SEI Investments Company (SEIC) Q1 2021 Earnings Call Transcript

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SEI Investments Company (SEIC 0.18%)
Q1 2021 Earnings Call
Apr 21, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the SEI First Quarter 2021 Earnings Call. [Operator Instructions] Now I will turn the conference to our host, Chairman and CEO, Al West. Please go ahead.

Alfred P. West -- Chairman and Chief Executive Officer

Thank you, and welcome, everyone. All of our segment leaders who are on the call as well as Dennis McGonigle, SEI's CFO, and Kathy Heilig, SEI's Controller. I'll start by recapping first quarter 2021. 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. As usual we will field questions at the end of each report.

So let's turn our attention to the financial results of the first quarter 2021. First quarter revenue grew 10% from a year ago. And first quarter earnings increased by 19% from a year ago. In addition, first quarter EPS of $0.89 grew 24% from the $0.72 reported in the first quarter 2020. Finally, first quarter asset balances grew by $3.4 billion, while LSV's balances grew by $7.9 billion. During the quarter, we repurchased 1.2 million shares of SEI stock at a price of $58.11 per share. That translates into $66.9 million of stock repurchases. Also in this quarter, we continued our investment into growth-generating initiatives. The newest effort is One SEI, which is a large part of our growth strategy. As you all will recall One SEI leverages existing and new SEI platforms are making them accessible to all types of clients, all adjacent markets and all other platforms.

Turning to revenue production. Net sales events in private banks and investment managers were $17.5 million of which $13 million are expected to be recurring. On the other hand, net sales events of a negative $12.7 million incurred in the Asset Management related units of Investment Advisors, Institutional Investors and banking's AMD. In a few minutes, unit heads will provide more detail on their specific sales results and their new business opportunities.

To grow and prosper in the future, we know that things will never be the same. So we have been busy adopting new middle models and realities. One such new reality is a remotely distributed workforce. We have been planning how we work in the future and are acting on these plans.

Fortunately, we have a lot of positive momentum moving in 2021. Currently, we have a strong backlog of sales and conversions, and a number of key prospects laid in the sales process. We have also made progress in strategically repositioning our Asset Management-related business segments. We are poised and ready to capture the opportunities inherent and significant change.

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

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

Thank you, Al. Good afternoon, everyone. I'll cover the first quarter results for the investments in the business segment and discuss the results of LSV Asset Management. During the first quarter of 2021, the investments in new business segment activities consisted of the operation of our Private Wealth Management group, 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 $9.5 million, which compared to a loss of $11.4 million during the fourth quarter of 2020. Approximately $7.5 million is tied to our One SEI effort. Regarding LSV, our approximate 39% ownership contributed $33.4 million in income to SEI for the first quarter. This compares to a contribution of $30.6 million in income for the fourth quarter of 2020. Assets during the quarter grew approximately $7.9 billion, LSV experienced net negative cash flow during the quarter of approximately $4.8 billion offsetting market appreciation of approximately $12.7 billion. Revenue was approximately $110.8 million for the quarter with nominal performance fees.

Finally, our effective tax rate for the quarter was 22.6%. We have also included in our earnings release additional financial information, and if you have any questions on any statistics, Kathy will be available to answer them.

With that I'll take any questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question is going to come from the line of Owen Lau of Oppenheimer. Please go ahead.

Owen Lau -- Oppenheimer -- Analyst

Thank you. Thank you for taking my questions. So Dennis, with the vaccine, could you please give us an update on your operating model in 2021? How does the vaccine change your view about the T&E span, healthcare costs and other G&A spend for the rest of this year? Thank you.

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

Sure. So where we sit today, your travel is still very, very limited. In fact, it's -- we can count on one hand. Not only the number of trips people have made, but the number of trips people requesting to make. So it's a very limited amount of travel activity, but we certainly anticipate as we move through the year and I would say particularly the second half of the year after the summer, we might see a slight uptick in the travel activity because we are starting to get some requests for folks to travel. Now that being said, it's -- I would say that if it has any impact on expenses, it's really going to be modest overall. In terms of healthcare spending, really no trend change over 2020 per se, other than we have a slightly higher or larger workforce, which is in of itself would drive benefit costs up, but I think if you're asking really based on the kind of anomaly we had in the third quarter of last year, I believe it was -- that was really, I'd say, case specific with certain health issues with employees.

Owen Lau -- Oppenheimer -- Analyst

Got it. That's very helpful. And then you touched on LSV -- I got some numbers from the LSV as well. So, could you please give us a bit more color on this, because I think in the first quarter, the fashion [Phonetic] trend was quite strong, the growth to value trend was quite strong. Could you please talk about how sustainable that is and also how would LSV capitalize it's strength. Thank you.

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

Yes, I mean, there outperformance -- relative performance was strong, both exiting the year and in the first quarter. So the good news is the value trade has certainly helped them. But in addition, their position on the -- in the value segment of the market has helped them even further. Now time will tell whether that value trade is going to persist in this market this year and beyond. Yeah, they certainly are going to stick to their admitting as a value firm and if it does persist and their outperformance were to continue, that would only bode well for their ability to compete and win assets, but also if clients started to rebalance back toward value within their overall portfolio, that should help them as well.

Owen Lau -- Oppenheimer -- Analyst

Thank you. That's it for me.

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

Thanks. Owen.

Operator

Then our next question, we are going to go to the line of Ryan Kenny from Morgan Stanley. Please go ahead.

Ryan Kenny -- Morgan Stanley -- Analyst

Hey, Dennis. How are you.

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

Hi, great. Ryan how about yourself?

Ryan Kenny -- Morgan Stanley -- Analyst

Good, just a follow-up on LSV on the $4.8 billion of outflows, I want to get a sense of, was that more of a rebalancing issue or a lost client issue and how should we think about organic growth in LSV going forward?

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

Yeah, it was about 50-50, so about 50% was rebalancing and 50% was lost clients and mainly in the managed volatility product that in terms of the future. I mean, they had positive gross sales during the quarter, but again back to the answer I gave to Owen, I think that if the value trade persists and their outperformance adds to that. I think that bodes well for their ability to capture not only assets flowing back to them via rebalancing. But also yeah, one in searches when firms who are our clients look to find value managers to hire.

