Private Banking Margins
Q: How will Private Banking pipeline drive margins?
A: SEI's executives stated that they are in Phase 4 of their Private Banking strategy, focusing on pipeline growth and targeting segments where they can win repeatedly, such as community and regional banks and UK investment managers. They are encouraged by the quality and depth of the pipeline, which is expected to drive revenue growth falling to the bottom line and expand margins. Additionally, they can deliver new business with little or no incremental expense, aiding margin expansion.

One-Time Benefit Impact
Q: What was the one-time impact on margins this quarter?
A: SEI received a one-time benefit of a little under $3 million related to a credit from a healthcare provider, which was allocated across business units and positively impacted margins.

Expense Management and Raises
Q: How will expenses and raises affect future quarters?
A: SEI had some raises that will be seen in Q3; however, they are shifting compensation increases more to year-end going forward. Management is proud of expense management and optimization efforts and intends to continue this focus in Q3 and Q4.

Impact of Rate Cuts on Cash Program
Q: How would rate cuts affect the Integrated Cash Program revenues?
A: Management indicated that if rate cuts occur, they will evaluate the impact, with some sharing between SEI and investors. They won't take the full 25 basis points decrease, and the effect will be allocated.

Fee Reductions in Adviser Business
Q: Was the full impact of adviser fee reductions in Q2?
A: The fee rate reduction was implemented on April 1, so the full impact was reflected in Q2. Advisers are pleased, and it is helping them from a competitive standpoint.

Regulatory Concerns on Cash Program
Q: Any concern the cash program conflicts with fiduciary duties?
A: SEI believes their Integrated Cash Program is consistent with advisers' fiduciary obligations, providing competitive rates, optionality, and full disclosure. They acknowledge it is a fluid situation and will adjust based on regulatory guidance.

M&A and Inorganic Growth Priorities
Q: What are SEI's priorities for inorganic growth?
A: SEI is focusing on three areas: increasing client growth in the RIA space, expanding operational and technological delivery in the Investment Manager Services business, especially outside the U.S., and adding value-added technology or services to their intermediary base. They are disciplined around these segments for inorganic growth.

Institutional Investors Segment Turnaround
Q: What's being done to turn around Institutional Investors?
A: SEI faces headwinds in the defined benefit space due to plan annuitizations accelerated by higher rates, expected to continue into 2025. They are optimistic about markets outside of DB, such as healthcare, education, not-for-profits, unions, and governments, where their OCIO solutions resonate. The pipeline is building, and they are refocusing strategies to drive future growth.

Growth in RIA Segment
Q: How is SEI growing in the RIA market?
A: The RIA market represents $23 billion of the $101 billion on SEI's platform and is their fastest-growing segment. They are redeploying sales and technical resources to support this market and are positive about future growth.

Competitive Landscape Changes
Q: Has competition changed due to recent acquisitions?
A: SEI acknowledges that competitors acquired by private equity remain formidable. They believe their programs stack up competitively, especially in the higher end of the RIA market, and are considering whether to become a destination firm.

Investment Managers Margins
Q: What's the normalized margin outlook for Investment Managers?
A: SEI is seeing margins closer to 35.5% to 37%, slightly higher than the previous target of 34% to 36%. They attribute this to increased focus on optimization and scaling operations.

SEI's Offering in Semi-Liquid Products
Q: How is SEI positioned in semi-liquid retail alternative products?
A: SEI is engaged with clients launching BDCs and semi-liquid funds. They have the technology and expertise to service high volumes of investors and are well-positioned in the "retailization" of alternatives.

Aspirational Goals for Cash Program Growth
Q: Is there a goal to grow the Integrated Cash Program balance?
A: Currently, SEI is maintaining the program at about 1% of total AUM and AUA and will continue to evaluate it based on investor rates and market options.

Clarification on Health Care Credits
Q: Can you reconcile the health care credits amount?
A: The one-time health care benefit was primarily shy of $3 million, though there are always some one-time items, with the majority of the difference accounted for by this benefit.