Ladies and gentlemen, thank you for standing by and welcome to the SEI Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session and I'll give instructions at that time. [Operator Instructions] And as a reminder, this call is being recorded. I would now like to turn the conference over to our host, Chairman and CEO, Al West. Please go ahead sir.

Thank you, and welcome everyone. All of our segment leaders are on the call, as well as Dennis McGonigle, SEI’s CFO; and Kathy Heilig, SEI's Controller. I'll start by recapping third quarter 2021. I'll then turn it over to Dennis to cover LSV and the investment in new business segment. After that, each business segment leader will comment on the results of their segments. And as usual, we will field questions at the end of each report. So, let's now turn our attention to the financial results of the third quarter 2021. Third quarter revenues grew 14% from a year ago. Third quarter earnings increased by 24% from a year ago, and third quarter EPS of $0.97 grew 29% from the $0.75 reported in the third quarter 2020. Third quarter asset balances decreased by approximately $3.7 billion, while LSV's balance decreased by $4.8 billion. During the quarter, we repurchased 2.0 million shares of SEI stock at a price of $60.58 per share. That translates into $120 million worth of stock repurchases. Now, I would like to provide you with our situation today. One of our businesses steadily grows its revenues and profits, that’s IMS. Another business, the Advisor segment has recently been executing against our new technology-driven strategy. We are experiencing strong indicators that the business has turned the corner, and we are very excited about that. Another business, private banking is diligently working on an implementation backlog, strong sales pipeline, and enhancing client satisfaction. Now the fourth business is the Institutional Investor segment. While it faces strong headwinds in the legacy-defined benefit OCIO client base, it’s currently addressing other growing segments. We're also focused on building growth engines beyond our four traditional businesses. Here we are finding opportunities in markets and services adjacent to our four main engines. In…

Thanks Al. Good afternoon everyone. I'll cover the third quarter results for the investments in new business segment and discuss the result of LSV asset management. During the third quarter, the investments in new business segment activities consisted of the operation of our Private Wealth Management Group, our IT services business opportunity, which Al told you now we now call SEI Sphere, the modularization of assets and data integration of different platforms to deliver on our One SEI strategy, and other investments. During the quarter, the investments in new business segment incurred a loss of $8.5 million, which compared to a loss of $9.6 million during the third quarter of 2020. Approximately, $6.5 million of expense during the third quarter 2021 is tied to our One SEI effort. Regarding LSV, our approximate 38.7% ownership contributed $35 million in income to SEI for the third quarter of 2021. This compares to a contribution of $28.3 million in income for the third quarter of 2020. Assets during the quarter contracted approximately $4.8 billion. LSV experienced net negative cash flow during the quarter of approximately $3.1 billion with market depreciation of approximately $1.7 billion. Revenue at LSV was approximately $115.7 million for the quarter with $1.9 million of performance fees. As we discussed on the last quarter call and over time, our people are the key to making SEI go. Our business growth adds to our need to recruit, develop, and retain our talent in all areas including our operational teams. During the quarter and again recently, we have taken steps to invest in our operational talent with adjustments to their compensation. We recognized their contribution to our success and the role they play in our competitiveness as a company. Regularly we monitor the labor markets within which we compete and will make…

[Operator Instructions] And we will go to the line of Owen Lau with Oppenheimer. Please go ahead.

Thank you for taking my question. Dennis, could you please give us an update of your latest status about people working in the office versus working remotely for the rest of 2021 and also the planning going into 2022? Thank you.

Sure. So, since the end of the second quarter, we have gradually welcomed employees back to our offices both here in Oaks and in London and somewhat in Ireland and Indianapolis. Starting just Monday of this week, we have what I kind of call an open door for anyone who voluntarily would like to come and work in our offices whether it be one or two or three or five days a week. We have – we’ve improved our protocols on how to keep people safe and protected. We certainly look forward to seeing more people on our campuses, but as Al mentioned, we have adjusted well to and we'll continue to take advantage of the opportunities and the pros if you will, from how we've worked over the past 20 plus months. And we've learned that we certainly can run effectively with people distributed in different geographic areas. We can run effectively with people not coming into the office every day. We do recognize and our workforce recognizes the benefits of being in the office when they can be relative to things like team engagement, group meetings, and conversations, certainly the benefits of spontaneity and running into people and covering specific business issues when they do, but that being said we're taking a kind of gradual build back process if you will versus a big bang. So, I could see that certainly that's our process route for the rest of this year; and as we work through fourth quarter, we will make some decisions around how we go into 2022.

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

Thanks. Hi Dennis, good afternoon. Hope you're doing well.

