Earnings Call Transcript - SEIC Q2 2024

Operator, Operator

Thank you everyone for standing by and welcome to the SEI Second Quarter 2024 Earnings Call. As a reminder, today's call is being recorded. I will now turn the call over to your host, Leslie Wojcik.

Leslie Wojcik, Host

Thank you and welcome, everyone. We appreciate you joining us today for our second quarter 2024 earnings call. On the call, we have Ryan Hicke, SEI's Chief Executive Officer; Sean Denham, Chief Financial Officer; and members of our Executive Committee. Before we begin, I'd like to point out that our earnings press release can be found under the Investor Relations section of our website. This call is being webcast live and a replay will be available on the Events and Webcasts page of our website. We would like to remind you that during today's presentation and in our responses to your questions, we have and will make certain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our notices regarding forward-looking statements that appear in today's earnings press release and in our filings with the Securities and Exchange Commission. We do not undertake to update any of our forward-looking statements. I'll now turn it over to CEO, Ryan Hicke.

Ryan Hicke, CEO

Thanks, Leslie, and good afternoon, everyone. Our positive momentum carried through the second quarter as we once again delivered strong profit growth quarter-over-quarter and continued solid execution of sales in our technology and operational platforms. We posted $1.05 EPS for the quarter, $22 million in sales, of which $15.9 million is recurring and $519 million in revenue. Sean will provide a detailed breakdown of all corporate and business segment financials shortly. I'm a little over 2 years into the role and at a high level, I'm really pleased with these 5 key areas. First, our sales pipeline of market activity. Client engagement is high. The reception to an enterprise positioning is resonating and our total addressable markets are expanding. Second, EPS growth. As a result of increased market activity, expense management, and execution on our continued optimization programs, we continue to drive earnings growth. Third, unit results. IMS revenue and profit growth are really strong. Private Banking margin expansion and revenue growth potential, and the increased focus on reimagining and growing adviser and institutional businesses remain a priority. Fourth, culture and talent. Infusion of new talent and leadership, as well as engagement and employee mobility across SEI, is becoming part of our DNA again. The executive team has gelled really well and we are unified in our vision on organic and inorganic growth priorities. Lastly, RIA expansion. Platform adoption in the RIA space is growing and our ability to operate in that market creates strategic opportunity. From a more strategic perspective, we are proactively addressing industry headwinds and capitalizing on tailwinds to position ourselves for long-term success. For example, there is an increasing trend of consolidation in the intermediary space, especially with RIAs and broker-dealers. As adviser firms navigate transitions, including expanding their capabilities and monetizing their businesses or planning for succession, we are actively engaged with them to provide more optionality to remain with SEI and accelerate their success with us. Another significant trend is public markets continue to seek opportunities to expand access to private markets and private asset managers are seeking access to the public markets. Phil is in the room and IMS is in the center of this every day. He can comment during the Q&A. But we are well positioned to expand our footprint and capitalize on this trend across technology, operations, as well as asset management. We are also experiencing increased demand across European private asset managers and our investment in the SEI Access Platform across multiple markets will be a driver of future growth. Investor needs and demand continue to evolve. We also believe the shift in market preference and product types, asset allocation, and investment choice presents opportunity. Portfolio customization and tax optimization are key to meeting investors' needs in today's economic environment. We proactively made fee reductions in our SMA program in April and launched new SMAs and ETFs to increase client retention as well as new client acquisition. We really like the medium to long-term growth prospects of these businesses if we can capture more AUM. The overall demand for outsourcing grows daily. We're seeing increased engagement in sales with our professional services offering inside the regional community bank segment and the U.K. private client investment manager segment. Wealth management, operations, and technology infrastructure change. Those initiatives are complex and require significant expertise to successfully execute. SEI's professional services offerings are not only helping our clients execute these transformation programs successfully but also helping our clients as they work on new initiatives to grow their business and improve operating efficiency. We believe this offering has enterprise applicability across all SEI segments, signaling the market's need for more services and capabilities. As we all know, innovation is critical. A component of increasing scale and leverage across the company is investing in emerging growth ideas to maximize return on invested capital to shareholders and harness new technologies. For example, we are actively exploring the application of AI in all 3 of our pillars of expertise, targeting internal efficiencies, client service improvements, and operational automation. We are also progressing AI business cases through our strategic partnership with TIFIN. As I mentioned earlier, we want SEI to be a premier destination for existing and future talent. There are exciting signs that we are recapturing in that space. In March, Sean joined SEI from Grant Thornton. Over the last 4 months, he has not only immersed himself in our business and culture but has also brought new ideas to the table and challenged us in ways that are helping drive results. He is ready for your Q&A in a few minutes. Also in September, Michael Lane will join the SEI executive team from BlackRock, leading our adviser and institutional businesses. Michael brings years of experience across financial services, and we believe his leadership and depth of industry knowledge will help us further execute our growth strategy, expand our total addressable market, and capitalize on further market opportunities. We look forward to welcoming Michael in September and introducing him to all of you. Our conviction around our performance for 2024 remains steadfast. The foundation of SEI is strong, our core businesses are delivering solid results, and we are leaning into future growth initiatives. With our formidable balance sheet, unmatched set of capabilities, and laser-focused strategy, we believe we are well-positioned to drive growth and continue delivering value to our shareholders. This concludes my prepared remarks. I will now turn it over to Sean to discuss our financial results for the quarter.

