Walter Berman: Basically a part of AWM and that is its cost of funds, and that’s why we feel comfortable with that. And certainly, as — if rates go up and down, we will evaluate the deposit betas. But yeah, that is — you’re exactly spot on.
Thomas Gallagher: So the incremental spread is over 500 basis points right now on the assets you’re shifting in?
Walter Berman: As the source, yes, because the source of those deposits is the spread, is coming out of the sweep.
Thomas Gallagher: Thanks. And just one final one on Comerica. I heard what you said to Suneet, but the — is that going to just be a revenue share or is there some upfront cash payment that will be made to them that’s going to use up excess capital at the end of the year? How is that going to work?
Walter Berman: No, I do not believe — again, this is like any deal like you asked basically upfront and you then get the paybacks that it work through it, and we feel very comfortable with the combination. So it will, as I said, make certainly from a P&L standpoint of contribution, then we look at the cash breakeven. So we feel very good of it. As Jim said, we’ll have some upfront expenses, but it’s a good economic deal for both of us.
Thomas Gallagher: Okay. Thanks.
Operator: Thank you. We go next now to John Barnidge of Piper Sandler.
John Barnidge: Good morning. Thank you very much for the opportunity. My question is on the Asset Management segment. Can you talk about fee rates on the flows leaving versus coming in? And then institutional tends to have a longer sales cycle. So any visibility into the pipeline there would be helpful. Thank you.
James Cracchiolo: Yeah. So if we have retail outflows, they are always of a bit higher margin than the fee rate than the institutional side. The good thing on the institutional, some of the flows we got in were real estate, which is very good fee rates. And that looks like we have a decent pipeline as well going forward. But of course, in retail is you’re a bit higher fee rate. So that’s where on the outflows, we’re probably are net-net, a bit negative there. And so — but hopefully, the retail will turn around. We look like Europe has actually slowed. It was almost neutral in the quarter, which is good. And if that picks up, that has positive fee rates even more than the U.S. So that would be positive for us there. But the U.S. is still a bit weaker on the growth side. But the redemptions has come down. So hopefully, we’ll see a turnaround. And so I think that we see more stabilization occurring and hopefully, that will pick up as we go through the year.
John Barnidge: Great. Thank you. And then my follow-up question. You were talking about additional synergies in Asset Management with integration to be completed by end of ’23. Those additional synergies, I know sometimes in Europe, a notice period may be longer. Are you talking about those synergies being announced or absolutely flowing through earnings by the end of the year? Thank you.
Walter Berman: So we should garner about as it relates to not realized, but certainly garner around 57% of it in that range, 50% in this year. So it’s tracking and you’re right, it’s certainly what’s going on, but we feel comfortable we’re on track. Did that answer your question?
John Barnidge: I was talking about the additional synergies, you…
Walter Berman: Yes. I’m talking about BMO synergies right now. If you’re talking about…
James Cracchiolo: Yes, so we’re tracking. We’re getting some of them this year, and then more of them as we close out the year into next year because we’re going through a lot more of the technology integration now. And then from that, we can then continue to do the middle and back office. And so — and to your point, it does take a bit longer in Europe and the U.K. as we go through different legal entities, et cetera. So — but we’re on target to what we originally said.
Walter Berman: Yes. So basically, as we talked about, we’re talking about in the 85% range, we will have not 57%, it was $57 million, we think will probably be the number that we will certainly not realize, but certainly achieve by the end of this year.
John Barnidge: Thank you very much.
Operator: Thank you. We go next now to Andrew Kligerman of Credit Suisse.
Andrew Kligerman: Good morning. So a couple of quick follow-ups on Comerica. So with the $18 billion in assets that you bring in, how should we think — once you get finished with the onboarding, how should we think about margins on that $18 billion relative to the $350 billion plus of your other non-wrap assets? Will it be materially better? Will it be in line? How should we think about that?
Walter Berman: I would say from looking at our direct contribution margin there is certainly within our range, and we feel very comfortable with it like I said, I distinguished the P&L and the cash but certainly from that standpoint, but the P&L side of this direct contribution is totally acceptable within as we look at this channel and it’s strong. It’s good. And like I said, but it’s good because it’s balanced between — for them and for us and certainly what will add and the ability to grow that activity. So it’s — the contribution margins will not be denigrating to anything we have else that.
