Sorry. I think we're on at 12:20 P.M. Okay. Great. Well, welcome back. Hopefully, everybody had a chance to grab something to eat as we kind of get going for our next session. I would love to welcome Seth Bernstein, President and CEO of AllianceBernstein. AllianceBernstein is a global, diversified asset manager with over $850 billion in AUM and robust capabilities across Fixed Income, Private Markets, and Global Equities. In addition, the firm's partnership with Equitable and its sizable Wealth Management franchise create unique product development opportunities further supportive of the firm's growth outlook. We look forward to getting an update from Seth on the business and his perspective on the landscape broadly as we look out here into 2026. Seth, always great to see you. Welcome back. Thank you for being here. Thank you. The only reason I come to this hotel is for this. We'll take what we can get. I mean, you and I have this conversation every year, and there's just nothing I can do about it. This place is a dump. But you do have a great time here. You got to? I do. I have a very good time. There you go. For what I heard, we're in the service economy and the experience economy. So this is what you're after. We're not in the infrastructure and well, maybe infrastructure, not in the manufacturing economy? Yeah. So here we go. Okay. Okay. Okay. All right. With that said, let's talk about the allocation trends. So 2025 was clearly a pretty volatile year, but ultimately, Equity Markets delivered pretty healthy returns, and Credit Spreads are still super tight. So given the setup and also layering in lower interest rate prospects, how are clients allocating into 2026? What are some of the themes you guys are paying attention to at a kind of macro sort of asset allocation level? I think there are two or three themes that are worth really digging into. First, look, we think inflation is going to be higher going forward than it's been in the past. So getting real returns that are going to be interesting, I think it's going to be tougher than it's been in the past five or six years. And getting diversification at the same time, I think, is going to prove challenging as well, particularly given how most people are set up today. First and foremost, the U.S. is not cheap on any measure. In fact, it's rich. On fixed income, spreads are tight. Returns have been pretty strong in fixed income as well as in equities. And as you know, as well as I do, when sort of cyclically adjusted returns, rates are at the level they are today, it's very hard to repeat that. So averaging 20% kind of returns for three years is heroic. So the notion that doing what you did in the past is going to do well for you going forward, I think it's a particular challenge. Getting diversification is a challenge. So what does that mean to us? I think it means, first and foremost, we need to readjust our expectations. Secondly, recognize that your true exposures to the U.S. are really large, larger than they've ever been, not just because the U.S. is a larger proportion of MSCI World or ACWI, but because your private equity allocations are primarily American. And so when you put them all together, plus your U.S. dollar fixed income exposures, you are making a very big bet on a country where, at least from my perspective, dollar weakness is not a temporary phenomenon. I think the administration wants a weaker dollar despite talking about the reserve currency status and everything else. And if you look at returns offshore, they've been compelling versus the U.S. And not all of that is dollar devaluation. A lot of it is valuation differentials. A lot of it is better governance, stronger growth opportunities in foreign markets, particularly in Asia, where we've seen it. But even Europe, emerging markets have been quite strong this year. So we are really pounding the table of our clients to be thinking about moving more offshore. Most Americans have an allergy to doing that, but people offshore don't have that same degree of allergy. And so we're seeing much more interest. We're seeing interest on the institutional side, even here in the U.S., much more interest in retail and institutional outside the U.S. for those, please. Still pretty comfortable with dollar fixed income assets. You can ask yourself why, but it is the best and deepest market. So it will continue to be an important source, particularly for those countries that are dollar-linked. So, for example, we're seeing better flows from Asia in AIPN a nd the weakness in the Yen has actually been beneficial to us in our Japanese business. So it's been a pretty good story for us there. So moving people offshore, I think, has been the critical message that we want to give people. I would note, if you look at the returns from gold, I think that's an indicator of dollar devaluation concerns, really more foreign-driven than U.S. local. But they're real a nd we see that concern and resistance a nd when I travel abroad with consultants and institutions, everyone wants to talk about Washington and Fed appointments and so forth. So I think you shouldn't just dismiss it. And I don't think it's episodic. I think it's with us for a while. Yeah. Super interesting. Let's take these themes and maybe translate it into some of your own business. And we're starting with fixed income. And I feel like for the last two to three years now, you and I have these conversations, and we've always had these conversations with other CEOs and other asset managers. And there's been this wall of money that's been sitting in money market funds, kind of waiting for that to eventually rotate into Fixed Income Vehicles, especially when we get a little bit of a steeper curve. It feels like we're finally starting to get there. I think we're there. I mean, look, earlier this year, it certainly had slowed down and reversed. We do still see in our private wealth business, for example, a lot of people still in cash. And money markets are still near