SEI Investments Company (SEIC): Business Model Canvas [10-2024 Updated]

In the fast-paced world of finance, understanding the business model of a key player like SEI Investments Company (SEIC) is crucial for investors and financial professionals alike. SEIC excels in delivering comprehensive investment solutions and customized wealth management services through a robust framework that emphasizes partnerships, technology, and client relationships. This blog post will delve into the intricacies of SEIC's Business Model Canvas, revealing how it effectively navigates the complexities of the investment landscape.

SEI Investments Company (SEIC) - Business Model: Key Partnerships

Collaborations with financial institutions

SEI Investments Company has established various collaborations with financial institutions to enhance its service offerings and expand its market reach. These partnerships include:

• Asset management firms, which contribute to SEI's total assets under management of approximately $1.6 trillion as of September 30, 2024.
• Private banks and wealth management firms, which have seen increased revenues from information processing and software servicing fees, amounting to $296.2 million for the first nine months of 2024.
• Institutional investors, with total assets under management reported at $81.1 billion as of September 30, 2024.

Partnerships with technology providers

SEI has formed strategic alliances with leading technology providers to enhance its operational efficiency and service delivery. Key aspects include:

• Investment in technology platforms, including the SEI Wealth Platform, which has contributed to a revenue increase of 19% in information processing fees to $102.0 million for the third quarter of 2024.
• Collaboration with software development firms, leading to a capitalized software development cost of $18.4 million in the first nine months of 2024, focused on enhancing digital capabilities.
• Implementation of cloud-based solutions and data analytics tools, resulting in improved client servicing and operational analytics, significantly impacting overall performance metrics.

Relationships with regulatory bodies

SEI maintains proactive relationships with various regulatory bodies to ensure compliance and mitigate risks associated with its operations:

• Engagement with the Securities and Exchange Commission (SEC) and other financial regulatory authorities, ensuring adherence to regulatory standards and practices.
• Participation in periodic reviews and examinations, which helps in maintaining operational integrity and compliance, with potential sanctions impacting financial results.
• Investment in compliance infrastructure, leading to increased corporate overhead expenses of $37.9 million in the third quarter of 2024.

Partnership Type	Description	Financial Impact
Financial Institutions	Collaborations with asset management and private banks	$1.6 trillion in total assets under management
Technology Providers	Alliances for software and technology enhancements	$18.4 million in capitalized software development costs
Regulatory Bodies	Engagement for compliance and oversight	$37.9 million in corporate overhead expenses

SEI Investments Company (SEIC) - Business Model: Key Activities

Asset management and advisory services

SEI Investments Company (SEIC) offers a range of asset management and advisory services, generating significant revenue from fees associated with assets under management. For the nine months ended September 30, 2024, revenues from asset management, administration, and distribution fees reached $1,237.6 million, up from $1,131.2 million in the same period of 2023, reflecting a growth of 9% year-over-year. The average assets under management (AUM) in equity and fixed income programs, excluding LSV, increased by $8.8 billion, or 5%, to $177.9 billion during the first nine months of 2024 compared to $169.1 billion in 2023.

Investment processing and operational support

SEI's investment processing services have also seen a positive trend. Revenues from information processing and software servicing fees increased to $330.3 million for the nine months ended September 30, 2024, compared to $303.7 million in the same period of 2023, representing an increase of 9%. This growth is attributed to new client conversions and increased transaction volumes from existing clients on the SEI Wealth Platform (SWP). The company capitalized $18.4 million in software development costs in the first nine months of 2024, mainly for enhancements to SWP and for a new platform targeting investment managers.

Key Metrics	2024 (9 months)	2023 (9 months)	Change (%)
Revenues from Asset Management	$1,237.6 million	$1,131.2 million	9%
Revenues from Information Processing	$330.3 million	$303.7 million	9%
Average AUM (Equity & Fixed Income)	$177.9 billion	$169.1 billion	5%
Capitalized Software Development Costs	$18.4 million	$26.6 million	-31%

Development of proprietary technology platforms

SEI continues to invest heavily in technology to enhance its service offerings. The net book value of the SEI Wealth Platform (SWP) was reported at $208.5 million as of September 30, 2024. The company recorded amortization expense related to SWP of $20.5 million for the nine months ended September 30, 2024, compared to $19.0 million for the same period in 2023. This indicates ongoing enhancements and upgrades to the platform, which is crucial for maintaining competitive advantages in the asset management space.

