Date

April 22, 2026 at 5 p.m. ET

Call participants

• Chief Executive Officer — Ryan Hicke
• Chief Financial Officer — Sean Denham
• Chief Product Officer — Sanjay Sharma
• Head of Global Wealth Management Services — Michael Lane
• Head of Investment Manager Services — Phil McCabe
• Head of New Ventures and Strategic Partnerships — Sneha Shah

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Takeaways

• Adjusted EPS — $1.44, marking a more than 20% increase year over year, driven by both top-line growth and margin expansion.
• Net Sales Events — $67 million, including $57 million in recurring revenue and $10 million in professional services; this outcome surpassed the prior quarterly record by over 40%.
• GAAP EPS — Increased 20% year over year.
• Adjusted Operating Profit — Up 24% year over year and 6% sequentially; improvement observed at both consolidated and segment levels.
• Stratos Contribution — $20 million of revenue and $3 million of operating profit to the Advisors segment during the quarter; generated $8 million of EBITDA at the consolidated level, before considering noncontrolling interests.
• Share Repurchases — $208 million of SEI stock bought back, with management stating buybacks “will remain a meaningful lever within our capital allocation strategy.”
• Private Banking Margins — Rose to 21% in the quarter, attributed to a faster realization of Professional Services revenue and higher-margin contract wins, without significant impact from the prior workforce reduction.
• IMS Net Sales Events — Surpassed $50 million, led by major enterprise mandates with two of the largest global alternative managers; less than 50% of net IMS sales events came from these two clients.
• International Professional Service Sales — Over one-third of Professional Services sales events originated internationally, notably within the U.K.
• Asset Management Net Inflows — Approximately $1.5 billion of net inflows, led by the Advisors business, while institutional investors experienced less than $1 billion of net outflows due to a large defined benefit client annuitization.
• Operating Margin at Consolidated Level — Improved sequentially and year over year on both a GAAP and adjusted basis, with a reported “core margin” of 32%.
• Assets Under Administration and Platform — Grew by 4%, attributed to strong new business wins and reduced mark-to-market sensitivity.
• AI and Automation Initiatives — Management reaffirmed ongoing investment and stated “These initiatives are translating into margin expansion with Q1 delivering higher margins at the consolidated level.”
• Balance Sheet — Ended the quarter with $363 million in cash; management emphasized “substantial financial flexibility.”

Summary

SEI Investments Company (SEIC +1.98%) reported record net sales events and a double-digit year-over-year increase in both adjusted and GAAP EPS, highlighting management’s assertion that recent changes have delivered sustainable, strategic progress. The integration of Stratos, consolidation of Professional Services, and international expansion contributed to margin improvement and diversified growth engines. Share repurchases of over $200 million underscored continued confidence in capital allocation priorities.

• Management characterized the current momentum in core business segments as “not an anomaly,” with sales pipelines described as strong and positioned for further growth, especially in alternative investment manager outsourcing.
• The newly reported adjusted financial metrics represent an enhancement in disclosure aligned with market practice; historical data has been included to support comparability.
• “Advisors margins declined due to the inclusion of Stratos, which was weighed down by intangible amortization,” but absent Stratos impact, margins in the Advisors segment increased approximately 50 basis points year over year.
• Management stated, “we are the third largest fund administrator in North America,” following recent major client wins.
• Client demand for Professional Services is increasingly driven by needs in AI-enabled data cloud solutions and cybersecurity, with early engagement cited as a differentiator in building durable client relationships.
• On the impact of AI, management said, “AI will definitely be a bit of an accelerant,” and expects ongoing investments in automation and innovation to support continued expansion in both revenue and operating margin.

Industry glossary

• IMS (Investment Manager Services): SEI’s segment focused on providing administration, outsourcing, and related services to asset and alternative investment managers.
• RIA (Registered Investment Adviser): A fiduciary advisor or advisory firm registered to provide investment advice to clients for a fee.
• IBD (Independent Broker-Dealer): Firms or platforms serving independent financial advisors in securities brokerage and investment advisory.
• SMAs (Separately Managed Accounts): Investment accounts managed by a professional asset manager in which the investor owns the individual securities.
• EBITDA: Earnings before interest, taxes, depreciation, and amortization; used to assess a company’s operating performance.
• Operating Margin: Ratio of operating profit to revenue; a measure of operational efficiency.
• OCIO (Outsourced Chief Investment Officer): Institutional asset management mandate where investment decision-making is delegated to an external firm.
• Private Credit: Debt investments in non-public companies, often managed by asset managers specializing in alternatives.
• BDC (Business Development Company): A closed-end investment company that invests in small- and medium-sized businesses, providing private credit exposure.
• Stratos: Acquired RIA aggregator and platform, contributing to SEI’s Advisors segment and broader advice value chain.
• SEI Sphere: SEI’s branded cybersecurity services offering to clients.
• GCC (Global Capability Center): SEI’s international service and operational hub referenced in business margin improvement.

