10-K: SEI Investments Reports Strong 2025 Growth, Strategic Acquisitions

SEI Investments Company reported an 8% revenue increase to $2.3 billion and a 23% rise in net income to $715.3 million for fiscal year 2025, driven by strategic acquisitions and growth in its Investment Managers segment.

Summary

• Total revenues increased 8% to $2.3 billion in 2025 from $2.1 billion in 2024.
• Net income attributable to SEI Investments Company increased 23% to $715.3 million in 2025 from $581.2 million in 2024.
• Diluted earnings per common share rose 28% to $5.63 in 2025 from $4.41 in 2024.
• Completed the sale of the Family Office Services business in June 2025, resulting in a net gain of $94.4 million ($0.58 diluted EPS).
• Revenue from Assets under management, administration, and distribution fees increased, primarily from higher assets under administration in the Investment Managers segment.
• Average assets under administration increased 15% to $1.2 trillion in 2025.
• Average assets under management in equity and fixed income programs (excluding LSV) increased 6% to $190.6 billion.
• Revenue from the SEI Integrated Cash Program in the Investment Advisors segment increased $31.4 million to $82.9 million.
• Information processing and software servicing fees increased due to new client conversions and growth from existing SEI Wealth Platform (SWP) clients.
• Earnings from unconsolidated affiliate LSV decreased 2% to $132.3 million due to negative cash flows and client losses, partially offset by market appreciation and higher performance fees.
• Personnel costs increased due to business growth in the Investment Managers segment and severance costs from a Q4 2025 reduction in force.
• Operating expenses rose due to higher technology and third-party vendor costs, and direct costs for separately managed accounts.
• Capitalized software development costs were $30.0 million, including $19.2 million for SWP enhancements and $10.8 million for the new SEI Scope platform.
• Completed the first stage of a strategic investment in Stratos Wealth Holdings in December 2025 for $440.8 million cash consideration, acquiring a 57.5% controlling interest.
• Repurchased 7.5 million shares of common stock for $616.2 million at an average price of $82.61 per share in 2025.
• Paid $124.2 million in cash dividends to shareholders in 2025 ($0.98 per share).
• Made a seed capital investment of $50.0 million in the LSV Global Equity Market Neutral Fund, LP (LSV GEMNF) in July 2025, recognizing a $7.1 million gain.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this filing positively due to strong financial performance, strategic acquisitions expanding market reach, and continued investment in technology, despite some minor headwinds in specific segments and ongoing regulatory scrutiny.

Positives

• Strong revenue growth of 8% year-over-year to $2.3 billion.
• Significant increase in net income (23% to $715.3 million) and diluted EPS (28% to $5.63).
• Successful divestiture of Family Office Services business yielding a $94.4 million gain.
• Growth in average assets under administration (15% to $1.2 trillion) and average assets under management (6% to $190.6 billion, excluding LSV).
• Expansion of SEI Integrated Cash Program revenue by $31.4 million to $82.9 million.
• Increased investment processing and software servicing fees from new and existing SEI Wealth Platform (SWP) clients.
• Strategic acquisition of a 57.5% controlling interest in Stratos Wealth Holdings, expanding footprint in the advice segment.
• Continued investment in technology infrastructure, including SWP enhancements and the new SEI Scope platform.
• Share repurchase program with $703.4 million remaining authorization, indicating confidence and returning value to shareholders.
• Launch of a Global Capability Center (GCC) in Hyderabad, India, to expand talent access and support follow-the-sun operations.
• Effective tax rate decreased to 21.7% in 2025 from 22.2% in 2024.