Sean Denham, CFO

Thanks, Ryan. As Ryan mentioned, EPS for the quarter was $1.05, up 18% over the $0.89 in the prior year period and 6% over the $0.99 reported in the first quarter. Revenue for the quarter was $519 million, up slightly from Q1 and up 6% from the second quarter of 2023. Total expenses for the quarter were $382 million, compared to $376 million last year and $386 million in the first quarter of 2024. Net income for the quarter increased 17% over the second quarter 2023 to $139 million and was up 5.9% compared to the first quarter of 2024. In the quarter, we repurchased approximately 1.6 million shares of SEI stock at an average price of $67.44 per share for a total of $111 million of stock purchases. On the sales front, net sales for the quarter totaled $22 million, of which $15.9 million is recurring. Our technology and investment processing businesses of Private Banking and Investment Managers net sales events totaled $26.9 million and are expected to generate $21.5 million in recurring revenue. In our asset management-related businesses, net sales were approximately negative $5.6 million, primarily due to asset movement from our mutual fund products into other investment programs as well as net losses in our institutional business. We also sold $700,000 of recurring revenue in our investments segment. Now I will cover financial highlights for each business segment. In our Private Banking business, net sales were $8.8 million, half of which were one-time associated with increased adoption of our professional services offering. During the quarter, the team recontracted with 3 clients, won new business with an existing client acquisition, and signed 3 new clients, 2 in the U.S. and 1 in the U.K. We're excited about second half sales events in Private Banking. Revenue for the quarter was $132.4 million compared to the first quarter of $130.1 million. Our backlog of sold but expected to install in the next 18 months recurring revenue was $14.9 million in Q2 compared to $18.5 million in Q1. Margin expanded by 2.3% to 15.5% in Q2 versus Q1. However, approximately 2% of the increase was one-time and if normalized, would have been 13.5% for the quarter. In our Investment Managers business, net sales for the quarter were $18.1 million, $17.2 million of which is recurring. This included a record number of new clients in North America. Our cross-selling initiatives remained strong and we saw increased adoption and expansion across most of our products. During the quarter, we recontracted 7 clients totaling $14.7 million of recurring revenue. Revenue for the quarter was $180 million, an increase of 4% compared to the first quarter of $172.7 million reflecting matriculation of previously announced events. Our backlog of sold but expected to install in the next 18 months recurring revenue was $28.3 million in Q2 compared to $28.9 million in Q1. Margin expanded 1.6% to 38% in Q2 versus Q1 due to expense optimization and a one-time expense benefit of 1% which when normalized would be 37%. In our adviser business, net cash flows onto our platform were up $100 million, driven by growth in the RIA segment, our strategist partner solutions, and managed account solutions. This was offset by negative flows from active equity mutual fund products and consolidation in the adviser market. We continue to demonstrate momentum in helping RIAs achieve scale, business growth, and value creation for their clients. During the quarter, we welcomed 92 new advisers, 25 of which came from a large enterprise that was partially onboarded in the quarter. This compares to 61 advisers in Q1 2024. Revenue in Q2 is $120.6 million versus $122.7 million in Q1. The decrease was primarily driven by fee reductions in our separately managed account program and shift in asset classes. Margins decreased from 45% in Q1 to 43% in Q2, mainly tied to the aforementioned SMA program fee reduction. One key item of note is the $10 million of revenue generated in the quarter from the FDIC insured deposit program. At quarter end, there were approximately $900 million in assets in this program. In the institutional business, net sales events for the quarter were negative $1.8 million, reflecting positive client signings in our OCIO and unbundled OCIO offerings offset by losses and repricing in client retention activities. Revenues for the quarter were essentially flat to the previous quarter. Margin increased 2% to 46% in Q2 versus Q1 due to one-time expense benefits. Without these one-time expense benefits, Q2 margin would have been approximately 44%. In the investments segment, revenues and expenses were also up compared to the first quarter with modest profit improvement. We recontracted clients and family office services and are very active with implementations for single-family offices. In SEI Sphere, we implemented our largest client to date. During the quarter, we were actively engaged with the SEI Access Platform across wealth managers, advisers, and fund managers. We continue to focus on identifying and exploring venture investment opportunities. LSV produced $34.2 million of profit during the quarter. This compares to $31.6 million during the first quarter. Revenues for LSV were $113.8 million compared to $107.3 million in the first quarter. Second quarter revenues included $13.5 million of performance fees. As a reminder, LSV recorded performance fees of $6 million during the first quarter. Performance fees are a reflection of continued positive relative performance. Our tax rate for the quarter was 23.9%. Before we turn to Q&A, Ryan asked me to share some strategic perspectives from my first 4 months. I've been fortunate to not just immerse myself in the SEI business, but I have also been in front of many of our clients, prospects, investors, and analysts, both domestically and globally. There is genuine enthusiasm for SEI's vision, and our value proposition is at an all-time high. I'm excited to see how many clients truly see SEI as a partner, not just a vendor. Our continued focus on the power of the SEI enterprise as opposed to historically 4 distinct business units unveiling more capabilities to increase AUA, AUM, and services will undoubtedly create greater shareholder value. I am thrilled to have joined SEI. Our future and what we need to do is clear. We are in full execution mode. We are well-positioned to capitalize on secular market trends driving demand for more technology, operations, and asset management services to accelerate growth for our clients, our shareholders, and our employees. That concludes my remarks. All of our unit heads are on the call. We'll now take questions. Thank you.

