AB - Earnings call transcript Q4 2017 | AllianceBernstein Holding L.P.

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Operator

Thank you for standing-by and welcome to the AllianceBernstein’s Fourth Quarter 2017 Earnings Review. [Operator Instructions] As a reminder, this conference is being recorded and will be available for replay for one 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.

You may begin.

Andrea Prochniak

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

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

on Safe I'd of Slide like is to language, So X the presentation. Harbor out our which point

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

such questions all call. this ask during please So

call. today's also are tweeting live We earnings

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

Now it I Seth. to will over turn

Seth Bernstein

delighted XXXX execution the Good report long-term Andrea. an Thanks, our reflecting of to I'm AllianceBernstein year steady exceptional morning. for strategy. that was growth

superb and income over and for above or AUM years. fixed our both First, year ended or peer in benchmark more of asset XX% vehicles. across clients equities alpha with the five We our generation was median classes performing

strong alternatives multi-asset in records services. have our also We track and

geography. breadth of in the mix and across of growth platform. and we every stellar our active rate in as all were channels X.X% And fee was of experienced The positive increased growth Net growth Second, inflows services organic our our XXXX X.X% rate. portfolio Active $XX.X net organic the equally a flows across billion for Firmwide nearly improved. impressive. average overall

to Firmwide into quarter provides XXXX's earnings we incremental let's billion into to of the year. Annual of margin XX%. X versus of that passive turn ensure was adjusted $XX.X are year's Slide up on offset to inflows growth for outflows $X.X cost fourth with strategies $XX.X our of outflows above we Third, generating were on XXXX the Total that and our structure flat up results. with a due And revenue billion $X.X our robust XX% manage Fourth-quarter quarterly of net EPU XXXX XX% billion an flows details $X.XX With unitholders. sales our continue growth slight better translates were X%. billion billion. overview net quarter of fourth of year. active on last year of nearly sales partially $X.X compared gross Gross net by to

net outflows. billion net mentioned, flows $XX.X For billion, were net active I in the billion in flows passive Firmwide $X.X by offset year our the $XX.X partially

strong or these and positive net under average $XX.X the Total respectively averaged up billion X% $XX.X of inflows were active worth Retail in quarterly Private steadily driven attractive our redemption in in for XX every and Institutional our in this first-quarter XXXX, XX% speak in exceeded inflows flows of appreciation Net three XXXX lower fact out January XXXX. shows up over some a two X.X% in our net In billion gross and flows $XX.X strategies, in management momentum. Private I rest of large net under fundings Institutional. view slight the and billion CRS, $X.X due to were that flows year. sales will up included firm we outflows, from and redemption. in quarter net announced positive most strong XX ended income. also momentum quarterly Slide sales in retirement Retail of to and totaling in This our flow in And Wealth, $X by morning billion in quarterly appreciation, space, January In year were largely trends into to fixed billion moment. billion months in quarter. for our ex-Japan averaged $XX.X quarterly billion, pipeline the market gross Asia Total With quite shows in assets gross flows and, strong market time. and management X, Wealth, assets after feed we XXXX. a ending improved billion a and consistent. yearend were flows XXXX, $X.X quarterly customized flows every sales $XXX strategies of into and

highest this affected our since attract $XX.X meaningfully shows our month's recent net to during assets flows. and more and view. gross in XXXX XXXX. flows sales Slide were And flow flow net volatility of continued were net flows new annual did billion we Institutional. both though has the since Retail month, X highest So certainly Firmwide our

I flows for only net attract to may equity the traditional be public the manager active think we year. asset

well. industry-wide Ours the the sales each definitely were In were our sales in US in contributed and $XX.X of gross and net billion Retail XXXX. as Latin million. driver, the felt ex-Japan was we largest decline In $X.X case of billion XXXX. flows since Institutional America $XXX Asia highest in but in Strength

gross XX% flows demonstrate. services. with flow momentum Stellar with array the sales drive assets territory few our to $X.X for flows fifth equity and our performance highest a were straight were in of But of decade. XXXX. across from $XX.X billion were Our up XXXX. income positive trend next down we Private nearly outperforming active quarter X, nearly the investment of billion. by sales diverse returned doubled these from offerings for as net net Gross slides net sales in two-thirds five Slide continue percentage fixed more down our gross than redemptions shows and year to Wealth a and

