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What changed in SEI INVESTMENTS CO's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of SEI INVESTMENTS CO's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+303 added−261 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-21)

Top changes in SEI INVESTMENTS CO's 2023 10-K

303 paragraphs added · 261 removed · 213 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

72 edited+23 added−15 removed55 unchanged
Biggest changeOur business segments are: Private Banks – Provides outsourced investment processing and investment management platforms to banks and trust institutions, independent wealth advisers, and financial advisors worldwide; Investment Advisors – Provides investment management and investment processing platforms to affluent investors through a network of independent registered investment advisors, financial planners, and other investment professionals in the United States; Institutional Investors – Provides Outsourced Chief Investment Officer and Enhanced Chief Investment Officer solutions, including investment management and administrative outsourcing platforms to retirement plan sponsors, healthcare systems, higher education and other not-for-profit organizations worldwide; Investment Managers – Provides investment operations outsourcing platforms to fund companies, banking institutions, traditional and non-traditional investment managers worldwide, and family offices in the United States; and Investments in New Businesses – Focuses on providing investment management solutions to ultra-high-net-worth families residing in the United States; developing network and data protection services; modularizing larger technology platforms into stand-alone components; entering new markets; and conducting other research and development activities.
Biggest changeOur business segments are: Private Banks – Provides outsourced investment processing and investment management platforms to banks and trust institutions, independent wealth advisers, and financial advisors worldwide; Investment Advisors – Provides investment management and investment processing platforms to affluent investors through a network of independent registered investment advisors, financial planners, and other investment professionals in the United States; Institutional Investors – Provides Outsourced Chief Investment Officer solutions, including investment management and administrative outsourcing platforms to retirement plan sponsors, healthcare systems, higher education and other not-for-profit organizations worldwide; Investment Managers – Provides investment operations outsourcing platforms to fund companies, banking institutions, traditional and non-traditional investment managers worldwide, and family offices in the United States; and Investments in New Businesses – Focuses on providing investment management solutions to ultra-high-net-worth families residing in the United States; developing network and data protection services; modularizing larger technology platforms into stand-alone components; entering new markets; and conducting other research and development activities. 7 The percentage of consolidated revenues generated by our business segments for the last three years was: 2023 2022 2021 Private Banks 26 % 29 % 26 % Investment Advisors 23 % 23 % 25 % Institutional Investors 15 % 16 % 18 % Investment Managers 35 % 31 % 30 % Investments in New Businesses 1 % 1 % 1 % 100 % 100 % 100 % Private Banks We provide investment processing outsourcing solutions to institutional and private-client wealth managers across a global wealth management marketplace, including banks, trust companies, independent wealth advisers, investment advisors, financial planners, and other financial services firms.
This flexibility enables us to adapt sales and client-onboarding processes for virtual engagement, delivery, and operations. 3 • We are committed to bringing new solutions to our markets. We are committed to bringing new solutions to our markets. We develop and nurture new business initiatives that we believe present opportunities for longer-term growth.
This flexibility enables us to adapt sales and client-onboarding processes for virtual engagement, delivery, and operations. 3 • We are committed to bringing new solutions to our markets. We develop and nurture new business initiatives that we believe present opportunities for longer-term growth.
These subsidiaries include: • SEI Investments Distribution Co., or SIDCO, a broker-dealer registered with the SEC under the Securities Exchange Act of 1934 and a member of the Financial Industry Regulatory Authority, Inc., or FINRA; • SEI Investments Management Corporation, or SIMC, an investment advisor registered with the SEC under the Investment Advisers Act of 1940 and with the Commodity Futures Trading Commission, or CFTC, under the Commodity Exchange Act; • SEI Private Trust Company, or SPTC, a limited purpose federal thrift chartered and regulated by the Office of the Comptroller of the Currency; • SEI Trust Company, or STC, a Pennsylvania trust company, regulated by the Pennsylvania Department of Banking and Securities; • SEI Institutional Transfer Agent, Inc., or SITA, a transfer agent registered with the SEC under the Securities Exchange Act of 1934. • SEI Investments (Europe) Limited, or SIEL, an investment manager and financial institution subject to regulation by the Financial Conduct Authority of the United Kingdom; • SEI Investments Canada Company, or SEI Canada, an investment fund manager that has various other capacities that is regulated by the Ontario Securities Commission and various provincial authorities; • SEI Investments Global, Limited, or SIGL, a management company for Undertakings for Collective Investment in Transferable Securities, or UCITS, and for Alternative Investment Funds, or AIFs, that is regulated primarily by the Central Bank of Ireland, or CBI; • SEI Investments - Global Fund Services, Ltd., or GFSL, an authorized provider of administration services for Irish and non-Irish collective investment schemes that is regulated by the CBI; • SEI Investments - Depositary and Custodial Services (Ireland) Limited, or D&C, an authorized provider of depositary and custodial services that is regulated by the CBI; • SEI Investments - Luxembourg S.A., or SEI Lux, a professional of the specialized financial sector subject to regulation by the Commission de Surveillance du Secteur Financier of the Grand Duchy of Luxembourg; • SEI Investments Global (Cayman), Ltd., a full mutual fund administrator that is regulated by the Cayman Island Monetary Authority; and • SEI Investments (South Africa) (PTY) Limited, a Private Company that is a licensed Financial Service Provider regulated by the Financial Sector Conduct Authority.
These subsidiaries include: • SEI Investments Distribution Co., or SIDCO, a broker-dealer registered with the SEC under the Securities Exchange Act of 1934 and a member of the Financial Industry Regulatory Authority, Inc., or FINRA; • SEI Investments Management Corporation, or SIMC, an investment advisor registered with the SEC under the Investment Advisers Act of 1940 and with the Commodity Futures Trading Commission, or CFTC, under the Commodity Exchange Act; • SEI Private Trust Company, or SPTC, a limited purpose federal thrift chartered and regulated by the Office of the Comptroller of the Currency; • SEI Trust Company, or STC, a Pennsylvania trust company, regulated by the Pennsylvania Department of Banking and Securities; • SEI Institutional Transfer Agent, Inc., or SITA, a transfer agent registered with the SEC under the Securities Exchange Act of 1934. • SEI Investments (Europe) Limited, or SIEL, an investment manager and financial institution subject to regulation by the Financial Conduct Authority of the United Kingdom; • SEI Investments Canada Company, or SEI Canada, an investment fund manager that has various other capacities that is regulated by the Ontario Securities Commission and various provincial authorities; 11 • SEI Investments Global, Limited, or SIGL, a management company for Undertakings for Collective Investment in Transferable Securities, or UCITS, and for Alternative Investment Funds, or AIFs, that is regulated primarily by the Central Bank of Ireland, or CBI; • SEI Investments - Global Fund Services, Ltd., or GFSL, an authorized provider of administration services for Irish and non-Irish collective investment schemes that is regulated by the CBI; • SEI Investments - Depositary and Custodial Services (Ireland) Limited, or D&C, an authorized provider of depositary and custodial services that is regulated by the CBI; • SEI Investments - Luxembourg S.A., or SEI Lux, a professional of the specialized financial sector subject to regulation by the Commission de Surveillance du Secteur Financier of the Grand Duchy of Luxembourg; • SEI Investments Global (Cayman), Ltd., a full mutual fund administrator that is regulated by the Cayman Island Monetary Authority; and • SEI Investments (South Africa) (PTY) Limited, a Private Company that is a licensed Financial Service Provider regulated by the Financial Sector Conduct Authority.
We primarily serve retirement plan sponsors, healthcare systems, higher education, not-for-profit organizations, and other institutional asset owners in the United States, Canada, the United Kingdom, continental Europe, the Middle East, South Africa, and East Asia. SEI’s Outsourced Chief Investment Officer (OCIO) platform supports institutional investors who delegate investment management decisions through a flexible implementation model.
We primarily serve retirement plan sponsors, healthcare systems, higher education, not-for-profit organizations, and other institutional asset owners in the United States, Canada, the United Kingdom, continental Europe, South Africa, and East Asia. SEI’s Outsourced Chief Investment Officer (OCIO) platform supports institutional investors who delegate investment management decisions through a flexible implementation model.
Through our integrated or unbundled solutions, we help advisors reduce risk, improve quality and gain operational efficiencies that enable them to devote more of their resources to growing their businesses and achieving better financial outcomes for their clients. Advisors are responsible for the investor relationship, including financial plan creation, investment strategy implementation, and customer education and servicing.
Through our integrated or unbundled solutions, we help advisors reduce risk, improve quality and gain operational efficiencies that enable them to devote more of their resources to growing their businesses and achieving better financial outcomes for their clients. 8 Advisors are responsible for the investor relationship, including financial plan creation, investment strategy implementation, and customer education and servicing.
We believe the advanced capabilities of SWP will enable us to significantly extend and enhance the services we offer to clients and expand SEI’s addressable markets. The decline in research and development expenditures in 2022 was primarily due to decreased spending related to the One SEI strategy to modularize and leverage technologies across the company.
We believe the advanced capabilities of SWP will enable us to significantly extend and enhance the services we offer to clients and expand SEI’s addressable markets. The decline in research and development expenditures in 2023 and 2022 was primarily due to decreased spending related to the One SEI strategy to modularize and leverage technologies across the company.
Enabled by the SEI Wealth Platform, these services include front-office investment management and investor collaboration capabilities, middle-office administrative outsourcing, and back-office processing and custody services. • Customized Investment Management Programs . We provide advisors with an array of investment programs to customize portfolios for their personal or institutional investors.
Enabled by the SEI Wealth Platform, these services include front-office investment management and end-investor collaboration capabilities, middle-office administrative outsourcing, and back-office processing and custody services. • Customized Investment Management Programs . We provide advisors with an array of investment programs to customize portfolios for their personal or institutional investors.
Penalties, fines and changes to business processes sought by regulatory authorities have increased substantially over the last several years, and certain regulators have been more likely in recent years to commence enforcement actions or to advance or support legislation targeted at the financial 11 services industry.
Penalties, fines and changes to business processes sought by regulatory authorities have increased substantially over the last several years, and certain regulators have been more likely in recent years to commence enforcement actions or to advance or support legislation targeted at the financial services industry.
At January 31, 2023, we employed approximately 100 sales representatives who operate from offices located throughout the United States, Canada, the United Kingdom, continental Europe, South Africa, Asia, and other locations. Customers In 2022, no single customer accounted for more than 10% of revenues in any business segment. 10 Regulatory Considerations We conduct our operations through several regulated wholly-owned subsidiaries.
At January 31, 2024, we employed approximately 100 sales representatives who operate from offices located throughout the United States, Canada, the United Kingdom, continental Europe, South Africa, Asia, and other locations. Customers In 2023, no single customer accounted for more than 10% of revenues in any business segment. Regulatory Considerations We conduct our operations through several regulated wholly-owned subsidiaries.
These solutions include investment strategies, customized asset management programs, and SEI-sponsored investment management products, as well as other consultative, operational, and technology components. We offer these solutions to wealth managers, investment advisors, and other financial intermediaries as part of a comprehensive asset management program for their investors, as well as directly to institutional investors and ultra-high-net worth investors.
These solutions include investment strategies, customized asset management programs, and SEI-sponsored and third-party investment management products, as well as other consultative, operational, and technology components. We offer these solutions to wealth managers, investment advisors, and other financial intermediaries as part of a comprehensive asset management program for their investors, as well as directly to institutional investors and ultra-high-net worth investors.
SEI’s four core business segments provide outsourcing services to banks, investment advisors, investment managers and institutional investors. We serve a broad range of client types of all sizes and complexity, including 10 of the top 20 U.S. banks and 49 of the top 100 investment managers worldwide.
SEI’s four core business segments provide outsourcing services to banks, investment advisors, investment managers and institutional investors. We serve a broad range of client types of all sizes and complexity, including 10 of the top 20 U.S. banks and 48 of the top 100 investment managers worldwide.
Our outsourcing solutions accommodate investment managers of all sizes and complexity, from the unique needs of emerging and start-up managers up to the complex needs of global, multi-asset hybrid managers. Our capabilities include data and information management and analytics; investment operations; regulatory and compliance support; fund administration and fund accounting; investor reporting; distribution support; and middle office services.
Our outsourcing solutions accommodate investment managers of all sizes and complexities, from the unique needs of emerging and start-up managers to the complex needs of global, multi-asset hybrid managers. Our capabilities include data and information management and analytics; investment operations; regulatory and compliance support; fund administration, fund accounting and depository services; investor reporting; distribution support; and middle office services.
In addition, see the discussion of governmental regulations in Item 1A, Risk Factors for a description of the risks that the current regulatory regimes and proposed regulatory changes may present for our business. 12
In addition, see the discussion of governmental regulations in Item 1A, Risk Factors for a description of the risks that the current regulatory regimes and proposed regulatory changes may present for our business. 13
Revenues for non-managed assets are earned as a percentage of average daily assets processed. 8 We compete with other custodians and providers of advisor technology products, money managers (both active and passive), turnkey asset management platform providers, and broker-dealers with affiliated advisor networks.
Revenues are primarily earned as a percentage of average daily assets under management. Revenues for non-managed assets are earned as a percentage of average daily assets processed. We compete with other custodians and providers of advisor technology products, money managers (both active and passive), turnkey asset management platform providers, and broker-dealers with affiliated advisor networks.
In addition, a portion of the revenues for this segment is earned as account servicing fees. As of December 31, 2022, we had relationships with 550 investment management companies, alternative investment managers, family offices and private wealth advisors. Our competitors vary according to the asset class or solutions provided and the domiciles in which they operate.
In addition, a portion of the revenues for this segment is earned as account servicing fees. As of December 31, 2023, we had relationships with 545 investment management companies, alternative investment managers, family offices and private wealth advisors. Our competitors vary according to the asset class or solutions provided and the domiciles in which they operate.
Our wealth and investment programs are designed to be attractive to affluent or high-net-worth individual investors and small to medium-sized institutional retirement plans. These programs include goals-based strategies, SEI-sponsored mutual fund models, separately-managed account programs, and curated third-party investment products, including exchange-traded funds.
Our wealth and investment programs are designed to be attractive to affluent or high-net-worth individual investors and small to medium-sized institutional retirement plans. These programs include goals-based strategies, SEI-sponsored mutual fund models, separately-managed account programs, and curated third-party investment products, including ETFs.
As of December 31, 2022, we have asset management distribution relationships in this segment with banks, wealth managers, and other financial services firms, including 87 clients who had at least $5.0 million each in customer assets invested in our programs.
As of December 31, 2023, we have asset management distribution relationships in this segment with banks, wealth managers, and other financial services firms, including 92 clients who had at least $5.0 million each in customer assets invested in our programs.
An additional $83.8 billion in assets is managed by our unconsolidated affiliate LSV Asset Management (LSV), a registered investment advisor (RIA) that specializes in value equity management for its clients. Investment management revenues are earned primarily as a percentage of net assets under management.
An additional $89.3 billion in assets is managed by our unconsolidated affiliate LSV Asset Management (LSV), a registered investment advisor (RIA) that specializes in value equity management for its clients. Investment management revenues are earned primarily as a percentage of net assets under management.
We will continue to add new asset managers, asset owners, family offices, and private wealth advisors as clientele, and grow our existing client relationships and expand into new markets. Contracts for fund administration outsourcing services generally have terms ranging from three to five years, and fees are earned primarily as a percentage of assets under management and administration.
We will continue to add new asset managers, asset owners, family offices, and private wealth advisors as clientele, and grow our existing client relationships while expanding into new markets. Contracts for the outsourcing services we provide generally have terms ranging from three to five years, and fees are earned primarily as a percentage of assets under management and administration.
This segment also includes costs associated with other business and research initiatives, including managed security services through SEI Sphere, the modularization of larger technology platforms, and a family wealth management solution offering flexible family-office type services through a highly personalized solution utilizing a goals-based planning process.
This segment also includes costs associated with managed security services through SEI Sphere, the modularization of larger technology platforms, and a family wealth management solution offering flexible family-office type services through a highly personalized solution utilizing a goals-based planning process.
Investors outsource some or all investment management functions based on their preferred governance structure, business needs, and financial objectives. Our Enhanced Chief Investment Officer (ECIO) platform supports internal investment teams through SEI Novus SM , a global portfolio intelligence tool, and SEI’s comprehensive investment processing, shadow accounting, and data and workflow management.
Investors outsource some or all investment management functions based on their preferred governance structure, business needs, and financial objectives. Our Unbundled OCIO platform supports internal investment teams through SEI Novus SM , a global portfolio intelligence tool, and SEI’s comprehensive investment processing, shadow accounting, and data and workflow management.
These programs leverage more than four decades of experience with manager research and advice, asset allocation, and portfolio construction. We believe that we can provide flexible and better solutions at a lower cost of ownership and quicker speed to market through outsourcing.
These programs leverage more than four decades of experience with manager research and advice, asset allocation, and portfolio construction. We believe that we can provide flexible and better solutions and quicker speed to market through outsourcing.
Our competitors include in-house information technology organizations, as well as Fidelity National Information Services, Inc. (FIS), Fi-Tek, and SS&C Innovest in the United States, and FNZ UK Ltd. and Avaloq in the United Kingdom. This segment also provides investment management programs to wealth managers and financial services intermediaries in North America, Europe, and Asia.
Our competitors include in-house information technology organizations, as well as wealth management technology service providers such as Fidelity National Information Services, Inc. (FIS), Fi-Tek, SS&C Innovest, FNZ UK Ltd. and Avaloq. This segment also provides investment management programs to wealth managers and financial services intermediaries in North America, Europe, and Asia.