Operator, Operator

We go to the line of Crispin Love, Piper Sandler.

Crispin Love, Analyst

Just first on Private Banking margins here. You've had some really good momentum. But can you just share some leading indicators and progress recently in private banks' activity pipelines and then how you would expect that to drive PV margins over the near to intermediate term? And then can you also just detail what the onetime impact in the quarter was related to Private Banking?

Ryan Hicke, CEO

Yes. Sure, Crispin. I'll go first. Hope you're doing well. I'll turn it over to Sanjay. For the sake of consistency, I think we've said in the last 5, 6 calls that there were really 4 stages that we were executing for the Private Banking strategy. And the first was a refocus and a re-energization of the leadership. The second was rightsizing the expenses to the opportunity. The third was a real different clarity and energy and focus on pipelines and segments where we thought we could repeatedly win and then to drive revenue growth that we believe would fall to the bottom line in a way that we drive margin expansion beyond just expense control. I think it's really clear that Sanjay and the team are in Phase 4 and have been in Phase 4. I'll let him provide some color on the pipeline. But when you look at the pipeline and when we go through it as a leadership team, we're really encouraged by the quality and we're encouraged by the breadth and the depth. We really changed our targeted focus around community and regional banks, U.K. private client investment managers, and making sure we had a different approach with larger organizations, positioning professional services as well as our technology and operational platforms. I think that's really bearing fruit. As we mentioned in the last quarter, some of it's just a product of timing. But when we look at the late-stage pipeline and the activity in banking, we're very positive. Sanjay, do you want to provide some color on where you think the business is and what you're doing execution-wise going forward?

