AB - Earnings call transcript Q3 2017 | AllianceBernstein Holding L.P.

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Operator

Thank you for standing by and welcome to the AllianceBernstein Third Quarter 2017 Earnings Review. [Operator Instructions] As a reminder, this conference is being recorded and will be available for replay for 1 week. I would now like to turn the conference over to the host for this call, the Director of Investor Relations for AB, Ms. Andrea Prochniak. Please go ahead.

Andrea Prochniak

Jack. you, Thank and review. everyone our quarter third Good welcome earnings XXXX morning, to This accompanied of webcast presentation being conference is call and in Investor www.alliancebernstein.com. that’s the by Relations website, section our posted slide a Bernstein, Gingrich, COO take Jim questions President CFO; results prepared our our our CEO; Weisenseel, will John Seth our our remarks. and after financial present and and

disclosure. Some SEC rules certain and subject of to the information regulations we regarding present today is forward-looking and

of our So, like X language point on the out Harbor I Safe presentation. would to Slide

You which also Harbor Regulation in this can the address our find language from community quarter Under nature only investment the Safe forum. third our in questions XXXX MD&A material public of FD, morning. we of management may Form a XX-Q filed a

questions all call. this ask please So, such during

live We tweeting call. earnings today’s also are

on us using Twitter @AB_insights. our follow can You handle

will Now, over it I Seth. to turn

Seth Bernstein

joining it’s you in strong am and working. here, months quarter. for to morning third AllianceBernstein’s that its the us. Good extended that momentum strategy long-term report clear me I is to X AllianceBernstein nearly thank pleased After

services suite out, a competitive focus the return costs and clients on product technology firm. that our our progress years spent themselves. and replicate maintaining are diverse to very for Our streams can’t commercializing And the increase to productivity relevant differentiated all we offer while building throughout we continue making reduce integrating relentless and

strategic the our of our fee include seeing alternatives, broad those of work annualized $XX.X years Outstanding adjusted to business ago. rate than end finally years, of basis in an X the points are institutional an I This added the impact and ongoing we started of those highest to in more and reductions. net year-to-date proud a through AllianceBernstein mix which direction future. this margin. of estimated active since balanced XXX revenue X%. equities have which same improving mix client we pipeline part operating in rigorous expense a the income we inflows and firm offerings our seen at its and its growth Now, organic years of is tracking And of set a Consequently, results, was quarter across billion, channels hard that records of in all confident X in am track of of base be more number fixed

$XX.X both Island billion That CollegeBoundfund appreciation $X.X back Beginning billion quarter’s $X.X alternative So, for with Total client. sales generated market large year’s both periods. by on on into in and the comparable $X.X new quarter. Rhode X, overview periods versus it’s with during Period institutional of of end comparable in prior the consistent we assets specifics. outflows third asset the inflows the Slide let’s we the the average from and outflows, of the represents we billion million quarter. partially in management were active firm-wide to get the a improvement prior lost in both assets billion and managed under both quarter up total quarter last $XX that’s had assets XXX a last offset the again and inflows for net gross passive big billion $XXX

highest since fact, is under $XXX assets today In of our billion management our XXXX.

Moving on to flow our quarterly channel, by X. Slide breakout

In gross flows. both declined of did and right of quarter all Institutional our third chart, For retail, redemptions. positive generated top the was is client but sales quarter, above it our flows. straight the second the third quarter, sales channels in net in $XX so which positive gross net billion consecutive

nearly gross million. inflows left quarter for chart. third billion. billion, $X.X private In about inched flows were $XXX sales straight the of net That’s net So, to $X bottom wealth, up with sequentially the

period. strategies services one Performance because of remains of the from percentage across low in a Slide of X. So now services and an our robust services. performance Luxembourg very and on year. That’s exceptions, our range XXs investment that for on delve X assets improved larger the half, dropped to X-year over but rankings funds top of array deeper past X-year time into out equity retail time dip outperforming Act experienced the investment sequential XX income the US for Equities With for largest our and periods. us. and begins represent X to X periods fixed focused XXs for Slide of performance periods bit few across the low a which the

on So, the of with ranked quartile quartile funds the for X-year two X for as top Slide decile funds X the the and X-year top on shown are in top do for X-year XX in On X, decile period of the eligible top X-year Every Slide this period. equity the but period. fund X. funds period. eligible income fixed let’s begin slide ranks all, the the for

percentile is this strategies they generating that period. sales multi-asset built $X.X momentum our X-year since period have Luxembourg second a all-market also XXXX inception. competitive markets December as income X-year the fund It has raised fifth are multi-asset and first emerging and the like for for record ranked track percentile We X-star strong income fund, category in billion multi-asset, which year-to-date percentile

