Ladies and gentlemen, thank you for standing by and welcome to the AllianceBernstein Third Quarter 2020 Earnings Review. At this time, all participants' lines are in a listen-only mode. After the remarks, there will be a question-and-answer session and I will give you instructions on how to ask questions at that time. As a reminder, this conference is being recorded and will be available for replay for one week. I would now like to turn the conference over to the host for this call Head of Investor Relations for AB, Mr. Mark Griffin. Sir please go ahead.

Thank you, Carmen. Good morning everyone and welcome to our third quarter 2020 earnings review. This conference call is being webcast and accompanied by a slide presentation that's posted in the Investor Relations section of our website, www.alliancebernstein.com. Seth Bernstein, our President and CEO; and Ali Dibadj, Head of Finance and Strategy will present our results. John Weisenseel, CFO; and Kate Burke, COO will join us for questions after our prepared remarks. Some of the information we'll present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. So, I'd like to point out the Safe Harbor language on slide two of our presentation. You can also find our Safe Harbor language in the MD&A of our third quarter 2020 10-Q which we filed earlier this morning. Under Regulation FD, management may only address questions of material nature from the investment community in a public forum. So please ask all such questions during this call. Now, I'll turn it over to Seth.

Good morning. Thank you for joining us today. We are pleased to share our third quarter results, which indicate consistent strength across our platform. All three channels experienced net inflows, with another strong quarter for active equities in both retail and institutional sectors. We achieved an annualized active organic growth of 5% net of AXA redemptions, while also expanding our margins and delivering double-digit growth in earnings and distributions to unitholders. The third quarter marked a continued broad recovery in global financial markets within both equities and fixed income. Our retail fixed income funds outperformed their peers this quarter as credit sectors improved, while our equities maintained strong long-term performance. Now, let's dive into the specifics, starting with a firm-wide overview. Gross sales totaled $29.3 billion, reflecting an increase of $3 billion or 11% compared to last year, though they moderated sequentially from the second quarter's near-record levels. Firm-wide net inflows reached $5.3 billion, excluding $2.2 billion of previously disclosed low fee AXA redemptions. Active net inflows were $7.3 billion, equating to a 5% annualized organic growth rate. At quarter-end, our total assets under management stood at $631 billion, a 6% increase year-over-year and a 5% rise from the previous quarter. The average AUM of $624 billion also grew by 6% year-over-year and 8% sequentially. The quarterly flow trend by channel shows growth in each area, driven particularly by the strength in institutional channels. In retail, we achieved net inflows of $700 million, largely due to ongoing strength in active equities, which grew by 8% organically, alongside munis, which rose by 12% organically. This robust performance outweighed the impact of slowing taxable fixed income sales. Institutional gross sales also remained robust at $8.3 billion, with net inflows of $4.3 billion when excluding AXA redemptions, evenly spread between active equities and active fixed income. In Private Wealth management, we saw gross sales jump 52% year-over-year, with net inflows of $300 million for the quarter. Shifting to investment performance, our fixed income funds benefited from various credit sector positions during a risk-on third quarter. Our retail fixed income funds ranked in the 39th percentile of the Morningstar peer group for the quarter, following a top quartile position in the previous quarter. Notably, five of our top ten retail taxable fixed income funds by AUM placed in the top quartile, and eight out of ten were in the top half. Furthermore, many of our municipal portfolios performed well, with eight of the top ten funds by AUM achieving top quartile status. In equities, long-term performance remains robust, with 67% of assets outperforming over both the three and five-year periods. During the one-year period, 43% of assets outperformed despite some challenges, particularly from our large cap growth portfolio, which fell a bit short of the Russell 1000 Growth Institutional benchmark. The tech sector's narrow group of stocks has driven recent performance, but we believe our strategies are well positioned as market leadership broadens beyond technology. Turning to our client channels, retail gross sales of $17.5 billion normalized after strong prior year comparisons. We generated net inflows of $700 million for the eighth time in the last nine quarters. Our retail channel has enjoyed improved balance in asset classes due to consistent active equity inflows. In the institutional channel, gross sales were strong at $8.3 billion. Active equity sales saw acceleration to over $2 billion in six of the last seven quarters. Our institutional pipeline was solid at $16.9 billion at quarter-end. In Private Wealth Management, gross sales of $3.5 billion rose by 52% year-over-year, with net inflows of $300 million for the quarter. Bernstein Research saw a slowdown in institutional trading volumes this quarter, with revenues down 3% year-over-year. However, our Asian business, including India, continues to grow. In summary, a strong performance across multiple client channels was driven by active equity growth. Our alternatives pipeline remains strong and expense management has positively impacted our bottom line. We are also anticipating an upcoming transition in leadership within our finance team.

