Core Insights - The acquisition of Stratos Wealth Holdings by SEI is aimed at accelerating growth and enhancing operational capabilities, leveraging SEI's resources to capitalize on market opportunities [1][2][4][6] - The deal is expected to facilitate a greater volume of acquisitions, with plans to announce 15 simultaneous acquisitions in January [4][5] - SEI's investment in Stratos will enhance its asset management capabilities and provide a more robust platform for financial advisors [16][18] Company Overview - SEI has acquired Stratos Wealth Holdings for approximately $441 million, which includes a controlling stake in the U.S. business and plans to acquire the Mexico-based business next year [5][6] - Stratos manages about $37 billion in client assets and has over 350 advisors, positioning it as a significant player in the registered investment advisor (RIA) space [6] Strategic Goals - The partnership with SEI is intended to provide Stratos with the necessary capital and resources to pursue larger and more numerous transactions in the RIA market [7][12][14] - SEI aims to integrate Stratos's operations with minimal disruption while enhancing the value offered to Stratos advisors through improved technology and investment management capabilities [21][22] Market Positioning - The acquisition aligns with the growing demand for financial advice, as the industry faces a shortage of financial advisors, which is expected to increase the sustainability of advisor income [16] - Stratos's focus on Main Street investors complements SEI's existing ultra-high-net-worth (UHNW) business, allowing for a broader service offering [18][19] Integration and Collaboration - SEI plans to leverage its extensive resources, including over 5,000 employees, to support Stratos in scaling its operations and enhancing service delivery [22] - There is a focus on collaboration between Stratos and SEI's existing capabilities, particularly in the OCIO (Outsourced Chief Investment Officer) space, to better serve clients [20][24]

Financial Data and Key Metrics Changes - In Q2 2025, AlTi generated consolidated revenues of $53 million, reflecting a 7% year-over-year increase [12] - Revenue in the core Wealth Management and Capital Solutions segment rose 8% to $52 million year-over-year, driven by an increase in AUM and strong market performance [12][25] - Adjusted EBITDA was $4 million on a consolidated basis and $14 million in the core segment, with a reported net loss of $30 million for the quarter [13][28] Business Line Data and Key Metrics Changes - The core Wealth Management and Capital Solutions segment saw a 14% increase in AUM, contributing to the revenue growth [25] - 99% of total revenue came from recurring management fees, highlighting the durability of the business model [13][25] - Operating expenses totaled $83 million, up from $64 million in the same period last year, primarily due to one-time professional fees related to transformation initiatives [26] Market Data and Key Metrics Changes - The international wealth business, including the recent acquisition of Kontoora, is showing strong momentum with new clients signed with over $500 million in projected billable assets [18] - In the U.S., new and expanded mandates totaled nearly $430 million in projected billable assets through June [19] - The Middle East is identified as a compelling opportunity, undergoing a generational wealth transition with a growing preference for independent advice [18] Company Strategy and Development Direction - AlTi aims to be the leading global wealth management and OCIO platform for the ultra-high-net-worth community, focusing on recurring revenue businesses [6][11] - The exit from the international real estate business marks a strategic shift to simplify operations and reallocate resources towards scalable growth areas [11][14] - The implementation of zero-based budgeting is expected to deliver approximately $20 million in recurring annual gross savings, enhancing operational efficiency [15][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's ability to generate sustainable value, emphasizing the strength of the recurring revenue model and operational discipline [31] - The second half of 2025 is expected to progressively reflect the strength of the recurring revenue business and operational leverage from a leaner cost structure [20][30] - Management acknowledged timing mismatches in costs and benefits but remains optimistic about the positive trends emerging from recent initiatives [22][30] Other Important Information - AlTi's client retention rate stands at 96%, supported by senior advisors with over 20 years of industry experience [8] - The company has a strong cash position of $42 million and is effectively debt-free, providing a solid foundation for growth [29] Q&A Session Summary Question: Will the exit of the real estate business improve EBITDA? - Management confirmed that the exit should lead to much lower expenses and higher EBITDA going forward, estimating a significant positive impact [34][35] Question: Are the net flows margin accretive? - Management indicated that international inflows have a higher ROA compared to exiting flows, resulting in a positive net effect [36] Question: What is the outlook for the Kontoor acquisition? - The Kontoor business is expected to drive organic growth and focus on converting existing clients to discretionary mandates, which aligns with AlTi's overall strategy [39][40] Question: What are the opportunities for recruiting teams from banks? - Management noted that recruiting depends on cultural fit and the desire for a holistic service model, indicating a positive outlook for attracting talent [41][42]