Full Conference Call Transcript

Ryan Hicke: Thank you, Brad, and good afternoon, everyone. This was a defining quarter for SEI. Q1 was not simply a strong start to the year. We believe it is emphatic evidence that the strategic and operating changes we have made set a new standard for what SEI is capable of delivering on a sustained basis. Q1 adjusted EPS totaled $1.44. That’s more than a 20% increase from last year, driven by both top line growth and margin expansion. We also delivered $67 million of net sales events in Q1, including $57 million of recurring revenue and $10 million of professional services. This is an outstanding outcome. It exceeds our prior quarterly record by more than 40%.

The scale and quality of these sales events reflect demonstrable progress in our core growth engines rather than a single market tailwind or discrete event. This distinction matters. It gives us confidence that what we delivered in Q1 is not an anomaly. During our Investor Day last fall, we outlined 5 strategic pillars that guide how we run the company, how we allocate capital and how we show up for clients. Q1 was decisive validation of that strategy and our ability to consistently execute against it. Let me walk through those pillars, how they showed up in Q1 and why do we feel good about the trajectory ahead.

First, we invest in proven great engines, most notably alternative investment managers and professional services. In IMS, demand for outsourcing remains strong, particularly among larger and more complex alternative managers. First quarter sales events reflect the initial phase of multiple enterprise-level mandates with first-time outsourcers, the “big deals” we’ve been talking about. These relationships are designed to expand over time as the clients deepen their partnership with SEI and as their fundraising and new product launches progress. These relationships also have the potential to grow into some of SEI’s largest overall clients. The momentum in this business is incredible, giving us confidence that what we saw in Q1 is a starting point, not an end point.

Professional services also continues to support growth. Clients are engaging SEI earlier and more strategically across a broader set of needs, which is improving win rates and increasing durability of relationships as evidenced by the previously announced Huntington Bank win. Second, reimagining asset management. I think we’re actually now past the reimagining stage, and we are executing against our evolve strategy at pace. The strategy is showing meaningful results. Q1 represented our best quarter in several years with the improvement in flows that built through 2025 continuing into 2026. We saw progress across both the RIA and IBD channels where our strategy of delivering a broader SEI ecosystem to more scaled advisers is showing results.

Engagement is improving every day, particularly with larger firms that value integrated solutions. Stratos integration is also well underway with multiple work streams focused on scalable infrastructure and building a centralized investment hub. We are encouraged by strong inbound interest from advisers seeking a long-term capital partner like Stratos. And in our institutional business, we remain on track towards net positive flows later this year while maintaining discipline around client fit and flow quality. Third is enterprise excellence. The partnership we recently announced with IBM reinforces and accelerates the direction we are taking around infrastructure modernization, automation and responsible AI deployment.

As I have said in the past several earnings calls, we are applying AI and automation where it creates real impact, reduces friction, lowering unit costs and expanding capabilities and services for clients and employees. These initiatives are translating into margin expansion with Q1 delivering higher margins at the consolidated level. Enterprise excellence is about running the company smarter, not just tighter and with increased accountability. Our margin expansion reflects real progress against that priority. We view AI as a force multiplier of time, and our execution of these programs will create additional capacity and opportunity for our employee base. Fourth, we continue to focus on boosting international returns.

We are taking a more disciplined approach to how we operate outside the U.S. with clear accountability for growth, margins and capital deployment. In Q1, we began to see traction across both Professional Services and Asset Management with more than 1/3 of Professional Services sales events generated internationally this quarter. We also continue to build out our Singapore presence as part of our global expansion priority. This remains an important opportunity as we apply a more integrated enterprise-wide operating model across our international platform. Fifth is strategic capital allocation. In Q1, we repurchased over $200 million of SEI stock.

Given the strength of our operating performance and long-term growth outlook, we believe our shares represent an attractive use of capital at current levels. Share repurchases will remain a meaningful lever within our capital allocation strategy, especially when market pricing does not, in our view, reflect the trajectory of our business. Beyond share repurchases, we also activated several investments targeted for later in the year, which are reflected in Q1 results. This was also our first full quarter with Stratos, which is deepening SEI’s participation in the advice value chain and strengthening the overall reach and relevance of our platforms. We remain committed to disciplined capital deployment that balances reinvestment, M&A and consistent returns of capital to shareholders.

Before turning the call over to Sean, a brief word on AI. We believe AI strengthens our value proposition and supports continued margin expansion and growth. It is a clear positive and accelerant for SEI. Our combination of regulated infrastructure, proprietary data, mission-critical processes and talent positions us well to apply AI in ways that can improve client outcomes and productivity. We have been proactive, investing over the past 2 years in AI native capabilities, automation and AI-enabled expansions and extensions across our platforms. In parallel, we are selectively experimenting with more disruptive ideas that have the potentially to substantially expand our addressable markets that we can serve.

