SEI Investments Company · NASDAQ:SEIC
SEI Investments — Investor Day (June 2014)
85 slides from SEI Investments's investor day presentation, Jun 2, 2014
Slide 1: Annual Investor Conference
Annual Investor Conference June 2–3, 2014 1
Slide 2: Agenda
Agenda › SEI’s Growth Strategy Al West › Investment Managers Steve Meyer › Institutional Investors Ed Loughlin › Investment Advisors Wayne Withrow › Private Banks Joe Ujobai › Asset Management Distribution Kevin Barr › Summary Al West 2
Slide 3: Growth Strategy Update
Annual Investor Conference Al West Growth Strategy Update 3
Slide 4: Vision
Vision › Helping clients succeed by delivering enterprise platforms 4
Slide 5: SEI markets & businesses
SEI markets & businesses Serving two related markets Wealth Holders Wealth Services Providers • Individuals • Distributors • Institutions • Manufacturers Through five business units Private Investment Institutional Investment New Banks Advisors Investors Managers Businesses 5
Slide 6: SEI wealth management enterprise platforms
SEI wealth management enterprise platforms Advice-based Services Investment Investment Investment Management Processing Operations Platforms Wealth Management Business Process Outsourcing • Individuals • Distributors • Institutions • Manufacturers 6
Slide 7: SEI business model: Portfolio of businesses
SEI business model: Portfolio of businesses › Focus on emerging client needs Organic Growth › Deliver enterprise platforms › Selective acquisitions › Forge intimate client relationships Client Relationships › Be a thought-leader › “Win-win” pricing models › Focus on sustainable growth in earnings-pe
Slide 8: SEI: Current Situation
SEI: Current Situation Focusing on Growth › Platforms receiving market acceptance › Strong sales momentum in three of four business lines › Large growth opportunities in all businesses › US version of SEI Wealth Platform launching › Sales to Large Institutions will establish scale › Profits growing
Slide 9: SEI: Corporate Overview
SEI: Corporate Overview › Three units hitting their pace – Strong profit and revenue growth – Strong new business signings › Banking unit transforming itself – Current client asset flows growing both AUA and AUM – SEI Wealth Platform fit with market needs is strong – Sales to large early adopters ar
Slide 10: SEI: Growth for Private Banking
SEI: Growth for Private Banking › Revenues – AUA growing from current and new clients – One time professional service revenues from large prospects – AUM growing › Profits – Will grow profits modestly – While we secure large early adopters of SWP – Manage expenses 10
Slide 11: SEI: Investing in the future
SEI: Investing in the future We are committed to make capital investments to drive growth Invest 8 percent of revenues on technology Half or 4 percent of revenues on SEI Wealth Platform This doesn’t count investments in TOO; AMD; new investment solutions; DC build out; plus others We target our tech
Slide 12: SEI Business Priorities
SEI Business Priorities › Help our clients succeed › Get SWP to the finish line – core functionality › Complete the transformation of Banking segment › Continue to invest in innovation to drive future growth › Provide our shareholders with long-term sustainable growth in EPS 12
Slide 13: Investment Managers
Annual Investor Conference Steve Meyer Investment Managers 13
Slide 14: SEI markets & businesses
SEI markets & businesses Serving two related markets Wealth Holders Wealth Services Providers • Individuals • Distributors • Institutions • Manufacturers Through five business units Private Investment Institutional Investment New Banks Advisors Investors Managers Businesses (ultra HNW) 14
Slide 15: Overview of Investment Managers
Overview of Investment Managers Serving All Key Investment Manager Product Segments Institutional Alternatives Mutual Funds CITs ETFs SMA Accounts Our Solutions Business Process Solution Focused on Investment Operations Back Office Middle Office Front Office GLOBALLY 15
Slide 16: SEI – Market Acceptance
SEI – Market Acceptance We have sophisticated, forward-looking clients: Our clients represent $13 trillion in assets and include 28 of the top 100 managers worldwide Industry surveys: Top 5 Fund Administrator globally Best Fund Administrator Most Innovative (Over $30bn) Best Administrator – Client S
Slide 17: IMS Evolution Driven by Innovation
IMS Evolution Driven by Innovation 2004 2009 2013 Traditional > Alternative > Multi-Asset > Global $105 mm revenue $139 mm revenue $226 mm revenue $26 mm net income $46 mm net income $77 mm net income BDCs Liquid Alts Institutional Accts Markets Multi-Asset Funds Separately Managed Accts ETFs Privat
Slide 18: What Are Managers Seeking?
