SEI Investments (NASDAQ:SEIC) reported what management called an “exceptional” fourth quarter, closing out what CEO Ryan Hicke described as one of the strongest years in the company’s 58-year history. Earnings per share were $1.38 for the quarter, and Hicke said that after adjusting for items CFO and COO Sean Denham characterized as “noisier,” the quarter represented SEI’s highest-ever quarterly earnings performance.
Denham said unusual items collectively reduced EPS by about $0.08, including $20 million of elevated corporate overhead tied to severance and M&A fees, partially offset by a $3 million tax benefit from purchased energy credits and a $3 million revenue accrual true-up in the Investment Manager Services (IMS) segment. Denham also cited favorable items that “went our way,” including LSV performance fees more than $3 million above the prior year at SEI share and a $4 million gain on variable interest entities attributable to the LSV hedge fund seed investment. He added that the Stratos partnership formally closed in the fourth quarter but contributed little financially because SEI only owned it for a few weeks.
Broad-based segment performance and margin commentary
SEI’s two asset management segments posted sequential growth from market appreciation and healthy flows in the advisor business, which management said offset client losses in the institutional segment and ongoing mutual fund outflows across the industry. Denham also noted that SEI’s integrated cash program contributed $21 billion to revenue in the fourth quarter, matching the prior quarter and prior year.
On consolidated profitability, Denham said operating margins were weighed down by severance and M&A costs in corporate overhead; excluding those items, consolidated operating margins increased significantly both year-over-year and sequentially.
Sales events led by Private Banking, with continued focus on alternatives in IMS
SEI reported total sales events of $44 million for the quarter, which Hicke said was among the company’s highest-ever quarterly results and capped its strongest year ever for sales events. Private Banking generated $28 million of net sales events, driven by two significant new mandates. Denham said the largest mandate includes SEI providing SWP software as a service, implementation services, and ongoing enterprise-wide professional services, representing SEI’s second SWP SaaS client. Management described an emerging trend of engaging clients earlier in an advisory capacity, which can lead to larger and longer-duration professional services engagements, while cautioning that large engagements can create quarterly variability and should not be extrapolated as a run rate.
IMS delivered $20 million of net sales events, with just over two-thirds coming from U.S.-based alternative managers. In response to analyst questions, Phil McCabe said the quarter’s IMS sales were a mix of new business and cross-sales globally and that nothing specific was “notable to call out,” adding that the pipeline remains strong. Hicke said SEI expects to provide a more tangible update by the April earnings call on progress with “a couple larger organizations” in IMS, following work SEI has discussed in prior quarters. McCabe said some of the potential wins involve “household names,” but added that the timing and magnitude depend on scope and invested capital.
Within the advisor segment, Denham said net events were flattish, but highlighted positive flow into SEI-managed ETFs from off-platform investors, which management tied to efforts to distribute SEI products through third-party models. The institutional segment posted negative sales events, primarily reflecting client losses in the UK, and Denham said leadership was streamlined and the cost structure reset to improve economics.
AUM and AUA growth, with advisor upmarket momentum
Denham said SEI posted sequential and year-over-year growth in both assets under administration (AUA) and assets under management (AUM). AUA increased 3%, which he attributed to strong win momentum and some market appreciation. AUM rose 2% on market appreciation that offset modest outflows, primarily in the institutional business.
Denham said focusing only on AUM growth understates progress in the advisor business. Over the past year, SEI has moved “further up market,” increasing the average size of advisors it is winning, and is seeing early success selling a broader ecosystem—including tax management and overlay capabilities—which he said drove an additional $2 billion of net new assets on the platform. Denham added that the advisor business delivered its best net inflow year in more than a decade.
Denham also discussed LSV, noting that LSV AUM increased 3.5% versus 2023 due to strong performance and market appreciation, offset by $3 billion of net outflows in the fourth quarter. LSV generated $22 million of performance fees in the quarter, or $8 million at SEI share.
Capital allocation, Stratos update, and near-term expectations
SEI repurchased $101 million of shares in the fourth quarter, bringing full-year repurchases to $616 million, which Denham said represents nearly 6% of total shares outstanding from the end of 2024. Denham said SEI completed the largest component of the Stratos acquisition with balance sheet cash and ended the year with $400 million of cash and no debt. He reiterated the company’s commitment to returning 90% to 100% of free cash flow to shareholders via dividends and repurchases.
On Stratos, Denham said SEI is not providing guidance on the run-rate impact for 2026, but noted that in the fourth quarter the business contributed about $5 million of revenue (in the advisory segment) and just under $1 million of operating income, which included nearly $2 million of amortization expense on acquired intangibles. He also cited about $300,000 of noncontrolling interest related to the 42.5% SEI does not own. Management said Stratos continues to pursue acquisitions; Denham noted that in early January Stratos acquired additional interests in some entities where it previously held minority stakes, and that additional acquisitions were planned.
Looking ahead, Denham reiterated that SEI does not provide earnings guidance but outlined factors affecting early 2026, including seasonality in the tax rate (typically lowest in the fourth quarter), LSV performance fees (typically highest in Q4 and lowest in Q1), two fewer days in the first quarter, and the likelihood that Q4-level gains on LSV investments will not repeat. He also said annual compensation increases take effect January 1 and that SEI is hiring to support pipelines and major wins, with depreciation and amortization expected to step up as investments are placed into service. As part of resource reallocation and efficiency efforts, Denham said SEI implemented a targeted reduction in force in December affecting approximately 3% of its global workforce, driving severance charges reflected in corporate overhead.
Hicke said SEI plans to “double down on what’s working” in 2026, including accelerating product launches across ETFs, SMAs, models, and select alternative products, and evolving IMS toward platform-level services with shared tooling, workflow automation, and data services. He also pointed to SEI’s investment in Avantos, described as an AI-native operating system for client onboarding. In closing remarks, Hicke noted that longtime executive Paul Klauder will retire in February after 30 years with the company.
About SEI Investments (NASDAQ:SEIC)
SEI Investments Company is a global provider of asset management, investment processing, and investment operations solutions. The firm offers a range of services designed to help financial institutions, private banks, wealth managers and family offices streamline back-office functions and enhance front-office capabilities. SEI’s technology platforms support various stages of the investment lifecycle, including trade execution, performance reporting, risk analytics and client communications.
The company’s core offerings include outsourced fund administration, custody and trust services, managed account solutions, and wealth management technology.