Ryan Kenny -- Morgan Stanley -- Analyst

Thanks. And then just a question on One SEI. I was wondering if you could give an update on the trajectory for that going forward.

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

Sure, so as we kind of look at the rest of the year, second quarter is going to look pretty close to first quarter. And that's kind of how we had it even planed, purchased it out last year and then we'll start to see -- and we saw a drop down from fourth to first, second quarters probably will be in the same range and could be a little bit higher than first, but not materially so. And then the second half of the year, third quarter, fourth quarter, we'll see additional step downs as we finish the work. Some of the One SEI work in terms of modernization is targeted at the client implementation later this year and we have to finish that work arguably in the second quarter. To get that the software releases and production. So there are well tested and embedded for the client. So we're on track and I think things are treading the way we had expected them to.

Ryan Kenny -- Morgan Stanley -- Analyst

Thank you.

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

You're Welcome.

Operator

And next we'll go to the line of Chris Donat from Piper Sandler. Please go ahead.

Christopher Donat -- Piper Sandler -- Analyst

Good afternoon, Dennis. Thanks for taking my question.

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

Hey Chris.

Christopher Donat -- Piper Sandler -- Analyst

Yeah, thanks. Just quickly, wanted to combine the two prior questions and thinking about your total expenses on a consolidated basis for the quarter. I mean given sort of like that, there should be a positive impact from One SEI decreasing over time, but probably higher expenses further out from some rebound in travel. Is it fair to think about the first quarter expenses as a reasonable run rate for the full year?

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

I think -- I mean, I think as we talked in the past. We'll see some inflationary growth as the year progresses. So the 1% uptick from fourth to first, I don't -- I think there'll be a little more pressure on expenses than that over the next few quarters. We are -- we have, as you'll hear from the unit, from Steve in particular, we have a pretty big backlog of clients to install. That will have some impact on hiring. I don't know the travel will really move the needle and kind of offset the ticked down and One SEI spend, I don't think travel will be that significant.

We did get a little bit of benefit in the first quarter on option expense. We had a couple of people leave and allow us to reverse some option expense. But, that being said, I think expenses will definitely -- I shouldn't say definitely. We expect on the tick-up as we progress through the year. but again our job is to continue to try to execute as best we can is to keep it -- keep our spending targeted at the right things, being as productive as possible, but without giving up some of the investments we think are critical to our future that will continue.

Christopher Donat -- Piper Sandler -- Analyst

Okay, Thanks very much.

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

Yeah.

Operator

[Operator Instructions] Next we'll go to the line of Robert Lee from -- one moment. Next we're going go to the line of Robert Lee from KBW. Please go ahead.

Robert Lee -- Keefe, Bruyette & Woods, Inc.

Great, thanks. Good afternoon, Dennis, how are you doing?

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

Great Robert, how about yourself.

Robert Lee -- Keefe, Bruyette & Woods, Inc.

Very good, thanks. Just kind of curious, at a higher level as you think about, not withstanding some spending. I think we all hope spending comes back on the travel or something similar in the second half of the year, but in a way -- but more broadly as you think about changing the business model and more of a distributed workforce, maybe it's too early, but if you have any kind of initial thoughts and how you think that plays out into over long term expenses, is that ---there is an opportunity here to diminish our real estate footprint or is the cost of kind of having supported disbursed sales force, kind of, pretty much offset any potential benefit, just kind of curious, your initial thoughts on it.

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

Yeah, the pandemic hit at kind of the wrong time relative to our own real estate planning, because we were about 75% done building a brand new building here and a new campus arguably, we call the North Campus. So we finished that building and it's ready to be occupied, the reason we've built that building was to eliminate couple leased facilities that we had in the Oaks area and we were able to do that. So we got rid of those leased facilities but all those people went home instead of to Oaks. So,

Robert Lee -- Keefe, Bruyette & Woods, Inc.

Right.

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

Because it's safe to say that we have plenty of capacity. So I hope in Dennis McGonigle's future, there is no longer the need to build another parking garage. We do expect the bulk of our workforce though over time to return to our offices around the globe. Let's focus on Oaks at a minimum enrolled that are more hybrid. So a few days a week type roles. So we will optimize our capacity as we kind of manage our workforce back to offices, provide them with a lot more employees with more flexibility in terms of own work environment versus just an office work environment. So I don't see our -- the cost change in much. Our lease space in our bigger offices, Ireland, UK, Indianapolis. We are leasing that to some clients and to the extend we get the end of leased terms and we don't need the amount of space we have, certainly we would have the options of just shrink. Right now, we are under reshow and are not really facilities that lend themselves to subletting. That's even awesome.

Robert Lee -- Keefe, Bruyette & Woods, Inc.

Okay, great. That was my question. Thanks so much.

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

All right. Thanks, Rob.

Operator

And at this time, I have no further questions in queue. Please go ahead.

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

Great, thanks. Before I turn it over to Steve. We would like to remind everyone that during today's presentation in our responses to your questions, we have and we will make certain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our notices regarding forward-looking statements that appear in today's earnings release and in our filings with the Securities and Exchange Commission. We cannot undertake to update any of our forward-looking statements.

With that I'll turn it over to Steve.

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Thanks, Dennis. Good afternoon, everyone. I'm going to talk about banking first and then as usual, I'll turn it over to Investment Managers. So let's focus on banking. During the first quarter, we continued our momentum in the market while also executing on our One SEI strategy and we're able to continue to prudently manage expenses which aided in the profit for the quarter. First quarter 2021 revenues totaled $117.6 million, which was up approximately 4% from the first quarter of 2020 due to higher recurring revenues. First quarter 2021 quarterly profit of $6.9 million for the segment was up approximately $4.3 million or 168% from the first quarter of 2020 and up 49% from the fourth quarter of 2020. This is primarily due to expense management.

And turning to sales activity, for the quarter we closed $8.7 million of gross recurring sales events, which resulted in $3.6 million of net recurring events for our investment processing business, offset by a negative $2.5 million in Asset Management events. This offset from Asset Management brought our total net recurring events for the quarter to approximately $1.1 million for the segment.

