SEI Investments Co (SEIC) Q2 2021 Earnings Call Transcript

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SEI Investments Co (NASDAQ: SEIC)
Q2 2021 Earnings Call
Jul 21, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the SEI Second Quarter 2021 Earnings Call. At this time, all participants are in listen-only mode. We will have a question-and-answer session following each presenter and instructions for queuing up will be given at that time. [Operator Instructions] And as a reminder, this conference is being recorded.

I’d now like to turn the conference over to our host, Chairman and CEO, Al West. Please go ahead.

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Alfred P. West, Jr.Chairman and Chief Executive Officer

Thank you very much. Good afternoon everybody welcome. All of our segment leaders are on the call with me here as well as Dennis McGonigle, CFO — SEI’s CFO and Kathy Heilig, SEI’s Controller.

I’ll start by recapping second quarter 2021. I’ll then turn it over to Dennis to cover LSV and the investment in new business segment. After that, each business segment leader will comment on the results of their segments. As usual we will field questions at the end of each report.

So now let’s turn our attention to the financial results of the second quarter 2021. Second quarter revenues grew 19% from a year ago. Second quarter earnings increased by 32% from a year ago. Second quarter EPS of $0.93, grew 37% from the $0.68 reported in the second quarter 2020. Second quarter asset balances grew by approximately $7 billion, while LSV’s balances, assets under balances grew by $800 million. During the quarter, we repurchased 21 million shares of SEI stock at a price of $61.93 per share. That translates into a $129 million of stock repurchases.

Now I’d like to provide you our situation today. One of our businesses is steadily growing its revenues and profits, that’s IMS. Another business, the RA segment as recently been executing against the new technology-driven strategy. Currently, we are experimenting — experiencing strong indicators that the business has turned the corner and we’re very excited about that. Another business, Private Banking is diligently working on an implementation backlog, a strong sales pipeline and enhancing client satisfaction. The fourth business is the Institutional Investors segment. While it faces strong headwinds in the legacy OCIO client base, it’s addressing growing segments of OCIO and ECIO.

We are also searching for growth engines beyond our four traditional businesses. Here we are finding opportunity in markets and services adjacent to our four main business engines. You have been exposed to a couple of these innovative young businesses. First GRC offering global regulatory compliance services, second SEI IT Services those leading service in Cyber Security and third, Private Wealth Management providing a complete platform to ultra-high net worth families and individuals.

Next, let’s turn to revenue production. Net sales events in private banks and investment managers were $13.2 million of which $9.8 million are expected to be recurring. In addition net sales events of $2.8 million incurred in the asset management-related units. These events reflect positive asset flows within investment advisors and AMD offset by losses in our legacy institutional investor client base. In a few minutes, unit heads will provide more detail on their specific sales results and the new business opportunities.

Now to grow and prosper in the future, we know that things will never be the same. So we have been busy adopting to new mental models and realities. One such new reality is a remotely distributed workforce. We have been planning how we will work in the future and are currently acting on those plans. Fortunately, we have a lot of positive momentum created during the first half of 2021. We have a strong backlog of sales and implementations and a number of key prospects late in the sales cycle. We have also made progress in repositioning our asset management-related business segments. So net-net, we look forward to capturing the opportunities inherent — inherent in significant change.

And this concludes my formal remarks. So, I will turn it over to Dennis to give you an update on LSV and the investment in our new business segment. After that, our segments heads will update results in their segments. Dennis?

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

Thanks, Al. Good afternoon, everyone. As Al mentioned, I’ll cover second quarter results for the investments in new business segment and LSV. During the second quarter of 2021, the investments in new business segment activities consisted of the operation of our private wealth management group, our IT services business opportunity and the modularization of larger technology platforms to deliver on our One SEI strategy and other investments.

During the quarter, the investments in new business segment incurred a loss of $9.6 million, which compared to a loss of $10.1 million during the second quarter of 2020. Approximately $7 million of expense during the second quarter of 2021 is tied to our One SEI effort.

Regarding LSV our approximate 38.7% ownership contributed $35.1million in income to SEI for the second quarter of 2021. This compares to a contribution of $28.3 million in income for the second quarter of 2020. Assets during the quarter grew approximately $800 million, LSV experienced net negative cash flow during the quarter of approximately $4.2 billion offsetting market appreciation of approximately $5 billion. Revenue was approximately $116.4 million for the quarter with nominal performance fees. Corporately, our expenses during the quarter included approximately $1.9 million of severance expense, which was recorded in the impacted business segments and approximately $5.6 million related to sub-advisor expense tied to revenue growth.

As we discussed on prior calls and with other companies and other industries, we’re seeing competition for talent that is driving up personnel costs. We expect this to continue. In addition, our business growth, particularly in our IMS segment will lead to an increase in overall employees. Each quarter, we reassess the vesting time frame for all previously issued options. This quarter, we made a change to the expense amortization schedule. This included in due to our judgment that certain option tranches will vest one year sooner than previously estimated, additional expense during the quarter of approximately $500,000. As disclosed in our earnings release, we expect option expense for the remainder of the year to approximately $25.7 million.

Finally, during the quarter, we increased our spending in corporate marketing and branding — in the branding area, enhancing our digital capabilities and expanding our market reach. We will continue to do so in support of the promotion and sale of SEI services. Our effective tax rate for the quarter was 22.3%. We have also included in our earnings release, additional financial information and to remind you, please refer to our soon to be filed 10-Q for additional information.

I’m now happy to take any questions.

Questions and Answers:

Operator

[Operator Instructions] We will go first to Robert Lee with KWB [Phonetic]. Please go ahead.

Robert LeeKBW — Analyst

Thanks. Hey, Dennis. How are you? Good afternoon.

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

Hi Rob.

Robert LeeKBW — Analyst

Could you please go over some of your commentary ever on kind of expenses and spending? I apologize because I was I think writing and kind of missed some of this, can you maybe just kind of go through that again?

