Waddell & Reed Financial, Inc. (NYSE: WDR) today reported
third quarter 2017 net income1 of $38.0 million, or $0.45 per
diluted share, compared to net income of $23.3 million, or $0.28
per diluted share, during the prior quarter and net income of $53.8
million, or $0.65 per diluted share, during the third quarter of
2016.
Operating revenues of $289.4 million during the third quarter of
2017 increased 1% sequentially due primarily to one additional day
during the current quarter. Compared to the third quarter of 2016,
operating revenues declined 5% due primarily to lower average
assets under management, which was partly offset by a 2.5 basis
point increase in our effective fee rate. The operating margin
during the current quarter was 19.0% compared to 17.8% during the
previous quarter and 24.3% during the same period last year.
Business Discussion
Redemptions during the current quarter were at their lowest
level since March 2014, owing mostly to the continued decline in
redemptions in our retail unaffiliated distribution channel.
Complex-wide, gross sales were $2.9 billion during the quarter,
declining 13% compared to the prior quarter, but improving 14%
compared to the third quarter of 2016. Assets under management were
$80.9 billion at the end of September, largely unchanged compared
to the prior quarter and 5% lower than the third quarter of 2016.
Net outflows of $2.8 billion during the current quarter increased
slightly compared to net outflows of $2.5 billion in the prior
quarter, but improved compared to net outflows of $4.9 billion
during the same period last year.
“While we have made progress toward stabilizing our assets under
management, we must now increase our focus on reenergizing organic
growth,” said Philip J. Sanders, Chief Executive Officer of Waddell
& Reed Financial, Inc. “Success in this effort will depend on
competitive investment performance, appropriate product offerings,
and effective sales and distribution strategies. The corporate
initiatives we outlined last quarter are already underway and, we
believe, will provide a foundation for success.”
As part of our regular assessment of the return of capital to
stockholders, we are implementing a revised capital return policy
intended to provide greater financial flexibility to invest in our
business, maintain a strong balance sheet and continue to provide a
competitive return to stockholders. Accordingly, the Board reduced
the quarterly dividend on our Class A common stock to $0.25 per
share, payable on February 1, 2018 to stockholders of record as of
January 11, 2018. This capital return policy also encompasses a
plan to repurchase $250 million of our common stock, which is
inclusive of buybacks to offset dilution of our equity grants.
Based on our current financial forecast, we intend to engage in an
opportunistic share repurchase plan to fulfill the targeted
buybacks over the next two years.
“We believe this policy allows us to create long-term value for
our stockholders by providing us with additional flexibility to
reposition our company amidst an ever-changing industry. This new
capital return policy will not only provide for sustainability of
the dividend, but also support our strategic initiatives going
forward,” added Sanders.
____________________________1 Net income represents net income
attributable to Waddell & Reed Financial, Inc.
Management Fee Revenue Analysis
Revenues increased 2% sequentially due to a small increase in
the effective fee rate and one additional day during the current
quarter. Compared to the same period last year, revenues declined
3%, while average assets under management declined 7%. A gradual
mix-shift in the asset base continues to move the effective fee
rate higher.
During the current quarter, the effective management fee rate
was 66.1 basis points, compared to 65.1 basis points during the
second quarter of 2017 and 63.6 basis points during the third
quarter of 2016. Average assets under management were $80.5 billion
during the current quarter, compared to $80.6 billion and $86.8
billion during the second quarter of 2017 and the third quarter of
2016, respectively.
Underwriting and Distribution Analysis
Underwriting and Distribution Revenues
Revenues remained unchanged sequentially. An increase in
advisory fees in our retail broker-dealer channel was offset by
lower front-load sales commissions. Revenues decreased 5% compared
to the third quarter of 2016 due to lower asset-based Rule 12b-1
service and distribution fees in our retail unaffiliated channel.
In our retail broker-dealer channel, an increase in asset-based
advisory fees was offset by lower front-load sales commission
revenues.
