Devin Ryan: Yes. Thanks, Dan. That’s great color. And I guess my follow-up is just it’s interrelated to that. So terrific momentum in recruited assets in 2023 and really the new affiliation models are clearly resonating in the market. And I believe you said $15 billion from those new channels in 2023. So that would seem to imply. I mean the legacy channels would be around $50 billion to get to the $67 billion total, if I’m correct there. So on the new affiliation channels, the contribution continues to scale and those mature, should that look like something similar to, call it, the $50 billion from the legacy channels? Or I’m just trying to size because they’re growing so quickly, kind of what they look like at maybe maturity or something that’s more mature like or maybe it’s well above $50 billion, but just want to get some thoughts on kind of where we’re coming from to where we’re going just because there has been such a tremendous growth there, especially when you split it out separately.
Dan Arnold: Yes. It’s a great question. And I think as we think about those longer terms and what is that possibility, I think we start with the size of each of those markets. And that we’ve broken down in the employee base market is the largest one of all in that $11 trillion to $12 trillion range or RIA in the second. And then — and then the sort of Swiss model that we have is a subset, if you will, typically those coming out of an employee-based model. And so, if you think about the opportunities that associated with those, I think you would start with that broader market and then you begin to then drill down on — what’s our right to win? What’s our ability to win. What are the capabilities necessary to continue to grow our win rates inside those markets.
And then if you do that, it’s reason to believe, given the size of those markets relative to the traditional independent that even if we achieve half of the win rate or the success rates, we do on our traditional independent channel that those begin to make sizable contributions that as you were estimating — look more like the contribution on the independent side. So what I’m not suggesting is we’ll get there. What I am suggesting is that’s an opportunity that it is for the continuing to work into, invest into and challenge ourselves to achieve the type of win rates we have on the independent side in these large markets. I hope that helps.
Operator: And our next question comes from Dan Fannon with Jefferies.
Dan Fannon: This quarter saw the biggest kind of quarter-over-quarter increase in sales-based commissions, looks to be somewhat driven by annuities. So curious about your outlook for that and in the context of what the DOL has proposed, how you think that might change behavior or not going forward?
Dan Arnold: Yes. Let me take that one. Thanks for the question. We have seen some momentum, frankly, since rates have gone up, but you’ve seen the interesting growth in the utilization and probably predictable growth in the utilization of fixed annuities. And then when the equity markets move and have volatility in them, and variable annuities can also be interesting opportunity to deploy capital. And so I think it’s been a nice tailwind for annuities for the better part of the year — last year plus. And you’re exactly right, fourth quarter just reinforced that. I think as we go forward, the question around the DOL is a good one relative to brokerage and advisory. And I think as we think about that, we go back to our playbook we used in ’15 and ’16 timeframe where — as from a principal standpoint, we believe that maintaining choice for advisors’ clients is in their best interest and our interest in making sure that we do the things necessary to preserve the choice for advisors between brokerage and advisory and our ability to ensure that we can help them adequately do that as the rules change relative to Reg BI.
And then again, if the DOL rule ultimately goes through and changes that slightly making sure that we’re prepared to help them pivot where they can successfully continue to do that business where it’s in the best interest of the clients. And I think hard to argue with making sure that you provide people choice and then ultimately enable those advisors to serve them and offering need to clients. That said, I do believe that in many cases, annuities will continue to be used where they’re needed, where they make sense as a rollover option or where they make sense in helping someone as we talked about earlier, with downside protection, it’s still participating in the upside for the equity markets, there’s good places to use them. I think that — what we will see though is in other areas, you’ll probably see a bigger shift to the utilization of advisory.
It’s just tougher to do brokerage business. There may be some places, small accounts, there may be other scenarios where given the two options, the advisor ultimately utilize the advisory solution. We’re still in the best interest of the client, but also just in the spirit of making sure the business can be done in a better and efficient way. So we do believe that’s a trend. Hence, the investments in our advisory platforms, vertical integration we have around our advisor offering, again, lines up well with structural change as well. So put a capstone on it. We will and make sure that we’re positioned to enable brokers to continue to be used. I do think that the DOL rule would create some headwind on the percentage of brokerage business that we see.
— but it won’t be a complete change. You’ll still see it utilized for some current rate.
Dan Fannon: Understood. And then just as a follow-up, I think, Dan, you mentioned 99% retention in 2023. And then Matt, you called out January a couple of departures. So just curious if we can get some context around maybe what happens in January? And if you think retention might be slightly different given the environment as we think about 2024 more broadly.
Dan Arnold: Yes. No, our sense of it is, look, we got to make sure we execute on our strategy. We’ve got to invest in our capabilities, and we’ve got to deliver attempt to deliver an extraordinary experience on a daily basis. We have solid trends there, strengthening NPS scores, evolving capability. We expect that retention rate in that 98.5% range to 99% range to be a good way to think about our good centering point, if you will, on retention for this year outside of the example of what Matt used, where someone sells the practice to potentially solve for succession solution. And look, that was the trigger that we launched our liquidity and succession program a year ago, gave us a great opportunity to go solve that really important question that many advisors had.
Those two examples, maybe we didn’t launch ours and time enough to get a swing at those. And though we won’t win them all, we do believe we’ve got a really appealing differentiated solution that will position us well, not only to help serve our clients that are already on our platform, but actually use it as a way to attract new assets to the platform because not only do we have a rich value proposition that we serve and support the daily needs, we also can help them with their succession. So that’s how we’re [indiscernible].