Sanjay Sharma, Executive Committee Member

Thank you, Ryan. I’d like to add a few more points. Previously, we discussed the backlog delivery. We have been disciplined, and you can see that in our quarter-by-quarter results, showcasing how efficiently we've delivered a pipeline of signed clients. This has led to revenue growth and has also helped us expand our margins. Regarding expense management, we have been focused on right-sizing the business and aligning our team with the revenue growth initiatives. On the growth front, our pipeline remains strong, and I’m very enthusiastic about its depth and quality. When I mention quality, I mean that we can fulfill this business with minimal or no additional expenses, resulting in margin expansion and enhancing our client engagement.

Ryan Hicke, CEO

That's great. And Sanjay, I think Crispin had a question around some color on the onetime sales in the quarter in professional services.

Sanjay Sharma, Executive Committee Member

Yes. So on professional services, what we've done is that this is a new service we started providing. If you look at the professional services, there are 2 buckets. One, we are providing it to our existing client base. That is resulting in one-time revenue. Then we are providing professional services to our newly signed clients, helping them to onboard, helping them to go through price change and helping them with systems integration. You would see that along with as we are signing new clients in the Private Banking space, the revenue growth is not just with the core offerings but on the professional services side. I would ask Sean to provide color on the margin one-time impact. Sean?

Sean Denham, CFO

Yes. In the quarter, we received a one-time benefit which was primarily related to a credit we received from one of our healthcare providers. That benefit was allocated to each of the business units. You'll see across the business units a little bit of an impact and uptick in the margins, and that's what I called out in my remarks.

Crispin Love, Analyst

Okay. And then do you have a dollar amount of that benefit, whether it's on kind of the revenue or expense line?

Sean Denham, CFO

Yes. I think it was a little under $3 million in totality.

Crispin Love, Analyst

All right. And then just on OpEx, it's pretty well contained in the second quarter here. But as we look to the back half of the year, anything specific to call out on the expense side? I know you typically make salary adjustments that show up in the third quarter. So would you expect comp increases still look pretty similar to past years' 2Q to 3Q? And just if there's anything else to call out.

Sean Denham, CFO

Yes, we implemented some raises that will be reflected in Q3. Historically, about 70% of the company received midyear raises, but we are moving the timing of our raises and compensation increases to year-end going forward. However, a portion of our workforce did receive some compensation increases that you will see in Q3. I want to emphasize that we are very proud of the expense management and optimization efforts we've been working on over the last few quarters, and we are committed to continuing this in Q3 and Q4.

Operator, Operator

And our next question will come from the line of Ryan Kenny, Morgan Stanley.

Ryan Kenny, Analyst

I wanted to dig into the SEI Integrated Cash Program. There are a few large banks and brokers that recently repriced sweep deposits. Is there any competitive impact of those actions on your business?

Ryan Hicke, CEO

Ryan, hope you're doing well. I mean I guess first and foremost, I think we try to make sure we reiterate that our program is complementary to our business model. We're not relying on that to run the business. It's a great solution that we can offer out in the market. As far as the competitive landscape and some of the things that have happened in the market a couple of weeks ago, that's for our competitors in the market to wade their way through. We have, I think, a little bit of a different business model. Paul is in the room and can comment. But we're always looking at what we can do from a client-centric perspective to enhance the value proposition and services we give our advisers. But I think our important point that we try to reiterate here with this program is it's complementary. It's not core to how we run the business. We're not relying on it.

Paul Klauder, Executive Committee Member

Yes. I'll just add just, from a competitive perspective, we think we have a very competitive rate that we offer investors. Our total balances are about 1% of our total AUM, and we provide our advisers optionality and they have choice and there's full disclosure and transparency of the entire program. So we think we've entered this different than many others when they kind of launched these programs 5 or 6 years ago.

Ryan Kenny, Analyst

And when you think about the $10 million of fees from that program in the quarter, if we were to get rate cuts later this year, how should we think about the trajectory of that and how that might impact the level of deposit sweep and revenues that you guys got?

Paul Klauder, Executive Committee Member

Yes. I mean you can do the math on rate cuts on 25 basis points. Like everyone else, as we get rate cuts, we'll look at what comes from SEI, which a portion will, and what comes from the investors themselves. So there'll be some kind of allocation to both. We won't take the full 25 basis points but there'll be some kind of sharing. We have a rate committee group that will decide that in the competitive environment that we know to be out there.