Importantly, clients are increasingly turning to SEI as a partner to help them think through responsible, scalable AI adoption in complex regulated environments. Stepping back, we believe Q1 represents a statement quarter for SEI. The quarter reinforces our confidence in the scalability of our business and the demand for our capabilities. But finally, I want to thank SEI employees for an outstanding quarter. The results reflect their focus, execution and daily and unwavering commitment to our clients. With that, I’ll turn the call over to Sean.

Sean Denham: Thank you, Ryan. I’ll begin on Slide 4 and to reiterate Ryan’s comments, SEI delivered an outstanding first quarter. On a GAAP basis, EPS increased by 20% and operating profit increased 21% versus Q1 of last year. On an adjusted basis, EPS increased 21% year-over-year. The sequential decline in adjusted EPS from Q4 was expected and reflects items we discussed last quarter. Most notably, a higher effective tax rate and lower investment income and performance fees from LSV, which tend to be seasonal in nature. In total, our tax rate, LSV and other below-the-line items drove a combined $0.15 headwind to EPS relative to Q4 last year.

Adjusted operating income, which excludes these items, increased by 6% from the fourth quarter. This quarter also marks our first period reporting adjusted financial metrics. We believe this enhanced disclosure aligns our reporting more closely with market practice and provides investors with a more effective basis for compares. For additional context, we have also included historical quarterly disclosures on an adjusted basis at the end of our press release. Turning to Slide 5. SEI’s adjusted operating profit increased 6% sequentially and by 24% year-over-year. Performance was strong across the enterprise. Private Banking delivered a notable increase in revenue and more impactfully, operating margins.

This reflects continued execution in deeper client engagement as banks increasingly partner with SEI earlier and across a broader set of strategic and operational needs, not just investment processing. For example, we are now playing a more active role in client implementations, resulting in less lag time between contract wins and revenue recognition. In addition, we were pleased to announce the Huntington win during the quarter, which underscores our relevance and credibility in the regional community bank market, especially at the higher end of that segment. Our Advisors segment had a healthy start to the year, but the first full quarter of our Stratos partnership reflected in the Advisors segment makes comparison with prior periods challenging.

Given our 57.5% ownership, Stratos is fully consolidated in our results. Stratos contributed nearly $20 million of revenue and $3 million of operating profit to advisers in Q1 before considering noncontrolling interests. Excluding depreciation and amortization, primarily acquired intangible amortization, Stratos generated $8 million of EBITDA at the consolidated level. Several planned transactions also closed during the quarter, so the underlying run rate contribution is modestly higher than reflected in Q1 results. Excluding the impact of Stratos, all of SEI’s businesses delivered year-over-year revenue growth, operating profit growth and margin expansion. This performance reflects execution against the strategic priorities Ryan outlined earlier, so I will not reiterate those themes here. Turning to Slide 6.

Consolidated operating margins were very strong, continuing the improvement trend we’ve seen over the past several years. At a segment level, the improvement in Private Banking margins, both year-over-year and sequentially reflects continued execution against the 5-Point Plan Sanjay discussed during our Investor Day. Key contributors include Professional Services growth, increased adoption of our Asset Management offerings internationally and operating leverage against deeper engagement with our clients. For our IMS business, the modest sequential decline in margins versus Q4 was expected and primarily driven by the absence of the revenue accrual true-up we referenced last quarter, which accounted for approximately 150 basis points of the decline.

The balance reflects onboarding costs associated with the substantial sales events delivered in the quarter. Advisors margins declined due to the inclusion of Stratos, which was weighed down by intangible amortization, as I just discussed. Absent the impact of Stratos, Advisors margins increased approximately 50 basis points relative to Q1 last year. At the consolidated level, adjusted operating profit margins improved versus both the prior quarter and the prior year on both a GAAP and adjusted basis. Slide 7 summarizes our sales events for the quarter. We debated opening the presentation with this slide, but decided it was best to remain consistent. Sales activity in the quarter was exceptional.

Investment Manager Services led the business with more than $50 million of net sales events driven by the large enterprise mandates Ryan discussed earlier. Together, portions of these wins accounted for just over half of total IMS sales events. As Ryan noted, we expect these relationships to continue contributing to sales activity in IMS over the coming quarters and years. Before moving on from IMS, a brief comment on private credit and a broader market commentary. We are not seeing any slowdown in IMS demand. Our exposure to retail private credit, including public BDCs, currently remains limited and the vast majority of our private credit exposure is institutional.

