EX-99.1 2 a18-12391_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

News Release

 

Waddell & Reed Financial, Inc. Reports First Quarter Results

 

Overland Park, KS, May 1, 2018 — Waddell & Reed Financial, Inc. (NYSE: WDR) today reported first quarter 2018 net income1 of $46.3 million, or $0.56 per diluted share, compared to net income of $29.8 million, or $0.36 per diluted share, during the prior quarter and net income of $33.9 million, or $0.40 per diluted share, during the first quarter of 2017.

 

Revenues of $297.6 million during the quarter increased 1% sequentially and 4% compared to the first quarter of 2017.  Operating expenses of $237.7 million during the quarter increased 2% sequentially and 2% compared to the same quarter in 2017. The operating margin was 20.1% during the current quarter, compared to 21.0% and 18.5% during the fourth and first quarters of 2017, respectively.

 

Assets under management ended the quarter at $80.2 billion, declining 1% compared to the prior quarter and 1% compared to the first quarter of 2017.  Gross sales increased 40% compared to the fourth quarter of 2017 and 30% compared to the first quarter of 2017, while redemptions improved.  Net outflows were $1.5 billion during the current quarter, compared to net outflows of $2.7 billion during the prior quarter and net outflows of $3.4 billion during the comparable quarter in 2017.

 

Broker-dealer assets under administration ended the quarter at $56.3 billion, declining less than 1% compared to the fourth quarter of 2017 and increasing 5% compared to the same quarter in 2017.  Average trailing twelve-month productivity increased to $285 thousand per advisor during the first quarter of 2018 compared to $256 thousand and $230 thousand during the fourth and first quarters of 2017, respectively.

 

“Over the last 18 months, we have made solid progress in transitioning our business model to one that better positions us for the future,” said Philip J. Sanders, Chief Executive Officer of Waddell & Reed Financial, Inc. “We have made headway on a number of corporate initiatives, including improving investment performance, which we know is key to our long-term success.”

 

Effective January 1, 2018, we elected to change our accounting policy on how we report indirect underwriting and distribution expenses in the underwriting and distribution caption and certain expenses historically reported as general and administrative.  The change in presentation of certain line items in our consolidated statements of income is intended to improve the transparency of our financial statements.  Separately, we adopted Accounting Standards Update (“ASU”) 2017-07, “Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”, which reclassifies net periodic pension costs, other than historical service costs, from compensation and benefits to investment and other income (loss).  All reclassifications were applied retrospectively and did not affect net income.

 


1  Net income represents net income attributable to Waddell & Reed Financial, Inc.

 

1



 

Revenues Analysis

 

Investment management fee revenues decreased $2.7 million, or 2%, sequentially as an increase in average assets under management was offset by two fewer days during the current quarter and a decrease in the effective management fee rate.  Compared to the first quarter of 2017, fees increased $3.3 million, or 2%, due to higher average assets under management and an increase in the effective management fee rate.  During the current quarter, the effective management fee rate was 65.8 basis points, compared to 66.5 basis points during the fourth quarter of 2017 and 65.0 basis points during the first quarter of 2017.  Average assets under management were $82.4 billion during the current quarter, compared to $81.3 billion and $81.4 billion during the fourth and first quarters of 2017, respectively.

 

Underwriting and distribution fees increased $5.8 million, or 4%, sequentially.  The increase was largely due to payments received from independent financial advisors for office space, compliance oversight and affiliation fees.  Prior to 2018, the cost of these services was embedded in commissions.  An increase in advisory fee revenues also contributed to the sequential increase in underwriting and distribution fees.  Compared to the first quarter of 2017, revenues increased $9.2 million, or 7%, due to growth in advisory fee revenue and new revenues from independent financial advisors for office space, compliance oversight and affiliation fees, which were partly offset by lower distribution fees to third-party distributors.

 

Operating Expenses Analysis

 

Distribution expenses increased $6.6 million, or 6%, sequentially due primarily to higher payout rates to independent financial advisors under the new commission structure that became effective on January 1, 2018.  Compared to the same quarter in 2017, costs increased $6.0 million, or 6%, due to higher commission rates for advisors, which were partly offset by lower commissions to third-party distributors.