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

There is a couple of things I pointed out that in the quarter as a company, we incurred $1.9 million of severance expense. So it’s really not a repeatable expense and the expense of that hits a different business segments or corporate overhead dependent upon where the — where the folks were residents of, if you will. And I also just wanted to point out that of our expense increase is about $5.6 million was tied to revenue, so tied to asset growth, so it’s a cost of revenue growth, because sometimes that doesn’t get aggregated or we don’t point that out. And then I mentioned that every quarter we go through an evaluation of when we think all the option tranches that we issue as a company will vest and as you know we amortize the cost over that vesting period. And in the quarter, we made a determination that a couple of options will vest sooner, essentially one year sooner than we had — we’re amortizing against in the first quarter, that added about $500,000 of additional cost in the second quarter and our option expense for the remainder of the year. So the third and fourth quarter, we expect it to be about $25.7 million.

Robert LeeKBW — Analyst

Okay, great. And so maybe one quick question with the severance, I mean obviously that’s a one-time thing, but how should we be thinking just broadly about kind of headcount growth, maybe pressure on compensation. Just given competition for talent and what that is, as the year progresses?

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

Yes, I think on — on the talent side, this is clear to us and I can’t imagine other comps, since we’re competing for talent against other companies. And some companies you all cover. The cost per talent is going up and has gone up. And so to the extent there is inflation — compensation inflation alive and well in the markets at least that we compete in for talent, that’s true and far be it for me to call that transitory and that’s just the nature of the beast right now.

Secondly, and you’ll hear this from Steve as well that in the IMS business, we’ve had really solid growth, even faster matriculation of some of the sales activity and I would say we’re a little behind in the hiring process. So we’ll be adding people to support not only future growth, but growth we’ve already brought on the book. So our headcount is likely to go up. Other businesses are less so and Paul, I’m sure he will mention or at least can speak to given what’s gone on his business, the changing nature of how marketing and selling has changed significantly over the past year, two years. He’s just worked to reset his organization, not only for the current environment but the future of that business. So I would just say it’s adjustments really working off of what our business strategies are and how the market is behaving.

Robert LeeKBW — Analyst

Okay, great. Thanks for taking my questions Dennis.

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

No, no problem.

Operator

And next we go to Chris Donat with Piper Sandler. Go ahead please.

Chris DonatPiper Sandler — Analyst

Hey, good afternoon Dennis.

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

Hi, Chris.

Chris DonatPiper Sandler — Analyst

Just wanted to follow up on the, specifically looking at the consolidated income statement in the sub-advisory fee line. As a percentage of your asset management revenue that did increase. Was there anything unique going on there? Anything kind of one-time in nature or was — just in sort of an elevated level here?

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

There was a one-time adjustment that occurred in the institutional business on a sub-advisory expense. And Paul will mention that in his comments, but other than that it’s — some of it is arguably the mix of assets relative to the sub-advisor costs associated with those assets. It could also be at play.

Chris DonatPiper Sandler — Analyst

Okay. I’ll wait for Paul’s comment.

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

Yes. But there was a — like I said, one-time catch-up expense.

Operator

[Operator Instructions] we’re going now to Ryan Kenny with Morgan Stanley. Go ahead please.

Ryan KennyMorgan Stanley — Analyst

Hey Dennis, how are you?

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

Great Ryan. How about yourself?

Ryan KennyMorgan Stanley — Analyst

Good, I heard Al on the opening remarks mentioned the possibility for more remote work. So given the pressure on personnel expense, just wondering if there’s anything you can do on the real estate footprint side or on the travel expense side to keep margins at current levels. And I’m asking in context of the company margin currently at 29% still being pretty elevated relative to historical levels.

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

Yeah, so let me just — from what Al said, it’s more of that we put a plan together that we’re executing against to bring our people back and we certainly expect that probably a fairly large percentage of our workforce will have the — being what we call the hybrid kind of category of in-office sometimes and sometimes working from home or working remotely. So that said, given that we own the real estate in Oaks, Pennsylvania, which is our predominant real estate footprint in terms of square footage and given that our other larger facilities, London and in Ireland and Indianapolis are operational centers, we will be bringing people back to those facilities as well, plus they are under longer-term leases. So our ability to shrink our real estate footprint is pretty limited frankly.

Ryan KennyMorgan Stanley — Analyst

Got it. Thank you.

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

You are welcome.

Operator

We do have a question from Ryan Bailey with Goldman Sachs. Go ahead, Mr. Bailey.

Ryan BaileyGoldman Sachs — Analyst

Hi, Dennis.

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

Hi Ryan.

Ryan BaileyGoldman Sachs — Analyst

I had a quick question on LSV. I think generally we’ve seen or heard of some better industry dynamics of value, maybe some rebalancing away from [Indecipherable] and I was just wondering, as you kind of look out or hearing anything around maybe potential for better flows in that business?

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

Yeah, the net flows for the quarter, it’s similar to first quarter and even little bit closer to fourth quarter also. Their net flows be it negative were mainly driven by rebalancing. So lost assets from existing clients. They did have some gross sales, signed a couple of fairly large mandates during the quarter. So they are also seeing more sales activity and sales activity pick up and I think that’s a good sign because people who are maybe looking at value, but there is strong performance in the second half of last year and the beginning of the first part of this year. I think it’s probably had some impact on rebalancing as well. Their performance for the quarter was on a relative basis was OK. I mean there were I guess neutral or slightly positive in some categories, but I would say the signs are that their ability to sell in the market being there to sell into is improving.

Ryan BaileyGoldman Sachs — Analyst

Got it, OK. And maybe just on repurchase activity, fairly healthy for the quarter. I was just wondering how we should be thinking about the pace review timing and maybe why was this quarter the right one to step up repurchase or was it sort of immediately after the last earnings release?

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

Yeah. So, you know, picking up 2.1 million shares this quarter, which is fairly healthy amount compared to the first quarter is a little bit of a kind of not really apples to apples, because in first quarter, we had a longer blackout period that kept us out of the market. So I would say the first quarter repurchases were under — what we would have normally — what you would normally expect. Second quarter is a little bit healthier and the market made stock available, if you will, to us that we were able to capitalize on as we look forward, our Board’s view hasn’t changed that will continue to be active in the repurchase space and kind of respond to what the market gives us.

Ryan BaileyGoldman Sachs — Analyst

Got it. Thank you.

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

You are welcome.

Operator

We have no additional questions in queue.

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

Before I turn it over to Steve, I’d like to remind you that during today’s presentation and in our responses to your questions, we have and we 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 release and in our filings with the SEC. We do not undertake to update any of our forward-looking statements.