We continue to see strong pipeline activity across existing and prospective clients and with the launch of our registered transfer agency in Q3, we would expect our retail exposure to increase with evergreen fund launches. IMS led the quarter, but the strength of those results should not diminish the continued progress we have seen in both Private Banking and Asset Management. While the magnitudes differ, all 3 businesses are contributing positively to growth. Asset Management delivered its strongest sales events quarter in several years, driven by growing demand for ETFs, SMAs and our custody-only platform offerings. We are encouraged by the momentum in this business and expected continued progress as we expand our product lineup and distribution capabilities.

Investments in new businesses generated approximately $4 million of net sales events, including engagements won in conjunction with Private Banking. This is another example of how our investment in Professional Services is supporting growth across the enterprise. Additionally, while not reflected in sales events, we successfully recontracted 8 Private Banking clients, renewing an average contract term of approximately 4 years and retaining $34 million of recurring revenue with no material impact to run rate profitability. Turning to Slide 8. We saw continued asset momentum during the quarter. In Asset Management, growth was led by the Advisors Business. Last quarter, Ryan mentioned that we’re accelerating Investment Management product launches in ETF, SMAs, models and alts.

This quarter, we are seeing progress against those initiatives, driving approximately $1.5 billion of net inflows. Institutional investors experienced less than $1 billion of net outflows, almost entirely attributable to a large defined benefit client annuitization following the achievement of funding objectives. This outflow is a result of SEI advising a client to successfully meet their long-term investment objectives. Based on current pipeline visibility, we expect improved flow performance in this business over the balance of the year. Regarding market impact. SEI’s portfolios remain highly diversified across equities, fixed income, alternatives, cash and geographies with a relatively higher weighting towards value which mitigated market headwinds during March.

And as you may have noticed, market performance in April has been pretty encouraging to put it lightly. LSV had a strong start to the year with key products in Global and U.S. Large Cap outperforming benchmarks by single-digit percentages in Q1, more than offsetting market weakness in March and approximately $2 billion of net outflows in the quarter. Assets under administration and on platform increased 4%, driven by strong new business wins and lower mark-to-market sensitivity. Turning to Slide 9 and building on Ryan’s comments on capital allocation. In Q1, we repurchased $208 million of SEI shares. While repurchase activity was elevated during the quarter, we continue to maintain significant capacity intend to remain active buyers.

We ended the quarter with $363 million of cash on the balance sheet and substantial financial flexibility. This balance sheet strength provides ample capacity to continue investing in the business while maintaining a disciplined and opportunistic approach to capital returns. Stepping back, the first quarter represents an amazing start to the year for SEI. We delivered meaningful earnings growth, improved margins and exceptional sales activity while continuing to invest to support the opportunities we are seeing across the business. The quality of our results reflect disciplined execution against the strategic priorities we outlined at Investor Day, and it reinforces our confidence on the path ahead.

There are a lot of exciting things happening right now at SEI, and there’s more to come. With that, operator, please open the line for questions.

Operator: [Operator Instructions] Our first question comes from the line of Alex Kramm with UBS.

Alex Kramm: Just maybe starting with the strong sales in IMS. I was hoping you can give a little bit more color around, I think you said multiple first-time deals, so maybe a little bit more about how competitive these wins were? And then most importantly, you said the pipeline remains very strong. So is this a run rate that we should be expecting in terms of new sales? Or is this going to be lumpy? Yes, just a little bit more color on how this year could shape up here given the recent strength here.

Ryan Hicke: Sure, Alex. It’s Ryan here. Thanks for the question. I think we’ll turn that one to Phil. And then, Phil, if you want to kind of unpack them in a couple of different ways, we can add on.

Phil McCabe: All right, that sounds great. Thank you for the question. A couple of quick highlights. So by every measure, we had a phenomenal quarter. We won 2 of the largest and most complex alternative managers in the entire industry. It was an extremely competitive bake-off that lasted over a period of a full year. Both of those managers who are moving from in-sourcing to outsourcing, one of them is in the top 5 globally and the other is in the top 15 globally alternative managers. So we believe there’s meaningful room to land and expand, like we always do over the course of the next several years. Both of these clients will be in our top 5.

But these deals are in addition to what we would normally sell on a quarterly basis. So from a pipeline perspective, we’re really strong. We are supported by the enterprise mindset from Ryan and Michael and Sanjay, we’re all out in the market selling together and we’re probably talking to 20 of the top 50 alternative managers right now. So we expect sales events to continue to trend up year-over-year. And one last fun fact. We’re actually now we are the third largest fund administrator in North America. So we’re moving up the league tables. Ryan, anything to add? Anything I missed?

Ryan Hicke: No. I think you nailed it. I think the appetite for outsourcing increases literally daily and the more effective we have been in helping our firms deploy capital in different areas for their growth acceleration, it has just increased the partnership and deepened our relationship. So as you said, I think if you’re looking, Alex, from kind of an average quarterly basis of sales, we would expect those numbers to continue to grow. Some quarters will be a little bit lumpier than others based on size of deals and timing, but the pipeline and the market and our positioning in this space is extremely strong.