We acquired Atlas Master Trust from Capita in 2021 to expand our competitive presence in the United Kingdom’s growing market for institutional investor services. We compete with various other providers depending on the prospective client’s national jurisdiction, business type, size, complexity and unique requirements.
We acquired Atlas Master Trust from Capita in 2021 and National Pensions Trust from its parent company XPS Pensions Group in 2023 to expand our competitive presence in the United Kingdom’s growing market for institutional investor services. We compete with various other providers depending on the prospective client’s national jurisdiction, business type, size, complexity and unique requirements.
We also maintain and regularly exercise enterprise-wide business continuity tests. During the pandemic-driven shutdown of onsite operations, we were able to maintain operational integrity for clients and seamlessly transition to a remote work environment for our global workforce.
We also maintain and regularly exercise enterprise-wide business continuity tests. During the pandemic-driven shutdown of onsite operations, we were able to maintain operational integrity for clients and seamlessly transition to a remote work environment for our global workforce. More recently, we were able to welcome back our workforce to our offices without disruption to our clients.
Investment management programs include strategies customized to support an investor’s organizational or personal objectives, risk tolerances and other considerations, such as tax or environmental, social, and governance (ESG) preferences. A typical long-term personal investor may have a series of goals, each with a specific investment strategy, appropriately diversified both globally and by asset class.
Investment management programs include strategies customized to support an investor’s organizational or personal objectives, risk tolerances and other considerations. A typical long-term personal investor may have a series of goals, each with a specific investment strategy, appropriately diversified both globally and by asset class.
The core principles of SEI diversity, equity, and inclusion work stem from the company’s inherent desire to welcome, respect, value and care for all individuals in our SEI community on a human level, in their collective and unique identities. In 2022, we launched a multiyear initiative to continue our efforts for diversity, equity, and inclusion (DEI).
Our core principles of diversity, equity, and inclusion (DEI) work stem from the company’s inherent desire to welcome, respect, value and care for all individuals in our SEI community on a human level, in their collective and unique identities.
We pursue growth by focusing on four critical elements: turning challenges into opportunities, driving mutual growth, meaningfully engaging clients and employees, and leveraging our financial strength. • Turn challenges into opportunities . For more than 50 years, we have delivered solutions that anticipate and address complex business challenges.
Business Model Our growth strategies are anchored in our proven business model. We pursue growth by focusing on four critical elements: turning challenges into opportunities, driving mutual growth, meaningfully engaging clients and employees, and leveraging our financial strength. • Turn challenges into opportunities . For more than 55 years, we have delivered solutions that anticipate and address complex business challenges.
We also support fund structures using standalone private or public fund vehicles or our SEC-registered U.S. mutual fund and ETF series trust platform, The Advisors’ Inner Circle Fund ® . We also offer a comprehensive suite of technology- and operationally-enabled services for ultra-high-net-worth families, their trusted advisors, and the institutions that service the family office market.
We support fund structures using standalone private or public fund vehicles or leveraging our SEC-registered U.S. ’40 Act series trust platform, The Advisors’ Inner Circle Fund ® . We offer a comprehensive suite of technology- and operationally-enabled services for ultra-high-net-worth families, their trusted advisors, and the institutions who serve the family office market.
Investment strategies are typically implemented with SEI-sponsored investment products, including mutual funds, collective investment products, alternative investment portfolios and separately-managed accounts. Through our wholly-owned subsidiaries, we serve as sponsor, administrator, transfer agent, investment advisor, distributor, and shareholder servicer for many of these products.
Investment strategies are typically implemented with investment products that include mutual funds, collective investment products, ETFs, alternative investments and separately-managed accounts. Through our wholly-owned subsidiaries, we serve as sponsor, administrator, transfer agent, investment advisor, distributor, and shareholder servicer for many of these products.
Enabled by SEI's Archway Platform SM , we handle complex partnership, portfolio, and corporate accounting alongside bill payment, investment management and 9 multi-asset class data aggregation for alternative and traditional investment portfolios. Our family office services are designed to help family offices and advisors to wealthy families serve their ultra-high-net-worth clients more efficiently.
Enabled by SEI's Archway Platform SM , we handle complex partnership, portfolio, and corporate accounting alongside bill payment, investment management, and multi-asset class data aggregation for alternative and traditional investment portfolios. Our family office services are designed to help family offices and their advisors serve the ultra-high-net-worth community in a more efficient manner.
Our affinity groups are self-created, self-run, and self-sustained with a global reach. • SEI Black Professionals Network: Fosters positive change and supports the advancement of Black professionals • SEI Cares: Sponsors and identifies volunteer opportunities and awareness events and oversees an employee-led 501(c)(3) organization • SEI Diversity and Inclusion: Supports our efforts to attract, develop, and retain employees from diverse backgrounds and provides educational events for all of SEI companywide • SEI Green Team: Provides environmental education focused on creating a sustainable future • SEI Pride: Supports SEI's LGBTQ+ community • SEI Salutes: Supports veterans and their families in the transition from military service to civilian life • SEI Women’s Network: Seeks to inspire and support the professional growth of women both at SEI and beyond • Somos SEI: Honors Hispanic and Latin Americans • Wellness Team: Promotes employees’ physical, financial, and social well-being Workplace Health and Safety The health and safety of our global workforce remains a top priority.
Our affinity groups are self-created, self-run, and self-sustained with a global reach. • SEI Black Professionals Network: Fosters positive change and supports the advancement of Black professionals • SEI Cares: Sponsors and identifies volunteer opportunities and awareness events and oversees an employee-led 501(c)(3) organization • SEI enABLE: Provides resources and support for individuals who identify as and/or who support individuals who identify as Neurodivergent and/or as a person with dis/Abilities (PWD) • SEI Green Team: Provides environmental education focused on creating a sustainable future • SEI Pride: Supports SEI's LGBTQ+ community • SEI Salutes: Supports veterans and their families in the transition from military service to civilian life • SEI Women’s Network: Seeks to inspire and support the professional growth of women both at SEI and beyond • Somos SEI: Honors Hispanic and Latin Americans • Wellness Team: Promotes employees’ physical, financial, and social well-being Workplace Health and Safety The health and safety of our global workforce remains a top priority.
To enhance our capabilities, scale our competitive presence, or enable strategic growth, we pursue selective acquisitions. • Engage clients and employees. We drive a client-first culture and strive to forge intimate, enduring client relationships, be a thought leader in the markets we serve, and craft “win-win” pricing models.
To enhance our capabilities, scale our competitive presence, or enable strategic growth, we pursue selective acquisitions. • Engage clients and employees. We foster an open, collaborative, client-first culture to nurture a talented and engaged workforce, forge intimate, enduring client relationships, be a thought leader in the markets we serve, and craft “win-win” pricing models.
The program provides an in-depth immersion into the core methodology of design thinking, as well as the opportunity to immediately apply the mindset and tools and take this learning to everyday practices.
Our Design Thinking program, which aims to foster employee creativity and innovation, provides an in-depth immersion into the core methodology of design thinking, as well as the opportunity to immediately apply the mindset and tools and take this learning to everyday practices.
As of December 31, 2022, we had significant relationships with 108 clients, including TRUST 3000 relationships with 49 bank and trust institutions in the United States, and SWP relationships with 59 signed banks, independent wealth advisers and other wealth managers located in the United Kingdom and the United States.
As of December 31, 2023, we had significant relationships with 109 clients, including TRUST 3000 ® relationships with 40 bank and trust institutions in the United States, and SWP relationships with 69 signed banks, independent wealth advisers and other wealth managers located in the United Kingdom and the United States.
We foster an open, collaborative culture and strive to nurture a talented and engaged workforce. We balance our investments over the short, medium and long term to serve existing clients, enhance existing solutions, develop new capabilities, expand markets, and keep an eye toward the future to deliver new sources of growth. • Drive mutual growth.
We balance our investments over the short, medium and long term to serve existing clients, enhance existing solutions, develop new capabilities, expand markets, and keep an eye toward the future to deliver new sources of growth. • Drive mutual growth.
Our continued commitment to employee education includes the introduction of new programs and learning content that suit their needs and development, along with the knowledge to fulfill their roles at SEI.
Training and Development We provide multiple tools to our employees to support their growth and professional development. Our continued commitment to employee education includes the introduction of new programs and learning content that suit their needs and development, along with the knowledge to fulfill their roles at SEI.
Our research and development expenditures for the last three years were: (all dollar amounts in thousands) 2022 2021 2020 Research and development expenditures $ 144,459 $ 168,519 $ 175,456 Capitalization of costs incurred in developing computer software $ 35,293 $ 26,037 $ 24,119 Research and development expenditures as a percentage of revenues 7.3 % 8.8 % 10.4 % The majority of our research and development spending is related to adding capabilities to the SEI Wealth Platform (SWP).
Our research and development expenditures for the last three years were: (all dollar amounts in thousands) 2023 2022 2021 Research and development expenditures $ 137,492 $ 144,459 $ 168,519 Capitalization of costs incurred in developing computer software $ 33,958 $ 35,293 $ 26,037 Research and development expenditures as a percentage of revenues 7.2 % 7.3 % 8.8 % The majority of our research and development spending is related to adding capabilities to the SEI Wealth Platform (SWP) and the development of a new platform for the Investment Managers segment.
We focus on the long term and achieving sustainable growth by delivering enterprise-wide platforms to the markets we serve. We are growing the business through new-name sales, cross-sales, and new platform delivery, as well as entering adjacent markets by delivering existing and new platforms.
We focus on the long term, helping our clients more intelligently deploy their capital and achieving sustainable growth by delivering enterprise-wide platforms to the markets we serve. We are growing the business through new-name sales, cross-sales, and solution delivery, as well as entering adjacent markets by delivering existing and new solutions.
Item 1. Business. Corporate Overview SEI delivers technology and investment solutions that connect the financial services industry. With capabilities across investment processing, operations, and asset management, SEI works with corporations, financial institutions and professionals, and ultra-high-net-worth families to solve problems, manage change and help protect assets–for growth today and in the future.
Item 1. Business. Corporate Overview SEI delivers technology and investment solutions that connect the financial services industry. With capabilities across investment processing, operations, and asset management, SEI works with corporations, financial institutions and professionals, and ultra-high-net-worth families to help drive growth, make confident decisions, and protect futures.
Our solutions provide the advanced operating infrastructure, technologies, and operational skills that are critical to their success in a highly competitive industry, enabling them to navigate constantly changing markets and increasingly complex business challenges. Clients include asset owners and a diverse, sophisticated group of alternative, traditional, and hybrid asset managers including 49 of the top 100 managers worldwide.
Our solutions provide the advanced operational infrastructure, technologies, and skills critical to our clients’ success, enabling their ability to navigate constantly evolving markets and increasingly complex business challenges. Our clients include asset owners and a diverse, sophisticated group of alternative, traditional, and hybrid investment managers including 48 of the top 100 managers worldwide.
We believe SEI’s long-lasting client relationships—some of which span decades—are fundamental to enhancing SEI’s financial strength. We also maintain a focus on employee safety and corporate social responsibility. • Leverage financial strength. We focus on achieving long-term, sustainable revenue and earnings growth. We maintain a strong balance sheet and are committed to research and development.
We believe SEI’s long-lasting client relationships—some of which span decades—are fundamental to enhancing SEI’s financial strength. • Leverage financial strength. We focus on achieving long-term, sustainable revenue and earnings growth. We maintain a strong balance sheet and are committed to research and development. We favor scalable businesses that generate recurring revenues and predictable cash flows.
Other Competitive Advantages Our experience in delivering technology and investment solutions, market leadership position, industry expertise, and proven business model serve as competitive advantages. Other key advantages include: • We are uniquely positioned in the wealth and investment management industry. We provide critical capabilities across technology, operations, and asset management, delivered standalone or combined into comprehensive solutions.
Other key advantages include: • We are uniquely positioned in the wealth and investment management industry. We provide critical capabilities across technology, operations, and asset management, delivered standalone or combined into comprehensive solutions.
PaaS includes software and information processing services, as well as business processing outsourcing services, including back-office operations, accounting, and custodial services. Contracts for TRUST 3000 and SWP services generally range from five to seven years.
Investment processing platforms are offered in Software-as-a-Service (SaaS) or Platform-as-a-Service (PaaS) delivery modes. SaaS includes investment processing software and information processing services. PaaS includes software and information processing services, as well as business processing outsourcing services, including back and middle-office operations, accounting, and custodial services. Contracts for TRUST 3000 ® and SWP services generally range from five to seven years.
As of December 31, 2022, we managed $315.6 billion in assets including: • $163.7 billion invested in fixed-income and equity funds and separately managed account programs; • $141.3 billion invested in collective trust fund programs; and • $10.6 billion invested in liquidity or money market funds.
As of December 31, 2023, we managed $342.7 billion in assets including: • $175.5 billion invested in fixed-income and equity funds and separately managed account programs; • $156.4 billion invested in collective trust fund programs; and • $10.8 billion invested in liquidity or money market funds.
We believe that the competitive environment in which we operate will focus more on capabilities other than portfolio investment expertise. With that in mind, we offer managers solutions to help them gain scale and efficiency; run their businesses more intelligently through data analytics and intuitive online dashboards; and be more responsive to regulatory, investor, and intermediary needs.
With that in mind, we offer managers solutions to help them gain scale and efficiency, run their businesses more intelligently through data analytics and intuitive online dashboards, and allow them to be more responsive to regulatory, investor, and intermediary needs.
Competitors for ECIO services include data analytics software firms and investment data management providers. Fees are primarily earned as a percentage of average assets under management calculated using the average of the four-month ending balances preceding the billing date. At December 31, 2022, we had relationships with 567 institutional clients, which includes clients of SEI Novus.
Competitors for Unbundled OCIO services include data analytics software firms and investment data management providers. Fees are primarily earned as a percentage of average assets under management calculated using the average of the four-month ending balances preceding the billing date.
They also seek to expand services, offer differentiated solutions, improve efficiencies, reduce risk, and better manage their businesses. With relationships across the financial services industry, we're uniquely positioned to meet our clients’ emerging and converging needs, help them make confident decisions and transform their businesses, and capture growth opportunities that increase shareholder value.
With relationships across the financial services industry, we're uniquely positioned to meet our clients’ emerging and converging needs, help them make confident decisions and transform their businesses, and capture growth opportunities that increase shareholder value. Key strategies include: • Transforming how we drive growth.
Clients can manage assets in almost any pooled vehicle, including hedge funds, private equity funds, private debt and real estate funds, open-ended and closed-ended mutual funds, separate accounts, ETFs, CITs, auction funds, UCITS, other offshore vehicles.
Our clients are able to manage assets in almost any manner they are required, including hedge funds, private equity funds, private debt funds, business development companies (BDCs), real estate funds, open-ended and closed-ended mutual funds, interval and tender offer funds, separate accounts, ETFs, CITs, auction funds, UCITS, and other offshore vehicles.
We are headquartered in Oaks, PA and support clients globally from service centers located in the United States, Canada, Ireland, South Africa and the United Kingdom, as well as in continental Europe and East Asia. We were founded in 1968 and became a public company in 1981.
We are headquartered in Oaks, Pennsylvania and support clients globally from service centers primarily located in the United States, United Kingdom, Ireland, Canada, continental Europe, and South Africa. We were founded in 1968 and became a public company in 1981. Mission and Strategy SEI’s mission is to build brave futures SM through the power of connection.
Investments in New Businesses is a fifth segment, focused on research and development for new business initiatives. SEI manages, advises, or administers approximately $1.2 trillion in assets.
Investments in New Businesses is a fifth segment, focused on other businesses, ventures or research and development activities intended to expand our solutions to new or existing markets. SEI manages, advises, or administers approximately $1.4 trillion in assets.
Capabilities span the front, middle, and back office and are designed to support a diverse mix of investors, accounts, and asset types, including portfolio management, client administration, accounting, and investment processing.
Capabilities span the front, middle, and back office and are designed to support a diverse mix of investors, accounts, and asset types, including portfolio management, client administration, accounting, and investment processing. SWP’s open architecture also allows for technology integrations with other SEI capabilities and client systems to enable an integrated and seamless private banking and wealth management experience.
Mission and Strategy SEI’s mission is to build brave futures SM through the power of connection. The needs of wealth managers, investment managers, financial advisors, family offices, and investors continue to converge, particularly among larger firms and investors. They face increasing competitive and market pressures, ever-growing regulations, and the need to replace aging legacy technologies.
The needs of wealth managers, investment managers, financial advisors, family offices, and investors continue to converge, particularly among larger firms and investors. They face increasing competitive and market pressures, ever-growing regulations, and the need to replace aging legacy technologies. They also seek to expand services, offer differentiated solutions, improve efficiencies, reduce risk, and better manage their businesses.
We enable an unbundled approach to delivery through aggregated data sourced from multiple systems and modularizing specific applications into standalone components. We believe this approach, as well as assessing opportunities for mergers and acquisitions, allow us to create flexible, client-responsive solutions, address the complex needs of larger firms, and expand the size of our addressable markets. • Investing in talent.
We believe this approach, as well as assessing opportunities for mergers and acquisitions, allow us to create flexible, client-responsive solutions, address the complex needs of larger firms, and expand the size of our addressable markets. • Investing in talent. The attraction, retention, and development of diverse talent is paramount to continuing to deliver tech-forward solutions to our markets globally.