X. I very with has discuss business. team our client Slide on what reinvent will am retail channels with to our I impressed done this beginning Now,

of retail leading ex-Japan billion our growth. year-to-date of $X.X billion $X.X inflows period franchise, net conditions, income increased a have diversified a in dramatically $X.X of year-on-year X totaled active double-digit Asia quite U.S. a and the and in in including fixed product income billion in net focused equities. sales fixed momentum, strong straight months During set expanded creating challenging That’s and presence built and they way. flows positive client gross

remains income ex-Japan our driver. largest Asia sales growth fixed

year-to-date from As top global up at August. where the industry are see sales left, through of funds high you the dominate gross can chart yield we XX%

yield doubled have high in global that of sales regional period. Our

In sub-advisory. to equity driving equity growing share sales performance by our to immediate have in our multi-asset sales Total growth. Multi-asset quarter share also U.S. region X% the and of an had large to equity, XXXX European were is equities Eurozone growth region. and in represent So, nearly business Strength in cap third contributed to $X quarterly the basis. of multi-asset our driven Investment and years in we X sales as year-to-date, its excluding momentum. equities net Thanks only management as are our XX% share year-on-year gross XX% XX% in discretionary sales year-to-date Compare and that inflows U.S. of to billion taking growth. the up growth zero annualized we on exceptional ago. in our well. largely that are and Meanwhile, gross Taiwan. investment

chart and status year-to-date, to of converted in Let’s we income, than a take four U.S. the Luxembourg number ago. net and and by MorningStar’s have XX-year and flows two large this double ranks. last funds American bond fund respectively. bottom top It’s funds retail category. X platform where in it ranking closed-end last percentile in shows U.S. X stars fund moved growth among cap Today, Other for a five in left our ranked most year, global how million in ranks the AB inflows flows AB decile include any income were year rated net Luxembourg and by year-to-date XX retail in net attracted we number point intermediate MorningStar. on and we category. up number funds performance ranked high-yield year-to-date one U.S. we open-end the years $XXX XX top XX more or The its That’s Act

business. So, the stage this seems in momentum set for further

institutional Slide to X. on on Moving

matters For back, slowdown business revenue consultants we can the then kept we business, a us it general but issues focus this in challenging mix most industry years, kicked many and generate. have more compelling us making products we been improving and legacy as we others, in relevant and in Initially, to performance returns showing math. held our clients at can constantly produce our so the increase for have that

seeing $XXX $X of and progress About $XX equities, additions. retirement billion sales billion quarterly one billion new in third customized Now, new reflected years finished in billion highest flows pipeline million in billion $X.X from the a we Gross and our pipeline. in both came quarter we our in included sales are of X and with mandate. in alternatives that strategies $X $XX with equity

XX Beyond top that our quarter win, in equities and new X additions higher pipeline in very typically which fees. carry of were the large alternatives,

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our broader evolution base the are resulting has to year our has total. ways of of been offering. been client more to part $XXX wealth making years As full flows important accelerating finding and private our in XXXX and our business efforts retail, net momentum Year-to-date exceed strategy with of An of today. million in the affluent appeal a our

had have meaningful so We success far.

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research have gain Two, that must potentially so you investment have provider remains replicate they and some articulate client AllianceBernstein’s remarks for clients. progress most far Concluding the here I sweets relevance performance behind them in our work Slide for on our noticed Our product truly I a themselves. We product hard some in process. can’t us. the and and meaningful differentiated and my told broadening how return have suggests our I you strategy. hope now may with on deliver clear. our are. changes One, core will conversations on XX, made share focus believe front I I They otherwise this paramount. offering remain today is diversifying streams to of continued

up We competitive have We and to services multi-asset is and is just equities income. that. fixed a shaking income, of example need that. commercialize just across alternatives, scale of The categories suite which the an

for to won’t assets active Our mutual accountability FlexFee and based opportunity series is fee find we It gather significant performance have but fund to another. both happen new certainly fund a standard the overnight, managers.