What Are Managers Seeking? PLATFORM COMPREHENSIVE INSTITUTIONAL QUALITY CUSTOMIZATION TECHNOLOGY SOPHISTICATED CLIENTELE INSIGHT EXCLUSIVITY PARTNER APPROACH CONFIDENCE KNOWLEDGE INNOVATION CULTURE GLOBAL CORPORATE PROFILE DASHBOARDS 1818
Slide 19: Strategic Investment in an Operational Platform
Strategic Investment in an Operational Platform 19
Slide 20: Strategic Investment in an Operational Platform
Strategic Investment in an Operational Platform 20
Slide 21: Strategic Investment in an Operational Platform
Strategic Investment in an Operational Platform 21
Slide 22: Strategic Investment in an Operational Platform
Strategic Investment in an Operational Platform 22
Slide 23: Macro Trends: an Advantage for IMS
Macro Trends: an Advantage for IMS Market trends continue to create demand… Greater complexity is driving change… A new Operational Frontier is upon us Data Analytics Convergence Opportunities Product for SEI Globalization Proliferation Growth Investor Regulatory Demands Pressures 23
Slide 24: Growth Opportunities
Growth Opportunities Market Opportunity Infrastructure1: $244 bn Real Estate2: $657 bn New Hedge Funds3: $2.6 tn Fund of Hedge Funds3: $665 bn Outsource Traditional --- Alternative Private Equity4: $3.5 tn New Non-UCITS5: $3.9 tn UCITS5: $9.8 tn Services ETFs6: $1.7 tn Managed Solutions7: $3.4 tn Cl
Slide 25: Strategic Direction
Strategic Direction › Current market demands Increase Current Market › Emerging needs › Focus on higher value proposition opportunities Share › Strategic, not opportunistic New Market / Geographic › Expand existing business lines › Leverage our solutions Expansion › Deepen relationships, natural exp
Slide 26: IMS Summary
IMS Summary › Market trends are providing growth opportunities › We are focused on selling larger opportunities › Innovation and premium solutions have driven our growth › As the industry evolves, managers need a Comprehensive Platform › We will continue to invest in innovation to drive growth › We
Slide 27: Institutional Investors
Annual Investor Conference Ed Loughlin Institutional Investors 27
Slide 28: Institutional investors: Business metrics
Institutional investors: Business metrics Financials* • Revenue $258 million • Expenses $133 million • Profit $124 million • Margin 48% • Assets under management $71.8 billion (as of 3/31/2014) • Worldwide clients 474 * Results of operations as of 12/31/2013 28
Slide 29: Institutional investors: 2009 – 2013 Results
Institutional investors: 2009 – 2013 Results 2009-2013 Change $300 $258 $250 2009-2013 Growth $200 Revenue 45% $178 Millions Profit 59% $150 $124 $100 $78 $50 $0 2009 2010 2011 2012 2013 Revenue Profit 29
Slide 30: SEI's Fiduciary Management Solution for Trustee Directed Funds
SEI’s Fiduciary Management Solution for Trustee Directed Funds A focus on helping clients meet their financial goals 30
Slide 31: Institutional investors: Trustee-directed funds market opportunity
Institutional investors: Trustee-directed funds market opportunity We operate in seven geographic markets Hong South Middle US Canada UK Netherlands Kong Africa East DB $7.9 T $1.4 T $2.3 T $1.3 T $106 B $12 B $1.5 T Healthcare $331 B E&F $646 B $7 B $8 B $500 B Municipalities $176 B Total $9 T $1.4
Slide 32: Investment outsourcing / delegation demand drivers
Investment outsourcing / delegation demand drivers Trustee Directed Funds • More complex capital markets • Demand for alternative investments • Limited resources among institutional investors • More active discretionary asset allocation • Traditional consulting model can’t support timely governance
Slide 33: Fiduciary Management Platform for core trustee directed funds