Key strategies include: • Transforming how we drive growth. We are focused on capitalizing on market trends and connecting addressable market opportunities to deliver the outsourced solutions our markets value. We continuously seek to enhance existing capabilities, create broader solutions, and invest in new ideas for new solutions.
We are focused on capitalizing on market trends and connecting addressable market opportunities to deliver the outsourced solutions our markets value. We continuously seek to enhance existing capabilities, create broader solutions, and invest in new ideas for new solutions. We enable an unbundled approach to delivery through aggregated data sourced from multiple systems and modularizing specific applications into standalone components.
Investment Managers We provide investment operations outsourcing solutions across a global investment management marketplace, including alternative and traditional investment managers, fund companies, sovereign wealth funds and family offices.
At December 31, 2023, we had relationships with 558 institutional clients, which includes clients of SEI Novus. 9 Investment Managers We provide investment operations outsourcing solutions to alternative and traditional investment managers, fund companies, sovereign wealth funds and family offices across a global investment management marketplace.
We have also invested in a comprehensive learning platform to remove the physical barriers of in-person training and provide employees with access to thousands of topical courses, enhancing how employees receive and interact with educational content. Creating a formalized internal mobility program for SEI is a critical component of our talent strategy.
We have also invested in a comprehensive learning 5 platform to remove the physical barriers of in-person training and provide employees with access to thousands of topical courses, enhancing how employees receive and interact with educational content. We are committed to making as much of an investment in recruiting from our current staff as we do recruiting outside our walls.
We can incur higher costs and face greater compliance risks in structuring and operating our businesses to comply with these requirements. Furthermore, a violation of a sanction or embargo program or anti-corruption or anti-money laundering laws and regulations could subject us and our subsidiaries, and individual employees, to regulatory enforcement actions as well as significant civil and criminal penalties.
Furthermore, a violation of a sanction or embargo program or anti-corruption or anti-money laundering laws and regulations could subject us and our subsidiaries, and individual employees, to regulatory enforcement actions as well as significant civil and criminal penalties. 12 Our businesses are also subject to privacy and data protection information security legal requirements concerning the use and protection of certain personal information.
Assets associated with this separate account processing are not included in reported assets under administration. • Investment management platforms provide comprehensive solutions for managing personal and institutional wealth. These platforms include goals-based investment strategies; SEI-sponsored investment products, including mutual funds, collective investment products, alternative investment portfolios, and separately managed accounts; and other market-specific advice, technology, and operational components.
Assets associated with this separate account processing are not included in reported assets under administration. • Investment management platforms provide comprehensive solutions for managing personal and institutional wealth.
We also offer trustee, investment management, and administration services for collective investment trusts (CITs). We enable managers to view their business in a comprehensive and integrated way, providing more insight and control over their business results and risks. We also offer regulatory services that help managers to adhere to an increasingly demanding and global regulatory environment.
We offer trustee, investment management, and administration services for collective investment trusts (CITs), serving the U.S. retirement market. We help our clients view their business in a comprehensive and integrated way, providing insight into potential risks and giving them increased control over their business results.
CEO Ryan Hicke joined more than 2,200 CEOs and presidents in signing the CEO Action for Diversity & Inclusion™, pledging to “ACT ON” supporting a more inclusive workplace for employees, communities, and society at large. Training and Development We provide multiple tools to our employees to support their growth and professional development.
CEO Ryan Hicke joined more than 2,200 CEOs and presidents in signing the CEO Action for Diversity & Inclusion TM , pledging to “ACT ON” and supporting a more inclusive workplace for employees, communities, and society at large. • We joined the DEI committee of the Investment Company Institute, the leading association representing regulated investment funds, and we align our DEI work with their DEI framework. • We contributed to and partnered with nonprofit organizations focused on global diversity and creating opportunities for youth of color.
Our focus on redefining the future of work at SEI includes promoting flexibility and work/life integration for our employees. Acting with a sense of urgency, as well as encouraging and rewarding positive risk-taking and productive debate, we are able to deliver world-class service and solutions for our clients. Business Model Our growth strategies are anchored in our proven business model.
We strive to cultivate an environment where our behavior aligns with our corporate values of courage, integrity, collaboration, inclusion, connection, and fun. Our focus on promoting flexibility and work/life integration for our employees, acting with a sense of urgency, and encouraging and rewarding positive risk-taking and productive debate enable us to deliver world-class service and solutions for our clients.
We help advisors manage and grow their businesses by offering consultative practice management services, including access to our business transition services, case management expertise, thought leadership, and marketing and growth programs. We had business relationships with approximately 7,400 financial advisors at December 31, 2022.
We help advisors manage and grow their businesses by offering consultative practice management services, including access to our business transition services, case management expertise, thought leadership, and marketing and growth programs. This business is primarily based on approximately 2,300 investment advisors who each have a minimum of $5.0 million in customer assets invested in our programs.
We favor scalable businesses that generate recurring revenues and predictable cash flows. SEI’s revenue is highly recurring; we generate strong cash flow, and we have a long history of profitability. We return capital to shareholders through stock repurchases and paid dividends.
SEI’s revenue is highly recurring; we generate strong cash flow, and we have a long history of profitability. We return capital to shareholders through stock repurchases and paid dividends. Other Competitive Advantages Our experience in delivering technology and investment solutions, market leadership position, industry expertise, operational footprint, and proven business model serve as competitive advantages.
The attraction, retention, and development of diverse talent is paramount to continuing to deliver tech-forward solutions to our markets globally. We continue to evaluate opportunities to competitively position SEI as an employer of choice, including compensation and training and development programs.
We continue to evaluate opportunities to competitively position SEI as an employer of choice, including compensation, training, and development programs. We look to 2 leverage the talent, technology, and capabilities across the company for the benefit of our clients and to expand opportunities for our employees. • Igniting our culture.
We believe clients select our full-service solutions for the flexibility, quality, and ability to support their diverse and often bespoke business needs across multiple product types and structures, investment strategies, and asset classes.
We believe clients select our integrated operational infrastructure and solutions because they are scalable, flexible and can effectively support their diverse and often bespoke business needs across multiple product types and structures, investment strategies, and asset classes. SEI has a global operating footprint which enables us to service funds in all major jurisdictions.
Research and Development We continue to devote significant resources to research and development, including expenditures for new technology platforms, enhancements to existing technology platforms and new investment products and services.
Reported in this segment is also our recent acquisition of Altigo, a cloud-based technology platform that provides inventory, e-subscription, and reporting capabilities for alternative investments. 10 Research and Development We continue to devote significant resources to research and development, including expenditures for new technology platforms, enhancements to existing technology platforms and new investment products and services.
The Gallup © CliftonStrengths assessment program also continues to help employees understand and build upon their unique strengths and develop as leaders. 5 Leadership Development Our “5-15 Leadership Program” brings together–in cohorts of approximately 15 employees–emerging and experienced leaders from across SEI, to learn, grow, and be challenged to think differently about the future of our business.
The Gallup © CliftonStrengths assessment program also continues to help employees understand and build upon their unique strengths and develop as leaders.
This effort supports our global investment stewardship strategy, building upon a decade of collaborative shareholder engagement in our Irish Funds complex. Business Segments Overview Business segments are generally organized around our target markets. Financial information about each business segment is contained in Note 12 to the Consolidated Financial Statements.
We aim to manage our greenhouse gas emissions, effectively manage our waste, and work to benefit the local watershed near our corporate headquarters. Business Segments Overview Business segments are generally organized around our target markets. Financial information about each business segment is contained in Note 12 to the Consolidated Financial Statements.
We’re committed to making as much of an investment in recruiting from our current staff as we do recruiting outside our walls. By moving around our company, employees gain experience, skills, perspective, and knowledge about SEI to help drive their professional growth. We have also continued our Design Thinking program, which aims to foster employee creativity and innovation.
By moving around our company through a formalized internal mobility program, employees gain experience, skills, perspective, and knowledge about SEI to help drive their professional growth.
We also continue to introduce tools for our clients to use in building portfolios for their clients that meet their desired social impact. In addition to integrating sustainability into our investment research and processes, we aim to bring dedicated sustainable investment solutions to our clients through mutual funds and customized solutions.
The degree to which ESG considerations affect our decisions varies and is considered on a case-by-case basis. In addition to integrating sustainability into our investment research and processes, we aim to bring dedicated sustainable investment solutions to our clients through investment products and customized solutions.
At January 31, 2023, we had 4,805 full-time and 32 part-time employees. Employee unions do not represent any of our employees. Diversity, Equity, and Inclusion SEI is committed to creating and maintaining an inclusive workforce and culture. We believe it is imperative to have diversity of thought and talent in order to address our markets' and clients' needs.
At January 31, 2024, we had 5,061 full-time and 28 part-time employees. Employee unions do not represent any of our employees. Diversity, Equity, and Inclusion SEI strives to create an environment where employees, clients, and strategic partners feel welcomed, heard, valued, and respected.
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We look to 2 leverage the talent, technology, and capabilities across the company for the benefit of our clients and to expand opportunities for our employees. • Igniting our culture. We strive to cultivate an environment where our behavior aligns with our corporate values of courage, integrity, collaboration, inclusion, connection, and fun.
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An important component to achieving our growth goals is solidifying the foundation from which we launch new businesses that can contribute to our success. In order to consistently generate new business ideas, test, and launch them, our Investments in New Businesses segment explores opportunities to incubate and accelerate those new ideas and cultivate innovation that drives top-line growth.
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For example, SEI Sphere, which provides managed security services, helps clients optimize, secure, and support their complex and evolving technology operations needs.
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Our Corporate Development team focuses on the development, execution, and integration of potential strategic transactions to accelerate growth.
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Our Private Wealth Management business leverages SEI’s technology and investment capabilities and expertise for the ultra-high-net worth market, and SEI Ventures, our corporate venture capital program, seeks to accelerate the launch of new platforms or drive new product development opportunities.
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These platforms include goals-based investment strategies; SEI-sponsored and third-party investment products, including ETFs, mutual funds, collective investment products, alternative investment portfolios, and separately managed accounts; and other market-specific advice, technology, and operational components.
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We value the contributions that come from a talented workforce informed by their diverse backgrounds, experiences and ideas. In keeping with that belief, we are proud to be an equal opportunity employer.
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We are committed to ensuring that no element of anyone’s diverse identity impedes them from accessing the opportunities and resources they need to achieve their fullest potential. Our community connects people, regardless of their race, sex, gender, religion, ethnicity, national origin, sexual orientation, dis/Ability, life experience, and viewpoints.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeEach of these objectives could be adversely affected by any failure on the part of management to: • devise effective business plans and strategies; • effectively implement business decisions; • institute controls that appropriately address the risks associated with business activities and any changes in those activities; • offer products and services that are appropriately priced, meet the changing expectations of clients and customers and are delivered in ways that enhance client satisfaction; • allocate capital in a manner that promotes long-term stability to enable us to build and invest in market-leading technologies and products, even in a highly-stressed environment; • adequately respond to regulatory requirements; • appropriately address shareholder concerns; • react quickly to changes in market conditions or market structures, or • develop and enhance the operational, technology, risk, financial and managerial resources necessary to grow and manage our business.
Biggest changeEach of these objectives could be adversely affected by any failure on the part of management to: • devise effective business plans and strategies; • effectively implement business decisions; • institute controls that appropriately address the risks associated with business activities and any changes in those activities; • offer products and services that are appropriately priced, meet the changing expectations of clients and customers and are delivered in ways that enhance client satisfaction; • allocate capital in a manner that promotes long-term stability to enable us to build and invest in market-leading technologies and products, even in a highly-stressed environment; • adequately respond to regulatory requirements; • appropriately address shareholder concerns; • react quickly to changes in market conditions or market structures, or • develop and enhance the operational, technology, risk, financial and managerial resources necessary to grow and manage our business. 21 Additionally, our Board of Directors plays an important role in exercising appropriate oversight of management’s strategic decisions, and a failure by our Board of Directors to perform this function could also impair our results of operations.
In the event these third parties fail to provide these services adequately or in a timely manner, including as a result of errors in their systems or events beyond their control, or refuse to provide these services on terms acceptable to us or at all, and we are not able to find and implement 13 timely suitable alternatives, we may no longer be able to provide certain services to customers, which could expose us and our clients to information security, financial, compliance and reputational risks, among others, and have a material adverse effect on our results of operations and financial condition.
In the event these third parties fail to provide these services adequately or in a timely manner, including as a result of errors in their systems or events beyond their control, or refuse to provide these services on terms acceptable to us or at all, and we are not able to find and implement timely suitable alternatives, we may no longer be able to provide certain services to customers, which could expose us and our clients to information security, financial, compliance and reputational risks, among others, and have a material adverse effect on our results of operations and financial condition.
Inefficiencies or operational failures, including temporary or permanent loss of customer data, damaged software codes, delayed or inaccurate processing of transactions, insufficient Internet connectivity, or inadequate storage and compute capacity, could diminish the quality of our products, services, and user experience resulting in contractual liability, claims by customers and other third parties, regulatory actions, damage to our reputation, and loss of current and potential users, each of which may adversely impact our consolidated financial statements.
Inefficiencies or operational failures, including temporary or permanent loss of customer data, damaged software codes, delayed or inaccurate processing of transactions, insufficient Internet connectivity, or inadequate storage and compute capacity, could diminish the quality of our products, services, and user experience resulting in contractual liability, claims by customers and other third parties, regulatory actions, damage to our 17 reputation, and loss of current and potential users, each of which may adversely impact our consolidated financial statements.
These procedures may utilize unobservable inputs that are not gathered from any active markets and involve considerable judgment. If these valuations prove to be inaccurate, our revenues and earnings from assets under management could be adversely affected. 17 Risks Related to Our Legal, Regulatory and Compliance Environment The financial services industry is subject to extensive regulations that impact our business.
These procedures may utilize unobservable inputs that are not gathered from any active markets and involve considerable judgment. If these valuations prove to be inaccurate, our revenues and earnings from assets under management could be adversely affected. Risks Related to Our Legal, Regulatory and Compliance Environment The financial services industry is subject to extensive regulations that impact our business.
Our overall profitability would be negatively affected if investments and expenses associated with such growth are not matched or exceeded by the revenues that are derived from such investment or growth. Expansion may also create a need for additional compliance, risk management and internal control procedures, and often involves the hiring of 20 additional personnel to monitor such procedures.
Our overall profitability would be negatively affected if investments and expenses associated with such growth are not matched or exceeded by the revenues that are derived from such investment or growth. Expansion may also create a need for additional compliance, risk management and internal control procedures, and often involves the hiring of additional personnel to monitor such procedures.
A number of our clients have frozen or 14 curtailed their defined benefit plans resulting in decreased revenues and earnings related to this market segment. We have also experienced increasing fee sensitivity and competition for certain fiduciary management services due to investor preferences toward lower-priced investment products including passive management approaches.
A number of our clients have frozen or curtailed their defined benefit plans resulting in decreased revenues and earnings related to this market segment. We have also experienced increasing fee sensitivity and competition for certain fiduciary management services due to investor preferences toward lower-priced investment products including passive management approaches.
In addition, if a number of our clients terminate their contracts, liquidate funds or fail to renew management contracts on favorable terms, the fees we earn could be reduced, which may cause our assets under management, revenue and earnings to decline. We rely on the services of third-party sub-advisers.
In addition, if a number of our clients terminate their 18 contracts, liquidate funds or fail to renew management contracts on favorable terms, the fees we earn could be reduced, which may cause our assets under management, revenue and earnings to decline. We rely on the services of third-party sub-advisers.
These limitations, including any imposed 21 by or as a result of future legislation or regulation, may require us to alter our compensation practices in ways that could adversely affect our ability to attract and retain talented employees. Our operations depend on the competence and integrity of our employees and third parties.
These limitations, including any imposed by or as a result of future legislation or regulation, may require us to alter our compensation practices in ways that could adversely affect our ability to attract and retain talented employees. Our operations depend on the competence and integrity of our employees and third parties.
A successful penetration or circumvention of the security of our systems or the systems of a vendor, governmental body or another market participant could cause serious negative consequences, including: • significant disruption of our operations and those of our clients, customers and counterparties, including losing access to operational systems; • misappropriation of our confidential information or that of our clients, counterparties, vendors, employees or regulators; • damage to our technology infrastructure or systems and those of our clients, vendors and counterparties; • inability to fully recover and restore data that has been stolen, manipulated or destroyed, or to prevent systems from processing fraudulent transactions; • violations by us of applicable privacy and other laws; • financial loss to us or to our clients, vendors, counterparties or employees; 15 • loss of confidence in our cyber security measures; • dissatisfaction among our clients or counterparties; • significant exposure to litigation and regulatory fines, penalties or other sanctions; and • harm to our reputation.
A successful penetration or circumvention of the security of our systems or the systems of a vendor, governmental body or another market participant could cause serious negative consequences, including: 16 • significant disruption of our operations and those of our clients, customers and counterparties, including losing access to operational systems; • misappropriation of our confidential information or that of our clients, counterparties, vendors, employees or regulators; • damage to our technology infrastructure or systems and those of our clients, vendors and counterparties; • inability to fully recover and restore data that has been stolen, manipulated or destroyed, or to prevent systems from processing fraudulent transactions; • violations by us of applicable privacy and other laws; • financial loss to us or to our clients, vendors, counterparties or employees; • loss of confidence in our cyber security measures; • dissatisfaction among our clients or counterparties; • significant exposure to litigation and regulatory fines, penalties or other sanctions; and • harm to our reputation.
