EX-99.1 2 tm1921306d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

 

News Release

 

Waddell & Reed Financial, Inc. Reports Third Quarter Results

 

Overland Park, KS, October 29, 2019 — Waddell & Reed Financial, Inc. (NYSE: WDR) today reported third quarter 2019 net income1 of $33.1 million, or $0.46 per diluted share, compared to net income of $33.9 million, or $0.45 per diluted share, during the prior quarter and net income of $46.3 million, or $0.58 per diluted share, during the third quarter of 2018.

 

Revenues of $270.7 million increased slightly compared to the prior quarter and decreased $24.4 million compared to the third quarter of 2018. Operating expenses of $230.7 million increased $1.8 million compared to the prior quarter and declined $5.0 million compared to the same quarter of 2018. The operating margin was 14.8% during the current quarter, compared to 15.3% during the prior quarter and 20.2% during the third quarter of 2018.

 

Assets under management ended the quarter at $68.8 billion, a decrease of 4% compared to the prior quarter and a decrease of 14% compared to the third quarter of 2018. Average assets under management were $70.5 billion during the current quarter, compared to $71.4 billion during the prior quarter and $79.5 billion during the third quarter of 2018. Net outflows of $2.7 billion during the current quarter were slightly higher compared to net outflows of $2.4 billion in the second quarter of 2019 and were higher compared to net outflows of $2.0 billion in the third quarter of 2018. Sales of $1.8 billion during the current quarter declined 16% and 30% compared to the prior quarter and the third quarter of 2018, respectively. Equity markets during the quarter continued to experience volatility leading to lower sales in key products as investors preferred lower-risk fixed income and money market funds. Redemptions improved slightly compared to the prior quarter and improved 3% compared to the third quarter of 2018.

 

Wealth management assets under administration ended the quarter at $57.1 billion, a slight decrease compared to the second quarter of 2019, and a 2% decrease compared to the same quarter in 2018. For both comparative periods, assets under administration decreased primarily due to outflows in non-advisory assets.


Philip J. Sanders, Chief Executive Officer of Waddell & Reed Financial, Inc. shared,  “the quarter remained challenging from a flow perspective, especially within the unaffiliated channel of our asset management business.  However, strong expense control, progress in our wealth management business and the continued strength of our balance sheet provides opportunities to add to and enhance our capabilities as a diversified financial services organization.”

 

Revenues Analysis

 

Investment management fees decreased $1.1 million, or 1%, compared to the second quarter of 2019 due to a 1% decrease in average assets under management and a lower effective management fee rate, partially offset by one additional day in the quarter. The effective management fee rate was 62.9 basis points and decreased compared to the prior quarter’s rate entirely due to a true-up in fund fee waiver expenses. Adjusting for the true-up amount, the effective fee rate was consistent with the second quarter’s rate. Compared to the third quarter of 2018, investment management fees declined $17.5 million, or 14%, due to lower average assets under management and a lower effective management fee rate, which was approximately two basis points lower due to fee reductions in selected mutual funds implemented in July 2018.

 

Underwriting and distribution fees increased $2.3 million, or 2%, compared to the prior quarter, primarily due to an increase in advisory assets under administration. Compared to the same quarter in 2018, fees decreased $4.5 million, or 3%, due to lower service and distribution fees and lower commissionable sales, partially offset by an increase in advisory fees.

 

 

 1 Net income represents net income attributable to Waddell & Reed Financial, Inc.

 

 

 

 

Shareholder service fees decreased $0.7 million, or 3%, compared to the second quarter of 2019 due to a decrease in accounts and a nonrecurring decrease in revenue related to the outsourcing of our transfer agent transaction processing. Compared to the third quarter of 2018, shareholder service fees declined $2.4 million, or 9%, primarily due to fewer accounts and a decrease in average assets.

 

Operating Expenses Analysis

 

Distribution expenses increased $1.0 million, or 1%, compared to the prior quarter, as a result of the increase in underwriting and distribution revenue. Compared to the third quarter of 2018, expenses increased $0.8 million, or 1%. Rule 12b-1 commissions paid to third parties decreased consistent with the revenue decrease due to lower average mutual fund assets, however, this decrease was more than offset by an increase in the compensation grid for associated independent financial advisors starting in 2019.

