SEIZE CHANGE...have been done before. Ask a child and you’ll hear a torrent of out-of-the-box ideas. With age, we gain intelligence but lose raw creativity. Think about little ideas

SEIZE CHANGE

Tomorrow’s tech + today’s humansSEI 2018 EXECUTIVE CONFERENCE | MARCH 4-7, SCOTTSDALE, AZ

EXECUTIVE CONFERENCE SESSION SUMMARIES

Table of Contents

The Economic and Political Realities Facing the President and Congress ..................................................3

Competitive Business Strategies in a New Environment ..................5

Be Revolutionary: How to Make Change Happen When Change Is Hard ......................7

The Cognitive Neuroscience of Financial Decisions .........................9

The Future of Augmented Reality ...................................................10

Putting Innovation to Work ..............................................................12

Innovation of Design .......................................................................14

Play to Win: Prevailing in a Changing Sales and Distribution Landscape ...................................................16

Q&A: Practical Tips for Raising Assets ............................................18

SESSION SUMMARIES | 3

THE FEDERAL RESERVE’S FORECAST IS DANGEROUSLY OVEROPTIMISTIC.Given GDP growth, direction of the stock market and unemployment trends, you

can see why the Fed is expressing confidence. The conventional wisdom is that

we’ve turned a corner and the Fed will be able to raise rates four or even more

times in the period ahead.

But in only six times in eight years has quarterly GDP growth exceeded 3%; annual

GDP growth in 2017 was 2.1%. In forecasting annual GDP growth above 3%, the

Fed has been wrong literally 35 quarters in a row.

We’re also terrible at forecasting recessions. Just because we don’t see one

as nasty as 2008’s on the horizon doesn’t mean one can’t be brought on by a

popping bubble, too rapid a rise in interest rates, or anything else that destroys

confidence and alters behavior (like an escalating trade war).

Whether the tax cut will create new capital investment is debatable; we also have

no idea what the end of quantitative easing will do.

This doesn’t mean the outlook is negative; I’m just not as positive as the Fed. I

see continued moderate growth, perhaps a little faster than the last five years,

but not much.

THE CURRENT POLICY GRIDLOCK IN D.C. IS NORMAL, AND COULD BE A GOOD THING BECAUSE IT LOWERS THE CHANCES OF SOMETHING AWFUL BEING ENACTED.It’s typical for new presidents to do things in the first year; after that, nothing much

happens. The chances of major immigration or infrastructure legislation are low.

The President has already taken the regulatory actions he can; going forward,

they will be incrementally smaller. This tempts him toward trade and raising tariffs

because he can. There’s some nervousness because trade wars will affect our

allies and can escalate unintentionally. If you blow up NAFTA, there’s a high

chance that a recession could result that would hurt the very industries we’re

trying to help.

The Economic and Political Realities Facing the President and Congress

AUSTAN GOOLSBEEFormer Chairman, President’s Council of Economic AdvisersProfessor of Economics, University of Chicago Booth School of Business


THE ECONOMIC AND POLITICAL REALITIES FACING THE PRESIDENT AND CONGRESS

WHY DO I REMAIN MORE OPTIMISTIC ABOUT THE LONG RUN THAN THE MEDIAN ECONOMIST?Ninety percent of growth has nothing to do with D.C., and the dynamics of private-

sector growth haven’t changed much.

While our national debt is a serious problem, we can manage it in a way other

countries can’t. Our debt-to-GDP ratio is well below that of any problem country.

Plus our demographics are the least negative of any advanced nation; as long as

we don’t cut off immigration, we can solve the imbalances.

We have the highest-productivity workforce in the world, plus a massively

entrepreneurial and innovative culture in both small and large organizations.

“ In the best case, Washington’s achievements will be zero.”


THE INVESTMENT INDUSTRY IS FACING A HOST OF CHANGES WE HAVE NEVER HAD TO DEAL WITH BEFORE.Slowing growth of flows

The years of massive growth are over.

Falling return expectations

The average for a 60/40 portfolio has dropped from 7% to 3.5% annually, which

will drive behavior.