Thanks, Seth. So let's start with the GAAP income statement on slide 15. Third quarter GAAP net revenues of $900 million increased 3% from the prior year period. Operating income of $217 million increased 7% and the operating margin was 24.1% up 150 basis points. GAAP EPU of $0.70 compared to $0.62 in the third quarter of 2019 up 13%. As we've done in the past, we'll focus remarks from here on our adjusted results, which remove the effect of certain items that are not considered part of our core operating business. We base our distribution to unitholders upon our adjusted results, which we provide in addition to and not as a substitute for our GAAP results. Our standard GAAP reporting and reconciliation of GAAP to adjusted results are in our presentation appendix press release and 10-Q. Our adjusted financial highlights are included on slide 16. While third quarter revenues of $727 million were flat year-on-year, operating income of $216 million increased by 8%; and operating margin of 29.7% increased by 220 basis points driven by strong incremental margins. We earn and will distribute to our unitholders $0.69 per unit compared to $0.63 for last year's third quarter. Lower compensation and promotion servicing expenses primarily drove the improved results. Compared to this year's second quarter, revenues increased by 4% due to higher base fees, operating income increased 11% and our margin increased 180 basis points, reflecting operating expense growth of just 1% on lower promotion servicing and G&A expenses. We delve into these items in more detail on our adjusted income statement on slide 17. Beginning with revenues. Third quarter net revenues of $727 million were flat year-on-year. Third quarter base fees increased 1% from the same prior year period on higher average AUM partially offset by a lower portfolio fee rate. Compared to the third quarter of 2019, total average AUM increased 6.5%. The portfolio fee rate of 38.3 basis points calculated net of distribution fees decreased 1.9 basis points year-on-year. Lower fees earned on various equity fixed income products and mix drove the decrease, which you may recall we first discussed last quarter. Sequentially, base fees increased by 8% from the second quarter, reflecting 8% higher average AUM across all channels with the portfolio fee rates essentially flat with last quarter as we discussed. Third quarter performance fees of $7 million were down $1 million year-on-year as lower performance fees for our middle market lending and concentrated global growth strategies were partially offset by higher fees from Arya our multi-portfolio manager long/short strategy. Third quarter revenues of $99 million for Bernstein Research Services decreased 3% year-on-year, due to reduced client trading volumes in the U.S. and Europe, partially offset by robust growth in Asia. Revenues decreased 13% sequentially due to lower client trading activity in the U.S. and Europe. Investment losses of $1 million compared to gains of $4 million in the prior year period, and resulted from losses on our broker-dealer investment portfolio and lower seed investment gains. Other revenues decreased $11 million compared to the same prior year period because of lower dividends and interest earned on our broker-dealer investments. Interest expense on the other hand decreased $12 million year-on-year due to lower interest paid on broker-dealer customer balances, resulting from lower interest rates. Moving to adjusted expenses now. All in, our total third quarter operating expense of $511 million decreased 3% year-on-year due to a lower compensation ratio and lower promotion and servicing expenses. For the third quarter, transition costs related to our Nashville corporate headquarters relocation totaled $6 million compared to estimated expense savings of $7 million resulting in a net $1 million increase in operating income. The $1 million in savings is a net of $4 million compensation savings and $3 million increased occupancy costs. For the 2020 nine-month year-to-date period, transition costs totaled $21 million compared to estimated expense savings of $20 million resulting in a net $1 million reduction in operating income. The $1 million expense is a net of $8 million of increased occupancy costs and $7 million of compensation savings. Total compensation and benefit expenses decreased 1% year-on-year on lower fringe benefits, other employment costs, and commissions. We accrued compensation at 48% of adjusted net revenues for the third quarter of this year versus 48.5% in both the second quarter and the prior year quarter. As we typically do at this time of the year, we plan to revisit our comp ratio and adjust accordingly as we gain further clarity as to the full year's revenue, compensation requirements for our business, and the transition costs relating to our corporate headquarters relocation. If the current market conditions persist, we do not expect that fourth quarter comp ratio to exceed 48.0%. Third quarter promotion servicing decreased 29% versus the same prior year period due to lower T&E and firm meetings resulting from continued COVID-19 travel restriction. Third quarter G&A increased 4% on year-on-year due to increased miscellaneous taxes and unfavorable foreign exchange translation. In addition, G&A included the write-off of one-time legal fees incurred for products, which will not be launched. Excluding these one-time legal fees, G&A would have increased by less than 2% year-on-year. Third quarter operating income of $216 million increased 8% from the prior year as expenses declined by 3%, reflecting our continued focus on managing expenses and delivering our targeted high incremental margin. Operating income increased by 11% sequentially, due primarily to a strong increase in base fees combined with a minimal 1% increase in operating expense. Third quarter operating margin of 29.7% increased 220 basis points year-on-year and 180 basis points sequentially. You may have noticed that our third quarter adjusted EPU was $0.01 below our GAAP EPU and our adjusted operating income $1 million lower than our GAAP operating income. This primarily reflects office space lease impairments, which were recorded and reflected in GAAP financial results in previous quarters, but must be amortized over the remaining lease terms earned as the financial results. The third quarter effective tax rate for AllianceBernstein L.P. was 4.2% lower than expected, reflecting a higher mix of domestic versus foreign pre-tax earnings. We anticipate that the 2020 full-year effective tax rate will range from 5% to 5.5% based upon our current forecast of domestic versus foreign pre-tax earnings. I'll finish with an update on our planned corporate headquarters relocation to Nashville. We continue to expect to begin moving employees into our new corporate headquarters building during the second quarter of next year. We currently anticipate the reduction in 2020 EPU due to the relocation to be approximately $0.01, which is less than our prior estimate of $0.02 and our $0.06 original guidance for 2020. We continue to expect that 2020 will be our last year of EPU dilution related to our headquarters relocation and project a slight increase in EPU beginning in 2021 with EP accretion for each year thereafter. Our estimate of ongoing annual expense savings beginning in 2025 once the transition period is over is unchanged and is expected to range from $75 million to $80 million per year. With that I'll turn it back to Seth.