 

Compensation and benefits expense increased $3.1 million, or 5%, compared to the prior quarter due to $3.0 million of severance expense, primarily related to the outsourcing of our transfer agency transactional processing operations.  Compared to the third quarter of 2018, compensation and benefits expense increased $0.4 million, or 1%, as severance in the current quarter was partially offset by lower costs from reduced headcount as well as a $1.3 million decrease in share-based compensation due to previously-issued awards vesting fully, as well as forfeitures.

 

General and administrative expenses increased $0.6 million, or 4%, in the current quarter primarily due to increases in recruiting costs, state business tax and insurance costs compared to the second quarter. Compared to the third quarter of 2018, expenses improved $0.9 million, or 5%, due to lower legal and consulting costs.

 

Technology costs decreased $1.4 million and $0.4 million compared to the prior quarter and third quarter of 2018, respectively.  The decrease in both periods was primarily related to a non-recurring benefit from the outsourcing of our transfer agent transactional processing operations.  Compared to the third quarter of 2018, the benefit was partially offset by costs from the centralized advisor desktop platform which was rolled out during the second quarter of 2019.

 

Occupancy and Marketing and advertising expenses decreased a combined $1.3 million, or 14%, compared to the prior quarter.  Compared to the third quarter of 2018, these expenses declined $1.8 million, or 19%. For both comparative periods, occupancy costs decreased as we realized cost savings from the closure of field offices, and marketing expenses decreased as prior period fund mergers have reduced fund-related marketing expenses.

 

Depreciation expense declined $0.4 million, or 8%, compared to the prior quarter and declined $3.3 million, or 41%, compared to the third quarter of 2018 primarily due to certain fixed assets reaching the end of their useful lives.

 

Investment and Other Income

 

Investment and other income declined $3.8 million compared to the prior quarter primarily due to lower unrealized gains on seed and corporate investment portfolios. Compared to the third quarter of 2018, investment and other income increased $3.5 million primarily due to unrealized gains on the seed and corporate investment portfolios and increased interest income from our corporate investment portfolio.

 

 

 

 

Assets Under Management

(in millions)

 

   Three Months Ended                 
   Sep. 30,   Jun. 30,   Sep. 30,   Prior Qtr.   Year-over-Year Qtr. 
   2019   2019   2018   Change   %   Change   % 
Unaffiliated 1                                   
Beginning assets  $27,545   $27,506   $30,782   $39    0%  $(3,237)   (11)%
Sales 2   999    1,291    1,589    (292)   (23)%   (590)   (37)%
Redemptions   (2,684)   (2,441)   (2,425)   (243)   (10)%   (259)   (11)%
Net exchanges   334    303    360    31    10%   (26)   (7)%
Net Flows   (1,351)   (847)   (476)   (504)   (60)%   (875)   (184)%
Market action   (337)   886    866    (1,223)   (138)%   (1,203)   (139)%
Ending assets  $25,857   $27,545   $31,172   $(1,688)   (6)%  $(5,315)   (17)%
Annualized organic growth rate   (19.6)%   (12.3)%   (6.2)%                    
Annualized redemption rate 3   40.9%   36.7%   31.8%                    
Institutional                                   
Beginning assets  $3,887   $4,053   $5,250   $(166)   (4)%  $(1,363)   (26)%
Sales 2   49    54    83    (5)   (9)%   (34)   (41)%
Redemptions   (230)   (440)   (535)   210    48%   305    57%
Net exchanges   —    25    —    (25)   NM    —    NM% 
Net Flows   (181)   (361)   (452)   180    50%   271    60%
Market action   (29)   195    389    (224)   (115)%   (418)   (107)%
Ending assets  $3,677   $3,887   $5,187   $(210)   (5)%  $(1,510)   (29)%
Annualized organic growth rate   (18.6)%   (35.6)%   (34.4)%                    
Annualized redemption rate 3   23.9%   46.1%   40.8%                    
Wealth Management                                   
Beginning assets  $40,444   $40,095   $42,619   $349    1%  $(2,175)   (5)%
Sales 2   744    789    874    (45)   (6)%   (130)   (15)%
Redemptions   (1,542)   (1,609)   (1,612)   67    4%   70    4%
Net exchanges   (334)   (328)   (360)   (6)   (2)%   26    7%
Net Flows   (1,132)   (1,148)   (1,098)   16    1%   (34)   (3)%
Market action   (64)   1,497    1,662    (1,561)   (104)%   (1,726)   (104)%
Ending assets  $39,248   $40,444   $43,183   $(1,196)   (3)%  $(3,935)   (9)%
Annualized organic growth rate   (11.2)%   (11.5)%   (10.3)%                    
Annualized redemption rate 3   13.4%   13.8%   12.8%                    
Consolidated Total                                   
Beginning assets  $71,876   $71,654   $78,651   $222    0%  $(6,775)   (9)%
Sales 2   1,792    2,134    2,546    (342)   (16)%   (754)   (30)%
Redemptions   (4,456)   (4,490)   (4,572)   34    1%   116    3%
Net exchanges   —    —    —    —    —    —    — 
Net Flows   (2,664)   (2,356)   (2,026)   (308)   (13)%   (638)   (31)%
Market action   (430)   2,578    2,917    (3,008)   (117)%   (3,347)   (115)%
Ending assets  $68,782   $71,876   $79,542   $(3,094)   (4)%  $(10,760)   (14)%
Annualized organic growth rate   (14.8)%   (13.2)%   (10.3)%                    
Annualized redemption rate 3   24.3%   24.3%   22.1%                    