Underwriting and Distribution Costs
Direct costs decreased 2% sequentially. In the retail
unaffiliated channel, direct costs declined due to a combination of
lower asset-based Rule 12b-1 service and distribution fees and
lower wholesaler commissions. In our retail broker-dealer channel,
an increase in advisory fees was partly offset by lower front-load
sales commission costs. Additionally, as part of our field
realignment efforts, field management compensation costs moved from
U&D direct to U&D indirect, resulting in a further decline
to direct costs in our retail broker-dealer channel.
Indirect costs rose 1% sequentially. In the retail unaffiliated
channel, lower marketing costs more than offset the previously
announced discretionary transition contribution payment to
employees’ 401(k) accounts at year-end. This contribution expense
is being recognized during the third and fourth quarters of 2017.
In our retail broker-dealer channel, the increase in costs was
largely due to higher compensation costs associated with our field
realignment efforts and the discretionary 401(k) contribution,
which were partly offset by compensation savings due to a decline
in field management headcount and lower technology costs.
Direct costs declined 8% compared to the third quarter of 2016.
In our retail unaffiliated channel, direct costs declined due to
lower asset-based Rule 12b-1 service and distribution fees. In our
retail broker-dealer channel, an increase in advisory fees was more
than offset by lower front-load sales commissions and lower
compensation costs for field management.
Indirect costs in the third quarter of 2016 included a
curtailment gain of $4.7 million associated with our
post-retirement medical plan, which accounts for the majority of
the increase between periods. The current quarter saw lower IT
costs in our retail unaffiliated channel, which were partly offset
by an increase in field compensation costs in our retail
broker-dealer channel.
Compensation and Related Expense Analysis
Costs increased 2% sequentially due to the previously announced
discretionary transition contribution payment to employees’ 401(k)
accounts at year-end, which was partly offset by cost savings
reached through the freezing of our pension plan. Compared to the
third quarter of 2016, costs increased 20%, or $8.1 million, due in
part to the $3.9 million curtailment gain recognized in the third
quarter of 2016. To a lesser extent, equity incentive compensation
and the discretionary 401(k) contribution contributed to the
increase, which was partly offset by lower pension costs due to the
freezing of our pension plan.
General and Administrative Expense Analysis
Costs decreased 1% sequentially. The second quarter of 2017
included costs associated with planned fund mergers, while the
current quarter had higher legal costs, partly offset by lower IT
costs. Compared to the same quarter last year, costs increased 20%
due to higher consultant costs and higher temporary office staff
for the implementation of the DOL fiduciary rule.
Changes in Assets Under Management ($ in millions)
Three Months Ended Mar. 31,
Jun. 30, Sep.
30, Dec. 31
Mar. 31, Jun. 30,
Sep. 30, Dec.
31 2016 2017 Retail Unaffiliated
Distribution Beginning assets $ 45,641 $ 38,623 $ 35,197 $