Thank you, Ali. Turning to slide 19. You might recall last quarter, we began more directly articulating the reasons to invest in AllianceBernstein. We'll return to the slide with some frequency to test our progress on behalf of unitholders. This quarter we continue to execute along the following dimensions that we outlined. Firstly, we drove 5% active annualized organic growth ex AXA outflows based on differentiated investment performance. We continued to expand our suite of higher fee alternatives through our recently launched European Commercial Real Estate Debt business which Equitable plans to support, another example of the strong mutual interest in growing our yield enhancing longer-dated alternative strategies. We drove expanded margins year-over-year and sequentially with G&A up less than 2% excluding a write-off of one-time legal fees. As a partnership, we continue to benefit from a durably low tax rate and we continue to pay 100% of our adjusted income supporting our robust distribution yield of approximately 8% in a low rate environment. We look forward to continuing to report progress along these lines in the future. With that we're pleased to take your questions.

Thank you. Your first question will come from Craig Siegenthaler. Please go ahead with your question and announce your company.

Thanks. Good morning, everyone. I wanted to start on fixed income. So just given how low rates are today and the depressed net return prospects across fixed income, are you seeing a rise in fee pressure in either your bond business or in your private client business?

Hi, Craig. It's Seth. Thanks for the question. We've been seeing pressure for a long time in the particularly the investment-grade institutional business. And I think we've talked about that in the past. That continues. Haven't seen the pressure in the private client business. And in the retail business, I mean we have seen some pressure in the retail business that has impacted us certainly in the third quarter. But I wouldn't say that anything unexpected. I think it's just the continuation of a trend that we've been experiencing along with the industry for some time. But I think your point is right. It will continue.

And then we saw a large reset in bond yields in March and April. But despite that, there's been a very strong migration into fixed income. Do you think we're at a point now where this may start to stall just given how low rates are? And I know you've seen a pickup in other areas like active equity, but most of your peers have not?

