Al West - Chairman and Chief Executive Officer Dennis McGonigle - Chief Financial Officer Joe Ujobai - EVP, Head, Private Banking Paul Klauder - VP & Managing Director Steve Meyer - EVP, Investment Managers Kathy Heilig - Controller.

Chris Donat - Sandler O’Neill Robert Lee - KBW Chris Shutler - William Blair Glenn Greene - Oppenheimer Wayne Withrow - EVP, SEI Advisor Network.

Welcome to the SEI First Quarter 2017 Earnings Call. [Operator Instructions] And as a reminder, today's call is being recorded. I will turn the conference now over to your host, Mr. Al West, Chairman and CEO. Please go ahead, sir..

Thank you and welcome everyone. All of our segment leaders are here on the call with me as well as Dennis McGonigle, SEIC's CFO and Kathy Heilig, SEIC's Controller. I will start by recapping the first quarter of 2017 and I will turn it over to Dennis who will cover LSV and the investment in new business segment.

After that each of the business segment leaders will comment on the results of their segments then finally Kathy Heilig will provide you with some important company-wide business statistics. As usual we will field questions at the end of each report. So let me start with the first quarter 2017. First quarter earnings increased by 15% from a year ago.

Diluted earnings per share for the first quarter of $0.55 represents a 17% increase from the $0.47 reported for the first quarter of 2016. We also reported an 8% increase in revenue from first quarter of 2016 to the first quarter of 2017. Also during the first quarter of 2017, our non-cash asset balances under management increased by $10.7 billion.

SEI assets grew by $7.3 billion and LSV assets grew by $3.4 billion. Finally during the first quarter of 2017, we repurchased approximately 1.1 million shares of SEI stock at an average price of $50.42 per share that translates to approximately $55.5 million of stock repurchases during the quarter.

In addition we capitalized approximately $16.7 million of the SEI Wealth Platform development, and amortized approximately $12 million of previously capitalized subject fee development and capitalized $1.7 million of IMS development.

Our sales events net of client losses were $20.2 million during the quarter which would generate $17.2 million of recurring revenues. Each of the segment heads will address their first quarter sales activity. As we noted last year we have been increasing our investment in SWP and as conversion and services infrastructure.

These investments are primarily aimed at preparing the platform to accept the regions and Wells Fargo bank's operations. It's important that we successfully convert regions in Wells Fargo bank.

These installations will signal to the market that this platform can handle larger -- platform as a service plans and even larger software as a service clients. Successful conversion of these two bellwether accounts will enhance our opportunities with other large and jumbo wealth management firms.

We're also making investments in the migration of our investment advisors clients to SWP. Already the advisor team is migrated in a number of larger more sophisticated advisor clients of SWP plus they are hit ready two large tranches of advisors to convert in the second and third quarters of this year.

New investments in the IMS platform are being made to enhance our competitive position and to support the installation of large new clients.

Now in the institutional investor segment we are investing in the foundation and endowment segment, define contribution solutions as well as other market segment opportunities that book the downward trend occurring with U.S. corporate defining business plans.

In summary invest in each of our business lines as they face transformational changes in their marketplace. These changes while challenging in a short run are full new opportunities in the interim, medium and long run. We look forward to capturing then. Now this concludes my remarks.

I will now ask Dennis to giveyou an update on LSV and the investment in new business segment. I will then turn it over to the other business segments.

Dennis?.

Thanks Al. Good afternoon everyone. I will cover the first quarter results for the investments in new business segment, discuss the results of LSV asset management and a couple of items we have known for the company during the quarter.

During the first quarter 2017 the investments in new business segment continued its focus principally on two areas, the ultra-high networth investor and the development of a web based investment services advice offering coupled with the use of mobile technologies.

During the quarter, the investments in new business segment incurred a loss of 3.3 million which compares to a 3.8 million during the first quarter of 2016. There's been no material change in this segment. Regarding LSV our earnings from LSV represent our approximate 39% ownership interest during the quarter.

LSV contributed 33.6 million in income to SEI during the quarter. This compares to a $29.2 million contribution for the first quarter of 2016. Asset growth was approximately $3.4 billion during the quarter. Revenue at LSV was approximately $110 million of which about 1% was performance fee related.