Fiduciary Management Platform for core trustee directed funds Assets <$500 M Client Resources Committee Manager Platform All SEI funds / managers Client Involvement Committee oversight Manager Discretion Delegated Asset Allocation Delegated Discretion Fees Bundled 33
Slide 34: Open architecture fiduciary platform for larger clients
Larger client segments and evolving competition require an open architecture fiduciary platform Assets >$500 M Client Resources + Limited staff Manager Platform Mostly SEI funds / managers Client Involvement Committee engaged Manager Discretion Delegated Asset Allocation Directed or delegated Discre
Slide 35: SEI brings the resources and experience to deliver results
SEI brings the resources and experience to deliver results Resources Integration Track Record Expertise and resources to Nimble decision making and Reduced risk with a accomplish goals simplified execution time-tested program • Nearly 300 experts in • SEI’s solution incorporates • Over $239 Billion
Slide 36: SEI's Fiduciary Management Solution for Defined Contribution Plans
SEI’s Fiduciary Management Solution for Defined Contribution Plans A focus on improving participant retirement outcomes 36
Slide 37: Defined contribution trends
Defined contribution trends Participants • 70% of participants not on track to meet retirement goals • Participants overwhelmed with number of investment choices • Participants uncertain of the most appropriate asset allocation • Participants in target date funds are more confident about retirement
Slide 38: DC plan participants want additional diversification and downside protection
DC plan participants want additional asset class and manager diversification as well as downside protection 1 38 MANAGER MANAGERS 4 13 ASSET ASSET CLASSES CLASSES Single Manager 2050 SEI 2050 Difference Median Expected Compound Return 8.2% 9.4% +1.2% Poor Scenario Return (5% Likelihood) -15.9% -13.1
Slide 39: SEI's solution for defined contribution plans
SEI’s solution for defined contribution (DC) plans: Focused on improving retirement income outcomes C Target Date Benefits for the participant Funds H • Improving outcomes: Potential to improve O replacement ratio / ability to retire on time I through increased participation and C Custom contributio
Slide 40: Institutional investors: Highlighted growth opportunities
Institutional investors: Highlighted growth opportunities Defined Contribution • US Defined Contribution • UK Defined Contribution / Master Trust New Markets • Middle East Corporate and End of Service Plans Large Investor Solutions • US DB Corporate • US Not for Profit 40
Slide 41: Summary
Summary Market environment reinforces outsourcing proposition • Funding levels dominate the pension discussion worldwide • Solution enhancements provide continued competitive differentiation • New competitors validates the outsource proposition but lengthen sales process • Clients are benefiting fro
Slide 42: Investment Advisors
Annual Investor Conference Wayne Withrow Investment Advisors 42
Slide 43: Advisors
Advisors • Who We Are • Growth Today • The Future 43
Slide 44: What is SEI's Advisor Business
What is SEI’s Advisor Business • 5,800 advisors • $42.8 billion in assets under management • 256,000 end client accounts • Leading Turnkey Asset Management Program (TAMP) provider 44
Slide 45: SEI's Advisor Vision
SEI’s Advisor Vision Our Vision: To be the leading provider of; 1. Managed Investments 2. Administration & Custody 3. Practice Management services … to Financial Advisors through a single wealth platform. 45
Slide 46: SEI's Advisor Mission
SEI’s Advisor Mission Our Mission: To help advisors; 1. Maximize their Income 2. Build enterprise value 3. Create time … to focus on the needs of their clients by providing the Industry’s preeminent Advisor wealth platform. 46
Slide 47: What is Our Growth?