Negatives

• Equity in earnings of unconsolidated affiliate LSV decreased 2% to $132.3 million due to negative cash flows from existing clients and client losses.
• Negative cash flows and lower fee structures from SEI fund programs and fee reductions in separately managed account programs partially offset revenue growth in the Investment Advisors segment.
• Client losses in the Institutional Investors segment led to a 1% revenue decrease.
• Interest and dividend income decreased to $39.9 million from $48.9 million due to an overall decrease in interest rates and lower invested cash balances.
• Corporate overhead expenses increased to $180.9 million from $147.6 million, partly due to M&A-related legal and financial advisor fees and severance costs from a reduction in force.
• Cash flows from operations decreased $14.7 million in 2025 compared to 2024.
• The UK subsidiary, SIEL, is under a voluntary regulatory requirement (VREQ) from the FCA, restricting new client agreements or product launches requiring significant changes or senior management engagement until FCA concerns are addressed.

Risks

• Market-Driven Risks: Financial performance is heavily influenced by capital market conditions and the value of assets managed or administered. Declines in asset values, changes in interest rates, or significant client withdrawals from sweep programs could directly reduce revenue and earnings. Market volatility, geopolitical turmoil, or illiquid markets can make valuing or liquidating investments difficult.
• Client and Relationship Risks: Dependence on maintaining strong client relationships across all segments. Risks include client attrition, unfavorable contract renewals, or termination of agreements due to pricing pressure, service disruptions, technology platform issues, competitive innovations (e.g., AI-driven solutions, tokenized products), or client consolidation/internalization of functions. Loss of one or more large clients could disproportionately impact financial results.
• Fee Compression and Competitive Pricing Pressure: Persistent pricing pressure across the industry due to investor demand for low-cost solutions, the rise of passive strategies, and competition from fintech and technology-driven firms, potentially leading to margin and profitability decline.
• Product Development and Innovation Risks: Dependence on continuous innovation and improvement of products and services. Failures in developing and delivering new products or enhancements, delays, cost overruns, or performance problems in critical systems (SEI Wealth Platform, TRUST 3000), and errors or disruptions in new products can impair competitiveness or reputation. Challenges in supporting alternative investment products due to lack of technological infrastructure.
• Business Model Innovation and Expansion Risks: Pursuing new business models or distribution channels (e.g., direct-to-consumer offerings) carries risks such as increased operational and regulatory complexity, higher servicing costs, heightened cybersecurity threats, substantial investments in marketing and infrastructure, and uncertain success or profitability.
• Market Consolidation and Competitive Disruption: The financial services industry is highly competitive and being reshaped by consolidation and technological disruption, including automation, artificial intelligence, and machine learning. This dynamic pressures fees, challenges market share, and could adversely affect revenues and earnings. New competitors (fintech, big tech) with superior technological capabilities or lighter regulatory constraints pose a threat. Consolidation among clients can also reduce the pool of potential clients or the scope of outsourced services.
• Key Personnel and Human Capital Risks: Success heavily depends on the leadership and expertise of key people. Loss of critical individuals or broader challenges in managing the workforce (e.g., unintended loss of institutional knowledge, increased workload, decreased morale from headcount reductions) could disrupt operations and impair performance. Difficulty in attracting, developing, and retaining talented employees.
• Outsourcing and Offshoring Strategy Risks: The Global Capability Center (GCC) in India introduces risks related to navigating local laws and regulations, cultural and communication differences, remote supervision, geopolitical uncertainties, infrastructure vulnerabilities, staff attrition, and integration challenges. Any significant interruption could impair client service and lead to financial losses.
