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SEI Investments Company (NASDAQ:SEIC)
Q4 2020 Earnings Call
Jan 27, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for your patience in holding, and welcome to the SEI Fourth Quarter of 2020 Earnings Call. [Operator Instructions].

I'm now happy to turn the conference over to Chairman and CEO, Al West.

Alfred P. West -- Chairman and Chief Executive Officer

Thank you very much, and welcome, everyone. All of our segment leaders are here with me on the call, as well as Dennis McGonigle SEI's CFO; and Kathy Heilig, SEI's Controller. I'll start by recapping fourth quarter and full year 2020. I'll then turn it over to Dennis to cover LSV and the investment in new business segment. After that, each business segment leader will comment on the results of their segments. And finally, Kathy Heilig will provide you with some important companywide statistics. As usual, we'll field questions at the end of each report. So now let's turn our attention to the financial reports of the fourth quarter 2020. Fourth quarter earnings -- excuse me, revenue grew 5% from a year ago. Fourth quarter earnings decreased by 2% from a year ago, and fourth quarter EPS of $0.86 grew by 2% from the $0.84 reported in 2019.

Fourth quarter asset balances grew by $27 billion, while LSV's balances grew by $11.6 billion. During the quarter, we repurchased 1.8 million shares of SEI stock at a price of $54.36 per share. That translates into $99 million of stock repurchases. During the entire year, in the form of repurchases and dividends, we passed $529 million of capital to shareholders. This quarter, we also continued our investment in the growth-generating initiatives. The newest effort is One SEI, which is a large part of our growth strategy. As you will recall, One SEI leverages existing and new SEI platforms by making them accessible to all types of clients for all adjacent markets and all other platforms. Now turning to revenue production. Fourth quarter sales events, net of client losses, totaled $8.8 million and are expected to generate net annualized recurring revenues of $4.9 million. Now we are not discouraged with this quarter sales results.

They do not reflect the sales activities occurring throughout the company in all of our target markets. We create results as a timing issue which will correct itself. A unit head will speak to their specific sales results and their opportunities. And to grow and prosper in the future, we know that things will never be the same. So we have been very busy adopting to new mental models in realities, such as remotely distributed workforce. We have a lot of positive momentum moving into 2021. We have strong backlog of sales and conversions in a number of key prospects late in the sales cycle. We also have made progress in strategically repositioning our asset management business segments. We are please -- poised and ready to capture the opportunities inherent in significant change.

Now that concludes my formal remarks, so I will turn it over to Dennis to give you an update on LSV and the investment in our new business segment. After that, all segment heads will update their results in their segments. Dennis?

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Thanks, Al. Good afternoon, everyone. I will cover the fourth quarter results for the investments in new business segment and discuss the results of LSV asset management. During the fourth quarter of 2020, the investments in new business segment activities consisted of the operation of our Private Wealth Management business, our IT services business opportunity, the modularization of larger technology platforms to deliver on our One SEI strategy and other investments. During the quarter, the investments in new business segment incurred a loss of $11.4 million, which compared to a loss of $9.8 million during the third quarter of 2020. This increased loss reflects an increase in investments, specifically related to our One SEI strategy.

Approximately $8.7 million is tied to that effort. We also recorded an adjustment to the valuation of our contingent obligation for the Huntington Steele acquisition, increasing expenses by approximately $900,000. Regarding LSV, our 39% ownership contributed $30.6 million in income to SEI for the fourth quarter of 2020. This compares to a contribution of $39.1 million in income for the fourth quarter of 2019. Assets during the period grew approximately $11.6 billion. LSV experienced net negative cash flow during the quarter of approximately $4.6 billion, offsetting market appreciation of approximately $16.2 billion. Revenue at LSV was approximately $102.1 million for the quarter,with no performance fees. Finally, for the company, our effective tax rate for the quarter was 19.6%.

I'll now be happy to take questions.

Questions and Answers:

Operator

[Operator Instructions] Looks like we do have a question here from the line of Ryan Kenny of Morgan Stanley. Your line is open.

Ryan Kenny -- Morgan Stanley -- Analyst

Hi, Dennis, good afternoon.

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Hey, Ryan.

Ryan Kenny -- Morgan Stanley -- Analyst

So on the last earnings call, you mentioned a $3 million uptick from health insurance costs in the third quarter. So just wondering where that number stands in the fourth quarter and how we should think about the trajectory of health insurance spend going forward?

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Yes. It was essentially flattish to down a little bit in the fourth quarter. So I mean it's really case -- since we're -- we self-ensure it's kind of case-by-case within the workforce. But I'd say it's pretty -- I would kind of estimate it would be in this range -- same range for the course of the year. If not, maybe down a little bit, other than we are adding -- we have added more employees to the company. So that, in and of itself, will drive up -- will increase our healthcare costs, but we have some special health situations with certain individuals that really drove up the kind of anomalies, if you will, unfortunate anomalies, I would add.

Ryan Kenny -- Morgan Stanley -- Analyst

Got it. And then on the $8.7 million increase from One SEI, just wondering if you could give an update on how you're thinking about the trajectory for the One SEI spend through 2021. I think you said before that it should start to come down gradually through the year so just wondering if that's still the case?

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Yes. So that was just -- it wasn't an increase. It was just how much we spent in the quarter, which was up slightly over third quarter, not -- I wouldn't say materially. But as we progress through this year, that's kind of -- the peak quarter was fourth quarter, and it will start to come down as we deliver finished activities from that work. And it won't go to zero the end of the year, but it will be significantly lower.

Ryan Kenny -- Morgan Stanley -- Analyst

Got it. Thanks.

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Yep.

Operator

[Operator Instructions] Looks like next, we have the line of Chris Donat of Piper Sandler. Your line is open.

Chris Donat -- Piper Sandler -- Analyst

Good afternoon guys. One for you and Al about the $8.8 million sales events. In Al's comment that it was a timing issue and not reflecting the sales effort. Should I read into that, that, so far, in January, sales events have been pretty good? Or is that the wrong conclusion to draw?

Alfred P. West -- Chairman and Chief Executive Officer

So rather than you read into anything, why don't we wait for Mr. Meyer to go?

Chris Donat -- Piper Sandler -- Analyst

Okay. I can wait.

Alfred P. West -- Chairman and Chief Executive Officer

Okay.

Chris Donat -- Piper Sandler -- Analyst

And then if I can try on another question, just following up on what Ryan was asking. Bigger picture for expenses and thinking about your 2020 expenses at $1.2 billion, should we expect something in that neighborhood for 2021? Or maybe a little less with less investment in One SEI? And I recognize sub-advisory is always going to be market dependent, but anyway, just help us think on the rest of 2021.

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Yes. So there are some costs -- variable costs associated with revenue. So you mentioned one of the key ones, which is sub-advisory expenses, which was one of the areas of cost increase in the fourth quarter. That's all good news, though. We want to see that. So as I look out for the rest of the year on expenses, I still kind of peg around kind of inflationary-type rates because we will have compensation inflation as the year progresses with our workforce, particularly as we had last year in that middle part of the year into -- going to the third quarter.