What is Our Growth? Net Cash Flow $3,533 million $1,815 million $436 million ($123) million 2010 2011 2012 2013 47
Slide 48: Contributors to Growth
Contributors to Growth • Stable Markets • New Advisor Recruiting 48
Slide 49: New Advisor Recruiting
New Advisor Recruiting 750 593 488 500 337 270 250 0 2010 2011 2012 2013 49
Slide 50: Contributors to Growth
Contributors to Growth • Stable Markets • New Advisor Recruiting • Cash Flow From Existing Advisors 50
Slide 51: Cash Flow – Existing vs. New Advisors
Cash Flow – Existing vs. New Advisors In $ Millions 3,000 $2,359 2,000 $1,565 $1,174 $799 $913 1,000 Existing $250 New 0 -$447 -1,000 -$902 -2,000 2010 2011 2012 2013 51
Slide 52: Contributors to Growth
Contributors to Growth • Stable Markets • New Advisor Recruiting • Cash Flow From Existing Advisors • Imminent Rollout of SEI Wealth PlatformSM 52
Slide 53: A Better Answer to "Bridging the Gap"
A Better Answer to “Bridging the Gap” Full Turnkey Open Custody Platform Traditional TAMP The Wealth Platform Do-It-Yourself SEI’s Investment Platform, Full custody platform with a middle office Full custody platform accommodated non-SEI Single system architecture Advisor-purchased Single system arc
Slide 54: Revenue Opportunity: New Segment
Revenue Opportunity: New Segment TAMP Flexible TAMP DIY Moss Adams Early Solo, Mature Solo, ½ of ½ of Early Ensemble and Mature Dominator Segments Early Ensemble Ensemble Key Themes Marketing / Bus Development Client Segmentation Operational Efficiency Operational Support Operational Scale Cost # Fi
Slide 55: The Technology Challenge
The Technology Challenge Aggregation By-All-Accounts CRM Custodian 2 Junxure Fidelity CRM Custodian 3 Sales Force TD Ameritrade CRM Custodian 1 Redtail Schwab Analytics/Research Callan Financial Planning MoneyGuide Pro Analytics/Research Financial Planning Morningstar NaviPlan Advanced Advanced Repo
Slide 56: The SEI Wealth Platform
The SEI Wealth Platform Integrated Workflow Financial Planning CRM Advanced Reporting Aggregation Advanced Portfolio Rebalancing Management Custody Document Management Reporting Advanced Tax Management Single Point of Accountability 56
Slide 57: Revenue Opportunity: Early Adopter
Revenue Opportunity › Early Adopter Revenue Sources TAMP SWP SEI mutual funds $595,017 $595,017 SEI managed accounts $78,399 $78,399 Non-SEI revenue sharing mutual funds $163 $252,163 Non-SEI managed account manager fees Trading fees $5,790 $7,440 Platform fees $49,500 Custody/administration fees $6
Slide 58: Summary
Summary • Experiencing strong growth today • SEI Wealth Platform fills a market need • SEI Wealth Platform rollout accelerates revenue growth 58
Slide 59: Private Banks Investment Processing
Annual Investor Conference Joe Ujobai Private Banks Investment Processing 59
Slide 60: SEI Private Banking
SEI Private Banking • We have a stable business and are investing for growth • SWP client revenues are growing as projected in the UK • We are beginning to deliver the SWP step-in strategy in the US • To scale the platform we are focused on larger prospects • Larger prospects are complex sales and s
Slide 61: Deliver our solutions through four segments
Deliver our solutions through four segments ASSET SEI WEALTH SEI WEALTH TRUST 3000® MANAGEMENT DISTRIBUTION PLATFORM–UK PLATFORM–US • Stable revenue • Growing • Strong asset flows • Execute step-in strategy • Profitable • $100 million + • Scaling operations to revenue improve profitability • Build o
Slide 62: A closer look at the UK
A closer look at the UK AUA and Revenue $30,000 $29B $25,000 $28M • AUA and revenue growth is on target $21M $22B $20,000 $20M • Strong growth from National $20M IWA’s and Platforms $15,000 • Some market consolidation led $15B by our clients $14B $10,000 2010 2011 2012 2013 AUA (in $B) Revenue ( in
Slide 63: A closer look at the US market entry step-in strategy
A closer look at the US market entry step-in strategy 2013 2014 3 Clients Live 6 Clients Live Clients AUA: $3B AUA: $9B • Addition US functionality • “Step-in” to more complex - Portfolio management functionality and asset • Core US functionality - Advisor experience types • Connectivity to US stree
Slide 64: SEI Wealth Platform Value Proposition
SEI Wealth PlatformSM Value Proposition • Modern user experience Enhance Client • Relationship centric • True open architecture Experience • Advisor productivity • Flexible segmentation Grow Revenue • Expanded market opportunities • Institutionalized client processes Increase • Straight through proc
Slide 65: Focused on large bank opportunity to drive scale
Focused on large bank opportunity to drive scale Market trends are positive Aligned to SEI Strengths Consolidation of wealth management Long term track record with large banks business lines Recognition that legacy systems are not SWP designed and built for the large scale viable global provider Glo
Slide 66: Sales challenges in the large bank market