Our businesses could be materially and adversely affected by a significant operational breakdown or failure, theft, fraud or other unlawful conduct, or other negative outcomes caused by poor judgement, human error or misconduct on the part of one of our employees or contractors or those of a third party on which our operations rely.
Our businesses could be materially and adversely affected by a significant operational breakdown or failure, theft, fraud or other unlawful conduct, 23 or other negative outcomes caused by poor judgement, human error or misconduct on the part of one of our employees or contractors or those of a third party on which our operations rely.
A successful assertion by others of infringement claims or a failure to maintain the confidentiality and exclusivity of our intellectual property may have a material adverse effect on our business and financial results. 16 We are dependent upon third-party service providers in our operations.
A successful assertion by others of infringement claims or a failure to maintain the confidentiality and exclusivity of our intellectual property may have a material adverse effect on our business and financial results. We are dependent upon third-party service providers in our operations.
Our businesses are highly dependent on our ability to process and report, on a daily basis, a large number of transactions across numerous and diverse markets and asset classes in many currencies. Operational efficiency is modeled on defined and strict timelines which present inherent risk.
Our businesses are highly dependent on our ability to process and report, on a daily basis, a large number of transactions across numerous and diverse markets and asset classes in many currencies. Operational efficiency is modeled on 22 defined and strict timelines which present inherent risk.
Our fund and trust management and administration operations are complex activities and include functions such as recordkeeping and accounting, security pricing, corporate actions processing, compliance with investment restrictions, daily net asset value computations, account reconciliations, and required distributions to fund shareholders.
Our fund and trust management and administration operations are complex activities and include functions such as recordkeeping and accounting, security pricing, corporate actions processing, compliance with investment restrictions, daily net asset value 20 computations, account reconciliations, and required distributions to fund shareholders.
If we become subject to such stockholder activism efforts, it could result in substantial costs and a diversion of management's attention and resources, which could harm our business and adversely 22 affect the market price of our common stock.
If we become subject to such stockholder activism efforts, it could result in substantial costs and a diversion of management's attention and resources, which could harm our business and adversely affect the market price of our common stock.
In addition to inflationary pressures affecting our operations, we, and the infrastructure we rely upon, may also experience an increase in cyberattacks against us and our third-party service providers from Russia or its allies.
In addition to inflationary pressures affecting our operations, we, 25 and the infrastructure we rely upon, may also experience an increase in cyberattacks against us and our third-party service providers from Russia or its allies.
Consequently, LSV's contribution to our earnings through our minority ownership, as well as to our operating cash flows through LSV's partnership distribution payments, could be adversely affected. Consolidation within our target markets may affect our business .
Consequently, LSV's contribution to our 15 earnings through our minority ownership, as well as to our operating cash flows through LSV's partnership distribution payments, could be adversely affected. Consolidation within our target markets may affect our business .
These factors may negatively impact our ability to generate future growth in revenues and earnings. External factors affecting the fiduciary management market could adversely affect us. The utilization of defined benefit plans by employers in the United States has been steadily declining.
These factors may negatively impact our ability to generate future growth in revenues and earnings. External factors affecting the fiduciary management market could adversely affect us. The utilization of defined benefit plans by employers in the United States, Canada and the United Kingdom has been steadily declining.
The primary responsibility for the management of operational risk is with the business segments; the business managers maintain processes and controls designed to identify, assess, manage, mitigate and report operational risk. Oversight of operational risk is provided by the Operations Risk Committee, legal entity boards, jurisdictional risk officers, committees and senior management.
The primary responsibility for the management of operational risk is with the business segments; the business managers maintain processes and controls designed to identify, assess, manage, mitigate and report operational risk. Oversight of operational risk is provided by the Enterprise Risk Management function, the Enterprise Risk Committee, legal entity boards, jurisdictional risk officers, committees and senior management.
Recently, employment markets have grown in competitive intensity leading to higher costs. Changes in law or regulation in jurisdictions in which our operations are located that affect taxes on employees’ income, or the amount/composition of compensation, may also adversely impact our ability to hire and retain qualified employees in those jurisdictions.
Employment markets continue to grow in competitive intensity leading to higher costs. Changes in law or regulation in jurisdictions in which our operations are located that affect taxes on employees’ income, or the amount/composition of compensation, may also adversely impact our ability to hire and retain qualified employees in those jurisdictions.
The extent to which the COVID-19 pandemic negatively affects our businesses, results of operations and financial condition, as well as its regulatory capital and liquidity ratios, will depend on future developments that are uncertain and cannot be fully predicted, including: • the ultimate scope and duration of the pandemic; • the effectiveness and acceptance of vaccines, other treatments, and their availability in certain regions; • actions taken by governmental authorities and other third parties in response to the pandemic; and • the effect that the pandemic or any prolongation of the pandemic may have on the pace of economic growth, inflation and the cost of the labor market.
The extent to which an event negatively affects our businesses, results of operations and financial condition, as well as its regulatory capital and liquidity ratios, will depend on future developments that are uncertain and cannot be fully predicted, including: • the ultimate scope and duration of the event; • the effectiveness and acceptance of vaccines, other treatments, and their availability in certain regions; • actions taken by governmental authorities and other third parties in response to the event; and • the effect that the event may have on the pace of economic growth, inflation and the cost of the labor market.
Geopolitical risks, including those arising from trade tension and/or the imposition of trade tariffs, European fragmentation, unrest in the Middle East and terrorist activity, political conflict and economic sanctions involving Russia, China and other countries, as well as acts of civil or international hostility, are increasing.
Geopolitical risks, including those arising from trade tension and/or the imposition of trade tariffs, European fragmentation, military conflicts and terrorist activity, political conflict and economic sanctions involving Russia, China and other countries, as well as acts of civil or international hostility, are increasing.
The majority of our technology product development risk pertains to the evolution of the SEI Wealth Platform, TRUST 3000 and our other proprietary technology platforms.
The majority of our technology product development risk pertains to the evolution of the SEI Wealth Platform SM , TRUST 3000 ® , our platform for the Investment Managers segment, and our other proprietary technology platforms.
Outside the United States, applicable laws, rules and regulations similarly require designated types of financial institutions to implement anti-money laundering programs. Failure to implement comprehensive anti-money laundering programs across our globally-regulated businesses poses regulatory risk including fines for noncompliance.
Outside the United States, applicable laws, rules and regulations similarly require designated types of financial institutions to implement compliance programs to address regulatory requirements related to 19 money laundering, financial crime and the financing of terrorist activities. Failure to implement comprehensive anti-money laundering programs across our globally-regulated businesses poses regulatory risk including fines for noncompliance.
Further, if we fail to deliver products and services which are of sound economic value to our clients and our target markets, or are unable to support the product in a cost-effective and compliant manner, we may face reputational damage and incur significant financial losses.
Further, if we fail to deliver products and services which are of sound economic value to our clients and our target markets, or are unable to support the product in a cost-effective and compliant manner, we may face reputational damage and incur significant financial losses. 14 We rely on third parties to provide products and services that may be difficult to replace or which could cause errors or failures in the services we provide.
Well-publicized allegations involving the misuse or inappropriate sharing of personal information have led to expanded governmental scrutiny of practices relating to the use or sharing of personal data by companies in the United States and other countries.
We have adopted measures designed to comply with these and related applicable requirements in all relevant jurisdictions. Well-publicized allegations involving the misuse or inappropriate sharing of personal information have led to expanded governmental scrutiny of practices relating to the use or sharing of personal data by companies in the United States and other countries.
In particular, the military conflict and escalating tensions between Russia and Ukraine have and may continue to result in geopolitical instability and adversely affect the global economy or specific markets, which could continue to have an adverse impact or cause volatility in the financial services industry generally or on our results of operations and financial conditions.
In particular, the military conflict between Russia and Ukraine, the war between Israel and Hamas in the Gaza region, and the attacks on Western military and commercial targets in the Middle East and related reprisals, have resulted in and may continue to increase geopolitical instability and adversely affect the global economy or specific markets, which could continue to have an adverse impact or cause volatility in the financial services industry generally or on our results of operations and financial conditions.
We may incur losses if our risk management and business continuity strategies, models and processes are not fully effective in mitigating our risk exposures in all market environments or against all types of risk.
The loss of these individuals may have a material adverse effect on our future operations. 24 We may incur losses if our risk management and business continuity strategies, models and processes are not fully effective in mitigating our risk exposures in all market environments or against all types of risk.
In addition, several jurisdictions have enacted or proposed personal data localization requirements and restrictions on cross-border transfer of personal data that may restrict our ability to conduct business in those jurisdictions or create additional financial and regulatory burdens to do so. 18 Many aspects of our businesses are subject to legal requirements concerning the use and protection of certain customer information.
Many other jurisdictions have adopted or are proposing to adopt standards similar to the GDPR. In addition, several jurisdictions have enacted or proposed personal data localization requirements and restrictions on cross-border transfer of personal data that may restrict our ability to conduct business in those jurisdictions or create additional financial and regulatory burdens to do so.
If management makes choices about these strategies and goals that prove to be incorrect, do not accurately assess the competitive landscape, the head winds and tailwinds affecting our business, or fail to address changing regulatory and market environments, then our growth prospects may suffer and our earnings could decline. 19 Our growth and prospects also depend on management’s ability to develop and execute effective business plans to address these strategic priorities, both in the near term and over longer time horizons.
If management makes choices about these strategies and goals that prove to be incorrect, do not accurately assess the competitive landscape, the head winds and tailwinds affecting our business, or fail to address changing regulatory and market environments, then our growth prospects may suffer and our earnings could decline.
Climate change concerns and incidents could disrupt our businesses, adversely affect the profitability of certain of our investments, adversely affect client activity levels, adversely affect the creditworthiness of our counterparties, or damage our reputation.
Climate change concerns and incidents could disrupt our businesses, adversely affect the profitability of certain of our investments, adversely affect client activity levels, adversely affect the creditworthiness of our counterparties, or damage our reputation. There continues to be increasing concern over the risks of climate change and related environmental sustainability matters.
As a result, our revenues and earnings derived from assets under management or administration, or our profitability or value as a firm, could be adversely affected. We are exposed to product development risk.
Additionally, periods of extreme market dislocation may require us to monetize our assets or those of our clients at a significant loss. As a result, our revenues and earnings derived from assets under management or administration, or our profitability or value as a firm, could be adversely affected. We are exposed to product development risk.
The frequency and scope of regulatory reform in the current regulatory environment may lead to an increase in fees and assessments resulting in increased expense, or an increase or change in regulatory requirements which could affect our operations and business. Our investment management operations may subject us to legal liability for client losses.
The frequency and scope of regulatory reform in the current regulatory environment may lead to an increase in fees and assessments resulting in increased expense, or an increase or change in regulatory requirements which could affect our operations and business. A failure to address conflicts of interest appropriately could adversely affect our business and reputation.
Geopolitical events, market volatility, illiquid market conditions and other disruptions in the financial markets, such as the November 2022 “gilts crisis” in the United Kingdom, may make it extremely difficult to value or monetize certain financial instruments, particularly during periods of market displacement.
Geopolitical events, market volatility, illiquid market conditions and other disruptions in the financial markets may make it extremely difficult to value or monetize certain financial instruments, particularly during periods of market displacement. Subsequent valuations of financial instruments in future periods, in light of factors then prevailing, may result in significant changes in the value of these instruments.
These include those adopted pursuant to the Gramm-Leach-Bliley Act and the Fair and Accurate Credit Transactions Act of 2003 in the U.S., as well as the privacy and cybersecurity laws referenced above. We have adopted measures designed to comply with these and related applicable requirements in all relevant jurisdictions.
Many aspects of our businesses are subject to legal requirements concerning the use and protection of certain customer information. These include those adopted pursuant to the Gramm-Leach-Bliley Act and the Fair and Accurate Credit Transactions Act of 2003 in the U.S., as well as the privacy and cybersecurity laws referenced above.
Increased competition on the basis of any of these factors could have an adverse impact on our competitive position resulting in a decrease in our revenues and earnings. Our earnings and cash flows are affected by the performance of LSV. We maintain a minority ownership interest in LSV which is a significant contributor to our earnings.
We have experienced and will likely continue to experience competitive pressures in these and other areas in the future. Our earnings and cash flows are affected by the performance of LSV. We maintain a minority ownership interest in LSV which is a significant contributor to our earnings.
Significant fluctuations in securities prices may also influence an investor’s decision to invest in and maintain an investment in a mutual fund or other investment products.
Significant fluctuations in securities prices may also influence an investor’s decision to invest in and maintain an investment in a mutual fund or other investment products. Declining or adverse economic conditions and adverse changes in investor, consumer and business sentiment generally result in reduced business activity, which may decrease the demand for our products and services.
The costs necessary to rectify these problems may be substantial and may adversely impact our business. We are exposed to intellectual property risks . Our continued success also depends in part on our ability to protect our proprietary technology and solutions and to defend against infringement claims of others.
We are exposed to intellectual property risks . Our continued success also depends in part on our ability to protect our proprietary technology and solutions and to defend against infringement claims of others. We primarily rely upon trade secret law, software security measures, copyrights and confidentiality restrictions in contracts with employees, vendors and customers.
Management’s effectiveness in this regard will affect our ability to develop and enhance our resources, control expenses and return capital to shareholders.
Our growth and prospects also depend on management’s ability to develop and execute effective business plans to address these strategic priorities, both in the near term and over longer time horizons. Management’s effectiveness in this regard will affect our ability to develop and enhance our resources, control expenses and return capital to shareholders.
Additionally, our Board of Directors plays an important role in exercising appropriate oversight of management’s strategic decisions, and a failure by our Board of Directors to perform this function could also impair our results of operations. We may be unable to fully capture the expected value from acquisitions, divestitures, joint ventures, minority stakes or strategic alliances.
We may be unable to fully capture the expected value from acquisitions, divestitures, joint ventures, minority stakes or strategic alliances.
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Subsequent valuations of financial instruments in future periods, in light of factors then prevailing, may result in significant changes in the value of these instruments. Additionally, periods of extreme market dislocation may require us to monetize our assets or those of our clients at a significant loss.
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And, in certain investment programs, a portion of our clients’ cash is swept into insured deposit accounts at third party banks on which we earn fees, which fees may be significant. A material change in interest rates could affect our profitability.
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We rely on third parties to provide products and services that may be difficult to replace or which could cause errors or failures in the services we provide.
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Increased competition on the basis of any of these factors could have an adverse impact on our competitive position resulting in a decrease in our revenues and earnings. Additionally, the trend toward direct access to automated, electronic markets will likely continue as additional markets move to more automated trading platforms.
Removed
We primarily rely upon trade secret law, software security measures, copyrights and confidentiality restrictions in contracts with employees, vendors and customers.
Added
The costs necessary to rectify these problems may be substantial and may adversely impact our business.
Removed
We must comply with economic sanctions and embargo programs administered by the Office of Foreign Assets Control (OFAC) and similar national and multinational bodies and governmental agencies outside the United States, as well as anti-corruption and anti-money laundering laws and regulations throughout the world.
Added
The trend toward direct access to automated, electronic markets and the move to more automated trading platforms has resulted in the use of increasingly complex technology that relies on the continued effectiveness of the programming code and integrity of the data to process the trades.
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Many other jurisdictions have adopted or are proposing to adopt standards similar to the GDPR.
Added
We rely on the ability of our employees, our consultants, our internal systems and third-party systems to operate our different businesses and process a high volume of transactions. Unusually high trading volumes or site usage could cause our systems to operate at an unacceptably slow speed or even fail.
Removed
The loss of these individuals may have a material adverse effect on our future operations. The departure of the United Kingdom from the European Union could negatively affect our business, results of operations and operating model.
Added
Disruptions to, destruction of, instability of or other failure to effectively maintain our information technology systems or external technology that allows our clients and customers to use our products and services could harm our business and our reputation. There can be no assurance that our business contingency and security response plans fully mitigate all potential risks to us.
Removed
It remains uncertain how the departure of the United Kingdom from the European Union (EU), which is commonly referred to as “Brexit,” will, ultimately, affect financial services firms that conduct substantial operations in the EU from legal entities that are organized in or operating from the United Kingdom.
Added
We are also subject to sanctions, such as regulations and economic sanctions programs administered by the U.S. government, including the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) and the U.S. Department of State, and similar sanctions programs imposed by foreign governments or global or regional multilateral organizations.
Removed
Legislation and regulations enacted as a consequence of Brexit, as well as political tensions between the EU and the United Kingdom as a consequence of Brexit, could lead to declines in market liquidity and activity levels, volatile market conditions, a contraction of available credit, changes in interest rates or exchange rates, weaker economic growth and reduced business confidence all of which could adversely impact our business.
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In addition, we are subject to anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, in the jurisdictions in which we operate.
Removed
Given the potential negative disruption to regional and global financial markets, and depending on the extent to which we may be required to make material changes to our EU operations beyond those currently planned, our results of operations and business prospects could be negatively affected.
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Anti-corruption laws generally prohibit offering, promising, giving or authorizing others to give anything of value, either directly or indirectly, to a government official or private party in order to influence official action or otherwise gain an unfair business advantage, such as to obtain or retain business.
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The COVID-19 pandemic has impacted and may continue to impact our business operations, including our employees, customers, partners and communities, and there is substantial uncertainty in the nature and degree of its continued effects over time.
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As a global financial services firm that provides products and services to a diversified group of clients, including public and private entities, financial institutions and individuals, we face potential conflicts of interest in the normal course of business.