We are growing, particularly in certain business lines, that do then lead to some additional headcount. So I would say it's -- we'll get some offsets with the One SEI spend coming down. We also are capitalizing less of our development spend, which is -- so the net effect of that is -- gets to the expense line. We're doing a lot to try to work that down as well. I would like to sit here and say that we'll be -- we would be flat, but I think we'll still see some level of increased spending, but I wouldn't say it's -- there's nothing unusual in that.

Year-over-year expenses were -- total year for the company, we're pretty flat, up maybe 2% or so. So I think that's -- if we can accomplish that again, we'll be in pretty good shape. Our number one focus is get the revenue in and get it -- as much of it to the bottom line as possible. That's the goal. So that's still the goal.

Operator

And next we have the line of Robert Lee of KBW. Your line is open.

Robert Lee -- KBW -- Analyst

Great. Thanks. Happy belated new year everyone. Thanks for my question.

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Thanks, Rob you too.

Robert Lee -- KBW -- Analyst

Thank you. Just a quick one. It's probably incorporated into your order comments on expenses, but I quickly included relative as pretty decent increase in equity-based comp, maybe some changes next year. Maybe just quickly how we should be thinking about that, kind of what maybe drove that? And where -- how -- will that be flowing -- flow through the segments or kind of in corporate? Just trying to think of the geography of it.

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Yes. So option-based expense follows the people, so it would hit the segments as well as G&A because it follows the employee themselves who are -- who have been awarded option grants in the -- and the increase in option expenses is a function of a couple of things. One is, certainly, we do grant options as a general rule every December, and we went through that grant process this past December. So there's new options that have been granted are now in the expense number, and we do expect those to divest kind of on schedule as our option plan outlines.

We also -- as we talked about after the third quarter, we pushed out a year vesting estimates on one particular tranche. So that just has the effect of extending the expenses into the future. So that adds to that number. But a big part of it is the option grants will be made in our usual annual cycle, but it does follow the people. So it will show up in all the segments as well as G&A.

Robert Lee -- KBW -- Analyst

Great. And then maybe just a quick follow-up. I know that in the past, a lot of your option grants have been partially kind of EPS driven. It's investing, how soon, how fast. I mean, I guess, we can wait for the proxy. But were there any changes kind of in the recent grants? Any color on kind of -- based in kind of earnings growth to kind of hit investing or accelerate investing?

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Yes. I usually like to wait till the proxy gets out there. But that being said, I'd say that our Board, when they look at the option grant process, that's really who -- that's the governing body that drives that. They -- that, as management, believes we are entering over -- we're already doing pretty well, I think, as a company. But over the next three to five years, we feel pretty bullish about our growth prospects, and they've set the vesting targets kind of in line with expectations on kind of near-term growth, coupled with longer-term growth expectations.

And I think our shareholders, as a general rule, if we hit those targets, they'll be satisfied and should be well rewarded in the stock price. The thing that is on top of our earnings goals, however, just emphasizes our option grants vest in 50% chunks, but they can vest no sooner than two years for the first 50% and four years for the second 50%. So we still have that kind of two year, four year minimum vesting cycle in addition to that, but then they don't vest at all if we don't hit the EPS targets.

Robert Lee -- KBW -- Analyst

Great. Great. Thanks, Dennis.

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Okay. No problem.

Operator

At this time, we actually have no further questions queued.

Alfred P. West -- Chairman and Chief Executive Officer

All right. Well, with that, I'll turn it over to Steve, and he can answer Chris Donat's question. Steve? Steve, are you still on?

Operator

It looks like Steve's line has dropped, and he'll be reconnecting just shortly for us.

Alfred P. West -- Chairman and Chief Executive Officer

Okay. Sorry about that, everyone. If we can just hold on 30 seconds for Steve.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sorry about that. I got dropped off.

Alfred P. West -- Chairman and Chief Executive Officer

Yes. No problem. You're on. You can -- Chris Donat is waiting for your answer to his question.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

I heard that's up. I appreciate it. So thanks, everybody. Sorry for the delay. Good afternoon, everyone. 2020 was a challenging year across our industry and the world due to the pandemic. But despite this challenge, we were able to continue to drive momentum in new business events, client expansion, implementations and our growth strategy for private banks. The fourth quarter and annual 2020 numbers and comparisons are listed in our earnings release for your review, so I'll only highlight a couple of key areas in the financial results.

Specifically, fourth quarter 2020 revenues totaled $119.7 million, which was up approximately 1% compared to the fourth quarter of 2019 and up 4.2% versus the third quarter of 2020. This was primarily due to onetime revenues, along with an increase in recurring revenues from increased assets. We do not expect the majority of the onetime revenues to repeat next quarter. Fourth quarter 2020 profit of $4.6 million for this segment was down slightly from the fourth quarter of 2019. This represents the absorption of previously announced losses, new revenue generation and a modest increase in expenses. Fourth quarter 2020 profit compared to the third quarter 2020 profit was up about $2.9 million, mainly driven by our increase in both recurring and nonrecurring revenues.

And turning to sales activity. For the quarter, we closed $3.8 million of gross recurring sales events, which resulted in $2.1 million of net recurring events for our investment processing business, offset by a negative $1.1 million in asset management events. This offset from asset management brought our total net recurring events for the quarter to $1 million for the segment. Also in the quarter, we closed $1.2 million in onetime sales. Onetime sales for the year totaled $16.5 million and helped dampen the impact of lost business.

I'm pleased to announce that during the quarter, we signed an agreement with a new client, a large trust company headquartered in New England. We expect this client to migrate to SWP from a competitor platform in the second half of 2021. In addition to converting their wealth management business, the client will also be outsourcing their back office to SEI. They previously managed their operations in-house.

As Al mentioned, our sales results were a function of timing. After the quarter closed, but prior to this call, we signed three additional SWP agreements. The first is with a longtime TRUST 3000 client, Bangor Savings Bank. Bangor Savings, headquartered in Bangor, Maine, has been an SEI client since 2011, and we expect to migrate their TRUST 3000 business to SWP in the first half of 2022.

Next, we signed an agreement with a West Coast large community bank who will migrate to SWP from a competitor platform in the first half of 2022. As we continue our One SEI strategy, we believe this firm has an opportunity to leverage additional SEI platforms and solutions and is currently evaluating SEI's asset management distribution product for the benefit of their business and their clients.

Finally, we are pleased to announce that we signed an agreement with another new client, UMB, United Missouri Bank, to migrate their private wealth management book of business to the SEI Wealth Platform. Headquartered in Kansas City, UMB is the second end-to-end assessment and decision-making process to be fully completed in a remote environment as our engagement began after our offices had gone to a work-from-home model as a result of COVID-19.

We are proud of the way both organizations were able to virtually come together to conduct and execute a meaningful business agenda despite the challenges brought forth by the global pandemic.

As Al referenced, this is an example of us changing our mental models, in this case around sales, which bodes well for the future. We are excited to work with all these firms as they migrate toward the SEI Wealth Platform and look forward to supporting their future growth initiatives.