XXXX share both time end and the year period. assets at outperforming increased on year the income of equities every for of For fixed

eligible periods. two fixed every performance Retail X, ranks equities. Beginning reinforce some top slide our you'll see and half diversity Slide on our the in steady consistency top and our qualifying slide of On five three of fund two two ranked Thematic periods. with X, of on the bottom X, the year quartile income five and them, the X XX Seven of in do and cases, European quartiles On All and year outperforming in the year periods. income shown but breadth dramatic this one three, well. on for one, the Luxembourg, as decile top time of rise them and, across equity US and for the funds ranked fixed top in the for slide Equity services. all

slide these key periods. ranked four as had top strategies and quartile some Multi-asset time Another this performance we've on milestones for well. aren't there alternative but three

such Income Multi-Manager Morningstar US rankings mutual with Market for out the XX fund The financial our third hit is as performance assets, from anniversary services five rating five-star in its opportunities, star breadth three five-star risk-adjusted we've years energy secured date if of and quartile All investment four real on commercial Our and series fourth strong high in mostly alternative received fund credit, and today fact. the top And our private of XX years vintages, target a delivered ratings the quarter. strategies returns. estate opportunities in ever. seen Aria In best debt not

region year. and quarter were Now beginning increased I channels in totaling will every flows in XXXX X. gross discuss $X.X for Slide our every with net Retail the on billion client sales in positive Retail

X%. is business XX% have diverse from clients' XXXX I America peak. done to our work of relevant earlier, our more doubled sales gross due X% best regional the As to today XXXX Meanwhile business of said make than balance year was we've this ex-Japan to in of than gross perspective much XX%. a to XXXX declined since more is Retail to then. our Yet XX% US our it years Latin evolved. from from increased Retail and That was share Asia needs From more total sales Retail XX% in while our as

of $XXX XX% than the tide of XX multi-asset bottom $X.X then. inflows funds were AB can you important the fourth in These fixed income see are XX%. the After is bond sequential and multi-asset. fund performance equity compete. a our XXXX, slowdown a diversification XXXX in industry where to gross region. XX% reason compared or dependence basis the in And sales steady sales global top left as services mix, the XXXX, three areas last on of markets, while just region Luxembourg strong fund On in high-yield quickly. are the That's these multi-asset net wide half billion flows in did flagship This in more higher fell quarters fell and bond whereas the ex-Japan sales gross months $XXX XXXX. chart, can left for Retail of AB and chart asset three big a American And Asia turn income reducing quarter. why US from million products were high-yield sales plunged As of Retail our equity dollar raising denominated happy shows with hitting the we global the milestones million funds in be in back nearly sales we the in see net

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We expect to soon. availability announce

funds take to industry set low for to have passing. funds, a that to the get with competitiveness As I've new chance years active said before, of improves fee it mass these standard but will ultimately critical dramatically our we

on Let's move slide Institutional to XX. on

in years complement base new alternatives. in and fixed strategy our active income to strong now capabilities our has been with For equities

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In fact, the $X than average fee the at rate times active quarter-end our current pipeline more Institutional of is three billion rate on the business.

dominated active bottom assets a Equities the are the North income going region. snapshot America, and both well these forward. Finally, shift Asia-Pacific total pies is mandates new This chart EMEA split CRS. positions mix and our believe years ago pipeline service by XX% Five fairly mix of regions. pipeline of and left positive evenly alternatives us fee and lower between fixed were I with by

will Wealth talk Slide XX. about I Now on management Private

quarter flows as under our reflect XXXX. rose and $XX were fifth sales since clearly for highest Private $XXX the billion every straight were year-end gross Here our net productivity results of Wealth Both our positive management XXXX well million XXXX. in advisor year momentum. at totaling and assets