People seem to be hesitant to take risks. Income remains a key theme that appeals to both institutional and notably retail investors, in our experience, and I believe this trend will persist. There aren't many alternative options available. Ultimately, I think central banks are guiding investors towards equities, which is likely the main outcome of this situation. I understand your concern that this trend may start to shift, as the justification for fixed income becomes more challenging in a market with zero-bound interest rates.

Thank you, Seth.

Your next question will come from the line of Robert Lee.

Hi. Thank you. KBW. If I could drill down a little bit into the retail flows if possible. Can you maybe break it down? How you're seeing kind of your APAC business in the quarter and what you're seeing there? I mean obviously equity flows have been good. But just trying to get a sense of what you're seeing demand-wise or expectations particularly in fixed income in Asia which has been I guess a strong point for you guys for a while.

Hi, Rob. It's Seth. Fixed income flows in Asia have definitely slowed in the third quarter, and we anticipate this trend will continue. This situation is influenced by two main factors. First, the local markets, especially the Chinese equity market, have performed well and drawn attention away from fixed income. Additionally, as we discussed earlier, lower rates are significant, and yields have decreased as prices have increased. Although we have not witnessed any mass exodus from the market and still observe positive flows, the levels are not as high as they were earlier this year or last year.

Great. For my follow-up, I know it's common to discuss mergers and acquisitions during these calls, so I'll bring it up. I can guess your response, but could you update us on the recent discussions about consolidation and scale? What are your views on how AB fits into that landscape and your thoughts on this trend within AB?

Sure. It's Ali. In terms of recent and upcoming activity, there are a few points I'd like to make. Firstly, we're significantly engaged in the flow of information regarding this situation. We're aware of many developments and have the opportunity to propose initiatives, so it's no surprise that more activity might be on the horizon. We also have a good understanding of past events in this space. Secondly, when we look at the history of our company and the industry, we find it challenging to make sense of some major acquisitions that have occurred. In our view, if cost-cutting is the main driver of value creation in mergers and acquisitions, then the chances of that M&A being successful are quite low. We've consistently seen instances that support this perspective. While some mergers and acquisitions do make sense, such as the recent Morgan Stanley event, our overall approach is to focus on M&A opportunities where we can strategically acquire talent and teams that contribute to growth rather than solely reducing costs. We believe this is where we can provide the most value, leveraging our distribution capabilities and seeking teams that share our investment discipline, have a solid track record, and fit well with our culture to best serve our clients. That encapsulates our philosophy on M&A.

Great. Thank you for taking my questions.

And your next question is from the line of Mike Carrier. Please go ahead.

Hi. Good morning. And thanks for taking the questions. First, I just wanted to clarify on performance. It sounds like 3Q was fairly strong in fixed income. But on the performance chart, it seems like fixing income slipped a bit on the one year. I'm realizing that can be solid quarters rolling off, or I think you mentioned American Income. I'm a bit below, but just wanted to confirm that. And then more importantly flows have been favorable and the pipeline looks good. Just wondering if the weaker short-term investment performance is starting to have much of an impact on conversations or clients. You remain focused on the stronger three and five-year track record?

Hey, Mike, it's Seth. Let me just clarify one thing. Your question is around equity flows or fixed income flows, or both?

It's basically both, just like the 3Q performance looks a little bit weaker, but it seems like overall on the active side, not just this quarter, but you guys have still been putting up good flows. So it doesn't seem like it's having a big impact. But just more curious, if it's coming up in conversations more.

It isn't yet, but that doesn't mean it won't. And we recognize that performance is the leading indicator or one of the key leading indicators on flows. So we take it seriously. I do think that clients understand that in the case of large cap growth, which is really what triggered I think the significance in the change on the equity one year, is really a story about just how narrow the equity markets are, and you guys know that story as well as we do. It's really quite remarkable. And we just weren't as concentrated as the benchmark. Now that could persist for a while. It has been out there, but we've done quite well. And in the retracement we saw a bit in September, we gained a performance as a consequence of that. So we're watching it, but we haven't seen any adverse behavior or flows as a consequence of that yet. But it's out there. With respect to fixed income, look, I think, particularly in American income the uniqueness of that strategy and the yield that it has offered clients has been compelling. Our clients in Asia in particular know the team well and are familiar and comfortable with the risk-on, risk-off nature of markets and how this portfolio performs. So it's been gaining performance since March. And we're hopeful that it will continue to gain altitude again. But, I mean, the performance is performance, and so we watch it and it could foretell lower flows in the future, but it hasn't so far. But overall flows, the overall market has been slower.