Also in the quarter, we closed $2.9 million in one-time revenue. While we are encouraged by the $8.7 million in gross sales events for the quarter and the momentum with new business that continues, we had to divest the headwind of an uptick in M&A activity in the industry, which negatively affected our sales total for the quarter. This is a headwind we will have to deal with this year as there are several other clients of ours who have been acquired. However, we remain very bullish on the new sales activity we continue to experience.

As previously announced on our fourth quarter 2020 call, we closed three SWP agreements in the first quarter, two of them new clients to SEI and one an existing client from TRUST 3000. I outlined the details of these events on the previous call but to summarize these new sales included Bangor Savings Bank, TRUST 3,000 clients since 2011, who will convert to SWP in 2022. A West Coast large community bank will migrate to SWP from a competitor platform in the first half of 2022 and who is also a candidate for 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 products.

And finally our third signing was with another new client UMB, United Missouri Bank, who will migrate their Private Wealth Management book of business to the SEI Wealth Platform late this year. We are proud to welcome UMB to the SEI family. Additionally, for new sales in the quarter keeping our One SEI approach in the forefront, we were able to cross sell our Archway Platform to one of our long-term TRUST clients as well as cross-sell additional services to several other clients, including an upsell of components to a client who is migrating to SWP.

During the quarter, we also had six client contracts securing another approximately $9 million in recurring revenue. As an update on our backlog, our total signed, but not installed backlog is approximately $77.3 million in net new recurring revenue at the end of the first quarter. From an Asset Management standpoint, total assets under management ended the period of $25.1 billion, which was down 1.6% from the fourth quarter of 2020. Our cash flow for the first quarter of 2021 was a negative $885 million. The majority of this outflow is due to a single Asset Management client who had purchased one of our Asset Management products and decided to sell out of that product completely.

As we continue through 2021, our focus continues to be on maintaining our strong momentum in the market, continue expanding our business with clients and expanding into new markets to increase our opportunities. Key to this will be our One SEI strategy and being able to increase our growth opportunities by unlocking all the assets and platforms SEI has to offer across the Company. We will also focus on driving scale in our business as we push toward providing a sustainable and accelerating margin growth in the future. We remain excited and optimistic on our growth opportunity.

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

Operator

Thank you. [Operator Instructions] Our first question will come from the line of Ryan Kenny from Morgan Stanley. Please go ahead.

Ryan Kenny -- Morgan Stanley -- Analyst

Hey, Steve. How are you?

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Good. How are you, Ryan?

Ryan Kenny -- Morgan Stanley -- Analyst

Good. Couple of questions. First one on the $22 billion drop in AUA for Private Banks. Just wondering if we could get more color on that all from M&A, and how did that impact the forward look on revenues?

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yeah, that was a client who looked like -- it was a fund family, who looked more like an asset manager clients. So we moved that fund complex to IMS. So it's really just an internal move and it's with a lower fee product so there wasn't a great deal of revenue associated with it. From a servicing kind of lining up segment opportunity, it was better to go to IMS.

Ryan Kenny -- Morgan Stanley -- Analyst

Got it, thanks. And then just as a follow-up. Wondering if you could give an update on the competitive environment you're seeing with some of the other wealth management platforms out there, where are you seeing the most pressure and where are you seeing the most success?

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yeah, I would say, the competition is -- there is no notable change except people in our competition like competing, we see, which is nothing new to us. For the wealth manager out there, they are looking for a new platform and much more capability, we certainly hit that on all strides. I do see some smaller boutique providers coming in and providing bespoke offerings or going after a piece of the puzzle. But again I think we've designed our platforms and our solution to really address the whole puzzle for Wealth Management and with our One SEI strategy we're -- we'll be able to lean into that now and do it in a more staggered fashion to make it more digestible. But for us, we feel very well positioned, both here and overseas, with our capabilities and our platform and technology.

Ryan Kenny -- Morgan Stanley -- Analyst

Got it, thanks.

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sure.

Operator

And next we're going to go to the line of Robert Lee from KBW. Please go ahead.

Robert Lee -- KBW -- Analyst

Great, thanks. Steve, how are you doing?

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

I'm great, Rob. How are you doing?

Robert Lee -- KBW -- Analyst

Good, thank you. Couple of questions. The first thing is on your comments on industry M&A, there is some headwind there, I guess in the past, because the industry has been consolidating for years, I guess, but there has been -- I've always kind of felt that as much consolidation opportunity is there as risk, but I don't want to read too much into your comments but you kind of suggest that maybe right now what you see in front of you, you're kind of expecting there is -- more likely to lose some of the relationships due to M&A, or is that just trying to be extra cautious now? I am thinking about it.

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

I'd say rather a little bit of both. So listen, a number of our clients, and I think we've talked about this in the past, it's been in the press that they've been acquired. One was acquired by a competitor from overseas that's kind of lining up to come into the U.S. I don't feel very confident that we're going to keep that business. The other ones I just think where we see it trending, yeah, I think out of caution, I would say we're lining up thinking that most likely because of other priorities that the acquiring organization is most likely will not stay with us. But yeah, when you started off the commentary, M&A we've dealt with this in the past, it can be a benefit to us or it can be a headwind. Over the past couple of years we've had some M&A that's been very positive for us and unfortunately I think we're going to have a couple of that are going to be negative for us this year. That's going to be a headwind, but I view it as a temporary headwind. That does not take away or distract from the momentum we have and I think quite frankly, my view of it is even if we do not retain a client from the acquisitions that gives us another prospect to go after in a larger way.

Robert Lee -- KBW -- Analyst

Okay, great. And then maybe -- maybe it's because of the pipeline, I mean, do you have any sense -- I mean, interest rates go up, bank earnings should go up, private costing can go up roads, so yes, bank earnings generally seem in better shape versus kind of a year ago potentially. So do you see that translating at all into your pipeline like bank that they are engaging more, they seem more willing to start spending some of the money or at least they feel more willing to kind of engage and think about change and change in technologies?