Intensifying fee pressures

Index providers are feeling this the most. As fees soften, client retention becomes

even more critical.

Rising costs

Fixed costs are outpacing variable ones.

Increasing concentration

In Q2 2013, the top 10 firms captured less than one-third of net flows; as of Q2

2017, the top 10 represented 57% of AUM.

Generational transition

Many privately held firms are run by aging founders, especially those in

alternatives.

Shifting growth segments

Traditional retail is growing slowly, and the legacy institutional business is a

takeaway game. The strongest growth will be in the “new institutional” business,

including the retail platform, sub-advisory and defined contribution retirement

segments.

Continuing global diversificationChina is the only high-growth scale market, and will account for 45% of global

organic flows over the next five years. Most firms don’t know what to do about that.

Competitive Business Strategies in a New Environment

YARIV ITAHManaging Principal, Casey Quirk


COMPETITIVE BUSINESS STRATEGIES IN A NEW ENVIRONMENT

WHAT NOW?Realize that increasing distribution is not a cure-all, adding

headcount doesn’t boost sales productivity.

Think through your firm’s global strategy, which is getting

harder.

Understand the power of brand. Star performers have a

strong brand and strong performance. When it comes to

driving flows, however, a strong brand is more important.

Be ready to invest across all operating dimensions—

strategy, the operating model, talent and especially

technology, which plays a big role in all solutions.

Our industry’s tech spending as a percentage of

revenue has doubled in the last four years, and

we’re still behind insurance and banking in cloud

computing, process automation and AI.

THE TAKEAWAY: While the industry is going through

substantial change, median profitability

remains strong, and some parts of

the industry will see massive growth

and profitability. This is still a highly

attractive industry for those who

are in the right place, continue to

grow and focus their technology

investments, and understand

how to integrate technology

with their business strategy.

FOUR STRATEGIC OPTIONS

Which course supports

your strategy?

1. Compete on cost—Every firm

will need to pursue ways of

cutting costs via efficiencies,

scale or quantification.

2. Differentiate on customer

experience—Technology creates

many possibilities to compete

through digitization, brand and

personalization. Get this right, and

you can worry less about costs and

fee pressures.

3. Differentiate on product—A few firms

will have uncommon alpha-generating

strategies or allocation skills. Some will use

data to create alpha.

4. Recapitalize/pursue M&A—If you can’t

compete or aren’t willing to invest, partner

with someone who can.


Be Revolutionary: How to Make Change Happen When Change Is Hard

JEREMY GUTSCHEFounder, Trendhunter.com

Rapid change is a relentless fact of corporate life today. In the 1950s, the average

life span of a Fortune 500 company was 75 years; now it’s 15 years and half the

companies from the 2000 list are gone.

The trouble is that companies are not built to adapt. Our brains are the product of

10,000 years of evolution as farmers. When we were hunter-gatherers, we never

knew where the next meal was coming from. That made us insatiable, curious

and willing to destroy. Agriculture created structure, but it also wired us to be

complacent, repetitive and self-protective.

AWAKEN YOUR INNER TREND HUNTERThe secret to remarkable success is hard work plus overlooked opportunity.

Everyone wants to get better and faster, but they all don’t put in the effort. Your

competitors are lazier than you think!

… THEN GO ON THE HUNTWe’re missing out on breakthroughs that are within our grasp. Ask most adults

what you can do with a paperclip and they’ll come up with a dozen things that

have been done before. Ask a child and you’ll hear a torrent of out-of-the-box

ideas. With age, we gain intelligence but lose raw creativity. Think about little

ideas you can make big and look at problems from different perspectives.

Remember, almost all innovation happens by making connections that other

people don’t see, often across very different industries, fields and disciplines.

There doesn’t have to be a single eureka moment. You can increase your odds of

success by lining up with multiple trends.


BE REVOLUTIONARY: HOW TO MAKE CHANGE HAPPEN WHEN CHANGE IS HARD

16 “HOMEWORK” QUESTIONSAsking these mission-critical questions will help your team see patterns of

creative opportunity while taking advantage of different learning types.

Insatiability1. How often do you experiment with ideas that might not work?