33,290 $ 30,295 $ 30,182 $ 30,307 Sales 1 2,144 1,526 1,320 1,373
1,799 2,080 1,790 Redemptions (7,680 ) (5,543 ) (4,824 ) (4,390 )
(3,707 ) (2,886 ) (2,486 ) Net exchanges 158
127 161 11 236
235 213
Net Flows (5,378 )
(3,890 ) (3,343 ) (3,006 ) (1,672 ) (571 ) (483 ) Market action
(1,640 ) 464 1,436 11
1,559 696 1,238
Ending assets $ 38,623 $ 35,197 $ 33,290 $ 30,295 $ 30,182 $ 30,307
$ 31,062
Retail Broker-Dealer Beginning assets $
43,344 $ 42,142 $ 42,261 $ 43,170 $ 42,322 $ 43,110 $ 43,084 Sales
1 1,068 1,094 1,024 1,101 978 1,142 1,024 Redemptions (1,197 )
(1,329 ) (1,542 ) (1,669 ) (1,871 ) (1,812 ) (2,049 ) Net exchanges
(172 ) (163 ) (194 ) (182 ) (236
) (241 ) (213 )
Net Flows (301 ) (398 ) (712 )
(750 ) (1,129 ) (911 ) (1,238 ) Market action (901 )
517 1,621 (98 ) 1,917
885 1,626 Ending assets $ 42,142 $
42,261 $ 43,170 $ 42,322 $ 43,110 $ 43,084 $ 43,472
Institutional Beginning assets $ 15,414 $ 14,426 $ 8,993 $
8,595 $ 7,904 $ 7,792 $ 7,036 Sales 1 453 190 180 242 142 78 68
Redemptions (1,068 ) (5,699 ) (1,051 ) (1,042 ) (727 ) (1,057 )
(1,139 ) Net exchanges 14 36 33
171 - 6 -
Net Flows (601 ) (5,473 ) (838 ) (629 ) (585 ) (973 )
(1,071 ) Market action (387 ) 40 440
(62 ) 473 217 400
Ending assets $ 14,426 $ 8,993 $ 8,595 $ 7,904 $ 7,792 $
7,036 $ 6,365
Consolidated Total Beginning assets $
104,399 $ 95,191 $ 86,451 $ 85,055 $ 80,521 $ 81,084 $ 80,427 Sales
1 3,665 2,810 2,524 2,716 2,919 3,300 2,882 Redemptions (9,945 )
(12,571 ) (7,417 ) (7,101 ) (6,305 ) (5,755 ) (5,674 ) Net
exchanges - - - -
- - -
Net
Flows (6,280 ) (9,761 ) (4,893 ) (4,385 ) (3,386 ) (2,455 )
(2,792 ) Market action (2,928 ) 1,021
3,497 (149 ) 3,949 1,798
3,264 Ending assets $ 95,191 $ 86,451 $ 85,055 $
80,521 $ 81,084 $ 80,427 $ 80,899 1 Sales is
primarily gross sales (net of sales commissions). This amount also
includes net reinvested dividends & capital gains and
investment income.
Supplemental Information
Three Months Ended Asset Manager
Mar. 31, Jun. 30,
Sep. 30, Dec.
31 Mar. 31,
Jun. 30, Sep. 30,
Dec. 31 ($ in millions)
2016
2017 Retail Unaffiliated Distribution AUM $ 38,623 $
35,197 $ 33,290 $ 30,295 $ 30,182 $ 30,307 $ 31,062 Net flows $
(5,378 ) $ (3,890 ) $ (3,343 ) $ (3,006 ) $ (1,672 ) $ (571 ) $
(483 ) Organic growth
(47.1
)%
(40.3
)%
(38.0
)%
(36.1
)%
(22.1
)%
(7.6
)%
(6.4
)%
Redemption rate
77.7
%
61.3
%
56.2
%
56.7
%
50.5
%
39.2
%
33.0
%
Retail Broker-Dealer AUM $ 42,142 $ 42,261 $ 43,170 $ 42,322
$ 43,110 $ 43,084 $ 43,472 Net flows $ (301 ) $ (398 ) $ (712 ) $
(750 ) $ (1,129 ) $ (911 ) $ (1,238 ) Organic growth
(2.8
)%
(3.8
)%
(6.7
)%
(6.9
)%
(10.7
)%
(8.5
)%
(11.5
)%
Redemption rate
9.3
%
10.5
%
12.1
%
12.5
%
15.1
%
14.7
%
16.4
%
Institutional AUM $ 14,426 $ 8,993 $ 8,595 $ 7,904 $ 7,792 $
7,036 $ 6,365 Net flows $ (601 ) $ (5,473 ) $ (838 ) $ (629 ) $
(585 ) $ (973 ) $ (1,071 ) Organic growth
(15.6
)%
(151.8
)%
(37.3
)%
(29.3
)%
(29.6
)%
(49.9
)%
(60.9
)%
Redemption rate
29.9
%
198.9
%
46.4
%
51.3
%
37.2
%
58.7
%
67.3
%
Fund Rankings1
1 Year 3 Years 5
Years Lipper Funds ranked in top half
41
%
36
%
45
%
Assets ranked in top half
53
%
41
%
50
%
MorningStar Funds with 4/5 stars
29
%
14
%
24
%
Assets with 4/5 stars
40
%
12
%
35
%
Three Months Ended Broker-Dealer Mar.
