SEI Investments: Targeting Baby-Boomers
Winning business from the baby-boomers -- who are beginning to retire and stand to collect vast inheritances -- means big money for financial-services companies. SEI Investments, which provides software and financial-planning programs to banks and investment advisers, aims to help its clients tap into this cohort of 76 million. "Boomers are already rejecting old strategies for meeting their wealth-management needs, because their needs are strikingly different from those of their parents," writes Jack May, senior vice president of SEI. The company recently began pushing a service called Wealth Network, a client-focused business model that employs a more-detailed asset-allocation and financial-planning process and utilizes experts on topics such as elder care and budgeting.
This grand plan of retooling the wealth-advisory business for a generation of customers is attracting the attention of analysts such as Tom McCrohan of Janney Montgomery Scott, a Philadelphia-based brokerage firm. "A history of innovation coupled with an ability to anticipate trends are two of the reasons we remain optimistic on this company," writes McCrohan. "SEI continues to take the road less traveled, sometimes building the road themselves."
This Oaks, Pa., company (symbol SEIC) also has a money-management arm, which, among other things, advises mutual funds and manages assets for pension funds, hedge funds and private clients. SEI also owns 43% of hedge fund LSV.
SEI's revenues rose 12% in 2005, to $773 million, with strong growth in nearly all of the company's segments. Although SEI's shares, currently trading at $40, have already risen 10% so far this year, McCrohan believes the stock is still undervalued. His 12-month price target is $47. The stock sells for 20 times the $2.05 per share that analysts expect SEI to earn in 2005.