These three clients are not included in our Q4 sales events and will be included in our first quarter events. From a global perspective, we continue to see expansion and growth in the U.K. from the Fusion-Schroders migration and continued progression with the HSBC implementation. As an update on our backlog, our total signed but not infilled backlog is approximately $70.5 million in net new recurring revenue at the end of the fourth quarter.

Turning to implementation activity. In the fourth quarter, we successfully converted Edward Jones Trust Company from TRUST 3000 to SWP. Edward Jones has been an SEI client since 2001. I'm happy to report that this is another client who we successfully brought live in a 100% remote environment.

From an asset management standpoint, total assets under management ended the period at $25.5 billion, representing a 9% increase from the third quarter of 2020. Our AUM increase was due to market appreciation. Our cash flow for the fourth quarter of 2020 was a negative $456 million.

As we move into 2021, our focus is on maintaining our strong momentum and to continue growing our business, bringing on new clients, expanding with existing clients, and entering new markets. We will also focus on driving scale in our business as we push toward providing a sustainable and accelerating margin growth. We will continue to manage through headwinds as we enter the year, but we'll do so with a focus on the future. We are excited and optimistic on our growth opportunity.

That concludes my prepared remarks, and I'll now turn it over for any questions you may have.

Operator

[Operator Instructions] It looks like we do have the line of Ryan Kenney of Morgan Stanley. Your line is open.

Ryan Kenny -- Morgan Stanley -- Analyst

Hey Steve, how are you?

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Good, how are you Ryan.

Ryan Kenny -- Morgan Stanley -- Analyst

Good. Just on the backlog, I think I heard $70.5 million is where it currently stands. I just wanted to get an update in terms of the timing, how much you expect to come through this year versus next year?

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yes. So, I think right now, looking at it. And again, this is a number somewhat moving. But right now, as we look at the backlog, about 58%, 60% of it's going to fund within the next 18 months, and the remainder will fund after that 18 months, probably the following 18 to -- past 18 to about 24, 26 months.

Ryan Kenny -- Morgan Stanley -- Analyst

Got it. Thanks.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sure.

Operator

Next with the line of Chris Shutler with William Blair. Your line is open.

Chris Shutler -- William Blair -- Analyst

Yes, Steve, good afternoon.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Good afternoon Chris.

Chris Shutler -- William Blair -- Analyst

On the three wins that you announced that were not in Q4, that will be in Q1. Can you give us a sense of how large those are on a recurring revenue basis?

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yes. So, if you take all three together, we're talking probably just under $7 million in recurring -- net recurring revenue. But we have a lot going on in Q1 positive wise as well as some potential headwinds. So, there's a lot of activity in motion that can impact the number. But -- so we have more work to do, but what I'd say is we're off to a good start.

Chris Shutler -- William Blair -- Analyst

All right, great. And I know you gave the onetime revenue in the quarter? Was it $1.2 million or was it $2 million? I didn't catch that number.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sure. It was $1.2 million in onetime for the quarter, 16.5% for the year.

Chris Shutler -- William Blair -- Analyst

Got it. Okay. Thanks a lot. I'll hop back in queue.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sure.

Operator

Next, we have Robert Lee, KBW.

Robert Lee -- KBW -- Analyst

Great. Thanks for taking my question. Hope all is well.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sure, Rob. Hope all is well with you.

Robert Lee -- KBW -- Analyst

All good. Thanks. Just curious. So I mean, two of the three that you signed subsequent to start of the year, our existing clients. I mean, can you just kind of talk a little bit about with the taking on the SWP platform, were those generally kind of revenue enhancing? Or is the kind of revenue flat? I mean, just kind of how you and the kind of revenue flat, how you kind of expect those relationships to evolve maybe first question?

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yeah. So you're a little unclear here, Rob. I think what you said is, so of the three signings post the quarter end, actually, one of them was an existing TRUST 3000 client, two were new to SEI, and what I'd say is my -- obviously, with the one the move from TRUST 3000, SWP was a net up in moving to SWP and the other ones were obviously at our market reach. So I'd say from a revenue standpoint and where they are, to start was kind of where I thought they would be. And as I mentioned, I think we have aspirations that we can grow with these clients.

Robert Lee -- KBW -- Analyst

Okay. Great. And just maybe on to the asset management business programs within the segment. I just want to make sure I heard right. Cash flows were minus $460 million.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

$456 million negative.

Robert Lee -- KBW -- Analyst

Okay. Just kind of curious, I mean, can you -- I think you maybe touched on it, but can you just update us on a couple of the initiatives under way in that part of the business away from SMP. I know there were some -- some new things in past years. So I'm just trying to get kind of an update how things there?

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yeah. So listen, I think, obviously, that business, we provide a program for mainly our banking clients. And we're part of an overall program of these banks. So we're a piece of it. I think that has been under a little pressure this year as banks have decided to move money either into cash or to other places or other parts of their program. So that is obviously reflected in the net negatives we've had. And I think ongoing, I do think during the year, though, we did have -- we didn't lose one client during the year. We did have new clients that helped mitigate some of the outflows. But I think, obviously, the concern with that a little bit is we're part of a program. We don't control the whole program. So as banks change either their strategies or their programs, that's obviously something strategically we look at because it would be positive for us or negative.

So I think there's been a number of initiatives as well as another new programs that we've launched this year. But obviously, the outflows have weighed them down. But it's something, we're hoping that as the market continues -- will continue to be a bigger part of the overall bank's programs with these. But obviously, if they decide strategically to do something else, that could have a negative impact on us.

Robert Lee -- KBW -- Analyst

Great. And if I could just throw one more at you.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sure.

Robert Lee -- KBW -- Analyst

You've also kind of talked about kind of reinvigorating kind of the U.K. business. I think if I'm not mistaken, maybe you did some change in personnel there year past year or so. Can you maybe update us on kind of what you're seeing there, how you feel about that part of the business, which, I guess, at this point, maybe about 10 years ago, kind of got you off the ground, but it's more dormant here?

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yeah. So what I'd say is, I think that when I look across all the businesses, the U.K. was probably impacted the most from the pandemic from a slowdown of sales. So while the pipeline still remains active, it's obviously slowed very significantly. There are several deals that we are working through the pipeline on, and I'm encouraged by them. And I'm encouraged by the size of the pipeline we have and the additions we're making. I guess, the one caveat is it's just taking a lot longer. A lot of the initiatives have slowed and/or they haven't stopped, but they've delayed. And with the pandemic going on a little bit more severely over in the U.K., I don't think that's going to fall out really in this quarter. It will probably take another quarter or two, I think, before we start to see -- and this is industrywide, start to see more activity.

Robert Lee -- KBW -- Analyst

Great. Thank you for taking all my questions. Appreciate it.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sure, Rob, no problem.

Operator

Next, we do have the line of Owen Lau of Oppenheimer. Your line is open.