Ryan Kenny, Analyst

All right. Great. Then just one more question. On the fee rate reduction in advisers, was that full impact in the second quarter? Or was that implemented mid-quarter with another step-down maybe showing up in 3Q results?

Paul Klauder, Executive Committee Member

Yes, that was implemented April 1. So we had the full impact in the quarter, and we're getting really good remarks there. We gave some, and then we got some fee reductions from our sub-adviser. So our advisers are really pleased with what we've been able to do, and it's really helping them from a competitive standpoint.

Operator, Operator

Our next question is from the line of Owen Lau, Oppenheimer.

Owen Lau, Analyst

So on Investment Managers, I have 2 questions here. The margin went up to 38% but I think that includes some one-time benefit. I remember there was a target of 36% a while back. Is this still the target you have on the margin? How do you think about the normalized margin for investment managers? And then on the comment Ryan made about you are helping public markets seeking access to private markets and also helping private markets seeking access to public markets. I'm just wondering. Could you please elaborate a little bit more on what kind of services and technology SEI can help your clients to expand the access?

Ryan Hicke, CEO

Owen, I hope you're enjoying your summer. Phil and I will address this in parts. Regarding IMS margins, Phil can provide further details. It's important for the community to understand that we are not setting specific margin targets at the unit levels. Our business strategy does not revolve around that; if we identify opportunities for growth acceleration, we will invest accordingly. This approach will drive our operations going forward. Sean previously discussed our focus on operational expenses, emphasizing a concentrated effort across SEI to optimize capital allocation, control expenses, and drive earnings per share growth. This commitment will remain unchanged and will not come at the cost of medium to long-term growth. On the topic of public and private markets, Phil can add more later, but we're witnessing significant demand from both sectors. Intermediary clients are eager to find ways to access and integrate alternative investments into their client portfolios. Additionally, there is rising interest in alternative products within the institutional market and larger registered investment advisor segments. Conversely, many investment manager clients are exploring how to develop products and utilize distribution methods to reach a wider client base in the intermediary market. We believe we are well-positioned from a technology, operational, and asset management standpoint to create services and platforms that support and expedite this process. The SEI Access Platform is an example of this capability. Furthermore, Phil can share that many traditional asset managers are collaborating with SEI to determine how they can launch alternative asset products using our technology and operations to expedite their market entry. Phil is engaged with this daily.

Phil McCabe, Executive Committee Member

Sure. Thanks, Ryan. And thanks, Owen, for the question. We used to say that margins were going to be 34% to 36%. But with all the focus, the laser focus on optimization and on scaling operations, the numbers are closer to 35.5% to 37% or so. We're starting to see a little bit of scale in that business. From a public and private market convergence perspective, clients are coming together massively. We used to think traditional managers were very different from alternative managers. The traditional managers, 20% of them now offer alternative asset classes. We see that number growing more and more with every single day. On the alternative side, alternative managers are looking for distribution. They're launching collective investment trusts that have target date funds that include alternative funds. They're also growing their book within that world. We see a ton of activity. For us, we look downstream. It has impacts on our systems. We're very well prepared for that. We literally are right in the middle of the traditional alternative manager convergence and we'll be capitalizing on that for years to come.

Owen Lau, Analyst

Got it. That's helpful. And then on institutional investors, you highlighted client losses on your press release. But your margin was still strong, I think, 44%, even taking a one-time benefit. Could you please talk about the effort to kind of turn around this segment and the timing of it?

Ryan Hicke, CEO

Sure. Jay Cipriano is in the room. He leads that unit. I'll let him kind of provide some color on that, Owen.

Jay Cipriano, Executive Committee Member

Sure. Thank you, Ryan. Thanks for the question, Owen. I think Ryan and Sanjay mentioned when Sanjay came into the Private Banking group that they were in the fourth quarter now turning around that execution strategy which started with really a refocus on the leadership, rightsizing the business, identifying the proper segments to sell into, and then execute. I'd say the institutional group is about in the second quarter right now of that. We continue to face headwinds in the defined benefit space. Certainly, the acceleration with folks annuitizing their plans accelerated with the uptick of rates. We expect to continue to see that in 2025. But we're very optimistic about the markets that we serve outside of DB: healthcare, higher education, secondary education, not-for-profit, unions, and governments where our OCIO solutions are really resonating there. As I said, headwinds continue into 2025, but our pipeline continues to build, and we're very optimistic about what lies ahead in 2025 beyond those headwinds.