Now I’m happy to turn it over to Steve.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Thank you, Dennis. Good afternoon, everyone. During the second quarter, we continued our momentum in the market, while also executing on our One SEI strategy. Second quarter 2021 revenues for the banking segment totaled $123.7 million, which was up approximately $16 million or 14.8% in the second quarter of 2020. Increased revenues were due to asset management revenues and an increase in our processing-related revenues as well as elevated one time revenues during the quarter. Second quarter 2021 quarterly profit of $6 million for the segment was up $6 million from the second quarter of 2020. This increase in the process was primarily due to the increase in revenues.

Turning to sales activity. For the quarter, we closed just shy of $3 million of gross recurring sales events, which due to some M&A activity, which I mentioned previously, resulted in a negative $1.1 million of net recurring events for an investment processing business. We did have a positive $1.6 million in asset management events. This offset from asset management brought our total net recurring events for the quarter to approximately $500,000 for the segment. In addition, in the quarter, we closed $1.8 million in one-time revenues. While we would have a net events for the quarter to be higher, we are encouraged by our sales activity and feel our results were more impacted by the timing and the length of contract — of the contracting process we continue to experience in this market. Despite the long contract cycles, we are strongly encouraged by the market activity, we are involved in and we are now seeing many firms in our target markets, getting back into normal operations. And with that sales activity is increasing in the larger end of the market. This bodes well for us going forward.

During the quarter, we signed an agreement with a new client to SEI. Tompkins Financial Advisor. We won this business in a competitive process and we expect Tompkins to migrate to the SWP platform from a competitor platform in the first half of 2022. We look forward to welcoming them to the SEI family and supporting their future growth initiatives.

Turning to implementation activity for the quarter. Pacific Premier Trust, a division of Pacific Premier Bank converted to SEI Wealth Platform from a competitor platform. And we look forward to working together in supporting their growth and expansion initiatives. Additionally, during the quarter we completed the conversion of Truist. The combination of SunTrust and the merged BB&T business onto Trust 3000. The completion of this conversion allows us to continue providing our current scope of technology and services to the new larger organization.

As an update on our backlog. Our total signed, but not installed backlog is approximately $72.6 million in net new recurring revenue at the end of the second quarter. From an asset management standpoint, total assets under management ended the period at $26.3 billion, which was up 4.7% in the first quarter of 2021. Our cash flow for the second quarter of 2021 was positive $269 million. As we go through the rest of the year, we look forward to continuing our momentum, executing on increased sales and prudently investing in the business to ensure sustainable growth. We will also continue to execute on our One SEI strategy, which will allow us to increase our growth opportunities by unlocking all the assets and platforms SEI has to offer across the company.

We remain excited and optimistic on our growth opportunity. That concludes my prepared remarks and I’ll now turn it over for any questions you may have.

Operator

[Operator Instructions] Our first question in queue Ryan Kenny. Please go ahead. Ryan Kenny with Morgan Stanley.

Ryan KennyMorgan Stanley — Analyst

Hey, Steve. How are you?

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Good, how are you?

Ryan KennyMorgan Stanley — Analyst

Good. So heard the message on the higher personnel costs in the IMS segment, which I know we’re talking about next, but just wondering if we should expect anything similar going forward and the banking segment? And any color on how that or any other expense pressure might impact the ability to get thinking margins higher.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Yeah, so two things. One, we will add expense in banking, but I think we’re trying to do this very judiciously like in another unit. But we’re also, as I mentioned before, looking at areas that we feel we can be a little bit more efficient in the technology operations area. We did have increase in our expenses in Q2, primarily in personnel and in operations. But I think we will look to manage this pretty tight and align with new revenue coming in. And I think as far as margins, us working on that expense plan, which is a longer-term initiative, but one I hope will have some benefit from through the year should help us with margins, but also as I mentioned in Q1, we will have some things this year [Indecipherable] some choppiness to margin, i.e. the M&A activity. I mentioned. So I think any movement in margin, you see from quarter-to-quarter this year will be more of kind of those one-time things in that choppiness as we go through the year.

Ryan KennyMorgan Stanley — Analyst

Thank you.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Sure.

Operator

[Operator Instructions] We’ll go now to Ryan Bailey from Goldman Sachs. Go ahead, please.

Ryan BaileyGoldman Sachs — Analyst

Hi Steve.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Hi Ryan.

Ryan BaileyGoldman Sachs — Analyst

I was just wondering, regarding some of that elevated one-time revenues that you were referring to, is there any way that we can try to think about sizing that and what sort of like maybe the more normalized revenue could look like going forward.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Yeah, one times are typically professional services fees. We did have a buyout of a client that was acquired this year and that was part of it. That was driving most of the elevation from Q1 to Q2. I expect it to kind of normalize as we go through the year, but there will be other potential M&A candidates that I’ve mentioned that again could provide a little choppiness to that, but I think you know as we’ve seen before that recurring, non-recurring revenue line is primarily around our implementation fees. So as we sign more clients, as we bring them on, you’ll see more of that as far as Professional Services implementation and conversion fees in that number.

Ryan BaileyGoldman Sachs — Analyst

Got it, OK. And maybe just to sort of circle out that conversation. Just to make sure, I’m thinking about it right, as you think about the M&A activity in the space, the general sentiment could be that there is some more headwinds through the back half of this year?

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Yeah, I’d say there’s a couple more headwinds. And again, I don’t think. These are significant or material business, but more of that will provide a little bit choppiness when you come down to the profit margin.

Ryan BaileyGoldman Sachs — Analyst

Got it, OK. And maybe if I can sneak one more quick one in, just regarding the $72.6 million for backlog, any change in the timeline for implementation?

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

No, I think we are just north of say about 50% [Phonetic] of that would form within the next 18 months, the remainder after that. We’re probably still on pace for that. I do — there are some clients that are experiencing some delays on their side. As we’ve all seen, the pandemic has continued in India. Some of those development fees that they have, has been a little stream. So we are seeing may be some minor pushes there, but nothing significant. We’re talking a couple of months, etc. so I feel pretty bullish on that implementation schedule slot.

Ryan BaileyGoldman Sachs — Analyst

Got it, OK. Thank you.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Sure.