2. How would you act differently if you knew there was a team working 24/7

to eat your lunch?

Curiosity3. How much time do you spend hunting new opportunities?

4. How many ways can you connect the dots/rebuild your business?

Willing to destroy5. What success is blinding you from trying new ideas?

6. How much simpler would you design your business if you had to restart

from scratch?

Acceleration7. Why, specifically, should I choose you?

8. How might you redefine your most important feature?

Cyclicality9. How much have styles and culture changed since your last reinvention?

10. What do your next customers think about your relevance?

Convergence11. What other services could be combined with your offering?

12. What dream brands or products could you work with?

Reduction13. What parts of your business do customers actually care about?

14. How many ways could you imagine a simpler startup?

Divergence15. What do people hate about your industry?

16. How could you be more customized, more unique or different from

the mainstream?


The conscious part of our brain is the broom closet in the mansion of the brain.

Most cognition is “under the hood,” and our decision-making is driven by the

unconscious, which operates at a scale of time and space far more complex than

our conscious minds can handle. We now know that our economic decision-

making is not rational, consistent and objective, as classical economics would

have it. Humans are in fact irrational, swayed by emotions and confused by risk.

KEY CONCLUSIONSOur decision-making is more chaotic than we thinkWith the advent of noninvasive brain imaging, we can see how our decisions

are influenced by different parts of the brain with different drivers. Our decision-

making can be broken down into three parts—valuation, emotions, the social

brain—that are always battling it out under the surface to steer what we do.

We’ll need cognitive flexibility to deal with future challengesThe brain is efficient and tries to automatize our behavior as much as it can. But to

deal with the challenges and technologies of the future, we’ll need to be able to

think creatively.

As technology improves, creativity becomes more criticalWe moved from a manufacturing-based to an information-based economy. Now,

as our technologies become even better at accumulating and interpreting huge

amounts of data, we’re moving toward a creativity economy in which an added

human spark leads to breakthrough innovations. Accordingly, companies need to

be flexible and diversified in their pursuit of new ideas.

The Cognitive Neuroscience of Financial Decisions

DAVID EAGLEMANAdjunct Professor, Psychiatry and Behavioral Sciences, Stanford UniversityDirector of the Center of Science and Law


The Future of Augmented Reality

MARY LOU JEPSENFounder, OpenwaterCo-founder, One Laptop per ChildFormer engineering executive at Facebook, Oculus, Google X and Intel

Imagine a medical imaging device that you can wear on your wrist or in a beanie

on your head, but has better functionality than a two-ton, $3 million MRI machine.

This is Openwater’s breakthrough. We are now able to focus through inches of

tissue to an area a few microns square, and will show live prototypes this year. Our

goal is to see deep into the body with the detail of a high-resolution 3D camera.

With healthcare accounting for 17.5% of our GDP, this advance is one we badly

need. Medical imaging accounts for $100 billion of annual healthcare costs in the

U.S. alone. Better, earlier diagnosis will reduce pain and suffering while lowering

costs of treatment, too.

BEHIND THE WEARABLE MRI, TRUE 3D IMAGINGHolography is the key to imaging in true 3D volumes that capture the speed and

intensity of light (unlike the 2D imaging in current virtual and augmented reality

systems). Bodies are translucent to near-infrared or, better yet, infrared light,

but scatter it. At Openwater, we figured out how to turn that scattering pattern

around and untangle it so a beam emerges from the body. We also leveraged

the electronics manufacturing capability already being used for next-gen VR and

AR systems.

The result is a technology that replaces the most expensive room in the hospital

with a compact, low-cost device and liquid crystal display. Other potential

applications include:

›› A bra for breast cancer detection

›› Molecular-level surgery without a knife

›› Cancer treatments that more effectively block the growth of blood vessels

feeding tumors

›› Low-dose chemotherapies that augment drugs with delivery of light inside

the body

›› Biotonic devices that use light to kill the plaques associated with Alzheimer’s

›› Better diagnosis of mental and neurodegenerative diseases that affect two

billion people around the world


THE FUTURE OF AUGMENTED REALITY

THOUGHTS MADE VISIBLEWhile privacy and ethical concerns will need to be addressed, we are quickly

entering the world of visible (and audible) thought. With MRI scan data alone,

we can capture a grainy image of what test subjects are seeing. By using fMRI,

functional imaging based on oxygen use in the brain, we can increase image

resolution to the point where we will be able to communicate with thoughts. What

if you could upload your thinking, your thoughts, your emotions and share your

mind with someone else? The possibilities for collaboration and discovery would

be endless.

