Dan Arnold: Yes. Well, I think when you look at the drivers, it’s really three things. And I think on that last point, it on the 100 million for potential it related to large financial institutions and those institutions coming on board. So I think the – we think about our opportunity set, I think we would expect to have those be an ongoing opportunity. But to the core of your question, if there weren’t any in a year or there weren’t any large financial institutions coming on board those expenses would go away. That 100 million is specific to Prudential. Meaning once that’s onboarded, unless there’s others coming on board you wouldn’t have a spend level of that amount. But the other and the key drivers though of the growth overall outside of the number of large financial institutions or enterprises we have, are coming on board is really organic growth, right?
And I think when you look at the amount of organic growth that we have the transition assistance associated with that and the amortization of that, that’s primarily what shows up in the growth for promotional. And it’s about the size of our recruiting. I think we’ve talked about it a bunch on this call and during this Q&A. But the amount of recruited AUM that we’re bringing on board is increased substantially in the capital that helps bring that on board and the expense shows up here. The other one I’d highlight to a much smaller extent is just conference spend, right? That’s based on the number of advisors we have at the firm. The bigger we get, the more value there is in engaging with more of those folks in person at our conferences that would naturally rise.
But I think the two key things are number of large financial institutions coming on board and then just the level and amount of our organic growth. Those would be the two big drivers.
Michael Cyprys: Great. Thanks. And just a follow-up question on D&A, I think you had called out about $200 million of platform investments to be capitalized. I mentioned that’s going to come through the D&A line, just how do we think about the timeframe and cadence for that to come through?
Dan Arnold: Yes. And that’s associated with Prudential as well. So if you think about Prudential overall of $325 million of investment and reminder, there’s no transition assistance that comes along with it. That’s the total investment. So that the timing will be like typical to a large financial institution. It will be mostly leading up to and during the quarter of onboarding, but there can also be some that comes across after that. And then you get into, based on the technology that we’re putting in place, which are typically amortization periods called in the four or five year zone once they’re deployed.
Michael Cyprys: So we think about that $200 million coming through over five years or so roughly, is that fair?
Dan Arnold: Yes, yes. One once it’s deployed, four or five years following this, I think that’s a good way to think about it.
Michael Cyprys: Great, thank you.
Operator: One moment for our next question. And our next question will be coming from Kyle Voigt of KBW. Kyle, your line is open.
Kyle Voigt: Hi, good evening. So maybe just one on the regulatory environment. It sounds like the DOL is set to propose a new fiduciary rule very shortly. Obviously, you don’t have any many details at this point. But just wondering if you could comment high level on the state of the business today relative to 2016 or minus of some of the more meaningful changes that were already implemented ahead of the prior DOL rule that was ultimately vacated. And would be great to kind of hear how you feel about potential expense needs to comply with any new rule proposal given the investments that were already made to comply with the prior rule?
Dan Arnold: Okay. So let me take that one in. And so look, there is a DOL proposal that’s under review at the White House Office of Management and Budget, and that’s the procedural step as you know, before the proposals released to the public comments. So there’s not a lot of insight on what’s contained inside of that. I think there’s been a lot of speculative dialogue about what that may be. But I think we’ll learn more as you know, we move to the next step. I think what we do believe is that once it moves to public comment, it’s a long process of which to work through ultimately either some proposed change that may occur from that and or not. And so I think you’ll see a good public dialogue about what’s being considered.
That said, I think we did, as you said, did significant work back in 2016 and had some cool innovation even around some products like mutual funds as an example that didn’t ultimately wasn’t ultimately utilized as we – as the 2016 fiduciary rule was struck down and ultimately pivoted to the Regulation Best Interest, what is different. And I think and by the way, that will serve as a great baseline, a lot of the innovative work that we did, some we use today in Reg BI, some we’re not using, and we think it prepares us well of which to ultimately pivot and or adjust for whatever changes may occur in the rule. I do think that the dialogue around the rule itself is a bit different in context. The circumstances are different than as you know Reg BI has just really been released out into the marketplace for a couple of years.
And we do think it is a, it proposes a higher standard of care, which we are aligned with and we think the SEC is the right regulator to create that rule across all parts of business, both retirement and non-retirement. And consequently we think that because of that rule is in place, the consideration set for that and allowing that to run its course and ensure that it’s effective in ultimately establishing and aligning around that higher standard of care. We think has a lot of relevance in the dialogue that will occur. And if you go back to some of the proposals in 2016, I think there is the big risk that ultimately you take away choice and that begins to harm low and middle income investors by limiting access to brokerage advice for those smaller retirement accounts, which obviously in systemically it’s not a good outcome.
It would be a big unintended influence, which I think you’ll have a lot of pushback and a lot of relevant concern around that potential outcome. So we just believe the circumstances are different to have this sort of public debate and open the view around the process. All that said, if there are some changes incrementally we do think we’re well prepared to pivot and add those and continue to deliver choice between both brokers and advisory. Always believe as principal choices of other option and we think it’ll serve investors much, much better. So I hope that gives you a little color. The point is we don’t really know yet. I think there is something that is being considered and we think it’ll be a good healthy debate and we’ll be well prepared.