Quarterly during the quarter our tax rate was 31% compared to the 35% rate experienced during the first quarter of 2016. A lower rate through the impact of the accounting changes on recording the tax effect from stock option exercises.

Under the previous rule, the tax benefit from stock option exercises was recorded as an increase to additional paid-in capital. This new role will likely result in a more volatile tax rate quarter to quarter than we have previously experienced.

In addition this change in accounting makes it more difficult to accurately provide guidance on our protective tax free. Finally you will notice we have begun to report a new asset category advised assets on the quarterly asset balance scheduled in the earnings release.

This represents assets from which we are earning an advisory fee that are not invested in SEI programs or products. We felt the asset reaches a meaningful level and that it was important to start to include this data element in the schedule, both of these assets are in the institutional business and Paul Klauder will discuss further.

With that I will now take any questions..

[Operator Instructions]. First from the line of Chris Donat with Sandler O’Neill. Please go ahead..

Hey, Dennis just wanted to ask on in the text of the release there's a comment that LSV earnings were negatively impacted by increased personnel expenses. Is that sort of a one-time phenomenon or is something that we should expect be kind of recurring here for LSV..

The earnings release year over year comparisons so that's relative to the first quarter of last year. So during the course of last year they had higher expenses in the personnel area, that will carry through this year. But it's not relative to fourth quarter, it's relative to last year's first quarter..

But you just added something that should carry forward through this year?.

Yes. So we report their full financials in the 10-K for last year so you can see what their total margins were that will continue this year..

Next we will go to Robert Lee with KBW. Please go ahead. .

I had two quick questions first one is going back to LSV, can you just update us on what their flows were like in the quarter?.

Sure. They had as you can expect with market performance and that was offset, they had slightly negative cash flows.

They did bring in new money from new clients they launched a couple of new products typically in emerging markets area and have had successful launches but they did lose some assets through rebalancing and they're also a little bit of victimized by the active passive and I hate to say it but some of our OCIO competitors have price taken a little bit of assets away.

But overall they are right -- healthy asset growth during the quarter..

And then maybe just as quick follow up.

You know understanding that can be hard to kind of forecast tax rate given the change in accounting but could you maybe give us a sense of what that impact was in the quarter or kind of what the tax rate would have looked like you know X that kind of the exercise of the options?.

We had about 400 basis points of rate benefit in the quarter..

We will go to Chris Shutler with William Blair. Please go ahead..

So I guess first on the taxes, can you give us some sense of I guess timing -- when do you usually see options exercised their particular quarters or is there anything to call out from a seasonality perspective?.

No there is really not. That's why it gets a little bit more tough, a more difficult to predict the tax rate.

The issue that we're all going to face as we go through the year is if we have lower exercise in the second quarter the first quarter then you got to adjust the second quarter rate to smooth out what you expect the rate to be for the full year.

So you have that you went for the higher rate or conversely if we had consistent level of option exercise you're going to see a similar rate but there's no predictability to the when [indiscernible] can exercise options or not..

The other one was just on I guess expenses for the overall company just the -- maybe just update us on your outlook for the year and not to steal any Joe's thunder but the expenses in private banks came in better than I think we had expected so what's the outlook there?.

Well let's Joe provide his thunder on that.

Yes generally I think as we have always said we do have pressures on our business to spend more money particularly in areas that are critical to us strategically whether it be technology development and investment certainly in an operational staffing to accommodate new client activity and I'd say that's been more impactful in Steve business and a little bit in Joe's business.

The conversion process in Wayne's business is starting to put pressure on expenses, but at the same time as we look across the entire company you know how do we manage things as best we can in other areas to keep our expense rate of growth fairly calm.

So if you look out for the rest of the year we got the same pressures, some of them -- a lot of them are frankly for good reasons and we will do our best to keep things kind of on the path that we're on right now. We have a no further questions please continue..

Thank you, Dan. I'm now going to turn it over to Joe Ujobai to discuss our private banking segment.

Joe?.

Thank you, Al. I will start with a financial update on the first quarter followed by an update on new business activity. First quarter revenue of $113 million were down slightly from the fourth quarter, the decline was to mostly because of timing of professional services fees and a decline in mutual fund trading revenue.

Expenses remained relatively flat to the fourth quarter, we are focused on controlling spending as we work to convert the backlog including key clients, regions banks in most fargo. Operating profit of 4.1 million was down slightly from the fourth quarter again due to the small revenue decline.

