My wife and I have restored antique homes across New England over decades. We look for “good bones.” That means a solid foundation, classic design and quality materials. With those, we can maintain the integrity of the original while enhancing it for modern living.
As a student of our industry, I’m always curious about how change-makers with “good bones” build on their underpinnings. SEI is one.
From its operations origins, SEI has expanded and enhanced its services, and now it is a sterling example of the confluence of digital and human advice. For years, they did that quietly. Now, I’m hearing about them all over the place.
I invited Erich Holland, head of sales and experience for SEI’s U.S. advisor business, to my WealthTech on Deck podcast. The numbers show that our industry is struggling to achieve just middling growth. Listening to Holland was a breath of fresh air.
He shared how SEI’s culture, innovative spirit, commitment to technological advances, and full-on attention to customers have propelled it to where it is today.
A Custodial Revolution
With $1.5 trillion in assets under management and administration (AUM and AUA), SEI is making some noise and attracting new audiences and customers.
Last year, SEI placed advertisements on billboards, buses, and recycling receptacles around the convention center where Charles Schwab was hosting its IMPACT conference in Philadelphia, SEI’s backyard.
The ads tweaked Schwab by inviting RIAs to “join the custodian (r)evolution,” “expect more,” and check out SEI’s capabilities. Their phones lit up.
Jeff Benfield, who heads SEI advisor solutions, said the company is focused on stripping out the complexity created by coordinating account registrations to simplify the advisor/client experience. The SEI advisor platform recognizes that “accounts don’t walk through the advisor’s door. It’s clients, it’s households, it’s families,” Benfield said.
Many of those clients are worried about the drag taxes have on their savings and retirements. SEI gets it. In April, the company announced enhancements to its SMA and UMA experience with SEI-managed and third-party investment solutions.
Holland said it has also developed a simple, clean report for advisors to use with investors to show the savings they’ve achieved through tax-efficient account management.
Benfield and Holland highlighted SEI’s commitment to pursuing solutions to meet the needs of a marketplace that is changing before our eyes.
“Being a CTO gets harder every day, especially in the financial planning business,” Benfield said. “Value isn’t just about finding the right partner. It’s about identifying and isolating what you're really good at and doing just that. And then let your partner handle the rest of it.”
A Stable Disruptor
You may have noticed a flurry of changes at the top of companies in our industry lately. SEI stands out for its stability. Its founder, Alfred P. West, Jr., an aerospace engineer, led SEI for over 50 years until Ryan Hicke, a 25-year SEI veteran, became CEO two years ago.
“We're proud to say we were founded in 1968 and went public in 1981. We've never been bought or sold,” Holland said. “Our diversification across business lines, the innovation that's in our DNA … paired with the continuity and stability of a close to six-decade-old organization provides our clients a lot of confidence in a time of substantial change.”
In 1968, West launched SEI with the clever idea of building a computer-based commercial credit simulator to train bank loan officers.
Innovations followed, including the first real-time automated trust accounting system in the 1970s. Today, with some major software revolutions, it is the SEI Wealth Platform. It powers nine of the 20 largest banks in North America, trust companies, and banks and financial advisor businesses worldwide.
Turning the page to the 1980s, SEI launched its institutional investor business with competencies in manager research, asset allocation advice, and integrated portfolio management for large pension funds and other pools of institutional money.
A point of pride is the work of a former executive, Gilbert Beebower. In 1986, he published an article, “The Determinants of Portfolio Performance,” with Gary P. Brinson and L. Randolph Hood. The paper first stated the now-prevalent view about the importance of asset allocation to investor returns.
By the 1990s, SEI used its “bones” in banking and institutional investing to launch a turnkey asset management platform (TAMP) for independent advisors.
Next, as it examined the asset management and investment businesses, SEI recognized an opportunity to reduce the overhead those businesses carried in operations that weren’t its core strengths. So, SEI launched its fund accounting and investor manager services business.
“Take a step back, and we have world-class capabilities around investment management, around technology and then around custody and operations,” Holland said. “Our clients today consume those either in component parts or in full.”
Holland and Benfield said the company looks to the future with confidence because of the depth and breadth of its capabilities, as it indicates in its website’s message to investors: “The strength of our legacy is the courage of our future.”
Jack Sharry is the EVP and chief growth officer of LifeYield and host of the WealthTech on Deck podcast. He is on the board of Next Chapter, a leadership community dedicated to improving retirement outcomes.