Technology Investment Metrics	2024 (9 months)	2023 (9 months)
Net Book Value of SWP	$208.5 million	Not Disclosed
Amortization Expense (SWP)	$20.5 million	$19.0 million
Capitalized Software Development Costs for SWP	$10.5 million	$13.7 million

SEI Investments Company (SEIC) - Business Model: Key Resources

Skilled workforce with financial expertise

SEI Investments Company employs a highly skilled workforce, particularly in financial services. As of September 30, 2024, the company had approximately 2,800 employees, with a significant portion holding advanced degrees and certifications in finance, accounting, and related fields. This expertise is crucial for providing high-quality investment management and financial services to clients.

Advanced technology infrastructure

SEI has invested heavily in its technology infrastructure, particularly the SEI Wealth PlatformSM (SWP). The net book value of SWP as of September 30, 2024, was $208.5 million. In the first nine months of 2024, SEI capitalized $18.4 million in software development costs, with $10.5 million specifically for enhancements to SWP. This platform supports various services including investment processing and asset management, facilitating efficient operations and client service.

Technology Investment	Amount (in millions)	Purpose
SWP Net Book Value	$208.5	Investment processing and asset management
Software Development Costs (2024)	$18.4	Enhancements to SWP
New Platform Development Costs	$5.0	Investment Managers segment

Strong brand reputation and client trust

SEI has established a strong brand reputation in the financial services industry. As of September 30, 2024, the company managed, advised, or administered approximately $1.6 trillion in assets. This significant asset base reflects client trust and confidence in SEI's services. The company’s effective tax rate for the third quarter of 2024 was 23.5%, demonstrating fiscal responsibility and stability, which further enhances its reputation.

Client Assets	Amount (in trillions)	Change (%)
Total Assets Managed	$1.6	—
Assets Under Administration (2024)	$998.4	15% increase
Net Income (2024)	$425.4	25% increase

SEI Investments Company (SEIC) - Business Model: Value Propositions

Comprehensive investment solutions for clients

SEI Investments Company offers a wide array of investment solutions that cater to various client needs, focusing on asset management, administration, and distribution. The company reported total revenues of $1,567,961,000 for the first nine months of 2024, reflecting a 9% increase from $1,434,935,000 in the same period of 2023. This growth was primarily driven by higher assets under administration, which increased by $132.4 billion, or 15%, reaching an average of $998.4 billion.

Type of Revenue	2024 (9 Months)	2023 (9 Months)	Percentage Change
Asset management, administration, and distribution fees	$1,237,623,000	$1,131,244,000	9%
Information processing and software servicing fees	$330,338,000	$303,691,000	9%

Customized wealth management services

SEI provides tailored wealth management services designed to meet the unique needs of individual and institutional investors. The company's Investment Advisors segment generated revenues of $370,141,000 in the first nine months of 2024, an increase of 13% from $326,579,000 in 2023. This was fueled by growth in separately managed account programs and new business initiatives. Moreover, the SEI Integrated Cash Program, launched in December 2023, contributed $30.4 million in revenue during the first nine months of 2024.

Service Type	2024 Revenue	2023 Revenue	Percentage Change
Investment Advisors Segment	$370,141,000	$326,579,000	13%
SEI Integrated Cash Program	$30,400,000	N/A	N/A

Innovative technology platforms for investment management

SEI has invested significantly in technology, enhancing its SEI Wealth Platform (SWP) to improve client services and processing efficiency. The capitalized software development costs for SWP amounted to $10.5 million for enhancements in the first nine months of 2024, reflecting the company's commitment to innovation. Additionally, the net book value of SWP as of September 30, 2024, was $208,457,000, underscoring its importance to SEI's operational capabilities.

Investment in Technology	Capitalized Costs (2024)	Net Book Value (SWP)
SWP Enhancements	$10,500,000	$208,457,000

SEI Investments Company (SEIC) - Business Model: Customer Relationships

Dedicated account management teams

SEI Investments Company emphasizes strong customer relationships through dedicated account management teams. These teams are tailored to meet the specific needs of each client, ensuring personalized service and responsiveness. As of September 30, 2024, SEI managed approximately $1.6 trillion in assets, showcasing the scale and importance of these dedicated teams in maintaining client satisfaction and retention.