During the quarter new business momentum began to grow with net sales events of $6.6 million of which 4.4 million is recurring and 2.2 million is one time for professional service fees. Included in the sales events are three new name SEI wealth platform clients. Washington Trust Company and two UK based wealth managers, [indiscernible].

We also signed a seven year extension with the [indiscernible] group. A large and growing national wealth manager in the UK. [Indiscernible] is the consolidation of several successful firms who are SVP [ph] clients including [indiscernible]. Toome [ph] has committed to additional asset growth as part of that re-contract.

Recurring sales events were negatively impacted by the loss of a TRUST 3000 client in a heavily competitive situation and also a loss of a U.S. SWP client due to merger activity. Earlier this week we signed an important TRUST 3000 client, TIAA to conversion to the SEI wealth platform.

TIAA is a fast growing and the leading provider of financial services in the academic research, medical, cultural and government fields. TIAA is a second quarter even so it's now included in the first quarter sales event numbers nor its included in the backlog but I will discuss in a few minutes.

With the sales announced today the SEI wealth platform value proposition is gaining traction in the market. TIAA [indiscernible] and Washington Trust Company are all comprehensive well management firms supporting multiple businesses and client segments.

These firms are seeking to consolidate and leverage infrastructure which is helping us win business now and is also setting us up for future growth. During the quarter we also re-contracted eight TRUST 3000 clients securing $41 million in annualized revenue in key clients until their eventual move to SWP.

Our asset management distribution business also showed growth with positive cash flow by adding $340 million of net new assets. New flows were representative of key distributors in Asia, Europe and the U.S.

At the end of the first quarter our total signed but not installed backlog for the [indiscernible] platform is now $45 million in net new recurring revenue. We expect to install 25 million in the next 18 months and the remainder to install in later years. In conclusion we are focused on the following.

Installing the current SWP backlog, increasing sales to new clients to grow that backlog, protecting our current revenue and maintaining strong client relationships and of course investing in the long term growth of our business while managing expense. We're off to an encouraging start in 2017.

Any questions?.

[Operator Instructions]. We will go to Glenn Greene with Oppenheimer. Please go ahead..

Yes, so nice to see some momentum and you sound more encouraged.

So maybe a little bit more color on what you're seeing in the environment and if you can give us a little bit more specifics on the TIA signing in a way to sort of frame order of magnitude or how we should think about that and also the conversion on that and also want to get the color on the little more color on the two client losses?.

Okay. So there are couple of points there. So I think we were working for a long time with a number of prospects and they're beginning to come to fruition.

I think that they have watched closely our conversion activities at places like Wells Fargo and regions bank and I think the market is growing increasingly comfortable that we are delivering what we've said it really is an integrated enterprise-wide financial services wealth management platform.

So I think we're seeing some -- we're making progress in the pipeline towards the backlog. We really can't comment on any specific details around any one client but as you know TIA has been a client of ours for about 16 or 17 years. There nearly about -- our outsourcing solution, they are fast growing.

It is a very distinct profile about them in last week's balance, it was really more focused on their acquisition and integration of new [indiscernible] but I think you get a sense of what the company is trying to accomplish. So we're thrilled to have them aboard as one of our next large milestone clients.

So we're making progress, part of that is just the continued hard work and I do think that banks and some of these more heavily regulated prospective bars are beginning to feel that they should start to make some important capital decisions to grow their business. So we are seeing progress from a receptivity standpoint..

Anyway to frame maybe and combine the magnitude of client losses because I assume 4.4 million was a net figure..

Yes, the 4.4 is a net. There were two client losses one was a ASP TRUST 3000 client, for the larger community bank and we were involved in a fairly as I talked about in the past some of our competitors are using price as their biggest lever.

So we are unfortunately lost that one and the other one was a smaller SWP client that was acquired and moving to the system of the acquirer..

Okay. And any anything of status quo and as it relates to the commercials with regions in Wells..

We're working really hard, we're going to model offices and testing but I think we are meeting all of our commitments and we're making good progress..

Next question is from Robert Lee, KBW. Please go ahead..

Maybe just going back to TIAA understand maybe can't give us too many specifics but since they're an existing client know with their take on SWP represent a initially at least a step up in revenue from what you're currently getting from them on a kind of legacy platform, more is initially kind of a swap than you expect kind of more revenue down the road.