What’s more, the gaps between thought and action will be steadily compressed.

With shorter feedback loops accelerating change, time scales will collapse, and

we’ll no longer have the security blanket of a time lag.

We currently see robots and 3D printers using blueprints to build bridges and

houses. In the not-too-distant future, the process of translating thoughts into

material form will be nearly instantaneous. We will be able to directly plug into an

architect’s conception and, with a little fine-tuning, see it as a finished building the

same day. The same goes for film, music and every other creative process. Get

ready, because the barriers between imagination and reality are about to crumble.

From Openwater patent application, as shown on medium.com


Leveraging technological developments from other industries, SEI is continually

working toward innovations that we and our clients can apply across business and

operational units.

KEY DESIGN CONCEPTSSEI is implementing core technical concepts across its platform to allow us to

continue to offer new functionality and solutions.

Open architectureOpen design allows us to offer a broader range of services, be source- and

destination-agnostic in our use of data, and readily extend, upgrade or replace

system components in the future.

Customization via configurationOur solutions can be tailored to varying needs through adjusting settings, rather

than custom coding.

Modular/reusable objectsModules for functions, such as scheduling, completing forms or electronic

signatures can be built once but used multiple times in many different contexts.

Design patternsJust as automakers may build a variety of vehicles on a single chassis, we create

reusable templates for complex solutions.

SecurityMachine learning enables instantaneous pattern recognition, so systems can

identify potential threats before they become incidents.

Abstraction layerThe user interface remains constant and familiar regardless of changes in the

underlying system.

Putting Innovation to WorkJIM WARREN, JIM LEWIS, DAN CENEVIVASEI


PUTTING INNOVATION TO WORK

OUR API VALUE PROPOSITIONAn application programming interface (API) is a set of

routines and tools for building software and applications.

A Netflix API, for example, will let you stream content

across a variety of devices and applications (iOS,

Android, Windows, AppleTV, etc.). Twilio’s API provides

secure text and voice messaging for enterprises,

including Netflix, Coca-Cola and Airbnb, allowing those

companies to focus on adding value rather than the

commodity that is messaging. Why reinvent the wheel?

We’ve built SEI’s API gateway and Developer Portal to serve as a self-service

platform for application development—for our development teams, our vendors

and our clients to use.

By applying these capabilities we can:›› Fully digitize investor onboarding and subscription processes.

›› Enhance the investor experience with “smart” forms that interactively guide

investors through completion, or capture data that already exists elsewhere on

a system.

›› Analyze data in a variety of ways, in real-time, based on queries via voice, text

or chat.

›› Produce personalized data and visual reporting with a minimum of clicks.

›› Provide straight-through-processing of data through multiple applications.

›› Create a seamless and fully branded end-to-end investor experience.

Coming soon: new leaps in functionality›› Investor self-service options, integrated with all necessary data, documents and

approvals.

›› Natural language processing that uses machine learning to bring the most

important information to the forefront.

›› More integration of SEI and client processes.

›› Advanced analytics, incorporating diagnostics (what happened), predictions

(what happens next) and prescriptive action steps (what should I do now).

What else is ahead?›› Blockchain—Having already done various proofs of concept, we are working

on issues of integration, identity management and security, so we can partner

with, and be a consultant to, our clients.

›› Automation—Artificial intelligence will enable us to make incremental progress

on automating repetitive processes.

›› Office of the future—Wearable devices and personal AI will improve the

working environment for all.


We are entering a new era of design. Since the Industrial Revolution, design has

been overwhelmingly influenced by the needs of mass production and assembly

lines that consider products as assemblies of discrete parts with distinct functions.

A new wave of scientists, engineers and architects seeks to redefine design by

thinking of products as integrated systems that inspire and are inspired by nature.