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yeah, it's a great question, Rob, and I'll put it like this. We see a number of forces coming to bear that I believe is causing managers, not just banks, but wealth managers across the board to relook at their business model and I think it goes well for us. I think you've heard us say time and time again before disruption in this business usually works out for us and presents opportunity. The pandemic has been a big disruption. I think this is causing a lot of people to reconsider outsourcing and strengthened the outsourcing position. You certainly have interest rates and the capital banks being in a better position. But the other pieces, many of these who are large wealth managers and banks know that they need to make a decision and need to upgrade their technology to drive scale and execute on their strategic plan. Many of them have pushed that decision and I think we're getting to an inflection point now where that pushing up the decision cannot be pushed anymore and I think this is why we leaned in with this One SEI strategy. One of the benefits of that is we can make our very powerful transformative solutions more digestible and enable to do this in steps. And I think that will play well as these forces come together.

Robert Lee -- KBW -- Analyst

Thank you. And if I can just probably two little numbers, I think I just missed on the the asset manager contribution in the quarter and then the one-time revenues were those both negative and positive 2.9 and are now breaking down?

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Well, I think the Asset Management, as it was said, were down to cash flow $885 million. And what was your other one, Rob?

Robert Lee -- KBW -- Analyst

Of the one-time revenues were...

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

One-time revenue, it was $2.9 million, but also if you're asking for Asset Management, as far as sales, is that what you're asking?

Robert Lee -- KBW -- Analyst

Yes. Yeah.

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

So, the sales were around negative $2.5 million. So it was negative $2.5 million that went against our growth of $8.7 million.

Robert Lee -- KBW -- Analyst

Okay, great. Thank you so much.

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sure.

Operator

Next, we're going to go to the line of Ryan Bailey from Goldman Sachs. Please go ahead.

Ryan Bailey -- Goldman Sachs -- Analyst

Hi, Steve. How's it going?

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Good. How are you, Ryan?

Ryan Bailey -- Goldman Sachs -- Analyst

Not so bad. Thank you. So I just had a quick question on some of the implementation and work for the backlog. So it looks pretty healthy, the growth in the backlog, quarter-over-quarter. As we look through the course of the year, how are you thinking about that getting implemented and how that can contribute to revenues?

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

So I am thinking about doing it on time. Right now we have people scheduled and we're in line. Things progressed, we didn't have any final implementation scheduled for Q1, but we do have other scheduled throughout the year. If you look at the backlog now, and I've been giving this kind of 18-month kind of parameter, right now about 61%, and the last time we talked, it was around 50%, up 61% is probably due in the next 18 months and the remainder after 18 months, probably more in the 24 to 26-month period. And we're looking to keep that on track. Could some of it push? Yeah, I don't think materially we're working with clients that might have more troubles or slow down on their side getting implementation, downstream implementations, on their side, but for the most part, I think we're in -- in fact we're on time.

Ryan Bailey -- Goldman Sachs -- Analyst

Got it, OK. All right. That makes sense. And maybe just a separate one and to the degree you can talk about a specific client, I'll give it a shot. I was just wondering, one of the drivers you have been talking about the business has been, your Asset Management and Wealth Management sort of coming close together and SEI being at a competitive advantage with that, I was just wondering with Wells and sale of -- majority sale of their asset management business, how that impacts your relationship with them? And what sort of an act we have going forward?

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yeah, so I don't think it changed our relationship with them. Obviously, Wells is going through their own rationalization and working on their business. We have a very close relationship and close contact with Wells. We knew about they were going to be divesting of that business. We serviced some of that business, but it's not a majority of the business and we don't think it will have a material impact on our revenue. But we're still focused and ironically, we think this is good for us because Wells is normalizing and rightsizing their business for the future and I think once they do that and get to -- and if they are getting to a good spot, we'll be able to engage them on how SEI can continue to support them and increase our support and business with them.

Ryan Bailey -- Goldman Sachs -- Analyst

Awesome. Can I sneak one more in?

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sure.

Ryan Bailey -- Goldman Sachs -- Analyst

I was just wondering about the -- I think you said that you upsold a client who is converting from TRUST 3,000 to SWP. I was just wondering if you can give us a little bit more detail there and maybe what components that was, how much of an increase in the revenue?

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Are you talking about the cross-sells, Ryan?

Ryan Bailey -- Goldman Sachs -- Analyst

Yeah, I think so. Yeah, yeah.

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yeah. So obviously, I'm not going to get into the client, but what I'd say is, and I think this is an important factor, before you've heard us talk a lot about new business, but we didn't spend much time on cross-sells. As I told you, part of our strategy, and we overuse it here with land and expand. But one of the key points of our One SEI strategy was to unbundle parts of our platform so people could digest and move quicker. And during that process, as we got to sign in, if there was opportunity to up-sell them or add other functionality. For example, in this case, to add front office capabilities because they were just focused either on the back or middle office, that will be an opportunity, and that's what happened in this case. And we do think as we lead in more, there'll be more opportunity for us on this, on clients that are converting as well as new sales that we have. So we view that as a very positive move forward for us. It gives us another lever to pull with as we expand and grow the business.

Ryan Bailey -- Goldman Sachs -- Analyst

Great. Thanks, Steve.

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sure.

Operator

And at this time we have no further questions in queue.

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Okay, so I'll -- with no questions, I'll turn it over to Investment Managers segment. So turning to the Investment Manager segment, during the first quarter, we continued our momentum in this segment and saw strong growth from both new clients and expansion with existing clients. For the first quarter of 2021, revenues for the segment totaled $136.4 million, which was 17% higher as compared to our revenue in the first quarter of 2020. Profit for the first quarter for -- profit for the first quarter for the segment of $53.4 million was 26.1% higher as compared to the first quarter of 2020. Third party asset balances at the end of the first quarter of 2021 were $831.8 billion, approximately $71.4 billion higher than the asset balances at the end of the fourth quarter of 2020. This increase was due to net client fundings of $38.6 billion as well as market appreciation of $32.8 billion.

And turning to market activity, during the first quarter of 2021, we had a strong sales quarter with net new business events totaling $9.3 million in recurring revenue as well as recontracts of $8.7 million in recurring revenues. These events this quarter were diverse and spanned our entire business. They were

Reflective of the current market dynamic which is highlighted by a larger amount of what we would call singles and doubles versus larger scale mandates, highlights of these events included.