our We seeing large already lead. firms are following

something. we So, must on be to

new expenses Third, efforts efficiencies throughout we to organization. and embrace manage technology leverage can’t our on better to our let up

did opportunities. expense keep from firm we must I joined Just in am our we faster generate in I even on and as we than focused forward investing position this the have competitive the as best revenue growth growth, quarter, that’s here. in most promising taking it years

Now, our turn it for over I John a of will to John? financial results. discussion

John Weisenseel

Seth. you, Thank

the third EPU higher the $X.XX and of net higher million primary quarter, the operating decreased increased non-recurring GAAP real XXX in The operating drivers $XXX income quarter GAAP points was other XX. XX.X% contingent write-offs Operating of year reversals. period. was expenses basis In third lower GAAP lower. items, margin Let’s start of estate income with $X.XX and the $XXX were versus on statement G&A margin to X% our of million in due revenues from prior income XX% the XXXX. and Slide decline payment

always, As our which items we adjusted remarks part not here will to which for unitholders in our adjusted GAAP not Results. from of distribution our business. removed focus results, to consider as we substitutes provide upon operating that I my do our We addition our based and results, on core certain

of Our a GAAP GAAP release press adjusted standard presentation’s reconciliation reporting appendix, are XX-Q. and results in our and to

EPU and XX. XX% distribute points. are operating increased margin unit, year’s non-recurring Our by $XXX to $XX third items highlights with the adjusted to million the of improvement, earned will third income last for fees than reduced basis Compared XX% We unitholders Slide for quarter. and effect. for year comp income $XXX lower our million quarter increased the same accrual $X.XX on XX%, prior a compensation accounting XX more after primarily which $X.XX Higher and quarter $X.XX from financial third the of base per combined operating ratio our of revenues our increased million compensation year-over-year three up to the period, by X%, throughout

took to payment vendor million to We a to for we transition of early to over a for as settlement termination $XX processes. a an outsourcing make plan First, reconciliation our X back to these of AB and contract years. charge reserve trade establish plan we a the result next the third-party processes

XXXX of efforts and is incur beginning to $XX cost million in costs result, realized of a million to expect in As we example ongoing $X annual savings improve in expenses This another transitional additional our continued structure the approximately in firm. G&A our XXXX. of

and Second, we took a drilling $X million charge to write-down our investment partnership. in gas an oil

Third, relating a items, points we detail increased statement been these Slide reported. recorded $XXX higher not into our with increased XX% million net of credit for been we our VAT have adjusted income it If these in revenues, would a would year-on-year. million on X% margin or $X XX.X% XX. basis third and more business than quarter value-added items XXX operating our We for year-over-year tax adjusted Beginning income the revenues delve on our or to Asia. have had XX% P&L refund operating non-recurring in

Third quarter reflecting higher higher year-on-year mix channels to average fee increased across all distribution rate and fees due higher three from shift base AUM realization a to lower fee products. XX%

middle-market Third fees from million our higher of same to million performance performance on compared earned in quarter fees prior strategies. resulted year lending $X $X the

lower to in in client weaker U.S. activity revenues. a Research for contributed and in our primarily offset Europe Third also the by higher partially U.S. increase trading quarter decreased due year-on-year dollar to Bernstein Services Asia, X% revenues activity European both

losses Asia million oil $X mentioned sales include year’s quarter from fee $XX $X were expenses million, retail for The the the for towards distribution of the shift last higher of third of fund distribution third earlier. distributors. million quarter. the net of write-down million investment result $X quarter Investment up and mix Third gas

interest expense quarter investments, dividends from expense by in increased of resulted other the broker-dealer earned in and increase The of balances. same from year million driven revenues Third interest higher $XX higher revenue interest period. interest prior on broker-dealer on primarily customer and million both increase other paid $X the while was

adjusted approximately year-on-year. and operating as expenses ratio compensation. increased to adjusted year was the point reduce full compensation compensation requirements XX% year-to-date business. same period of quarter. revenues third due revenues The our we incentive reduction XX% and Moving million to clarity to for and of we year X% for year. quarter to second this plan was and expenses, revenue year-on-year to comp X% Compensation EPU. quarter our comp to $XXX year’s With of gain quarter up it expense net benefits third basis higher increased felt for the third compared revisit X%, adjust ratio third further total in our last adjusted our quarter added Total to $X.XX the for XX.X% the accordingly appropriate XX the as We the this