This is the focus of MIT’s Mediated Matter Group, where we work at the

intersection of computational design, digital fabrication, materials science and

synthetic biology. We create new multifunctional design forms and fabrication

processes with broad applications across disciplines and scales. In our field of

Material Ecology, we study relationships and interactions between designed

objects and structures and their environs. Imagine a skyscraper made with

concrete that can breathe and grow and think; road cracks that can be filled with

a natural substance that expands and contracts along with the road’s surface; a

chair that moves and grows with your body. The potential is virtually limitless.

WEARABLE BIOLOGICAL AUGMENTATIONBetween smart watches, fitness trackers and virtual reality

headsets, wearable technologies of today passively convey

information. But what if they could actively generate the

life-sustaining resources we need to survive?

At MIT, we create wearables that augment human biological

systems. New relationships are engineered between

microorganisms that do not coexist in nature. They are contained

in custom 3D-printed microfluidic channels grown on the external

human body and computationally designed to mimic our internal

systems. In a wearable digestive system, cyanobacteria from our oceans

photosynthesize light into sugars and E. coli from our human guts convert those

sugars into food and other biofuels. They work together inside a single channel

that varies in material properties to achieve the desired functionality over a

length 10 times that of our small intestines. This is evolution not only by nature,

but by design.

Innovation of Design

NERI OXMANArchitect, Designer, InventorSony Corporation Career Development Professor and Associate Professor of Media Arts and Sciences, MIT Media Lab


NATURALLY DESIGNED ARCHITECTUREFrom the microscale to the building scale, nature exhibits the most

sophisticated architecture in existence. The silkworm uses a single thread

consisting of two proteins in different concentrations to construct a tensile

structure enveloped by a compressive cocoon that serves as a home in which

to safely metamorphose. Shape, composition and structure of each cocoon

are directly informed by the environment.

Based on this, we designed a six-meter-high pavilion with robotically spun

silk laid in varying geometric densities. Given the silkworm’s response

to environmental factors, a sun path diagram informed the placement of

apertures that would influence the distribution of light and heat on the

pavilion. Over three weeks, 6,500 live silkworms released at the bottom rim

spun 6,500 km of silk, filling in the gaps of our scaffold while simply processing

through their natural course of life. Such a convergence of digital and biological

fabrication could revolutionize architecture and design.

GLASS ADDITIVE MANUFACTURINGOne of the oldest production materials, glass has unique material properties.

However, its optical transparency, mechanical strength and chemical stability

remain underutilized because of challenges associated with its design and

fabrication.

Our additive manufacturing platform combines 3D printing with insulated kiln

technologies to enable precise deposition of molten glass in complex geometries,

with high spatial resolution, accuracy, strength and transparency. Printed glass

filaments can be tuned to control transmission of light and heat, and to produce

gradients in color and composition. Future cities could have buildings with functional

facades optimized for solar radiation. For the first time, glass can be used to its

fullest potential in products of infinite potential forms at the industrial scale.

DIGITAL CONSTRUCTION PLATFORMEffective integration of our built environment into the natural environment

demands a system that can deploy anywhere in the world and adapt to real-time

environmental site data. Such a system could work faster at lower cost. It could

also challenge traditional construction methods and architectural forms through

custom internal designs and composite materials that optimize strength, insulation

or other properties.

To explore this concept, we built a free-moving vehicle supporting an industrial

robotic arm. A smaller precision arm on the end controls effectors of any

construction or digital fabrication capability, from pouring concrete to milling

materials. Once on location, our platform assesses the site, prepares the surface

and 3D prints the structure all on electric and solar power. It can easily fit into

existing sites, equipment and building codes, while improving construction

efficiency, quality and safety. A fully autonomous version has the potential to

be a transformative part of providing shelter in remote regions, disaster relief,

hazardous environments and extraterrestrial exploration.

INNOVATION OF DESIGN


Presented content was adapted from DST’s “Navigating the Storm: Modern

Instruments for a New Age in Asset Management” white paper, which is available

at www.dstsystems.com/rac. The session included a lively debate and the

summary below primarily reflects the views of DST and Lee Kowarski.