Operator

Next we have Owen Lau from Oppenheimer. Go ahead, please.

Owen LauOppenheimer — Analyst

All right, thank you very much. Hi, Steve, just a quick question — just a quick question, going back to the like outsized one-time revenue in the second quarter. Did I hear correctly, it was $1.8 million in the second quarter and then there’ll be some lumpiness [Indecipherable] is that the right way to think about that?

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

No. So there is two numbers. Let’s not confuse Owen. So $1.8 million is what we actually sign. So they were part of our sales of one-time revenues but what other one-time revenues were actually booked one time revenues. And we did have an increase in our booked one time revenues during the quarter primarily due to professional conversion fees but also a buyout of a client who was acquired.

And when I talk about the potential choppiness of that one time revenue, there could be an increase in this one-time revenues. If we have other buyouts of clients that go through M&A activities, but again nothing material. It’s more an impact on the quarterly margin, quarter-over-quarter.

Owen LauOppenheimer — Analyst

Got it. Then any change of the timeline, when you mentioned previously that the margin will continue to expand here. Maybe this year, next year, any change of timeline in terms of the expectation?

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

No, we’re still working on Owen, I think we’re still looking to get through this year and look for a path we can come out of were again, my goal is to continue our momentum and get us to more of that sustainable and accelerating margin level, but we certainly haven’t hit that yet.

Owen LauOppenheimer — Analyst

Got it. All right, thank you very much.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Sure.

Operator

And our last question comes from Robert Lee with KBW. Go ahead, please.

Robert LeeKBW — Analyst

Great, thanks, good afternoon. Steve, hope all is well.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Great. Rob, how are you doing?

Robert LeeKBW — Analyst

Good, thanks. Well, first, quick question back to the booked one-time revenue, what was that number for the quarter?

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

We tend not to break it out Rob giving one time, etc. What I’d tell you, I think it’s more pertinent is that we did have an uptick over Q1, and most of that uptick a few million dollars was due to the buyout.

Robert LeeKBW — Analyst

Okay. So just kind of curious maybe on the competitive environment, you talked about I guess with maybe was Tompkins, kind of taking that from a competitor. And is there any way of general — I don’t know if you can, but generalizing like if you’re — when you feel like you maybe you’re losing new potential new business to a competitor or something gets taken away is it I guess if it’s Trust 3000 maybe it’s price, but if it’s on something that’s more SWP related, no. Is there kind of a common characteristic why maybe you — if you like, you don’t win some business And then conversely when someone is coming to you, are they — is it more because they’re buying a specific component or do you, or is it they are coming over to you because they want the whole package. They want the straight — the whole straight-through process and just trying to maybe get some sense if there is any [Speech Overlap].

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

As you can imagine, that’s a big question, it kind of depends on the prospects there are. I would say the lion’s share of why we win business is our capabilities, our technology, and our people. Why we lose business? Well, when someone gets acquired and they go on a competitor’s platform because that’s changing platforms isn’t the priority, finishing the acquisition is. But that’s — there is a good news in that, a silver lining, that client who might be acquired becomes part of a bigger organization and they become a new prospect again. So I’d say, and you mentioned Trust 3000. I think when people leave it’s less to do with price and either more about them changing business model or capabilities they are looking for, but maybe they want less capability and a more streamlined. So I think it’s really again it’s hard to answer for the market, but we again feel pretty well-positioned from our technology and platform. We feel we have probably the best platform in the industry, both here and globally and unless someone is doing kind of a plug and play looking to maybe just replace one or two components, we feel well situated against kind of our competitors.

Robert LeeKBW — Analyst

And maybe one question on client retention, and maybe this is more for the UK versus the US where the business is somewhat newer, but do you, how do you think like retention rates when an SMEP [Phonetic] contract comes up for renewal, which I know you’ve had a bunch in UK, I’m assuming some in the US, are you — do you feel like your retention rates or and pick a number, 90%, 80% is there [Speech Overlap] kind of metric you kind of think about.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Yeah, Rob I actually don’t have the specific number in front of me. What I would tell you is that it’s well into the high 90s. Again when you look at why we lose business, it’s because mostly, if you look in the past it’s been, we have lost a couple of client service over the past 10 years. But most of it’s been because of M&A activity. There are people that have changed, business model, they might go to more just a pure advisory model in the wealth management practice and they don’t be a full-blown platform like us. So the good news is, and listen we were not perfect. We have things to work on. We’re always looking at what we can do to improve, but we have a pretty solid loyal client base. And we look to be client obsessive and to deliver new client experience. And I think that helps us as we go to recontract.

Robert LeeKBW — Analyst

Okay. Okay, great. Thanks for taking my questions.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Sure.

Operator

And we also have a question from Chris Donat with Piper Sandler. Go ahead, please.

Chris DonatPiper Sandler — Analyst

Hey Steve, just wanted to ask on that buyout. If you can give us this specific number that it was. And if you can’t give us a specific number, maybe what sort of range you’ve seen over time and how frequently you see these kinds of buyouts.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Yeah. So it’s literally around $2 million. Like I say, it’s a few million dollars. It was not significant in the grand scheme of things. And Chris, this is one of those that again it’s not something I look to kind of forecast. If you look, we’ve talked about this in the last quarter call. We’ve had M&A activity since we’ve been in this business as part of this industry. With the past several years, we’ve had M&A activity that’s benefited us and yeah, we won the combined entity. So as I’m looking through, I think one of the things we wanted to give a heads up on last quarter was, we do see a couple of clients that are in an M&A process were its been completed. And typically, when that happens as I mentioned previously, the changing of platforms is not a priority, it’s getting the acquisitions done, and while we might lose them short term they become a prospect for a longer-term in a bigger organization.

So I think the way we look at is it is a part of doing business. It’s something that which will win some and it will help us some that we might lose for the short term, but the way I look at it is, they become the next prospect on our list.

Chris DonatPiper Sandler — Analyst

Got it. Thanks, Steve.