Alex Kramm: Okay. And then maybe staying on the same topic, and you already addressed this somewhat proactively in terms of what’s going on in private credit and private equity right now. But maybe we can go a little bit deeper there and not to lead the witness here too much, but we’ve seen in the past, for example, during the financial crisis on the hedge fund side, in particular, and made off, there was a lot of outsourcing demand that already all of a sudden came out of some of that stress and some scrutiny around that space.

So again, not trying to paint to rosy of a picture here, but just curious how the discussions have changed given what’s going on? Do you think this could actually be maybe an accelerant to saying, “Hey we need to open the kimono a little bit, and this will be maybe one of the ways to do it.” So yes, just curious about what you’re hearing live?

Phil McCabe: So just to answer that real quick, this is Phil, the 3 of our largest clients are looking at launching flagship products this year. So we’re not seeing any slowdown in demand, especially on the institutional side. And I do think as if the market was ever to get a little bit more interesting or challenged, we’re playing in the very, very large end of the market, and these clients are really, really good at what they do.

So — and I know in the script, Sean said that we’re a little lighter on the retail side of the market, but we expect that to pick up when we launch our registered transfer agency solution over the course of the next couple of months.

Ryan Hicke: I think it’s also really important to distinguish, when we talk about this business, 70% of IMS is driven by exposure to alternatives and 25% of that 70% is private credit.

Operator: Ladies and gentlemen please standby. All right we’ll move on to the next person. Our next question person — our next question comes the line of Jeff Schmitt with William Blair.

Jeffrey Schmitt: So in private banks, I know the margin can jump around, but it was up to 21% in the quarter. Professional Services growth is obviously helping. But how much of that was driven by the reduction in the workforce? Or were there any other onetime items that were in there?

Ryan Hicke: So Jeff, can you hear me? It’s Ryan.

Jeffrey Schmitt: Yes, I can.

Ryan Hicke: Okay. So I’ll open up here for Sanjay. The reduction in workforce had little to no impact really specifically in banking. That was across the enterprise. That really was part of a Q4 initiative as we talked about. I mean, Sanjay can talk about, I mean, the execution against the 5 specific things that we discussed in New York in September, and we’ve been talking about the last couple of years, he literally continues to execute against that quarter-over-quarter. But Sanjay, do you want to highlight some of the specific things that drove kind of the increased margin this quarter?

Sanjay Sharma: Yes, absolutely. That’s a clearly good question. If you look at the 5 pillar strategy we talked about on September 18, 2025, 2 of those 4 pillars were Professional Services, was one of them. And then second was how we’re going to market with the new logos. Professional Services events, we have significant events in third quarter and fourth quarter, and as you could see that our revenue realization is much faster for those kind of deals. And in Q1, that’s a good reflection that, yes, we sold new Professional Services in third quarter, fourth quarter, and we realized that. And that is one dimension of it.

Second is we are very judicious how we’re going to market and the new contracts we are signing, they are coming with a higher margin. So it’s a combination of those. Thus, of course, our GCC initiative is playing big role here. We are leveraging GCC. We talked about be judicious about our Software-as-a-Service expenses. So when you combine all those things together, you would see that — and you will see in the coming quarters as well. We are continuously making progress on all those 5 pillars.

Jeffrey Schmitt: Okay. Great. And then it sounds like transaction multiples for RIAs have been on the rise. Is that the case? Are you seeing that in the market? And do you think that would be — do you see that as being a hindrance for your roll-up strategy for Stratos? Or are there still good opportunities out there?

Ryan Hicke: Michael, did you hear the question?

Michael Lane: I didn’t.

Ryan Hicke: Jeff said, it seems like EBITDA multiples are rising for RIAs or IBD roll-ups. Do we think that’s impairing our strategy with Stratos and their M&A strategy?

Michael Lane: No, not at all. We do see that the multiples on the high end definitely have been increasing. And if you look at the scaled firms, there was a report recently came out that the typical multiple would be between 22 and 24. And remember, we acquired Stratos that are much less multiple than that. And so you do see it at the very high end in the scale players.

But when you go into the marketplace where you’re looking at the $100 million RIAs up to about $1 billion RIAs, you still have a very reasonable multiple arbitrage opportunity between what you buy them at versus what they would then reprice at when they become part of the scale player. So we’re not seeing any slowdown at all right now.

Operator: Our next question comes from the line of Crispin Love with Piper Sandler.

Crispin Love: I had some feedback issues earlier in the call. Just one follow-up on the IMS sales wins, you mentioned 2 of the largest and most complex alts being part of those wins. Can you discuss any concentration on the wins in the quarter? I mean how much of the $51 million came from those 2 or just any other concentrations worth calling out from the sales?