The long bull market has delivered windfall after windfall, but another picture

lies under the surface. While average asset manager margins remain healthy in

the 30-percents, active funds haven’t been delivering the performance or the

consistency investors typically seek, while flows to passive have been increasing.

Meanwhile, the investment management industry is facing a perfect storm:

changing demographics, technological innovation, fee pressures and regulatory

change, not to mention a shifting distribution landscape. We are selling an

increasingly holistic set of services to financial advisors, only 36% of whom make

investment decisions.

Play to Win: Prevailing in a Changing Sales and Distribution Landscape

LEE KOWARSKIVice President, DST Systems

T. NEIL BATHONFounder, FUSE

Active mutual fund and ETF flowsThree years ending 12/31/2017

Out of Active

$410.8B↓Into Passive

$1.6T↑

% of Domestic Equity Funds Outperforming

Beat benchmark in three-year period ending June 2017

14.4%

Consistently top quartile

over two years ending June 2017

2%Sources: Morningstar Direct data as of 12/2017; DST Research, Analytics and Consulting (flows) S&P Dow Jones Indices SPIVA U.S. Scorecard and Persistency Scorecard Mid-2017 (performance)


PLAY TO WIN: PREVAILING IN A CHANGING SALES AND DISTRIBUTION LANDSCAPE

FORWARD-LOOKING FIRMS ARE EMBRACING CHANGEAdvancing the use of data. The challenge isn’t accessing data, but having too much and knowing what to

focus on. The other issue is changing the culture of firms so they can become

more data-driven.

Creating a Chief Data Officer position. Data isn’t merely a reporting or back-office function; it should have a seat at the

table and inform overall business strategy.

Identifying which distributors are the best strategic partners. Most firms still don’t know their ROI for spending at broker-dealer partners. They

should ask: How well do our strategies align? What’s our access to leadership?

What’s the quality of the relationship over the long term?

Positioning themselves to prosper. This can require considerable analysis and hard decisions that may not be in line

with the personality of a firm’s leaders. Any functions that don’t provide a true

competitive advantage will be outsourced. Those best equipped to compete

going forward will be true best-of-breed asset managers, or scale players with

operational excellence. Most firms are stuck somewhere in the middle.

Considering tough choices. While there is no immediate catalyst for change, the market has been masking

underlying problems. When the market shifts, the survivors will find their options

more limited. One reason we haven’t seen more M&A is that firms tend to

overvalue themselves; they think the price is too low, but a year from now it will

be lower. The right move may be to sell off some noncore and nondifferentiating

assets, find a compatible partner or sell the firm outright.

Developing competitive pricing models. Recognizing that lower fees will require a big jump in AUM to maintain constant

revenues, firms should explore alternatives to the traditional AUM-based

percentage model. Expect to see some pressure for innovation from large

players or regulators.

THE TAKEAWAY: Having long been buoyed by great operating margins, our industry has been one

of the slowest to change and evolve. The key to long-term survival and success is

understanding who you are, and focusing where you can be a leader in terms of

performance, fee structures or operational excellence.


Q&A: Practical Tips for Raising Assets

MODERATORRachel Minard, CEO, Minard Capital

FOLLOWING ARE SELECTED QUESTIONS AND ANSWERS FROM THE PANEL SESSION.

How do you look at risk when evaluating emerging managers?Flamholz: With fund launches more expensive and complex than ever, we see two

types of emerging funds. First are small managers with family-and-friends assets;

they are focused on portfolio investment and often have trouble raising funds

because they can’t pass operational due diligence. Then there are institutionally

oriented firms that focus on the business side, may have larger AUM than they

should, and may see performance suffer from a lack of investment focus. We

look for a balance of performance and business excellence, along with a strong

compliance culture, a willingness to work with our infrastructure and an investor-

friendly approach. Managers should feel privileged having firms like us as

investors rather than taking clients for granted.

What investment ideas are you excited about?Cagan: I see enormous opportunities arising from the globalization of tech;

innovation is occurring everywhere. Sustainability is another theme I’m passionate

about; it’s compelling for our planet and for the returns. I’m investing in wind

and solar storage solutions along with technologies for water desalination and

industrial wastewater reuse, among other things.