31, Jun. 30, Sept.
30, Dec. 31 Mar.
31, Jun. 30, Sept.
30, Dec. 31 2016 2017
AUA2 ($ in billions) $ 49.9 $ 50.5 $ 52.1 $ 51.7 $ 53.6 $ 54.1 $
55.5 AUA2 fee based accounts ($ in billions) $ 17.4 $ 17.8 $ 18.5 $
18.4 $ 19.1 $ 19.5 $ 20.7 Advisor headcount 1,803 1,799 1,796 1,780
1,662 1,581 1,481 Advisor productivity ($ in thousands) $ 61.3 $
63.1 $ 59.0 $ 59.4 $ 60.7 $ 65.0 $ 69.0 U&D revenues ($ in
thousands) $ 110,735 $ 113,802 $ 105,787 $ 105,931 $ 103,942 $
105,252 $ 106,000 1 Starting in June 2017, we began
using I shares in our rankings. This change was made to use a
consistent share class that aligns with the industry's sales and
asset concentrations. Performance in prior periods utilized each
funds' older share class, which was generally the A shares.
2 AUA represent Assets Under Administration
Unaudited Consolidated Statement of Income ($ in thousands,
except per share data)
Three Months Ended
Sep. 30, Jun. 30, Sep.
30, Sequential Qtr. Year-over-Year Qtr.
2017 2017 2016 Change %
Change % Operating Revenues: Investment
management fees $ 134,149 $ 130,878 $ 138,745 $ 3,271 2.5 % ($4,596
) (3.3 ) % Underwriting and distribution fees 128,892 128,776
135,778 116 0.1 % (6,886 ) (5.1 ) % Shareholder service fees
26,406 27,003 28,563 (597
) (2.2 ) % (2,157 ) (7.6 ) % Total operating revenues
289,447 286,657 303,086
2,790 1.0 % (13,639 ) (4.5 ) %
Operating Expenses:
Underwriting and distribution 149,400 151,119 152,999 (1,719 ) (1.1
) % (3,599 ) (2.4 ) % Compensation and related costs 48,340 47,224
40,214 1,116 2.4 % 8,126 20.2 % General and administrative 27,832
28,153 23,280 (321 ) (1.1 ) % 4,552 19.6 % Subadvisory fees 3,566
3,194 2,566 372 11.6 % 1,000 39.0 % Depreciation 5,230 5,175 4,541
55 1.1 % 689 15.2 % Intangible impairment -
900 5,700 (900 ) (100.0 ) % (5,700 )
(100.0 ) % Total operating expenses 234,368
235,765 229,300 (1,397 ) (0.6 ) % 5,068
2.2 %
Operating Income 55,079 50,892 73,786 4,187 8.2
% (18,707 ) (25.4 ) % Investment and other income/(loss) 7,236
2,021 7,878 5,215 258.0 % (642 ) (8.1 ) % Interest expense
(2,796 ) (2,788 ) (2,792 ) (8 ) (0.3 ) % (4 )
(0.1 ) % Income before taxes 59,519 50,125 78,872 9,394 18.7 %
(19,353 ) (24.5 ) % Provision for taxes 20,296
26,162 24,067 (5,866 ) (22.4 ) % (3,771
) (15.7 ) %
Net Income 39,223 23,963
54,805 15,260 63.7 % (15,582 )
(28.4 ) % Noncontrolling interests 1,272 656
978 616 93.9 % 294 30.1 %
Net Income Attributable to Waddell & Reed Financial,
Inc. $ 37,951 $ 23,307 $ 53,827 $ 14,644
62.8 % ($15,876 ) (29.5 ) % Net income per share, basic and
diluted: 0.45 0.28 0.65
Weighted average shares outstanding -
basic and diluted 83,476 83,611
82,834 Operating margin 19.0 % 17.8 % 24.3 %
Net Distribution Cost Analysis ($ in thousands)
Three
Months Ended Sep. 30, Jun. 30, Sep. 30,
Sequential Qtr. Year-over-Year Qtr. 2017
