And it becomes more important for the sponsors, for the actual firms to actually get their arms around this, because the average ticket size is going down. 10, 15 years ago, the LP investors, typical LP investor was an institution, it was a pension fund, a sovereign wealth gun fund. Today, the average investor is some affluent person that’s in some kind of a pooled fund. And so, getting this all right is actually quite important, and the demand is very high for us. We’re investing a lot in it, a lot of technology in it. And increasingly, as these firms become multi asset, not just focused on — in one area, the idea of an Alpha front to back kind of thing and all that’s associated with it — with data becomes very important, both as providers, but also as investors.
So the opportunity here is not just the big private providers, but also the big private investors, the sovereign wealth funds and asset owners here. So yes, we see it as a very significant opportunity for us.
Eric Aboaf: And Glenn, just add a little bit of the kind of quantitative elements of this. Private markets, broadly defined around the world from a servicing fee standpoint are growing in the 9% to 10% a year. We described our performance, which has been quite strong in that area. And based on our client base and our pipeline, our expectation is that, we should be growing in the 15% range next year. Part of that is because we serve so many large global asset managers who have a wide range, both in traditional products and in privates, right? So they’re coming to us, and partly because increasingly we’re serving the classic alternative and private organizations, right, who increasingly want to focus on what their core investment process is as opposed to processing. And so, we see more and more outsourcing and opportunities for us from that segment as well.
Glenn Schorr: Maybe just one follow-up to all that good detail. You were early on the — lot of the offshore outsourcing. You were early on hedge fund outsourcing and it helps you on your growth rate over time. Do you have a sense that you’re early here, do you think you have a head start and competitive edge on this private front? We just don’t see the same competitive landscape, so curious on your thoughts? Thanks.
Ronald P. O’Hanley: It’s a little bit hard to tell, Glenn. I think that we are certainly amongst the traditional asset servicers, we think that were early. You’ve got some of the very focused fund administrators that do some narrow kinds of activities in there, and certainly in terms of offering a full front to back solution that includes data, as far as we can tell, we’re the only ones out there. So yes, we think in general we’re early.
Glenn Schorr: Okay, thank you for all that.
Operator: Thank you. Your next question comes from Ryan Kenny from Morgan Stanley. Your line is already opened.
Ryan Kenny: Hi, thanks for taking my question. So the industry has been seeing servicing fee rate pressure for a while. Can you update us on what you’re currently seeing in terms of fee rate repricing? And are the newer wins coming in at a lower fee rate than your existing contracts or at a higher fee rate?
Eric Aboaf: Ryan, it’s Eric. The overall cadence of fee repricings have been stable for us and I think for the industry the last couple years. As you know, back in 2019, we went through a phase of higher repricings, but they’ve been relatively consistent in that kind of 2% or so headwind level, which is not that different from what it was over the last five years to 10 years. So that’s been relatively stable. What we have seen is very good fee rates on new business. And part of that is the discussion we just had in privates, where just because of the nature of the activity, the servicing, it tends to be a manually intensive process. The fee rates are multiples of the average fee rate for our business. And in fact, the last couple of quarters, we’ve seen fee rates on new business comfortably above the average that we’ve seen.
You can just do a little bit of comparison and we’d be cautious about doing it for every quarter. But take the last few quarters of AUC/A wins, the last few quarters of fees wins and you kind of — you get to that view. And we’ve mentioned that in ways in our quarterly reports this year in particular. So I think in some ways, what we’ve been able to find is that, with Alpha, we bring more to a client across the AUC/A base, right? So we have fees on the front office side, which we disclose separately, but both the middle and the back office, we have complex clients, and so that’s been quite fruitful for us. And then the alternatives and privates is a very — is a much higher fee rate area, just by virtue of that industry. And that together is what gives us some of the revenue kind of momentum that we’ve seen into the third quarter of this year and we expect in the fourth quarter as well.
Ryan Kenny: Thanks, that’s helpful. And if we look at the quarter, it looks like the servicing fee rate over average AUC/A did come down a bit. Was there anything driving that? Is that just a function of lower volatility and timing, or is there anything else in that number that we should think about?
Eric Aboaf: No, if you just look at the aggregates, remember you’ve got this kind of effect, where when equity markets are up, right, you kind of have this natural thinning in the fee rate just because of how the fee schedules are structured, right? And they’re not — they’re not quite like they are in the asset management business. So no, that’s been fairly — that was expected and in line with the ranges that we’ve been seeing.
Ryan Kenny: All right, great. Thank you.
Operator: Thank you. Your next question comes from Brian Bedell of Deutsche Bank. Please go ahead.
Brian Bedell: Great, thanks. Thanks very much for taking my question. Just actually to follow on that last one, Eric. And just doing the math, just — and if you can confirm if I’m correct on this, the $91 million over the $149 billion is the appropriate way to look at that and that would be 6 basis points as opposed to the $255 million of servicing revenue to be installed over the $2.3 trillion, representing more than — just like a basis point or so. So, I guess, first of all, is that — are we — am I looking at that correctly and is it all characterized as servicing fee revenue and I guess is what’s driving that — is that differential sort of a sustainable type of new revenue win run rate for, I guess Private Markets sector business?
Eric Aboaf: Brian, it’s Eric. I’m really glad you asked that question because with new disclosure comes sometimes very simple answers and sometimes more textured ones. So what you’ve done is an analysis. If you look at our fee wins divided by our new AUC/A wins, which on average, over time, I’ll stress that will approximate the rates that of the win. The challenge is, in any one quarter, remember, some of what we win is on existing AUC/A business. So Ron mentioned one of the global asset managers, we added back office to that relationship. Those AUC/As were already in our base. Why? Because we had already been doing both front and middle office processing for them. So in a way, those fees wins in the quarter cannot be compared to any of the new AUC/A.
