Ladies and gentlemen, thank you for standing by, and welcome to the Westwood Holdings Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Julie Gerron, General Counsel and Compliance Officer. Please go ahead.

Thank you, and welcome to our fourth quarter 2020 earnings conference call. The following discussion will include forward-looking statements that are subject to known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those contemplated by the forward-looking statements. Additional information concerning the factors that could cause such a difference is included in our press release issued earlier today, as well as in our Form 10-K for the year ended December 31, 2020, that is filed with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are cautioned not to place undue reliance on forward-looking statements. In addition, in accordance with the SEC rules concerning non-GAAP financial measures, the reconciliation of our economic earnings and economic earnings per share to the most comparable GAAP measures is included at the end of our press release issued earlier today. On the call today, we have Brian Casey, our President and Chief Executive Officer; and Terry Forbes, our Chief Financial Officer. I will now turn the call over to Brian Casey.

Good afternoon. Thank you for taking the time to listen to our quarterly earnings call. I've spoken in previous calls about the ongoing disruption in the asset management industry and the need for asset management firms to evolve to meet the challenges head on. We feel like we've made significant progress in the evolution of Westwood, by taking steps that will allow us to thrive and grow in the years ahead. Some of the highlights from the fourth quarter include the expansion of our dedicated multi-asset investment team with the addition of Scott Barnard to the Income Opportunity Fund and Seth Gould to the Alternative Income Fund, the transition of our Global Convertible investment team to Aviva Investors resulting in cost savings of personnel and the elimination of the lease and overhead expense of our Boston office. Received the Best Places to Work award for the seventh year in a row, raised the overall star rating in Morningstar for the WHG Funds family and experienced significant gains with our investment in InvestCloud. These accomplishments come on top of several actions taken in 2020 to reduce costs and increase competitiveness, namely the outsourcing of our institutional trading desk to Northern Trust, which saves us over $1 million per year. The closing of Westwood International Advisers in Toronto; a repositioning across our multi-asset lineup to broaden appeal and increase attractiveness; a repricing of our entire book to become more price competitive and attractive in new product streams; the introduction of several new strategies, including high alpha, credit opportunities, systematic large-cap growth and systematic small-cap growth that we initially launched for our Wealth clients and plan to launch in intermediary and retail channels, as they build longer performance records. Turning now to performance. I'll start with our U.S. value strategies. The year 2020…

Thanks, Brian, and good afternoon, everyone. Today, we reported total revenues of $17.1 million for the fourth quarter of 2020 compared to $18.6 million in the prior year's fourth quarter and $15.5 million in the third quarter of 2020. The decrease from the prior year was principally due to lower average assets under management. The increase from the prior quarter was a result of higher advisory performance based fees, trust fees and other revenues. Fourth quarter net income of $2.8 million compared to a third quarter 2020 net loss of $10.3 million, the current quarter benefited from higher revenues, lower operating expenses and lower income taxes, and the third quarter was impacted by several nonrecurring items. Economic earnings, a non-GAAP metric, was $4.6 million or $0.58 per share compared to the third quarter's economic losses of $1.7 million and $0.22 per share. Fourth quarter net income of $2.8 million or $0.36 per share compared to $2.5 million or $0.30 per share in the prior year's fourth quarter, the increase principally related to lower operating expenses, particularly employee compensation and benefits and lower income taxes, partially offset by lower revenues. Economic earnings was $4.6 million for the current quarter or $0.58 per share, down from $5.4 million or $0.64 per share in the fourth quarter of 2019. For fiscal 2020, total revenues of $65.1 million compared to $84.1 million in 2019. The decrease was due to a $19 million decrease in asset-based advisory fees and a $1.9 million decrease in Trust fees, reflecting lower average AUM, partially offset by a $2 million increase in performance-based advisory fees earned in 2020. Fiscal 2020 net loss was $8.9 million or $1.12 per share compared to 2019's net income of $5.9 million or $0.70 per share. The current year was impacted by lower revenues,…

[Operator Instructions] Our first question comes from the line of Mac Sykes from Gabelli.