Right. Okay. Makes sense. And then just given the favorable longer-term performance and some positive flow trends, just wanted to get an update on how you guys are thinking about your distribution positioning. And if you see some areas of opportunity, whether it's invest in or areas to invest in to drive additional closed event.

Well, look, first and foremost, I'm glad you asked that question, is China for us. We think that we have a lot to benefit from in building a presence and we are doing that now, as I think you know, in Shanghai and we're moving forward in our process with regulators. That will start as more of an onshore money management to onshore distribution, but our hope is that that ultimately opens up into being able to bring to Chinese investors our capabilities in global investing, both fixed income and equity. I think that hands down is the biggest opportunity we see. And that's why we're investing so aggressively there. But beyond that we continue to want to expand our private client business and are doing so and adding at base. And we are continuing to look at what we are doing here in the United States in our Retail channel. So I think, look, it's been a continuing investment focus for us since I've been here. And on the margin, China is where our emphasis is, but we continue to add resources, albeit, slowly, in the U.S. and a little bit in Europe.

Okay. Thanks a lot.

Your next question comes from the line of John Dunn. Please go ahead with your question.

Evercore ISI. Maybe just on the mechanics of the pipeline. Any changes to where the demand is coming from, or has funding times changed over the past year? And is it coming from existing customers, you're getting any new customers? Any color you could just give around the pipeline?

Sure. Thank you. The pipeline had $4.9 billion in additions in the third quarter, and it always shifts a bit. What’s different now is that with the passage of the Secure Act, we are seeing much more interest in customized retirement solutions, which generally involves large defined contribution plans. These plans tend to be significant, and since they typically have lower fees, they create disproportionate impacts on our results. We've also observed considerable activity in large fixed income investment grade, which similarly is associated with lower fees. Cash flows have been fluctuating. While we don't maintain a substantial cash business like some other firms, this can introduce volatility in both directions for our pipeline. In equities, much of the activity is driven by consultants, leading to new clients for us, which has been beneficial in the U.S., Europe, and somewhat in Australia. In the alternative investments area, this remains largely institutional. When it comes to fundraising for commercial real estate debt or middle market lending, firms often return to their original or existing investors. Nonetheless, we continue to add clients, primarily from insurers and others seeking higher-yielding assets.

Thank you. And then, maybe a little more on the European commercial real estate business, maybe what order kind of the objective? Maybe what this might potentially look like, over the next few years? And then, how does that region differ from the U.S.?

Well, we want to take advantage of this opportunity. Ali, why don't you answer the question?

Okay. No, no problem. I think we're probably going to say, roughly the same thing. Thanks for the question there. Look, we're really pleased to have launched this commercial real estate debt business in Europe. It's important for us for a couple of main reasons. One is it's a classic example of us being able to lift and shift our knowledge base and our capabilities. And frankly, a little bit of our brand from one region to the other. Obviously we have a very strong U.S. commercial real estate debt business. And so launching this in Europe is something that's very important to us and shows the ability for us to expand on those. The second thing that it showed and Seth mentioned this in his prepared remarks is importantly it ties into planned commitment from Equitable, it ties very much to their strategy, publicly stated of improving their yield, improving their returns, and this is a great way to do that. We think to your questions this scales quite well. And we do believe that there's more opportunities like this, in alts to expand geographically from what we have as a good core base in the U.S.

Got it. Thanks very much.

Your next question is from the line of Robert Lee. Please go ahead with your question.

Great. Thanks for taking my follow-ups. So I'm just curious, I mean in the Private Wealth business you called it out that your SMA Tax-Loss Harvesting business and arguably, something similarly maybe one of these things that tracking Morgan Stanley and the AB brand. So could you talk a little bit about, are there plans to kind of roll out that capability more broadly than retail? That was my question.

Hi it's Kate Burke here. Look, in our Private Wealth business, I think that what you've seen from a tax perspective much of what we do is really in that SMA form. And that is a very attractive area for us that we continue to look to leverage and building out overall the Private Wealth business. We certainly are looking from a product strategy standpoint, across channels and how we can leverage success in one channel to another that has been a focus of our product strategy work here. And so we're going to continue to look for opportunities to see if there's a way to leverage that also in the Retail channel.