I mean how should we think about that..

There will be some uptake on the revenue -- the current book of business that's currently administered on trust and then I believe there's strong opportunity beyond that inside the firm.

As well as you know we talk often about the business model which are revenue growth as our clients grow so that would be another level of trust to grow the business with them..

Given that I assume they are fairly sizable existing clients given the organization, should we think that this is something that's going to be kind of after you start converting wells that they're kind of I will call it next in line after that..

No we actually expect them to convert by the end of next year. So it's sort of kind of the middle of after regions bank and sort of somewhat simultaneously with the Wells Fargo conversion..

And we shouldn't expect any given your prior comments and what you're spending, any notable incremental spend to take them on or to convert them I should say..

That’s correct. There is always something you have to do for a large new clients what they are buying from us is largely being accomplished in the launch of Wells Fargo and Bridge's Bank [ph]..

We will go to Chris Donat with Sandler O’Neill. Please go ahead..

Hey, Joe.

Just wanted to see if there was any more thunder you had to deliver on the expense side, any commentary there?.

I think Dennis did a good job of answering that question, as you know we ramp up on development and infrastructure expenses over the last couple of quarters.

As we said that those should peak in the first quarter and remain relatively flat for the next handful of quarters that we obviously are trying to manage expense in other areas that was top of my mind every day. Sales is really at the very top of my mind, managing expenses is right underneath that and we're doing our best.

So some quarters could be bumpy and I'm hoping to pay a lots of big sales compensation to the team.

There are some of the costs associated with conversions that don’t necessarily line-up quarter to quarter with conversion revenue but our goal is to manage it as closely as possible but still deliver the strategy of an enterprise world-wide platform for the marketplace..

We have a question from [indiscernible]..

Yes I had a question on the revenue line, I guess if you look back to the third quarter 2016 you guys had about 116 million of revenue and it's kind of reduced, its further down to 1/12 so that’s about 3.5 million run rate or $14 million per year and I just wanted to ask two questions on that, it looks like you had negative sales events on the last two quarters so going about roughly either 9 million but now you have a significantly positive quarter.

So how do you account for the negative $14 million annual run-rate in that line and then can we assume that given the success that you've had recently that this quarter is the bottom in terms of revenue for the segment..

Okay. Could you explain me again what is the comparison you're using because I didn’t hear that at very beginning.

So you're comparing this quarter versus when?.

Yes, so if you look back to the third quarter of 2016 116 million of revenue that reduced to 113.7 million back in the fourth quarter and then 112.6 million in the first quarter and I assume some of that was because of the negative sales events that you had but I didn't think that number was a $14 million run rate and so my question was where there one-time items negatively in this quarter, positively last year and then also can we assume that this is the bottom of revenue for the segment..

So there are couple of impacts to revenue so I can tell you that overall our revenue associated with our core product SEI wealth platform has been growing quarter over quarter so I'm mostly focused on that.

The decline in revenue across the Board has been subject to a couple of different things one is yes we did have some negative sales events largely associated with TRUST 3000 clients, we also saw some decline in our asset management distribution business last year that impacted revenue particularly over the last couple of quarters.

The good news is that we are now in positive net cash flow in that business, we announced about 40 million in positive net cash flow. Some of the timing of one time from clients, there also sometimes buyouts in that revenue where the client does no longer contracts with us.

There maybe a buyout of their current client so there are a number of different factors and what I'm mostly focused on is we're growing our SWP revenue. We are protecting our TRUST 3000 revenue and we're now seeing positive impacts in the asset management space. So I'm mostly focused on that..

Just the other question is do you think that given what you said we're pretty much at the bottom in terms of revenue on this line and that it should be going up from here..

It's always hard to predict that we're working very hard to grow our revenue, it's the first step in growing our profit. So I think we're making good progress. You will also see some of the pipeline start to articulate towards the end of this year which will have a positive impact at the SWP pipeline which will have a positive impact on revenue. .

We have a question from Chris Shutler with William Blair. Please go ahead..

So on TIAA, did they commit to additional books of business and then are they moving from kind of a license model to an asset based model?.

TIAA is a fast growing firm and so we are very focused on converting the book of business, we currently on TRUST 3000. As I said there is lots of other opportunities for us there, so they are similar to several other wealth managers that are really looking to leverage consolidated infrastructure.