Operator

Sure. There are no additional questions in queue.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Great. So with that, I’ll turn to the Investment Manager segment. During the second quarter, we continued our momentum and saw strong growth from both new clients and expansion with existing clients. For the second quarter of 2021, revenues for the segment totaled $142.8 million, which was 19.7% higher as compared to our revenue in the second quarter of 2020. Profit for the second quarter of the segment of $57.8 million was 29.4% higher as compared to the second quarter of 2020. Additionally, the second quarter’s profit margin was 40.5%, a high for the segment. This was a result of several factors, specifically a substantial increase in revenue due to market growth, a significant portion of our quarterly sales implemented during the quarter, as well as a delay in on-boarding the operational infrastructure expense related to this new business during the quarter. Also, a temporary reduction in investment expense this quarter aided the margin increase as well. I expect our margin to normalize over the next few quarters.

Third-party asset balances at the end of the first [Phonetic] quarter of 2021 were $875.9 billion, approximately $44.1 billion higher than the asset balances at the end of the first quarter of 2021. This increase was due to net client fundings of $5.9 billion, as well as market appreciation of $38.2 billion.

And turning to market activity, during the second quarter of 2021, we had another strong sales quarter with net new business events totaling $11 million of recurring revenue as well as recontracts of $6.3 million in recurring revenues. Highlights of these events included in our alternative market unit, we closed number of strategic new names, while sales to existing clients continue to be rebuffed robust. SEI has also won the business of a large multi-strat manager and competitive sales process and is currently converting that client off competitors platform. Momentum has also continued in the private equity and private debt space as we continue to launch funds with both new and existing firms.

In our traditional market unit we continue to add new business in all product lines with both new and existing clients. Consistent with our land and expand strategy. In particular, we continue to experience strong momentum in both our turnkey collective investment trusts and ETF platforms. For the quarter, we added three new client relationships and expanded relationships with more than 35 clients. In Europe, we continue to have solid cross-sales and in our family office services unit we signed six new name single-family office client on the Archway Platform. And assets on that platform exceeded $500 billion for the first time. Our backlog have sold, but unfunded new business stands at $29.4 million at the end of the second quarter.

So in summary, this business had another strong quarter. We continue to see strong demand for our solutions and platform and see great opportunities for continued growth as we execute on our strategy.

That concludes my prepared remarks and I’ll now turn it over for any questions, you may have.

Operator

[Operator Instructions] We go now to Owen Lau from Oppenheimer. Go ahead, please.

Owen LauOppenheimer — Analyst

All right, thank you for taking my question. Steve, just one clarification. I think the margin second quarter 20.5%, but you did mention you expect margins to normalize over the next few quarters. Could you please elaborate a little bit more? Do we expect to spend more sort of expense line would go up? You expect kind of revenue would be under pressure? And what’s the reason for that? Thank you.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Yeah, Owen, the primary reason is as I said, we had the benefit of this quarter, which I love seeing it. We had quite a good bit of market revenue growth as well as new business. The new business we sold in Q2, 87% of that is funded already. So that funded well ahead of us, bringing in the expense to supportive of the infrastructure expense and the personnel. So I do expect this is a competitive environment for hiring as Dennis mentioned. I do expect that expense line item to go up. When I look out over the quarter, there is always a question, will the margin get up to the 40% which is at. I don’t think that’s long-term sustainable and I think will come back down to the mid or just above mid-30s again over the next few quarters. I wouldn’t say it’s pressure on expense, I think it will be adding and normalizing the expense to match the revenue we already have in the door.

Owen LauOppenheimer — Analyst

Got it. That’s very helpful. And then on kind of related topic, when you look back, do you feel like COVID had any impact on your investment managers business. And do you expect in, all things equal, do you expect any acceleration of devaluation of the business given that the vaccination way it’s going up.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

So what I’d say is if you look back during the pandemic that IMS continue to execute. I think we executed in a different way. If you look at the percentage of sales, we started to grow a lot more with clients than new business. While there was new business, a lot of the larger initiatives, especially over the past year, in the market and in the industry were put on hold. So I think we executed well. We continued our growth rate, but I think the one impact which was the new business, especially the larger side slowed down a little bit and I expect that to start to pick up. We’re starting to see signs of that already. So I’m not sure that will add fuel to the acceleration or just add another lever to accelerate with.

Owen LauOppenheimer — Analyst

Got it. That’s good. And then finally, could you please maybe give us an update about any demand of enabling maybe crypto transactions from your clients? Do you think it can be kind of incremental to your business from revenue standpoint?

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Owen, I missed the first part of the question, I apologize.

Owen LauOppenheimer — Analyst

I’m asking about, sorry, I’m asking about the demand of enabling crypto transactions, like do you see any quick demand [Speech Overlap] yeah, do you think it can be incremental to your business from a revenue standpoint if there is any — any request from the clients and say, hey, can you help us to enable some crypto transaction.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Yeah. So, great question. So, actually right now. We actually do support cryptos funds and servicing. We have been in contact with a number of our clients who’re adding this to their investment management suite. So we do see some burgeoning demand here. We actually had a group that has looked at expanding our solution and when I mentioned our investment spend was a little down this quarter which helped profit, we are looking to expand that investment in cryptocurrency and this is just in Investment Manager Services. We’re also looking at that in SWP and we’re actually running an experiment right down around SWP and looking at the custody of cryptocurrency in SWP. So this is something that we think is has got some legs, not just for IMS but for the company and all of our investment processing businesses. This will also impact Archway as well and we think it will — we — which could provide another lever for growth for us.

Owen LauOppenheimer — Analyst

Got it. Thank you very much.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Sure.

Operator

Let’s go back to Robert Lee from KBW. Go ahead please.

Robert LeeKBW — Analyst

Great, thanks. Thanks again, Steve. Just real quick question the — I think you mentioned $6 million of revenue from I guess recontracting existing clients. Just want to make sure I understood that, was that like clients recontracted and upon recontract you actually were able to increase the revenue to $6 million.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

No, that’s just that’s the number of recontracts in there Rob, might be some slight upticks maybe for additional service, etc., but it’s basically looking at clients that were recontracted and the contract value of their — of their contract at that time. So there was a few of them during the quarter and I just called out that recontract them.

Robert LeeKBW — Analyst

Okay. I just wanted to clarify that — that was my only question. Thanks.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Sure.

Operator

And next, we go back to Ryan Bailey with Goldman Sachs. Please go ahead.

