Exhibit 99.1
News Release
Waddell & Reed Financial, Inc. Reports Fourth Quarter Results
Overland Park, KS, Feb. 4, 2014 — Waddell & Reed Financial, Inc. (NYSE: WDR) today reported fourth quarter net income of $78.8 million, or $0.92 per diluted share, compared to net income of $68.4 million, or $0.80 per diluted share during the previous quarter and net income from continuing operations of $52.4 million, or $0.61 per diluted share during the fourth quarter of 2012.
Operating revenues of $375.0 million rose 8% sequentially and 24% compared to the same period last year. At 30.2%, the operating margin compares favorably to the previous quarter’s 29.8% and 27.5% during the fourth quarter of 2012. Continued margin expansion is the result of solid revenue growth and careful control of operating costs.
Assets under management were $127 billion at quarter-end, rising 11% since September 30 on a combination of strong market action and solid inflows across asset classes and distribution channels. Sequentially, sales rose 37% and net flows resulted in an organic growth rate of 14%. Compared to the end of last year, assets under management increased $30 billion, or 31%, of which $8.5 billion were new flows, representing organic growth of 9%.
Business Discussion
“Fourth quarter and full year results marked a number of new records for our firm,” said Hank Herrmann, Chairman and Chief Executive Officer of Waddell & Reed Financial, Inc. “Net income, earnings per diluted share, operating revenues and operating income set new highs in 2013. Sales and advisor productivity were at record levels while net flows were the second highest level ever. Such successes are a testament to our people, our business model, the strength and effectiveness of our distribution network, and a significant suite of products with strong performance records.”
The Wholesale channel captured $6.1 billion of new sales, an 18% increase compared to the previous quarter and a 71% improvement compared to the same period last year. Net flows of $2.8 billion represent an organic growth rate of 19%, significantly outpacing industry trends.
The Advisors channel remains a model of asset stability, maintaining an industry-low redemption rate and growing sales and productivity. These characteristics provide steady and predictable sources of cash flow.
The Institutional channel benefited from a number of new allocations during the quarter resulting in sales of $1.9 billion. While we do not expect to repeat this record level of business in the first quarter of 2014, the pipeline of opportunities is plentiful.
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Management Fee Revenue Analysis
Both the sequential and year-over-year increase in quarterly revenues was due to higher levels of assets under management. The effective fee rate remains largely unchanged at 59.5 basis points.
Underwriting and Distribution Analysis
Wholesale channel
The sequential increase in revenues was due to higher levels of assets under management. Direct costs rose with higher sales commissions paid to third party distributors, while commissions paid to our wholesalers remained unchanged due to a design feature in our compensation plan that shifts from cash to equity (restricted stock) once sales goals are exceeded. Most of the increase in indirect costs can be attributed to higher travel and business meeting costs.
Revenues and direct costs rose compared to the fourth quarter of 2012 with higher asset levels, and to a lesser degree, sales commissions. Most of the increase in indirect costs can be attributed to higher travel and business meeting costs.
Advisors channel
Sequentially, revenues rose as higher levels of assets under management led to an increase in advisory and Rule 12b-1 fees. Higher commission revenues on various investment products sales contributed an additional $2.4 million to the increase in revenues. Direct costs rose in close correlation with revenues. Indirect costs increased due to business meeting, travel, and sales program and conference costs.
Compared to the fourth quarter of 2012, the increase in revenues was largely due to higher advisory fees, and to a lesser degree, asset-based Rule 12b-1 fees. Direct costs rose with related revenues while indirect costs rose with higher sales program and conference costs.
Compensation and Related Expense Analysis
The sequential increase in costs is due to a combination of higher incentive compensation and payroll taxes. Compared to the same period in 2012, costs rose on higher incentive bonuses, and to a lesser degree, an increase in base salaries year-over-year.
General and Administrative Expense Analysis
The sequential and year-over-year quarterly increase is due to a combination of higher consulting fees (largely related to our technology improvement efforts), increased advertising and higher dealer services costs.
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Investment and Other Income Analysis
During the current quarter, investment and other income included capital gains of $9.7 million, which were partially offset by losses from a limited partnership of $2.0 million. Capital losses from prior periods were utilized against the current quarter’s capital gains, thereby reducing income tax expense by $3.3 million.