Phil McCabe: I can take it. Crispin, this is Phil. Those 2 deals were less than 50% of the concentration for the quarter. So not even — and we expect a lot more later.

Crispin Love: Perfect. And then just on margins, 32% core margins in the quarter, commentary seems to be very positive. Can you just discuss the outlook for margins still expecting — are you still expecting high 20s range? Or could there be a new run rate here, maybe high 20s to low 30s. And then just if there’s anything onetime that impacted the core margin in the first quarter that’s out of the ordinary?

Sean Denham: Crispin, it’s Sean. Thanks for the question. So the main driver for overall margin improvement really just the fact that revenue growth is up 2%. We’re doing a much better job of managing our expense. We had nice sequential improvements in PB and institutional but primarily, it was driven from revenue growth. And so as we have large or improvement in revenue and sales and revenue growth, we expect margins to improve. So our fixed costs are pretty well fixed. There are some variable costs. But for the most part, you’re seeing the appreciation of margin due to revenue.

Operator: Our next question comes from the line of Ryan Kenny with Morgan Stanley.

Ryan Kenny: Can you hear me? .

Ryan Hicke: Yes.

Ryan Kenny: All right. Great. So on the AI theme, you touched on it in the opening remarks a little bit, but can you just dig in a little bit deeper because I think there is a perception in the market that some of the businesses that you operate in, like fund administration maybe could be at risk of disruption or maybe you could see fee rates come down over time if you’re expected to pass on efficiencies that you gain. So could you just dive a little deeper on how you view yourself as more protected from AI disintermediation?

Ryan Hicke: Yes. I mean, we’ll answer that in a few ways. Ryan, I hope you’re doing well, and then I think Sneha’s in the room if she wants to provide some color. I mean, the second half of your question, I think we really need to also continue to focus on continued productivity and efficiency through leveraging technology and process engineering has always been part of our strategy and has always been part of how we pass on and maintain margin expansion or pricing levels relative to the competitive market. So AI will definitely be a bit of an accelerant to that.

But if you think about how we’re looking at it right now, and I mentioned this a little bit earlier in the call, we really see this right now as a significant positive for SEI. And we’re not naive. We know that there’s disruptive possibilities out there. But when we look at our ability to provide a full suite of capabilities and platforms to our clients. Our clients are looking to SEI to figure out how to harness these capabilities to expand our services, potentially drive more scale and productivity, so we definitely see it as a positive.

And when you look at the suite of capabilities that we provide, certainly, there will be organizations firms that try to go displace that brick by brick, if you will. And it’s our job to maintain that positioning for that whole wall of our services. But right now, and just Sneha you can weigh in, we’re really excited about what we see. And we definitely are excited, Ryan, around the engagement we have with clients looking to SEI to partner with them around how to harness and drive more growth here.

Sneha Shah: Yes. I’ll just add, Ryan, thank you for that. But I think that there’s 2 elements of this. The one is the ability for us to do more with like the amount of resources that we have, which we’re actively driving. We’ve got AI-enabled employee base, and they’re using it actively in their database jobs. We’re also seeing the way to deliver growth more efficiently. So [ Astil ] is winning, he is doing it without adding more cost, which I think is really helpful, which is why you’re seeing a little bit of a margin expansion.

And then we’re seeing this adaptability of not just us but our client base as they become more efficient and we become more efficient, discovering new areas of growth. And so we’re seeing, for example, in the banking client base a lot of interest in us helping them become more AI native. And so doing work with data cloud and professional services and helping secure their data through our security services. And on the IMS side, we’re seeing a lot of interest to say what additional services can we provide those same clients as their growing that we wouldn’t have done naturally because now AI is making that possible.

So we see it really as a net driver of growth and both for our people and for our businesses and our clients.

Ryan Kenny: And we get the question a lot on fee rate impact from AI. But as you mix shift into areas like alts, could your reported aggregate fee rate actually go up or stable? How should we think about fee rate in the various businesses?

Ryan Hicke: Right now, we’ve seen a tremendous amount of stability in our fee rates, been able to continue to win new business at premium prices and deliver a premium service. So I don’t know, anybody else wants to add anything to that? We just — we haven’t seen yet, Ryan. I mean we’re certainly aware there’s a tremendous amount of change happening in the market. We actually are excited about that. I mean if you think about our cultural posture, and the position that we have around leaning more into accelerating good ideas for good outcomes. That’s just the way we think right now.