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to sophisticated XXXX with targeted most percentage left $X driver. offerings suite doubled bottom commitments and how Total popularity between our from grew of clients only our billion. committed year XX% our the the yet. services well beginning, to has own XXXX track XX% of at XXXX, we've commitments more differentiated a than records. received compound deployed grown twice The at a Our major and rate been And one billion introduced been chart very has was strong from their clients best who service targeted assets were XXXX and our The success as of total we've qualified and for of shows nearly $X.X growth least has affluent XX%. $X.X annual at billion. built

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can are churns, become prepared markets performance year recent the of retains indicates here the remain for portfolio. work of active AllianceBernstein, of era relevant a ever. volatility demonstrates clients this fact part we Our us. management in in to critical years and we remarkable management active lower an will that on more team in hard their place this entering And are if than After well whatever have at our store for important that

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in progress success expense segments our highest And thrilled our this am be market. growth operating in through our we discipline. with about steady of the journey to the keep greatest margin highest having our prospects. excited expand are making I penetrating on future AB strict and goal and We fee to

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

John Weisenseel

Seth. you, Thank

in year and prior with of $X.XX $XXX GAAP margin XXX from quarter start EPU by Slide the $X.XX of quarter increased million on of XX. revenues to fourth XXXX. million $XXX GAAP period. the basis increased XX% Let's operating of Fourth the points. income net the increased compares statement income GAAP XX% Operating XX.X%

effects core removes business. not considered operating that part which on results for results. GAAP our of always distribution results our substitutes adjusted we We here in upon certain are items to unitholders and our as my adjusted our focus I'll of addition As base the provide not remarks which from our to

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

compared $X.XX of XX. We unitholders million, XX.X% quarter of fourth all increased $XXX our earned distribute Fourth of on improvement. Our base primarily adjusted included year's are per fees margin drove and the for Slide performance our revenues operating quarter, income unit will financial to and million, higher $X.XX and last to highlights year-on-year. $XXX

$XXX the into XX.X%. rose For in due prior-year more $X.XX Beginning these to performance respectively and in operating statement revenues million, operating detail $XXX points on EPU Higher fee We XX% million expansion. from same fees billion, base $XXX prior shift respectively to three increased higher adjusted to to rose year's delve from increased the revenues, basis and quarter and base year income fourth and and margin income $X.XX. products. full-year year-on-year Fourth with revenues versus Adjusted XX% and increased realization by XXX fee increased lower mix $X.X revenues our million expense distribution across by fees the all net to by XX% and Slide XX. quarter margin increase diligent drove drove and continued items our management rate a channels reflecting XX% average higher full-year on periods. AUM the higher to

For average million rate base compare rate increase total to portfolio $XX realization. the came XX%, quarter and the of million total same from year increased fee of million AUM the in fees fees Approximately $XX higher performance $XX of the Fourth X.X%. fee million, in $XXX X.X% increased full period. prior-year or

increased fees million by $XXX million. performance year, the For $XX to

on due select services activity and fixed both assets, higher equity which securitized on decreased was For trading offset to full-year performance lower activity from electronic lending, both expenses X% and Retail increased weaker Bernstein part resulting and and Services interest investments higher U.S. favorable were million more fee distributors Asia increase revenue for $X of sales the and payments revenues $XX a and servicing as offset Rhode for higher a partially from the growth long/short Research million offset equity trading investments to in on Full-year same in our of as dollar. client mandate and distribution gain of distribution X% respectively a quarter dividends middle-market partially quarter increased only increased result sales. earned fund Aria the Asia distribution towards the Fourth investments. mix in prior-year the investment promotion concentrated decline XXXX. on fourth due quarter and of clients, to partner by and markets. net Fourth higher fees from Other full-year Island increased shift fund shift by periods, lower increased and resulting is by earned equity, on primarily periods shareholder savings a XX% the fee seed earned loss client partially the capital College European other higher in broker-dealer dividends lower U.S. interest to revenues income broker-dealer due fees

the the paid million as result a included higher Interest quarter fourth refund rates. custodian addition interest expense of quarter a one-time the for increased and fourth higher year $X of on because In balances full customer XXXX million broker-dealer $X million fees. of $XX for interest