 

 

(1)Unaffiliated includes National channel (home office and wholesale), Defined Contribution Investment Only “DCIO”, Registered Investment Advisor “RIA” and Variable Annuity “VA”.
(2)Sales is primarily gross sales (net of sales commissions). This amount also includes net reinvested dividends and capital gains, and investment income.
(3)Excludes Money Market.

 

 

 

 

MorningStar Fund Rankings  1  1 Year   3 Years   5 Years 
Funds ranked in top half   54%   42%   29%
Assets ranked in top half   63%   63%   40%

 

MorningStar Ratings  1  Overall   3 Years   5 Years 
Funds with 4/5 stars   29%   29%   23%
Assets with 4/5 stars   45%   42%   36%

 

 

(1)Based on class I share, which reflects the largest concentration of sales and assets.

  

   Three Months Ended                 
Wealth Management  Sep. 30,   Jun. 30,   Sep. 30,   Prior Qtr.   Year-over-Year Qtr. 
(in millions)  2019   2019   2018   Change   %   Change   % 
Assets under administration (AUA)                                   
Advisory assets  $25,107   $24,789   $23,653   $318    1%  $1,454    6%
Non-advisory assets   32,006    32,641    34,468    (635)   (2)%   (2,462)   (7)%
Total assets under administration   57,113    57,430    58,121    (317)   (1)%   (1,008)   (2)%
                                    
Net new advisory assets 1  $236   $253   $(87)  $(17)   (7)%  $323    371%
Net new non-advisory assets 1, 2   (769)   (885)   (931)   116    13%   162    17%
Total net new AUA 1, 2   (533)   (632)   (1,018)   99    16%   485    48%
                                    
Annualized advisory AUA growth 3   3.8%   4.3%   (1.5)%                    
Annualized AUA growth 3   (3.7)%   (4.5)%   (7.1)%                    
                                    
Advisors and advisor associates   1,344    1,347    1,425    (3)   NM    (81)   (6)%
Avg. trailing 12-month revenue per advisor 4 (in thousands)  $422   $408   $351   $14    3%  $71    20%

 

 

(1)Net new assets are calculated as total client deposits and net transfers less client withdrawals.
(2)Excludes activity related to products held outside of our wealth management platform.  These assets represent less than 10% of total AUA.
(3)Annualized growth is calculated as annualized quarterly net new assets divided by beginning AUA.
(4)Production per Advisor is calculated as trailing 12- month Total underwriting and distribution fees less “other” underwriting and distribution fees divided by the average number of Advisors. “Other” underwriting and distribution fees predominantly includes fees paid by Advisors for programs and services.