So I think long term we have a terrific opportunity to grow that relationship..

Are they moving to an asset based relationship or is it remain?.

SWP is an asset based business model, so yes..

Got it and are they BSP?.

They were early adopter of BSP and they will continue to be a BSP client..

Okay. And then in the AMD business Joe, I know that you re-contracted your largest client there last year what have you seen so far in terms of net flows from that client, it sounds like overall the AMD picked up a bit but I'm most interested in that one particular client..

I think we're off to a good start, we're pleased with the growth there. It's been driving a lot of our assets and I guess it needs sometimes with relationship managers and private bankers to sell that. They are happy to be back in the market with a solution and it continues to be a key offering for that bank..

Okay. Got you.

And then lastly if you sort of on expenses so if we were to exclude any sales kind of sales related incentive comp may come from future wins, how would you expect the SWP expenses to kind of trend over the course of the year, my understanding previously was that you'd see sort of flattening into Q2 and then decline into the back half of the year as consult and expense rolls off.

So is that still the right way to think about it?.

I think its flattening, we have a lot of work to do between now and the end of the year and into next year with conversions but again we're managing that based on the expectations and guidance we've given you in the past.

Again it could bounce around if we -- lots more big clients and have conversion expense that doesn’t necessarily line-up quarter by quarter but we're managing it and we're looking forward to starting to mature the revenue and increase our profit..

We do have a follow-up from Glenn Greene. Please go ahead..

Joe, just two quick ones.

I don’t know if you talked about if I missed I apologize, but did you give the AMD flows in the quarter and then back to TIAA, can you just remind us what book of the business you were doing for them on TRUST 3000?.

Yes, the AMD flows net cash flows was $340 million and it came primarily from distributors in Asia, Europe and the U.S. and the business we have historical done for TIAA is TIAA Trust Company and its where they have generally fiduciary trust relationships with their clients tend to be larger clients..

Follow-up from Chris Shutler. Please go ahead..

Just one more, did you give the SWP net cash flows in the UK?.

I didn't but I will give you a little update on that. The net cash flows were about $2 billion in the UK resulting in about 43 billion total assets under administration. So in the UK our firms are largely private client led firms, so SEI revenue is really driven by AUAs. Some of you will ask well what's happening in the U.S.

around that and I think the underlying characteristics are a little different with our clients in the U.S. is generally a mix of private client and large institutional accounts. So although an AUA based business, AUA is maybe not as indicative to revenue growth in the U.S.

books, but we aren’t pleased with the flows in the in the UK, and this is probably our strongest quarter ever I think..

We have no further questions. Please continue..

End of Q&A:.

Thank you., Joe. And our next segment is investment advisors, Wayne Withrow will cover this segment.

Wayne?.

Thank you, Al West. During the first quarter we posted good growth in our traditional business. At the same time we made significant progress in the transformation of our business on the one supported by the SEI wealth platform. Assets under management were $58 billion at March 31, a 10.6% increase from March 31 of last year.

During the quarter we had $660 million of positive net cash flow. Revenues for the quarter were $88.2 million, this compares to $76.7 million during last year's first quarter a 15% increase.

Contributing to this increase were net positive cash flow and positive market return, a more favourable product mix also contributed to the revenue increase versus last year's quarter. Expenses for the quarter were up roughly 6% compared to the first quarter of 2016.

This increase was driven by increased personnel expense and increased direct costs both driven by our growth and expense associated with our migration to the SEI wealth platform. On the new businesses front we signed 120 new advisors, this is a slight decrease from the fourth quarter but our pipeline of prospects remains strong.

Moving on to the status of the SEI wealth platform, we now implement new clients directly onto the wealth platform as opposed to TRUST 3000. We have over $13.5 billion on the platform and expect to be around $30 million by year end. While the migration is a challenging task we're proud of the progress we're making.

In summary, we continue to recruit new advisors and gather a net positive cash flow. While these activities are critical for our near term financial success in the broader view 2017 will be all about our transformation to the SEI Wealth platform and the business model flexibility and the growth opportunities it holds for us in the future.

I will now welcome any questions you have..

[Operator Instructions]. No questions coming in..

End of Q&A:.

