or $0.47 per share. First quarter free cash flow was $64 million or $0.39 per share. First quarter capital expenditures, excluding capitalized software, $4.6 million and we project an additional $30 million, again excluding capitalized software for the remainder of the year. As noted in the release, the tax rate for the first quarter was 35.2% and we project the tax rate for 2016 to be approximately between 34.5% and 35%. We also would like to remind you that many of our comments are forward-looking statements and are based upon assumptions that involve risks and that the financial information presented in our release and on this call is unaudited. Future revenues and income could differ from expected results. We have no obligation to publicly update or correct any statements herein as a result of future development. You should refer to our periodic SEC filings for description of various risks and uncertainties that could affect our future financial results. And now, please feel free to ask any additional questions that you may have.

Thank you. [Operator Instructions] And first we have Glenn Greene with Oppenheimer. Go ahead, please.

Hey, Dennis. Just one quick question, the FX revenue drag in both private banking and Trust and II?

In banking, it was just a little over $1 million in revenue and in II, it was just over $500,000.

Okay, thanks.

But I would also lay – on the expense side, I mean, the net P&L impact, because we did get some benefit on the expense side is pretty neutral across the company. It’s about $250,000 negative across the company.

Okay.

So, you don’t over – remember, there is two sides of the coin with FX sometimes.

I got it. Thank you.

Thank you. Our next question is from Robert Lee with KBW. Go ahead please.

Great. Thanks. And I guess this is for Dennis. I mean, it’s pretty clear from everyone’s comments that there is – comp accruals are down in the quarter, discretionary spending down in the quarter. And is there anyway to just kind of – outside of SWP spend and things, just are you guys kind of targeting zero expense growth for the year outside SWP, I mean how should we – how are you guys thinking about expense spend just to your – with ex-SWP?

No. I mean I wouldn’t say zero, because I think we have to run our businesses effectively and to the extent we think we are making a good decision that requires us to spend money to enact that decision, we are going to do it. I think the compensation variation depends on what period you are talking about. I mean first – fourth to first, certainly in Wayne’s business, sales compensation will be down because he had certain factors in the fourth quarter. A, he had greater net asset flow production. B, he had end the year – it was in the fourth quarter, so many of his salespeople had hit accelerators on their compensation plans. So we had some incremental expense associated with that compared to first quarter, where he did – the better comparison would be to last year’s first quarter, because it did a little bit over $1 billion last year and $900 million this quarter. In fact he has more people in the field, so there is probably more comparative that way. If you look at Joe’s business, I mean his sales compensation in the first quarter certainly is higher than it was in the fourth quarter, because the sales activity was so much higher. So it depends on what periods you are talking about, the comparatives on compensation. On non-sales compensation, that’s really just something that we generally would build during the year as the year starts to take shape relative to our internal goals and objectives. So Rob, I mean our only business here isn’t about SWP. I mean we have more an aggregation of businesses and they all require us to manage effectively. Steve’s business really has nothing to do with SWP. So the investments he makes are all about growing that particular franchise for us and his client signings and his acquisition of clients, really going back a few years now, but really accelerating, particularly with the larger clients, does require us to put more money into our operation, into technology. And that’s aside from us staying ahead of our competition, just in product and service offering and value to the client. So – and I don’t want to – I wouldn’t leave – want to leave the impression that the only place we are going to spend more money here is SWP because that’s not the case. But our job is to manage the business, businesses.

Great, I appreciate the added color. Thank you.

Thanks, Rob. No last question.

No, that’s it.

And we will go next to Tom McCrohan with CLSA. Go ahead please.

I think just a question for Joe, just a clarification on Webster Bank win, I don’t remember seeing a press release, so that was just announced today on the call or did I miss the announcement?

Yes, that was just announced today on the call.

Okay. Thanks.

[Operator Instructions] And we have no further questions. End of Q&A:

Thank you. So ladies and gentlemen, we feel that 2016 is off to a good sales start while we manage our way through some choppy waters, choppy markets. Looking ahead, we will keep our focus on sound execution across the company while we grow. And thanks again, for joining us today and have a good afternoon.

Thank you. And ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.