• M&A Execution and Integration Risks: Uncertainty in deriving value from mergers, acquisitions, and strategic partnerships, especially when integrating large or cross-border transactions (e.g., Stratos Wealth Holdings acquisition and potential Mexico affiliate). Complexities include merging systems, aligning controls, integrating relationships, unforeseen liabilities, technology gaps, and resource diversion. Failure to integrate effectively could delay or reduce financial benefits.
• Third-Party Service Provider Dependencies: Reliance on third-party suppliers for essential functions (software development, processing, cloud hosting, ACH network) increases the risk of operational failure, service disruptions, financial loss, regulatory sanctions, or reputational harm. Dependence on critical market infrastructure and investment sub-advisers also poses risks.
• Process Errors (Fund Accounting, Investment Operations, Pricing Services): Operations involve complex processes with inherent risk of human error in trade execution, manual processing, and asset valuation, potentially resulting in financial losses, regulatory issues, and reputational harm.
• Operational Resilience (Business Continuity and Disaster Recovery): Dependence on uninterrupted functioning of systems. Disruptions due to operational failure, cyberattack, or other causes could impair transaction processing, information exchange, and service delivery, leading to reputational damage, client loss, and revenue decline. Risk management processes may not fully adapt to evolving markets.
• Rapid Growth and Capacity Constraints: Business growth may increase costs and regulatory risks. Expanding platforms, integrating acquisitions, and partnering with other firms present financial, managerial, and operational challenges. Increased digital capabilities heighten cybersecurity and fraud risks. Expansion into new geographic markets (EMEA, APAC) introduces diverse regulatory environments and cultural differences.
• Cybersecurity Threats: Exposure to significant cybersecurity risks, including millions of daily cyber-attacks, proliferation of new technologies, use of AI, human error, insider malfeasance, and third-party vendor vulnerabilities. A successful attack could result in operational disruption, data misappropriation, regulatory violations, financial losses, litigation, and severe reputational harm.
• Artificial Intelligence, Machine Learning, and Automation: Risks associated with the adoption of AI/ML technologies, including model bias, flawed assumptions, over-reliance on historical data, operational disruptions, unauthorized access, adversarial attacks, and systemic errors. Evolving regulatory frameworks may impose additional compliance obligations.
• Tokenization: Risks associated with asset tokenization, including uncertain and evolving regulatory frameworks, custody and settlement challenges, cybersecurity vulnerabilities in smart contracts and digital wallets, and liquidity and valuation risks in nascent markets. Integration with existing platforms and increased exposure to financial crime risks.
• Open-Source Software Risks: Reliance on open-source components introduces security vulnerabilities, inconsistent maintenance, potential exposure to malicious code, and legal liability for license non-compliance. Requires significant resources to monitor and remediate vulnerabilities.
• Data Privacy and Protection: Risks related to storing, transferring, and processing large amounts of personally identifiable information. Improper disclosure or misuse of personal data could harm reputation, lead to legal exposure, or subject the company to liability under evolving privacy laws (e.g., GDPR, CCPA).
• Intellectual Property Risk: Dependence on protecting proprietary technology, trademarks, copyrights, and solutions, and defending against infringement claims. Unauthorized use or failure to maintain confidentiality could dilute brand, harm reputation, and materially affect financial results.
• System Outages and Downtime: Risks of outages, data losses, and disruptions of services due to complex infrastructure, operational failures, or external events, leading to contractual liability, client claims, regulatory actions, and reputational damage.
• Technology Disruption and Software Development Delays: Software defects, development delays, or installation difficulties would harm business and reputation and expose to potential liability.
• Earnings and Volatility (including LSV impact): Earnings and cash flows are subject to volatility driven by multiple factors, including the performance of LSV Asset Management, regulatory capital requirements, and strategic investments and acquisitions.