I’m full of quotes that Sean likes to listen to, but a ship is safe in the harbor. That’s not what ships were built for. So we are being aggressive with experimentation. We’re being aggressive with innovation, and that’s just the kind of mindset we want to bring here. But right now, specific to your fee rate question, we’re actually really excited about our current position, and we don’t plan to kind of lessen our focus and let that position get diminished or deteriorated? Phil, do you want…

Phil McCabe: From an IMS perspective, we’re not seeing a lot of fee pressure at all. But what we do expect from AI is faster NAVs, higher quality, adjacent markets that we’re getting into. So our clients are expecting that from us. And they’re — again, we’re in the higher end of the market and they just want things better, faster and perfect.

Operator: Our next question comes from the line of Alex Bond with KBW.

Alexander Bond: Another follow-up on the wins in the IMS segment this quarter and just the impact on the margin. In the past, you’ve spoken to the fact that through the onboarding processes for large wins like this, the IMS margin may dip slightly before reaching the full run rate once the implementations are completed. Can you just help us size up the timing and magnitude of these processes or processes on the IMS margin over the next few quarters?

Phil McCabe: Sure. I’d love to. We’re going to convert these clients in a few different tranches over the next year or so. We expect the revenue, it’s going to increase more and more quarter-over-quarter over the next 15 months. From an event perspective, we’re going to continue to land and expand as we always do. This year, revenue and expense will be flattish for those 2 deals, but we’re going to get back to normal margins for those 2 deals in mid-2027, and we’re going to start to see pretty significant revenue in that time frame as well.

Alexander Bond: Got it. Great. That’s very helpful. And then maybe just moving to the Professional Services suite. I think you all also made reference there previously to expanding that offering within other areas of the business like IMS and certainly appreciate the new breakout there this quarter. But can you maybe help us think about the opportunity set within IMS or other areas of business for the Professional Services offering maybe relative to — within private banks where you’ve seen the majority of sales for Professional Services to date. And then also maybe just how sizable the international opportunities for Professional Services given the strength that you all noted there this quarter as well?

Ryan Hicke: Yes, you’re welcome. That’s a great question. So I think if you think about kind of the breadth of the capabilities in Professional Services, some of the things that have the most momentum in demand right now across all the client bases. And some of this is early in some of the segments.

But the AI-enabled data cloud platform is probably one of the most attractive capabilities we have, where we help our clients really harmonize ingest and create business intelligence off of their data sets off of our data cloud platform and Sanjay and his team really pioneered that really in the banking segment, but it absolutely has applicability in Phil’s segment and as well as Michael Lane’s when you’re looking at larger RIAs and also kind of the more enterprise scale organizations. I would say integration services continues to have significant demand.

Sean called that out around kind of truncating if you will, some of the lag time between signing and implementation because we’re taking on more responsibility for other integration services and workflows, if you will, as part of the implementation. And I would say, coming back to, Alex question that Ryan had just asked a couple minutes ago, we’re also starting to see demand for firms that want to think about how do they become more AI-enabled. How do they become an AI-native organization. So there are a variety of ways that we are able to add value from professional services. And we also had a tremendous quarter with our cybersecurity capabilities with SEI Sphere in there as well.

So that’s just some color. I mean, Sanjay you’re a little bit closer to it, especially on the banking side, but also it’s the — Alex’s question around international.

Sanjay Sharma: Yes. So first of all, a great question. I really appreciate asking this question. On Professional Services side, Ryan and Sean, they also called out, but we are engaging with our prospects very early now. And we are changing our playbook a bit rather than just leading with our platform change initiatives. Now we are leading with enterprise capabilities, and that is creating a different growth opportunities for us. I would think about how many banks or institutions are looking for platform change every year, not many, but almost every financial institutions is looking for some professional services so that they can keep pace with the change. And that presents significant opportunity for SEI.

And we are seeing that opportunity not just in here in the U.S. market but in the international market as well. That’s like 1/3 of our Professional Services wins, they came in the U.K. market for last quarter. And we are seeing that momentum building up. And that’s where I’m partnering with Michael Lane and Phil in terms of how we can continue to expand that at the enterprise level.

Operator: Our next question comes from the line of Patrick O’Shaughnessy with Raymond James.

Patrick O’Shaughnessy: Another AI question for you. How are you guys thinking about AI potentially disrupting the wealth management advice industry broadly in terms of disintermediating your clients, whether it’s AI native software or something else?

Ryan Hicke: Michael, do you want to take that one?

Michael Lane: Sure. Good to talk to you, Patrick. So that — it’s interesting. This has been a topic of conversation that dates back 25 years from when the first robo-adviser came to play where they thought that coming out with a robotic advice to offer up the advice for 25 basis points or something in that ballpark that would disrupt the financial adviser business. And what they found over time was that the robo advice marketplace didn’t work. It wasn’t a good B2C. It needed to actually be a B2B fill or a B2C2B or whatever, but it was it didn’t actually do what people expected it to do, which was to take over the financial adviser business.