 

 

 

 

Unaudited Consolidated Statements of Income

(in thousands, except per share data and margin)

 

   Three Months Ended                 
   Sep. 30,   Jun. 30,   Sep. 30,   Prior Qtr.   Year-over-Year Qtr. 
   2019   2019   2018   Change   %   Change   % 
Revenues:                            
Investment management fees  $111,806   $112,870   $129,302   $(1,064)   (1)%  $(17,496)   (14)%
Underwriting and distribution fees   135,787    133,495    140,308    2,292    2%   (4,521)   (3)%
Shareholder service fees   23,087    23,789    25,508    (702)   (3)%   (2,421)   (9)%
Total   270,680    270,154    295,118    526    0%   (24,438)   (8)%
Operating expenses:                                   
Distribution   117,425    116,477    116,591    948    1%   834    1%
Compensation and benefits (including share-based compensation of $11,580, $11,199 and $12,856, respectively)   64,999    61,876    64,561    3,123    5%   438    1%
General and administrative   16,680    16,037    17,559    643    4%   (879)   (5)%
Technology   15,019    16,442    15,414    (1,423)   (9)%   (395)   (3)%
Occupancy   5,684    6,701    7,148    (1,017)   (15)%   (1,464)   (20)%
Marketing and advertising   2,134    2,399    2,461    (265)   (11)%   (327)   (13)%
Depreciation   4,833    5,228    8,141    (395)   (8)%   (3,308)   (41)%
Subadvisory fees   3,882    3,715    3,767    167    4%   115    3%
Total   230,656    228,875    235,642    1,781    1%   (4,986)   (2)%
Operating income   40,024    41,279    59,476    (1,255)   (3)%   (19,452)   (33)%
Investment and other income   5,212    9,025    1,697    (3,813)   (42)%   3,515    207%
Interest expense   (1,562)   (1,552)   (1,555)   (10)   (1)%   (7)   (0)%
Income before provision for income taxes   43,674    48,752    59,618    (5,078)   (10)%   (15,944)   (27)%
Provision for income taxes   10,175    14,190    13,105    (4,015)   (28)%   (2,930)   (22)%
Net income   33,499    34,562    46,513    (1,063)   (3)%   (13,014)   (28)%
Net income (loss) attributable to redeemable noncontrolling interests   445    614    208    (169)   (28)%   237    114%
Net income attributable to Waddell & Reed Financial, Inc.  $33,054   $33,948   $46,305   $(894)   (3)%  $(13,251)   (29)%
Net income per share, basic and diluted:  $0.46   $0.45   $0.58                     
Weighted average shares outstanding - basic and diluted   72,387    74,694    79,595                     
Operating margin   14.8%   15.3%   20.2%                    
                                    
(1) Distribution expense                                   
Unaffiliated   23,323    24,501    28,116                     
Wealth Management   94,102    91,976    88,475                     
   $117,425   $116,477   $116,591                     

 

 

 

 

Unaudited Consolidated Statements of Income

(in thousands, except per share data and margin)

 

   Nine Months Ended         
   Sep. 30,   Sep. 30,     
   2019   2018   Change   % 
Revenues:                
Investment management fees  $334,438   $393,385   $(58,947)   (15)%
Underwriting and distribution fees   395,527    416,222    (20,695)   (5)%
Shareholder service fees   70,279    78,464    (8,185)   (10)%
Total   800,244    888,071    (87,827)   (10)%
Operating expenses:                    
Distribution   343,696    345,376    (1,680)   (0)%
Compensation and benefits (including share-based compensation of $35,471 and $42,526, respectively)   191,718    199,174    (7,456)   (4)%
General and administrative   47,421    56,240    (8,819)   (16)%
Technology   47,769    49,293    (1,524)   (3)%
Occupancy   19,100    21,081    (1,981)   (9)%
Marketing and advertising   6,497    7,638    (1,141)   (15)%
Depreciation   16,062    19,262    (3,200)   (17)%
Subadvisory fees   11,154    11,158    (4)   (0)%
Intangible asset impairment   —    1,200    (1,200)   (100)%
Total   683,417    710,422    (27,005)   (4)%
Operating income   116,827    177,649    (60,822)   (34)%
Investment and other income   23,690    5,354    18,336    342%
Interest expense   (4,662)   (4,908)   246    5%
Income before provision for income taxes   135,855    178,095    (42,240)   (24)%
Provision for income taxes   35,036    41,355    (6,319)   (15)%
Net income   100,819    136,740    (35,921)   (26)%
Net income (loss) attributable to redeemable noncontrolling interests   1,763    (380)   2,143    564%
Net income attributable to Waddell & Reed Financial, Inc.  $99,056   $137,120   $(38,064)   (28)%
Net income per share, basic and diluted:  $1.33   $1.69           
Weighted average shares outstanding - basic and diluted   74,446    81,372           
Operating margin   14.6%   20.0%          
                     
