Michael O’Grady: Mike, it’s Mike. To your point, if you go back a number of years, where we were at levels that were like this, it’s been a long time, and that’s why it is considered unacceptable where we are. We were effective in driving that ratio down into an area where, yes, we thought it was within that range for us to be able to continue to operate, and that’s kind of that 105 to 110 range. We have the same objective now of getting it back into that range. That calculation is a numerator and a denominator, and we’re trying to drive both of those. Beyond the challenging environment on the fee front, which is going to happen at various times, we’re trying to drive the organic growth there, and as much as we had good growth in the year, it was not one of our stronger organic growth levels, so challenged on the numerator both, I would say conditions, but also what we did on our part.
Then on the other side, from an expense perspective, as Jason said, we got a lot done not just this year but the last couple of years in really making, call it the company more resilient, and I’ll get into a little more detail on that; but just contextually if you think back a few years with the pandemic and the last couple of years, the technology infrastructure of the company is just critical to your ability to be just what you said, which is resilient and there for your clients in any set of conditions, and so that’s required a lot of investment in technology. Some of it, if you think about it, you have to be able to operate completely remotely, and so you have to invest to be able to do that, and you also have to be reliable for clients, so when it comes to modernizing all the technology you have, it does require investment on that front.
In the meantime, we also push forward with our digitalization efforts, which is much more the client-facing part of that which is essential to being competitive and essential to growing. It’s been very active across that. Some of that is, call it non-discretionary, right – it needs to be done to be able to do what I said. Other parts of it, you do have more discretion in the speed, particularly around the digitalization front, and you’re looking at the returns that you’re going to get for that. We talked about things like Matrix, which has been a meaningful investment which will drive both productivity but also will drive our capabilities, and therefore revenue and organic growth on that front. The same thing is happening in wealth management, where we have to make sure that our interface with our clients is frictionless, as Steve would say, in the technology interface with the clients.
That part of it, again, we can pay some, and that’s part of what we’ll have to do on the technology front. The last part of it is just the need for efficiencies around the technology spend and then just more broadly, which we’ve done many times and need to just increase the focus on execution around those, what I’ll call more traditional ways to drive productivity. You asked the question on, okay, when does it get into that range, is it ’23, is it ’24? I don’t know, because I don’t know exactly what’s going to happen with the numerator and the denominator, but that’s what we’re driving towards, is to get it into that range and, in the meantime, also trying to drive profitability, meaning driving pre-tax margins above 30%. That’s kind of the view and the plan.