• Interest Rate, Currency, and Tax Changes: Changes in interest rates (impacting fixed-income investments, cash balances), currency exchange rates (global expansion), or tax laws (effective tax rates, examinations) could adversely affect financial condition and operating results.
• Covenant Compliance: Subject to financial and non-financial covenants under senior unsecured revolving credit facilities. Failure to maintain compliance could require waivers, incur additional costs, or restrict access to credit.
• Holding Company Structure Implications: Reliance on dividends and other payments from subsidiaries to meet obligations. Many subsidiaries are subject to regulatory requirements that may limit such payments, affecting liquidity.
• Liquidity Risk (Including Alternative Investments): Risks arising from liquidity constraints, particularly in alternative investments. May be required to fund timing differences from delayed receipt of client funds.
• Investment Performance and Fee Pressure: Investment management business depends on product and strategy performance. Poor returns or underperformance could reduce assets and fees. Failure to adapt offerings to AI-driven, ESG-focused, or alternative asset trends could lead to asset outflows and fee compression.
• Insourcing Investment Functions and Operational Complexity: Transitioning previously outsourced functions to internal management increases direct responsibility, operational complexity, and execution risk. Requires expanded internal capabilities, systems, and governance, and introduces new fixed costs and operational challenges.
• Proprietary Capital Deployment and Conflicts of Interest: Investing corporate capital introduces market and credit risk and earnings volatility. Creates potential conflicts of interest between proprietary portfolios and client portfolios, requiring rigorous disclosure and management to avoid reputational damage or regulatory sanctions.
• Fiduciary Risk: Providing fiduciary management services to institutional clients. Risks include the ongoing decline in defined benefit plans, fee sensitivity, and increased competition for fiduciary services.
• Regulatory Changes and Compliance Obligations: The financial services industry is subject to extensive and evolving global regulations. Failure to comply could result in legal or regulatory sanctions, material financial loss, and reputational harm. Compliance obligations are complex and costly, especially with rapid regulatory change and multi-jurisdictional operations.
• Financial Crime, Sanctions, and Anti-Corruption: Subject to stringent AML, counter-terrorist financing, sanctions, and anti-corruption requirements. Failure to maintain comprehensive programs could result in significant fines and enforcement actions.
• Privacy and Data Protection: Businesses are subject to privacy and data protection laws (e.g., Gramm-Leach-Bliley Act, GDPR, CCPA). Improper disclosure or misuse of personal data could harm reputation, lead to legal exposure, or subject the company to liability.
• Conflicts of Interest: Potential conflicts of interest arise in the normal course of business due to diverse clients and a multi-channel business model. Failure to manage these conflicts effectively could result in litigation, enforcement actions, reputational harm, and loss of business.
• Litigation, Examinations, and Investigations: Global operations expose the company to a wide range of legal and regulatory risks, including litigation, governmental inquiries, and supervisory examinations. These matters can result in significant financial exposure, reputational harm, and operational disruption.
• Shareholder Activism: May be subject to shareholder activism, which can cause material disruption to the business, substantial costs, diversion of management attention, and adverse impacts on stock price.
• Geopolitical Instability: Geopolitical conflicts (e.g., Russia-Ukraine, Israel-Hamas, US-China rivalry) pose significant risks to global business operations, including commodity market volatility, trade fragmentation, technological decoupling, and escalated state-sponsored cyber threats.
• Unforeseen or Catastrophic Events: Potential losses due to unforeseen or catastrophic events, including pandemics, extreme weather, or natural disasters, which can disrupt economic activity, impair operations, and lead to increased costs and liquidity pressures.
• Climate Change and ESG Considerations: Climate change and ESG considerations present risks such as disruption from extreme weather, impacts of the transition to a low-carbon economy, reputational harm, increased compliance complexity from evolving ESG regulations, and the politicization of ESG practices.