Annual Decisions entire came X% the from Bernstein Given the expected Research to servicing ratio meetings not marketing we $XX wealth the refund comp net of earlier, the quarter Asia spend a current million the in the expect private in market and do due to to U.S. $X decreased client increased million charge and G&A Strategic as sequentially by higher quarter. Promotion two The expenses held but expenses, slightly expenses contract XX% year-on-year marketing VAT increase conditions, we discussed year-on-year. million due decrease seasonal increased the items and non-recurring outsourcing credit. exceed second $XX XX.X%. which and Conference for T&E fourth termination

as year increased growth operating growth. outpaced income quarter prior of million XX% expense $XXX Third revenue for the period

quarter year margin approximately period the prior third XX%. The was versus incremental

the business. we quarter items, incremental our both identified effect I consolidate ratio opportunities second on call further to adverse reflecting the our our that had of operating was comp office additional the the space. margin leverage mentioned earnings non-recurring Excluding benefit XX% net of and

third savings our and additional During $X in reporting generate million office vacated starting and the next New our of to quarter floor to additional an savings sublease from headquarters expected basis be we estate efforts approximately real year. consolidation $X.X for million charge The market recorded second third approximately XXXX. annualized for occupancy a York quarter, beginning occupancy GAAP cumulative is at on an annualized million $XX to ongoing

the marketing savings charge subtenant the estimates best for length assumptions the expense rates, based of broker of estate and to both the allowances incentives. and to our current commissions corresponding prepare cost the rental and on market, Our real are periods, market properties

the charges and our current will actually total realized over actual as expense expect recorded We conditions related differ is from change the market savings time. estimates

our may adjusted noticed primarily our items than that are results, than is have recurring our GAAP million net EPU the You effect quarter our our they due higher operations. operating $X of three excluded from part was we operating our of third adjusted income income. core business was to and This or EPU $X.XX not because higher GAAP adjusted

first I real The $XX charge mentioned estate is million the earlier.

we credit for estimate we third quarter the recognized $X recorded a of for that lower we Second, the are liability dividend million tax the in the able affiliates foreign from when tax deemed income to XXXX.

EPU. Third, we these we income investments GAAP deconsolidated by million, reporting. net in operating or certain for affect consolidated that Consolidating not seed adjusted $XX but did results our income investments increased had

of All of the these appendix are this in presentation. non-GAAP adjustments outlined

about Finally, for was rate as the AllianceBernstein effective for calculating quarter third X.X% of LP adjusted purposes tax expected. EPU

X.X% We And answer slide earlier. for effective income tax and well. this these AllianceBernstein as $X LP on the pleased reflects I Seth, highlight quarter rate your Jim discussed and comparisons and third offer that to next presentation points sequential the are tax questions. with credit GAAP of was quarter The million

Operator

Bank question from of of Carrier you. Thank Your comes the Michael [Operator line first America. with Instructions]

line open. Your is

Michael Carrier

you and have some the at expense wanted to given and maybe the right structure, continue that going controlling on the of line. are in are cost margins get is where look adjustments Fees initiatives the growth. lower good on in some then first in Thanks, of of guys an of an and you to the head some the guys. one maybe just where and just update line how the margin the you healthy ratio. your on, direction organic if side update in trends see on commentary comp the G&A on John, quarter the the guys I business you when the heading to can comp kind

stuck more and kind seems an in we there, of margin Just potential this have update range low, kind maybe because got like have mid you of it here? been

John Weisenseel

AUM flows Sure. moves Michael, as to more the there operating move the is drop should bottom and higher, see line. leverage said, in we markets the higher, always as have we move the higher, more business

quarter but I XX%, items are the we mentioned, margin those as So out strip non-recurring we did this XX%. at it we was incremental and have

incremental as in you should I on looking the be inflation. the to upside grow lines, the when think revenues for think at range. expense to And I in longer and XX% So, over we line we to look the those margins revenues, should continue XX% different with servicing, looking if G&A, the increase, for promotion be haul,

Michael Carrier

we industry kind can institutional on, the the fee Okay, other to I the in follow-up in also not the Seth, wanted or update flow if of just on trend? positive alternative seeing that the side, the just are you trends seeing at rates, as seeing channels fee about but in seems to that’s mandate, of of a then the the distribution on on that, there are on the a pipeline be I the so, rate series, net lot kind areas the on you of versus over questions in momentum a just and an the continue like when get want of traction and helpful. like lower equity where are think think look fee I side. lot only is the couple fee year it the the of on but both pipeline FlexFee And I a what demand still guess and trends And on the then next

