The need to review SEI's business reflected, in part, a sense that the firm wasn't performing at the top of its game, said Mr. Hicke, even as he insisted prospects remained strong for its four main business lines — providing institutional investors with outsourced CIO services, and investment managers, financial advisers and private banks with technology, asset management and operational platform solutions.
"There was a companywide feeling that we all weren't mobilized in the same direction … that we were not moving boldly enough and quickly enough" to take advantage of opportunities, said Mr. Hicke.
"A lot of us who've been here for a long time" — a cohort that included Mr. Hicke himself, who came to SEI in May 1998 as a college intern and never left — have "fond memories of years of runs at SEI where we were really winning in the market, where the energy on the campus was very high," he said.
The challenge now is "how do we … recreate and reignite that type of environment for our clients, for our employees, so that everybody really feels what the best of SEI could be."
Part of that solution, said Mr. Hicke, involved breaking down some mental silos.
"We started to identify ourselves too much with the units within which we were working. People started saying … I work for SEI's advisory unit or SEI's technology unit. We wanted to get people back to thinking about the company."
Mr. Hicke sees progress being made on that score.
One of the things that's been "fun in the last 15 months is there's so much more collaboration across the units at SEI," he said. For example, "our private banking business just had an off-site workshop with the sales team on the advisory side, figuring out — when we have a banking client that owns a registered investment adviser or a banking client that's really more in kind of the intermediary wealth space — what capabilities could we be leveraging there."
Another key: continued efforts to unbundle the firm's three "pillars," or capabilities — technology, investment operations and asset management — underlying SEI's business segments.
"Clients want more choice (and) we're trying to figure out a different way to meet the client where they want to meet as opposed to saying you've got two flavors to choose from," said Mr. Hicke. "It really required a re-think of our business model."
By way of example, Mr. Hicke pointed to SEI's adviser business, where "historically you had to take SEI investment programs and put that on our custodial platform. Well, we've changed that. We have much more open architecture," as evidenced by about $2 billion of flows already this year to SEI's custodial platform from third-party investment programs, he said.
The market has yet to appreciate the scale of that change at SEI but "that's on us," concedes Mr. Hicke.
For years, "we allowed the market and our competitors to control the narrative of SEI," but that's over, he said.
For now, Mr. Hicke contends, SEI's existing businesses have plenty of room to run, even as he stressed the importance of adding another growth engine or two to bolster the company's earnings outlook.
Of SEI's four main business segments, the company's OCIO institutional investor business faces the greatest headwinds in achieving top-line growth, reflecting growing competition, fee pressures and "natural runoff and closure of existing clients," said Mr. Hicke.
The prevailing interest rate environment could lead to a pickup in annuitizations, adding to pressure to offset those closures with more and more new business, he said.
SEI's latest results show its institutional investor business accounting for 15.4% of company revenues for the June 30 quarter, down from 17.3% the year before.
The firm's earnings report for the quarter ended June 30 showed assets under management of $81.6 billion for its institutional OCIO business, little changed from the year before. AUM for the firm's adviser business, meanwhile, stood at $90.5 billion, up 4.4% on year, and at $27.5 billion for SEI's private bank business, up 6%. SEI also reported $86.5 billion in AUM for LSV Asset Management, the Chicago-based quantitative equity manager SEI holds a 38% stake in.
For the firm's institutional business, "we have to continue to think about how do we refresh and grow that pipeline on a regular basis," said Mr. Hicke.
One response? In mid-July, SEI bought a U.K. master trust, XPS Pensions (Nexus) Limited, principal employer and scheme funder of the National Pensions Trust — a master trust with over 60,000 defined contribution members and £1.4 billion ($1.8 billion) in combined assets.
"That's definitely a segment we're leaning into more heavily," he said.
Likewise, Mr. Hicke pointed to the enhanced CIO (ECIO) service SEI introduced in late 2020 — offering big institutional investors technology and customization as opposed to discretionary management — as another example of "meeting the client where they want to meet."
Offering more unbundled services in the OCIO space has been another response, such as assuming discretionary control over a client's alternatives exposures — a segment where SEI is fielding a number of strong-performing, internally managed strategies with combined AUM now of roughly $15 billion, Mr. Hicke said.
A spokeswoman for the firm said SEI's alternatives lineup at present includes $5.5 billion of private equity and private property strategies, $2.2 billion in hedge fund, $2 billion in private debt and $4.6 billion in liquid alternatives, including multistrategy and dynamic asset allocation funds.
On balance, then, SEI's institutional investor segment remains an important business for the firm, even if it's not a prime growth engine.
"Do I think that business is going to double or triple in the next five to seven years? No, I don't," said Mr. Hicke. "Do I think we continue to grow that business and provide a lot of really valuable services to our clients and add to the bottom line of SEI? Yeah, I do," he said.
SEI's more than 550 institutional clients as of June 30 included 435 outsourced CIO mandates, with ECIO clients accounting for the remainder, an SEI spokeswoman said.
The company's other asset management-focused segment — providing a range of capabilities to 8,000 advisers across the U.S. with $100 billion in assets in SEI programs — offers continued room for growth, either by bringing in new advisers or getting existing clients to move more of the roughly $1 trillion they advise onto SEI's platforms, he said.
SEI's investment advisers segment contributed 22.4% of revenues for the latest quarter, down from 23.5% the year before.
The company's investment manager segment — with large managers "outsourcing technology and investment administration and operations, back office, mid office, fund accounting" — is SEI's fastest growing business, said Mr. Hicke.
The flood of alternatives strategies coming to market now are "very complex to process," which works in SEI's favor, he said. Traditional money manager clients are increasingly coming and saying they need to offer more services and capabilities in the alternative space as well. "We allow them to get that up and running quickly," he said.
SEI's investment manager segment accounted for 33.8% of revenues for the June 30 quarter, up from 32.4% the year before.
The company's second-biggest business segment is serving private bank clients, with a focus on technology and back office processing, said Mr. Hicke. Ten of the top 20 U.S. banks are SEI clients, he noted.
SEI's private bank segment accounted for 27.4% of its revenues in the latest quarter, up from 25.8% the year before.
Meanwhile, aggressive expansion overseas isn't likely for now, Mr. Hicke said.
At some point, SEI will have to think more strategically about what Asia means for long-term growth but for the moment "we think we have a tremendous amount of opportunity in the markets we're already in," he said.
Outside the U.S., SEI will continue to focus on markets where all of its services can be deployed, such as the U.K. with its big advisory community, institutional market, investment managers and wealth managers, he said.
Longer term, Mr. Hicke said SEI is devoting more resources now to adding a fifth or sixth growth engine to the firm's business lineup.
The company's latest annual report showed revenues from "new businesses" stuck in the 1% range for the past three years, but Mr. Hicke said SEI is ramping up its efforts now, with the hire in June of Sneha Shah as executive vice president and head of new business ventures, and the build out of a mergers and acquisitions team over the past 12 months.
"We're going to be more aggressive," said Mr. Hicke.