Owen Lau -- Oppenheimer -- Analyst

Thank you. Good afternoon, Steve. Sorry. I lost my connection a little bit. If you have addressed that, I apologize for that. So it looks like you controlled the expense quite well given your revenue growth in the fourth quarter. And we caught -- you mentioned that you will continue to make investments, but it will tail-off in the second half of 2021. Is there any change in that time line? Thank you.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yes. No, Owen. There's no change. Listen, we're going to still make investments, and we feel good about how we've managed expenses. I think, as Dennis said, as we continue to grow, there might be more expenses we add. But as I've started to say in past quarters, we're really starting to focus on the scale of this business, and we're looking to drive a more sustainable and accelerating margin level. So we will look to manage our expenses as well as reduce our expenses where we can, and that will be one of our priorities for this year.

But the one thing we won't do is, manage expenses to the extent where it would hurt revenue coming in. Obviously, if we have a number of large deals we're working on and if they were to happen, we would certainly support them with any new business, new people, new expenses we needed to. But I feel that where we are in the track record of expense kind of from Q3 to Q4, that's what we can expect going forward.

Owen Lau -- Oppenheimer -- Analyst

Got it. And then another quick one. Could you please comment a bit on your strategic partnership with Canoe Intelligence? How big do you see the opportunity in the family office space and then the next step of this strategic partnership? Thank you.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sure. So just one clarification, so Canoe is part of a strategic partnership we formed with our family office services, formerly known as Archway, and that rolls up in our investment management unit. But I'll answer the question here. Just wanted to make that clear to everybody. So it is a partnership that we feel helps expand, certainly, our reporting and aggregation capabilities. That's a widely used system and capability in the industry and it feels it just gives us more power to our platform. So it's something that we felt that we needed to do will help us continue to support the growth we've seen and future growth down the road.

Owen Lau -- Oppenheimer -- Analyst

Okay. Thank you. That's it for me.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Great. Thanks, Owen.

Operator

And next, we have the line of Ryan Bailey, Goldman Sachs. Your line is open.

Ryan Bailey -- Goldman Sachs -- Analyst

Good afternoon, Steve.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Good afternoon, Ryan. How are you?

Ryan Bailey -- Goldman Sachs -- Analyst

Good. Thanks. I'm just wondering if you could talk about the addressable market for the segment and your thoughts around expanding into the RIA space. I was just wondering how you think about timing of when that could start contributing to the sales pipeline?

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yes. So I think the market listed. It's still -- I think the market we have both in the U.S. and the U.K. is still active. I think it's smaller than I would like, especially when I look at it compared to some of our other markets like in IMS. And one thing, we've started to do, obviously, is start to branch that out to more of a wealth manager-based approach. The large RIA initiative we have could give us upwards of 1,800 new prospects that we could go after. We've actually started to already prospect in that space, and we're hopeful that this year, it will help drive some of our sales.

Ryan Bailey -- Goldman Sachs -- Analyst

Got it. Thank you.

Operator

And at this point, we actually have no further questions queued.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Great. So with no other questions, I'll turn to the Investment Managers segment. The 2020 marked another strong year of growth and momentum for Investment Managers across the business, including in our results, sales, expansion with clients and execution of our growth strategy. Revenue for the fourth quarter of 2020 of $129.6 million was 13% higher as compared to our revenue in the fourth quarter of 2019. Profit for the fourth quarter of the segment of $49.4 million was 17.6% higher as compared to the fourth quarter of 2019.

Third-party asset balances at the end of the fourth quarter of 2020 were $760.4 billion, approximately $30 billion higher than the asset balances at the end of the third quarter of 2020. This increase was due to market appreciation of $36.3 billion, offset by net client fundings of a negative $6.3 billion. The negative fundings this quarter were due to new client fundings being offset by one client shutting down a product line and liquidating their fund complex.

Turning to market activity. During the fourth quarter of 2020, we had a strong sales quarter with net new business events totaling $9 million in recurring revenue as well as a record quarter recontracts of $43 million in recurring revenues. These events included the following highlights: In our alternative marketing unit, we closed a number of strategic new names, while sales to existing clients continue to be robust, as these clients continue to launch new products. SEI was selected to provide fund administration for several new credit fund launches for a $200-plus billion global alternatives manager, demonstrating our industry-leading platform and continued commitment to the growing private credit space.

SEI was also selected after an extensive RFP process by a $20 billion private equity for our first time outsourcer for full fund administration. In our traditional market unit, we had another strong quarter in our collective investment trust business. We also had continued success executing on our growth strategies, adding new and existing clients onto our data aggregation and middle office services platform, all of which is consistent with our land and expand strategy.

In Europe, we added several new names, including our top 10 global financial institution in the fourth quarter. In our family office services unit, we released a comprehensive technology upgrade to the industry-leading Archway Platform, the upgraded platform provides the foundation for rapid innovation within the Family Office Technologies segment. In addition, family office services continue to see steady demand in the single-family office segment with the signing of multiple new sales events. Our backlog of sold, but unfunded new business stands at $38.6 million at the end of the fourth quarter.

As we progress into 2021, we will continue to focus on our growth strategy and look to continue our strong momentum in new sales and expansion with existing clients. We will also look to continue the expansion of our platform, primarily into the front office with our investor platform, which we believe will provide an additional source of growth. We remain optimistic and excited about our growth opportunities.

That concludes my prepared remarks, and I'll now turn it over for any questions you may have.

Operator

[Operator Instructions] Looks like first, we'll go to the line of Robert Lee of KBW. Your line is open.

Robert Lee -- KBW -- Analyst

Hi, great. Thanks Den and Steve. In a margin question, I mean, margin, 38%, probably by my records, kind of maybe even an all-time high. I'm not sure -- and I do know what balances around, but it kind of feels like it's been running toward the high end of where you have historically? I mean, how should we be thinking of kind of margins going forward? You've always kind of running this 35%, 36% range. Is that still what we should be thinking? Or are you kind of reaching a new level of scale at an should be somewhat higher?

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yes, I'm going to sound like a broken record here, Rob. So I feel comfortable with the business in that 35%, 36% in the mid. And I've always said it will bounce around a little bit. I am more comfortable when you look at it year-over-year. And if you look at it year-over-year, it's still in that 36% range. I think, Q4, we did a good job managing expenses. I think there was a number of factors in that, including some expenses that did not repeat from Q3 and some investment downtick. But part of the key for our continued and sustained growth in this business, which I think is the key that we're looking for banking as well, is we've always looked to expand out to future markets, expand out our solution, invest in our solutions and platform.

And we'll continue to do that. And with that continued investment spend, which, again, we don't capitalize, we expense, that will mute down the margins a little bit. But will we get a couple of quarters? And can we start to tick up a little bit here and there? Yes. And I think when we asked this -- if you were to ask this and look back five years ago, I kind of caveat it in the 34%, 35% range. So I do think there's a progression. I just don't think it's as big as a progression as we saw this quarter.

Robert Lee -- KBW -- Analyst

Okay. Fair enough. And can I ask you just to repeat, you mentioned what your comments around the client liquidation. I missed the comment on the first part of it.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

So if you look for the first time that I can remember, we had kind of a negative net events on the asset growth side. And we did have positive client fundings this quarter, but they were wiped away by one client who had a specific target date fund family really targeted to one client, and they, for strategic reasons, shut that down. So those assets going out was what caused the negative client fundings.

Robert Lee -- KBW -- Analyst

Okay. Got it. Thank you.