Regular communication and performance reviews

Regular communication is integral to SEI's customer relationship strategy. The company conducts performance reviews with clients to discuss investment performance, service delivery, and future strategies. In the first nine months of 2024, SEI reported revenues of $1.57 billion, up 9% year-over-year, which highlights the effectiveness of maintaining open lines of communication with clients.

Metric	Q3 2024	Q3 2023	% Change
Total Revenues	$537.4 million	$476.8 million	13%
Net Income	$154.9 million	$115.7 million	34%
Assets Under Management	$1.6 trillion	$1.4 trillion	14%

Client education and support services

SEI provides extensive client education and support services, enhancing the overall customer experience. These services include training sessions on investment strategies, market trends, and the use of SEI's technology platforms. In the first nine months of 2024, SEI capitalized $18.4 million in software development costs, reflecting its commitment to enhancing technology that supports client education.

Service Type	Investment in 2024	Investment in 2023	% Change
Software Development	$18.4 million	$26.6 million	-31%
Client Education Programs	Included in software costs	Included in software costs	—
Performance Reviews	Regularly scheduled	Regularly scheduled	—

SEI Investments Company (SEIC) - Business Model: Channels

Direct sales through financial advisors

SEI Investments Company utilizes a robust network of financial advisors to reach its clients directly. In the first nine months of 2024, SEI reported an average of $177.9 billion in assets under management from equity and fixed income programs, reflecting a 5% increase from $169.1 billion in the same period of 2023. This growth has been attributed to effective cross-selling strategies among existing clients and new advisor partnerships.

Online platforms and digital tools

SEI has invested significantly in its digital infrastructure, particularly the SEI Wealth PlatformSM (SWP), which has become a critical channel for delivering services. In the first nine months of 2024, SEI reported $330.3 million in revenue from information processing and software servicing fees, an increase from $303.7 million in the same period of 2023. The platform supports financial advisors and clients with a suite of tools that enhance investment management and client engagement.

Revenue Source	Q3 2024	Q3 2023	Percentage Change
Investment Management Fees - SEI Fund Programs	$59.7 million	$60.0 million	(1)%
Separately Managed Account Fees	$49.9 million	$45.2 million	10%
Other Fees	$17.3 million	$5.2 million	229%
Total Revenues	$126.8 million	$110.5 million	15%

Partnerships with investment firms and banks

SEI has established partnerships with various investment firms and banks to enhance its service offerings. As of September 30, 2024, SEI's total assets under administration reached $998.4 billion, a 15% increase from $866.0 billion year-over-year. Collaborations with financial institutions enable SEI to expand its distribution channels and improve client access to its investment products.

In 2024, SEI reported that its SEI Integrated Cash Program generated $10.7 million in revenue during Q3 and $30.4 million for the first nine months, showcasing the effectiveness of its partnership strategies.

SEI Investments Company (SEIC) - Business Model: Customer Segments

Institutional Investors

SEI Investments Company serves institutional investors by providing comprehensive investment management and advisory services. As of September 30, 2024, the total assets under management for institutional investors reached $81.1 billion, reflecting a 9% increase from $74.5 billion in the previous year. The revenues generated from this segment were $71.6 million for the three months ended September 30, 2024, which represented a slight increase of 2% compared to $70.5 million in the same period of 2023. The operating profit for the institutional investors segment was $33.8 million, with an operating margin of 47%.

Financial Advisors and Wealth Managers

The financial advisors and wealth managers segment is crucial for SEI, contributing significantly to its revenue streams. In the first nine months of 2024, revenues from this segment totaled $370.1 million, up from $326.6 million in the same period of 2023, marking a 13% year-over-year increase. The average assets under management in equity and fixed income programs increased to $177.9 billion, up 5% from $169.1 billion in 2023. Operating profit in this segment was reported at $164.1 million, with an operating margin of 44%.

Private Banks and Family Offices

SEI also targets private banks and family offices, offering tailored investment solutions and wealth management services. As of September 30, 2024, the total assets under management for private banks reached $29.5 billion, an increase of 11% from $26.7 billion in the previous year. Revenues from the private banks segment were $138.7 million for the three months ended September 30, 2024, a 16% increase from $119.7 million in the same quarter of 2023. The operating profit for this segment was $23.6 million, with an operating margin of 17%.