Unaudited Balance Sheet Information
Schedule of Selected Items
| | Quarter ended | |
(Amounts in millions) | | Dec. 31, 2013 | |
Cash & cash equivalents | | $ | 487.8 | |
Investment securities | | 201.3 | |
Total assets | | 1,337.0 | |
Long-term debt | | 190.0 | |
Total liabilities | | 649.7 | |
Stockholders’ equity | | 687.3 | |
| | | | |
(Amounts in thousands, except per share data) | | Quarter-to-Date | | Year-to-Date | |
Shares repurchased | | | | | |
Number of shares | | 304,696 | | 1,492,535 | |
Total cost | | $ | 19,586 | | $ | 72,132 | |
| | | | | |
Dividend paid | | | | | |
Rate per share | | $ | 0.28 | | $ | 1.12 | |
Total paid | | $ | 23,917 | | $ | 96,018 | |
| | | | | |
Capital returned to stockholders | | $ | 43,503 | | $ | 168,150 | |
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Unaudited Consolidated Statement of Income
(Amounts in thousands, except for per share data)
| | 2012 | | 2013 | |
| | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | |
Operating Revenues: | | | | | | | | | | | | | | | | | |
Investment management fees | | $ | 134,900 | | $ | 134,213 | | $ | 138,364 | | $ | 141,754 | | $ | 148,445 | | $ | 156,219 | | $ | 165,559 | | $ | 180,219 | |
Underwriting and distribution fees | | 121,153 | | 123,687 | | 122,819 | | 128,806 | | 135,419 | | 141,597 | | 146,863 | | 158,940 | |
Shareholder service fees | | 31,818 | | 31,786 | | 32,182 | | 32,323 | | 32,691 | | 33,890 | | 34,667 | | 35,845 | |
Total operating revenues | | 287,871 | | 289,686 | | 293,365 | | 302,883 | | 316,555 | | 331,706 | | 347,089 | | 375,004 | |
Operating Expenses: | | | | | | | | | | | | | | | | | |
Underwriting and distribution | | 144,486 | | 148,067 | | 147,408 | | 150,020 | | 161,571 | | 164,844 | | 169,046 | | 181,252 | |
Compensation and related costs | | 44,158 | | 41,931 | | 42,343 | | 43,343 | | 48,155 | | 47,376 | | 49,472 | | 52,594 | |
General and administrative | | 17,764 | | 23,634 | | 15,774 | | 18,160 | | 16,208 | | 26,938 | | 20,462 | | 22,811 | |
Subadvisory fees | | 6,271 | | 5,208 | | 4,921 | | 4,609 | | 4,484 | | 4,291 | | 1,667 | | 1,778 | |
Depreciation | | 3,359 | | 3,329 | | 3,188 | | 3,335 | | 3,227 | | 3,222 | | 3,172 | | 3,213 | |
Total operating expenses | | 216,038 | | 222,169 | | 213,634 | | 219,467 | | 233,645 | | 246,671 | | 243,819 | | 261,648 | |
Operating Income | | 71,833 | | 67,517 | | 79,731 | | 83,416 | | 82,910 | | 85,035 | | 103,270 | | 113,356 | |
Investment and other income | | 3,949 | | 1,325 | | 2,632 | | 1,911 | | 4,377 | | 1,002 | | 5,212 | | 9,313 | |
Interest expense | | (2,826 | ) | (2,825 | ) | (2,826 | ) | (2,834 | ) | (2,854 | ) | (2,858 | ) | (2,832 | ) | (2,700 | ) |
Income from continuing operations before taxes | | 72,956 | | 66,017 | | 79,537 | | 82,493 | | 84,433 | | 83,179 | | 105,650 | | 119,969 | |
Provision for taxes | | 26,119 | | 24,792 | | 27,421 | | 30,143 | | 30,570 | | 31,222 | | 37,231 | | 41,210 | |
Income from continuing operations | | 46,837 | | 41,225 | | 52,116 | | 52,350 | | 53,863 | | 51,957 | | 68,419 | | 78,759 | |