Yes, great.

Good, thanks. Another earnings season.

They come up fast.

They do. I just want to go back to two things, well maybe your commentary around I guess was kind of employee compensation expense and I apologize that I may have missed a little bit of it, but were there like specific metrics or whatnot that you know that you may have mentioned that for whatever reason I kind of missed?

No, I didn’t mention any metrics for it, but , remember back on the second quarter call we talked about that we were seeing the inflation impact hitting our compensation structures, particularly in certain areas and we wanted to make sure everybody knew that third quarter we were going to see some impact of that because July 1 for many of our employees is their anniversary date for compensation, and so we would have a full quarter’s effect of any adjustments we made then. But as we work through the quarter, as we look at our kind of work force strategy and long-term planning particularly in the area of operations and operational talent, we made a recent decision to do something in addition to what we did for our workforce back in the beginning of July. So, it was more to kind of set the expectation that again you'll see some growth in compensation costs in the fourth quarter, and in ongoing as a result of those decisions.

Okay great. And you know maybe just…

I would just say that after the letting on, what was funny about the conversation back in the second quarter is that within a couple of weeks after the call ended what we have said on our call became much more the norm than the outlier, because every company is talking about it, I mean it's a labor force.

Yes, very much solid, you know maybe keeping with that theme and this maybe goes back to the prior question a little bit of back to office, but as you know knock on wood we hopefully start exiting the COVID and whatnot and anything we should be thinking about maybe on other expenses like may be marketing, T&E starting to pick up as you get into the quarter, or expectations for next year or anything that we should maybe just thinking about as you look ahead the next few quarters into the first part of next year?

Yes, I think you pinpointed out. During the third quarter we saw a little bit of elevation of that and we did have more people on the road. It's all relative though to kind of where we were in the first half of the year and we're seeing more client engagement. Things as simple as dinners or meals with clients to outdoor activities without the staff being the most positive or prominent one of that, Now with the winter coming maybe that will die down, but sales folks and client relationship folks that are comfortable, and we do have a process of approval for what we allow and won't allow, we'll see that continue to inch up. I don’t think you're going to see a big bang event. We're going to drop the flag and it's going to look like a NASCAR race.

Although may be we don’t want that.

Al also thinks there's probably a few people at Eagles games and Giant games and some of that going on as well, so --.

Okay, and lastly, I appreciate your patience, the One SEI and the investments in new business, I guess, I've been thinking about that kind of starting to trail off so we get deeper into this second part of this year, so should we still expect that that's going to start kind of trailing off somewhat in that $6.5 million of expense or is that kind of a reasonable place to be the next couple of quarters?

Yes, I'd say that it trailed down a little bit second or third, it will trail down a little bit more third to fourth, and then it will step down I think more as we go into the next year. So, I wouldn’t necessarily carry where we are today into next year because it will be more.

Okay, great. Thanks for taking my questions.

Thanks Rob.

And the next is Chris Donat with Piper Sandler. Please go ahead.

Hey Dennis. Thanks for taking my question. Just a small one on the facilities, supplies and other costs, just looked a little light, anything to call out there or is that sort of new run rate for some reason if, you know, I'm just trying to understand what's moving there?

So, on that line item on the income statement we were the beneficiaries of state tax program for R&D investments and after frankly very exhaustive process by our tax team, our IT folks and other folks in accounting we applied for rebate if you will on R&D investments we made in our data center and so we did pick up a nice check. They actually did accept our application and request and we got that benefit in the third quarter. So I would say that number is probably more. It's a little bit understated. So far from an expense standpoint we did get that benefit. On the other side there were some more one-time expenses that went the other way. So in total costs for the company total expenses were fairly neutral in terms of the things at one moment or the other.

Okay, but as we think about the end of your line items like facilities probably comes up, but some others come down?

Yes.

Okay, that's it from me for now.

Thanks.

And we have one more question in the queue, Ryan Kenny with Morgan Stanley. Please go ahead.

Hey Dennis, how are you?

I'm great, Ryan and yourself?

Good. One more question on expenses. So we talked about comp and the return to work, but given that revenue growth at the company has been up 14% year-to-date, how should we think about how much of that you plan to reinvest into the business beyond the comp and beyond One SEI, is there any other type of investment initiatives that you might lean more heavily into?

