Waddell & Reed Financial, Inc. WDR
Q1 2010 Earnings Call Transcript

Operator: (Operator Instructions). Cynthia Mayer, Banc of America.

Cynthia Mayer - Banc of America: Just to clarify on the Advisor headcount, what would the headcount be on an apples-to-apples basis in terms of decline or number?

Daniel P. Connealy - SVP and CFO: This is Dan Connealy. I believe it would be close to 200 different.

Henry J. Herrmann - CEO and Chairman of the Board: But said in other way to change in the licensing probably accounted for roughly half of the decline from the fourth quarter level.

Cynthia Mayer - Banc of America: And here is another question for Dan. If you adjust the G&A for the one-time expense, it would be like $14.3 million which seems lower than it’s been in a while. Is that a good run rate or was there something else going on in there? I used to think of 15 as a good run rate.

Daniel P. Connealy - SVP and CFO: Well, there aren’t a lot of major differences in there. In fact, some legal expenses were little higher, but that was the major difference.

Cynthia Mayer - Banc of America: And I guess just stepping back a little bit, if I look at the trend in flows, the redemption rate in the wholesale channel has picked up a little bit. And let’s see 21% to 24.5%, can you talk a little bit about what’s behind that? And I guess at the same time that the redemption rate for the institutional channel is down, but I assume that’s lumpier.

Henry J. Herrmann - CEO and Chairman of the Board: I’ll let Tom to take a shot at first and then I might add the comment.

Thomas W. Butch - EVP and CMO: I think if you were to point at one factor, we saw some redemption pressure against the Global Natural Resources fund as a specific example. I think in a broader sense it’s just a maturation of the book. And with the natural run rate that evolves from that, we are still right at or little beneath the industry redemption rate and also.

Operator: Jeff Hopson, Stifel Nicolaus.

Jeffrey Hopson - Stifel Nicolaus: So in the institutional channel, can you breakdown a little bit I guess, between Pictet, between this traditional define benefit and then your other distributors. And Tom, maybe could you look at the non-prop sales by product and talk about any emerging products that you see or anything kind of at the margin that we may not necessarily see that would be important?

Henry J. Herrmann - CEO and Chairman of the Board: I’ll try the first half of it. Roughly speaking, the traditional defined benefit business was modestly positive in flows. And then the sub-advised business in Pictet are the rest and the flows business was much larger than Pictet, that’s clearly the way I’ve brought it down.

Thomas W. Butch - EVP and CMO: Then on the question relative to specific funds, Jeff, on the wholesale side. As you know, Asset Strategy, of course, is the largest contributor and Global Natural Resources is second on a gross basis. High income fund continues to experience good flows. Science and technology picked up a great deal and was based on some research we see in the top selling fund in that category in Q1. The limited term bond fund continues to take good flow as particularly as short-term. High quality bond funds remained somewhat in favor given what’s happening to return less money market funds. International core equity is another one that continues to do very well, and we’ve seen some promise in midcap growth as one of the -- and the municipal high income as two of the emerging products, which are getting focused. The other thing put your question, it might be just a touch of your radar screen at the moment is that we’ll be launching a new fund here in the next week or so on May 3, it’s called Asset Strategy New Opportunities Fund and it’s a derivative of the existing Asset Strategy Fund, which will essentially mirror that investment philosophy and style but focus on the equity side and small and mid-cap holdings. So that’s I think a pretty good run down of what’s working and what’s on the horizon.