Moving operating incentive for increased XX% driven benefits quarter year million expenses, and employment higher to quarter of expenses and XX%. costs. the of from fringe prior X% the expense Full full total expenses increased increased other and commissions, year in $XXX in year. by compensation, fourth fourth our the Total adjusted compensation all operating $X.XXX X% billion

full XX% the adjusted for higher XX.X% quarter year. for net for severance costs. due was full In compensation year Compensation revenues fourth of addition, to base the the increased and

to the in of XXXX for ratio reduction in year. still lower a full-year ratio added leverage XXX a our comp objectives fourth EPU. the our basis we operating ratio approximately point our XXXX quarter of for were The our XX.X% our able while compensation with business, As reflection meeting comp $X.XX to

in continue expect given to Going XX% to manage not that will ratio a forward year. comp to we any exceed

in in adjust expenses plan X% if ratio However, Island items. promotion from given compensation fees, and Rhode year we loss Full-year versus due servicing due conditions, Both the quarter reduction translation G&A by and period higher XXXX. current the to fees fourth investment to of change. claims at full transfer Both professional Fourth market the savings due the are million periods to X% of litigation. one-time the quarter $X the prior-year in a year XXXX mandate same the throughout foreign decreased market increased T&E processing, to quarter, first benefit the reserves accrue marketing exchange of a College the XX.X% conditions option with a promotion accordingly X% execution for XX% resulted in for expenses. that trade reduction servicing technology to and and full-year fourth higher increased and related quarter expenses included lower and losses. year-on-year the legal prior comparisons distorted nonrecurring to and settled

million charge G&A the on the value-added that addition, contract and included discussed quarter nonrecurring of third In related call. Asia $XX quarter XXXX of net a our charge I third net to earnings tax termination refund effect outsourcing

in the outpaced XX% quarter nonrecurring from and fourth X% and prior incremental periods and increased full was items, increased year. quarter margin the year-on-year. XX.X% XX% of XXXX up points fourth Fourth XX% these increased respectively. million was revenue income the the of expense margin XXX year year as income The growth. XX% have quarter G&A Fourth basis Excluding $XXX operating X% growth million for of would by the operating and quarter full-year $XXX full operating for

management of year the margin leverage sixth from and expansion and These XXXX operating was and our in margin consecutive continued demonstrate operating XX.X% diligent XXXX full-year focus nine basis Our represents of on up business. points results highest our expense outstanding XXX years. our of our

two quarter operating You noticed our excluded business our from operating than are We adjusted results of that million our GAAP not lower operations. that may items part our $XX adjusted have was fourth core income. income

million estate non-cash estate relating real our period $X sublease reporting prior credit assumptions a to for up to real GAAP First true we recorded write-offs.

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

our $XXX GAAP lower income. than adjusted operating million the income For of was $XX million year, operating

a consolidated entities $X income; $XX operating of charges; real four interest estate Here and non-cash costs; in a we $XX realized in items million acquisition of million appendix on ownership for of this gain outlined million are third-party exchange million $X data These non-GAAP excluded tools. an variable in note; of market in presentation. provider financial the software in stake and the technology trading developed we adjustments

impact enacted reform The legislation revaluation legislation the our increased new tax tax from by million tax deferred the foreign from corporate $X tax in of assets Let's deemed earnings. legal U.S. December. charge and at our $XX the on entity, expense of million, $XX the discuss recorded million repatriation or toll

GAAP EPU adjusted basis the increase a reflects GAAP Both tax recorded calculating third EPU. AllianceBernstein to XXXX of adjusted AllianceBernstein However, foreign with LP as cash tax for full-year effective to in tax The adjusted only them and in and rates $X discussed GAAP credit The a for U.S. the XXXX, both $XX our point rate legislation. XXXX million back for nonrecurring include nonrecurring U.S. entities. rate X.X% to XXXX on attributed increase full-year entities on net similar in incremental reduction in in expense beginning and a effect rather million mentioned and quarter. foreign is of and XXX This tax accessing provided million earlier payable resulting tax for Therefore the earnings generated was flow more $X the $X.XX incremental than afforded net for the XXXX. in tax we managing LP previous effective in X.X%, U.S. X.X% intra-company earnings calls, purposes tax foreign reform balances to income was allowed our us effective the the flexibility net