Ryan Hicke, CEO

And the only other color I would add is maybe an addendum to the previous question about leading indicators. Owen, as you know, you know us really well, we're really careful to never get too far over our skis. We don't spend too much time patting ourselves on the back because we get really focused on medium to long term. But when we look at new adviser acquisition last quarter, when we look at the new signings in institutional, when we look at the banking pipeline, IMS' record quarter, increased demand in Europe, and family office services, we feel that we're in a really strong spot with client activity, prospect activity momentum. Now it's up to us to deliver that. The other thing I want to make sure is clear, optimization is never going to be at the expense of client experience. So the things we're doing to drive margin expansion in IMS, we're investing heavily in IMS. We're just being more thoughtful across the company around where we're deploying our capital, including talent, to make sure that our existing clients have the best experience possible. And when we close this pipeline, we are onboarding those clients with the experience that we would want them to have day 1 at SEI.

Owen Lau, Analyst

Got it. That's helpful. And if I may, I want to squeeze one more, maybe this one for Paul. You talk about the Integrated Cash Program. The cash balance is just about 1% of total AUM. Do you have any aspirational goal for how high it can go and also the traction of it?

Paul Klauder, Executive Committee Member

Yes. Right now, we're just holding the line with 1%. We'll continue to evaluate the program based on the rates we provide investors and what other optionality is out there in the marketplace. However, I think for your forecast, you should assume that kind of 1% operational cash on a go-forward basis.

Operator, Operator

And our next question will be from the line of Jeff Schmitt, William Blair.

Jeff Schmitt, Analyst

You talked about growing in the RIA market and Investment Advisors. How much of the asset mix is that in the segment currently? And what are you doing to sort of grow your share there?

Ryan Hicke, CEO

Paul, do you want to take that one?

Paul Klauder, Executive Committee Member

Yes, I can take that. So the $101 billion that's on the platform, the RIA marketplace represents about $23 billion of the $101 billion, the rest being advisers through independent broker-dealers. That is obviously our fastest-growing segment and where we're getting bigger chunk plays and larger advisers. We had a large one in the second quarter that partially funded that and will finish the funding in the third quarter. There's a lot of growth with those opportunities as well. So we're really bullish on that marketplace through the leadership of Erich Holland and Gabe Garcia. We're redeploying more sales folks and more technical resources to support that marketplace. The good news with that is often they come over as AUA. But as they see our investment platform, they may consume some of that AUM. So there's some upsell revenue activity that we get once they get to understand SEI and the full capabilities. So we would continue to be positive on that as we move forward.

Jeff Schmitt, Analyst

Okay. And then one more on the cash program. I'm just curious how much of that cash is held in advisory accounts. Or is that mainly in brokerage accounts?

Paul Klauder, Executive Committee Member

It's all in advisory accounts.

Operator, Operator

All right. And our next question will go to the line of Patrick O'Shaughnessy, Raymond James.

Patrick O'Shaughnessy, Analyst

Okay. Maybe to beat the horse a little bit dead here on the insured deposit program, is there any level of concern that the program might not be consistent with advisers' fiduciary obligations to their clients in the eyes of the SEC?

Paul Klauder, Executive Committee Member

We've looked at all the disclosures. We've looked at all the documents that we provide advisers and investors. Operational cash is something that we need to have in order to operate the overall portfolio. That's been consistent with our investment thesis. We think we're on sound ground. Obviously, it's a fluid nature in the industry of what's happening. We will adjust based on whatever regulatory guidance is provided. But we consider that the combination of the investor rate that we give investors, the optionality we give advisers, the 1%, and the need for operational cash in the models, all those are consistent with an adviser meeting their fiduciary obligation. But it will be fluid as things change in the marketplace.