Future Outlook

The company plans to continue investing in technology and operational infrastructure, pursue selective acquisitions, and expand its presence in EMEA and APAC regions. It expects to recognize amortization expense of $35.9 million for capitalized software development costs and $31.4 million for intangible assets in 2026. The Board intends to declare future cash dividends on a semiannual basis. The company anticipates available funds and cash flow from operations will be sufficient to meet operational cash needs, M&A activity, and the stock repurchase program for at least the next 12 months and the foreseeable future.

Management Comments

• "We believe that a critical component of our long-term success is our ability to continually improve our technology infrastructure."
• "We will continue to invest in improving our technology and operational infrastructure in order to maintain the foundation that we believe enables us to best serve our clients needs."
• "To enhance our capabilities, scale our competitive presence, or enable strategic growth, we pursue selective acquisitions as part of our capital allocation strategy."
• "SIEL is fully committed to addressing the concerns raised by the FCA. The Company believes the actions SIEL is taking to remediate the issues identified in the Skilled Person Report will not only strengthen its business but also help maintain its focus on achieving positive customer outcomes, positioning SIEL for sustainable future growth."
• "SIEL management believes that the remediation actions currently underway will appropriately address the recommendations made by the Skilled Person and concerns articulated by the FCA in respect of the issues identified by the Skilled Person."
• "We believe our operating cash flow, available borrowing capacity, and existing cash and cash equivalents will provide adequate funds for these obligations and ongoing operations."
• "We currently anticipate that our available funds and cash flow from operations will be sufficient to meet our operational cash needs, expected M&A activity, and fund our stock repurchase program for at least the next 12 months and for the foreseeable future."

Industry Context

StockSavvy.ai notes that SEI's strategic investment in Stratos Wealth Holdings reinforces its position in the consolidating RIA sector and expands its presence in the advice segment, aligning with broader industry shifts towards scaled, fee-based advisory platforms. The company's focus on alternatives, private credit administration, and integrating AI/automation tools reflects the industry's demand for specialized, efficient, and technologically advanced solutions, particularly as clients seek diversification and operational efficiency. The establishment of a Global Capability Center in India is a common strategy among financial services firms to access talent and optimize costs in a competitive global market.

Comparison to Industry Standards

• SEI serves 8 of the top 20 U.S. banks and 43 of the top 100 investment managers worldwide, indicating a strong market position compared to competitors like SS&C Technologies, State Street, BNY Mellon, Northern Trust, and Citco in investment management and fund administration.
• The SEI Wealth Platform (SWP) is positioned as a modern, fully integrated, single-infrastructure solution, competing with wealth management technology providers such as Fidelity National Information Services, Inc. (FIS), Fi-Tek, SS&C Innovest, FNZ UK Ltd., and Avaloq.
• In the Investment Advisors segment, SEI competes with platforms like Envestnet and Orion, and diversified firms focusing on custody operations such as Charles Schwab & Co., Inc., and Fidelity Investments.
• For OCIO services, SEI competes with global advisory firms like Mercer, Aon Hewitt, Willis Towers Watson, and asset management firms such as BlackRock and Goldman Sachs.
• The company's 38.5% minority interest in LSV Asset Management, an RIA specializing in value equity management, provides a distinct offering compared to other asset managers.

Management Changes

Corporate Governance

Legal Proceedings

• Rubicon Wealth Management: Lawsuits remain pending against SEI Private Trust Company (SPTC) in its capacity as custodian for Rubicon accounts, following fraudulent activity by Rubicon's founder, Scott Mason, who was sentenced to 97 months in prison. SPTC estimates potential losses would not exceed approximately $15.0 million of client assets transferred.
• Qu v. LSV Asset Management: SEI and its subsidiary SEI Funds, Inc. were joined as defendants in an Illinois State Court action originally filed in July 2024, alleging misrepresentations by LSV Asset Management and its executives regarding employee ownership interests, claiming damages of approximately $100.0 million. The claim against SEI Parties alleges aiding and abetting breach of fiduciary duty.
• Hall v. SEI Capital Accumulation Plan: A class action complaint was filed in the United States District Court for the Eastern District of Pennsylvania on December 26, 2025, naming SEI and affiliated entities as defendants, alleging breach of fiduciary duties under ERISA regarding the selection and monitoring of affiliated investment options in the Plan.
• United Kingdom Financial Conduct Authority Supervisory Review of SEI Investments (Europe) Limited (SIEL): SIEL is undergoing a two-stage review by a Skilled Person appointed by the FCA regarding its governance and control environment. SIEL voluntarily applied for a Voluntary Requirement (VREQ) on February 26, 2025, restricting new client agreements or product launches requiring significant changes or senior management engagement until FCA concerns are addressed.