Removed
The COVID-19 pandemic and governmental responses to the pandemic have had, and continue to have, a severe impact on global economic conditions, including: • significant disruption and volatility in the financial markets, • disruption of global supply chains, • closures of many businesses, leading to loss of revenues and increased unemployment, and 23 • the potential to cause the institution of social distancing and sheltering-in-place requirements in the United States and other countries.
Added
For example, potential conflicts can occur when there is a divergence of interests between us and a client, among clients, between an employee on the one hand and us or a client on the other, or situations in which we may be a creditor of a client.
Removed
Although global economic conditions have been improving with the changing nature of the COVID-19 pandemic, any ongoing negative economic impacts arising from the pandemic or any prolongation or worsening of the pandemic, including as a result of additional waves or variants of the COVID-19 disease or the emergence of other diseases that have similar outcomes, could have significant adverse effects on our businesses, results of operations and financial condition.
Added
Moreover, we utilize multiple business channels, including those resulting from our acquisitions, and continue to enhance the collaboration across business segments, which may heighten the potential conflicts of interest or the risk of improper sharing of information.
Added
We have policies, procedures and controls that are designed to identify and address potential conflicts of interest, and we utilize various measures, such as the use of disclosure, to manage these potential conflicts. However, identifying and mitigating potential conflicts of interest can be complex and challenging and can become the focus of media and regulatory scrutiny.
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It is possible that potential conflicts could give rise to litigation or enforcement actions, which may lead to our clients being less willing to enter into transactions in which a conflict may occur and could adversely affect our businesses and reputation. Our investment management operations may subject us to legal liability for client losses.
Added
Notwithstanding evolving technology and technology-based risk and control systems, our products and services ultimately rely on people, including our employees and those of third-parties with which we conduct business.
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As a result of human error or engagement in violations of applicable policies, laws, or procedures, certain errors or violations are not always discovered immediately by our controls, which are intended to prevent and detect such errors or violations.
Added
These can include calculation or input errors, inadvertent or duplicate payments, errors in software or model development or implementation, or errors in judgment, as well as intentional efforts to disregard or circumvent applicable policies, laws, rules or procedures. Human errors and malfeasance, even if promptly discovered and remediated, can result in material losses and liabilities for us.
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We have devoted significant resources to develop our risk management capabilities and expect to continue to do so in the future.
Added
Nonetheless, our risk management strategies, models and processes, including our use of various risk models for assessing market, credit, liquidity and operational exposures and other analysis, may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk, including risks that are unidentified or unanticipated.
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The risks associated with, and the perspective of regulators, governments, shareholders, employees and other stakeholders regarding, climate change are continuing to evolve rapidly, which can make it difficult to assess the ultimate impact on us of climate change-related risks and uncertainties.
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We are subject to risks relating to environmental, social, and governance (ESG) matters that could adversely affect our reputation, business, financial condition, and results of operations, as well as the price of our stock. We are subject to increasing scrutiny from clients, investors, regulators, elected officials, shareholders and other stakeholders with respect to ESG matters.
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Our various stakeholders hold diverse and often conflicting views on ESG topics, including the role of ESG in the investment process. This increases the risk that any action or lack thereof with respect to ESG matters will be perceived negatively by at least some stakeholders.
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Views on ESG practices, particularly those related to climate issues, have also become political issues, which can amplify these risks. Any adverse publicity or reaction in connection with ESG issues could damage our reputation, ability to attract and retain clients and employees, compete effectively, and grow our business.
Added
A growing interest on the part of investors and regulators in ESG factors, and increased demand for, and scrutiny of, ESG-related disclosures by companies and asset managers, has increased the risk that we could be accused of making inaccurate or misleading statements regarding our ESG efforts or initiatives, commonly referred to as “greenwashing.” Further, certain government officials have suggested that ESG-related investing practices may result in breaches of fiduciary duty or violations of law, including antitrust laws.
Added
Such perceptions or accusations could damage our reputation, result in litigation or regulatory enforcement actions, and adversely affect our business. Regardless of the outcome of any governmental enforcement or litigation matter, responding to such matters is time-consuming and expensive and can divert the attention of senior management.
Added
Certain U.S. states have adopted laws or regulations that provide that asset managers that have adopted policies that restrict investing in certain industries or sectors, such as traditional energy, may not be permitted to manage money belonging to these states and their pension funds.
Added
If such a state deems our policies to contain such restrictions, whether accurate or not, it could impair our ability to access capital from certain clients and investors. A lack of harmonization globally in relation to ESG laws and regulations leads to a risk of fragmentation across global jurisdictions.
Added
This may create conflicts across our global business, which could impact our competitiveness in the market and damage our reputation resulting in a material adverse effect on our business. We may, from time to time, communicate certain initiatives, targets, or goals regarding environmental matters, diversity, responsible sourcing, or other ESG matters.
Added
These initiatives, targets, or goals could be difficult and expensive to implement, and we may not be able to accomplish them within the timelines we announce or at all.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. Our corporate headquarters is located in Oaks, Pennsylvania and consists of ten buildings situated on approximately 134 acres. We own and operate the land and buildings, which encompass approximately 628,000 square feet of office space and 34,000 square feet of data center space. We lease other offices which aggregate 192,000 square feet.
Biggest changeItem 2. Properties. Our corporate headquarters is located in Oaks, Pennsylvania and consists of ten buildings situated on approximately 134 acres. We own and operate the land and buildings, which encompass approximately 628,000 square feet of office space and 34,000 square feet of data center space. We lease other offices which aggregate 155,000 square feet.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeCurrently, the Company does not believe the amount of losses associated with these matters can be estimated.
Biggest changeThe Company believes that the ultimate resolution of any of these matters will not have a material adverse effect on the Company's financial position or the manner in which the Company conducts its business. Currently, the Company does not believe the amount of losses associated with these matters can be estimated.
Item 3. Legal Proceedings. The Company is party to various actions and claims arising in the normal course of business that the Company does not believe are material. The Company believes that the ultimate resolution of these matters will not have a material adverse effect on the Company's financial position or the manner in which the Company conducts its business.
Item 3. Legal Proceedings. The Company is party to various disputes, actions and claims arising in the normal course of business that the Company does not believe are material.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeInformation regarding the repurchase of common stock during the three months ended December 31, 2022 is: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program October 2022 50,000 $ 54.13 50,000 $ 169,771,000 November 2022 473,000 58.89 473,000 141,889,000 December 2022 818,000 59.95 818,000 92,852,000 Total 1,341,000 59.36 1,341,000
Biggest changeInformation regarding the repurchase of common stock during the three months ended December 31, 2023 is: Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program October 2023 175,000 $ 53.58 175,000 $ 91,628,000 November 2023 625,000 56.89 625,000 56,069,000 December 2023 387,000 61.41 387,000 282,079,000 Total 1,187,000 57.88 1,187,000 (1) Average price paid per share does not include excise tax on stock repurchases.
This information is obtained from sources believed to be reliable but we cannot guarantee their accuracy. Returns are based on historical performance and are not indicative of future results.
This information is obtained from sources believed to be reliable; however, we cannot guarantee their accuracy. Returns are based on historical performance and are not indicative of future results.
ASSUMES $100 INVESTED ON DECEMBER 31, 2017 ASSUMES DIVIDENDS REINVESTED FISCAL YEAR ENDED DECEMBER 31, Issuer Purchases of Equity Securities: Our Board of Directors has authorized the repurchase of up to $5.328 billion worth of our common stock. Currently, there is no expiration date for our common stock repurchase program (See Note 7 to the Consolidated Financial Statements).
ASSUMES $100 INVESTED ON DECEMBER 31, 2018 ASSUMES DIVIDENDS REINVESTED FISCAL YEAR ENDED DECEMBER 31, Issuer Purchases of Equity Securities: Our Board of Directors has authorized the repurchase of up to $5.578 billion worth of our common stock. Currently, there is no expiration date for our common stock repurchase program (See Note 7 to the Consolidated Financial Statements).
For information on our equity compensation plans, refer to Note 7 to the Consolidated Financial Statements and Item 12 of this Annual Report on Form 10-K. 26 Stock Performance Graph : The following graph shows a comparison from December 31, 2017 through December 31, 2022 of the cumulative total return for our common stock, the NASDAQ Market Index and an Industry Index, a blend of indices including 76% NASDAQ US Asset Managers and Custodians and 24% NASDAQ US Software.
For information on our equity compensation plans, refer to Note 7 to the Consolidated Financial Statements and Item 12 of this Annual Report on Form 10-K. 29 Stock Performance Graph : The following graph shows a comparison from December 31, 2018 through December 31, 2023 of the cumulative total return for our common stock, the NASDAQ Market Index and an Industry Index, a blend of indices including 79% NASDAQ US Asset Managers and Custodians and 21% NASDAQ US Software.
On June 1, 2022, our Board of Directors approved an increase in the stock repurchase program by an additional $200.0 million.
On December 15, 2023, our Board of Directors approved an increase in the stock repurchase program by an additional $250.0 million.
Our Board of Directors intends to declare future dividends on a semiannual basis. 2022 High Low Dividends First Quarter $ 64.29 $ 54.03 $ — Second Quarter 61.43 51.34 0.40 Third Quarter 58.96 48.90 — Fourth Quarter 63.49 46.30 0.43 2021 High Low Dividends First Quarter $ 62.45 $ 52.12 $ — Second Quarter 64.78 55.05 0.37 Third Quarter 63.50 57.06 — Fourth Quarter 65.22 57.72 0.40 According to the records of our transfer agent, there were 225 holders of record of our common stock on January 31, 2023.
Our Board of Directors intends to declare future dividends on a semiannual basis. 2023 High Low Dividends First Quarter $ 64.69 $ 53.93 $ — Second Quarter 59.87 56.10 0.43 Third Quarter 64.43 58.25 — Fourth Quarter 64.94 52.20 0.46 2022 High Low Dividends First Quarter $ 64.29 $ 54.03 $ — Second Quarter 61.43 51.34 0.40 Third Quarter 58.96 48.90 — Fourth Quarter 63.49 46.30 0.43 According to the records of our transfer agent, there were 202 holders of record of our common stock on January 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAverage Asset Balances (In millions) For the Year Ended December 31, Percent Change Percent Change 2022 2021 2020 Private Banks: Equity and fixed-income programs $ 23,326 $ 25,857 (10) % $ 23,728 9 % Collective trust fund programs 7 6 17 % 6 — % Liquidity funds 3,834 4,019 (5) % 3,902 3 % Total assets under management $ 27,167 $ 29,882 (9) % $ 27,636 8 % Client assets under administration 4,204 4,451 (6) % 24,831 (82) % Total assets $ 31,371 $ 34,333 (9) % $ 52,467 (35) % Investment Advisors: Equity and fixed-income programs $ 70,394 $ 77,596 (9) % $ 63,812 22 % Liquidity funds 5,682 3,509 62 % 4,641 (24) % Total Platform assets under management $ 76,076 $ 81,105 (6) % $ 68,453 18 % Platform-only assets 13,574 13,426 1 % 9,914 35 % Total Platform assets $ 89,650 94,531 (5) % 78,367 21 % Institutional Investors: Equity and fixed-income programs $ 79,415 $ 91,832 (14) % $ 81,518 13 % Collective trust fund programs 5 44 (89) % 98 (55) % Liquidity funds 1,939 2,609 (26) % 2,302 13 % Total assets under management $ 81,359 $ 94,485 (14) % $ 83,918 13 % Advised assets 4,330 4,533 (4) % 3,608 26 % Total assets $ 85,689 $ 99,018 (13) % $ 87,526 13 % Investment Managers: Collective trust fund programs (A) 125,595 85,622 47 % 60,348 42 % Liquidity funds 311 496 (37) % 519 (4) % Total assets under management $ 125,906 $ 86,118 46 % $ 60,867 41 % Client assets under administration 837,647 850,510 (2) % 692,819 23 % Total assets $ 963,553 $ 936,628 3 % $ 753,686 24 % Investments in New Businesses: Equity and fixed-income programs $ 1,968 $ 1,906 3 % $ 1,581 21 % Liquidity funds 247 202 22 % 174 16 % Total assets under management $ 2,215 $ 2,108 5 % $ 1,755 20 % Advised assets 1,191 1,395 (15) % 1,199 16 % Total assets $ 3,406 $ 3,503 (3) % $ 2,954 19 % LSV: Equity and fixed-income programs (B) $ 87,220 $ 99,591 (12) % $ 85,043 17 % 34 Total: Equity and fixed-income programs (C) $ 262,323 $ 296,782 (12) % 255,682 16 % Collective trust fund programs 125,607 85,672 47 % 60,452 42 % Liquidity funds 12,013 10,835 11 % 11,538 (6) % Total assets under management $ 399,943 $ 393,289 2 % $ 327,672 20 % Advised assets 5,521 5,928 (7) % 4,807 23 % Client assets under administration (D) 841,851 854,961 (2) % 717,650 19 % Platform-only assets 13,574 13,426 1 % 9,914 35 % Total assets $ 1,260,889 $ 1,267,604 (1) % $ 1,060,043 20 % (A) Collective trust fund program average assets are included in assets under management since SEI is the trustee.
Biggest changeAverage Asset Balances (In millions) For the Year Ended December 31, Percent Change Percent Change 2023 2022 2021 Private Banks: Equity and fixed-income programs $ 23,638 $ 23,326 1 % $ 25,857 (10) % Collective trust fund programs 6 7 (14) % 6 17 % Liquidity funds 3,537 3,834 (8) % 4,019 (5) % Total assets under management $ 27,181 $ 27,167 — % $ 29,882 (9) % Client assets under administration 4,976 4,204 18 % 4,451 (6) % Total assets $ 32,157 $ 31,371 3 % $ 34,333 (9) % Investment Advisors: Equity and fixed-income programs $ 68,407 $ 70,394 (3) % $ 77,596 (9) % Liquidity funds 4,960 5,682 (13) % 3,509 62 % Total Platform assets under management $ 73,367 $ 76,076 (4) % $ 81,105 (6) % Platform-only assets 16,026 13,574 18 % 13,426 1 % Platform-only assets-deposit program 70 — NM — NM Total Platform assets $ 89,463 89,650 — % 94,531 (5) % Institutional Investors: Equity and fixed-income programs $ 74,546 $ 79,415 (6) % $ 91,832 (14) % Collective trust fund programs 4 5 (20) % 44 (89) % Liquidity funds 1,636 1,939 (16) % 2,609 (26) % Total assets under management $ 76,186 $ 81,359 (6) % $ 94,485 (14) % Advised assets 4,479 4,330 3 % 4,533 (4) % Total assets $ 80,665 $ 85,689 (6) % $ 99,018 (13) % Investment Managers: Collective trust fund programs (A) 148,097 125,595 18 % 85,622 47 % Liquidity funds 261 311 (16) % 496 (37) % Total assets under management $ 148,358 $ 125,906 18 % $ 86,118 46 % Client assets under administration 875,369 837,647 5 % 850,510 (2) % Total assets $ 1,023,727 $ 963,553 6 % $ 936,628 3 % Investments in New Businesses: Equity and fixed-income programs $ 2,053 $ 1,968 4 % $ 1,906 3 % Liquidity funds 205 247 (17) % 202 22 % Total assets under management $ 2,258 $ 2,215 2 % $ 2,108 5 % Advised assets 1,089 1,191 (9) % 1,395 (15) % Total assets $ 3,347 $ 3,406 (2) % $ 3,503 (3) % LSV: Equity and fixed-income programs (B) $ 85,661 $ 87,220 (2) % $ 99,591 (12) % 37 Total: Equity and fixed-income programs (C) $ 254,305 $ 262,323 (3) % 296,782 (12) % Collective trust fund programs 148,107 125,607 18 % 85,672 47 % Liquidity funds 10,599 12,013 (12) % 10,835 11 % Total assets under management $ 413,011 $ 399,943 3 % $ 393,289 2 % Advised assets 5,568 5,521 1 % 5,928 (7) % Client assets under administration (D) 880,345 841,851 5 % 854,961 (2) % Platform-only assets 16,096 13,574 19 % 13,426 1 % Total assets $ 1,315,020 $ 1,260,889 4 % $ 1,267,604 (1) % (A) Collective trust fund program average assets are included in assets under management since SEI is the trustee.
Revenues during 2022 were primarily affected by: • Decreased investment management fees from defined benefit client losses and market depreciation during 2022; and • The negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound on our foreign operations; partially offset by • Added revenues from the acquisitions of SEI Novus and Atlas Master Trust.
Revenues during 2022 were primarily affected by: • Decreased investment management fees from defined benefit client losses and market depreciation; and • The negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound on our foreign operations; partially offset by • Added revenues from the acquisitions of SEI Novus and Atlas Master Trust.
Operating income in 2022 was primarily affected by: • An increase in revenues; and • Decreased direct expenses associated with lower investment management fees from existing international clients; partially offset by • Increased personnel costs due to competitive labor markets; • Increased costs, mainly personnel and consulting costs, primarily related to maintenance, support and client migrations to SWP; and • The negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound on our foreign operations.
Operating income in 2022 was primarily affected by: • An increase in revenues; and • Decreased direct expenses associated with lower investment management fees from existing international clients; partially offset by • Increased personnel costs due to competitive labor markets; 40 • Increased costs, mainly personnel and consulting costs, primarily related to maintenance, support and client migrations to SWP; and • The negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound on our foreign operations.
The fair value of all other financial assets are determined using Level 1 or Level 2 inputs and consist mainly of investments in equity or fixed-income mutual funds that are quoted daily 41 and Government National Mortgage Association (GNMA) and other U.S. government agency securities that are single issuer pools that are valued based on current market data of similar assets.