(1) Distribution expense                    
Unaffiliated   71,124    87,155           
Wealth Management   272,572    258,221           
   $343,696   $345,376           

 

 

 

 

Underwriting and distribution fees

(in thousands)

 

   For the three months ended Sep. 30, 2019 
   Unaffiliated   Wealth
Management		   Total 
Fee-based asset allocation product revenues  $—   $73,356   $73,356 
Rule 12b-1 service and distribution fees   16,003    16,426    32,429 
Sales commissions on front-end load mutual funds and variable annuity products   361    12,523    12,884 
Sales commissions on other products   —    8,024    8,024 
Other revenues   67    9,027    9,094 
Total underwriting and distribution fees  $16,431   $119,356   $135,787 

 

   For the three months ended Jun. 30, 2019 
   Unaffiliated   Wealth
Management		   Total 
Fee-based asset allocation product revenues  $—   $70,220   $70,220 
Rule 12b-1 service and distribution fees   16,329    16,327    32,656 
Sales commissions on front-end load mutual funds and variable annuity products   488    12,302    12,790 
Sales commissions on other products   —    8,497    8,497 
Other revenues   83    9,249    9,332 
Total underwriting and distribution fees  $16,900   $116,595   $133,495 

 

   For the three months ended Sep. 30, 2018 
   Unaffiliated   Wealth
Management		   Total 
Fee-based asset allocation product revenues  $—   $69,468   $69,468 
Rule 12b-1 service and distribution fees   19,707    18,106    37,813 
Sales commissions on front-end load mutual funds and variable annuity products   441    13,651    14,092 
Sales commissions on other products   —    9,111    9,111 
Other revenues   126    9,698    9,824 
Total underwriting and distribution fees  $20,274   $120,034   $140,308 

 

   For the nine months ended Sep. 30, 2019 
   Unaffiliated   Wealth
Management		   Total 
Fee-based asset allocation product revenues  $—   $208,806   $208,806 
Rule 12b-1 service and distribution fees   48,514    48,441    96,955 
Sales commissions on front-end load mutual funds and variable annuity products   1,287    36,845    38,132 
Sales commissions on other products   —    24,127    24,127 
Other revenues   242    27,265    27,507 
Total underwriting and distribution fees  $50,043   $345,484   $395,527 

 

   For the nine months ended Sep. 30, 2018 
   Unaffiliated   Wealth
Management		   Total 
Fee-based asset allocation product revenues  $—   $201,565   $201,565 
Rule 12b-1 service and distribution fees   60,734    54,591    115,325 
Sales commissions on front-end load mutual funds and variable annuity products   1,418    41,900    43,318 
Sales commissions on other products   —    26,632    26,632 
Other revenues   459    28,923    29,382 
Total underwriting and distribution fees  $62,611   $353,611   $416,222 

 

 

 

 

Unaudited Condensed Balance Sheet

(in thousands)

   Sep. 30,   Dec. 31, 
   2019   2018 
Assets          
Cash & cash equivalents (unrestricted)  $162,567   $231,997 
Investment securities   691,616    617,135 
Other assets   205,269    285,649 
Property and equipment, net   49,785    63,429 
Goodwill and intangible assets   145,869    145,869 
Total assets  $1,255,106   $1,344,079 
Liabilities, redeemable noncontrolling interests and equity          
Long-term debt   94,908    94,854 
Other liabilities   303,755    354,312 
Redeemable noncontrolling interests   16,913    11,463 
Total stockholders’ equity   839,530    883,450 
Liabilities, redeemable noncontrolling interests and equity  $1,255,106   $1,344,079 
Shares outstanding   71,211    76,790 