Related Party Transactions

• SEI, through its subsidiaries, serves as the sponsor, administrator, investment advisor, distributor, and shareholder servicer for SEI-sponsored investment products, earning fees totaling $388.7 million in 2025.
• SIDCO, SEI's broker-dealer subsidiary, serves as an introducing broker-dealer for securities transactions of SEI-sponsored investment products, recognizing $2.5 million in commissions during 2025.
• SEI Funds, Inc. (a wholly-owned subsidiary of SEI) allocates certain costs, including employee benefits and other general and administrative expenses, to LSV Asset Management, totaling $2.8 million in 2025.
• LSV Asset Management is an investment sub-advisor for a limited number of SEI-sponsored investment products, earning $14.2 million in fees from SEI subsidiaries in 2025.
• Some LSV partners have investment interests in LSV funds, generating $6.8 million in fees for LSV in 2025.
• SEI made a seed capital investment of $50.0 million in the LSV Global Equity Market Neutral Fund, LP (LSV GEMNF) in July 2025, which is consolidated into SEI's financial statements.

Stakeholder Impact

• Shareholders: Positive impact from increased net income, diluted EPS, share repurchases, and consistent semi-annual dividends. Potential risks from litigation, regulatory actions, and market volatility.
• Employees: Increased personnel costs due to business growth, but also severance costs from a reduction in force. Launch of GCC in India expands talent access. Stock-based compensation plans provide incentives.
• Clients (Investment Managers, Private Banks, Investment Advisors, Institutional Investors): Benefit from enhanced technology platforms (SWP, SEI Scope), expanded solutions (Stratos acquisition, LifeYield integration, SEI Access for alternatives), and commitment to security/AI. Risks include service disruptions, fee pressure, and potential impact from regulatory actions on SIEL.
• Regulatory Authorities: Ongoing engagement with multiple U.S. and international regulators (SEC, FINRA, CFTC, FCA, CBI, etc.). Increased scrutiny and potential for enforcement actions or mandated business process changes.
• Acquired Entities (Stratos, LifeYield): Integration challenges and potential for synergies or unforeseen liabilities. Stratos advisors benefit from SEI's ecosystem.

Next Steps

• Finalize accounting for the Stratos Acquisition during the fourth quarter of 2026.
• Potentially acquire the Mexico affiliate of Stratos Wealth Holdings in 2026, subject to due diligence and regulatory approval.
• Continue to invest in improving technology and operational infrastructure.
• Continue to pursue selective acquisitions.
• Expand presence in the EMEA and APAC regions.
• SIEL to continue remediation actions to address FCA concerns and recommendations.
• Board of Directors intends to declare future cash dividends on a semiannual basis.
• Expect to recognize approximately $35.9 million in amortization expense for capitalized software development costs in 2026.
• Expect to recognize approximately $31.4 million in amortization expense for intangible assets in 2026.
• Expect to recognize approximately $29.1 million in stock-based compensation costs for stock options in 2026.
• Expect to recognize approximately $24.9 million in stock-based compensation costs for RSUs in 2026.
• Continue to defend against the Rubicon Actions lawsuits.
• Vigorously defend against the Qu Litigation.
• Vigorously defend against the Hall Complaint.
• SWE expects to use remaining cash in escrow and promissory notes to acquire controlling interests in other entities that were parties to non-binding letters of intent and other understandings as of the Closing Date.

Key Dates

Recommendation

The company demonstrates strong financial performance with significant revenue and earnings growth, driven by strategic acquisitions and technology investments. The share repurchase program and consistent dividends are positive for shareholders. However, ongoing legal proceedings, regulatory scrutiny (especially with SIEL and the VREQ), and the inherent risks of integrating large acquisitions like Stratos introduce uncertainties. While the growth trajectory is positive, these factors warrant a "hold" recommendation as investors monitor the resolution of legal/regulatory matters and the successful integration of new businesses before considering a stronger position.

Keywords

Financial Technology, Asset Management, Wealth Management, SEC Filing, 10-K, Investment Advisors, Private Banks, Institutional Investors, Fintech, Cybersecurity, AI, Stratos Acquisition, Share Repurchase, Earnings Report, Regulatory Compliance, Risk Management, Corporate Governance, Financial Services