 

Compensation and benefits expenses declined $0.5 million, or less than 1%, sequentially due to a discretionary 401(k) contribution in the fourth quarter and partially offset by higher payroll taxes during the first quarter.  Compared to the first quarter of 2017, expenses increased $1.8 million, or 3%, primarily due to annual merit increases, which were partly offset by lower pension costs due to the prior year plan freeze.

 

General and administrative expenses declined $0.5 million, or 3%, sequentially due to lower business meeting and travel costs and lower usage of contractors and consultants due to the completion of various projects.  Compared to the first quarter of 2017, expenses declined $2.7 million, or 12%, primarily due to a combination of lower usage of contractors and consultants, and lower business meeting and travel costs.

 

Technology expenses increased $1.4 million, or 9%, sequentially due to higher data service costs related to fund mergers and cost of service increases, as well as higher technology consulting costs.  Compared to the first quarter of 2017, expenses declined $0.3 million, or 2%.

 

Income Taxes

 

Our effective tax rate during the current quarter was 24.6% and was lower compared to prior periods as a result of the Tax Reform Act, which lowered the statutory rate from 35% to 21%.  We expect our effective tax rate to range from 23% to 25%, exclusive of the effects of share-based payments, state tax incentives, unanticipated state tax legislative changes and unanticipated fluctuations in earnings.

 

2



 

Assets Under Management

(in millions)

 

 

 

Three Months Ended

 

 

 

Mar. 31,

 

Jun. 30,

 

Sep. 30,

 

Dec. 31,

 

Mar. 31,

 

 

 

2017

 

2018

 

Unaffiliated 1

 

 

 

 

 

 

 

 

 

 

 

Beginning assets

 

$

30,295

 

$

30,182

 

$

30,307

 

$

31,062

 

$

31,133

 

Sales 2

 

1,799

 

2,080

 

1,790

 

1,577

 

2,245

 

Redemptions

 

(3,707

)

(2,886

)

(2,486

)

(2,912

)

(2,692

)

Net exchanges

 

236

 

235

 

213

 

316

 

247

 

Net Flows

 

(1,672

)

(571

)

(483

)

(1,019

)

(200

)

Market action

 

1,559

 

696

 

1,238

 

1,090

 

122

 

Ending assets

 

$

30,182

 

$

30,307

 

$

31,062

 

$

31,133

 

$

31,055

 

Annualized organic growth rate

 

(22.1

)%

(7.6

)%

(6.4

)%

(13.1

)%

(2.6

)%

Annualized redemption rate

 

50.5

%

39.2

%

33.0

%

37.9

%

35.8

%

Institutional

 

 

 

 

 

 

 

 

 

 

 

Beginning assets

 

$

7,904

 

$

7,792

 

$

7,036

 

$

6,365

 

$

6,289

 

Sales 2

 

142

 

78

 

68

 

66

 

552

 

Redemptions

 

(727

)

(1,057

)

(1,139

)

(521

)

(604

)

Net exchanges

 

 

6

 

 

 

 

Net Flows

 

(585

)

(973

)

(1,071

)

(455

)

(52

)

Market action

 

473

 

217

 

400

 

379

 

212

 

Ending assets

 

$

7,792

 

$

7,036

 

$

6,365

 

$

6,289

 

$

6,449

 

Annualized organic growth rate

 

(29.6

)%

(49.9

)%

(60.9

)%

(28.6

)%

(3.3

)%

Annualized redemption rate

 

37.2

%

58.7

%

67.3

%

32.2

%

37.8

%

Broker-Dealer

 

 

 

 

 

 

 

 

 

 

 

Beginning assets

 

$

42,322

 

$

43,110

 

$

43,084

 

$

43,472

 

$

43,660

 

Sales 2

 

978

 

1,142

 

1,024

 

1,077

 

1,001

 

Redemptions

 

(1,871

)

(1,812

)

(2,049

)

(2,026

)

(1,958

)

Net exchanges

 

(236

)

(241

)

(213

)

(316

)

(247

)

Net Flows

 

(1,129

)

(911

)

(1,238

)

(1,265

)

(1,204

)

Market action

 

1,917

 

885

 

1,626

 

1,453

 

251

 

Ending assets

 

$

43,110

 

$

43,084

 

$

43,472

 

$

43,660

 

$

42,707

 

Annualized organic growth rate

 

(10.7

)%

(8.5

)%

(11.5

)%

(11.6

)%

(11.0

)%

Annualized redemption rate

 