Well, I don’t know how you defined heavily, but we are clearly investing in some new initiatives that Al outlined in his talk, the SEI Sphere business activities, the GRC business activities. As I mentioned we did two smaller acquisitions in October which Steve and Paul will speak a little more to. They also have short term expense almost to the roof. So we are investing, we always speak in terms of the percentage of our revenue in terms of total R&D and I think we are still operating in that kind of 10% type range in total. There is nothing that I think would surprise any one, that we're doing or that are underway. You ought to already have employees. Yes, things like Private Wealth Management has the self funding business now because it is a revenue generating business.

Thank you.

You are welcome.

And we do not have any more questions in queue.

Before I turn it over to Steve, we would like to remind you that during today's presentation and in our responses to your questions we have and will make some forward-looking statements that are subject to risks and uncertainties that may cause actual results to defer materially. Please refer to our notices regarding forward-looking statements that appear in today's earnings release and in our filings with the SEC. We do not undertake to update any of our forward-looking statements. Kathy Heilig is so happy that I get to say it. With that I'd like to new turn it over to Steve.

Thank you, Dennis. Good afternoon everyone and as usual I'll start with Private Banking segment. Third quarter 2021 revenues totaled $123 million which was up $8 million or 7% as compared to the revenues of the third quarter of 2020. This increase was driven primarily from recurring revenues. Third quarter 2021 quarterly profit of $6.3 million for the segment was up $4.6 million from the third quarter of 2020. This increase in profit was primarily due to the increase in recurring revenues. And turning to sales activity, during the quarter we signed an agreement with a new client to SEI CNB Bank based in Clearfield, Pennsylvania. We won this business through a competitive process and we expect CNB Bank to migrate to SWP from a competitor platform in the first half of 2022. We look forward to welcoming them to the SEI family and supporting their future growth initiatives. For the third quarter of 2021, our total gross sales event signed for the investment processing business was approximately $1 million dollars of analyzed revenue. Total net sales for the Investment Processing business was essentially flat. The primary driver of this was our new sales event offset by a reduction in several trusted contracts, reflecting some reductions in the size of a specific client's business or reduction in services utilized. Also in the quarter we closed $2.6 million of onetime revenues. While we would have liked to see stronger sales events signed in the quarter, this net result was more a function of timing than effort. It is safe to say we have a good start to the fourth quarter having moved some transactions along. I will wait to give an update on those activities when we report our fourth quarter results. Turning to implementation activity for the quarter, last year…

[Operator Instructions] And we will go to Ryan Kenny with Morgan Stanley. Please go ahead.

Hi, Steve, how are you?

Good. How are you, Ryan?

Great. So you've outlined some growth opportunities on private banks. I'm just wondering how much of the growth is expected to come from expanding existing relationships versus new clients if you could help us size that scale?

Yes, I think Ryan, yes it's hard to size and I probably wouldn't give you the exact size. But I'd say when we look at the pipeline right now, we probably have about 60% a little bit more on new opportunities and 40%, from what we're looking at, maybe expansion of existing relationships. When we look at the platforms we have, including Archway, IMS, some of the other technology platforms we have, we see good opportunity. And we've actually been successful with some of those during the past 18 months. So I'd say we're equally bullish on both and we are trying to move both now with that.

Got it, thanks. Just as a follow-up, how do you think about transition risk? And I'm asking because one investor concern that we've been hearing is that there's been some chatter of a large wealth advisor looking to change their provider. And we don't know if that's even someone on your platform or who it is. But it does bring up the question of how do you think about protecting yourself around that potential risk, but flexibility you have in your model? And if you could remind us what your concentration in revenues is on maybe your top-three or top-five clients?

Yes, I'll start in reverse order. We don't have any material to the business single clients or group of top-five or so clients. So, we don't really go into specifics, but if we had a real client, we would certainly talk about that. As far as transition ratio that we're in a servicing and outsourcing business, that risk is out there for everybody in this business. I think our client retention rates being in the very high 90s points to the fact that we've managed that risk very well over the years. I think, it all comes down to execution on what you have in front of you the services, and the power of your technology and people and I think we feel pretty secure on those. Typically, I think we've covered this in Q2, the risk we run in the private banking segment, when I look back at history, where the majority you see transition, while we have had some client service or client movement outside of M&A, most of it comes from M&A and when a bank is bought by another bank or wealth managers bought by another wealth manager. And if that larger organization is not a client of ours, typically that's when we will lose a client. But as I've also said, the silver lining in that is for us, they become an immediate prospect for us again.

Thanks.

Sure.

And the next question comes from Owen Lau with Oppenheimer. Please go ahead.

Thank you for taking my question. Hi, Steve. So the expenses, the expenses are slightly better than expected, and I think it declined sequentially. Is anything you want to call out for that expense discipline? I think you mentioned that you will continue to make investments, but is this a sign that they will start to tell off? Thank you.