The fair value of all other financial assets are determined using Level 1 or Level 2 inputs and consist mainly of investments in equity or fixed-income mutual funds that are quoted daily and Government National Mortgage Association (GNMA) and other U.S. government agency securities that are single issuer pools that are valued based on current market data of similar assets.
Critical Accounting Policies and Estimates The accompanying consolidated financial statements and supplementary information were prepared in accordance with accounting principles generally accepted in the United States. Inherent in the application of many of these accounting policies is the need for management to make estimates which require extensive judgments in the determination of certain revenues, expenses, assets and liabilities.
Critical Accounting Policies and Estimates The accompanying consolidated financial statements and supplementary information were prepared in accordance with accounting principles generally accepted in the United States. Inherent in the application of many of these accounting policies is the need for management to make estimates which require extensive judgments in the determination of certain 47 revenues, expenses, assets and liabilities.
Amortization of capitalized software development costs begins when the product is ready for its intended use. Capitalized 44 software development costs are amortized on a project basis using the straight-line method over the estimated economic life of the product or enhancement. We evaluate the carrying value of capitalized software when circumstances indicate the carrying value may not be recoverable.
Amortization of capitalized software development costs begins when the product is ready for its intended use. Capitalized software development costs are amortized on a project basis using the straight-line method over the estimated economic life of the product or enhancement. We evaluate the carrying value of capitalized software when circumstances indicate the carrying value may not be recoverable.
Revenues during 2022 were primarily affected by: • Decreased investment management fees from SEI fund programs resulting from market depreciation during 2022 and negative cash flows primarily from a significant client loss during the third-quarter 2022; partially offset by • Increased fees from separately managed account programs and Strategist programs from positive cash flows and market appreciation occurring during 2021.
Revenues during 2022 were primarily affected by: • Decreased investment management fees from SEI fund programs resulting from market depreciation and negative cash flows primarily from a significant client loss during the third-quarter 2022; partially offset by • Increased fees from separately managed account programs from positive cash flows and market appreciation occurring during 2021.
During the measurement period, 45 which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
During the measurement period, which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
Fees earned on this product are less than fees earned on customized asset management programs. (B) Equity and fixed-income programs include assets managed by LSV in which fees are based solely on performance and are not calculated as an asset-based fee. The average value of these assets for the year ended December 31, 2022 was $2.0 billion.
Fees earned on this product are less than fees earned on customized asset management programs. (B) Equity and fixed-income programs include assets managed by LSV in which fees are based solely on performance and are not calculated as an asset-based fee. The average value of these assets for the year ended December 31, 2023 was $2.0 billion.
Goodwill is tested for impairment at the reporting unit level annually or more frequently if events or changes in circumstances would more likely than not reduce the fair value of a reporting unit below its carrying value. We have three reporting units subject to goodwill impairment testing. As of December 31, 2022, no impairment of goodwill has been identified.
Goodwill is tested for impairment at the reporting unit level annually or more frequently if events or changes in circumstances would more likely than not reduce the fair value of a reporting unit below its carrying value. We have three reporting units subject to goodwill impairment testing. As of December 31, 2023, no impairment of goodwill has been identified.
We are obligated to make payments in connection with the credit facility, operating leases, maintenance contracts and other commitments (See Notes 6, 10 and 17 to the Consolidated Financial Statements). We believe our operating cash flow, available borrowing capacity, and existing cash and cash equivalents will provide adequate funds for these obligations and ongoing operations.
We are obligated to make payments in connection with the credit facility, operating leases, maintenance contracts and other commitments (See Notes 6, 10 and 18 to the Consolidated Financial Statements). We believe our operating cash flow, available borrowing capacity, and existing cash and cash equivalents will provide adequate funds for these obligations and ongoing operations.
These expenses are primarily included in Compensation, benefits and other personnel costs, Consulting, outsourcing and professional fees, and Amortization on the accompanying Consolidated Statements of Operations. • We capitalized $25.7 million of software development costs in 2022 for SWP as compared to $25.9 million in 2021.
These expenses are primarily included in Compensation, benefits and other personnel costs, Consulting, outsourcing and professional fees, and Amortization on the accompanying Consolidated Statements of Operations. • Capitalized software development costs were $25.7 million in 2022 for SWP as compared to $25.9 million in 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (In thousands, except share and per-share data) This discussion reviews and analyzes the consolidated financial condition at December 31, 2022 and 2021, the consolidated results of operations for the years ended December 31, 2022, 2021 and 2020, and other factors that may affect future financial performance.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (In thousands, except share and per-share data) This discussion reviews and analyzes the consolidated financial condition at December 31, 2023 and 2022, the consolidated results of operations for the years ended December 31, 2023, 2022 and 2021, and other factors that may affect future financial performance.
Accordingly, we endeavor to: • automate previously manual processes in our operational, compliance, risk, control and other functions in order to create internal efficiencies; • evolve our cyber-security and data privacy systems to combat known and emerging threats and meet and exceed industry and regulatory standards around the world; • increase the resiliency and reliability of our systems; and • create more efficient technology solutions to scale our various businesses.
Accordingly, we endeavor to: 33 • automate selected manual processes in our operational, compliance, risk, control and other functions in order to create internal efficiencies; • evolve our cyber-security and data privacy systems to combat known and emerging threats and meet and exceed industry and regulatory standards around the world; • increase the resiliency and reliability of our systems; and • create more efficient technology solutions to scale our various businesses.
Below are the most significant recurring and discrete items (See Note 11 to the Consolidated Financial Statements for more information): Year Ended December 31, 2022 2021 2020 Statutory rate 21.0 % 21.0 % 21.0 % State taxes, net of federal tax benefit 2.9 2.6 3.0 Foreign tax expense and tax rate differential (0.2) (0.1) (0.4) Tax benefit from stock option exercises (0.7) (1.2) (1.1) Research and development tax credit (1.1) (1.0) (1.0) Foreign-Derived Intangible Income Deduction (FDII) (0.3) (0.2) (0.3) Other, net 0.4 0.1 0.1 22.0 % 21.2 % 21.3 % The increase in the effective rate in 2022 was primarily due to reduced tax benefits related to the lower volume of stock option exercises as compared to the prior year and an increase in the state effective tax rate.
Below are the most significant recurring and discrete items (See Note 11 to the Consolidated Financial Statements for more information): Year Ended December 31, 2023 2022 2021 Statutory rate 21.0 % 21.0 % 21.0 % State taxes, net of federal tax benefit 2.6 2.9 2.6 Foreign tax expense and tax rate differential (0.3) (0.2) (0.1) Tax benefit from stock option exercises (0.3) (0.7) (1.2) Research and development tax credit (1.1) (1.1) (1.0) Foreign-Derived Intangible Income Deduction (FDII) (0.3) (0.3) (0.2) Other, net 0.7 0.4 0.1 22.3 % 22.0 % 21.2 % The increases in the effective rate in 2023 and 2022 was primarily due to reduced tax benefits related to stock option exercises as compared to the prior year.
The increase was partially offset by lower direct costs related to asset management revenues and lower amortization expense. • We initiated a Voluntary Separation Program (VSP) to long-tenured employees as part of our commitment to professional development and expanded responsibilities for current and new employees by increasing advancement opportunities.
The increase was partially offset by lower direct costs related to asset management revenues and lower amortization expense. • We initiated the VSP to long-tenured employees as part of our commitment to professional development and expanded responsibilities for current and new employees by increasing advancement opportunities.
Fees earned on this product are less than fees earned on customized asset management programs. (B) Equity and fixed-income programs include $2.1 billion of assets managed by LSV in which fees are based solely on performance and are not calculated as an asset-based fee (as of December 31, 2022).
Fees earned on this product are less than fees earned on customized asset management programs. (B) Equity and fixed-income programs include $1.9 billion of assets managed by LSV in which fees are based solely on performance and are not calculated as an asset-based fee (as of December 31, 2023).
The decline was partially offset by positive cash flows into separately managed account programs and Strategist programs of the Investment Advisors segment.
The decline was partially offset by positive cash flows into separately managed account programs of the Investment Advisors segment.
As of December 31, 2022, through our subsidiaries and partnerships in which we have a significant interest, we manage, advise or administer approximately $1.2 trillion in hedge, private equity, mutual fund and pooled or separately managed assets.
As of December 31, 2023, through our subsidiaries and partnerships in which we have a significant interest, we manage, advise or administer approximately $1.4 trillion in hedge, private equity, mutual fund and pooled or separately managed assets.
Approximately 44% of our investment processing and software servicing fees are earned as a percentage of the market value of clients’ asset processed, primarily from SWP and our mutual fund trading solution clients. Investment Management Platforms Our investment management platforms include investment management programs and back-office investment processing outsourcing services and are generally offered on a bundled basis.
Approximately 43% of our investment processing and software servicing fees are earned as a percentage of the market value of clients’ asset processed, primarily from SWP and our solution clients. Investment Management Platforms Our investment management platforms include investment management programs and back-office investment processing outsourcing services and are generally offered on a bundled basis.
SEI Novus and Atlas Master Trust were acquired during the fourth quarter of 2021 and are reported in the Institutional Investors segment (See Note 15 to the Consolidated Financial Statements). • Earnings from LSV decreased by $16.9 million, or 12%, in 2022 due to negative cash flows from existing clients, market depreciation and client losses.
SEI Novus and Atlas Master Trust were acquired during the fourth quarter of 2021 and are reported in the Institutional Investors segment. • Earnings from LSV decreased by $16.9 million, or 12%, in 2022 due to negative cash flows from existing clients, market depreciation and client losses.
Operating income decreased $24.6 million, or 14%, in 2022 compared to the prior year. Operating income during 2022 was primarily affected by: • A decrease in revenues; • Increased personnel, professional fees, amortization and other costs related to the acquisitions of SEI Novus and Atlas Master Trust; partially offset by • Decreased direct expenses associated with investment management fees.
Operating income increased slightly in 2022 compared to the prior year. Operating income during 2022 was primarily affected by: • A decrease in revenues; • Increased personnel, professional fees, amortization and other costs related to the acquisitions of SEI Novus and Atlas Master Trust; partially offset by • Decreased direct expenses associated with investment management fees.
The dividend was paid on January 5, 2023 for a total of $58.1 million. Cash Requirements Cash requirements and liquidity needs are primarily funded through cash flow from operations and our capacity for additional borrowing. At December 31, 2022, unused sources of liquidity consisted of cash and cash equivalents and the amount available under our credit facility.
The dividend was paid on January 9, 2024 for a total of $61.1 million. Cash Requirements Cash requirements and liquidity needs are primarily funded through cash flow from operations and our capacity for additional borrowing. At December 31, 2023, unused sources of liquidity consisted of cash and cash equivalents and the amount available under our credit facility.
If this estimate proves to be inaccurate, the remaining amount of stock-based compensation expense for stock options could be accelerated, spread out over a longer period, or reversed. We currently base expectations for these assumptions from historical data and other applicable factors. These expectations are subject to change in future periods.
If this estimate proves to be inaccurate, the remaining amount of stock-based compensation expense for stock options could be accelerated, spread out over a longer period, or reversed. We currently base expectations for these assumptions from historical data and other applicable factors.
Investment Managers Revenues increased $43.8 million, or 8%, in 2022 compared to the prior year.
Revenues increased $43.8 million, or 8%, in 2022 compared to the prior year.
As of January 31, 2023, the amount of cash and cash equivalents considered free and immediately accessible for other general corporate purposes was $357.3 million. Cash and cash equivalents include accounts managed by our subsidiaries that are used in their operations or to cover specific business and regulatory requirements.
As of January 31, 2024, the amount of cash and cash equivalents considered free and immediately accessible for other general corporate purposes was $355.2 million. Cash and cash equivalents include accounts managed by our subsidiaries that are used in their operations or to cover specific business and regulatory requirements.
(D) In addition to the assets presented, SEI also administers an additional $12.5 billion in Funds of Funds assets on which SEI does not earn an administration fee (as of December 31, 2022). 33 Average Asset Balances This table presents average asset balances of our clients, or of our clients’ customers, for which we provide management or administrative services through our subsidiaries and partnerships in which we have a significant interest.
(D) In addition to the assets presented, SEI also administers an additional $11.2 billion in Funds of Funds assets on which SEI does not earn an administration fee (as of December 31, 2023). 36 Average Asset Balances This table presents average asset balances of our clients, or of our clients’ customers, for which we provide management or administrative services through our subsidiaries and partnerships in which we have a significant interest.
(C) Equity and fixed-income programs include $6.8 billion of average assets invested in various asset allocation funds for the year ended December 31, 2022.
(C) Equity and fixed-income programs include $6.2 billion of average assets invested in various asset allocation funds for the year ended December 31, 2023.
(C) Equity and fixed-income programs include $6.4 billion of assets invested in various asset allocation funds at December 31, 2022.
(C) Equity and fixed-income programs include $6.3 billion of assets invested in various asset allocation funds at December 31, 2023.
Level 3 financial liabilities at December 31, 2022 and December 31, 2021 consist of the contingent consideration resulting from an acquisition (See Note 15 to the Consolidated Financial Statements). Regulatory Matters Like many firms operating within the financial services industry, we are experiencing a complex and changing regulatory environment across our markets.
Level 3 financial liabilities at December 31, 2023 and December 31, 2022 consist of contingent considerations resulting from business acquisitions (See Note 15 to the Consolidated Financial Statements). Regulatory Matters Like many firms operating within the financial services industry, we are experiencing a complex and changing regulatory environment across our markets.
We capitalized $35.3 million, $26.0 million and $24.1 million of software development costs in 2022, 2021 and 2020, respectively. The majority of our software development costs are related to significant enhancements for the expanded functionality of the SEI Wealth Platform.
We capitalized $34.0 million, $35.3 million and $26.0 million of software development costs in 2023, 2022 and 2021, respectively. The majority of our 46 software development costs are related to significant enhancements for the expanded functionality of the SEI Wealth Platform.
(D) In addition to the assets presented, SEI also administers an additional $13.0 billion of average assets in Funds of Funds assets for the year ended December 31, 2022 on which SEI does not earn an administration fee.
(D) In addition to the assets presented, SEI also administers an additional $11.8 billion of average assets in Funds of Funds assets for the year ended December 31, 2023 on which SEI does not earn an administration fee.
There was approximately $95.8 million of unrecognized compensation cost related to unvested employee stock options at December 31, 2022 and we expect to recognize approximately $36.6 million in stock-based compensation costs for stock options in 2023.
There was approximately $89.1 million of unrecognized compensation cost related to unvested employee stock options at December 31, 2023 and we expect to recognize approximately $36.6 million in stock-based compensation costs for stock options in 2024.
SEI and some of our regulated subsidiaries have undergone or been scheduled to undergo a range of periodic or thematic reviews, examinations or investigations by numerous regulatory authorities around the world, including the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, the Financial Conduct Authority of the United Kingdom (FCA), the Central Bank of Ireland and others.
SEI and some of our regulated subsidiaries have undergone or been scheduled to undergo a range of periodic or thematic reviews, examinations or investigations by numerous regulatory authorities around the world, including the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, the Financial Conduct Authority of the United Kingdom (FCA), the Central Bank of Ireland (CBI), the Commission de Surveillance du Secteur Financier (CSSF) of the Grand Duchy of Luxembourg, and others.
Our purchases, sales and maturities of marketable securities during 2022, 2021 and 2020 were as follows: 2022 2021 2020 Purchases $ (178,217) $ (216,260) $ (143,493) Sales and maturities 161,160 195,096 155,952 Net investing activities from marketable securities $ (17,057) $ (21,164) $ 12,459 See Note 5 to the Consolidated Financial Statements for more information related to marketable securities. • The capitalization of costs incurred in developing computer software.
Our purchases, sales and maturities of marketable securities during 2023, 2022 and 2021 were as follows: 2023 2022 2021 Purchases $ (143,389) $ (178,217) $ (216,260) Sales and maturities 121,988 161,160 195,096 Net investing activities from marketable securities $ (21,401) $ (17,057) $ (21,164) See Note 5 to the Consolidated Financial Statements for more information related to marketable securities. • The capitalization of costs incurred in developing computer software.
As of January 31, 2023, we had outstanding letters of credit of $6.0 million which reduced the amount available under the credit facility. These letters of credit were primarily issued for the expansion of the corporate headquarters and are due to expire in 2023.
As of January 31, 2024, we had outstanding letters of credit of $4.9 million which reduced the amount available under the credit facility. These letters of credit were primarily issued for the expansion of the corporate headquarters and are due to expire in 2025.
As of January 31, 2023, the amount of the credit facility available for corporate purposes was $319.0 million. The availability of the credit facility is subject to compliance with certain covenants set forth in the agreement.
As of January 31, 2024, the amount of the credit facility available for corporate purposes was $320.1 million. The availability of the credit facility is subject to compliance with certain covenants set forth in the agreement.
The effective tax rate is also affected by discrete items that may occur in any given year, but are not consistent from year to year.
The income earned by jurisdiction has been fairly consistent. The effective tax rate is also affected by discrete items that may occur in any given year, but are not consistent from year to year.
Stock options granted included a service condition which requires a minimum two or four year waiting period from the grant date along with the attainment of the applicable financial vesting target. The amount of stock-based compensation expense related to stock options is recognized based upon an estimate of when the financial vesting targets may be achieved.