In our alternative market unit, we closed a number of strategic new names, while sales to existing clients continue to be robust. SEI was selected to provide fund administration for several new hedge fund. SEI was also selected after an extensive RFP process by a $25 billion fund of funds to utilize the SEI trade platform. Momentum also continues in the private equity and private debt space and we continue to launch funds with both new and existing clients.

In our traditional market unit, we continue to add new business in all product lines with both new and existing clients consistent with our land and expand strategy. Two new client selected us to take advantage of our middle office services platform, a multi-fund complex joined our pioneering advisors in our circle, Oranj [Phonetic] platform and we also added a new ETF client to our turnkey advisors in our circle TRUST platform.

In Europe, we continue to have solid cross-sales. And finally, in our family office services unit, we signed multiple new names, single family office clients to the Archway platforms and continue to see strong demand from this industry vertical.

Our backlog of sold but unfunded new business stands at $35.6 million at the end of the first quarter. As we progress into 2021, we will continue to focus on our growth strategy and look to continue our strong momentum in the market. We have a strong pipeline across all segments, great momentum and a leading platform combined with exceptionally talented and experienced people. This combined with our continued execution of our strategy bodes well for the future.

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

Operator

Thank you. [Operator Instructions] Going to the line of Ryan Kenny from Morgan Stanley. Please go ahead.

Ryan Kenny -- Morgan Stanley -- Analyst

Hey Steve. Just want to get an update on how you're thinking about margins from here and how sustainable the 39% is?

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Thanks, Ryan. So margins, my view has not changed from -- I know I sound like a broken record. I feel comfortable with the margins in the mid '30s. As I said last -- I think it was last quarter, I can see that offsetting to 36 range. This quarter, we had a number of things, as I think, impacted the margin positively. One, we implemented a lot of new business and the labor market is a little tighter here. So we implemented a lot of the revenue, ahead of bringing in some of the resources for it. So our personnel expense was a little low compared to the revenue and well obviously -- that will, that will switch as we go through and switch certainly by Q2. Secondly, we had some, kind of one-time expense adjustments that helps us, some around compensation as Dennis mentioned that won't repeat. So I think if I took those out and look at the margin, we'd probably more -- and be more in the 36% range, which is again where, I feel comfortable with this business is at especially as we continue to invest and continue to build out our platform and solutions for sustainable revenue.

Ryan Bailey -- Goldman Sachs -- Analyst

Got it. And then just a question on digital assets. We've seen some announcements from a few investment servicers, over the last few months outlining plans to offer, servicing, accounting and custody of digital assets. I just want to get a sense of how that could potentially fit into your space and if you're seeing any demand from your customers to offer something similar.

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Yeah. So we've got you Ryan. We're already providing services for a handful of Crypto funds and it is something strategically we believe and we've already had discussion with numerous of our clients, that they have plans to set up funds around this. So it is something that strategically, we are on, obviously we don't provide custody, but we are obviously linked and integrated into custodians, but it is something we do think that we're going to have a larger servicing footprint on in the future.

Ryan Bailey -- Goldman Sachs -- Analyst

Great, thanks.

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sure.

Operator

And next we're going to go to the line of Robert Lee from KBW. Please go ahead.

Robert Lee -- KBW -- Analyst

Great, thanks. Hi again, Steve. Since you already gave us the pipe -- the backlog, I just want to paste one another quick question, just kind of curious, I mean, you see, there's obviously been plenty of M&A in the Asset Management industry to -- more so in the traditional versus alternative space certainly some there. Is there anything we should be thinking about, as that kind of plays out, that there is any kind of impact on the momentum in this business. Same like it's been and even just kind of curious to know your thoughts on the matter.

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

No, So I think Rob and I missed a little bit there, I kind of cut out. But dealers in the alternative side has been a driver for us as well as the industry for a number of years. However, what I'd say and I think we saw this toward the end of last year, our traditional business is resurging again and I think it's resurging for a number of reasons. The managers at space are under pressure as active management comes under pressure and they're rethinking their business model and how to drive scale. Outsourcing and the capabilities we have in the platform resonate very well when they're looking at that. If you look at this quarter sales, a good bit of it was our traditional business. So we're very happy with the progress. We see a huge need for our middle office services platform. We also see a need across our CITs and our EPS platforms. So that's an area that I expect good growth from this year. And I think as managers kind of rethink their business model. We stand in a good position to service them and give them an offering that will help them with that.

Robert Lee -- Keefe, Bruyette & Woods, Inc.

Hey, great, thanks for taking my questions.

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Sure.

Operator

And at this time we have no further questions in queue. Please go ahead.

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Great, thank you. I'll now turn it over to Wayne Withrow to cover the advisor segment, Wayne?

Wayne M. Withrow -- Executive Vice President, Independent Advisor Solutions

Thanks, Steve. During the first quarter of 2021, we continued execution of our strategy including improvements in our sales and marketing process to fit a virtual environment. We're offering a bundled fee and our new unbundled fee investment products. And continued enhancement and delivery of a completely integrated front to back office, technology platform including custody. First quarter revenues totaled $113 million, it's a 11% increase from the first quarter of last year, reflects the impact of AUM growth as well as lower fee rates on some of our products. Expenses were up compared to the first quarter of last year primarily due to an increase in direct costs and to a lesser extent, expenses associated with our purchase of the Orange technology platform. Same factors influence the expense increase in the fourth quarter of last year, as well as inclusion in the fourth quarter expenses of some non-recurring saving. Overall, the profit picture for the unit remained relatively intact, light pressure on our asset management revenue rate.

Assets under management rose to $77.4 billion at the end of the first quarter and total platform assets tended $90 billion. Market appreciation drove this increase. We did achieve strong cash flow growth in our newer unbundled fee products. But they were mostly offset by net redemptions in our older embedded fee the products, primarily in our actively managed Mutual Fund Wrap program. Total net cash flow for the quarter was $306 million. Of this total $125 million was in assets under management and $181 million was in assets under administration. We recruited 52 new advisors during the quarter.