.:

Thank you. We will now go to Robert Lee with KBW. Please go ahead.

Thanks. Hi, Steve, I hope you're doing well.

I am. How are you?

Good. Thank you. Couple of quick ones. First one is this kind of on bank M&A and its impact and I know sometimes you win as with first to rise and sometimes it doesn't go your way, but, more broadly is, as bank M&A feels like it's been pretty heated and, maybe like would stay that way. Does that at all impact, excuse me, does that all impact kind of the conversations you have with prospects in terms of their willingness to kind of go for, go down too far down the path if, there's so much kind of activity going on around them is really a factor just, in the kind of the day-to-day prospecting and trying to move the pipeline along.

Yes, Rob. I's say, I don't think it's too much of an impact day-to-day, unless the prospect we're talking to is down a path already and that becomes pretty evident when we start negotiations or discussions or if we reach out to them in their residence to start a conversation. They're typically the ones you'll see that are in process. Other ones, I think they view it just like it's a part of the business right now. And they're making their strategic decisions that they have to go forward to grow their business. So we really don't see us being as a big fear or hurdle in the sales or prospecting process.

Okay, great. And then maybe as a follow-up on the backlog, can you just remind us kind of how you currently expect that the backlog to kind of fund over the next two years and as well as, is Wells Fargo still in that, still in the backlog as part of that or have they dropped out of the way?

No, I appreciate that. Rob. So yes, the Wells Fargo the net-off would be in that backlog. And the way we're looking at right now of that process, $72 million backlog, about 61% of it we expect to come in the next 18 months the remainder probably in the following 18 months. With that said, we have seen certain prospects where we, we expect a delay, but it will be a short term delay probably more a three or four month delay. As the pandemic has hit development centers pretty hard over the past 18 months, so I think getting some development done in certain of our clients and prospects to take a little longer. So, I don't think it will dramatically change those timeframes are laid out, but there could be a couple that move here or there.

Great. Thanks so much. Thanks for taking my questions.

Sure, no problem.

And next we will go over to Ryan Bailey with Goldman Sachs. Please go ahead.

Hey, Steve, how's it going?

Hey, Ryan.

I'm sorry. Just a quick follow up to Rob's question is, if you can't comment, I completely understand, but as well as in sort of that first 18 months of the backlog or the second 18 months?

It would be in the second.

Got it. Okay.

And the reason is, because we just don't have a date on that one.

Got it. Okay. And then, Steve, I think you've said in some of your recent commentary that feel like the segment will be heading towards a more sustainable and accelerating margin, as we sort of exit this year. Now that we're kind of nearly 10 months through the year, does that still feel like the right case? And how much of that is based on the matriculation of the $72 million call it like over the next six months or so?

Yes, right. That's one of the goals. We're not there yet. I feel we're getting closer to a point where again I can say we're on more of a sustainable and accelerating margin level. We still have some things to navigate through that I mentioned through the year. We're also getting to that sustainable margin, really the two main pieces are matriculating that $72 million as well as us managing and looking to right size certain expenses. And then the third piece of that or the third leg of the stool will be us continuing to fill the backlog with new sales as we matriculate the sale agreement.

Got it. Okay. And if I can sneak one more quick one in, just on the RIA with a larger scale RIA opportunity, any sort of advancements there or anything that's developing or percolating?

No, I think the team is working very hard building the pipeline there. We continue down the path. We see that as a big opportunity for us, but nothing to report yet.

Okay, thank you.

Sure.

And we do not have any more questions in the queue. You may continue.

Thank you. So I'll turn now to the Investment Manager segment. During the third quarter, our momentum continued in the segment, with continued strong growth in both new and existing clients. For the third quarter of 2021, revenues for the segment totaled $147.4 million 19%. higher as compared to our revenue in the third quarter of 2020. Profit from third quarter for the segment of $57.8 million was 31.4% higher as compared to the third quarter of 2020. Third party asset balances at the end of the third quarter of 2021 were $861.6 billion; approximately $14.3 billion lower than the asset balances at the end of the second quarter of 2021. This decrease was due to net client funding of a negative $25.6 billion offset by market appreciation of $11.3 billion. The net client funding decrease was driven by one client in sourcing their lower fee liquidity product resulting in a large drop in assets and a much smaller drop in revenue. And turning to market activity, during the third quarter of 2021, we had another strong sales quarter with net new business events totaling $15.2 million in recurring revenue, as well as we contracted $15.8 million in recurring revenues. Highlights of these events included in our alternative market unit we closed a number of strategic new names, while our land and expand strategy continues to resonate as sales to existing clients continue to be robust. SEI won the business of a large private equity fund in a very competitive sales process, and is currently converting that client off competitors platform. A highlight of the quarter was our selection as a service provider to an $80 billion private equity manager outsourcing a fund for the first time, thus adding to our land and expand roster. In our traditional market unit,…

[Operator Instructions] And we will go to Owen Lau with Oppenheimer. Please go ahead.