Operator

At this time, we have no further questions queued.

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Great. With that, I'll turn it over to Wayne to discuss the advisor segment. Wayne?

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Thanks, Steve. The world headlines for 2020 was the coronavirus. The 2020 headlines for the SEI Adviser segment were the incorporation of digital advisory recruiting in response to the pandemic, a further opening of our platform to third-party investment brands and added flexibility in our pricing model and the way we engage advisors. The financial results of this segment with numerical comparisons to last year are included in the press release. Color explaining some of those numbers include fourth quarter revenues rose due to positive capital markets, partially offset by negative cash flow.

Expenses were down and margins were up due to onetime savings, mostly related to the pandemic. Ongoing operational expenses were pretty much awash with both increases and decreases most notably an increase in direct costs due to asset valuations and a decrease in our technology spend. During the quarter, we had $245 million in negative net cash flow out of SEI-managed assets and a positive $160 million in assets under administration. Total platform assets stand at $87 billion. Of this total, $75 billion were assets under management.

While cash flow into our bundled pricing assets under management was negative, cash flows into our newer unbundled pricing products was strong. During the quarter, we recruited 78 new advisors, our best quarterly performance of the year. Our pipeline of new advisors remains active. For 2021, we will concentrate on four main areas. First, we will continue to enhance our technology platform to provide a compelling front-to-back business platform. We view our single-source, completely integrated front-to-back platform as a differentiator.

Second, we will continue to broaden our investment platform to include non-commoditized components with examples being direct indexing and tax management overlays. Third, we will educate advisors on the applicability and benefits of both our historical investment management products with bundled fees and our newer unbundled fee products. Finally, in response to advisor needs, we have realigned our sales force to ensure adequate focus, accessibility and contact with advisors, seeking our capabilities to assist with their growth agendas.

I now welcome any questions you may have.

Operator

[Operator Instructions] First, with the line of Ryan Kenny with Morgan Stanley. Your line is open.

Ryan Kenny -- Morgan Stanley -- Analyst

Hi, Wayne. Good afternoon.

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Good afternoon.

Ryan Kenny -- Morgan Stanley -- Analyst

So just hoping if you could give some more color on the advisor recruitment strategy. I know before COVID, a lot of it was done face-to-face, and then it turned virtual. So just wondering what the appetite is to stay digital and virtual post vaccination? And if there is an appetite, would there be any material expense benefit you could save prolonged into next year? Thanks,

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

I guess, the way I'd answer is there may be some expense benefit, but that's not really our focus. I think we will continue with the methods we're using now and what they primarily are is when you look at the early parts of the sales process, we can make them national in scope as opposed to geographic in scope. And as we conduct recruiting events, we can more finally segment the clients as to what they're looking for as opposed to just what geography they happen to be located in. So that, I believe, makes us much more effective in recruiting advisors, and I expect that will continue more because I feel it's more effective than -- because of the pandemic or the existence of the pandemic.

Ryan Kenny -- Morgan Stanley -- Analyst

Thanks. That's helpful.

Operator

Next, we have the line of Owen Lau of Oppenheimer. Your line is open.

Owen Lau -- Oppenheimer -- Analyst

Thank you. Hi, Wayne. I just have one quick question. Your comment about the revenue was up year-over-year, but expense was down. You mentioned a onetime saving due to the pandemic. Can you please quantify for us? Is it just fair to say that the delta between 4Q 2019 and 4Q 2020, it's kind of the saving we should think about? Thank you.

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Yes. I think that's a fair comment. I think you need to look at the fourth quarter of 2019 as much more indicative of the operating expenses of the unit with the one modification being as our assets under management increase, our direct cost line increases, but we're seeking savings in other areas. But that delta, I would say, between those -- to what has gone up in our operating expenses compared to two years, we saved it in the onetime savings.

Owen Lau -- Oppenheimer -- Analyst

Got it. And then with the vaccine, would that change your view that the expense may go up in 2021? How should we think about the impact of the vaccine distribution on advisors? Thank you.

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Yeah. I would not say -- I do not expect the expenses to go up because the -- we're back live in person. I mean, obviously, things like travel and perhaps conducting events, live events, the cost of that associated, but we're structuring and conducting virtual events and expense associated with them, and we'd like to -- we don't want to save money by not doing events. We just want to spend the money on virtual events as opposed to live events. So I would not -- there will be some increase. But I think the increase in expenses will be largely due to the increase in the assets we manage.

Owen Lau -- Oppenheimer -- Analyst

Got it. It's helpful. Thank you very much.

Operator

Next, we have Robert Lee with KBW. Your line is open.

Robert Lee -- KBW -- Analyst

Thanks. Hey, Wayne, how are you?

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Great.

Robert Lee -- KBW -- Analyst

Good. A couple of questions. First one, and I apologize if you had mentioned it, kind of, advisor headcount, new signings in the quarter. And then maybe a second question is, as you kind of -- I think it would be helpful to, kind of, at least for me, to kind of get a sense of how do we think of the revenue dynamics between bundled versus unbundled in the sense of -- are you talking about having good flows in your unbundled services versus the bundling services being negative? How do we think about revenue dynamic between the two? I mean, is it negative, even wash? I'm just trying to get a sense of how to think of the -- yeah, the moving pieces underneath these business shifts.

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Okay. I think your first question, Rob, was new advisor. The number was 78. I think the more in-depth question is how do you think about the pricing of the unbundled products? I would say, generally, and I'm generalizing, the unbundled products all-in are less expensive and lower sources of revenue than the bundled products. And I think that's a reflection of investor and advisor needs. And I think, as we go out, to educate advisors as to what fits best for them, an unbundled pricing product is a little bit harder to explain, and it has more moving parts. Bundled is much simpler and straightforward. But you are correct, we are seeing more growth in the unbundled pricing model, and the revenue recognition rate is a little bit lower, to be direct with your question.

Robert Lee -- KBW -- Analyst

And maybe since I'm just being a little slow. I mean, obviously, bundled is pretty easy to centralize. So if I'm thinking of an unbundled investment product, at least for me, it may be helpful just, kind of, what's been kind of a popular product where you see traction with and maybe a little bit of how that pricing works, just to understand it better.

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Yeah. So I mean the easiest example and one of the very successful products, I would say, is an ETF wrap program, where the pricing of the underlying investment implementation, if you will, kind of the beta generation, is embedded in the ETF, which is not an SEI product. We use a multitude of third party. We pick, which -- whether it be iShares or Vanguards, whatever it is, and we assemble that.

And then we tried -- we unbundled the price, and we'll charge a portfolio-level fee, that is the asset allocation, the tax management, the cost of the technology, the operation, the custody, that sits on top of that -- as opposed to -- if you go into our mutual fund wrap program, all of it's bundled into the mutual funds. Does that clarify?

Robert Lee -- KBW -- Analyst

Yes, it does. Thanks.

Operator

Next, we have the line of Chris Shutler of William Blair. Your line is open.

Chris Shutler -- William Blair -- Analyst

Hey, Wayne, I just wanted to follow-up on that last one. On -- can you give us a sense, like rough averages, how different the pricing is, unbundled versus bundled? Is it like 5%, 10%? Or is it materially more than that?