During the quarter, we purchased the assets of Orange technology.This acquisition was in furtherance of our front to back office technology strategy. While the financial size of the transaction was modest, we feel the end investor collaboration platform we acquired is compelling and will unlock new opportunities for tech forward client engagement. We intend to fully integrate this platform into SWP and begin the rollout to our advisors in the second half of this year. In addition to this platform assets, the acquisition included a team of skilled cloud technology professionals. During the balance of this year, we expect to incur a $5 million expense increase as we integrate and roll out this platform.

While there still remains much to be accomplished, I feel we are making progress in that three focus areas. Evolving our sales and marketing process to fit today's digital world, designing and offering investment products responsive to today's investor and delivering a compelling front to back office technology platform incorporating custody. It is my opinion that achieving success in these areas favors companies with our skill set and asset.

I'll now welcome any questions you have.

Operator

[Operator Instructions] We are going to go to the line of Ryan Kenny from Morgan Stanley. Please go ahead.

Ryan Kenny -- Morgan Stanley -- Analyst

Hey, Wayne. How are you.

Wayne M. Withrow -- Executive Vice President, Independent Advisor Solutions

I'm great, Ryan. How about you.

Ryan Kenny -- Morgan Stanley -- Analyst

Good, just a question on that Orange acquisition. Wanted to get a sense of how it fits into your tech strategy in terms of what specifically it enables you to do that you weren't able to do before. And then from here, are there any other gaps and tack or capabilities that you're looking to fill in

Wayne M. Withrow -- Executive Vice President, Independent Advisor Solutions

What, the highest level -- Orange was an end investor collaboration pool, so we did not have a strong presence in the end investor collaboration tool. So, If you look at it in terms of specific functionality, things like account aggregation, digital document wall, secure messaging and collaboration between us and advisors and advisors and end clients, it functions such as that. It is also a completely cloud native technology platform and will be in the forefront of us moving all of our end investor technologies into the cloud.

Ryan Kenny -- Morgan Stanley -- Analyst

And then are there any other gaps or capabilities that you're looking to fill in from here.

Wayne M. Withrow -- Executive Vice President, Independent Advisor Solutions

Yeah, I mean I think when you look at it, we'll always going to --- we always enhance our end customer reporting and we expect it to be able to do that. If you look at the collaboration on the financial planning flat, how you can sort of review and modify financial plans in real-time as something we have on that roadmap. It's items such as that without, telling the world what our tech strategy is.

Ryan Kenny -- Morgan Stanley -- Analyst

Got it. Okay, thanks.

Operator

And the next we are going to go to the line of Ryan Bailey from Goldman Sachs. Please go ahead.

Ryan Bailey -- Goldman Sachs -- Analyst

Hi, Wayne. How is it going?

Wayne M. Withrow -- Executive Vice President, Independent Advisor Solutions

Hey Ryan. I'm sorry, I missed the number. Did you say for the AUM side you had inflows? Right. Total new assets in the platform were $306 million, the net cash flow of that total $125 million with assets under management and $181 million with assets under administration.

Ryan Bailey -- Goldman Sachs -- Analyst

Got it. Okay. I guess, just sort of a question as you think about the bundled versus unbundled approach. It seems like you're having -- you've had several quarters now of really good momentum on the unbundled or AUA approach. I was just wondering if you can help us think about why it might be that advisors are choosing the AUA approach over the AUM for you guys? Is it just sort of an investment selection decision, is there a pricing component to it at all, or even maybe something else I'm not thinking about.

Wayne M. Withrow -- Executive Vice President, Independent Advisor Solutions

Yeah, I think you hit all the high points. As you get down into the weeds, it is a little more complex than that. I mean some of the products, ones that are more expensive than existing products, I would say -- if you had it generalized, I would say the unbundled products are a little bit more expensive when -- excuse me, a little bit cheaper when you add all the components together. But some people prefer having the bundled price even if it is little more expensive. It just seems cheaper because it's not a whole [Technical Issue]. But the major difference, I think of the unbundled and bundled is that it allows you to put a -- to deconstruct the whole investment management process. So that if you want to try definitely for example for tax management, take that as an example, you can do that in unbundled structure where if every thing's bundled, you have to offer all the components of asset management together whether an investor values it or not. So take tax management be an easy example. If you have qualified money in tax management in the pricing of the bundled product, you pay for it even though you really don't need it. So this allows us to customize the pricing and the delivery of the products to what the investor really needs and I think that's what's resonating.

Ryan Bailey -- Goldman Sachs -- Analyst

Got it. That makes sense. And then I know I asked this question last quarter, but if I can ask it again, if you could do a sort of rough justice on the split of the AUA floors between sort of like new advisors versus existing, sort of converting existing books of business from AUM to AUA.

Wayne M. Withrow -- Executive Vice President, Independent Advisor Solutions

Yeah, I think right now the major growth is -- the majority of it goes to the new advisors at this point.

Ryan Bailey -- Goldman Sachs -- Analyst

Okay. Perfect. Thanks, Wayne.

Operator

And at this time, I have no further questions in queue.

Wayne M. Withrow -- Executive Vice President, Independent Advisor Solutions

All right, great. With that, I will turn it over to Paul to talk about Institutional Investors.

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Thanks, Wayne. Good afternoon, everyone. I'm going to discuss the financial results for the first quarter of 2021. First quarter 2021 revenue of $84.5 million increased 7% compared to the first quarter of 2020. Operating profit for the first quarter 2021 were $45.3 million and increased 11% compared to the first quarter of 2020. Both revenue and operating profit increases were due to market appreciation, positive currency translation offset slightly by negative client fundings. Operating margin for the quarter was 54%. Quarter-end asset balances of $99.4 billion, reflect a $19.8 billion increase versus first quarter 2020. This was due to the market appreciation.

Net sales events for the first quarter were a negative $2.7 billion. Gross sales were $1.2 billion and client losses totaled $3.9 billion. First quarter new sales were diversified across U.S and dominant foundations, governmental and healthcare. The client losses for the quarter were predominantly due to unsuccessful client rebids and DB curtailments. The OCIO market is highly intermediated and numerous OCIO search consultants are active and getting asset owners to evaluate their incumbent OCIO firm. We were impacted by this in the first quarter and it is likely this trend continues given our tenured client base, particularly in the corporate defined benefit market. The unfunded client backlog of gross sales at quarter end was $865 million. We continue to focus on stabilizing our client base, distinguishing our OCIO solution, selling new OCIO relationships and advancing our ECIO proposition.