Seth Bernstein

Jim it chime take in churn of John questions. long might let me sort and the think in Yes, Mike. or I Thanks

offended So, again. just be it, some don’t of I ask missed

We past. are well. And certainly not improving than better and are U.S., our seeing the tone we outside in seeing it’s the United a have recent but is mix pipeline just we as to States in the the that

is activity market mix contingent on think better as that’s as overall I know. absolutely client of But regard major couple they there continue are and to potential with for points FlexFee So, series, conditions ongoing move going course, well. we are you where to forward. With there, conversations our distributors, of fund

sort realigns our at We assets. significant We what are think managers I clients going first working a focus credible up they of of the are We there who conscious gather beginning versus expectation additional are is is marketing of think process don’t alternative are the returns excess of We potential to will that’s beginning that half be of in to share earnest those it away. taking keeping. fee here begin funds claim think incredibly today. of to first it for to the the and XXXX. at think our quarter the

So, have I into seeing of question. nicely the in marketplace, I might fits evident think it are your that we missed part border but buying patterns

what So, just I could missed? you repeat

Michael Carrier

did you No, all.

the So, thanks for answers.

Operator

question next the with Katz Bill from of Citi. Your line comes

Bill Katz

morning, much. the Okay. Good everyone. Thank I questions. you taking appreciate very

through sales number the a range highlighted they overall, is flattish answered strategic First X both volume across the think you incremental How you and/or shape. potentially been of a side, now you move marketing great question, picture discussion, within know favorable opportunity capture to relatively the this of this the have accelerate a have here you I Seth, at $XX mentioned and each that months in the I understanding of you versus question big maybe and is your here? margin business do system as of leveraging gross in on spent both just going about so but things billion If the maybe in sort margin, some look I helm at as better there segments. think to

Seth Bernstein

team guys call we at That said opportunistic of quarter. be end several rebalance in and on think to with much that. had its last to found sell second that. firm capitalize less in mean internally my ago the we the go great downsize and redeployed. doesn’t essentially capabilities years or has is think certainly to economically painful certainly was decision product astute done. And the It’s what to if I another wouldn’t of you made we the idea a I an this distribution as build-out I and think suite it need I This

We are distribution I in making. see investment with that channel, client it’s they throughput the are higher what whether doing expectations in is to largest sales on by is single much and whether beginning our our volume our private our think it’s are we And retail institutional teams. individual a

want I if John you to that. know add Jim don’t So, to or

Jim Gingrich

from a standpoint. that earlier about where I fit would John margin are guess what comments to I add is we Bill, we very conscious back going made

to forward, And there that that of our well investments striking managing as structure. ensuring manage the move and we parts as business between in a are we the for as various cost long-haul is continue our balance so business we

capabilities So, the years, the which helps last over compensation investments investment of the those X to our made of course Seth the company indicated, some contribute investments number ratio a starting in to financial season, to as down. bringing are

we Now, opportunities but growth, of into see choose that’s be may to to a that to accelerate the to extent business that portion the back we reinvest determined.

Bill Katz

do think back you that. a is your for for And the let’s you cannibalization fee how do second does operational some just Number say question that sort structure you. the of risk And think and follow-up capital? a two-part off? take to just of How then is of to maybe pricing given one, platform? legacy this terms the in the as you potential thank listening book so had and then about of comp about actually the FlexFee just question that highlight Okay, variable

Seth Bernstein

take me second let first. part the of Well, it

think have of lot significant. thought it’s a we risk I think about don’t the cannibalization. We

at know a clients. First people for positions bet the the this said, targeted I most out of and another to out into think I of the number that is or larger these moment. moving hesitate we are very to least there don’t obvious would who thing performance fund different of shades med there clients focused at our are there. gains continues fee of the But embedded to And taxable as We that fees piece stating are one cause there service, upside client and service have give willing maybe up by improve. a while are

to is broadly what the want market And respect going. the will choose where with to so think but that’s they we choose they funds, frankly,

start From we managers So, risk in think benefit targets. for we things portfolio creating to and more very do perspective in incentives conscious might operating an lose as we order we not a are hit there specific to we to and have potentially well regard. that perspective, of have than