Congratulations, gentlemen, on a strong quarter. Just a couple of questions. I think you talked about the closing of the funds impacting flows this quarter. If you were to exclude those impacts, what was the kind of aggregate flows for quarter? And if you have that for the year as well?

If we exclude the closed strategies, what were the flows for the quarter?

Yes.

I'm going to ask Terry to give you that number. Yes. Terry will be looking for a number. What's your other question, Mac?

So on the digital offerings, how should we think about the efficiency there? Are you thinking about the digital offerings driving more sales in the future or just increasing client engagement and having something that you need to have for the platform?

Well, I think the additional offerings are really what we've intended to do for a number of years now, which is to continue to build out our multi-asset capabilities. And we have a lot of strategies now across the spectrum, where we -- at one time, only had income opportunity. They've all exhibited a lot of strong performance. They're in categories within Morningstar now where we feel like they can win. They're priced competitively, and we hope to see some good traction on flows in the years ahead, and the performance for multi-asset was exceptional last year. As far as the digital goes, it's really a comprehensive solution. It's interesting, if you read a lot about wealth management, 77%, I think, of people want to engage digitally with the firm that they work with, but they also want to have a human being that they can call and connect with when they have specific questions. So it's really about a hybrid model of having a digital capability that people can use on any device, any time a day and then have the ability to connect with the human. And it sounds simple to pull off, but it's taken us years to get our platform to a position where we can actually execute and deliver this really cool digital solution for clients.

Mac, the -- excluding the flows from closed strategy, your net outflows for the quarter was around 800.

Okay. And just trying to expand on the digital. We've seen obviously an explosion in the platforms like Robinhood, and I'm not suggesting that's the best way to service clients, but do you think now, with your capability, there's an ability to reach different segment of clients potentially, just given all the investments you've made today?

Well, we hope so. It's going to require a number of things. We'll have to: number one, retrain the folks that work with our customers in a way that as we all learn the capabilities of the system, what's really neat about it is that it really has infinite capacity. So we'll have to figure out lots of ways to use it and retrain ourselves. And then what I think it will allow us to do is engage with a segment of the high net worth world that we have not had a lot of success in and that's the younger generation, which I would call sort of the 35 to 50-year-old, who's working, working hard, making money, they -- maybe they pick something when they were in their 20s or 30s, and they haven't thought a lot about it. This is a way for us to really engage with them. The other things we've been doing is, we've built out private banking and state planning and financial planning. Our group in Houston, last year, ahead of the election, a lot of people were concerned about changes to the state tax, and so everybody wanted to redo their financial plan and take a look at their state plan. So we were exceptionally busy doing that for clients. But what it always does is it cements that relationship a little further because they become more tied to the advice that we give. And when we can deliver that to them digitally so that when they hit the Westwood app, they go to the Apple Store and download it, and they go to their account, they're able to find their financial plan, their state plan, any important documents that they have, we can keep a running balance sheet for them of all of their financial assets and do it in a way that's easy for them to look at and engage with. And other things that we've done is, we have done a couple of really good investments in private equity. In fact, some of our clients invested in InvestCloud, which was a tremendous win for them and for us. So that was a good one. And then we're doing some other things that are exciting in the private equity world that people really have pretty good uptake on.

[Operator Instructions] And I'm not showing any further questions at this time. I'd like to hand the program back to Brian Casey for any further remarks.

Okay. Well, great. Well, thank you Mac for your question, and thank you all for listening. I'd just close by saying that so far, year-to-date, our flows are positive and actually net positive for the year. We've got some big news coming over the next couple of months on some searches that we're in, in SmallCap that could be materially interesting. And we're pleased to reinstate our dividend this quarter at a rate of $0.10 and really reflects our confidence in the business, in the future, and we hope that we can build it over time as we did over 17 years before. Thanks for your time.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.