Stock options vest from the achievement of financial vesting targets and include a service condition which requires a minimum two or four year waiting period from the grant date. The amount of stock-based compensation expense related to stock options is recognized based upon an estimate of when the financial vesting targets may be achieved.
The following table lists information regarding repurchases of common stock during 2022, 2021 and 2020: Year Total Number of Shares Repurchased Average Price Paid per Share Total Cost 2022 5,914,000 $ 57.22 $ 338,442 2021 6,747,000 61.00 411,534 2020 8,008,000 53.04 424,702 • Proceeds from the issuance of our common stock.
The following table lists information regarding repurchases of common stock during 2023, 2022 and 2021: Year Total Number of Shares Repurchased Average Price Paid per Share Total Cost 2023 5,237,000 $ 59.34 $ 310,769 2022 5,914,000 57.22 338,442 2021 6,747,000 61.00 411,534 • Proceeds from the issuance of our common stock.
Operating income in 2022 was primarily affected by: • A decrease in revenues; • Increased direct expenses associated with increased assets into our separately managed account program; and • Increased personnel and technology costs as well as increased promotion costs; partially offset by • Decreased direct expenses related to a significant client loss during third-quarter 2022.
Operating income in 2022 was primarily affected by: • A decrease in revenues; • Increased direct expenses associated with increased assets into our separately managed account program; and • Increased personnel and technology costs as well as increased promotion costs; partially offset by • Decreased direct expenses related to a significant client loss during third-quarter 2022. 41 Institutional Investors Revenues decreased $33.6 million, or 10%, in 2023 compared to the prior year.
The positive impact from the change in the Company's working capital accounts partially offset the decrease. Cash flows from operations increased $144.4 million in 2021 compared to 2020 primarily from the increase in net income and increased repayments of advances due from our unconsolidated affiliate, LSV, related to their working capital accounts.
Cash flows from operations decreased $67.0 million in 2022 compared to 2021 primarily from the decrease in net income, non-cash items and lower repayments of advances due from our unconsolidated affiliate, LSV, related to their working capital accounts. The positive impact from the change in the Company's working capital accounts partially offset the decrease.
Amortization expense related to SWP decreased to $35.6 million during 2022 as compared to $47.8 million during 2021 due to the fully amortized initial SWP development costs (See the caption "Capitalized software development costs" later in this discussion for more information). • The effective tax rate during 2022 was 22.0% as compared to 21.2% during 2021.
Amortization expense related to SWP decreased to $35.6 million during 2022 as compared to $47.8 million during 2021 due to the fully amortized initial SWP development costs. • The effective tax rate during 2022 was 22.0% as compared to 21.2% during 2021.
We received $58.2 million, $55.2 million and $49.4 million in proceeds from the issuance of common stock during 2022, 2021 and 2020, respectively. The proceeds we receive from the issuance of common stock is directly attributable to the levels of stock option exercise activity. • Dividend payments.
We received $101.2 million, $58.2 million and $55.2 million in proceeds from the issuance of common stock during 2023, 2022 and 2021, respectively. The proceeds we receive from the issuance of common stock is directly attributable to the levels of stock option exercise activity. • Payment of contingent consideration.
Cash dividends paid during 2022, 2021 and 2020 were as follows: Year Cash Dividends Paid Cash Dividends Paid per Share 2022 $ 109,830 $ 0.80 2021 105,516 0.74 2020 103,914 0.70 The Board of Directors declared a semi-annual cash dividend of $0.43 per share on December 5, 2022.
Cash dividends paid during 2023, 2022 and 2021 were as follows: Year Cash Dividends Paid Cash Dividends Paid per Share 2023 $ 114,837 $ 0.86 2022 109,830 0.80 2021 105,516 0.74 The Board of Directors declared a semi-annual cash dividend of $0.46 per share on December 15, 2023.
Overview Consolidated Summary SEI delivers technology and investment solutions that connect the financial services industry. With capabilities across investment processing, operations, and asset management, SEI works with corporations, financial institutions and professionals, and ultra-high-net-worth families to solve problems, manage change, and help protect assets for growth today and in the future.
Overview Consolidated Summary SEI delivers technology and investment solutions that connect the financial services industry. With capabilities across investment processing, operations, and asset management, SEI works with corporations, financial institutions and professionals, and ultra-high-net-worth families to help drive growth, make confident decisions, and protect futures.
Operating margins were 44% in 2022 and 50% in 2021. Operating income decreased $46.5 million, or 19%, in 2022 compared to the prior year.
Operating income decreased $46.5 million, or 19%, in 2022 compared to the prior year.
We also capitalized $9.6 million of software development costs during 2022 for a new platform for the Investment Managers segment. • Capital expenditures. Capital expenditures in 2022, 2021 and 2020 primarily include purchased software and equipment for data center operations. Expenditures in 2020 also include the expansion of our corporate headquarters completed in the fourth quarter 2020.
We also capitalized $15.8 million and $9.6 million of software development costs during 2023 and 2022, respectively, for a new platform for the Investment Managers segment. • Capital expenditures. Capital expenditures in 2023, 2022 and 2021 primarily include capital outlays for purchased software and equipment for data center operations.
The assets presented in the preceding tables do not include assets processed on SWP and are not included in the accompanying Consolidated Balance Sheets because we do not own them. 35 Business Segments Revenues, Expenses and Operating profit (loss) for our business segments for the year ended 2022 compared to the year ended 2021, and for the year ended 2021 compared to the year ended 2020 were: Year Ended December 31, 2022 2021 Percent Change 2020 Percent Change Private Banks: Revenues $ 575,625 $ 493,570 17 % $ 455,393 8 % Expenses 473,209 462,796 2 % 446,481 4 % Operating profit $ 102,416 $ 30,774 233 % $ 8,912 245 % Operating margin 18 % 6 % 2 % Investment Advisors: Revenues 447,766 482,949 (7) % 407,564 18 % Expenses 251,650 240,334 5 % 205,913 17 % Operating profit $ 196,116 $ 242,615 (19) % $ 201,651 20 % Operating margin 44 % 50 % 49 % Institutional Investors: Revenues 323,353 343,805 (6) % 317,627 8 % Expenses 172,252 168,070 2 % 149,909 12 % Operating profit $ 151,101 $ 175,735 (14) % $ 167,718 5 % Operating margin 47 % 51 % 53 % Investment Managers: Revenues 624,918 581,157 8 % 489,462 19 % Expenses 404,850 348,655 16 % 308,999 13 % Operating profit $ 220,068 $ 232,502 (5) % $ 180,463 29 % Operating margin 35 % 40 % 37 % Investments in New Businesses: Revenues 19,375 16,828 15 % 14,012 20 % Expenses 45,159 53,219 (15) % 52,871 1 % Operating loss $ (25,784) $ (36,391) NM $ (38,859) NM For additional information pertaining to our business segments, see Note 12 to the Consolidated Financial Statements. 36 Private Banks Year Ended December 31, 2022 2021 Percent Change 2020 Percent Change Revenues: Investment processing and software servicing fees $ 453,531 $ 356,655 27 % $ 324,574 10 % Asset management, administration & distribution fees 122,094 136,915 (11) % 130,819 5 % Total revenues $ 575,625 $ 493,570 17 % $ 455,393 8 % Revenues increased $82.1 million, or 17%, in 2022 compared to the prior year.
The assets presented in the preceding tables do not include assets processed on SWP and are not included in the accompanying Consolidated Balance Sheets because we do not own them. 38 Business Segments Revenues, Expenses and Operating profit (loss) for our business segments for the year ended 2023 compared to the year ended 2022, and for the year ended 2022 compared to the year ended 2021 were: Year Ended December 31, 2023 2022 Percent Change 2021 Percent Change Private Banks: Revenues $ 503,317 $ 575,625 (13) % $ 493,570 17 % Expenses 455,820 473,209 (4) % 462,796 2 % Operating profit $ 47,497 $ 102,416 (54) % $ 30,774 233 % Operating margin 9 % 18 % 6 % Investment Advisors: Revenues 436,298 447,766 (3) % 482,949 (7) % Expenses 259,142 251,650 3 % 240,334 5 % Operating profit $ 177,156 $ 196,116 (10) % $ 242,615 (19) % Operating margin 41 % 44 % 50 % Institutional Investors: Revenues 289,708 323,353 (10) % 343,805 (6) % Expenses 165,455 172,252 (4) % 168,070 2 % Operating profit $ 124,253 $ 151,101 (18) % $ 175,735 (14) % Operating margin 43 % 47 % 51 % Investment Managers: Revenues 670,486 624,918 7 % 581,157 8 % Expenses 437,174 404,850 8 % 348,655 16 % Operating profit $ 233,312 $ 220,068 6 % $ 232,502 (5) % Operating margin 35 % 35 % 40 % Investments in New Businesses: Revenues 19,984 19,375 3 % 16,828 15 % Expenses 45,437 45,159 1 % 53,219 (15) % Operating loss $ (25,453) $ (25,784) NM $ (36,391) NM For additional information pertaining to our business segments, see Note 12 to the Consolidated Financial Statements. 39 Private Banks Year Ended December 31, 2023 2022 Percent Change 2021 Percent Change Revenues: Investment processing and software servicing fees $ 370,730 $ 453,531 (18) % $ 356,655 27 % Asset management, administration & distribution fees 132,587 122,094 9 % 136,915 (11) % Total revenues $ 503,317 $ 575,625 (13) % $ 493,570 17 % Revenues decreased $72.3 million, or 13%, in 2023 compared to the prior year.
Sensitivity of our revenues and earnings to capital market fluctuations The majority of our revenues are based on the value of assets invested in investment products that we manage or administer which are affected by changes in the capital markets and the portfolio strategy of our clients or their customers. 30 The capital market conditions during 2022 were marked by significant depreciation across fixed income and equity markets regardless of region or style.
Sensitivity of our revenues and earnings to capital market fluctuations The majority of our revenues are based on the value of assets invested in investment products that we manage or administer which are affected by changes in the capital markets and the portfolio strategy of our clients or their customers.
Condensed Consolidated Statements of Operations for the years ended 2022, 2021 and 2020 were: Year Ended December 31, 2022 2021 Percent Change* 2020 Percent Change Revenues $ 1,991,037 $ 1,918,309 4 % $ 1,684,058 14 % Expenses 1,515,284 1,364,928 11 % 1,238,171 10 % Income from operations 475,753 553,381 (14) % 445,887 24 % Net loss from investments (3,078) (366) NM (286) NM Interest income, net of interest expense 12,559 3,086 307 % 5,959 (48) % Other income 3,379 — NM — NM Equity in earnings of unconsolidated affiliates 120,667 137,572 (12) % 117,134 17 % Income before income taxes 609,280 693,673 (12) % 568,694 22 % Income taxes 133,813 147,080 (9) % 121,408 21 % Net income 475,467 546,593 (13) % 447,286 22 % Diluted earnings per common share $ 3.46 $ 3.81 (9) % $ 3.00 27 % * Variances noted "NM" indicate the percent change is not meaningful. 28 Significant Items Impacting Our Financial Results in 2022 Revenues increased $72.7 million, or 4%, to $2.0 billion in 2022 compared to 2021.
Condensed Consolidated Statements of Operations for the years ended 2023, 2022 and 2021 were: Year Ended December 31, 2023 2022 Percent Change* 2021 Percent Change Revenues $ 1,919,793 $ 1,991,037 (4) % $ 1,918,309 4 % Expenses 1,495,269 1,515,284 (1) % 1,364,928 11 % Income from operations 424,524 475,753 (11) % 553,381 (14) % Net gain (loss) from investments 2,757 (3,078) NM (366) NM Interest income, net of interest expense 40,444 12,559 222 % 3,086 307 % Other income — 3,379 NM — NM Equity in earnings of unconsolidated affiliates 126,930 120,667 5 % 137,572 (12) % Income before income taxes 594,655 609,280 (2) % 693,673 (12) % Income taxes 132,397 133,813 (1) % 147,080 (9) % Net income 462,258 475,467 (3) % 546,593 (13) % Diluted earnings per common share $ 3.46 $ 3.46 — % $ 3.81 (9) % * Variances noted "NM" indicate the percent change is not meaningful. 31 Significant Items Impacting Our Financial Results in 2023 Revenues decreased $71.2 million, or 4%, to $1.9 billion in 2023 compared to 2022.
Ending Asset Balances (In millions) As of December 31, Percent Change Percent Change 2022 2021 2020 Private Banks: Equity and fixed-income programs $ 22,377 $ 26,281 (15) % $ 25,498 3 % Collective trust fund programs 7 6 17 % 6 — % Liquidity funds 3,201 4,724 (32) % 3,778 25 % Total assets under management $ 25,585 $ 31,011 (17) % $ 29,282 6 % Client assets under administration 4,151 4,481 (7) % 26,346 (83) % Total assets $ 29,736 $ 35,492 (16) % $ 55,628 (36) % Investment Advisors: Equity and fixed-income programs $ 66,240 $ 81,686 (19) % $ 71,248 15 % Liquidity funds 5,436 4,317 26 % 3,832 13 % Total Platform assets under management $ 71,676 $ 86,003 (17) % $ 75,080 15 % Platform-only assets 13,931 14,564 (4) % 11,862 23 % Total Platform assets $ 85,607 $ 100,567 (15) % $ 86,942 16 % Institutional Investors: Equity and fixed-income programs $ 73,178 $ 91,719 (20) % $ 90,869 1 % Collective trust fund programs 5 5 — % 98 (95) % Liquidity funds 1,557 2,118 (26) % 2,128 — % Total assets under management $ 74,740 $ 93,842 (20) % $ 93,095 1 % Advised assets 4,314 4,857 (11) % 4,063 20 % Total assets $ 79,054 $ 98,699 (20) % $ 97,158 2 % Investment Managers: Collective trust fund programs (A) $ 141,285 $ 92,549 53 % $ 75,214 23 % Liquidity funds 199 423 (53) % 424 — % Total assets under management $ 141,484 $ 92,972 52 % $ 75,638 23 % Client assets under administration 810,491 907,377 (11) % 760,397 19 % Total assets $ 951,975 $ 1,000,349 (5) % $ 836,035 20 % Investments in New Businesses: Equity and fixed-income programs $ 1,912 $ 2,096 (9) % $ 1,711 23 % Liquidity funds 215 240 (10) % 162 48 % Total assets under management $ 2,127 $ 2,336 (9) % $ 1,873 25 % Advised assets 1,077 1,410 (24) % 1,299 NM Total assets $ 3,204 $ 3,746 (14) % $ 3,172 18 % LSV: Equity and fixed-income programs (B) $ 83,753 $ 98,984 (15) % $ 93,692 6 % 32 Total: Equity and fixed-income programs (C) $ 247,460 $ 300,766 (18) % $ 283,018 6 % Collective trust fund programs 141,297 92,560 53 % 75,318 23 % Liquidity funds 10,608 11,822 (10) % 10,324 15 % Total assets under management $ 399,365 $ 405,148 (1) % $ 368,660 10 % Advised assets 5,391 6,267 (14) % 5,362 17 % Client assets under administration (D) 814,642 911,858 (11) % 786,743 16 % Platform-only assets 13,931 $ 14,564 (4) % 11,862 23 % Total assets $ 1,233,329 $ 1,337,837 (8) % $ 1,172,627 14 % (A) Collective trust fund program assets are included in assets under management since SEI is the trustee.
Ending Asset Balances (In millions) As of December 31, Percent Change Percent Change 2023 2022 2021 Private Banks: Equity and fixed-income programs $ 24,496 $ 22,377 9 % $ 26,281 (15) % Collective trust fund programs 4 7 (43) % 6 17 % Liquidity funds 3,916 3,201 22 % 4,724 (32) % Total assets under management $ 28,416 $ 25,585 11 % $ 31,011 (17) % Client assets under administration 7,267 4,151 75 % 4,481 (7) % Total assets $ 35,683 $ 29,736 20 % $ 35,492 (16) % Investment Advisors: Equity and fixed-income programs $ 71,634 $ 66,240 8 % $ 81,686 (19) % Liquidity funds 4,812 5,436 (11) % 4,317 26 % Total Platform assets under management $ 76,446 $ 71,676 7 % $ 86,003 (17) % Platform-only assets 18,324 13,931 32 % 14,564 (4) % Platform-only assets-deposit program 843 — NM — NM Total Platform assets $ 95,613 $ 85,607 12 % $ 100,567 (15) % Institutional Investors: Equity and fixed-income programs $ 77,208 $ 73,178 6 % $ 91,719 (20) % Collective trust fund programs 1 5 (80) % 5 — % Liquidity funds 1,734 1,557 11 % 2,118 (26) % Total assets under management $ 78,943 $ 74,740 6 % $ 93,842 (20) % Advised assets 6,120 4,314 42 % 4,857 (11) % Total assets $ 85,063 $ 79,054 8 % $ 98,699 (20) % Investment Managers: Collective trust fund programs (A) $ 156,376 $ 141,285 11 % $ 92,549 53 % Liquidity funds 114 199 (43) % 423 (53) % Total assets under management $ 156,490 $ 141,484 11 % $ 92,972 52 % Client assets under administration 935,564 810,491 15 % 907,377 (11) % Total assets $ 1,092,054 $ 951,975 15 % $ 1,000,349 (5) % Investments in New Businesses: Equity and fixed-income programs $ 2,174 $ 1,912 14 % $ 2,096 (9) % Liquidity funds 209 215 (3) % 240 (10) % Total assets under management $ 2,383 $ 2,127 12 % $ 2,336 (9) % Advised assets 1,150 1,077 7 % 1,410 (24) % Total assets $ 3,533 $ 3,204 10 % $ 3,746 (14) % LSV: Equity and fixed-income programs (B) $ 89,312 $ 83,753 7 % $ 98,984 (15) % 35 Total: Equity and fixed-income programs (C) $ 264,824 $ 247,460 7 % $ 300,766 (18) % Collective trust fund programs 156,381 141,297 11 % 92,560 53 % Liquidity funds 10,785 10,608 2 % 11,822 (10) % Total assets under management $ 431,990 $ 399,365 8 % $ 405,148 (1) % Advised assets 7,270 5,391 35 % 6,267 (14) % Client assets under administration (D) 942,831 814,642 16 % 911,858 (11) % Platform-only assets 19,167 $ 13,931 38 % 14,564 (4) % Total assets $ 1,401,258 $ 1,233,329 14 % $ 1,337,837 (8) % (A) Collective trust fund program assets are included in assets under management since SEI is the trustee.