in risk within So, we are guidelines that of own amongst effort we taking quite about think risk a time spend ensure our internal our as lot monitoring and we our and And teams. calculating portfolio this, here, we operational Jim striking complexities thought performance daily. management through and operationally we prefer matters I and the our math are of but the the maybe on will everyday to

of guard but should that risks some Jim? the against there, potential So,

JimGingrich

and P&L we a I gathering to I not much much have sometime plus going revenue, this to standpoint, a have funds, From it’s ourselves on where that’s $X.X of we but of the bad year to the Flex good day don’t thing think that talking add like, will Bill, it looks move as in is right to Seth what creates got a clients, to trajectory said. look just if next the for problem, better we managers incentives for really be at half first needs direction this end a have billion industry right I we the think – the about to it’s it’s thing Yes, assets do, the problem, begin right find think to the the in towards. handle significant what

JohnWeisenseel

a I expect ramp not seeded would to on at P&L. And distributor when is is up. material would platforms. to Bill, impact a it’s on just again XXXX, But process have this that while take getting going this – these either it’s them when negative all them add John. our I think you or just to about We positive the

Bill Katz

questions. Okay. very the taking Thank you much

Operator

Lee question of next with line comes Your KBW. from Robert

Your line open. is

RobertLee

services or base I billion dramatically the the AUM presentation, Thank everyone. first and maybe on out the Number of growing clients, you haven’t strategies billion. guess And a that. couple about targeted to since really yet. $X morning, that your last entire a those things to question is of on to it thought good would management rundown focused been commitments committed institutional assets, be that business, $X that year it’s out sense what’s in I pointed that is Great. you the really the I pretty my one, starting and in roll guess, in just run institutionalizing wealth broader are that investors? mean

JohnWeisenseel

And rolling of a institutional AUM a process question, your both number of client of one, first a our services good in to On we combination to your and it’s out is committed. observation base. these the are

that is products equity service targeted pipeline. is pipeline, services it’s in that success which our lending has one institutional a our fits in global insights, private been business, our large but similarly middle-market our a of part concentrated the fitting has been example, our today Also, very within wealth of research services. for So institutional

So, alternative is into equity seeing of success as in terms the of are opportunity we world. services that well in as to there extend some of institutional our both services suite target considerable the our products

RobertLee

their a get with undertaking speed I as that. curious assume I I its Axa U.S. as of a next from in lot eventual sometime were marches undertaken? you initiatives the talked of came making Great. strategic terms maybe that the you later. of And impacting or strategic your IPO, maybe AB of impacting that Axa sense how am then follow-up about I that not which spinning some there they governance maybe do I with and is maybe of the when is year, the are being or on and just you sooner how has perspective, decision-making? and mean, think at am are a it’s of trying Seth, guess Maybe to versus do part obviously, toward some you just them business changes as you obviously, curious U.S. just board having board, out

Seth Bernstein

Rob. Thanks,

finance be arising other to we liberty a coordination been might has of period, in When the and What talked what the question alluding reinforcing been is is I years perspective we that focus and and just strategy its initiatives on are Axa had here first what think many location very our Axa to significant quiet provide people that principle important we strategy we part at planning internally to to to you information in have in the a do of as do so we own the how these general side, was and X involved remain the obligations Axa we alternatives limited seed it’s nothing our continue we know which and you tried to to day-to-day firm of equities. own do They really I doing this services. have on about was and think that services been have internally, a a developed agenda. the side including we from is to is new X with worth as involved future last your intends given than about we are begun what the as talk now firm not the Axa whether have works to of on know done will are or disclosed, but our the much its those and in user and the in it have imagine. contributor everything has itself business so regard disclose to forth to that have who over

noting has supportive balance, – everything to of relationship our of initiatives them that those I we on. of anticipate rather here is change. been to worth that taking Axa and it priorities done that than don’t it’s has I are internally. management all we I is the against generated been own But has team really at apprised can’t mean, say very internally we focused are fair that everything So, Axa those on by think the have is doing, but generated been balance on

RobertLee

color. appreciate I Great. the

Operator

Sachs. comes with Your next Goldman from the Alex Blostein of question line

is Your open. line

Ryan Bailey

This morning. Bailey Ryan is filling behalf. for you in Thank our Good Alex’s on questions. taking

are all the on of appreciate So, was I wondering at from I office. if out might suggested relocate media color the be think could flow New guess further looking whether wondering York? of on couple expense – the there consolidation was opportunities there. And that a employees that savings the there first expand articles you I of you I New to some were City York I