 

Unaudited Condensed Cash Flow

(in thousands)

 

   Three Months Ended   Nine Months Ended 
   Sep. 30,   Jun. 30,   Sep. 30,   Sep. 30,   Sep. 30, 
   2019   2019   2018   2019   2018 
Cash provided by (used in):                         
Operating activities  $61,084   $40,644   $90,652   $84,231   $263,733 
Investing activities   (14,173)   9,946    (7,160)   (18,160)   42,571 
Financing activities   (58,591)   (53,605)   (50,131)   (171,709)   (242,636)
Net change during period  $(11,680)  $(3,015)  $33,361   $(105,638)  $63,668 

 

   Three Months Ended   Nine Months Ended 
   Sep. 30,   Jun. 30,   Sep. 30,   Sep. 30,   Sep. 30, 
(in thousands, except number of shares)  2019   2019   2018   2019   2018 
Shares repurchased                    
Number of shares   2,480,019    2,142,894    1,424,612    6,849,238    4,519,546 
Total cost  $40,715   $36,824   $28,369   $116,677   $89,018 
Dividend paid                         
Rate per share  $0.25   $0.25   $0.25   $0.25   $0.25 
Total paid  $18,372   $18,840   $20,050   $56,560   $61,531 
Capital returned to stockholders  $59,087   $55,664   $48,419   $173,237   $150,549 

 

 

 

 

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, Philip J. Sanders, CEO, will review our quarterly results. Live access to the teleconference will be available on the “Investor Relations” section of our Web site at ir.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 ir.waddell.com. Under the “Investor Information” tab you will find a link to presentations as well as to data tables, which include supplemental information schedules.

 

Contacts

 

Investor Contact:

Mike Daley, Vice President, Chief Accounting Officer & Investor Relations, (913) 236-1795, mdaley1@waddell.com

 

Mutual Fund Investor Contact:

Call (888) WADDELL, or visit www.waddell.com or www.ivyinvestments.com.

 

Past performance is no guarantee of future results. Please invest carefully.

 

About the Company

 

Through its subsidiaries, Waddell & Reed Financial, Inc. has provided investment management and wealth management services to clients throughout the United States since 1937. Today, we distribute our investment products through the unaffiliated channel under the IVY INVESTMENTS® brand (encompassing broker/dealer, retirement, and registered investment advisors), our wealth management channel (through independent financial advisors associated with WADDELL & REED, INC.), and our institutional channel (including defined benefit plans, pension plans, endowments and subadvisory relationships).  For more information, visit ir.waddell.com.

 

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, stock repurchases 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 us or on our behalf 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, 2018, which include, without limitation:

 

·The loss of existing distribution relationships or inability to access new distribution relationships;

 

·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;

 

 

 

 

·The adverse ruling or resolution of any litigation, regulatory investigations and proceedings, or securities arbitrations by a federal or state court or regulatory body;

 

·Changes in our business model, operations and procedures, including our methods of distributing our proprietary products, as a result of evolving fiduciary standards;

 

·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;

 

·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;

 

·Our inability to reduce expenses rapidly enough to align with declines in our revenues due to various factors, including fee pressure, the level of our assets under management or our business environment;

 

·Non-compliance with applicable laws or regulations and changes in current legal, regulatory, accounting, tax or compliance requirements or governmental policies;

 

·Our inability to attract and retain senior executive management and other key personnel to conduct our broker-dealer, fund management and investment advisory business;

 

·A failure in, or breach of, our operational or security systems or our technology infrastructure, or those of third parties on which we rely; and

 

·Our inability to implement new information technology and systems, or our inability to complete such implementation in a timely or cost effective manner.

 

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, 2018 and as updated in our quarterly reports on Form 10-Q for the year ending December 31, 2019. All forward-looking statements speak only as of 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, except to the extent required by law.