AllianceBernstein Going pretax earnings. forward of we expect foreign mix current X.X% effective forecasted rate domestic tax be to based LP for the on approximately versus our

XXX, this lowered. new revenue standard recognized implement has XXXX. Under effective in fees will the since required standard, a X, new past Finally, revenue than be threshold ASC we performance-based as been accounting potentially may January earlier the

equity As required we real we our to and which under the million approximately related have which XXXX earlier the of income fund today, estate filed a former quarterly in in accounting higher achieve deferred our revenue $XX threshold filings, disclosed XX-K, rules. recognition operating investment of to previous

XXX will retrospective recognition method the ASC in sheet $XX reflect of and the partner's for satisfied test increase balance opening expect the implementation the modified With the be using will required XXXX capital. we million

would quarter be adjusted plan amount first $X.XX. highlight points operating P&L, EPU income unitholder with well. as and distribution this in million not that our are of to which per we the and your increase adjusted on to XXXX these reflect P&L first next $XX implementation expected as expect Although Seth, is in by to XXXX approximately our the Jim reflected presentation GAAP the And questions. rules, to pleased quarter answer We slide the the we I in

Operator

[Operator Instructions] comes Your Robert Lee, KBW. of first question from line the

Your open. is line

Robert Lee

maybe us been focus I you. into thought was Maybe taking an you the for the pretty and my drill thank on firm. could put last you last quarters. the Great, area would there Wealth Thanks like Seth, just you that this update years, – when Can joined know morning. just the business to, has several Clearly you Private question I a bit. incremental good couple this it's – some momentum

about that it in had offices. accelerate new or business further more is it there? is whether maybe what or thinking keep are out know you us build in of financial or terms momentum how can on I you building you the So up you update advisors don't hiring have do if

business. about thinking that how Just you're

Seth Bernstein

for you the question. Thank

have to resonance seems particularly I that job aggressive prescriptive array has clients, targeted done front advantage with more more portfolio now itself them. our created take foot of itself to putting It's thematic approach a transitioning services. a the broader of real affluent, and gives have and those and to of being about think particularly managers less to are clients appealing managing business money and that our our ideas a on through course that and it its it remarkable opportunity

growth certainly And incremental of driving more affluent been chunk in clients. helping the us penetrate so, it's significant a

are for been We increase there penetration It certainly were hire where already we our more already aiming markets to in FAs difficult us. present. are order has in – to

of industry the but the the we to the do themselves, I laterally. very think through very tough better to market But improving up and the very both it's we on our we there, we broadly a that penetration difficult focused have differentiated it, productivity a FAs – fact productivities to offer. slog. develop that organically also and the mature increasing one are for encouraged by ranks it's market, think been a proposition the are ability but but It's they are moving

Robert Lee

broader instrumental That on and alternative Maybe you maybe follow-up some that. of Institutional and Could your may is just this strategies, to there, a certain been think point? almost in offerings are in maybe kind where you it update type for whatnot. my out marketplace whatnot, various question, to alternative business where offerings your has strategies also second of So credit like what private alternative – bring insatiable demand at plans or starting you a of seems too. building be your us to

Seth Bernstein

demand view think has Institutional share that I among credit your I'd very clients for strong. been

in increasingly momentum the institutions have strategy it's that out. ideas, to team seen financials thematic of more you our sort growth as And acceleration estate we been well area. But years of clients. couple We available that have our Institutional demand building seeing with private where, ago also will we've if demand recruited beyond the significant seen Both clients, satisfying private in just in we've but are we've in real we it our credit in recall, Aria both. some but space. and and Whether as middle-market lending of commercial in our private seen for a been

but newer base. a it's a Private from number in Client of right, our it's platform Private on been on well growing capabilities, been of which Client terms these the have its beyond a – you're So demand we platform we which has platform launched client