Seth Bernstein

Yes, but add I let to Jim. might think start, me John that or

I occupancy in people at we disclosed it’s future traffic are marketing importantly whether looking have strategy are talent where It’s to only that and we our compensation, deep talent We been that secret that for think industry think internally been is pools and/or as larger no looking And going talent we there changes, our I also of technology I operations sales. would this largest firms expense. for are to quite single investment that a to the source and seek not while. have and our location obtain. has to our after say it’s the conviction think and

the to and operations are think that technology us it going And case so do given today. increasingly the be case centralized what than their is you allows firms happened forward find I will in will less they

York of are in like New XX% area. I our employees metropolitan something total think the

a said New we metropolitan It’s our at part locations D&A for are New absolutely looking right, think outside to location that’s of the but and York someone other principal will me York us. area. remain I as always

would groups We haven’t decided what move.

we transition, a to it are with absolutely could we have at days. We looking meaningful but and impact have color, the on to location. a on provide including that anything additional early finalized our its but don’t over consequently, really haven’t expenses time, you And it regard improving timing of

just have people share wanted about. we We what internally our to thinking with were

JohnWeisenseel

add just for a Seth a couple big One of would occupancy I noted, us. is as cost things. is,

taking try it sheet optimize series configured could that is are whole space it, a clean we taken today would, noted, use, from you of the that have the way space we As can and we a we standpoint. the we figure and steps if way work have space not to

steps we steps New taken in are as in other the taken we have world. So, there that parts you but that have of are noted also there York,

the new office moved Hong of Kong couple Our past space weeks. into in just

Our Boston office was just reconfigured.

downsized. been office Our has Tokyo recently

down. create going over both forward will hopefully series bring environment, a actions world taken expense is and there our people a our work to our around well take for of we the that as as experience So, better have we work optimize time occupancy continue to

Ryan Bailey

at Got I has portfolio have what Thank like been investment was just would wondering color change questions, Are be FlexFee’s the from the managers in it. I there guess to the they a new And analysts. great? their you. Any thought then will feedback to expecting they follow-up response and process that all on structures?

JohnWeisenseel

services managing the in both portfolios. was take the are for six from the way anticipate those don’t product the and We the this, work design teams. changes launched identified that considerable give services we before on any we we there portfolio and done have Yes, that

to they part with think give are of analog to distributors and an what I the with comfortable is today. appeal familiar

we choice. a a clients that designed our were So, in we really consciously way distributor it giving

Ryan Bailey

Got it. Thank you very much.

Operator

Craig question Suisse. Your the with of from line next Siegenthaler comes Credit

Your line open. is

Craig Siegenthaler

Good well? there Thanks. to they years at John, point? are Tokyo, been so on morning, changes made that given this York, Kong Jim, Boston, starting Hope sizable Just have are expense expenses, ort over Seth, still remaining the the New Andrea. marginal you redundancies are few next guys very already offices, Hong

JohnWeisenseel

in back XX% those of New do comments City marginal. this at expensive Craig, real or Again, estate. York New Jim’s so and and we our is to have John, employees are Seth York it’s City point, though, No,

where, way who the go So, when, again but as analysis, or we look we part obviously, too of anything that for nature. new of know is a would location, don’t that early,

Craig Siegenthaler

funds those flows? follow-up, and just of there supermarkets front Got in recently Can are more been the then AB us like terms doing funds Schwab as the And major financial an my added have to U.S. update provide Fidelity. you on just and it. how

Seth Bernstein

quarter’s reflected has would that U.S. that platforms, gives of to the performing. the flows have flows the aggregate I tell – specifically funds continued in quite our me strong over you in our those in I don’t in were this me build are is that on of that Craig, front flows can – how momentum tell don’t anything is those quarter. That is I What retail year. course

look you. have would which the don’t at if John suggest is that get I I So, space significantly one, RIA can business type doing of I that those your the am to sure, front a back are but observation me. up that year-on-year we good also is in in of numbers

John Weisenseel

Yes, we do that. will

Craig Siegenthaler

for Alright. questions. my taking Thanks

Operator

a have follow-up Citi. from with do Katz Bill You

open. line is Your

Bill Katz

Okay, thanks much. so

discussion one Just to margin more the coming time. back

reasonable terms from So your continued the residual think revenue look moves relocating, to made play occupancy to as into sort a as might outlook plus the already synergies through do clip? you you of does in the you of incremental at have how you out build be what margin able assuming that that