Great. If I could have one more follow-up, Seth, you guys have always been more attentive to capacity constraints in your strategies compared to some peers, which is beneficial in the long run. I'm curious to know if you have any key strategies where you believe you might be nearing capacity limitations in the upcoming quarters due to strong demand.

It's Seth. Let me answer that. Well, we obviously always are monitoring capacity in small and mid-cap space. And some of that is closer and so that would be the most likely stuff. In the larger cap areas, we do have capacity limits. We think we have sufficient room that it shouldn't be impacting us any time in the near future, given the level of flows we're having.

Great. Thank you for taking my follow-ups.

Thank you. And your next question is from the line of Bill Katz.

Okay. Thank you very much for taking my questions. Just some technical difficulties on my end, just in terms of the five consultant upgrades, are you went through that rather quickly. I was just wondering if you could maybe step back and just talk about maybe the cumulative opportunity across the product lines there?

Hi Bill, it's Seth. I think I should have taken a bit more time with that. We've received upgrades for our select long short strategy, our global core, our Eurozone equity, and our sustainable growth service. There's significant opportunity here as we gain more support from the consulting community. However, the timing is tricky because it depends on their demand and focus in these areas, which can be sporadic. For instance, we've noticed a lot of interest in our global core strategy, primarily fostered by consultant support who apply a sustainable lens when evaluating investment opportunities. This approach has resonated particularly well with institutions outside the U.S., where ESG is more emphasized. We believe this method can be successful in the U.S. as well, making it a key entry point for us. However, attempting to predict the exact impact would be unwise, as it largely depends on their schedules and priorities, from which we stand to benefit.

Great. Okay. And just as a follow-up for Ali, thank you for addressing my questions this morning. You provided some fourth quarter guidance for the comp. Reflecting on that, it seems the ratio is a bit higher than what we've seen in the past couple of years for this fourth quarter. What are some of the variables influencing your thinking about what might constitute a range, not exceeding 48%? Could you elaborate on what some of the key drivers might be?

So, thanks for the question. I guess, in an absolute term 48% isn't higher than what we delivered in the past, in the fourth quarter at least from where we started the year. Remember, when we started this year we took down the comp ratio by a full point. So we started at a much lower level than we have done in the past. And we as you've seen have done our best to ratchet that down over time by being just more efficient across the board, so that's just a little bit more context to that question. For the fourth quarter specifically, but the big variable is going to be the market. If the market is where we are today we don't think will go above 48%. But frankly your magic eight ball is probably as good as my magic eight ball about what could happen over the next couple of quarters. And so we just want to be very prudent in that to make sure that we are appropriately careful about the comp ratio and making sure we provide for our talent at the firm in the context of what's probably going to be a volatile market.

Okay. Thank you.

Your next question is from the line of Alex Blostein. Go ahead with your question.

Great, good morning. Thanks. Hey guys, I was hoping you could expand a little bit on some of the recent commentary you made with respect to your relationship with Equitable. They obviously have a stated policy with trying to improve their yield on the assets just like many other insurance companies I guess. But can you talk a little bit about what strategies that you provide fit well within that? What are sort of the fee rates and opportunity set you see that for yourself? And I guess lastly, is there a bigger almost kind of like investment management agreement dynamic that you guys could work out with Equitable at some point of time like we've seen with other sort of like insurance and asset management partnerships? Thanks.

Alex, thanks for your question. We have been developing our private alternatives business in collaboration with AXA initially and now with Equitable. Our focus has been on middle market lending and commercial real estate debt, and we plan to apply the same approach to our European commercial real estate business. We are also exploring other areas in private credit with Equitable's support, although they will conduct their own evaluations to determine suitability for their general account. We collaborate closely with them on planning, and we have a mutual understanding regarding our processes, timing, and the funding required to expand these capabilities. We believe that the current partnership structure with Equitable is beneficial, aligning the interests of their policyholders with those of AB's shareholders and unitholders. Ultimately, Equitable stands to gain from the earnings increase that comes from the higher fee products and new business growth, given their substantial ownership of AB units. This alignment feels natural, and the coordination between our firms is strong and interactive, making it a critical component of our growth strategy.