Income/(loss) from discontinued operations, net of income taxes | | 550 | | 493 | | (43,590 | ) | 971 | | 0 | | 0 | | 0 | | 0 | |
Net Income | | $ | 47,387 | | $ | 41,718 | | $ | 8,526 | | $ | 53,321 | | $ | 53,863 | | $ | 51,957 | | $ | 68,419 | | $ | 78,759 | |
Net Income per share from continuing operations | | 0.55 | | 0.48 | | 0.61 | | 0.61 | | 0.63 | | 0.61 | | 0.80 | | 0.92 | |
Income/(loss) per share from discontinued operations | | 0.00 | | 0.00 | | (0.51 | ) | 0.01 | | 0.00 | | 0.00 | | 0.00 | | 0.00 | |
Net income per share | | 0.55 | | 0.48 | | 0.10 | | 0.62 | | 0.63 | | 0.61 | | 0.80 | | 0.92 | |
Weighted average shares outstanding - diluted | | 85,606 | | 86,095 | | 85,755 | | 85,459 | | 85,593 | | 85,869 | | 85,603 | | 85,294 | |
Operating margin | | 25.0 | % | 23.3 | % | 27.2 | % | 27.5 | % | 26.2 | % | 25.6 | % | 29.8 | % | 30.2 | % |
Net Distribution Cost Analysis
(Amounts in thousands)
| | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | |
Wholesale Channel | | | | | | | | | | | | | | | | | |
U&D Revenues | | $ | 44,473 | | $ | 43,908 | | $ | 44,659 | | $ | 45,660 | | $ | 48,175 | | $ | 49,846 | | $ | 52,472 | | $ | 56,926 | |
U&D Expenses - Direct | | (55,104 | ) | (55,287 | ) | (57,390 | ) | (56,963 | ) | (63,548 | ) | (64,694 | ) | (67,107 | ) | (72,698 | ) |
U&D Expenses - Indirect | | (9,339 | ) | (10,212 | ) | (10,045 | ) | (10,333 | ) | (11,000 | ) | (11,229 | ) | (10,409 | ) | (11,285 | ) |
Net Distribution (Costs) | | $ | (19,970 | ) | $ | (21,591 | ) | $ | (22,776 | ) | $ | (21,636 | ) | $ | (26,373 | ) | $ | (26,077 | ) | $ | (25,044 | ) | $ | (27,057 | ) |
| | | | | | | | | | | | | | | | | |
Advisors Channel | | | | | | | | | | | | | | | | | |
U&D Revenues | | $ | 76,680 | | $ | 79,779 | | $ | 78,160 | | $ | 83,146 | | $ | 87,244 | | $ | 91,751 | | $ | 94,391 | | $ | 102,014 | |
U&D Expenses - Direct | | (53,676 | ) | (55,813 | ) | (54,246 | ) | (56,375 | ) | (59,657 | ) | (62,794 | ) | (64,550 | ) | (69,023 | ) |
U&D Expenses - Indirect | | (26,367 | ) | (26,755 | ) | (25,727 | ) | (26,349 | ) | (27,366 | ) | (26,127 | ) | (26,980 | ) | (28,246 | ) |
Net Distribution (Costs)/Excess | | $ | (3,363 | ) | $ | (2,789 | ) | $ | (1,813 | ) | $ | 422 | | $ | 221 | | $ | 2,830 | | $ | 2,861 | | $ | 4,745 | |
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Changes in Assets Under Management
(Amounts in millions)
| | 2012 | | 2013 | |
| | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | |
Wholesale Channel | | | | | | | | | | | | | | | | | |
Beginning assets | | $ | 40,954 | | $ | 46,738 | | $ | 44,379 | | $ | 47,650 | | $ | 48,930 | | $ | 53,254 | | $ | 53,860 | | $ | 59,661 | |
Sales & Other Net Inflows* | | 4,520 | | 4,113 | | 3,699 | | 3,599 | | 5,042 | | 5,030 | | 5,191 | | 6,148 | |
Redemptions | | (3,446 | ) | (3,535 | ) | (3,088 | ) | (3,828 | ) | (3,157 | ) | (3,983 | ) | (3,723 | ) | (3,449 | ) |
Net Exchanges | | (104 | ) | 48 | | 59 | | 152 | | 66 | | 61 | | 83 | | 91 | |
