Craig Siegenthaler: Thank you, Dave.
Operator: Your next question comes from the line of Etienne Ricard from BMO Capital Markets. Please go ahead.
Etienne Ricard: Thank you, and good morning. To follow up on the topic of acquisitions, for what asset class do you see the best opportunities? In other words, there’s lots of discussion about an eventual improvement in fixed income net flows. Is this being reflected in potential transaction activity that you come across? And as a follow-up, do you see potential for a broader range of fixed income strategies at Victory?
David Brown: So, the way we look at acquisitions, we start off with a concept that does it make our company better. We don’t specifically target asset classes. I think acquisitions are much wider and more in depth and more complicated than just trying to fill an asset class or a product capability. And so, we’ve never really approached it that we need a certain asset class. We do follow where our clients are going and that’s how we’ve built our product lineup. So as far as acquisitions, as far as the acquisitions that we’re looking at, I think it’s a wide range of asset classes and types. And then in specific response to your question on fixed income, we have a really, really strong fixed income franchise. We’ve referenced the performance in our prepared remarks.
And we feel really good about the lineup we have. There is a lot of assets moving into the private side of fixed income, private credit. That is an area that we’re interested in. We don’t have that capability today. The opportunity for us to go and get other fixed income capabilities. We’re evaluating whether we do that internally, whether we partner with somebody, whether we acquire it. But if you look at the lineup we have today, I think it’s quite compelling. And I also think it’s very well positioned to capture assets when assets come out of the cash asset class and we’re starting to see that today. We have a number of vehicles. We have ETFs that are driven by fixed income. We have mutual funds, institutional separate accounts, and all kinds of shared classes.
So we feel really good about what we have today.
Etienne Ricard: Okay. And as a follow-up on the organic side, could you please share an update on your brokerage platform almost a year following the launch and the related improvements in client engagement that you’ve seen since? So, as you stated, we created a brokerage platform off of our direct business or direct channel and today clients can sign up for a brokerage account and perform basic brokerage activities, trade stocks, buy mutual funds in ETFs that aren’t managed by Victory Capital. And we’ve seen great engagement with our clients. Our client service scores are excellent. We’re starting to see clients sign up for brokerage accounts, move brokerage assets in there. And so, we’re in the beginning phases of that. We look at that as a long-term build.
We look at that as offering more products to our direct clients and then also potentially marketing to new clients. We look at the success of that over multiple years. And the phase we’re in today is really around capabilities, around service, and we’re doing an excellent job of both of those and we’re starting to see some assets being raised on the brokerage side.
Etienne Ricard: Great. Thank you very much.
Operator: Your next question comes from the line of Alex Bolstein from Goldman Sachs. Please go ahead.
Alex Bolstein: Hey, good morning guys. Thanks for the question. I wanted to follow-up on the comments you made around WestEnd advisors. It sounds like you made meaningful traction on kind of getting the product in front of financial advisors. I think the stat you cited something like up 35% in terms of the headcount. Can you help us frame the opportunity set within the sort of the addressable market that you kind of see there? So meaning advisors that utilize WestEnd, what’s the average AUM maybe that they have under their umbrella and if others can get to a similar level, what kind of a flow and AUM uplift could that create for Victory? Just trying to get a little bit of a better framework to [indiscernible]. Thanks.
David Brown: Good morning, Alex. So when we acquired WestEnd, we had gone out and said that this was going to be an opportunity for us to grow their business and really for them to plug into our distribution capabilities. And so, since we’ve acquired them, which was really the beginning of 2022, they have been organic growth positive in every time period since inception. They were organic growth positive in 2023 and 2022. And part of that really is, as we’ve stated, is expanding the number of platforms that their product is on, and it’s also increasing the number of advisors that are doing business with them. We’ve also increased their product set by launching their first ETF, MODL, which has been successful and allows advisors to access the WestEnd platform not just through the model delivery accounts.
And so that area of the market has a lot of momentum. There are definitely opportunities that we will grow into and we’ll grow into them a couple different ways. Typically what happens with a WestEnd client advisor is, they will start off small, and then they will eventually grow larger into the relationship. So the WestEnd product will capture a percentage of the advisors book and then over time the advisor will allocate more so there’s really an opportunity to grow the existing relationship with advisors, get new advisors and then increase the platforms. I don’t have a dollar amount I can share with you on the average AUM for an advisor or what the size of the market is, but if WestEnd is successful the way we think they will be, it’ll be a material part of our organic growth story and the — if you look at their growth historically and if you look at some of the projections for that part of the market and we capture what we think would be our share, it’ll have an impact on our organic growth story.
