Michael Tiedemann: Thank you, Steve. We entered 2024 with incredible momentum on the heels of executing several key components of our strategic plan. I’m proud of our team and appreciate all of the hard work they’ve put in, particularly since our listing to get us to where we are today. I’m confident that this progress, combined with the valuable partnerships we’ve established, position AlTi to deliver long-term profitable growth in the years to come. Finally, we want to thank our global client base, who put their trust in our team day in and day out. We’re grateful for your support and look forward to working with you in the year ahead. With that, we’d like to now open up the call for questions. Operator?
Operator: Thank you, Mr. Tiedemann. [Operator Instructions] We’ll go first this afternoon to Wilma Burdis of Raymond James.
Wilma Burdis: Hey, good afternoon, everyone. Could you discuss the relative attractiveness of the Wealth Management deals versus Asset Management deals, especially as you’re going into plenty of potential deployments this year?
Michael Tiedemann: Thank you, Wilma. So, first of all, it’s important to highlight that there are both strategic and accretive deals in both business lines and they offer, in some cases expansion geographically, some cases a deepening of the product offering, in the case of Strategic ALTs. So they really do vary in terms of their specific relevance for the business lines. All of them are in valuation ranges that we believe can be driven from starting to when you look forward three or four years, from the standpoint that we expect these to be growth investments that we’re making into businesses that we believe collectively we will be able to grow, whether that be a wealth, a new jurisdiction, or a deepening of a market that we’re already in.
So all of them bring that component and then the valuations really vary based on everything you would imagine. So prior growth rates, scale of the business, margins of the business, our view on our ability to drive that business and drive margins going-forward, and then anything perhaps that is additive strategically as well.
Wilma Burdis: Got it. Thank you. And maybe you could just touch on why you guys decided to change the name of the asset management segment?
Michael Tiedemann: Strategic Alternatives is much more related to the underlying businesses that we are investing in and have been managing. We believe there’s also a great time with the Wealth segment from the standpoint of these are long-term trends and ultimately have a lot of tailwinds, but are segments of the marketplace that we feel any long-term pool of capital would be investing in. Whether that be a large family, an endowment foundation, multi-generational pools of capital want to be and will be investing in these areas. And — so this — but it is more targeted and more specifically oriented around alternatives. So we felt the labeling of that was much more in tune with our underlying business.
Wilma Burdis: Thank you. And could you talk a little bit about the outlook for operating expenses in 2024? I know you guys mentioned that it’s going to be a little bit tough to give guidance for this year, given all the changes you have going on with the Allianz investment, but maybe just talk a little bit about that and the trajectory? Thanks.
Stephen Yarad: Sure. Hi, Wilma. It’s Steve Yarad. How are you?
Wilma Burdis: I’m doing well. How are you?
Stephen Yarad: Good. Thank you. So, look, in terms of operating expenses, we’re continuing to make progress. As we’ve talked about before, we’re implementing the plans to deliver $16 million of cost savings on an annualized basis and that’s working through, and we think that will be fully realized in the third quarter of next year, in the second half of next year. In terms of this quarter — excluding compensation, the normalized operating expenses were down a little bit, which we’re really pleased with. Comp was up, but primarily revenue-driven formulaic — the compensation is formulaic based on revenue in the event-driven business. So away from that, we were sort of down a little bit, quarter-over-quarter, which was pleasing for us. So as we continue to move forward and continue to work on professional fees, and those types of things, we do think that there’s opportunities to further reduce operating expenses as we move ahead.
Wilma Burdis: Got it. Thank you. And could you talk a little bit about the net client flows in the Wealth Management segment?
Stephen Yarad: Sure. So I think in the U.S. business, we had some really pleasing flows for the fourth quarter. Market-driven, probably up around 5% to 6% in the quarter. Internationally, it was sort of flattish, but some good flows in certain areas. So overall, still pretty pleasing, but pretty much driven by market performance quarter-over-quarter.
Wilma Burdis: Got you. So mostly market performance, not necessarily a big volume of wins in the quarter?
Stephen Yarad: Yeah. More market-driven, that’s right.
Michael Tiedemann: And important Wilma, you have the prospect, process, and then conversion to client moving into asset and billing on assets does take time. So you can have a very good quarter from the standpoint of prospecting and verbal wins with clients. For that then to materialize to contractual and then the assets moved in and fully built does take some time. So we’re very happy with the pipeline that we have globally and the opportunities that we continue to see as we go into 2024.
Wilma Burdis: Thank you. And I think you guys highlighted some impairments on real estate. Could you maybe just go into a little bit more detail on that, what the drivers were?