Patrick O'Shaughnessy, Analyst

Got it. Appreciate that. And then sticking with the IA segment here, a couple of competitors to that business recently were acquired or had acquisitions announced getting taken on private equity. Have you seen any change to the competitive landscape in that business as a result?

Paul Klauder, Executive Committee Member

The firms that just got acquired are still competitors and they're worthy competition, specifically asset market investment. We know that. They're going through some changes in integration and things like that into the new organizations. We think our programs stack up very competitively versus those 2 firms, especially as we go into the higher end of the RIA marketplace with the robustness of our technology, our operations, and our investment management. There's a lot happening in the marketplace. There's a lot of firms that are getting aggregated and being acquired. We're very active in consulting with our advisers, providing a pathfinder program for our advisers and ultimately contemplating whether or not we need to be a destination firm. But that's something for the future. We think about this every day. We know what's happening in the marketplace. Those competitors, as I said, are formidable, but we think we stack up very well from a capability standpoint.

Operator, Operator

Okay. Our next question will be from the line of Aidan Hall, KBW.

Aidan Hall, Analyst

Maybe just a follow-up on IMS. My question is kind of around SEI's offering as it relates to the semi-liquid retail products that have become very popular within the alternative asset management space. So how are conversations going within the channel? How do you think SEI's offering is differentiated versus peers? Then similarly, what areas are you most focused on here to continue gaining market share over the next couple of years?

Ryan Hicke, CEO

Okay. Over to you, Phil.

Phil McCabe, Executive Committee Member

Thank you. We are right again in the middle of all of the semi-liquid funds that clients are offering. All of our top, largest clients are either launching BDCs or semi-liquid funds. We have a matrix that we update daily that basically tells us all the different components and capabilities that they have or that they require. For us, we have all the technology in place; we're used to servicing very, very high volumes of investors. We're very, very good at it. We are tweaking our offering where need be, but we're really in a great spot with all of the retailization of alts to the democratization of alts.

Aidan Hall, Analyst

And then, Ryan, yes, maybe just one on kind of inorganic growth opportunities. Can you just remind us how you would kind of stack rank the priorities there, whether by segment, region, or capability?

Ryan Hicke, CEO

Yes, absolutely. We continue to kind of hone our focus. I think there are 3 areas where we stay really active right now. Thematically anything in that RIA space that would increase our ability to drive client growth, client adoption but as also Paul mentioned, broaden our capability to offer succession opportunities for advisers. When you talk about Phil's business, the IMS business, areas that could expand our operational or technological delivery, especially in the areas of alts and especially outside the U.S. and expand that global footprint. And then when you just think about value-added technology or services either to our intermediary base across banks, advisers, and wealth managers, I would say, focused there. The good news for us is we definitely progressed that. Sean, Mike, and I were with our Board the last 2 days. I think there's a lot of clarity and unification around what we're going to do moving forward. We're really disciplined around the segments and areas that we're targeting for inorganic growth, and it's exciting because we think they can be really accelerated now that we have the foundation across the board solidified for organic growth.

Operator, Operator

Okay. And we do have a follow-up from the line of Ryan Kenny, Morgan Stanley.

Ryan Kenny, Analyst

Just a technical question on the healthcare credits. If we add them up by segment, 70 basis points in IMS, 160 in banking, 230 in institutional, it gets to around $5 million. So that's a little higher than the $3 million that was referenced earlier. So I just wanted to check if that math was right, if you could help reconcile.

Sean Denham, CFO

Yes. I said primarily. The health care benefit was shy of $3 million. There's always one-time here and there. But the number I gave of shy of $3 million was the majority of that difference or that one-time benefit.

Operator, Operator

Okay. We have no further questions in the queue. I'm going to go back over to CEO, Ryan Hicke, for closing remarks.

Ryan Hicke, CEO

Well, thank you for all the questions. It's great to see the engagement. Our results through the first half of the year reinforce our commitment and execution against our strategy to drive growth in the short and long term, and we're going to continue to build upon our success. As I mentioned earlier, we're going to be hosting an Investor Day on November 7. Additional details will be shared in the coming months. I look forward to welcoming you all back to our Oaks campus and thank you for joining today's call.

Operator, Operator

Yes. And once again, ladies and gentlemen, thank you for joining today's conference. You may now disconnect. Have a good day.