Thank you, Wayne. I can't believe it. Our next segment is the institutional investors segment. Paul Klauder will report on this segment..

Thanks, Al. Good afternoon everyone. I'm going to discuss the financial results for the first quarter of 2017. First quarter revenues of $77 million increased 6% compared to the first quarter of 2016. This was primarily due to market appreciation on positive client fundings.

Net fundings for the quarter were a positive 660 million, these net fundinsg were impacted by client losses for mergers and acquisitions.

First quarter 2017 operating profit was 38.2 million increased 2% compared to the first quarter of 2016 primarily due to market appreciation in client fundings was offset by higher compensation expenses and negative term fee impact. Quarter right now bounced at 86.2 billion reflected 7.2 billion increase compared to the first quarter of 2016.

This increases is driven by higher capital markets, positive client fundings and 3.2 billion of the revised externally managed asset added to the asset base in Q1, 2017. The unfunded client backlog at quarter end was 2.8 billion and was aided by client fundings of 2.1 billion this quarter, this includes three new the U.S.

to find contribution clients and five newly signed foundations and endowments. This success is a result of a greater sales focus on these market segments. The unfunded backlog is higher at quarter end as new defined contribution clients take longer to fund and extend time needed to fund a large UK DB fiduciary management client.

Our sales pipeline is strong and we will continue to focus on key markets in 2017. I now welcome any questions you might have..

[Operator Instructions]. We will go to Robert Lee, KBW. Please go ahead..

Good afternoon and maybe we will have to make up for Wayne's lack of questions.

I think I missed it, did you quantify the unfunded backlog?.

Yes, that is presently 2.8 billion at the end of the quarter..

And a big chunk of that you expected in this like in the short term its been kind several quarters or so?.

No we would expect the majority of that fund in the second quarter of 2017. The DC accounts only fund at quarter-end and you have to map that over with the reenrolment with HR.

So we saw any slippage there might be still the DC accounts that might go to 930, 2017 but the other accounts we're pretty confident we will be able to fund in the second quarter of 2017..

And maybe could you talk a little bit about kind of pricing environment and I know that there's been kind of an increased competition in kind of the outsource CIO business from consultants and whatnot so maybe just update us kind of how that's affecting kind of obviously the business [indiscernible] but kind of the impact you're seeing and on kind of resigning clients, you're finding that you have to kind of resign them at a lower price point?.

Yes if we had a client go through due diligence there could be some pricing pressure associated with that again we will point them back to the value proposition that we brought the net of fee value that we brought, the asset allocation, advice that we brought, the absolute return but we might see some modest reduction with new client signings typically they are anniversary based so generally somebody would go through a due diligence process you know every five years, that’s also a sales figure for us because our other OCIO firms that are going through a similar process so that's going to open up opportunity sets.

As we pivot into the foundation and down the marketplace that market in of itself probably has the healthiest margins. They are comfortable paying a marketable rated for a high quality OCIO firm.

They're also going to consume alternative investments that are higher clip [ph] than other institutional investors and there's definitely higher revenue and higher profit associated with that.

So generally I mean to get back to resume your question with more competition there is [indiscernible] but given the value proposition we have in these new markets we think we'll be able to make up for that..

And I know you mentioned it on, gave some color in your remark.

So we think of that unfunded pipeline and your net fundings in the quarter could you kind of size how what chunk of that is coming from foundations given that they're kind of I guess I will call it a higher fee client compared to your legacy DB clients?.

About a $1.2 billion, I have got $2.1 billion that we signed this from the five foundations and endowments..

We will go to Glenn Greene, Oppenheimer. Please go ahead..

Just a couple of questions, so going back to the DC adds, the three.

Could you sort of give us just a firm reference like what size assets that you're signing and where are we in terms of total asset levels in the DC business?.

So the assets are in and around about $7.5 billion of our nearly 6 billion, about 8 billion needs to -- two of three clients are above 300 million, the good news with two of the three clients incremental assets they are actually existing DB clients. So these were cross sells against great relationships we have on the DB side.

They wanted to institutionalize their DC side similar to what they've doing at DB side and again those will be finding either in the second quarter or the latest third quarter. As I said in previous calls we have 220 U.S. corporate defined benefit clients.