Customer Segment	Total Assets Under Management (as of Sept 30, 2024)	2024 Q3 Revenues	Operating Profit	Operating Margin
Institutional Investors	$81.1 billion	$71.6 million	$33.8 million	47%
Financial Advisors and Wealth Managers	$177.9 billion	$370.1 million	$164.1 million	44%
Private Banks and Family Offices	$29.5 billion	$138.7 million	$23.6 million	17%

SEI Investments Company (SEIC) - Business Model: Cost Structure

Personnel and operational expenses

The personnel and operational expenses for SEI Investments Company include salaries, benefits, and other employee-related costs. For the nine months ended September 30, 2024, total personnel costs were approximately $318.3 million, reflecting an increase from $292.5 million for the same period in 2023. This increase is attributed to business growth and inflationary pressures on wages.

Technology development and maintenance costs

Technology development costs play a significant role in SEI's business model, particularly in enhancing its SEI Wealth PlatformSM. For the nine months ended September 30, 2024, SEI capitalized $18.4 million in software development costs, which included $10.5 million for enhancements to the SEI Wealth Platform. Additionally, amortization expenses for capitalized software were $20.5 million for the same period.

Expense Type	2024 (in millions)	2023 (in millions)	Change (%)
Personnel Costs	318.3	292.5	8.5%
Capitalized Software Development	18.4	26.6	-30.9%
Amortization of Software	20.5	19.0	7.9%

Regulatory compliance and legal expenses

SEI Investments Company incurs regulatory compliance and legal expenses associated with its operations across various jurisdictions. As of September 30, 2024, the gross liability for unrecognized tax benefits was $17.8 million, with interest and penalties amounting to $2.2 million. The total gross uncertain tax positions stood at $20.0 million. These ongoing compliance costs are essential for maintaining regulatory standards and avoiding potential fines.

Expense Type	Amount (in millions)
Gross Liability for Unrecognized Tax Benefits	17.8
Interest and Penalties	2.2
Total Gross Uncertain Tax Positions	20.0

SEI Investments Company (SEIC) - Business Model: Revenue Streams

Asset management and administration fees

For the nine months ended September 30, 2024, SEI Investments Company generated approximately $1,567,961,000 in total revenues, which represented a 9% increase compared to the same period in 2023. The primary contributor to this revenue growth was the increase in asset management, administration, and distribution fees, driven by higher assets under administration and management.

The average assets under administration rose by $132.4 billion, or 15%, reaching $998.4 billion during the first nine months of 2024, compared to $866.0 billion in the same period of 2023. Additionally, average assets under management in equity and fixed-income programs, excluding LSV, increased by $8.8 billion, or 5%, totaling $177.9 billion in 2024 compared to $169.1 billion in 2023.

Metrics	2024	2023	Change (%)
Total Revenues	$1,567,961,000	$1,434,935,000	9%
Average Assets Under Administration	$998.4 billion	$866.0 billion	15%
Average Assets Under Management (Equity and Fixed Income)	$177.9 billion	$169.1 billion	5%

Information processing and software servicing fees

SEI also reported increased revenue from information processing and software servicing fees, primarily due to new client conversions and growth among existing SEI Wealth PlatformSM clients. The revenue from these fees was bolstered by a one-time early contractual buyout fee of $10.5 million recorded in the second quarter of 2023, which partially offset the increase.

In the first nine months of 2024, the company capitalized $18.4 million in software development costs, with $10.5 million allocated to enhancements of the SEI Wealth Platform and $5.0 million for a new platform for the Investment Managers segment.

Metrics	2024	2023	Change (%)
Revenue from Information Processing and Software Services	Increased (exact figure not disclosed)	—	—
Software Development Costs Capitalized	$18.4 million	$26.6 million	-31%
SWP Enhancements Costs	$10.5 million	—	—

Performance-based fees from investment products

Performance-based fees from investment products also contributed to SEI’s revenue streams. Earnings from LSV, a significant investment affiliate, increased to $102.4 million in the first nine months of 2024, up from $91.5 million in 2023, attributed to market appreciation and higher performance fees.

Additionally, SEI reported that net income for the nine months ended September 30, 2024, was $425,420,000, reflecting a 25% increase from $341,527,000 in 2023.

Metrics	2024	2023	Change (%)
Earnings from LSV	$102.4 million	$91.5 million	12%
Net Income	$425,420,000	$341,527,000	25%

Article updated on 8 Nov 2024

Resources:

1. SEI Investments Company (SEIC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of SEI Investments Company (SEIC)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View SEI Investments Company (SEIC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.