Net flows | | 970 | | 626 | | 670 | | (77 | ) | 1,951 | | 1,108 | | 1,551 | | 2,790 | |
Market action | | 4,814 | | (2,985 | ) | 2,601 | | 1,357 | | 2,373 | | (502 | ) | 4,250 | | 4,604 | |
Ending assets | | $ | 46,738 | | $ | 44,379 | | $ | 47,650 | | $ | 48,930 | | $ | 53,254 | | $ | 53,860 | | $ | 59,661 | | $ | 67,055 | |
| | | | | | | | | | | | | | | | | |
Advisors Channel | | | | | | | | | | | | | | | | | |
Beginning assets | | $ | 31,709 | | $ | 35,073 | | $ | 33,846 | | $ | 35,374 | | $ | 35,660 | | $ | 37,915 | | $ | 38,172 | | $ | 40,767 | |
Sales & Other Net Inflows* | | 1,097 | | 1,193 | | 1,004 | | 1,209 | | 1,303 | | 1,404 | | 1,242 | | 1,283 | |
Redemptions | | (1,042 | ) | (961 | ) | (1,019 | ) | (1,132 | ) | (1,047 | ) | (1,083 | ) | (1,071 | ) | (1,104 | ) |
Net Exchanges | | 103 | | (49 | ) | (60 | ) | (152 | ) | (66 | ) | (62 | ) | (83 | ) | (92 | ) |
Net flows | | 158 | | 183 | | (75 | ) | (75 | ) | 190 | | 259 | | 88 | | 87 | |
Market action | | 3,206 | | (1,410 | ) | 1,603 | | 361 | | 2,065 | | (2 | ) | 2,507 | | 2,813 | |
Ending assets | | $ | 35,073 | | $ | 33,846 | | $ | 35,374 | | $ | 35,660 | | $ | 37,915 | | $ | 38,172 | | $ | 40,767 | | $ | 43,667 | |
| | | | | | | | | | | | | | | | | |
Institutional Channel | | | | | | | | | | | | | | | | | |
Beginning assets | | $ | 10,494 | | $ | 11,981 | | $ | 10,894 | | $ | 11,785 | | $ | 11,775 | | $ | 12,626 | | $ | 12,312 | | $ | 13,316 | |
Sales & Other Net Inflows* | | 682 | | 625 | | 763 | | 649 | | 430 | | 379 | | 386 | | 1,913 | |
Redemptions | | (507 | ) | (1,058 | ) | (532 | ) | (662 | ) | (469 | ) | (811 | ) | (550 | ) | (792 | ) |
Net Exchanges | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | |
Net flows | | 175 | | (433 | ) | 231 | | (13 | ) | (39 | ) | (432 | ) | (164 | ) | 1,121 | |
Market action | | 1,312 | | (654 | ) | 660 | | 3 | | 890 | | 118 | | 1,168 | | 1,384 | |
Ending assets | | $ | 11,981 | | $ | 10,894 | | $ | 11,785 | | $ | 11,775 | | $ | 12,626 | | $ | 12,312 | | $ | 13,316 | | $ | 15,821 | |
| | | | | | | | | | | | | | | | | |
Consolidated Total | | | | | | | | | | | | | | | | | |
Beginning assets | | $ | 83,157 | | $ | 93,792 | | $ | 89,119 | | $ | 94,809 | | $ | 96,365 | | $ | 103,795 | | $ | 104,344 | | $ | 113,744 | |
Sales & Other Net Inflows* | | 6,299 | | 5,931 | | 5,466 | | 5,457 | | 6,775 | | 6,813 | | 6,819 | | 9,344 | |
Redemptions | | (4,995 | ) | (5,554 | ) | (4,639 | ) | (5,622 | ) | (4,673 | ) | (5,877 | ) | (5,344 | ) | (5,345 | ) |
Net Exchanges | | (1 | ) | (1 | ) | (1 | ) | 0 | | 0 | | (1 | ) | 0 | | (1 | ) |
Net flows | | 1,303 | | 376 | | 826 | | (165 | ) | 2,102 | | 935 | | 1,475 | | 3,998 | |
Market action | | 9,332 | | (5,049 | ) | 4,864 | | 1,721 | | 5,328 | | (386 | ) | 7,925 | | 8,801 | |
Ending assets | | $ | 93,792 | | $ | 89,119 | | $ | 94,809 | | $ | 96,365 | | $ | 103,795 | | $ | 104,344 | | $ | 113,744 | | $ | 126,543 | |
* Sales & Other Net Inflows is primarily gross sales (net of sales commissions). This amount also includes net reinvested dividends & capital gains and investment income.