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Yeah. I think it's probably more like 20%.

Chris Shutler -- William Blair -- Analyst

Okay, got it. And then just on

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

What I would just sort of put that in -- I mean, the unbundled EPS product has been around for five years. I mean, what you see is kind of reflect -- as we migrate to that, it kind of smooth into the numbers you see.

Chris Shutler -- William Blair -- Analyst

Yeah. Okay. And I think this is sort of in line with the pricing question, but I think in this business as well as maybe in the Institutional Investors business. There's been some benefit over time from increased adoption of alternatives. Is it -- maybe just refresh my memory, actually, has that been a benefit in your business that's helped the fee rate? Or is that just in the institutional business?

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

What I would say, that is primarily in the institutional business. Well, it's not in my business. Let's put it that way. It's in the institutional business. And one of the major factors there, you need to understand in my business, to the extent, 90% of the advisors are affiliated with broker-dealers. The broker-dealers own the compliance oversight, and alternatives complicate that job for them.

Chris Shutler -- William Blair -- Analyst

Yeah. Okay, that all makes sense. Then just, lastly, on the -- you talked about tax management overlays, direct indexing. Just remind me what kind of the timing of that rollout is?

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Well, the direct indexing product is rolling out in two weeks.

Chris Shutler -- William Blair -- Analyst

Okay.

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

So the initial direct indexing product will have tax loss harvesting and a negative ESG option built into the core product. And what comes out, and I think it's February five or something. I don't know the exact date, but it's around there. And then tax loss -- active tax loss management is something we will incorporate into the direct indexing product later in the year.

Now we already have that incorporated into our active management SMA. But if you think about it, if you can take tax-active tax loss management and put that into a passive portfolio that makes it much more valuable. So, you don't have to pay for the active component and the tax overlay. You can just say, I just want the beta and then tax loss manage it for me.

Chris Shutler -- William Blair -- Analyst

Yeah, makes sense.

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

I mean, you can't do that when you own an ETF, because you own a basket security, you don't know any individual names like you do in direct indexing.

Chris Shutler -- William Blair -- Analyst

Understood, understood. Sorry, just one more quick one, just on expenses, Wayne. Is Q4 a good jumping-off point?

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

No.

Chris Shutler -- William Blair -- Analyst

Maybe could you just elaborate on that?

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

I think that there's a lot of what I would consider non-recurring savings in Q4 this year, so I would probably say -- I don't want to commit the expenses, but I'd probably look at Q4 last year as being more indicative.

Chris Shutler -- William Blair -- Analyst

Of where, of the -- what the jumping-off point should be? Okay, got it.

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Yes.

Chris Shutler -- William Blair -- Analyst

Okay. Thank you, Wayne.

Operator

And next, we have Ryan Bailey of Goldman Sachs. Your line is open.

Ryan Bailey -- Goldman Sachs -- Analyst

Good afternoon, everyone.

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Hi, Ryan.

Ryan Bailey -- Goldman Sachs -- Analyst

I was just wondering if you could help me think about the flows that are coming into the unbundled option or the AUA. Is that from existing advisors who are in the bundled option and kind of shifting assets across, or is this completely new advisors? Do you have any sense of, I guess, the mix of what's driving that growth?

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Yeah. I would say that it is about 50-50, but our objective here is the asset management world has changed. And we're trying to put at both our advisors and the clients and the products that make sense for them. And if that means shifting from the bundled to the unbundled, that's fine by us. We'd rather get them in a better solution. So -- and then it's also very appealing to new advisors. So currently, it's about 50-50 between existing and new.

Ryan Bailey -- Goldman Sachs -- Analyst

Got it, OK. And I guess for the existing base, I'm not sure how much insight you have into this. Is it they're bringing across new accounts? Are there sort of new money that's coming in? Or is it more of a conversion?

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

It's a little bit of both. I mean I think that they're not bringing new accounts on to the platform until they convert the existing book into the new philosophy, one way to think about it. So this is setting us up for more growth with them.

Ryan Bailey -- Goldman Sachs -- Analyst

Got it. Okay. All right. That makes sense. And then on the AUM side, we've kind of moved through some of the initial curve volatility. And it sounds like the digital marketing strategy is sort of taking off. I was wondering like do you feel that the flows are going to turn more positively on the AUM side into '21? Or is it kind of closer to flattish over the near term?

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

No. I feel more positive about going into 2021.

Ryan Bailey -- Goldman Sachs -- Analyst

Okay. All right. And that's -- is it largely because curve is behind us, and it's sort of operating other things? Or is there a driver?

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Yes. I mean I don't want to -- don't take this the wrong way. I don't want to say it's because COVID's behind it. I think that we've adapted to the new digital world, and we've learned by it. And I think that now we have a model that makes a lot of sense. And now -- it may get modified going forward, but we have some things now. You just kind of work better that COVID forced us to adopt.

Ryan Bailey -- Goldman Sachs -- Analyst

Got it. Okay. That makes sense. Thank you.

Operator

Next, we have Robert Lee of KBW. Again your line is open.

Robert Lee -- KBW -- Analyst

Great. Thanks for taking my follow-up. Wayne, I just want to kind of make sure I'm understanding the minus $245 million negative cash flows. Is that just bundled? Or is that kind of -- if I'm looking at bundled and unbundled, combined, total cash flows in the -- between the AUM and AUA in the segment? Is that the right way to think about it?

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Yes. Both the AUM and the AUA numbers I gave you are the entire totals for the unit.

Robert Lee -- KBW -- Analyst

Okay. All right. Got it. And then I'm just kind of curious, sticking with the unbundled theme, I guess, on the call. How do you think of that kind of when you're talking to existing new advisors about your capabilities? And obviously, you've been doing the ETF program for a while now. But how do you position that competitively? Is it performance versus other kind of -- other services out there, whether they're kind of robo services, if you will, or modeled portfolios? I mean how do you position that to be differentiated from -- with other programs your advisors could do elsewhere? I mean is it just performance really driven?

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Well, it's actually the opposite. I think that, as you unbundle it, it allows you to sell the individual components -- individual value proposition of each component as opposed to want to see whether -- do you want everything on the left side of the menu? Do you want to pick what you want? I mean -- so do you need tax overlay? Okay, well, that's unbundled. Do you need ESG overlay? That's kind of unbundled. If you want the various components of it, we can unbundle. And they can pick and choose what they consider valuable and what they're willing to pay, so it just makes it much more customized for them. It's in keeping with kind of the overall theme of everything, which is mass customization at both the investor level and the advisor level.

Robert Lee -- KBW -- Analyst

Okay. Appreciate it. Thanks.

Operator

At this point, we have no further questions queued.

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Okay. With that, I will turn it over to Paul.