Operating income during 2022 was primarily affected by: • Increased personnel costs due to competitive labor markets; • Increased costs associated with new business, primarily personnel expenses and third-party vendor costs; and • Increased non-capitalized investment spending, mainly consulting costs; partially offset by • An increase in revenues; Operating margins were 40% in 2021 and 37% in 2020.
Operating income during 2022 was primarily affected by: • Increased personnel costs due to competitive labor markets; • Increased costs associated with new business, primarily personnel expenses and third-party vendor costs; and • Increased non-capitalized investment spending, mainly consulting costs; partially offset by • An increase in revenues; Other Corporate overhead expenses Corporate overhead expenses primarily consist of general and administrative expenses and other costs not directly attributable to a reportable business segment.
We recognized one-time costs of $54.8 million during 2022 from the program. These costs are primarily included in Compensation, benefits and other personnel costs on the accompanying Consolidated Statements of Operations (See Note 14 to the Consolidated Financial Statements). • The Institutional Investors segment includes personnel, professional fees, amortization and other costs related to SEI Novus and Atlas Master Trust.
We recognized one-time costs of $54.8 million during 2022 from the program. • The Institutional Investors segment includes personnel, professional fees, amortization and other costs related to SEI Novus and Atlas Master Trust.
Intangible assets acquired through acquisitions and asset purchases The increase in amortization expense related to intangible assets and asset purchases in 2022 and 2021 was due to the acquisitions of Finomial, SEI Novus and Atlas Master Trust during the fourth quarter 2021.
Intangible assets The increase in amortization expense related to intangible assets and asset purchases in 2022 was due to the acquisitions of Finomial, SEI Novus and Atlas Master Trust during the fourth quarter 2021. Through these transactions, we acquired intangible assets related to technology, trade names and client relationships which are amortized over the estimated useful life of the assets.
Investment Advisors Year Ended December 31, 2022 2021 Percent Change 2020 Percent Change Revenues: Investment management fees-SEI fund programs $ 263,266 $ 301,581 (13) % $ 271,627 11 % Separately managed account fees 162,762 158,181 3 % 115,887 36 % Other fees 21,738 23,187 (6) % 20,050 16 % Total revenues $ 447,766 $ 482,949 (7) % $ 407,564 18 % Revenues decreased $35.2 million, or 7%, in 2022 compared to the prior year.
Investment Advisors Year Ended December 31, 2023 2022 Percent Change 2021 Percent Change Revenues: Investment management fees-SEI fund programs $ 239,244 $ 263,266 (9) % $ 301,581 (13) % Separately managed account fees 174,418 162,762 7 % 158,181 3 % Other fees 22,636 21,738 4 % 23,187 (6) % Total revenues $ 436,298 $ 447,766 (3) % $ 482,949 (7) % Revenues decreased $11.5 million, or 3%, in 2023 compared to the prior year.
Operating margins were 6% in 2021 and 2% in 2020. Operating income increased $21.9 million, or 245%, in 2021 compared to the prior year.
Operating margins were 35% in 2023 and 2022. Operating income increased $13.2 million, or 6%, in 2023 compared to the prior year.
The capitalization of the initial development work related to SWP began in 40 mid-2007 when the platform was determined to be ready for its intended use. The amortization expense related to the initial software development costs ended in the second quarter of 2022, resulting in a decline in amortization expense related to capitalized software development costs in 2022.
The capitalization of the initial development work related to SWP began in mid-2007 when the platform was determined to be ready for its intended use.
Fair Value Measurements The fair value of financial assets and liabilities, except for the investment funds sponsored by LSV, is determined in accordance with the fair value hierarchy. The fair value of the investment funds sponsored by LSV is measured using the net asset value per share (NAV) as a practical expedient.
The fair value of the investment funds sponsored by LSV is measured using the net asset value per share (NAV) as a practical expedient.
We continue to evaluate improvements to our information technology infrastructure which, if implemented, will result in additional expenditures for purchased software and equipment for data center operations. • Cash paid for acquisitions, net of cash acquired. In October 2021, we made a net cash payment of $8.2 million to complete the acquisition of Finomial, an investor lifecycle management fintech firm.
We continue to evaluate improvements to our information technology infrastructure which, if implemented, will result in additional expenditures for purchased software and equipment for data center operations. • Cash paid for acquisitions, net of cash acquired.
The increase in the effective rate was primarily due to reduced tax benefits related to a lower volume of stock option exercises and an increase in the state effective tax rate. • We continued the stock repurchase program during 2022 and purchased approximately 5,914,000 shares at an average price of $57.22 per share for a total cost of $338.4 million.
The increase in the effective rate was primarily due to reduced tax benefits related to a lower volume of stock option exercises and an increase in the state effective tax rate. • Cash flow from operations was $566.1 million during 2022. • SEI repurchased 5.9 million shares of its common stock at an average price of $57.22 per share for a total cost of $338.4 million and paid $109.8 million in cash dividends to shareholders during 2022.
Net income decreased $71.1 million, or 13%, to $475.5 million and diluted earnings per share decreased to $3.46 per share in 2022 compared to $3.81 per share in 2021.
Significant Items Impacting Our Financial Results in 2022 Revenues increased $72.7 million, or 4%, to $2.0 billion in 2022 compared to 2021. Net income decreased $71.1 million, or 13%, to $475.5 million and diluted earnings per share decreased to $3.46 per share in 2022 compared to $3.81 per share in 2021.
For additional information regarding stock-based compensation, see Note 7 to the Consolidated Financial Statements. Valuation of Assets Acquired in an Acquisition Including Goodwill and Intangible Assets: We allocate the fair value of the total purchase price paid for acquisitions to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.
These expectations are subject to change in future periods. 48 Valuation of Assets Acquired in an Acquisition Including Goodwill and Intangible Assets: We allocate the fair value of the total purchase price paid for acquisitions to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.
The effective tax rate is affected by recurring items, such as the U.S. federal tax rates and tax rates in various states and foreign jurisdictions and the relative amount of income earned in those jurisdictions. The income earned by jurisdiction has been fairly consistent.
Income Taxes Our effective tax rate was 22.3% for 2023, 22.0% for 2022 and 21.2% for 2021. The effective tax rate is affected by recurring items, such as the U.S. federal tax rates and tax rates in various states and foreign jurisdictions and the relative amount of income earned in those jurisdictions.
Operating income increased $52.0 million, or 29%, in 2021 compared to the prior year. Operating income during 2021 was primarily affected by: • An increase in revenues; partially offset by • Increased costs associated with new business, primarily personnel expenses and third-party vendor costs; and • Increased non-capitalized investment spending, mainly consulting costs.
Operating income during 2023 was primarily affected by: • An increase in revenues; and • Decreased non-capitalized investment spending, mainly consulting costs; partially offset by • Increased costs associated with new business, primarily personnel expenses and third-party vendor costs; 42 • Increased personnel costs due to competitive labor markets; and • The write off of $5.3 million in previously capitalized software development costs.
Any change in estimate could result in the remaining amount of stock-based compensation expense to be accelerated, spread out over a longer period, or reversed. This may cause volatility in the recognition of stock-based compensation expense and materially affect earnings. During 2022, 2021 and 2020, we revised the estimates of when certain vesting targets were expected to be achieved.
Any change in estimate could result in the remaining amount of stock-based compensation expense to be accelerated, spread out over a longer period, or reversed. This may cause volatility in the recognition of stock-based compensation expense and materially affect earnings (See Note 7 to the Consolidated Financial Statements for more information).
These unfavorable market conditions had a negative impact on our asset-based fees thereby decreasing our base revenues. Macroeconomic factors such as persistent inflationary pressures, the continuation of interest rate increases, stagnant or recessionary economies, tight labor markets and geopolitical tensions, among others, could have significant influence on capital markets in 2023 and beyond.
Macroeconomic factors such as stagnant or recessionary economies, persistent inflationary pressures, continuation of interest rate increases, declining property markets and consumer confidence, tight labor markets and geopolitical tensions, among others, could have significant influence on capital markets in 2024 and beyond.
Revenues increased $38.2 million, or 8%, in 2021 compared to the prior year.
Revenues increased $82.1 million, or 17%, in 2022 compared to the prior year.
Operating margins were 50% in 2021 and 49% in 2020. Operating income increased $41.0 million, or 20%, in 2021 compared to the prior year.
Operating margins were 41% in 2023 and 44% in 2022. Operating income decreased $19.0 million, or 10%, in 2023 compared to the prior year.
Revenues increased $26.2 million, or 8%, in 2021 compared to the prior year.
Revenues decreased $35.2 million, or 7%, in 2022 compared to the prior year.
The increase in corporate overhead expenses during 2022 is primarily due to personnel costs associated with the VSP of $54.8 million (See Note 14 to the Consolidated Financial Statements). Corporate overhead expenses also increased due to higher personnel costs, consulting and professional fees and severance costs unrelated to the VSP.
Corporate overhead expenses were $132.2 million, $168.2 million and $91.9 million in 2023, 2022 and 2021, respectively. The decrease in corporate overhead expenses during 2023 is primarily due to personnel costs associated with the VSP of $54.8 million recorded in the third quarter of 2022 (See Note 14 to the Consolidated Financial Statements).
The table below presents the revenues and net income of LSV and our proportionate share in LSV's earnings. 2022 2021 Percent Change 2020 Percent Change Revenues $ 406,895 $ 456,259 (11) % $ 391,648 16 % Net income 312,180 354,964 (12) % 301,620 18 % SEI's proportionate share in the earnings of LSV $ 120,667 $ 137,572 (12) % $ 117,134 17 % The decrease in earnings from LSV in 2022 was due to negative cash flows from existing clients, market depreciation and client losses.
The table below presents the revenues and net income of LSV and our proportionate share in LSV's earnings. 2023 2022 Percent Change 2021 Percent Change Revenues $ 426,270 $ 406,895 5 % $ 456,259 (11) % Net income 328,905 312,180 5 % 354,964 (12) % SEI's proportionate share in the earnings of LSV $ 126,930 $ 120,667 5 % $ 137,572 (12) % The increase in earnings from LSV in 2023 was primarily due to higher performance fees and market appreciation.
Liquidity and Capital Resources Year Ended December 31, 2022 2021 2020 Net cash provided by operating activities $ 566,119 $ 633,101 $ 488,682 Net cash used in investing activities (89,809) (164,883) (67,496) Net cash used in financing activities (437,235) (422,319) (482,135) Effect of exchange rate changes on cash and cash equivalents (17,474) (1,868) 4,129 Net increase (decrease) in cash and cash equivalents 21,601 44,031 (56,820) Cash, cash equivalents and restricted cash, beginning of year 831,758 787,727 844,547 Cash, cash equivalents and restricted cash, end of year $ 853,359 $ 831,758 $ 787,727 Our credit facility provides for borrowings up to $325.0 million and is scheduled to expire in April 2026.
The direct and indirect costs of responding to these regulatory activities and of complying with new or modified regulations, as well as the potential financial costs and potential reputational impact against us of any enforcement proceedings that might result, is uncertain but could have a material adverse impact on our operating results or financial position. 45 Liquidity and Capital Resources Year Ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 447,030 $ 566,119 $ 633,101 Net cash used in investing activities (141,543) (89,809) (164,883) Net cash used in financing activities (331,324) (437,235) (422,319) Effect of exchange rate changes on cash and cash equivalents 7,476 (17,474) (1,868) Net (decrease) increase in cash and cash equivalents (18,361) 21,601 44,031 Cash, cash equivalents and restricted cash, beginning of year 853,359 831,758 787,727 Cash, cash equivalents and restricted cash, end of year $ 834,998 $ 853,359 $ 831,758 The credit facility provides for borrowings up to $325.0 million and is scheduled to expire in April 2026.
The negative impact from the change in the Company's working capital accounts partially offset the increase. Net cash used in investing activities includes: • Purchases, sales and maturities of marketable securities.
Net cash used in investing activities includes: • Purchases, sales and maturities of marketable securities.
Amortization Amortization expense on the accompanying Consolidated Statements of Operations consists of: 2022 2021 Percent Change 2020 Percent Change Capitalized software development costs $ 41,437 $ 53,568 (23)% $ 49,062 9% Intangible assets acquired through acquisitions and asset purchases 12,580 5,260 139% 3,683 43% Other $ 263 $ 324 (19)% $ 230 41% Total amortization expense $ 54,280 $ 59,152 (8)% $ 52,975 12% Capitalized software development costs Capitalized software development costs are amortized on a project basis using the straight-line method over the estimated economic life of the product or enhancement.
Net gain (loss) from investments Net gains and losses from investments during 2023 and 2022 were primarily due to realized and unrealized gains and losses recorded in current earnings related to the investment funds sponsored by LSV, equity holdings and SEI-sponsored mutual funds (See Note 5 to the Consolidated Financial Statements). 43 Amortization Amortization expense on the accompanying Consolidated Statements of Operations consists of: 2023 2022 Percent Change 2021 Percent Change Capitalized software development costs $ 26,227 $ 41,437 (37)% $ 53,568 (23)% Intangible assets 12,161 12,580 (3)% 5,260 139% Other 281 263 7% 324 (19)% Total amortization expense $ 38,669 $ 54,280 (29)% $ 59,152 (8)% Capitalized software development costs Capitalized software development costs are amortized on a project basis using the straight-line method over the estimated economic life of the product or enhancement.
Increased performance fees during 2022 partially offset the decrease in earnings from LSV. Average assets under management by LSV decreased $12.4 billion to $87.2 billion during 2022 as compared to $99.6 billion during 2021, a decrease of 12%. The increase in earnings from LSV in 2021 was due to higher assets under management from market appreciation and new clients.
Net negative cash flows from existing clients and client losses partially offset the increase in earnings from LSV. Average assets under management by LSV decreased $1.5 billion to $85.7 billion during 2023 as compared to $87.2 billion during 2022, a decrease of 2%.
Operating income in 2021 was primarily affected by: • An increase in revenues; and • Decreased non-capitalized costs, mainly personnel and consulting costs, related to maintenance, support and client migrations to SWP; partially offset by • Increased direct expenses associated with increased investment management fees from existing international clients; • Increased amortization expense related to SWP; and 37 • Increased personnel and stock-based compensation costs.
Operating income in 2023 was primarily affected by: • A decrease in revenues; • Increased personnel costs; • Increased net direct expenses primarily associated with the increase in separately managed account fees; and • Increased non-capitalized consulting costs; partially offset by; • Decreased amortization expense related to SWP. Operating margins were 44% in 2022 and 50% in 2021.
Any prolonged future downturns in general capital market conditions could have adverse effects on our revenues and earnings derived from assets under management and administration. 31 Ending Asset Balances This table presents ending asset balances of our clients, or of our clients’ customers, for which we provide management or administrative services through our subsidiaries and partnerships in which we have a significant interest.
Any prolonged future downturns in general capital market conditions could have adverse effects on our revenues and earnings derived from assets under management and administration.
Currently, our ability to borrow from the credit facility is not limited by any covenant of the agreement (See Note 6 to the Consolidated Financial Statements).
Currently, our ability to borrow from the credit facility is not limited by any covenant of the agreement (See Note 6 to the Consolidated Financial Statements). On April 17, 2023, we amended the credit facility agreement with the lenders to add the Secured Overnight Financing Rate (SOFR) as an alternative reference rate for borrowings in place of LIBOR.
These changes in estimates resulted in an increase in stock-based compensation expense of $4.9 million in 2022 in comparison to the previous management estimate, an increase in stock-based compensation expense of $5.9 million in 2021, and a decrease in stock-based compensation expense of $2.7 million in 2020 in comparison to the previous management estimates.
During 2023, 2022 and 2021, we revised the estimates of when certain vesting targets for stock options were expected to be achieved. These changes in estimates resulted in a decrease in stock-based compensation expense of $6.9 million and $4.9 million in 2023 and 2022, respectively, and an increase in stock-based compensation expense of $5.9 million in 2021.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInformation required by this item is set forth under the captions "Our revenues and earnings are affected by changes in capital markets and significant changes in the value of financial instruments" and "Changes in interest rates may affect the value of our fixed-income investment securities" in Item 1A, Risk Factors and under the caption "Sensitivity of our revenues and earnings to capital market fluctuations" in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. 46
Biggest changeInformation required by this item is set forth under the captions "Our revenues and earnings are affected by changes in capital markets and significant changes in the value of financial instruments" and "Changes in interest rates may affect the value of our fixed-income investment securities" in Item 1A, Risk Factors and under the caption "Sensitivity of our revenues and earnings to capital market fluctuations" in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. 49

Other SEIC 10-K year-over-year comparisons