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

Operator

Thank you. We're going to go to our first question from Robert Lee from KBW. Please go ahead.

Robert Lee -- KBW -- Analyst

Hi. Good afternoon, Paul.

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Hi, Robert.

Robert Lee -- KBW -- Analyst

I am curious. So, given the commentary around how heavily intermediary channel, I mean, I guess, in some way that's always been the case, but what's kind of changed, maybe more recently that seems like maybe there's some acceleration in the pace of activity, is it just coming out of the first half of last year, there was like maybe pent-up demand? I mean how should we think of that?

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Yeah, good question. The OCIO search consultants have kind of exploded over the last three or four years and certainly the velocity has increased even more in the last 12 months. What we witnessed last year in the first couple of quarters, in the second and third quarters of last year as most of our clients were just kind of entrenched in focusing on their own business and focusing on the risk management with respect to their asset pool, rightly so. But what also with Zoom and video and efficiencies unveiled was more time they had to maybe think about their incumbent provider and perhaps test the market, at the same time many of the search consultants were prodding into clients, our clients and other tender clients suggesting that proper due diligence and proper governance after some intervals, say at five years, seven years, whatever that they should go out and test the market. So it's been a little bit of a confluence of events in the sense that the clients have more time on their hand and maybe more efficiencies in their quarterly meetings and the service consultants have gotten more aggressive in their target.

Now, we're not anti-search consultants. We have a whole team focused, in both the U.S and the U.K around the search consultants, but we also believe that you have to give a OCIO firm an ample amount of time to prove value, to prove worth and just to go through due diligence -- for the sake of due diligence may save a couple of hours from a cost perspective, but might not bring the right value proposition. So we are in flight reminding all of our clients of that. The Zoom impact, we've lost a little bit of the human element. So while we haven't traveled as much. We do see that some of our clients are requesting travel and we're excited to be back in person because some of the human part of the client relationship we think is important, in addition to just the substance and the quantitative components that we deliver.

Robert Lee -- KBW -- Analyst

That makes sense. So maybe follow-up to that. So if there is a way to characterize -- when you -- even with the search -- intermediaries having their own agenda, more or less. Is there a way of characterizing when you do lose mandate, is it price, performance, a mix of the two, because it's anyway to kind of -- for us to kind of get a sense of, if you do something what tends to be the kind of tipping point?

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Yeah, when we see rebids, price is always a factor. So whatever we made in the past, we kind of know intuitively, we probably won't make the same in the future. So we address that in our rebid for the client phase. So we adjust price when we're actively trying to retain the client. That said, and I think I've mentioned this in the past, there are some OCIOs that are very predatory, with respect to price, where they're even bidding very low single-digit basis points and we spend a lot of time making sure the search consultant and the asset owner understands all costs, not just the OCIO fee, but all the cost of the implementation, which -- the bigger component is what the cost of the managers are and just having a simpler model, low cost model, doesn't mean it's a better model. So cost is a factor, back to your original question. Sometimes that might be the shiny new car. You go through, rebid and they have eight or nine firms that are presenting and they maybe click with the new team or there is a different relationship or there's other dynamics. One of the beauties of the business is being able to get assets over quickly. One of the negatives of the business is the business does not have long-term contract. So our contracts for 30 days and most OCIOs 30 days notice, so clients could move easily if they want to, not that it's not painless to move, but it's not like you're migrating technology or doing a whole large scale migration and moving from one OCIO firm to another OCIO firm. So all those factors are at bay now, with all that said, which is clearly a headwind from an existing client perspective, but also a tailwind from a new business standpoint and our new business trends have increased, our pipelines are increasing and our ability of attracting larger investors are increasing. So while we don't want to lose any client, we do think there's going to be trends continuing on our trial, but we also feel the velocity of selling new client is still going to be there as well.

Robert Lee -- Keefe, Bruyette & Woods, Inc.

Great. And if I could just ask one more question and I apologize...

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Sure.

Robert Lee -- Keefe, Bruyette & Woods, Inc.

For taking up so much time, but one of I guess your longtime competitors, I guess is Russell. I guess he is working with enabler viewers, Hamilton Lane, to be there, kind of, I guess, one of their sole providers, kind of private investing, private assets, I mean, I guess they maybe deciding to outsource that. I mean do you feel comfortable this thing that something if you look at the universe of your own capabilities that something you guys have thought about or thinking about, that maybe that part of your offering. There is somebody else you could team up or did u feel comfortable that you've got what you need in-house.

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Yeah. We have a very robust alternative offering and we've been a pioneer for number of years and now that we have endowments and foundations that are larger clipped, they're consuming alternative. So we're very comfortable with our alternative capabilities. We would always like to add more resources and more people that have expertise and we're looking at that and Kevin Barr has taken that responsibility. Within the investment management unit, quite simply what Russell did -- is there an outsourcer that just outsource their major asset class to another firm, so that the follows to be a little bit, that if you're picking a firm that can't do like core component of the asset classes, that are maybe the most important component, then why are you picking that from to be the outsourcer. So looking through the realities of some other things that are occurring with their business and I won't comment on that. Lee may be because they don't want to invest in the people and they rather just have a relationship or partnership.

Robert Lee -- KBW -- Analyst

Okay, great. Appreciate it. Thanks, Paul.

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Thank you, Rob. Appreciate it.

Operator

Next, then we'll go the line of Chris Donat from Piper Sandler. Please go ahead.

Christopher Donat -- Piper Sandler -- Analyst

Hey, Paul, how are you doing.

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Good, Chris. How are you?

Christopher Donat -- Piper Sandler -- Analyst

Doing fine. One quick question on the revenue yield as we calculated on average assets. It looked like it's ticked down about two basis points over the last year. I don't know if I'm looking at right now, itself is not a dramatic move, but I just wonder if you got any commentary on either you're mix shifting or pricing pressure or a lower mix of all this after the volatility or any dynamic going on that's affecting your revenue yield per average assets?