Thank you very much. Steve, could you please remind us your criteria of doing M&A and what area do you think it's better to buy versus build? Thank you.

Sure. So I think our criteria has switched, where if we feel we can get into an adjacent market, add capabilities, and better serve because the market moves so fast. Doing it through an acquisition or strategic partnership versus build, I think we're open for business then. And I think in the Finomial space; we came across a company with just a terrific group of assets from their technology to most importantly, their people and their expertise. And quite frankly, is there's a very tough labor market out there. And we looked at this and thought it would just be a great addition to a lot of the products we have in place to adding some kind of firepower to the solutions products we have and really as we look to build things out for the future, so we just thought it was a very good match and it made sense for us. I think as we look and go down the path further, and I think this product cross the company, if we see that an opportunity comes to us that will help us get into a new market, whether that be an adjacent market or completely new market, or help us build out substantially our solution and platforms, I think we'd be very interested in that. We will not be interested in things just to gain market share, or just to buy assets to gain market share. That's not strategic to us. We're very focused on, the benefits of an acquisition or strategic partnership, what comes after the actual acquisition to offset the most important thing.

Got it. That's very helpful. And then, in terms of the margin, how should we think about the margin going into next quarter, and maybe even 2022? Because I think your margin came down, but you also mentioned that you're going to make some investments. So how should we think about margin? Thank you.

I was hoping you were going to ask that. I0 think I've said this I – at this point, I feel like the Boy Who Cried Wolf, I've said for the past two quarters, I do not feel where the margin is right now is sustainable, being up close to 40%, it did come down as a little bit to 39% and can change in this quarter. I do believe, again, at the risk of sounding like the boy who cried wolf, we will see that come down and more in line with the mid 30s, maybe a little higher. And the reason for that is we are obviously growing the business and expanding our sale. We are actually implementing those sales more rapidly than we have in the past. The markets are very active and we're actually bringing in revenue before the expense of supporting that combined with the salary increases that Dennis mentioned, we believe will have an impact in Q4 going forward. So that will normalize the more into back to where they were historically we believe.

Got it. That's very helpful. Thanks, Steve.

Sure.

And we will go to Robert Lee with KBW. Please go ahead.

Great. Thanks for taking my questions and got my margin question already. But I do have a question kind of on, I guess nowadays almost have to feel like all these calls almost have to ask about crypto and crypto assets and capabilities. So I'm just kind of curious and will be a question for Wayne later so be prepared. But the -- can you talk a little bit about that the, can you talk a little bit about, in your business. are you seeing a need or demand from your clients to start building out or providing more some of those capabilities, whether it's safekeeping, transaction, however you want to find it in for crypto assets?

Yes. Rob, so I think we did cover this a little before. We now have seen need, we're already there. So we are supporting some crypto funds we have. We do see a demand from our client base and we actually have quite a few inquiries from a number of our clients and prospects on our capabilities. So we do think there is a burgeoning demand for it. What I'd say, though, is even with the ones we have those funds are typically smaller. While we do see some adoption of them, it's not wide scale adoption. So I think we're in the early innings of this still. I think there are still concern about regulations around these, how they will take off in wide scale, but there's definitely a question we get asked and we're getting after a lot of prospecting leadings on capabilities around crypto. So we actually have a cross functional team across banking, advisor, IMF looking at how this would impact the platform's operations and additional services we might have to offer, but right now, as far as I'm asked, we go lease offer the administration and outsourcing services around crypto funds.

Great, that was it. Thanks for taking my question.

Sure.

And the question is from Chris Donat with Piper Sandler. Please go ahead.

Hey, Steve, thanks for taking my question.

Sure.

Yes, just about Finomial. I thought I heard you say that it was cloud native. And I'm wondering how you're thinking about the world and how your clients want you to think about the world in terms of a single tenant or multi tenant cloud or are your clients expressing a strong opinion? Or do they prefer data centers or on-prem? Just where are your clients heads right now, in terms of architecture?