15.1

%

14.7

%

16.4

%

16.1

%

15.1

%

Consolidated Total

 

 

 

 

 

 

 

 

 

 

 

Beginning assets

 

$

80,521

 

$

81,084

 

$

80,427

 

$

80,899

 

$

81,082

 

Sales 2

 

2,919

 

3,300

 

2,882

 

2,720

 

3,798

 

Redemptions

 

(6,305

)

(5,755

)

(5,674

)

(5,459

)

(5,254

)

Net exchanges

 

 

 

 

 

 

Net Flows

 

(3,386

)

(2,455

)

(2,792

)

(2,739

)

(1,456

)

Market action

 

3,949

 

1,798

 

3,264

 

2,922

 

585

 

Ending assets

 

$

81,084

 

$

80,427

 

$

80,899

 

$

81,082

 

$

80,211

 

Annualized organic growth rate

 

(16.8

)%

(12.1

)%

(13.9

)%

(13.5

)%

(7.2

)%

Annualized redemption rate

 

30.5

%

27.9

%

27.1

%

25.7

%

24.8

%

 


(1)         Unaffiliated includes National channel (home office and wholesale), Defined Contribution Investment Only “DCIO”,  Registered Investment Advisor “RIA” and Variable Annuity “VA”

(2)         Sales is primarily gross sales (net of sales commissions).  This amount also includes net reinvested dividends & capital gains and investment income.

 

Fund Rankings

 

1 Year

 

3 Years

 

5 Years

 

Lipper

 

 

 

 

 

 

 

Funds ranked in top half

 

43

%

35

%

43

%

Assets ranked in top half

 

52

%

49

%

50

%

MorningStar

 

 

 

 

 

 

 

Funds ranked in top half

 

38

%

35

%

41

%

Assets ranked in top half

 

44

%

38

%

48

%

 

MorningStar Ratings

 

Overall

 

3 Years

 

5 Years

 

Funds with 4/5 stars

 

38

%

19

%

25

%

Assets with 4/5 stars

 

58

%

26

%

49

%

 

Based on class I share, which reflects sales and asset concentrations.

 

3



 

Broker-Dealer

 

 

 

Three Months Ended

 

 

 

Mar. 31,

 

Jun. 30,

 

Sep. 30,

 

Dec. 31,

 

Mar. 31,

 

(in millions)

 

2017

 

2018

 

Assets under administration (AUA)

 

 

 

 

 

 

 

 

 

 

 

Advisory assets

 

$

19,071

 

$

19,535

 

$

20,734

 

$

21,613

 

$

22,050

 

Non-advisory assets

 

34,453

 

34,373

 

34,856

 

35,073

 

34,216

 

Total assets under administration

 

53,524

 

53,908

 

55,590

 

56,686

 

56,266

 

 

 

 

 

 

 

 

 

 

 

 

 

Net new advisory assets 1

 

$

(100

)

$

22

 

$

420

 

$

129

 

$

392

 

Net new non-advisory assets 1, 2

 

(868

)

(693

)

(965

)

(1,047

)

(983

)

Total net new AUA 1

 

(968

)

(671

)

(545

)

(918

)

(591

)

 

 

 

 

 

 

 

 

 

 

 

 

Annualized advisory AUA growth 3

 

(2.2

)%

0.5

%

8.6

%

2.5

%

7.3

%

Annualized AUA growth 3

 

(7.4

)%

(5.0

)%

(4.0

)%

(6.6

)%

(4.2

)%

 

 

 

 

 

 

 

 

 

 

 

 

Advisor headcount

 

1,662

 

1,581

 

1,481

 

1,367

 

1,170

 

Avg. trailing 12-month revenue per advisor 4 (in thousands)

 

$

230

 

$

232

 

$

240

 

$

256

 

$

285

 

Advisor associates

 

252

 

254

 

262

 

265

 

327

 

 


(1)    Net new assets is calculated by taking total client deposits and net transfers less client withdrawals.

(2)    Excludes activity related to products held outside of our platform.  These assets represent less than 10% of total AUA.

(3)    Annualized growth is calculated by annualizing the quarterly net new assets divided by beginning assets under administration.

(4)    Production per advisor is calculated as trailing 12- month total underwriting and distribution fees less “other” underwriting and distribution fees divided by the average number of financial advisors.  “Other” underwriting and distribution fees predominantly include fees paid by advisors for programs and services.