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Yeah, Chris, not necessarily a lower reduction in all alternatives. I mean like anything there is a rebalancing that we occur -- that incurs its kind of quarter to take it back in line with the Investment Policy Statement. So there might be a little bit of that but the participation in all of this continues to be consistent and in fact is probably actually increasing as we bring on more endowments and foundations. I would say the biggest thing on the revenue yield is the reality of either lost clients or rebid clients, so clients that we rebid that we keep, that we don't keep it the same rate that we had before.

Christopher Donat -- Piper Sandler -- Analyst

Got it, OK. Thanks, Paul.

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Thanks, Chris.

Operator

And our next question is going to come from the line of Ryan Bailey from Goldman Sachs. Please go ahead.

Ryan Bailey -- Goldman Sachs -- Analyst

Hi, Paul. I wanted to come back to some of the lost clients, so lost rebids, dynamic, when you tinker a bit of that shiny new call analogy. Do you find that your call it 12 to 24 months after a client leaves. Are you able to sort of like reengage with them and sort of win them back. Is that sort of like a blueprint that you could think about?

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

I wouldn't say 12 or 24 months. That would be awesome if it was that quick. That would probably be unlikely that they would pick somebody else and then move again in 12 or 24 months or if they made a really bad decision, that said your question is a great question. We keep a incubation program alive with our lost clients. In fact, there is two or three prospects right now that were clients that were lost more than five or seven years ago, that their program maybe is not working out as great as they had hoped, that we are reengaging with. So, I would say most asset owners that would take an OCIO firm unless something really went bad, it would be a very odd less than three years, it would be more normal, somewhere between five and seven years. And yes we do and try to keep connecting with lost clients. Of course, as you know, some of our lost clients are things that are actually they're just lost entities in the sense that the DB plan is going away. So they're not the assets go, the plan or the organizations don't exist, but there is not a DB plan any longer. So those can be reengaged, of course.

Ryan Bailey -- Goldman Sachs -- Analyst

Got it. That makes sense. On the ECIR opportunity, do you have a rough timeline for when you think you'll be out in the market and starting to generate some revenues

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Yeah. We're in the market, we're active. We have a number of prospects. We're optimistic that we can get some closes this year, hopefully sooner in the quarters then the later quarters, but we're also realistic to understand that any new initiatives, while we have passion and energy about getting things over the goal line, the institutional asset owners don't move as swiftly as we would like and that's just common. I started in the, what was called the manager group back in 1995 and I remember the early years, it took a while, it took us 18 months to get our first one over the goal line when we were selling manager. Managers now clearly environment's different now than it was then. But that said, even new initiatives take some time, there are some things that we're trying to offer as sweeteners, with respect to pricing and trying to get a longer-term contract that I can talk about when we do get one over the goal line. And there's also some things that we're going to continue to invest in and which we've already budgeted for in our P&L around front-end technology to make the user experience customizable and as efficient for these asset owners as possible.

Ryan Bailey -- Goldman Sachs -- Analyst

Got it. Makes sense. Thank you.

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Thank you.

Operator

Next we are going to go to the line of Robert Lee with KBW. Please go ahead.

Robert Lee -- KBW -- Analyst

Hi again, segment followup.

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

No problem.

Robert Lee -- KBW -- Analyst

So I guess, Paul, just kind of the, I guess the quarterly margin question. So margins will continue to maintain at a pretty healthy level and kind of maybe not at historic highs. Yeah, I guess that was last quarter but kind of certainly up there, so be given some of the, what is the pricing challenges and the business challenges, clearly, there's been some asset tailwinds which have held, but how should we be thinking of kind of margin progression from here, just given some of the headwinds you face and there'll be just simplistically assume markets and I use the word normalize, but however you want to define that. How should we think of progression from here is kind of 53 plus sustainable or should we think it introspect like a 51 kind of handle.

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Yeah so, Rob, I think I've messaged in the past, without question we've been aided by tremendous capital markets. I don't think 53%, 54%, 55% for the business and the headwinds is sustainable. It's probably more realistic that is closer to 50% and maybe toggles between say 49%, 50%, 51% some of that area. We don't necessarily and we don't as a business practice, we don't manage to a specific margin, the realities of client rebids and the lost clients and what goes out the door is far larger than what comes in the door. That said, more and more of the new clients are consuming alternatives, which is there a little better clipped. So I think a more longer-term run rate profit margin that's -- profit margin percentage that's closer to 50% and might spike down a little bit from there is more real estate. The other component, Dennis commented on, that I think you'll see our group return quicker is travel. We want to be in front of these clients, we want the human element, and there are some of our clients because they have these formal quarterly meetings, that require us or they are are asking us to come travel soon rather than later. Now that doesn't mean that we have to send multiple people in, but we want to be in front of them because we want to remind them of the value of the relationship. So you might see my group pick up the travel a bit quicker than perhaps some of the other groups.

Robert Lee -- Keefe, Bruyette & Woods, Inc.

Okay. Great, thanks for the refresher. Appreciate it.

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Thanks. Thank you.

Operator

And at this time, I have no further questions.

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Great. I'd like to turn the call back over to Al West.

Alfred P. West -- Chairman and Chief Executive Officer

Well. So, ladies and gentlemen, we are making progress on two fronts. On the first front, we are very fortunate to have kept our workforce healthy and productive, delivering a high level of client service throughout the pandemic. On the second front, despite short term headwinds, momentum is building throughout our business. Please be safe and remain healthy. Have a great day. Thank you for attending our call.

Operator

Thank you. [Operator Closing Remarks]

Duration: 70 minutes

Call participants:

Alfred P. West -- Chairman and Chief Executive Officer

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

Steve Meyer -- Executive Vice President and Head of Global Wealth Management Services

Wayne M. Withrow -- Executive Vice President, Independent Advisor Solutions

Paul F. Klauder -- Executive Vice President and Head of Institutional Group

Owen Lau -- Oppenheimer -- Analyst

Ryan Kenny -- Morgan Stanley -- Analyst

Christopher Donat -- Piper Sandler -- Analyst

Robert Lee -- Keefe, Bruyette & Woods, Inc.

Robert Lee -- KBW -- Analyst

Ryan Bailey -- Goldman Sachs -- Analyst

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