Which words or concepts are becoming jargon and should be eschewed?Guinney: I’m a critic of the “alternative” concept; it’s an oxymoron because most

strategies labeled that way are no longer alternative. “Difficult to benchmark”

doesn’t mean alternative. “Absolute return” is also overused.

Ford: “A private equity approach to public market investing” is a phrase I never

want to hear again.

Panelists

LAIRD CAGANCagan-McAfee Capital Partners A longtime tech investor affiliated with RocketSpace, an innovation accelerator

ABBY FLAMHOLZWorth Venture PartnersProvider of investment solutions focused on emerging hedge fund and private credit managers

DAVID FORD, JR.1112 Partners, LLCHead of a single-family office

MARK GUINNEYTiedemann Wealth ManagementHead of a multifamily office that invests broadly


Q&A: PRACTICAL TIPS FOR RAISING ASSETS

We’re seeing a movement out of hedge funds, but also big launches. Where are hedge funds going and what might replace them?Flamholz: There will always be a place for privately managed capital, but if you are

charging premium fees, you need a premium product. Alternative allocations are

moving away from beta strategies and toward more complex, less liquid structures

such as direct lending. We’re seeing launches that have drawdown structures more

like private equity, with the fund’s liquidity matching the liquidity of assets.

How important is the ESG investing trend?Ford: There is a proliferation of impact investing products, but not a lot of history

or data on their performance. It’s challenging because everyone’s definition of

impact is different. With so many objectives, you can’t be all things to all clients.

That said, it is a nascent industry with a lot of demand and people who live and

breathe that approach. You can’t be superficial about it.

What is the future of AI and its applications?Cagan: It will be ubiquitous, due to the convergence of computing power, cheap

storage, sensors and cellphones, and it will change many industries. Computers

can read X-rays better than humans. Autonomous vehicles are a huge paradigm

shift that’s coming faster than you think, starting with long-haul tractor-trailers. It

will affect traffic, parking, real estate, housing, insurance and more.

What is your best advice for those launching new firms or products?Flamholz: We’re looking for the strategy or product with a sustainable edge within

a lasting and relatively uncrowded opportunity set. We like strategies that are less

scalable and more capacity-constrained, so larger firms can’t participate. Managers

need to be intellectually honest about their edge and where their AUM maxes out;

that honesty is our number-one criterion. The pricing should also be attractive, but

higher fees are acceptable if the strategy is unique and not scalable.

Does globalization imply that small start-ups can’t do it alone anymore?Cagan: Part of the challenge is knowing what’s going on everywhere. Innovations

are still sparked by individuals, but your technology may be a component of an

ecosystem. The world is now full of people looking to deploy capital to build new

things, and what works here in the U.S. works everywhere. Technology incubators

like RocketSpace can help innovators accelerate adoption around the world.

Where do you get your best information?Flamholz: My best ideas come from existing investors and word of mouth from

smart clients or colleagues who invest for themselves.

What are the traits of your best and worst meetings?Guinney: I expect that people will come with an agenda, but I try to get them off

message as quickly as possible. I’m looking for honesty about how differentiated,

unique and expert they really are, and you have to go off-script to get there.

Those are the best meetings. There’s also lots of mediocrity and “me-too”

approaches out there, and those are the least interesting meetings. But almost

anyone can provide some perspective, even if it’s just to help me know what I

don’t want to do.

©2018 SEI 17e404- IMS-141474 (06/18)

United StatesCorporate Headquarters 1 Freedom Valley DriveP.O. Box 1100Oaks, PA 19456+1 610 676 1270

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IrelandStyne HouseUpper Hatch StreetDublin 2+353 1 638 2400

[email protected]/ims

The data and research reference in this summary are credited to the speakers involved, and do not necessarily reflect the views of SEI. This is not intended to be, or relied upon, as investment advice.

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SEIZE CHANGE...have been done before. Ask a child and you’ll hear a torrent of out-of-the-box ideas. With age, we gain intelligence but lose raw creativity. Think about little ideas