2017 2016 Change % Change
% Retail Unaffiliated Distribution U&D Revenues $
22,892 $ 23,524 $ 29,991 (632 ) (2.7 ) % (7,099 ) (23.7 ) % U&D
Expenses - Direct (31,779 ) (32,998 ) (39,489 ) (1,219 ) (3.7 ) %
(7,710 ) (19.5 ) % U&D Expenses - Indirect (9,648 )
(10,123 ) (10,643 ) (475 ) (4.7 ) % (995 )
(9.3 ) % Net Distribution Costs ($18,535 ) ($19,597 )
($20,141 ) 1,062 5.4 % 1,606 8.0 %
Retail Broker-Dealer U&D Revenues $ 106,000 $
105,252 $ 105,787 748 0.7 % 213 0.2 % U&D Expenses - Direct
(71,119 ) (72,110 ) (72,276 ) (991 ) (1.4 ) % (1,157 ) (1.6 ) %
U&D Expenses - Indirect (36,854 ) (35,888 )
(30,591 ) 966 2.7 % 6,263 20.5 % Net
Distribution Costs ($1,973 ) ($2,746 ) $ 2,920
773 28.2 % (4,893 ) (167.6 ) %
Unaudited Consolidated Statement of Income ($ in thousands,
except per share data)
Nine Months Ended
Sep. 30, Sep. 30, 2017
2016 Change % Operating
Revenues: Investment management fees $ 395,463 $ 424,403
($28,940 ) (6.8 ) % Underwriting and distribution fees 386,499
428,748 (42,249 ) (9.9 ) % Shareholder service fees 80,706
92,959 (12,253 ) (13.2 ) % Total operating
revenues 862,668 946,110 (83,442 ) (8.8
) %
Operating Expenses: Underwriting and distribution
450,843 508,080 (57,237 ) (11.3 ) % Compensation and related costs
144,970 151,495 (6,525 ) (4.3 ) % General and administrative 81,709
61,708 20,001 32.4 % Subadvisory fees 9,457 6,984 2,473 35.4 %
Depreciation 15,626 13,163 2,463 18.7 % Intangible impairment
1,500 5,700 (4,200 ) (73.7 ) % Total
operating expenses 704,105 747,130
(43,025 ) (5.8 ) %
Operating Income 158,563 198,980 (40,417
) (20.3 ) % Investment and other income/(loss) 11,386 (1,653 )
13,039 (788.8 ) % Interest expense (8,370 ) (8,336 )
(34 ) 0.4 % Income before taxes 161,579 188,991 (27,412 ) (14.5 ) %
Provision for taxes 64,857 63,146 1,711
2.7 %
Net Income 96,722 125,845
(29,123 ) (23.1 ) % Noncontrolling interests 2,408
1,355 1,053 77.7 %
Net Income
Attributable to Waddell & Reed Financial, Inc. $ 94,314
$ 124,490 ($30,176 ) (24.2 ) % Net income per share,
basic and diluted: 1.13 1.51
Weighted average shares outstanding
- basic and diluted 83,719 82,629
Operating margin 18.4 % 21.0 %
Net Distribution Cost
Analysis ($ in thousands)
Nine Months Ended Sep.
30, Sep. 30, 2017 2016 Change
% Retail Unaffiliated Distribution U&D Revenues $
71,305 $ 98,424 (27,119 ) (27.6 ) % U&D Expenses - Direct
(98,685 ) (128,787 ) (30,102 ) (23.4 ) % U&D Expenses -
Indirect (29,376 ) (38,931 ) (9,555 ) (24.5 ) % Net
Distribution Costs ($56,756 ) ($69,294 ) 12,538
18.1 %
Retail Broker-Dealer U&D Revenues $
315,194 $ 330,324 (15,130 ) (4.6 ) % U&D Expenses - Direct
(213,631 ) (240,293 ) (26,662 ) (11.1 ) % U&D Expenses -
Indirect (109,151 ) (100,069 ) 9,082 9.1 % Net
Distribution Costs ($7,588 ) ($10,038 ) 2,450
24.4 %
Unaudited Condensed Balance Sheet ($ in
thousands)
Sep. 30, Dec.