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Supplemental Information
| | 2012 | | 2013 | |
| | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | |
Channel highlights | | | | | | | | | | | | | | | | | |
Number of Wholesalers | | 49 | | 50 | | 50 | | 50 | | 50 | | 50 | | 49 | | 50 | |
Number of Advisors | | 1,778 | | 1,764 | | 1,753 | | 1,763 | | 1,717 | | 1,734 | | 1,784 | | 1,746 | |
Advisors’ Productivity * | | 40.3 | | 42.2 | | 41.4 | | 44.3 | | 46.9 | | 49.4 | | 49.7 | | 53.7 | |
| | | | | | | | | | | | | | | | | |
Redemption rates - long term assets | | | | | | | | | | | | | | | | | |
Wholesale | | 30.7 | % | 31.5 | % | 26.6 | % | 31.9 | % | 24.6 | % | 29.4 | % | 25.7 | % | 21.7 | % |
Advisors | | 10.1 | % | 9.1 | % | 9.7 | % | 10.6 | % | 9.4 | % | 9.1 | % | 8.7 | % | 8.5 | % |
Institutional | | 18.2 | % | 37.3 | % | 18.4 | % | 22.8 | % | 15.5 | % | 25.5 | % | 17.0 | % | 21.6 | % |
Total | | 21.5 | % | 23.9 | % | 19.3 | % | 22.9 | % | 18.0 | % | 21.7 | % | 18.6 | % | 17.1 | % |
| | | | | | | | | | | | | | | | | |
Operating highlights | | | | | | | | | | | | | | | | | |
Organic growth/(decay) Annualized | | 6.3 | % | 1.6 | % | 3.7 | % | -0.7 | % | 8.7 | % | 3.6 | % | 5.7 | % | 14.1 | % |
Total assets under management (in Millions) | | 93,792 | | 89,119 | | 94,809 | | 96,365 | | 103,795 | | 104,344 | | 113,744 | | 126,543 | |
| | | | | | | | | | | | | | | | | |
Diversification (Company Total) | | | | | | | | | | | | | | | | | |
As % of Sales | | | | | | | | | | | | | | | | | |
Asset Strategy | | 27.7 | % | 28.6 | % | 21.1 | % | 25.7 | % | 33.6 | % | 28.5 | % | 25.9 | % | 27.6 | % |
Fixed Income | | 32.3 | % | 30.9 | % | 39.4 | % | 34.6 | % | 30.7 | % | 30.4 | % | 31.8 | % | 24.4 | % |
Other | | 40.0 | % | 40.5 | % | 39.5 | % | 39.7 | % | 35.7 | % | 41.1 | % | 42.3 | % | 48.0 | % |
As % of Assets Under Management | | | | | | | | | | | | | | | | | |
Asset Strategy | | 35.3 | % | 34.2 | % | 33.6 | % | 33.8 | % | 33.7 | % | 33.4 | % | 33.8 | % | 34.3 | % |
Fixed Income | | 16.9 | % | 19.4 | % | 20.2 | % | 21.0 | % | 20.7 | % | 19.9 | % | 19.0 | % | 18.1 | % |
Other | | 47.8 | % | 46.4 | % | 46.2 | % | 45.2 | % | 45.6 | % | 46.7 | % | 47.2 | % | 47.6 | % |
| | | | | | | | | | | | | | | | | |
Operating margin | | 25.0 | % | 23.3 | % | 27.2 | % | 27.5 | % | 26.2 | % | 25.6 | % | 29.8 | % | 30.2 | % |
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| | 1 Year | | 3 Years | | 5 Years | |
Lipper Fund Rankings | | | | | | | |
Funds ranked in top quartile | | 39 | % | 30 | % | 30 | % |
Funds ranked in top half | | 70 | % | 43 | % | 53 | % |
| | | | | | | |
Assets ranked in top quartile | | 68 | % | 68 | % | 63 | % |
Assets ranked in top half | | 84 | % | 73 | % | 80 | % |
* Advisors’ productivity is calculated by dividing U&D revenues for the Advisors channel by the average number of advisors during the period.
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Earnings Conference Call
Stockholders, members of the investment community and the general public are invited to listen to a live Web cast of our earnings release conference call today at 10:00 a.m. Eastern. During this call, Henry J. Herrmann, Chairman and CEO, will review our quarterly results. Live access to the teleconference will be available on the “Investor Relations” section of our Web site at www.waddell.com. A Web cast replay will be made available shortly after the conclusion of the call and accessible for seven days.