Your next question is from the line of Dan Fannon. Please go ahead with your question.

Thanks, good morning. Just wanted to follow-up on the fee rate and kind of the outlook there, retail seems to be the soft point in the quarter. Can you talk about the mix and kind of what are some of the factors behind that? And how we should think about the fee rate I guess in the overall context going forward?

Sure. Thanks Dan. So let's talk about the fee rate and just aggregate it a little bit to give you some extra color. So look on a year-on-year basis it was down 190 so 1.9 basis points. Lots of moving parts obviously. But essentially that change is the same change as we saw last quarter on a year-on-year basis. The idea some of the issues and some of what's moving around is effectively the same. Broadly speaking just to remind you the value equities portion of our AUM was lower last quarter year-on-year this quarter year-on-year. And that is a very high fee product right? So that's a mix effect. That actually happened pretty meaningfully in the private wealth channel that shift around and value equities happen there as well. But you're right I mean more broadly we are seeing some pressure as Seth mentioned in his prepared remarks and answered to earlier question on fixed income and some of that is in the Retail channel as well. But net-net on a year-on-year basis broadly the same themes that we saw last quarter we talked about last quarter. And that leads to I guess the second point which is on a quarter-on-quarter basis we're essentially flat right? So essentially flat. We're seeing some fee pressure across the board Institutional Retail, but nothing remarkable I'd say relative to some of the stuff that we talked about last quarter. The one thing though from a going forward perspective that's worth emphasizing to your question about what we'd anticipate. And Seth mentioned just a little bit, but it's just worth underlining is if you look at the pipeline, the pipeline specially on the Institutional side has a very broad dispersion right now of fee rates in it, right? So yes alternatives, yes active equity is the majority of it the largest piece of it. But you'll see this and you saw this in some of our monthly AUM announcements that we're getting lifetime income strategy and CRS mandates. We're getting some of these mandates that are really chunky so really big mandates. We disclosed the $2.6 billion one that we talked about before. And those just by nature of what they are much lower fee rates. So the dispersion within the pipeline is quite big. What that means is although the fee rate will be grinding higher, right? It may not be linearly grinding higher, right? As something fun that's a lower fee rate and it happens to be an x billion dollar mandate you might have quarter-to-quarter volatility in that fee rate. But the thesis is exactly the same as it's been. And we're fortunate to have some of these larger mandates come in. They happen to be lower fee rates. But again, it's the same thesis as before grinding slightly higher over time, but could be a little bit more volatile quarter-to-quarter.

Thank you. That's helpful. And, I guess, just thinking about spending for next year it's early. I'm sure you're still in the budgeting process, but just trying to get a sense of kind of what you're thinking about kind of return to normalization for certain discretionary items and how we should be thinking about kind of 2021 expense trajectories for some of those line items?

So you're right, we're currently in that process. If you look at our expenses and break them down, we're focused on compensation and benefits, and we're hopeful that help from Nashville will positively impact that moving forward. When considering promotion, servicing, and G&A, promotion and servicing were significant this quarter, and we've seen a decrease over the past couple of quarters this year. The main factor behind this is certainly travel and entertainment, which has seen a significant decline. Think about your own travel schedule and ours, as there has been a lot of travel in the past. We hope that travel returns to more normalized levels for everyone's sake. However, we are looking for ways to avoid returning to the same level we experienced in 2019. We're considering the opportunities available, like hosting more virtual conferences, which many of you are likely doing as well. To be clear, we do not expect travel and entertainment expenses to decrease as much next year as they did this year, but we are being very cautious about returning to past norms, as those may not apply going forward. We will wait to see what our clients want and will adjust accordingly, but we hope to realize some savings and insights from this year's experiences in the promotion and servicing area. Regarding G&A, we are maintaining our guidance, aiming to keep it in line with inflation, hopefully slightly below it. You have seen a 4% increase quarter-on-quarter for this quarter. If you exclude some one-time charge-offs, the growth is less than 2%, which aligns with our desired G&A growth rate. I hope this gives you a bit more clarity as we consider the future.

Sure. Thank you.

And there are no further questions at this time. I'll now hand the call back to Mr. Griffin for any closing remarks.

Thank you, everyone for participating in our conference call today. Feel free to contact Investor Relations with any further questions and have a great day.

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