They all have DC plans, they may not all be opportunities but a subset of that is and we're actively calling into that marketplace and our stated capability as an OCIO firm helps another capability that we have and we admire through is administrative capabilities so through the extension if somebody needs unitization or CIT administration we are one of the few firms in the marketplace that has those two competencies that we can bring together, so that’s a pretty powerful solution where we will bring into the marketplace..

Most of those cross sells, So one question, the 660 million in fundings in the quarter just help me reconcile it because you had a 2.1 billion backlog going into the quarter I think you alluded to some client losses..

Yes. So about 700 million did not fund from the previous quarter about 1.3 billion of that is gross new client fundings and about 700 or 1.36 of that is gross new client signings and 700 million of that is client losses and again almost exclusively due to mergers and acquisitions.

We have a question from Chris Shutler with William Blair. Please go ahead..

If we just look at the not to harp on expenses but if we look at the sequential trend and expenses I know it was up a little bit sequentially if you exclude the onetime items from Q4.

I'm guessing that's mainly just due to the strong sales quarter but is there anything else call?.

It's predominantly because of the sales quarter and sales comp..

And then Dennis alluded to this upfront around the advised assets, I think it's 3.2 billion which was in the press release this quarter.

Can you just explain what those assets are and how are you getting paid on them?.

Sure. So these would be in larger clients that have legacy assets or best practice assets that do not make sense to liquidate and move into comparable SEI or ramps or separate accounts.

We are a fiduciary an OCIO firm over those, we collect an OCIO fee over that and we integrate it as part of the overall asset allocation and take fiduciary responsibility. So the price point would be similar to whatever we would price a large account.

We're not getting paid anymore NUS or public market assets whether they are in our kind of manager umbrella or whether it's a best practice that we're incorporating and this just shows the evolution of our program, the flexibility of our program and the ability of accepting fiduciary standards over best practices that a client might already have in the portfolio..

And we have a no further questions please continue..

End of Q&A:.

Thank you, Paul. Our final segment today is an investment manager and I will turn it over to Steve Meyer to discuss the segment.

Steve?.

Thanks, Al. Good afternoon everyone. For the first quarter 2017 revenues for the segment totalled $80.5 million which is $10.6 million or 15.1% higher as compared to our revenue in the first quarter of 2016. This increase from revenue is primarily due new client fundings and implementation of new business.

Our quarterly profit for the segment is $28.4 million was $3.8 million or 15.3% higher than the first quarter of 2016. Third Party asset balances at the end of the first quarter of 2017 were $457.4 billion approximately, $56.8 billion or 14.2% higher as compared to asset bounces at the end of the first quarter of 2016.

Increase in asses is primarily due to net new client fundings of $48.5 billion combined with market appreciation of $8.3 billion. Turning the market activity during the first quarter 2017 we had a solid sales force. Net new business sales totalled just over $6.5 million in annualized revenue.

Encouragingly these sales were spread across all our segments and sincluded two private equity outsourcing mandates one in competitive process, a large well-established traditional managers SMA outsourcing mandate as well as the largest traditional managers middle office outsourcing.

Additionally we expanded our relationship with two of our primary global clients during this quarter. From a market perspective we continue to see demand and opportunity while we continue to get traction in the large segment of the market these deals take time and have longer sales cycles as we have discussed previously.

However we are encouraged by the mix of opportunity that all levels of size and complexity of the robust market as well as among our solutions from our outsourcing to technology to our global regulatory compliance solution to name a few. Our pipeline, client quiet retention and growth opportunities with existing clients all remain strong.

That concludes my prepared remarks and I will now turn it over for any questions you may have or feel free to ask Wayne any questions..

[Operator Instructions]. We will go to Chris Shutler. Please go ahead..

Did you give the net new client fundings number for the quarter?.

I did I gave it basically we look at year over year so basically for the year entire year quarter over quarter..

Can you just call it off for Q1?.

Q1, was a little lower it is about -- I think it was about 2.9% from the funding clients?.

Okay.

And then the backlog number?.

Backlog we entered the quarter at around 39 and we're coming out right now the backlog is 29, we have just about $10 million of funding during the quarter..

Okay.

You said redemption rates were what stable maybe a little better?.

Wish I could say that, I think that’s one headwind we continue to see and I think its something that the industry is placed. So headwinds [indiscernible] little down the quarter but they are still steady, but we're growing through..

Down a little versus what you saw a year ago?.