John Weisenseel

Rob, higher I our with look that at out, the would if at we fee are part alternatives a pipeline just an is big alternatives. And Institutional associated look is fees high. they when you pipeline again, clearly why, point XX%-some the you more actually which all-time now than at on on rate it in services, is traditional channel, of the is

Robert Lee

the back I’ll in queue. you. thank Great, Thank you. get

Operator

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

is Your open. line

Alex Blostein

just might last impact you obviously morning, see to of on of kind guys volatility? points different quite in the the Great. near-term your see of early earnings of product having trends conversations question. most Thanks report guys for of the to to what any spike a your one taking It helpful around like fronts number clients volatility. and And peers And you are kind be implications after for recent the after unprecedented reported of base. the seeing. you of was guys. sort Wanted already. what guys go Good are back – with week that Obviously

Seth Bernstein

more would Well, it's seeing that make at on certainly are less inflows. to moment and in early the are longer-term conclusions I volatility say investing look, we clients too it. Retail interested

more will to that of consequence continued a activity overall flows third be begin Equity last good. I volatility, of pretty meaningful of quarter continues volume see But if have been year. As it from to the it on credit. has concentrated the in outflows. more is balance think down And

Jim Gingrich

volatility. going with very thing teams to services note the to the done. of think majority for them most all important again, very of have during have in happy period as large bouts expect which, across terms have with I are pleased no not firm how for array we The we is you're volatility, of whether done maybe performance investment But of we that the this these and we would our or are long-term the doubt. clients, profile growth to delivering are do,

John Weisenseel

year where them. helping add would that on their basis doing volatility of And year-to-date been much has just trading Bernstein X%. volatility they Alex, are better lack Obviously this down services, and the a research is in John. the revenues resulted I last

Alex Blostein

helpful it, content. that’s Got

albeit I year, around like guess And we Second as we've this maybe performance up show also so obviously bit high into much just fees of path and incremental doesn't but very dynamic going without that step obviously look quarter fees, next that into strong out margin. quarter, more in seasonal, Is it expenses, performance quarter, material the expenses. reasonable seem something there follow-through but question in fee a a seen unique huge very forward? a margins about to that this for was a your led on Or up but expenses? performance

John Weisenseel

Alex. John, It’s

annual fees for an the the typically absolutely because end based largest quarter our quarter on on fourth our are contracts is are of basis correct, majority basis. You calendar performance which a

I the incremental I XX% we think think for quarter, and said In were the higher margin at XX%. we full-year terms were fourth of in the I

for in as – forward at fee I AUM going servicing But as the as in would expenses. would obviously incremental fees. particular level think rates you mode promotion the we XX% in we should around be the fourth the higher, of this And incremental long margin. of in we are terms of non-compensation we I a and targeting margin have an the higher – G&A and continue when out with performance quarter think the look in level as XXXX really far to be expenses, cost-containment terms terms

keep inflation And servicing line the expenses would we in we going so, trying when on strip non-recurring somewhere going those all you in had G&A out things be promotion and that to with XXXX, growing forward.

Seth Bernstein

is recognition it necessarily I think there's Alex, fees. One John's is. over the add associated performance that that it do in to year, be there with on two I with fees, of so perfectly correct for the other would But the performance course points accrue not those we compensation on would do fact doesn't revenue line assume those up no to comments.

a John services expect – to is as the would picture. Second, beta as I also as obviously market. And mix, of revenue performance you there broad component Company, our if array there's There's our pretty performance fees. a a the in is piece fees of you the the shift continues of think of a have overall that bigger another about larger piece by alternatives driven become or to performance those it will, become fees, component in that contributed business to noted,

In fact performance related real large first as to quarter John a we in equity estate business. our be noted, recognizing the will fee

Alex Blostein

much. sense. Yes, Thank guys all very you make

Operator

the next from of line Thind, question Surinder Jefferies. Your comes

is open. Your line

Surinder Thind

could performance base I touch fund mean peer the or it's guys much from equal, current think your flows. I the more on just the your and upside X% say wanted morning. How all at do much do push top you think end here? versus about at investment from How With near else Good aside to performance currently growth can would you volatility. already get you groups, rate? organic annualized. you what I