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Thanks, Wayne. Good afternoon, everyone. I'm going to discuss the financial results for the fourth quarter of 2020 as well as the entire year. Fourth quarter 2020 revenue of $82.3 million increased 2% compared to the fourth quarter 2019. Full year revenue of $317.6 million decreased 1% compared to 2019. Market appreciation positively impacted revenue, while net client losses was the primary detractor. Operating profits for the fourth quarter 2020 were $45.5 million, 8% higher than the fourth quarter of 2019. 2020 full year profits were $167.7 million and were flat compared to 2019. Higher capital markets and lower operating and travel expenses were positive to profit, offset by net client fundings. Operating margin for the quarter was 55% and for the year was 53%. Quarter end asset balances of $97.2 billion reflect a $7.1 billion increase versus the fourth quarter of 2019.

Net asset events for the fourth quarter were a negative $300 million. Gross sales were $1.4 billion, and client losses totaled $1.7 billion. Total new client signings for 2020 were $5.4 billion, which represents $12.8 million in revenue. This was accomplished predominantly in the virtual environment. Fourth quarter new sales were diversified across U.S. endowment and foundations, healthcare and U.K. wealth management. The client loss numbers for the quarter and the year were primarily driven by acquisitions, DB terminations or curtailments and unsuccessful rebids of competitive tenders.

The OCIO marketplace is extremely competitive and client rebids are common, so we anticipate client decisions to continue. This should also be a tailwind for new signings. The unfunded client backlog at year-end was $500 million. Finally, our focus in 2021 will be to continue to diversify new business growth out of the U.S. defined benefit market for OCIO, actively demonstrate our value proposition to current OCIO clients and market extensively in order to close larger investors for our new ECIO, Enhanced Chief Investment Officer, offering. We also look at both organic and inorganic opportunities to fuel future growth.

Thank you very much, and I'm happy to answer any questions you may have.

Operator

[Operator Instructions] First, we go to the line of Ryan Kenny of Morgan Stanley. Your line is open.

Ryan Kenny -- Morgan Stanley -- Analyst

Hey, Paul good afternoon.

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Hi, Ryan.

Ryan Kenny -- Morgan Stanley -- Analyst

So I just wanted to get an update on the strategy. So maybe starting on the geographic side, I know you're mostly in the U.S. but also have a sizable book in the U.K., Ireland and Canada. So I just want to get a sense of where you see the growth going forward from that lens and how big the appetite is to expand more broadly into other regions?

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Sure. So as you indicated, the big segments are U.S., Canada, U.K., South Africa and then a little bit nominal in the Far East. So we have different growth strategies for each one of the subcomponent markets. And then in the subcomponents, some of the niches, like endowments and foundations in the U.S., are certainly big plays. We see growth in the U.K. with regard to continued evaluation of fiduciary management. We see growth with the consolidation of Master Trust in the DC marketplace in the U.K. We also see opportunities across the globe with our new initiative, ECIO, which is really spearheaded and targeted to very large, sophisticated investors that we introduced on the last call. That is probably about 1,400 suspects globally that represents about $25 trillion of potential assets.

And again, that's a technology and non-fiduciary service integration and helping their staff be more efficiently. So that's -- the good news is those types of investors are diversified around the globe, and we would see that as a key strategy. We are evaluating again a more larger commitment in the Far East, and that's something, I think, as a company, we need to evaluate as opposed to just the individual segment. So hopefully, that answers your question, Ryan, about some of the focus globally.

Ryan Kenny -- Morgan Stanley -- Analyst

Got it. That's helpful. And then just from a product lens, are there any capabilities that you feel like you would benefit maybe from more scale or as an add-on?

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Yes. We think from an OCIO perspective, from a product lineup and from a capability, we are one of the largest in that marketplace and viewed as a kind of best practice in that marketplace. So other than a couple of small components of different types of alternative launches that we normally would do, we don't think we have a product efficiency. One of the issues we have, which others have, is with such a crowded space, we have an issue of differentiation. When you have 80 different players who are in the space, it's hard for the consumer to distinguish from that vast number of competitors. So consolidation would help.

Certainly, we spend an exhaustive amount of time with our clients and getting client referrals and client references because those are key to getting new business opportunities. On the ECIO, we think we have a full suite of capabilities from a technological perspective, but there are things that we're looking at externally that might help augment the suite. And that's something that we'll continue to do as we roll out that new initiative to those do-it-yourself investors.

Ryan Kenny -- Morgan Stanley -- Analyst

Thanks.

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Thank you.

Operator

And next, we have Robert Lee of KBW. Your line is open.

Robert Lee -- KBW -- Analyst

Hi, Paul. How are you doing?

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Hey, Robert. How are you?

Robert Lee -- KBW -- Analyst

Good. Thanks. Actually, same question I asked Steve on Investment Managers and on the margin. I mean 55% may be running around the all-time high, if my numbers are correct. I mean, certainly, you've had very healthy margins here for a while. But was there anything we should think about that was suppressed maybe expenses in the quarter? And what's -- how should we think of it going forward kind of -- you've been in this kind of 51%, 52-ish type range. Is that the right way to think of it for a while?

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Yes. I would say outside of just great leadership, Robert, some of the realities of that profit margin are the markets. The markets clearly exploded in the fourth quarter. Obviously, it exploded in the third quarter. The way we recognize revenue in our group are four periods. So for the fourth quarter, it would be September 30, October 31, November 30, December 31. All four of those periods were high watermarks in those respective months. So that was a real positive. And consequently, the revenue increased fairly dramatically. And in fairness, most of that was market related, not kind of new initiative related. Now we're starting the year with a nice base.

It looks like January will be a nice month as well, so we're off to a good start, at least from that component. The expenses are down. And like my other colleagues, expenses are down because of travel, not that we're not trying to travel. But the vast majority of our clients and prospects want to experience virtually. So historically, we've spent about $600,000 a quarter in travel. We've really not spent much of that over the last three quarters. We would anticipate not really spending much of that in the first two quarters. But at some point, we will head back to the clients because they will want us to head back. But the way we'll do it is measured, and we'll do it differently. We may not have to send as many resources in the various geographies.

We do think virtual will always be an aspect of a delivery for institutional investors. It might not be the only aspect, but it will probably be a critical aspect. So, visiting clients five or six times a year may not be as necessary in the future the way it was in the past. So I think the margins, to get back to your original question, low 50% area is probably a more kind of normalized margin range. And this quarter was certainly an extension for those reasons I noted.

Robert Lee -- KBW -- Analyst

Great. Thank you for taking my questions. I apologize for the parking in the back.

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

So, no problem.

Operator

Next, we have the line of Chris Shutler of William Blair. Your line is open.

Chris Shutler -- William Blair -- Analyst

Hey, Paul, I just want to put a finer point on that question around margins or expenses. Similar question what I asked Wayne. But is the -- if we look at the Q4 expense number, is that a good jumping-off point for 2021? And I ask because, if you look back, I think over the last five years, typically, other than last year where expenses were down just slightly into Q1. Sequentially, in the other four years, I think they were down $2 million, $3 million, $4 million sequentially. So just how to think of, I guess, Q4 into Q1, excluding any kind of change that might have to do with the markets.