Yes..

Okay. And then just two more on the last call you mentioned seeing a uptick in middle office opportunities, it sounds like you just won one with traditional managers.

It sounds like others have been seeing the same things, I'm just curious is that kind of a broader trend of the market or what's driving it?.

I think if you look at all these trends that we're facing our business and we talked about it, so there is feed pressure obviously in the asset managed business, so all of our clients are not immune of that feed pressure.

So as they look to grow and as they deal with this new feed compressing that they have in their fees they are looking to kind of recast their infrastructure in the way they're running their business.

For many of them that have this large infrastructure at middle office which many of them have not outsourced I think they are realizing to go forward and grow the right way they can't have that infrastructure so it's prime for outsourcing and I think we're seeing that across the industry..

Okay. And then last one, I think of the first quarter business highlights in the press release you talk about some increased marketing costs associated with new client acquisition can you just explain that comment..

I don’t remember that comment, where was this Chris?.

Just on page three of the press release, it may be -- there is nothing to call out it just says the expenses are primarily were due to operational and marketing cost..

That’s price sales -- not sales competition related..

You've no further questions..

End of Q&A:.

Thank you, Steve. I would like to Kathy Heilig to give you a few company statistics [ph].

Kathy?.

Thanks, Al. Good afternoon everyone. I have some additional corporate information about this quarter. The first quarter cash flows from operations was $73 million or $0.45 per share and free cash flow for the first quarter was $53 million.

We had capital expenditures excluding capitalized software of 3.2 million and we project about another 22 million of capital expenditures excluding capitalized software this year.

As we discussed the tax rate for the first quarter was 31% and that changes due to the adoption of the new accounting standards which required us to report the tax benefit of the first quarter stock option exercises in the calculation of our income tax expense. Our effective quarterly tax rate could fluctuate as a result of this new standard.

We also would like to remind you that many of our comments are forward looking statements and are based upon assumptions that involve risk and that the financial information presented in our release and on this call is on audit. Future revenues and income could differ from expected results.

We have no obligation to publically update or correct any statements here in as a result of future developments, be sure to refer to our periodic SEC filings for a description of various risks and uncertainties that could affect our future financial results. And now feel free to ask any other additional questions that you may have..

[Operator Instructions]. We will go to Robert Lee, KBW..

I actually just a follow up for Dennis, really this goes back to the earlier question thinking about expenses for the year.

I mean if I remember correctly we've been talking about full year '17 total expenses of something around called 1.1 billion and at least versus where we were expenses seem to be running now a little lower at least than forecast is that -- should we still be thinking that that’s kind of where you are thinking you'll end up or is that kind of would that be more a little on the high end of where you think it would be? Just kind of help us maybe frame that for the full year?.

Where we sit today I would say -- my answer would be that I'm still thinking kind in that range it might be outlook and certainly that’s not where we want to get to but that’s -- to me more conservative to think that way. Our current run-rate wouldn’t get us there but hopefully a lot of new business wins will close the gap a little bit.

But I think it's a conservatively high stay there in that range, because there was no exact number to begin with Rob..

We have a question from [indiscernible]. Please go ahead..

I just had one question involving stock repurchases, it looks like the capital deployed in the stock repurchases was the lowest amount since the second quarter of 2013 and I was just curious to hear how you all are thinking about that and kind of is there any change there or just anything noteworthy?.

If anyone is going to ask that question it would have been you..

I had to make up for Wayne not getting any--.

Wayne left. He is outraged by the whole period. There hasn’t been any change from our Board's perspective on use of capital, so in the first quarter little bit even though some years in the first quarter we can get more stock in.

We have little bit longer blackout period as a general rule because of the 10-K filing so we're a little more conservative than not been in the market too much. The way the stock traded during the quarter where the days where the volumes just weren’t there but I would say generally our capital utilization approach hasn’t unchanged..

We have no further questions in queue..

End of Q&A:.

Okay. Thank you. So ladies and gentlemen sales activity in our pipelines are healthy like that, in addition I'm encouraged by the strategic direction in each of our business lines is taking and the progress we're making. I believe that our investments will help us and our clients benefit from all the changes taking place in the industry.

So have a good evening. Thank you for attending our call..

Ladies and gentlemen that does your conference. Thank you for your participation. You may now disconnect..