Sales challenges in the large bank market • We are selling an enterprise wealth management platform • This is a “CEO” level sale and includes many buyers across the bank • The buying process typically includes professional services • The rapid pace of regulatory change impacts bank decision making •
Slide 67: Sales activity update
Sales activity update • Global pipeline remains largely the same size • Focused on fewer but larger firms • Includes current TRUST 3000 clients and new names • Longer sell cycles particularly with early adopters 67
Slide 68: SEI Wealth Platform Development Status
SEI Wealth Platform Development Status UK Focus on operational efficiencies to improve profitability Continue to develop against the step-in strategy US through to the large complex wealth manager 68
Slide 69: Private Banking summary
Private Banking summary • Keep building the platform • Capitalize on AUA and AUM momentum • Focus on selling large early adopter • Modest continual profit improvement 69
Slide 70: Asset Management Distribution
Annual Investor Conference Kevin Barr Private Banks Asset Management 70
Slide 71: Asset Management Distribution: Markets
Asset Management Distribution: Markets We operate in core global markets: Americas UK/Europe Asia Serving four market segments: Banks Insurance Broker Dealers/ Wealth Managers/ Companies Wirehouses Platforms Offering solutions centered around: Private/White-Labeled SEI-Branded Separate Investment So
Slide 72: Asset Management Distribution: Strategy/Value Proposition
Asset Management Distribution: Strategy/Value Proposition To be the global leader in providing client-centric asset allocation Strategy strategies to large financial intermediaries with their own distribution force and an established brand Economic: Provide financial intermediaries with expanded pro
Slide 73: Asset Management Distribution: Market and Challenges
Asset Management Distribution: Market and Challenges Target Market Industry Challenges SEI Strengths Solution Differentiation Goals-Based Solution (Advice thru Reporting) Banks Distribution Profitability Strategic Partnership Model Open Architecture offering Customized Solutions Wealth Investor Tran
Slide 74: Asset Management Distribution: Net Sales Trends
Asset Management Distribution: Net Sales Trends 2,000 $1.4B 1,500 1,000 $600M $600M 500 ($700M) 0 -500 -1,000 -1,500 2010 2011 2012 2013 Americas (577) 170 98 161 UK/Europe (110) 311 373 860 Asia (25) 76 87 421 (All figures in Millions of USD) 74
Slide 75: Asset Management Distribution: AUM Trends
Asset Management Distribution: AUM Trends 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2010 2011 2012 2013 Americas 5,300 6,000 6,600 7,300 UK/Europe 1,800 2,200 2,900 4,100 Asia 800 1,200 1,400 2,000 (All figures in Millions of USD) 75
Slide 76: Asset Management Distribution
Asset Management Distribution Americas United Kingdom and Europe Asia 76
Slide 77: Americas
Americas Key Facts: Americas Total Assets: $7.3 billion Americas Growth Early, Sales force being built out Stage: Rep Banks: Clients: - Safra, Bremer, Huntington, BMO/NB, Coast Capital Insurance Co’s: - AXA, Jefferson, Standard Life Wealth Managers/Platforms: - Edward Jones, WorldSource New • Invest
Slide 78: UK & Europe
UK & Europe Key Facts: UK & Europe United Kingdom and Europe Total $4.1 billion Assets: Growth Early, Expansion throughout Stage: UK & Europe Rep • True Potential Clients: • Transact • HSBC • Fusion • Standard Life • Aviva • Cofunds • Ascentric New • Multi-asset income Solutions solution (Q3) 2014 •
Slide 79: Asia
Asia Key Facts: Asia Total $2.0 billion Assets: Growth Early, Targeting 1 Additional Stage: Regional Partners in 201 Rep HSBC (Hong Kong and Clients: Singapore Asia 79
Slide 80: Summary
Summary • A Solution that addresses the major challenges for Global Distributors • Leverage existing SEI client base and expand into new markets • Client wins and AUM growth have confirmed solution is on “right track” • Early-Stage in Growth Cycle 80
Slide 81: Summary
Annual Investor Conference Al West Summary 81
Slide 82: SEI: Corporate Overview
SEI: Corporate Overview › Three units hitting their pace – Strong profit and revenue growth – Strong new business signings › Banking unit transforming itself – Current client asset flows growing both AUA and AUM – SWP fit with market needs is strong – Sales to large early adopters are complex and sl
Slide 83: SEI Business Priorities
SEI Business Priorities › Help our clients succeed › Get SWP to the finish line – core functionality › Complete the transformation of Banking segment › Continue to invest in innovation to drive future growth › Provide our shareholders with long-term sustainable growth in EPS 83
Slide 84: Forward-Looking Statements
Forward-Looking Statements This presentation may include "forward-looking statements," and discussions about future operations, strategies and financial results. Future revenues and income could differ from expected results. We have no obligation to publicly update or correct any statements herein a
Slide 85: Thank you
Annual Investor Conference Thank you 85