Ronald P. O’Hanley: Yes, Ken, it’s Ron. I mean there’s a number of initiatives underway, as we I think always talked about. We’ve really got an ongoing productivity that have actions underway, that is comprehensively looking throughout the organization. Some of the things that are underway now. We mentioned what’s going on in India. And this India JV bringing that inside and this JV goes back to our early days in India, before we had our own Center of Excellence there. It’s going to enable us to eliminate redundancy and eliminate a lot of oversight activities. So we’ll be able to take down costs there, take down repetitive costs. We’ve got a comprehensive look at operating model throughout the business, which is, will start to yield results into next year.
We’re looking at some — where work gets done throughout the world and are there places where we can move and combine things, create more end-to-end. So it’s a series of things. Some of them — you know a lot of the easy work has already been done. So some of these things have been — the work’s been underway for a while and we’ll start to realize the benefits of it. But we see visibility such that we can make the statements that we are that notwithstanding that, we continue to make significant investments in the business that we feel we can keep our cost in reasonable check.
Eric Aboaf: And Ken, I’ll just add that the other thing that we have — we’re down on effectively that we talked about over the last quarter or so was our hiring freeze. I mean, what we found is, we’ve got outstanding individuals and people on our team. And part of what we need to do is, we reinvest in different features of the business or different areas. We actually need to reallocate some of that talent to those areas and actually, at the same time, we need to find efficiencies in others. And so that’s been — well it is — it is hard work, it’s been an effective way to actively manage our team and our human resources. It still means we invest in all that we need to do for new products, functionality, regulatory requirements and so forth. But the reallocation that’s born from the — from this sort of freeze is actually very effective tool for us at this stage in the cycle.
Ronald P. O’Hanley: Yes. Ken, what I would add to this, I think what we’re talking about now is a continuation of what we started going back to 2019, that was rudely interrupted by COVID and everything that occurred coming out of COVID, the disruption, the great resignation, the issues that arose out of that with service quality and where we needed to overinvest to make up for some of the turnover that we were seeing that led to the kind of cost increase that you saw. That’s all been normalized. Service quality has stabilized. And so, I would say that we’re back on the path that we started back in 2019, and overcome what we saw in the kind of 2021-2022 period.
Kenneth Usdin: Thank you.
Operator: Thank you. And your next question comes from Brennan Hawken from UBS. Please go ahead.
Brennan Hawken: Good morning, Ron and Eric, and thanks for taking my questions. One question on your expectations for 4Q, Eric. Encouraging to hear that you still are expecting non-interest-bearing to find a stable point here in the beginning of next year. But when you think about your fourth quarter expectations, are you thinking that the typical seasonality that we see in deposits will come through? And is that embedded within the middle of that range of $550 million to $600 million for NII?
Eric Aboaf: Brennan, it’s Eric. Yes, broadly, but with the asterisks of the seasonality that we’ve seen, it has moved around a bit, sometimes a little stronger, sometimes it’s a little weaker than typical. So we do see a bit of an uptick in a normalization in total deposits. And so we’ll — we’ve guided to stabilization, maybe we’ll see an uptick, we’ll see. But — this is based on really quite deep analysis of our client deposit base. Remember, we managed it on the US dollar, we managed on each of the foreign currencies. We have just an NIB, for example, I think we have 30,000 accounts, the average account size is $1 million. We’ve seen the trends in the largest, most sophisticated client and largest accounts come down quite a bit.
The smaller ones tend to have a flatter line and evolution. So the guide is based on that plus a little bit of the seasonality, and we’ll just update as we go. But I think we’ve started to see some amount of inflection here. But we want to be careful, right? There’s still some amount of rotation playing out. There’s some amount of balances and pricing coming through. A good bit of which we have a visibility into, but it’ll take a little time to just work through it in the next few months and quarters.
Brennan Hawken: Okay, great. Thanks. And then maybe following up a little bit on Ken’s question. I’m sure at this point you’re going through the budgeting process for 2024. Do you have any preliminary expectations for what you could be looking at for expense growth — operating expense growth here in the next year?
Eric Aboaf: Brennan, it’s early to do that. You know, we — I think what gives us confidence and actually the feel of necessity on fee operating leverage is, we need to run the business in a way that is healthy for our shareholders and our various stakeholders at the same time and we need to find a way through that. We certainly have gone through a strategic planning exercise. We do that through the summer, July, August, and September, and we have — we’ve got our path forward. We believe both on the top-line and on expenses, it’s a little soon to get into that. But we’re working through that and part of what we’re doing now is actually making sure that we have detailed plans, business-by-business, function-by-function. We run alternative scenarios.
We even develop contingency plans and we are also — we are careful about metering out our spend next year, where we do add to spend, we’re going to do that with stage gate. So there’s a lot going on right now and we’ll come back with kind of a full set of guide — guidelines and guidance in January. But I think — we’re confident that we’ve got a path forward here that’ll be healthy and fee operating leverage is very good way for us to think about it and I think for you guys as well.
Brennan Hawken: Yeah. Thanks very much, Eric. Appreciate that color.
Operator: Thank you. The next question comes from Glenn Schorr from Evercore. Please go ahead.
Glenn Schorr: Hello. Thank you. So we’ve discussed over time and today that the lower client flows from the market, the whole active to passive trend, and that how disadvantages kind of all of us. Can you talk about what you’re seeing in all private markets, both from a servicing standpoint and you sprinkled in a little comment about Alpha for private markets, like bring this to life a little bit? Could this be a growth industry for the next handful of years, just curious on the side of that. Thanks.
Ronald P. O’Hanley: Hey, Glenn, it’s Ron. Obviously, you know the kind of growth that the private markets have seen, whether it’s private equity and more recently private credit infrastructure and we see none of that abating. Private equity may be taking a bit of a pause, but all of the fundamentals point to those industries increasing, and in fact many of the large — if you look at some of the large multi-asset managers, a lot of their growth is actually coming from privates. Much of that business today remains in sourced and there’s very few standards in the business, a lot of it gets serviced in very expensive locations and is not a very good experience for the ultimate LP investors. So it’s a very fast growth area for us.