I think our clients are very some of us, I think people realize we have to be on the cloud. I think there's obviously people who still have concerns, especially when you get into some more of the wealth managers and banking side. However, if you look across many of the large institutions, most of them have cloud initiatives or in the middle of them. So we think they're kind of aligned with us. We believe this is inevitable. We believe it's a key part of our future. And we believe that expertise, and taking all of our platforms, to be able to be cloud native, multi tenancy is very important. So I think strategically, we're both very well aligned with our markets.

Got it. Thanks.

Sure.

And I apologize I forget the name, but it is Rajiv Bhatia with Morningstar. Please go ahead.

Great. Good afternoon. Can you remind us what your revenue mix is between traditional versus alternative? And how does the traditional versus alternative revenue growth rates compare?

So our split is about 55% alternative. The remainder traditional, obviously, the alternative side of the business over the past several years has been higher. What I would say, specifically for this quarter, and what we saw the trend starting in Q2, our traditional business had a strong showing as well. So I would say it was close to split down the middle, maybe 55%, 58% alternatives remainder traditional, but we are very excited to see kind of a strong push from our traditional clients as well as they expand out their passive management capabilities, as well as look for some of our other services around our platforms and middle office.

Got it. Thanks.

Sure.

And we do not have any more questions in queue. You may continue.

Thank you. So I'll now turn it over to Wayne Withrow to cover the Advisor segment. Wayne?

Thanks, Steve. The third quarter reflected continued progress in the execution of our strategic framework. Third quarter revenues totaled $125 million. This 21% increase from the third quarter of last year reflect positive net cash flow, as well as lower fee rates on some of our products. Expenses increased compared to the third quarter of last year, primarily due to sub advisor and personnel costs tied to our growth, and to a lesser extent, increased investments in our technology platform. Overall, the profit picture for the unit remained intact, despite pressure on asset management revenue rates. Total platform assets rose to $96 billion at the end of the third quarter, and included $82 billion in assets under management. Cash flow onto our platform during the quarter was approximately $1.4 billion. Of this total $1.1 billion represented assets under management, and $300 million represented platform only assets. Like was the case in the second quarter, this quarterly AUM and total platform asset cash flow is the strongest we have realized in over two years. I believe this is a clear indication that our strategy is working. Contributing to our growth in platform assets, were 82 new engaged advisors during the quarter. Our competitive advantages are built upon the technology capabilities in which we have invested and continue to invest. To this end, we continue to integrate the Oranj platform and our goal of a launch this year remains on track. We are also continuing rollout of a fully digital account open and proposal technology, as well as enhanced mutual fund, an estimated model management and trading automation. While there still remains much to be accomplished, we continue to make progress in execution of our strategy. I welcome any questions you have.

[Operator Instructions] And we have Ryan Kenny with Morgan Stanley. Please go ahead.

Hey, Wayne, how are you?

All right, good afternoon, Ryan.

So I heard the comments on your competitive advantages with the Oranj acquisition and some of the automation work they are doing. So wondering if we could just get a broader picture update on the competitive environment? Specifically, there have been a lot of new entrants in the tamp space. So I'm wondering if you're mostly competing today with the big players like investment and asset mark. Or are you seeing more competition from some of the newer entrants?

Yes, I think, to be honest, it would be a mistake just to focus on other firms that compete in this space. I think you also need to look at the broker-dealers that are most of our advisors are affiliated with and they're building sort of complimentary platforms where people could take the business in half. So that's also a competitor, and you might not see that as much. So we really compete against those proprietary platforms, as well as, an asset more great investment or one of these other people. But I think, for us our advantages, we continue to gain additional traction, and, in the market acceptance of our platform, in the tamp space, I think that, our strong technology, which really give us an advantage in that market.

Thanks. That's helpful color.

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

Thanks. So good afternoon, Wayne, hope you doing? Okay.

I'm great.

Good. Can you just kind of refresh our memory on the, on your new cash flows, so you know the $1.1 billion, just how should we think of that from like, an aging perspective? What and what I mean by that is, I guess my impression has always been that new advisors are recently added advisors tend to obviously be kind of the, tend to be bigger drivers, maybe of net flows, whereas, advisors have been on the platform for a while and around, maybe their books of business, have less organic growth baked into them. So, is that kind of, still the case, are you seeing any kind of changes in kind of how the book of businesses is flowing overall, as it's so skewed towards the newer advisors?

Yes, I think, I mean, you're right, that has always been the case and we still look at it that way. But this shift we're seeing and maybe this is, a lot of this is going on our new technology platform. We're seeing kind of reengagement and a lot more growth coming from our existing book to the point where, look at the last quarter, most of the growth came from the existing book and not the, the newer book and that's been one of our key to successes. They often say, you know, the best new customers and existing customers. So, I think there's been a little bit of shift in that traditional view.

