'I want to help private markets offer their services to retail clients'

Originating in the 1960s, SEI has been publicly listed since 1981, but the markets have changed so fundamentally that the company’s leadership may have gone down a different path.

Hicke says: "If SEI launched today, we may not choose to be a public company. The access to capital is significantly different than it was 25 years ago — there's fewer public companies than there were and [with private capital] you have a different level of flexibility."

Private markets are where capital is heading in current times. As the initial public offering market dries up in the UK, many businesses are selling to private equity, or raising money through private credit.

Taking the next step

SEI has been positioned in this sector for more than 20 years, facilitating alternative asset classes for professional investors. It now wants to take the next step and help the private capital markets offer their services to the retail client. 

Hicke, who joined SEI in 1998 and has been chief executive for two years, says: "Let's say that a private credit manager says: 'We're going to launch a retail fund; we want to get that in front of intermediary clients'. 

"We believe SEI is ideally positioned to create a platform that facilitates the access to your intermediary client, to create an alternative asset class. There are intermediaries out there, saying: 'I want to put private equity in my client's portfolio'.

"The trend of private markets incorporated into portfolios will increase over the coming years. Ninety per cent of the meetings I deal with investment managers is how they're going to access the retail market; and 90 per cent of intermediaries is how they can access alternatives."

Investors are going to need to get educated as there are different tax implications, the fee structures are different, and there's a lot of education required around allocating private markets in a client's portfolio

SEI builds platforms for wealth managers and fund managers, and in the UK it powers the technology for Evelyn Partners, Waverton and Schroders Private Wealth, doing a similar job to FNZ. 

But Hicke believes that private markets will be the next iteration of investment offering in the wealth management space, especially in the retail sector.

To achieve this there will need to be a huge transformation of awareness in the retail investment arena, and providers will have to jump through many hoops to have their product reach the end client, he says. "Fund managers have to get regulatory permission and they have to work out the fund structure that will allow a retail investor to access that fund.

"Investors are going to need to get educated as there are different tax implications, the fee structures are different, and there's a lot of education required around allocating private markets in a client's portfolio. If [in the US] they do that through a 40 Act fund [a US-pooled retail fund], they will have to provide some level of transparency as a 40 Act fund."

SEI is one of the larger administrators to 100 alternative investment managers that outsource back-office and fund administration to the tech company, providing dashboards to alternative investment managers.

Altogether, the business has $1.5tn in assets under administration, management or advice — $444bn is AUM and $983bn is under administration. SEI has about 5,000 employees globally, with 300 in London. It recently bought Altigo, a tech business that will help it provide alternative asset solutions.

SEI has a master trust presence in the UK, with SEI Master Trust, through which it also owns the National Pensions Trust and the Atlas Master Trust, as this is a growth sector, and Hicke sees consolidation in this space.

But in the UK, Hicke also has a keen eye on the re-platforming needed by independent financial adviser companies also consolidating, often with the backing of private equity firms — a world he is familiar with.

“Let’s say consolidator A has bought 20 firms and those 20 firms are on nine different platforms and in 20 different investment propositions and have 20 different client processes. We work with those organisations to harmonise and streamline all of those areas,” he says.

“SEI is one of the better organisations at technology migrations and re-platforming. We’ve been [re-platforming] for years; the SEI business has a lot of capabilities and experience in harmonising data and making sure the migration of data is happening.”

One of the issues that often gets missed is third-party data. SEI can integrate third-party applications through APIs where required and also has its own proprietary applications.

There has also been the technology issue in merging a lot of adviser companies. “There was originally more of a consolidation arbitrage strategy of saying: ‘We’re going to roll up a number of large [businesses] and through size create opportunities and leverage'," Hicke says.

There is a demand for a modern, end-to-end wealth management experience and a need for a holistic view of data, so it’s critical for firms to align their investment process and have a unified infrastructure in place

“But in a lot of these cases the consolidators were not requiring a change to that firm’s investment solution. That has changed in the past 24 months. [They realised that] as they get larger and larger the best way to scale is to have a common process in place. 

“There is a demand for a modern, end-to-end wealth management experience and a need for a holistic view of data, so it’s critical for firms to align their investment process and have a unified infrastructure in place. There’s going to be significant growth in the investment adviser space — advisers are going to lean more into technology to serve clients and that’s going to grow.”

Hicke has spent some time living and working in the UK. He was in the country from 2001 to 2012 and ran the UK office, with a six-month interval in the US.

“I love the UK; three of my five children were born in the UK,” he says. His job was to sell SEI’s asset management to IFAs all over the country. “I love the concentration — you can go and see anybody in the UK, and you can see anybody in Edinburgh, and I love being able to walk to meetings.”

Looking forward, he wants UK advisers to be part of the next evolution of SEI’s services.