 

4



 

Unaudited Consolidated Statements of Income

(in thousands, except per share data and margin)

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

Dec. 31,

 

Mar. 31,

 

Sequential Qtr.

 

Year-over-Year Qtr.

 

 

 

2018

 

2017

 

2017

 

Change

 

%

 

Change

 

%

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment management fees

 

$

133,692

 

$

136,387

 

$

130,436

 

$

(2,695

)

(2.0

)%

$

3,256

 

2.5

%

Underwriting and distribution fees

 

138,041

 

132,200

 

128,831

 

5,841

 

4.4

%

9,210

 

7.1

%

Shareholder service fees

 

25,882

 

25,889

 

27,297

 

(7

)

(0.0

)%

(1,415

)

(5.2

)%

Total

 

297,615

 

294,476

 

286,564

 

3,139

 

1.1

%

11,051

 

3.9

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution 1

 

114,470

 

107,889

 

108,437

 

6,581

 

6.1

%

6,033

 

5.6

%

Compensation and benefits

 

68,785

 

69,273

 

67,035

 

(488

)

(0.7

)%

1,750

 

2.6

%

General and administrative

 

19,538

 

20,069

 

22,195

 

(531

)

(2.6

)%

(2,657

)

(12.0

)%

Technology

 

16,644

 

15,282

 

16,977

 

1,362

 

8.9

%

(333

)

(2.0

)%

Occupancy

 

6,964

 

7,743

 

7,785

 

(779

)

(10.1

)%

(821

)

(10.5

)%

Marketing and advertising

 

2,281

 

3,353

 

2,611

 

(1,072

)

(32.0

)%

(330

)

(12.6

)%

Depreciation

 

5,302

 

5,357

 

5,221

 

(55

)

(1.0

)%

81

 

1.6

%

Subadvisory fees

 

3,708

 

3,717

 

2,697

 

(9

)

(0.2

)%

1,011

 

37.5

%

Intangible asset impairment

 

 

 

600

 

 

N/M

 

(600

)

N/M

 

Total

 

237,692

 

232,683

 

233,558

 

5,009

 

2.2

%

4,134

 

1.8

%

Operating income

 

59,923

 

61,793

 

53,006

 

(1,870

)

(3.0

)%

6,917

 

13.0

%

Investment and other income (loss)

 

2,816

 

(2,218

)

3,012

 

5,034

 

N/M

 

(196

)

(6.5

)%

Interest expense

 

(1,802

)

(2,909

)

(2,786

)

1,107

 

38.1

%

984

 

35.3

%

Income before provision for income taxes

 

60,937

 

56,666

 

53,232

 

4,271

 

7.5

%

7,705

 

14.5

%

Provision for income taxes

 

14,966

 

26,380

 

18,881

 

(11,414

)

(43.3

)%

(3,915

)

(20.7

)%

Net income

 

45,971

 

30,286

 

34,351

 

15,685

 

51.8

%

11,620

 

33.8

%

Net income attributable to redeemable noncontrolling interests

 

(366

)

522

 

480

 

(888

)

(170.1

)%

(846

)

(176.3

)%

Net income attributable to Waddell & Reed Financial, Inc.

 

$

46,337

 

$

29,764

 

$

33,871

 

$

16,573

 

55.7

%

$

12,466

 

36.8

%

Net income per share, basic and diluted:

 

$

0.56

 

$

0.36

 

$

0.40

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic and diluted

 

83,111

 

83,137

 

84,077

 

 

 

 

 

 

 

 

 

Operating margin

 

20.1

%

21.0

%

18.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Distribution expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaffiliated

 

30,354

 

31,395

 

33,908

 

 

 

 

 

 

 

 

 

Broker-dealer

 

84,116

 

76,494

 

74,529

 

 

 

 

 

 

 

 

 

 

 

$

114,470

 

$

107,889

 

$

108,437

 

 

 

 

 

 

 

 

 

 

5



 

Underwriting and distribution fees

(in thousands)

 

 

 

Three months ended Mar. 31, 2018

 

 

 

Unaffiliated

 

Broker-Dealer

 

Total

 

Fee-based asset allocation product revenues

 

 

$

65,516

 

$

65,516

 