Web Site Resources
We invite you to visit the “Investor Relations” section of our Web site at www.waddell.com under the caption “Data Tables” to review supplemental information schedules.
Contacts
Investor Contact:
Nicole Russell, VP, Investor Relations, (913) 236-1880, nrussell@waddell.com
Mutual Fund Investor Contact:
Call (888) WADDELL, or visit www.waddell.com or www.ivyfunds.com.
Past performance is no guarantee of future results. Please invest carefully.
About the Company
Waddell & Reed, Inc., founded in 1937, is one of the oldest mutual fund complexes in the United States, having introduced the Waddell & Reed Advisors Group of Mutual Funds in 1940. Today, we distribute our investment products through the Waddell & Reed Wholesale channel (encompassing broker/dealer, retirement, and registered investment advisors), our Advisors channel (our network of financial advisors), and our Institutional channel (including defined benefit plans, pension plans and endowments, and our subadvisory partnership with Mackenzie in Canada).
Through its subsidiaries, Waddell & Reed Financial, Inc. provides investment management and financial planning services to clients throughout the United States. Waddell & Reed Investment Management Company serves as investment advisor to the Waddell & Reed Advisors Group of Mutual Funds, Ivy Funds Variable Insurance Portfolios and Waddell & Reed InvestEd Portfolios, while Ivy Investment Management Company serves as investment advisor to Ivy Funds. Waddell & Reed, Inc. serves as principal underwriter and distributor to the Waddell & Reed Advisors Group of Mutual Funds, Ivy Funds Variable Insurance Portfolios and Waddell & Reed InvestEd Portfolios, while Ivy Funds Distributor, Inc. serves as principal underwriter and distributor to Ivy Funds.
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Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the current views and assumptions of management with respect to future events regarding our business and industry in general. These forward-looking statements include all statements, other than statements of historical fact, regarding our financial position, business strategy and other plans and objectives for future operations, including statements with respect to revenues and earnings, the amount and composition of assets under management, distribution sources, expense levels, redemption rates and the financial markets and other conditions. These statements are generally identified by the use of such words as “may,” “could,” “should,” “would,” “believe,” “anticipate,” “forecast,” “estimate,” “expect,” “intend,” “plan,” “project,” “outlook,” “will,” “potential” and similar statements of a future or forward-looking nature. Readers are cautioned that any forward-looking information provided by or on behalf of the Company is not a guarantee of future performance. Actual results may differ materially from those contained in these forward-looking statements as a result of various factors, including but not limited to those discussed below. If one or more events related to these or other risks, contingencies or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from those forecasted or expected. Certain important factors that could cause actual results to differ materially from our expectations are disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2012, which include, without limitation:
· The introduction of legislative or regulatory proposals or judicial rulings that change the independent contractor classification of our financial advisors at the federal or state level for employment tax or other employee benefit purposes;
· The adverse ruling or resolution of any litigation, regulatory investigations and proceedings, or securities arbitrations by a federal or state court or regulatory body;
· The loss of existing distribution channels or inability to access new distribution channels;
· A reduction in assets under our management on short notice, through increased redemptions in our distribution channels or our Funds, particularly those Funds with a high concentration of assets, or investors terminating their relationship with us or shifting their funds to other types of accounts with different rate structures;
· Our inability to implement new information technology and systems, or inability to complete such implementation in a timely or cost effective manner;
· Non-compliance with applicable laws or regulations and changes in current legal, regulatory, accounting, tax or compliance requirements or governmental policies;
· A decline in the securities markets or in the relative investment performance of our Funds and other investment portfolios and products as compared to competing funds; and
· Our inability to hire and retain senior executive management and other key personnel.
The foregoing factors should not be construed as exhaustive and should be read together with other cautionary statements included in this and other reports and filings we make with the Securities and Exchange Commission, including the information in Item 1 “Business” and Item 1A “Risk Factors” of Part I and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Part II to our Annual Report on Form 10-K for the year ended December 31, 2012 and as updated in our quarterly reports on Form 10-Q for the year ending December 31, 2013. All forward-looking statements speak only as the date on which they are made and we undertake no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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