Ryan BaileyGoldman Sachs — Analyst

Steve, I guess, private equity in general we’re seeing deployment pipelines near or at record levels for the industry and that’s probably a pretty good for private credit too. I was just wondering if you can give us a reminder on roughly how much of either revenues or assets that are tied to deployed capital for the business versus committed capital?

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Yeah, so I don’t really get into that level of number, Ryan. What I’d tell you there from our assets split, we’re still about 55%, 56% alternative that would include hedge, private equity and 45% traditional, which would be ETF, CIP, mutual funds. Of our alternative assets, of that 55%, more and more of that is going to our private equity both in private credit, private debt, real estate, but we really don’t break that out in that specific.

Ryan BaileyGoldman Sachs — Analyst

Okay. All right, thank you. Gave it a try.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Sure.

Operator

At this time there are no additional questions in queue.

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Great. So with that, I’ll now turn it over to Wayne Withrow to cover the Advisor segment. Wayne?

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

Thanks, Steve. During the second quarter, we were immersed in execution of the strategic framework we’ve been building over the last few years. In this regard, we are seeing benefit from each of the three pillars of that framework. First, our robust technology stack built on the SWP foundation is being increasingly adopted across both existing clients and our new advisors prospects. Second, evolution of our sales and marketing process that fits today, digital first marketplace continues to gain acceptance. And third, the impact of offering both bundled and unbundled fee investment products has been a catalyst for strong advisor net cash flow. Second quarter revenues totaled $119 million, this 27% increase from the second quarter of last year reflects the positive of our asset growth as well as the negative of lower fee rates on some of our products.

Expenses were up compared to the second quarter of last year primarily due to increased direct cost and costs associated with our purchase and ongoing integration of the Orange Technology Platform. The year-over-year comparison also reflected one-time pandemic-related expense reductions included in the Q2 2020 total. Direct costs and Orange expenses had a similar impact on the Q2 to Q1 comparison. Overall, the profit picture for the unit remained intact despite pressure on asset management revenue rate.

Total platform assets rose to $95 billion at the end of the second quarter and included $81.6 billion in assets under management. Market appreciation and positive net cash flow drove this increase with market impact being the biggest factor. Quarterly net cash flow onto our platform was approximately $1.2 billion, of this total $874 million represented assets under management and $300 million represented assets under administration. This is our strongest cash flow quarter. The completion of the SWP migration over two years ago. Please note that while AUA growth may be viewed as a factor indicating strengthening market acceptance of our technology stack, our AUM growth would not have occurred without the advisors choosing to adopt our technology platform.

Contributing to our growth in platform assets were 65 new engaged advisors during the quarter. Perhaps more significantly 104 advisors began engagement with SEI in the second quarter, strong improvement from the 67 we recorded in the first quarter. Partial engagement reflect a valuable step in the sales process and while some of these advisors move directly into new advisor engaged status within one quarter, our goal is to ultimately move all of these firms to new advisor status.

Our competitive advantages are built upon the technology capabilities in which we have invested and continue to invest. To this end, we continue to integrate the Orange Platform and our goal of a late 2021 rollout remains on track. We have also begun the Phase 1 rollout of our fully digital account open technology which will connect in a straight-through manner proposal generation and automated account opening as well as enhanced mutual fund and SMA model management and trading automation.

While there still remains much to be accomplished, we continue to make progress in our three focus areas, delivering a compelling front-to-back technology platform, designing and offering investment products responsive to today’s investor and evolving our sales and marketing process to fit today’s digital world.

I now welcome any questions you may have.

Operator

[Operator Instructions] We’re going now to Ryan Kenny with Morgan Stanley. Please go ahead.

Ryan KennyMorgan Stanley — Analyst

Hey, Wayne, good afternoon.

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

Good afternoon, Ryan.

Ryan KennyMorgan Stanley — Analyst

So, saw the press release come through last week on the reorg in your business with a lot of additions to the management team. So maybe you could just elaborate on the opportunity and rationale there and how the new organization can better serve clients?

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

Well, I think behind the whole reorganization is the fact with much stronger technology focus built upon our ever maturing [Phonetic] technology stack and a lot more focus on a digital first distribution and marketing strategy. So we had to add some expertise in some of those areas and organize in sort of what I would call more modern framework as opposed to a more traditional geographic/AUM-based model.

Ryan KennyMorgan Stanley — Analyst

Makes sense. And then just one more, I know that you mentioned that the lack of travel during the pandemic helped margins a bit. So just wondering if you can help size how much and when travel resuming might impact margins from here.

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

Yeah, I mean. Yeah, I can do that and but I won’t. I mean I think that this — we look at that, but in my mind the thing that’s the most fun is not how we manage the expenses, which we do every day, but when you look at our response to the evolution of the physical location dynamic that works forward, it’s going to help us address the question somebody asked earlier, which is the war for talent. So I’m more focused on how we can respond to that. And yes, it will cost us some more money, I don’t think it’s something I worry about, but I think it can get us an advantage in the war for talent.

Ryan KennyMorgan Stanley — Analyst

Thank you.

Operator

We go now to Owen Lau with Oppenheimer. Go ahead, please.

Owen LauOppenheimer — Analyst

Yes, thank you for taking my questions again. So, Wayne, I think you just launched a direct indexing product with an ESG overlay in February this year. Could you please give us an update on the recent traction you have? And what have you learned from this rollout? Thank you.

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

Yeah, I think that the — again, a lot of traction is sort of a direct indexing in ESG overlay and what I would say is don’t look at — take direct indexing for example, direct indexing is a tool. Direct indexing gives you the ability to do something like an ESG overlay in a passive world. It also gives you the ability to do tax management in a passive world. So you need to look at the combination of those two together and not each one of those individually. ESG overlays is getting a lot of traction in all of our products, it used to be primarily limited to an SMA actively managed product, now we can operate in sort of the passive world, which is a big advantage. And we’d do the same in a tax management. So hopefully, that answers your question. Need to look at it, the technology capabilities of all those products need to be combined and that’s what’s compelling.

Owen LauOppenheimer — Analyst

Got it. Do you have any kind of thought, maybe estimate or sizing about the TAM opportunity here in this space by combining direct indexing plus the ESG, any number you can share?