Rule 12b-1 service and distribution fees

 

20,976

 

18,377

 

39,353

 

Sales commissions on front-end load mutual funds and variable annuity products

 

470

 

14,427

 

14,897

 

Sales commissions on other products

 

 

8,422

 

8,422

 

Other revenues

 

185

 

9,668

 

9,853

 

Total underwriting and distribution fees

 

$

21,631

 

$

116,410

 

$

138,041

 

 

 

 

Three months ended Dec. 31, 2017

 

 

 

Unaffiliated

 

Broker-Dealer

 

Total

 

Fee-based asset allocation product revenues

 

 

 

$

63,905

 

$

63,905

 

Rule 12b-1 service and distribution fees

 

22,123

 

19,305

 

41,428

 

Sales commissions on front-end load mutual funds and variable annuity products

 

380

 

13,727

 

14,107

 

Sales commissions on other products

 

 

7,615

 

7,615

 

Other revenues

 

186

 

4,959

 

5,145

 

Total underwriting and distribution fees

 

$

22,689

 

$

109,511

 

$

132,200

 

 

 

 

Three months ended Mar. 31, 2017

 

 

 

Unaffiliated

 

Broker-Dealer

 

Total

 

Fee-based asset allocation product revenues

 

 

$

56,756

 

$

56,756

 

Rule 12b-1 service and distribution fees

 

24,016

 

18,655

 

42,671

 

Sales commissions on front-end load mutual funds and variable annuity products

 

447

 

14,326

 

14,773

 

Sales commissions on other products

 

 

7,237

 

7,237

 

Other revenues

 

426

 

6,968

 

7,394

 

Total underwriting and distribution fees

 

$

24,889

 

$

103,942

 

$

128,831

 

 

6



 

Unaudited Condensed Balance Sheet

(in thousands)

 

 

 

Mar. 31,

 

Dec. 31,

 

 

 

2018

 

2017

 

Assets

 

 

 

 

 

Cash & cash equivalents (unrestricted)

 

$

177,630

 

$

207,829

 

Investment securities

 

642,237

 

700,492

 

Other assets

 

228,156

 

241,305

 

Property and equipment, net

 

82,488

 

87,667

 

Goodwill and intangible assets

 

147,069

 

147,069

 

Total assets

 

$

1,277,580

 

$

1,384,362

 

Liabilities, redeemable noncontrolling interests and equity

 

 

 

 

 

Short-term notes payable

 

$

 

$

94,996

 

Long-term debt

 

94,801

 

94,783

 

Other liabilities

 

275,241

 

307,190

 

Redeemable noncontrolling interests

 

18,570

 

14,509

 

Total stockholders’ equity

 

888,968

 

872,884

 

Liabilities, redeemable noncontrolling interests and equity

 

$

1,277,580

 

$

1,384,362

 

Shares outstanding (in millions)

 

82.7

 

82.7

 

 

Unaudited Condensed Cash Flow

(in thousands)

 

 

 

Three Months Ended

 

 

 

Mar. 31,

 

Dec. 31,

 

Mar. 31,

 

 

 

2018

 

2017

 

2017

 

Cash (used in) provided by:

 

 

 

 

 

 

 

Operating activities

 

$

50,265

 

$

70,519

 

$

63,565

 

Investing activities

 

56,272

 

(13,415

)

10,220

 

Financing activities

 

(131,948

)

(75,197

)

(49,320

)

Net change during period

 

$

(25,411

)

$

(18,093

)

$

24,465

 

 

 

 

Three Months Ended

 

 

 

Mar. 31,

 

Dec. 31,

 

Mar. 31,

 

(in thousands)

 

2018

 

2017

 

2017

 

Shares repurchased

 

 

 

 

 

 

 

Number of shares

 

996,309

 

937,927

 

476,882

 

Total cost

 

$

20,507

 

$

20,133

 

$

7,976

 

Dividend paid

 

 

 

 

 

 

 

Rate per share

 

$

0.25

 

$

0.46

 

$

0.46

 

Total paid

 

$

20,890

 

$

38,351

 

$

38,771

 

Capital returned to stockholders

 

$

41,397

 

$

58,484

 

$

46,747

 

 

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Earnings Conference Call

 

Stockholders, members of the investment community and the general public are invited to listen to a live Web cast of our earnings release conference call today at 10:00 a.m. Eastern. During this call, Philip J. Sanders, CEO and CIO, will review our quarterly results. Live access to the teleconference will be available on the “Investor Relations” section of our Web site at ir.waddell.com. A Web cast replay will be made available shortly after the conclusion of the call and accessible for seven days.