John Weisenseel

Sure. John. it’s Bill,

longer maybe if than to little towards out think higher level, just are XX% still the term revisit more strip a know we to the early but our what would looking side. So, when to investigation get stages again how at but on a we be back going would rise, XX% now currently are items, we the non-recurring again in plans back again bit margin currently and the you come have XX% we continue we information this in range occupancy side, of in once somewhere very much incremental longer revenues the term of on finalize I or more terms perhaps

Seth Bernstein

you question just assuming? not or that Can I is move statement just the to clarify you assuming the future one made,

John Weisenseel

assuming. not No,

Bill Katz

Okay, perfect. the Thank questions. extra you much taking very

Operator

Robert follow-up KBW. with Lee next is from Your

open. Your line is

Robert Lee

And your it net you are of have FlexFee in for quarter kind at curious and follow could you introduced I up. kind broadly? of the what the were important. contribution Great, you or terms or I do that and year-to-date? be I of of somewhat pipeline. am in fee increasingly of revenue hinted next about my year guess as taking talked more this flows of you the particularly to But it a kind lot mean, mix thanks get – structure

to has flows trying revenues to maybe and color about some just to get contributing the contribution So, quantify that been how trying way? some in of

John Weisenseel

that the Rob, do seen though we is quarters as revenue them very among specify a and two I far terms from for the of products. the quarters And these of past the that have in in as retail the flows it’s be flows have We reason lot coming tell a are of particular will typically contributions fee, you close. definitely not the actual John. strongest recent quarter’s been revenue. lot to in a centered terms retail of higher high-yield

Seth Bernstein

point suite our That’s what are fee go our that’s And if of is from about are we of well we channels. to our endeavoring we an ago. average retail. a to the John continued basis a alternative actually, forward in enhancement company. a said, building unreasonable the out terms On in overall expectation across up the in mix of Look, mix rate well from kind do basis, as where as of grow not year were a the as footprint combination in as as both flows continuing successful

Robert Lee

worse, have sense we sense of back, and of impacts it a neutral trying you kind of better if to mean, kind an existing could just your at don’t them and of if applied curious and I if I know maybe follow-up, structure you FlexFee this map you funds fund FlexFee of at have to been? or have maybe one done to of about, am if to the but think going the And some a across I get had Great. do if would I just it their were looked look you how have you work, those if outperformance. been maybe revenues, would funds to you traditional kind kind

Seth Bernstein

have don’t if made comment As you I I would material don’t FlexFees in were looked had think back can think were impact our have reported. John that that imagine, we – if at we results had on place to earlier, a to that. it to we we have

John Weisenseel

Yes.

I that much will as start I later. here. impact on start probably think, think XXXX, term focus to of it’s sooner am XXXX, this John, the Again, in than Rob, rather I folks a this I just venture do sure because wouldn’t about wanted you too longer to really is reemphasize because too to again again

We it’s and have to going ramp to to to us these that. for I up see sometime quite take think see how – products

Robert Lee

Great. Thanks for taking my follow-ups.

Operator

next Instructions] Carrier is follow-up Bank America. Michael of [Operator with Your from

Your line is open.

Michael Carrier

guys. Thanks,

maybe guys of gains you or over – market sell it’s how mentioned navigating years? in buy share business. part the business, coming Just globally some thinking I Europe the on over also this side on the whether you on regulation, II, ‘XX/XX I you side MiFID the of one said over are guess think the potential,

Seth Bernstein

and it conceivable looking to there are speculating be to am consumed many to don’t are comes think going reach for within related that be at material the are costs fall from this U.S. in that I becomes because that back Europe competitors, a cost a our will perspective its absorbing possible the II for to as it’s firm. we the of to amounts we to going It’s continue have research we certainly here it We services and the long that MiFID Like to involved effective next for do – to year. time,

need think at to respond it time. we so and And about proactively that

Michael Carrier

thanks Okay, lot. a

Operator

like are presenters. time. over There back no to at turn call now the to this I’d further questions the

Andrea Prochniak

with Investor you have. to our if Feel questions conference follow-up you participating today. Relations in Thank further Have free great everyone might for a day. any call

AllianceBernstein Holding (AB) 25 Oct 172017 Q3 Earnings call transcript