Great. And then maybe I'll just ask the same question I just asked, Steve which is on crypto, so do what you're hearing from some of the, brokers and others who reported that they're more of their advisors are getting asked about, adding crypto to portfolios or, having the capabilities. So can you maybe just talk a little bit of, Steve, obviously talked about it some, but, are you seeing that same from your kind of adviser base, and that you have to kind of build that, spend more time or money or whatnot, building that out or just kind of curious what you're seeing there?

Yes, I mean, I think you need to sort of divide it into two separate items. The first Steve addressed with, and that is, how does crypto fit into your whole processing capabilities and your platform capabilities, and also refer to Steve's comments with which I agree, and we need to build out that capability. And a lot of that supports kind of a more of a custody/trading capability. Now, the second question is how does this fit into an investment portfolio? And have you modified your investment strategies to incorporate crypto into asset allocation into the portfolio is that, are making available that are that you advocate for your clients? I think we're still studying that right now. I don't know that we have an answer for you on that right now. The pricing capabilities wanted help isn't an investment strategy is a different conversation. We're further along in the process of that.

Great. That was it. Thanks for taking my questions.

And then the next question is Ryan Bailey with Goldman Sachs. Please go ahead.

Hi, Wayne. So I was just wondering that you're reported the very strongest quarter, accelerating over the last quarter. I think generally, we see accelerating floor trends from some of your peers as well. And clearly there are some thumb specific tailwinds, which are helping SEI, I was just wondering if you're hearing anything from the new advisors who in joining as to why they're more willing to outsource or use temps now, relative to call it six or 12 months ago, if anything's changed, or was there pent-up demand or is there something like that?

Yes, I don't know if I'd call it really pent-up demand. I think that what I'm saying is, as we have further enhance our technology platform and now when we look at some of the capabilities sort of I mentioned earlier in which we are investing, I think our technology platform and this is not just we call it sort of textodian [ph], the whole -- the entire business platform including custody, as that becomes more and more compelling, people are more and more willing to make a change. So for me, I would say that’s the dynamics going on out there.

Got it. Okay. And also just passing along appreciation for the breaking out the platform early assets in the disclosure. Thank you for doing that.

You’re welcome.

And we do not have any more questions in queue. You may continue.

Okay, thank you. With that, I will pass it on to Paul.

Thanks, Wayne. Good afternoon, everyone. I'm going to discuss the financial results for the third quarter of 2021. Third quarter 2021 revenue of $85.8 million increased 8% compared to the third quarter of 2020. Operating profits for the third quarter 2021 were $44.1 million an increase of 6% compared to the third quarter of 2020. Both revenue and operating profits increases were due to market appreciation, positive currency translation offset slightly by fee compression across the client base. Operating margin for the quarter was 51%. Quarter end asset balances of $96.7 billion reflect a $7.1 billion increase versus the third quarter of 2020. This is due to market appreciation. Net sales event for the third quarter were a positive $310 million. Gross sales were $370 million and client losses totaled $60 million. Third quarter new sales included U.S. not-for-profit, US Healthcare and UK Fiduciary Management. The unfunded client backlog of gross sales at quarter end was 2.5 billion. As Al and Dennis mentioned, we completed the acquisition of Atlas, cap it as the fine contribution Master Trusts in the UK. Subject to regulatory approval, the acquisition positions the SEI Master Trust to continue to deliver best-of-breed service with greater scale and more capabilities. The combined assets under management as of 9/30/2021 of the two Trusts are approximately £1.9 billion, or US$2.6 billion. Presently the UK DC Master Trust marketplace is $80 billion pounds according to Go Pensions Ltd and is growing rapidly. While not financial material, this transaction significantly increases our competitive presence in the UK DC market, and demonstrates our commitment to the Master Trust clients and members. This transaction gives the SEI Master Trust additional scale, and the SEI Master Trust has a long-term track record of investment results dating back to 2007. These are important criteria when DC schemes evaluate candidates to serve their members. In addition to the news regarding our UK Master Trust, we continue to focus on stabilizing our client base, distinguishing our OCIO platform and selling new OCIO relationships. We are advancing our ECIO platform with global large mega prospects while making enhancements to the overall platform. Thank you very much and I'm happy to answer any questions that you may have.

[Operator Instructions] And we will go to Robert Lee with KBW. Please go ahead.

Hey, hi, Paul. How are you?

Good. Robert.