AI will supplement and make advisers more efficient. It will enable advisers to have I think, a greater ability to serve more clients in a more efficient way. And when you look at the statistics about what’s happening in the wealth marketplace where there’s going to be a shortage of financial advisers, we’re going to need AI in order to be more efficient in the wealth space to serve more people. The demand for advice is increasing, the number of advisers is decreasing. And so we have to actually use AI in the wealth marketplace to serve more. So I don’t see it disintermediating. I’ve been involved in that question for a long, long time.

I think that at the end of the day, when people start to achieve a reasonable amount of wealth, they want to talk to a human being. It will supplement the advice that’s given though.

Patrick O’Shaughnessy: All right. Very helpful. And then institutional investors, it sounds like you guys are incrementally more optimistic there. Can you just give a little bit more color on kind of what sort of sales are in your pipeline there? And also kind of how to think about the fee rate impact as you get those new wins on board?

Ryan Hicke: Institutional investors. Just your view on kind of the pipeline there, fee rates moving forward?

Michael Lane: Yes. The thing that I love about the institutional business that we saw the first quarter, although you saw a negative revenue from the institutional business. It was driven by the fact that we helped — as Sean said, we helped a significant client achieve a funding status that enabled them to derisk the portfolio and take it off to the books. I mean that’s what we do in the institutional business on the defined benefits play is we — if we’re successful, we help firms actually achieve their goals that they can derisk. So largely, the first quarter, the event was a result of a single plan that derisked.

When you look forward, where we’re spending a considerable amount of time and energy is continuing to deepen our penetration in areas where there are demographical shifts that will grow the area of OCIO, for instance, endowment and foundation. With a great wealth transfer, not a portion of those assets that will transfer now the estimates are over $100 trillion. When that $100 trillion continues to transition from generation to generation, a portion of that is going to go to not-for-profits, it’s going to go to foundation. That’s going to grow that part of the business that’s going to result in the need for more outsourcing of investment management. And so we are leading more and more into that space.

And so we feel strongly that over the next few quarters, that the business — our institutional business has growth opportunities. We will start to see a rising pipeline in areas like endowment and foundation, health care, and where we have an occasional defined benefit that derisks like we should be celebrating those wins as helping clients achieve their goals. They’re going to happen once in a while in the DB space. But we feel good about where the market is going, the demographics are going and where we’re positioned as one of the largest OCIO providers.

Operator: Our next question comes from Alex Kramm. We have a follow-up question from him. He’s with UBS.

Alex Kramm: Just a very quick follow-up. I don’t think this has come up, but can you just give a quick view on your integrated cash programs? I mean there’s been a little bit more noise around brokers, investment managers and some of their cash programs and new offerings, some large banks have talked about this like optimizing cash program. So just wondering if you could outline? I know it’s a relatively new program for you over the last few years, but how sticky do you think there is? And if there’s any risk from those assets going out or that cash going out of the door at some point?

Michael Lane: Absolutely. We have been reading the same headlines that you have about a certain large bank who came out and talked about how they were going to be looking to optimize cash across different programs. And so we are very aware of the cash management programs and the pressures on cash management programs, both from what’s happened over the last couple of years — last year in the reduction of interest rates and the reduction of yields to the firms that have these cash management programs. As you said, we — ours is relatively young. It’s only about 2.5 years old. Ours was structured differently than many of the competitors that are being discussed in the media.

Ours was structured as a 1% operational [indiscernible] cash, which was meant to cover operational expenses. It wasn’t a percentage of a portfolio. It wasn’t a percentage of a model. It wasn’t something that was more of a fiduciary percentage of somebody’s portfolio. That’s a huge differentiator. And from our perspective, what’s very different as well is when you look at a lot of the different players in the custody business, their cash positions tend to be significantly higher. The average balance is being up to 4%, whereas if you look at our cash balances with a minimum of 1%, the aggregate in totality is still less than 2% that we tend to see across the entirety of our book.

And when you also then look at because of being a diversified business, the total cash revenue from our suite programs is 3% of the gross revenue of SEI. Even in the Advisor business, it’s still only 12% of the total revenues. And so from our perspective, yes, there is pressure that will come on those. It’s not new. There are several companies out there that already have cash optimization programs. where they will take anything above the minimum required to be held and they’ll sweep that into higher-yielding investments. So that’s existed for years.

I think we got a lot of news out of that because there was a large bank that came out and said they were going to use that. I think because AI was put in front of it, also signals something. But at the end of the day, it’s been algorithmic for quite a while, and we haven’t seen any impact on that.

Operator: Thank you. Ladies and gentlemen, I’m showing no further questions in the queue. I would now like to turn the call back over to Ryan for closing remarks.

Ryan Hicke: Thank you again for the discussion today. We appreciate and we are encouraged by the execution and progress we’ve seen early in the year. Have a great evening.

Operator: Ladies and gentlemen, that concludes today’s conference call. Thank you for your participation. You may now disconnect.