31, 2017 2016 Assets Cash & cash
equivalents (unrestricted) $ 225,922 $ 555,102 Investment
securities 697,138 328,750 Other assets 237,018 271,402 Property
and equipment, net 91,708 102,449 Goodwill and intangible assets
147,069 148,569
Total assets $ 1,398,855 $
1,406,272
Liabilities, redeemable noncontrolling interests and
equity Short-term notes payable $ 94,971 - Long-term debt
94,765 189,605 Other liabilities 308,178 362,012 Redeemable
noncontrolling interests 30,636 10,653
Total equity
870,305 844,002
Liabilities, redeemable noncontrolling
interests and equity $ 1,398,855 $ 1,406,272
Shares
outstanding (in millions) 83.4 83.1
Unaudited Condensed Cash Flow ($ in thousands)
Three Months Ended Nine Months Ended Sep.
30, Jun. 30, Sep. 30, Sep. 30,
Sep. 30, Cash provided by (used in):
2017 2017 2016 2017 2016
Operating activities $ 20,682 ($86,431 ) $ 66,061 ($16,580 ) $
66,059 Investing activities (181,312 ) (27,888 ) 69,281 (198,980 )
69,281 Financing activities (41,387 ) (22,913 )
(164,053 ) (113,620 ) (164,051 ) Net change
during period ($202,017 ) ($137,232 ) ($28,711
) ($329,180 ) ($28,711 )
Three Months
Ended Nine Months Ended Sep. 30, Jun. 30,
Sep. 30, Sep. 30, Sep. 30, ($ in thousands)
2017 2017 2016 2017 2016
Shares repurchased Number of shares 190,056 237,472 28,537
904,410 2,230,034 Total cost $ 3,622 $ 4,037 $ 522 $ 15,635 $
47,984 Dividend paid Rate per share $ 0.46 $ 0.46 $ 0.46 $ 1.38 $
1.38 Total paid $ 38,455 $ 38,465 $ 38,120 $ 115,691 $ 114,736
Capital returned to stockholders
$ 42,077 $
42,502 $ 38,642 $ 131,326
$ 162,720
Earnings Conference Call
Stockholders, members of the investment community and the
general public are invited to listen to a live Web cast of
our earnings release conference call today at
10:00 a.m. Eastern. During this call, Philip J. Sanders,
CEO and CIO, will review our quarterly results. Live access to the
teleconference will be available on the “Investor Relations”
section of our Web site at ir.waddell.com. A Web cast replay will
be made available shortly after the conclusion of the call and
accessible for seven days.
Web Site Resources
We invite you to visit the Investor Relations section of our Web
site at ir.waddell.com. Under the “Investor Information” tab you
will find a link to presentations as well as to data tables, which
include supplemental information schedules.
Past performance is no guarantee of future results. Please
invest carefully.
About the Company
Waddell & Reed, Inc., founded in 1937, is one of
the oldest mutual fund complexes in the United States, having
introduced the Waddell & Reed Advisors Group of Mutual
Funds in 1940. Today, we distribute our investment products through
the retail unaffiliated distribution channel (encompassing
broker/dealer, retirement, and registered investment advisors), our
retail broker-dealer channel (through financial advisors), and our
Institutional channel (including defined benefit plans, pension
plans and endowments, and our subadvisory partnership with
Mackenzie in Canada).