Curious, maybe I am -- my notes were wrong, but I guess, I recall that there was like a large, I think it was like $3 billion or so of business you thought you were going to lose in the quarter. Is that still out there or did I kind of misunderstand something last quarter?

No, last quarter, we reported gross sales of $2.6 billion and losses of $2.4 billion. And the majority of that $2.4 billion that we reported is out as of 930, which is why the asset balance is down relative to the 630 asset balance.

Okay, I guess I must have misunderstood I thought there was something else out there you go. You may be losing but I had the wrong number, I guess. Then maybe going back to the margin, I guess, it's as it's been holding up really well, although, I mean, obviously down from where it was a bit the end of last year and last quarter, but or the first quarter. But, I know you've talked about getting back towards kind of, out of the 50s range, but it's been, is pretty sticky. So any reason that it should start to trend down a bit or you feel pretty comfortable that this is where it's going to be for the round here give or take for the foreseeable future?

Yes, I feel a little bit like Steve in the Boy Who Cried Wolf about the margin. But I do expect that there's going to be pressure on the margin percentage, given fee compressions or rebids which we've messaged. Travel is increasing, which is good. So, certainly not at the levels that we saw pre-pandemic, but we are out seeing clients and prospects, which we think is helpful in both retention as well as being able to distinguish ourselves and new business settings. We're hopeful that sales comp increases with greater production around OCIO. And so just generally given some of those, those macro things, we think there would probably be some margin pressure over time, we've been holding nicely in the low 50%. And then investing back in the business, including the acquisition of Capita, which would be accretive to earnings, we see relative to, just profit not profit percentage, but making an investment in that business and investment in salespeople as well as being able to get into the marketplace and compete in that very large market of 80 billion pounds. So for those reasons, we're probably going to see ultimately some margin percentage erosion, but we hope by retaining or returning to growth on a top line that the profit itself in absolute terms will increase over time.

Great and then one last question, thanks for taking the time, kind of busy, client mix, you know, if we think of kind of your pipeline or gross sales and any update on, how maybe that's shifting, more towards endowments, foundations, hospital systems, less DB just kind of curious how your how that's evolving?

Yes, we certainly have seen a switch over the years to endowments and foundations and hospitals and some of the non-corporate DB, whether that's governmental or multi employer plan, or DB plans that aren't being terminated, I mean, that's the other thing that we look at when we are thinking about DB, defined benefit for new business. Not all plans are on a path to termination, as they have a lifecycle that's longer, that's still attractive, because that's going to be around for a longer period of time. So clearly, the mix is diversified more to what I would call evergreen or longer term asset pools. So we're confident where we are and building the pipeline, one of the things that we really like with the larger end of the market segment is we have this continuum of OCIO to ECIO. So we have the ability of walking into a billion dollar Foundation, and honestly letting them self select whether a delegation model makes sense for them, or whether a model where we would help them be more efficient with an investment team makes sense. We never had that before. So that actually may pivot some to go to outsourcing because they may decide that that's more palatable for them. It also may pivot some to go to ECIO. But having that continuum, we're not forcing them into one of those categories, which has really been nice on the larger end of the market segment.

Great, thank you so much.

Thanks, Robert.

And we have a question from Owen Lau with Oppenheimer. Please go ahead.

Thank you for taking my question. Paul just one quick one from me, ECIO, you just mentioned, Could you please talk about the progress there, started generating any revenue or it's still in the investment and expense stage? Thank you.

Yes. Owen, we've been at it for about a year. We announced it, this time about a year ago. So we haven't gotten any over the goal line yet. There's active suspects and prospects. And there's also an evaluation that we continue to do enhancing the platform specifically around the front end capabilities that analytics. So a lot of nice work has been done. Suspects are turning to prospects and we're hopeful prospects will turn to clients. We've seen this reality before getting the early worms or the harder worms getting them over the goal line. But we're bullish, and we're confident about the capabilities we have there. And again, I'll just harken back to the comments I just said, and having that continuum to be able to go in the marketplace really gives the buyer a decision to choose as opposed to us pushing them one way or the other, so we're excited about that.

Got it. Thank you very much.

Thanks, Owen.

And we do not have any other questions in queue, you may continue.

Great. I'd like to now turn the call back over to Al West.

Thanks, Paul. So ladies and gentlemen, we are making progress on two fronts. On the first one, we are very fortunate to have kept our workforce healthy and productive, delivering a high level of client service throughout the pandemic. On the second front, we are building momentum throughout our businesses. Please be safe and remain healthy. Have a great day. Thank you for attending our call.

That does conclude our conference for today. Thank you for your participation and for using AT&T Event Services. You may now disconnect.