Jim Gingrich

versus again, our his let said as in Look, say noted, the me you services, our that, Obviously in well The is active the of as performance to mix, the that. than services, to, as as referring which remarks, were passive think we in contributed is AUM both active growth you Seth I is in X%. our increase terms year-on-year. active growth saw growth higher fee

of a point, overall indicated, organic terms your pretty investments our be tends to that as a of with it have in consultants robust That indicator intermediary in flows. make our continued happening you've as well to has improve. also against we've And growth, So in Performance, seen XXXX. leading continues was to partners capital we be markets. to what's distribution of backdrop capabilities both and as relationships the to in future

to are and need the predict growth think, goes long-term. the in deliver able is, year-on-year to over to But be that executing I do or that are on where future we very very the is tough to that that quarter-to-quarter. things consistent broad-based durable so we And we confident

Seth Bernstein

on it's to Jim that profoundly mix I are has earlier, of as the noting such had business, to not that we as that a drive important, And alluded worth it's think I think that. changed dependent also particular service really

Surinder Thind

on products. my And base wanted second question, for Understood. the FlexFee touch just to

bit. may would be forward demand it perhaps, mass. take thoughts? pull differentiated to you those products that provide to noted I get to a years how given those are, Can you that perhaps any few that critical color thought You have around able might a little

Seth Bernstein

through on we in get it's and up well. going we've platforms first, our and got to here them key hopeful. We're quite that process U.S. at are counterparties the the Well, working

what clients really they options similar lot growth assets tax think will Clients grow and will of be their create funds for point in their that existing out I might out of clients happen is a I the our of business. or will moving our portfolios steadily there model events. with

underlying a countervailing be would slow that of funds themselves. that the would So the force growth

getting own it my in about more to rates bigger organic I think a piece pies. those at least their So akin growth mind of and

So, it. but we with how normal market rather wrong, than remain going very will with drive to in it that's are I'm Maybe the pleased grow we but that's the broader something flows. about the course think them, we with currently thinking take-up forward

Surinder Thind

in And Thank back the I’ll queue. get That’s help. you.

Operator

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

open. Your line is

Bill Katz

you for taking Okay. this question Thank the morning.

last ratio, XX.X% real New quarter. look year then clarification terms staff I going And the the takes us expect York at think in presuming coming estate of some comp and potentially just migrating of update the end some and City ratio is said be year, puts some going middle said the the Would back of against the a to you for discussion so on trend the focus around you moment, like you're probably So to of expense point your consolidation? that? comp second the Any of the indications first just quarter I'm early comps this or of a to in you perhaps. how of outside would the the what

John Weisenseel

second I go we've then previous first, start comp Bill, started the then ratio will question. at Why can the as off question we came throughout if I look to and, XX.X%. were you with But the and at you first on year the And Sure. at previous as ratio, don't start know years the to last years, year. down work got XX% able in we

which this year feel at fee out at finished a look year coming stronger XX.X%. is are and where look and this starting AUM our was As average ago, year last we the at than comfortable ratio bringing year it we we sooner year. rate, to this start we off down We the

we AUM quarter If as we up. we the goes markets or here could are reverse year go come down course may at each look through down stay If Of up year. go this goes as going and down. and that that ratio better to markets do AUM ratio go the happens, if last did

work where vis-à-vis we this much year to we XX.X% looking at we're we a starting still go in don't the last last to and regards in is the know Firm of where year, progress with year accruing to were new XX% better we year. ended timing. So are still here. starting move, going, first opposed a location parts are would all the comfortable that or did We we're we're Getting question the to a principal place we the saying as ago, out where that what

the talk the timeframe. with this months where discussions year what what to though we the of estate type of are be year several going tell terms think would and a by could in work here where a the different to first is, first groups were or of I do. year about goal half would half the go, of end the able but along different ago three further up real two we scale transition. But they the we move you that of the in to wrap be I are more of than cities, this And say have We developers the still lot would is

happen In another over still presence large and terms of New in it's years we a move a obviously York City. staff to several maintain York location, if of going New start to out to we

Operator

question Carrier, comes next of Michael the from of America. Bank Your line

Your line is open.