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Yes. So as far as expenses, I would say, like Wayne had answered a year ago, expenses are probably closer. It's probably not that high. It's probably a little bit lower than that as far as a jumping-off point. Fourth quarter, again, there's a lot of savings there with respect to client events and client travel that we wouldn't estimate. It may continue in the first and second quarter, but we would not estimate that, that would be kind of a normalized kind of run rate what we're seeing in the fourth quarter. So we had a little bit of a comp reduction in the fourth quarter as well that we would expect, and we hope will not normalize or will not be the same in 2021 with being able to close more business and paying more sales comp. So, I would say it's probably not as high as a year ago, but it's probably closer to a year ago fourth quarter than it is to the current fourth quarter.

Chris Shutler -- William Blair -- Analyst

So the sales comp reduction in Q4, how much was that?

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

It was probably small. $250,000 wasn't a big number.

Chris Shutler -- William Blair -- Analyst

Okay. Got it. Okay. Thank you, Paul.

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Yes.

Operator

And next, we have Owen Lau of Oppenheimer. Your line is open.

Owen Lau -- Oppenheimer -- Analyst

Thank you. Hi, Paul.

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Hi.

Owen Lau -- Oppenheimer -- Analyst

I just want to go -- so I just want to go back to the enhanced CIO. I hear you that the opportunity is just huge in this space. But could you please give us a bit more color in terms of the marketing transaction? Have you started generating any revenue yet? Or any other feedback from your clients or prospects?

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Yeah. So Owen, we have not generated any revenue yet. We're actively in the market. We have talked to many suspects. We have converted many suspects to prospects, and some of those prospects are getting into a finer evaluation of our overall capabilities. As I indicated, it is different than investment management. It is an administrative platform that is coupling technology and non-fiduciary services. And it is a method to help those chief investment officers become more efficient and more effective at effectuating their kind of internal investment process. So OCIO takes the place of the CIO. ECIO helps the CIO be more efficient. We would expect it to be basis points. We have every belief in our marketing efforts of charging basis points. The yield with respect to basis points will probably be different in ECIO, where it might be in the 20s to low 30s. For OCIO, it's probably in the high single-digits to low teens for ECIO, but that will make up its sales force in scale because we're going to be dealing with multibillion-dollar organizations.

So to date, we're really excited about a lot of the work that we've done. We've hired some dedicated people focused exclusively on the marketing efforts. We've done a lot of enhanced digital marketing. We found that CEOs want to talk, which is great, and they're very comfortable in having virtual meetings. And now it's just a question of kind of converting those prospects to clients and moving more suspects to prospects.

Owen Lau -- Oppenheimer -- Analyst

Got it. Just final one. Based on your progress so far, do you have any expectation when you can start generating revenue from that? Or you're not ready to kind of talk about that for now? Thank you.

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

I would love to give more specifics, as Steve did with some post-quarter deals. I don't have that yet. So I think I'd be remiss to give a specific time frame, but we're working as hard as we possibly can to get those deals over the goal line.

Owen Lau -- Oppenheimer -- Analyst

Got it. Thank you very much, Paul.

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Thank you.

Operator

At this time, we have no further questions by phone.

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Okay. I would like to turn the call over to Kathy Heilig, SEI's Controller.

Kathy C. Heilig -- Chief Accounting Officer & Controller

Thanks, Paul, and good evening, everyone. I have some additional corporate information regarding this quarter. In fourth quarter, our cash flow from operations was $93.4 million or $0.64 a share bringing year-to-date cash flow from operations to $488.7 million or $3.28 per share. Fourth quarter free cash flow was $76.6 million, and year-to-date free cash flow was $410 million. For the fourth quarter, capital expenditures, excluding capitalized software, were $11.3 million, which did include $2.3 million for facility expansion. Year-to-date capital expenditures, excluding capitalized software, were $54.4 million with about half of it relating to the facility expansion. We project our 2021 capital expenditures, again, excluding capitalized software, to be about $21 million, which does include about $6 million relating to the facility.

We also would like to remind you that during today's presentation and in our responses to your questions, we have made certain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our notice regarding forward-looking statements that appears in today's earnings release and in our filings with the Securities and Exchange Commission. We do not undertake to update any of our forward-looking statements. And now please feel free to ask any other questions that you may have.

Operator

[Operator Instructions] And it looks like we do have a question from the line of Chris Shutler of William Blair. Your line is open.

Chris Shutler -- William Blair -- Analyst

Hi. Just a couple of final ones on expenses, if you don't mind. First, just to confirm, Dennis, in your initial comments, I think you said to basically expect low single-digit base expense growth in 2021, excluding any changes in sub-advisory. Is that correct?

Kathy C. Heilig -- Chief Accounting Officer & Controller

Yeah. I'm trying to be cautious on this because, as we know, things change pretty -- it can change pretty quickly. So I think --

Chris Shutler -- William Blair -- Analyst

Yeah. I think without the markets, how do we think about it?

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Yeah. I think that's a fair guess.

Chris Shutler -- William Blair -- Analyst

Okay. And then just to confirm that, call it, 2%, 3%, whatever the number is, does that include the increase in stock comp that you're projecting? Or does it exclude that?

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

It would exclude that.

Chris Shutler -- William Blair -- Analyst

It would exclude that. Okay.

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Yes, yeah.

Chris Shutler -- William Blair -- Analyst

And then just lastly, I just want to confirm on the SEI -- the One SEI spend, I know you said it won't be zero by the end of the year. But should we expect it to basically be pretty close to zero in 2022?

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

It will be -- again, I hate to go out on a limb, because technology folks have -- and solution development folks have a great way of finding additional things to do. But I would say, it's -- the most comfortable I am in saying it'll clearly be below half of what it is now

Chris Shutler -- William Blair -- Analyst

Okay.

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Between half and more than half.

Chris Shutler -- William Blair -- Analyst

Okay. Thanks a lot. I appreciate it.

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Yeah. No problem.

Operator

And at this time, we have no further questions queued by phone.

Alfred P. West -- Chairman and Chief Executive Officer

Very good. This is Al. So ladies and gentlemen, we're fighting on two fronts: first, the COVID pandemic; and second, growing revenue and process during the disruptive times. On the first front, we were very fortunate to have planned well and been able to keep our workforce healthy and productive; and on the second front, despite short-term headwinds, momentum is building throughout our business segments. So that ends our call. Please be safe and remain helpful. Have a great day. Thanks for attending our call.

Operator

[Operator Closing Remarks]

Duration: 79 minutes

Call participants:

Alfred P. West -- Chairman and Chief Executive Officer

Dennis J. McGonigle -- Chief Financial Officer and Executive Vice President

Stephen G. Meyer -- Executive Vice President and Head of Global Wealth Management Services

Wayne Montgomery Withrow -- Head of Independent Advisor Solutions and Executive Vice President

Paul Francis Klauder -- Head of Institutional Group and Executive Vice President

Kathy C. Heilig -- Chief Accounting Officer & Controller

Ryan Kenny -- Morgan Stanley -- Analyst

Chris Donat -- Piper Sandler -- Analyst

Robert Lee -- KBW -- Analyst

Chris Shutler -- William Blair -- Analyst

Owen Lau -- Oppenheimer -- Analyst

Ryan Bailey -- Goldman Sachs -- Analyst

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