 

Web Site Resources

 

We invite you to visit the Investor Relations section of our Web site at ir.waddell.com. Under the “Investor Information” tab you will find a link to presentations as well as to data tables, which include supplemental information schedules.

 

Contacts

 

Investor Contact:

Nicole Russell, VP, Investor Relations, (913) 236-1880, nrussell@waddell.com

 

Mutual Fund Investor Contact:

Call (888) WADDELL, or visit www.waddell.com or www.ivyfunds.com.

 

Past performance is no guarantee of future results. Please invest carefully.

 

About the Company

 

Through its subsidiaries, Waddell & Reed Financial, Inc. has provided investment management and financial planning services to clients throughout the United States since 1937.  Today, we distribute our investment products through the unaffiliated distribution channel (encompassing broker/dealer, retirement, and registered investment advisors), our broker-dealer channel (through independent financial advisors), and our Institutional channel (including defined benefit plans, pension plans, endowments and subadvisory relationships).  For more information, visit ir.waddell.com.

 

Forward-Looking Statements

 

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the current views and assumptions of management with respect to future events regarding our business and industry in general. These forward-looking statements include all statements, other than statements of historical fact, regarding our financial position, business strategy and other plans and objectives for future operations, including statements with respect to revenues and earnings, the amount and composition of assets under management, distribution sources, expense levels, redemption rates, stock repurchases and the financial markets and other conditions. These statements are generally identified by the use of such words as “may,” “could,” “should,” “would,” “believe,” “anticipate,” “forecast,” “estimate,” “expect,” “intend,” “plan,” “project,” “outlook,” “will,” “potential” and similar statements of a future or forward-looking nature. Readers are cautioned that any forward-looking information provided by us or on our behalf is not a guarantee of future performance. Actual results may differ materially from those contained in these forward-looking statements as a result of various factors, including but not limited to those discussed below. If one or more events related to these or other risks, contingencies or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from those forecasted or expected. Certain important factors that could cause actual results to differ materially from our expectations are disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2017, which include, without limitation:

 

·                  The loss of existing distribution relationships or inability to access new distribution relationships;

 

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·                  A reduction in assets under our management on short notice, through increased redemptions in our distribution channels or our Funds, particularly those Funds with a high concentration of assets, or investors terminating their relationship with us or shifting their funds to other types of accounts with different rate structures;

 

·                  The adverse ruling or resolution of any litigation, regulatory investigations and proceedings, or securities arbitrations by a federal or state court or regulatory body;

 

·                  Changes in our business model, operations and procedures, including our methods of distributing our proprietary products, as a result of evolving fiduciary standards;

 

·                  The introduction of legislative or regulatory proposals or judicial rulings that change the independent contractor classification of our financial advisors at the federal or state level for employment tax or other employee benefit purposes;

 

·                  A decline in the securities markets or in the relative investment performance of our Funds and other investment portfolios and products as compared to competing funds;

 

·                  Our inability to reduce expenses rapidly enough to align with declines in our revenues due to various factors, including fee pressure, the level of our assets under management or our business environment.

 

·                  Non-compliance with applicable laws or regulations and changes in current legal, regulatory, accounting, tax or compliance requirements or governmental policies;

 

·                  Our inability to attract and retain senior executive management and other key personnel to conduct our broker-dealer, fund management and investment advisory business;

 

·                  A failure in, or breach of, our operational or security systems or our technology infrastructure, or those of third parties on which we rely; and

 

·                  Our inability to implement new information technology and systems, or our inability to complete such implementation in a timely or cost effective manner.

 

The foregoing factors should not be construed as exhaustive and should be read together with other cautionary statements included in this and other reports and filings we make with the Securities and Exchange Commission, including the information in Item 1 “Business” and Item 1A “Risk Factors” of Part I and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Part II to our Annual Report on Form 10-K for the year ended December 31, 2017 and as updated in our quarterly reports on Form 10-Q for the year ending December 31, 2018. All forward-looking statements speak only as of the date on which they are made and we undertake no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

 

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