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

Yeah, I don’t really have a number to share. But I would say those two components are among the fastest-growing aspects of our business.

Owen LauOppenheimer — Analyst

Got it. Okay, all right. That’s it for me. Thank you very much.

Operator

Our next question comes from Robert Lee with KBW. Please go ahead.

Robert LeeKBW — Analyst

Thanks. Good afternoon, Wayne.

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

Good afternoon.

Robert LeeKBW — Analyst

Real quick. I’m just kind of maybe unpack a little bit the cash flows for the quarter. So on the, I guess the AUM side, the $800 million in change, this puzzle kind of unpacked that a little bit more, should we kind of assume. I don’t want but what happens when you assume that you’re still — that there is no reason to believe that you haven’t seen kind of continued outflows from kind of, I’ll call it the legacy products and whether it’s the direct indexing product or the ETF overlay product, I mean, there you are still seeing that kind of ongoing mix shift underneath that kind of $800 million.

And then if I think of the cash flows overall, which were pretty healthy this quarter, how much of your cash flows or do you tend to find that, hey it’s advisors who signed on in the last 18 months, two years who are really driving the gross sales and those advisors who have been with us for a while that maybe their books are more stagnant or an outflow any kind of color around kind of the aging of advisor relationships, so to speak.

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

Okay. Rob, our marketing group told us, we had to be done by six. So, I’ll try to answer this question. I would say that when you look — in terms of aiding of advisors, I think internally we aid all the advisors, from the first [Indecipherable], do you know how the cash flow goes and we had metrics, then we measure them and when we mark them and based upon the maturity of the buys. I would say that is a general rule, the newer the advisor, the more active they are, but it reaches a tipping point, where you have these large and fast growing advisors and they, could dominate the cash flow and they could have been with us a very, very long time. But as a general rule, the newer the advisor, the faster the cash flow. Does that answer your question, but it’s not, that’s a really rough, rough generalization.

In terms of newer product and the legacy products, what I would say is a lot of the newer products they use more of an unbundled fee approach and I think we’re capitalizing on just overall transparency in the world. I mean you can see all the press around where kind of the revenue flows among the providers in the value chain, and there was much more and more transparency. So we’re absolutely seeing better cash flow in the unbundled fee, which is a more transparent fee structure.

Robert LeeKBW — Analyst

I mean, just out of curiosity, things like direct indexing –.

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

Fee structure as products, right.

Robert LeeKBW — Analyst

So maybe just would direct indexing that starts to take off. Is that going to flow through, I’m assuming as an AUM or is that actually going to be in AUA?

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

That’s AUM.

Robert LeeKBW — Analyst

Right. Okay, great. Thanks, Wayne.

Operator

And we’ll go now to Ryan Bailey with Goldman Sachs. Please go ahead.

Ryan BaileyGoldman Sachs — Analyst

Hi, Wayne. Just a quick one on the direct indexing. Is there any sort of rough gauge you can help us think about for the economic that SEI receives for those products. Is it sort of, in addition to the fee rates you already earning, or is it sort of like a substitute for existing products?

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

I would say — let me, let me see if this the question you’re asking. When you look at the growth in direct indexing products. I would say half of the money is new to SEI and half maybe people who are changing out of a more traditional product into a direct indexing product, that was your question.

Ryan BaileyGoldman Sachs — Analyst

Okay. And I guess like, as we think about the revenues, I guess is it accretive to the fee rate for there is a switching from a more traditional product and that’s going to like net of the sub-advisory or is it, would that be kind of like a net down in the fee rate?

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

Yeah, I think if you look at from our traditional, if you will kind of a mutual fund product that is a net down in terms of the revenue rate.

Ryan BaileyGoldman Sachs — Analyst

Okay, all right. And that is inclusive of those sub-advisory component.

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

Yes.

Ryan BaileyGoldman Sachs — Analyst

Okay, all right, thanks Wayne.

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

There isn’t it really yes, there isn’t a separate sub-advisory fee in there. We manage all that in-house.

Ryan BaileyGoldman Sachs — Analyst

Got it, OK. Yeah, yeah. Okay.

Operator

We have no additional questions in queue at this time.

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

Okay, thanks. With that I will turn it over to Paul. Have a great afternoon.

Paul F. KlauderExecutive Vice President, Head of the Institutional Group

Thanks, Wayne. Good afternoon, everyone. I’m going to discuss the financial results for the second quarter of 2021. Second Quarter 2021 revenue of $85.7 million, increased 12% compared to the second quarter of 2020. Operating profits for the second quarter 2021 were $43.8 million, an increased 11% compared to the second quarter of 2020. Both revenue and operating profit increases were due to market appreciation, positive currency translation offset slightly by negative client fundings. Second quarter 2021 expenses were impacted by $1.8 million in non-recurring expenses that primarily represented a true-up of a sub-advisor incentive fee and one-time severance expenses.

Operating margin for the quarter was 51%. Quarter-end asset balances of $100.1 billion, reflect a $14.5 billion increase versus the second quarter of 2020. This is due to market appreciation. Net sales events for the second quarter were a positive $200 million, gross sales were a strong $2.6 billion, and client losses totaled $2.4 billion. Second quarter new sales were diversified globally and included Canadian OCIO, US not-for-profit OCIO and UK Fiduciary Management. Client losses for the quarter and year-to-date was predominantly due to unsuccessful client rebids, M&A activity and continued DB curtailments and will provide headwinds on revenue and profits in Q3 and Q4 of 2021.

In the quarter, we were able to retain a number of OCIO relationships globally that we went through a competitive rebid process. The unfunded client backlog of gross sales at quarter end was $2.6 billion, offset by $3.7 billion of recognized losses that are still part of the 06/30/2021 asset balance. We continue to focus on stabilizing our client base distinguishing our OCIO solution and selling new OCIO relationships. We continue to advance our ECIO solution with global, large and mega [Indecipherable] and prospects, as well as evaluate the enhancements to the overall solution.

Thank you very much and I’m happy to answer any questions that you may have.

Operator

[Operator Instructions] We’ll go now to Ryan Kenny with Morgan Stanley. Go ahead, please.

Ryan KennyMorgan Stanley — Analyst

Hey, Paul, how are you?

Paul F. KlauderExecutive Vice President, Head of the Institutional Group

Good, Ryan.