Through its subsidiaries, Waddell & Reed
Financial, Inc. provides investment management and financial
planning services to clients throughout the United States and
internationally. Waddell & Reed Investment Management
Company serves as investment adviser to the Waddell & Reed
Advisors Group of Mutual Funds, while Ivy Investment Management
Company serves as investment adviser to Ivy Funds, Ivy
NextShares, Ivy Variable Insurance Portfolios and InvestEd
Portfolios, and investment adviser and global distributor to the
Ivy Global Investors SICAV, an umbrella UCITS fund domiciled in
Luxembourg. Waddell & Reed, Inc. serves as principal
underwriter and distributor to the Waddell & Reed Advisors
Group of Mutual Funds and InvestEd Portfolios, while Ivy
Distributors, Inc. serves as principal underwriter and
distributor to Ivy Funds and Ivy Variable Insurance Portfolios.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended, which reflect the current views and assumptions
of management with respect to future events regarding our business
and industry in general. These forward-looking statements include
all statements, other than statements of historical fact, regarding
our financial position, business strategy and other plans and
objectives for future operations, including statements with respect
to revenues and earnings, the amount and composition of assets
under management, distribution sources, expense levels, redemption
rates, stock repurchases and the financial markets and other
conditions. These statements are generally identified by the use of
such words as “may,” “could,” “should,” “would,” “believe,”
“anticipate,” “forecast,” “estimate,” “expect,” “intend,” “plan,”
“project,” “outlook,” “will,” “potential” and similar statements of
a future or forward-looking nature. Readers are cautioned that any
forward-looking information provided by us or on our behalf is not
a guarantee of future performance. Actual results may differ
materially from those contained in these forward-looking statements
as a result of various factors, including but not limited to those
discussed below. If one or more events related to these or other
risks, contingencies or uncertainties materialize, or if our
underlying assumptions prove to be incorrect, actual results may
differ materially from those forecasted or expected. Certain
important factors that could cause actual results to differ
materially from our expectations are disclosed in the “Risk
Factors” section of our Annual Report on Form 10-K for
the year ended December 31, 2016, which include, without
limitation:
- The loss of existing distribution
channels or inability to access new distribution channels;
- A reduction in assets under our
management on short notice, through increased redemptions in our
distribution channels or our Funds, particularly those Funds with a
high concentration of assets, or investors terminating their
relationship with us or shifting their funds to other types of
accounts with different rate structures;
- The adverse ruling or resolution of any
litigation, regulatory investigations and proceedings, or
securities arbitrations by a federal or state court or regulatory
body;
- Changes in our business model,
operations and procedures, including our methods of distributing
our proprietary products, as a result of the Department of Labor’s
new fiduciary rule;
- The introduction of legislative or
regulatory proposals or judicial rulings that change the
independent contractor classification of our financial advisors at
the federal or state level for employment tax or other employee
benefit purposes;
- A decline in the securities markets or
in the relative investment performance of our Funds and other
investment portfolios and products as compared to competing
funds;
- Our inability to reduce expenses
rapidly enough to align with declines in our revenues, the level of
our assets under management or our business environment.
- Non-compliance with applicable laws or
regulations and changes in current legal, regulatory, accounting,
tax or compliance requirements or governmental policies;
- Our inability to attract and retain
senior executive management and other key personnel to conduct our
broker-dealer, fund management and investment advisory
business;
- A failure in, or breach of, our
operational or security systems or our technology infrastructure,
or those of third parties on which we rely; and
- Our inability to implement new
information technology and systems, or our inability to complete
such implementation in a timely or cost effective manner.
The foregoing factors should not be construed as exhaustive and
should be read together with other cautionary statements included
in this and other reports and filings we make with the Securities
and Exchange Commission, including the information in Item 1
“Business” and Item 1A “Risk Factors” of Part I and
Item 7 “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” of Part II to our Annual
Report on Form 10-K for the year ended December 31,
2016 and as updated in our quarterly reports on Form 10-Q for
the year ending December 31, 2017. All forward-looking
statements speak only as of the date on which they are made and we
undertake no duty to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except to the extent required by law.
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version on businesswire.com: http://www.businesswire.com/news/home/20171024005458/en/
Waddell & Reed Financial, Inc.Investor Contact:Nicole Russell,
913-236-1880VP, Investor
Relationsnrussell@waddell.comorMutual Fund
Investor Contact:(888) WADDELLwww.waddell.com or
www.ivyfunds.com
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