Jeff Ambrosi

as year is and quarter Ambrosi Mike. Congrats This actually strong well. Jeff filling for in on a

Just just I to trend the you XXXX. I side, that get the said and line on think there. guide expenses. XX.X% grow in quickly with non-comp cleanup a ratio of the one comp on expect Then in inflation

guess, include any MiFID-related for research does So I budget that like costs?

John Weisenseel

immaterial. the said just costs are you mentioned those our plan Jeff to out they that And numbers pay to costs is actually what actually and in Well, the past P&L. Europe the are we included I in of in we research

Jeff Ambrosi

in Okay, great, the distribution And quarter. one you. on thank second just then

as from given outflows. in XQ tend funds to understand you elevated them that and guys I Just think those count be I

on like looks that you. what number, curious billion $X.X inflow just distributions. Thank that ex So

John Weisenseel

The the $X.X billion into of all-in in an is terms flows number our funds.

Seth Bernstein

it include dividend. But reinvested doesn’t

John Weisenseel

That’s correct.

Jeff Ambrosi

that includes but into performance. reinvested gets back outflows, goes right? that it But Is Right. anything distributions as

Seth Bernstein

Correct.

John Weisenseel

That’s correct.

Jeff Ambrosi

okay. it, Got

So I the was? what guess a to is distribution quantify way there

John Weisenseel

it analyze we way. No, don’t that

Jeff Ambrosi

Okay, taking the thanks for question. Thanks a lot.

Operator

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

Your line is open.

Bill Katz

Okay.

Sorry phone problems was I about asking I questions, as here some so having my that. I was apologize.

Retail that prepared target multi-strat your other and in you date some between you about some think for talk to highlighted what drivers handoff flows. reaching Can mentioned about versus set trying the the about the had funds you the as that you could for how impact quickly think incremental milestones. commentary follow-up, we opportunity on to slides here Just Just were the think important some ramp? full-year

Seth Bernstein

think I I Bill, that a the think broader I But product a had space. the question. respect is left thought with we you thanks, All Well, for has Retail to potentially very Market multi-asset speechless. the big funds Income in audience

products multi-asset will up of rather fund, looking beginning I I in pace think kind have that Institutional in and not it's understand normal an And Institutional target would sort it, which picks pickup. and been our think something know, would to sale. DC that embraced. to you lot a immediately. of the been But distribution of about at is it timeframe. and It's of it We've go date I regard an Retail getting cornerstone than With channel competitors' have a think income through that multi-asset it. adopted of As sales distinctive that of to we a approach

Bill Katz

Okay, you. thank

Operator

line Your next question Robert from KBW. comes the Lee, of

line open. is Your

Robert Lee

is US soon. spin follow-up. guess US quarter, going I’m curious, guess assuming quarter, taking AXA the this its just Thanks my for company, maybe I I your next parent I'm – through

is impacts changing company publicly own governance kind or else? anything your being the envision a AXA any hands once But US traded feel there again, you stake will this even any there from becomes be Just – to if do of so you like though now. speak, perspective change in they

Seth Bernstein

or going a in We would tell change. parent. We you the Well close say much we I relationship of a as our change them know, managing don't But we business. USA's you AXA AXA period. AXA I anticipate for we US quiet and are it's bigger anticipate to to money the intend that very forward are a continue proportion Firm. a a respect that either relationship with would don't with for SA,

context that with change say regularly. in are are engaged them going the their day-to-day tenor. frequency wouldn't we And But or interactions I to in so, certainly

relationship. think is this a I mature very

Robert Lee

that Thanks for was Okay, it. question. taking my

Operator

[Operator presenters. our We Instructions] call no to back the questions. I'll have turn further

Andrea Prochniak

And follow-ups Thank day you, Thank our everyone, IR any all joining call you. is have. available may today. you for for

AllianceBernstein Holding (AB) 13 Feb 182017 Q4 Earnings call transcript