Ryan KennyMorgan Stanley — Analyst

Just wondering if you could give an update on the percentage of revenues or business coming from corporate DB versus some of the growth industries like endowments and foundations, and then what is the optimal business distribution you think you could ultimately get to?

Paul F. KlauderExecutive Vice President, Head of the Institutional Group

In percentage of assets for corporate DB still hover around the low 30% threshold, we certainly have seen more losses in the DB side, but the DB balances have gone up for a couple reasons, one obviously asset appreciation, but the long duration nature of the fixed income has actually improved as well. So, that’s where we are from a — from a business perspective as far as assets under management and note that five years ago, that number was probably closer to about 52% or 53%. So it’s still sizable piece of the business, does not mean that all the DB plans are on a path of termination. Certainly, we know what’s happening in the US and in UK with regard to defined benefit plans, but not all of them are on a kind of final glide path, some subset of those are and we certainly have seen some impact of that over the last four or five quarters.

As far as an optimal mix, there’s probably a home for defined benefit plan long term, there are some that are still active in some industries that are still supportive of DB that’s usually the minority and the smaller industries like the utility industry. So I would say that that’s going to continue to add over time and really is being replaced with the longer-term assets of foundations, endowments, other defined benefit plans that are going to be around long term like Governments and unions, hospitals, defined contribution and sovereign wealth funds etc. So hope that answers your question.

Operator

And next, we’ll go to Robert Lee with KBW. Go ahead please.

Robert LeeKBW — Analyst

Great. Good afternoon, Paul.

Paul F. KlauderExecutive Vice President, Head of the Institutional Group

Hi, Robert.

Robert LeeKBW — Analyst

Hi. Two questions, I just want to make sure — unpack a little bit the unfunded pipeline just wanted make sure I understood it correctly. So it’s $2.6 billion kind of committed, but unfunded but then there is $3.7 billion of relationships that were, you know you’ve, lost, that they just haven’t flowed out yet. So I just want to make sure it $2.6 billion is not net of the three.

Paul F. KlauderExecutive Vice President, Head of the Institutional Group

No, the $2.6 billion is the gross sales. We’ve had a little bit of sales that are funded from the second quarter in the second quarter, but we have a couple of sales in the first quarter that still haven’t funded. And then I just wanted to call out given the losses that we have incurred that in the $100.1 billion as of 06/30 there is $3.7 billion of losses that we’ve been notified that we have recognized or will recognize the revenue when they actually lose that should come out probably sometime in the third quarter.

Robert LeeKBW — Analyst

Okay. And just maybe a margin question, I mean if I — if we adjust for the one-time $1.8 million, margins is still running at pretty healthy levels and you have said in prior calls that kind of don’t expect this, you kind of expect that or maybe back toward — I think you may have talked about maybe the high 40s or 50. So I mean, is that still what we should be expecting over time or do you feel like you’ve been pretty consistently running at 52% to 53% for almost a year now, kind of, even adjusting for this. So, is that really what we should be thinking a better indication of where you maybe could be over the coming quarters?

Paul F. KlauderExecutive Vice President, Head of the Institutional Group

Yeah. I think regarding the headwinds of losses and the fact that even clients that stay with us, we had a healthy rebid process this year. We retained $4.5 billion, I’m sorry, this quarter $4.5 billion of competitive tenders that went out that we retained, which is a wonderful statistics for us, but even when that happens, we do have some reduction of fees based on the competitiveness of that. So when you add all that up together and you look at the realities of the losses hurting us a little bit more than the wins benefiting us, I think high ’40s is more realistic as we look at longer term into 2022. We manage the business judiciously, but we don’t just manage for expenses. We want to invest appropriately and we’re looking at that with regard to ECIO and some initiatives, we’re doing on that front. But there is some benefit we’ve gotten from travel and really because the clients probably will have a delivery device that will always include some aspect of virtual, so that will probably be long-term travel savings that we have. We want to be in front of our clients, we love to be in front of our clients, but we may not need as many as the resources that we’ve had in the past in front of our clients in the future.

Robert LeeKBW — Analyst

Great. And then is there any rule of thumb that you’re seeing that. Hey, when we win on a rebid on average the concession on fees is 10%, 20%. I mean, I don’t know if there is any kind of rule of thumb that you’re — there is something that you’re experiencing that would be helpful.

Paul F. KlauderExecutive Vice President, Head of the Institutional Group

Yeah, I could go on for a while and add and unlike Wayne I worked till seven. So I could go — I could go longer if you want, but kidding aside, it’s so idiosyncratic based on each specific deal. But if you look at it in general, it’s probably 10% to 12% concessions off of what we’ve had in the past, but it depends on the competitive framework. Now again some of that we might be able to get back over time if they are looking to redeploy more into alternative investments, but I’d say 10% to 12% is probably a good marker to think about.

Robert LeeKBW — Analyst

Okay. Great, thanks so much.

Paul F. KlauderExecutive Vice President, Head of the Institutional Group

Thank you.

Operator

And there are no additional questions in queue.

Paul F. KlauderExecutive Vice President, Head of the Institutional Group

Great. I’d like to turn the call back over to Al West.

Alfred P. West, Jr.Chairman and Chief Executive Officer

Thanks, Paul. So, ladies and gentlemen. We are making progress on two fronts. On the first front, we are very fortunate to have kept our workforce healthy and productive, delivering a high level of client service throughout the pandemic. On the second front, we are building momentum throughout our businesses and this is the end of our time this afternoon. Please be safe and remain healthy. Thanks a lot.

Operator

[Operator Closing Remarks]

Duration: 71 minutes

Call participants:

Alfred P. West, Jr.Chairman and Chief Executive Officer

Dennis J. McGonigleExecutive Vice President, Chief Financial Officer

Steve MeyerExecutive Vice President, Head of Global Wealth Management Services

Wayne M. WithrowExecutive Vice President, Independent Advisor Solutions by SEI

Paul F. KlauderExecutive Vice President, Head of the Institutional Group

Robert LeeKBW — Analyst

Chris DonatPiper Sandler — Analyst

Ryan KennyMorgan Stanley — Analyst

Ryan BaileyGoldman Sachs — Analyst

Owen LauOppenheimer — Analyst

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