Adam Spector: So I’m not Matt Nicholls, I can’t do the math that quickly. He probably could. So I couldn’t quite follow all of that. But I will tell you that the growth areas where some of the things you wanted to pull out alternatives, ETFs, Canvas. I think we said consistently that those are our growth focuses and that they’re growing a little faster than the rest of the business. If you take a look at the more traditional business and you look at our outflow rate our decay rate, it’s really been stable to improving. So I think over the last few years, we’ve been able to do a very good job at protecting ourselves on the downside. And as we said earlier, I think Jenny pointed to a notion that we talk about in terms of core sales, which is our smaller sales, which are up pretty consistently at about 14% on average. So stable outflows, increasing quarter sales we’re feeling pretty good about the traditional part of the business.
Jennifer Johnson: And I’ll just add, look, we’ve been very open and honest that we’ve been underrepresented in the retirement channel. As I mentioned on the last quarter’s call, we were ranked 14th on Empower’s platform, and it’s similar in some of the others. And with this acquisition of Putnam and the relationship and the absorption of their retirement team as well as their target date products, 1/3 of retirement flows go to the qual side investment plans, and they’ve got phenomenal performance of their target date products as well as stable value, we think we are poised to — and again, if we just take our market share, it’s a massive increase — the retirement channel is still a very traditional asset-oriented channel, traditional mutual funds, equities and fixed income.
And we just think with our distribution capability, not just to benefit from Empower, but taking that to all the different retirement platforms and gain more market share there.
Matthew Nicholls: And then the last thing I’d just add, Bill, is that this area you’re trying to get to, which we actually have a little bit — it’s not really 18, but we think of it as I think it’s more like 10 that we got to. But when you get to those numbers, it’s very concentrated in areas where performance is even more important than usual, let’s call it. And in those areas, performance has begun to improve, certainly on the equity side, in particular, quite significantly. So we’ve seen quite a slowdown in those outflows.
On the fixed income side in the couple areas, we’ve had some weaknesses there, as you know, but we’ve seen some improvement there, too. So it’s a fairly concentrated situation you’re referring to and one that as performance improves, you see a correlation of slowdown in outflows.
Adam Spector: And Bill, I would add that it’s sometimes difficult to separate investment product from the vehicle itself. We have a number of businesses where an investment team is positive, but they’re positive because their SMA, their usage, their ETFs are all positive, and the mutual fund might be negative. So is that the core business, they’re not, right? At the traditional asset class, they’re gaining flow, but they’re gaining it because of the vehicle choice, not necessarily because the mutual fund is positive.
William Katz: That makes some sense. And just a follow-up on all of that, Matt, maybe for yourself, just your base fee rate, it just seems like it’s bouncing around a little more than I would envision just given the sheer sizing of the platform today. So can you help me understand if you’re going to be sort of in that 37% range plus for the next quarter. And then you sort of bounce back into the fourth? Is that input to a very high level of flow in the alts managers. And if that’s the case, is that just vehicles that are just turning on from capital to raise? Or is that from new money coming in the door? And if so, where might that be?
Matthew Nicholls: Well, remember, the annual guide I gave included the first quarter or so where we had an elevated EFR for the reason that I explained around the catch-up fees and so on. I think we were pretty close to 40 basis points at one point. We’ve been trying to be quite clear about that. So when you normalize that out, you get into the 38.
And then the only thing that’s driving it down periodically from quarter-to-quarter is the areas of growth. And when you add those areas of growth up and you just a second ago, Bill, when you went through your analysis on the traditional side of the business versus other areas of growth. When you start adding up ETFs, Canvas, SMAs and then the flows from Putnam, the overall Putnam — remembering that it’s not just the flows coming from Great-West Life from Putnam, it’s the $160 billion, which is 17% higher than when we announced transaction of AUM that’s at a multiple basis — multiple point lower than the EFR of Franklin.
So the fact that we’ve been more successful in that has — that’s what’s driven the EFR down a little bit. But what we’d expect is that going into at least fiscal 2025, what we experienced at the beginning of fiscal 2024, depending on what products we have and everything that Jenny just read through or not, there’s a possibility that it could step back up again into the higher 38 based on the episodic alternative asset fees. But that’s just an exclamation around why it could go up a little bit more and down a little bit more than usual. It’s those offsetting factors. It’s basically a form of business mix plus the episodic activity out of alternatives.