record highs. So I think it's there. I think you don't have to go far out the curve just given how steep it is. And so we're seeing a lot more interest in sort of intermediate duration kinds of assets. We continue to see it. And I think part of it is our growth relative to others in the money market, but that SMA demand continues to be pretty robust for us. So that feels pretty good. There continues to be a strong bid for high yield. And frankly, in the investment-grade side, very strong demand from institutions. That's reversed as well. That's interesting because you've had so much issuance. I mean, extraordinary issuance, unparalleled even, just given that there hasn't been a rate move to really justify that. It's really a needs move. Yeah, and I guess presumably when you get the movement in lower interest rates, despite the fact that credit spreads are really tight, that maybe actually creates a little bit of a support level for high yield, fixed duration. Yeah, but they're looking at absolute levels, and so they're okay with that. That makes sense. That makes sense. That makes sense. That makes sense. But the back end, I think, of the curve has a risk of actually widening going up because there's a lot of issuance need for Treasury to go out and fund. So I think that's why that steepness is going to persist and why you're going to see more money move out of money market funds over time. So how are you guys positioned to capture that? Because AB obviously has a very long track record of fixed income, really good long-term returns. The one-year numbers, I think, has gotten. A little bit softer. So how do you think about your competitive position if we do, in fact, see a much bigger wave of capital coming back into fixed income funds? It hasn't been hurting us in Asia. In the U.S., look, our three and five-year are still quite strong. And the last month or so have been better from a performance perspective. So we're beginning to see it was due to duration where we were really seeing that weakness. So I think we're pretty well positioned to capture it. But I think it's still going to be fairly slow. I think people are less reactive than they used to be to this stuff. They're biding their time and waiting. And look, you're still making 365 or whatever it is in money markets. Yeah. There's less of it. And you're making real returns. But I think it's there a nd certainly, your margin to be there has shrunk considerably. Yeah. Yeah. I was really intrigued by the comments you made on the last earnings call related to your global equity franchise. And you kind of alluded to some of that in your first response as far as the themes go. But look, clearly, the active equity space for the industry has been really challenged for a long period of time. The appetite for global equities, non-U.S. equities, to your point, is starting to improve a little bit. So let's just double-click in terms of what that means for you guys. How are you positioned to capture that sort of rotation if and when that does start to occur? So what is interesting just on the sort of non-U.S. track is that we're seeing interest in EFA product for the first time outside of the United States. And that's more from consultants and institutions who want to reduce their U.S. exposure. But remember, that product was designed for Americans. So those were international funds. But for people who want to increase their allocations globally, but other than the United States, we see a lot of talk going on there. I mean, even to the point of talking about putting them on platforms outside the United States, which typically you wouldn't have seen historically. Europe, there's more interest. Asia, there's more interest. I wish I could tell you it's showing up in U.S. retail flows. It's not yet. Americans are going to be the last people to move offshore. China has begun to attract more interest within Asia, and we think in Europe. And we're seeing it in our own numbers. I wish I could tell you it's beginning to become more meaningful, but it's not powerful yet. And Japan, which has already had a pretty strong track record for a couple of years, continues to show interest, even though I don't think the value there justifies it. But I think emerging markets look, emerging market cycles kick in in periods of dollar weakness. And I think there's an argument to really focus, particularly in Asia, in emerging markets. So we're feeling pretty good about that. Great. Also, value works better outside the U.S. than it does. Sure. Yeah. Well, especially, I guess, relative to where U.S. valuations are and concentration, right? Right. Let's move from maybe the asset class and the kind of product strategies to more of the wrappers and some of the channels. First, I would love to spend a couple of minutes on active ETFs. It's been a big theme for the space. It's been growing rapidly. You guys have been early. I think you're running at about $10 billion in AUM across the. Yeah. And we have about 20 strategies. About 60% of that is net new flows to us. I think you got to net out the rewrappings and the conversions in these numbers, right? But we do see it as how we will continue to grow in U.S. retail for sure. But we're also seeing interesting appetite in Australia and Taiwan. We have a joint venture we've just announced in Japan with the largest digital distributor in Japan for ETFs. So we're actually kind of excited that that adoption is beginning to catch a bid outside the U.S. in a more meaningful way. How are you thinking about the product roadmap here, either conversions or launching new strategies? What's most suitable for an active ETF wrapper where you actually feel like you've got the right to win and really just the wrapper that was the issue? So as I think about the contribution to the overall growth? So let me give you a good example. We have done, I think, very well in building our reputation for being the place you go for meeting the SMAs. It's really resonated with our largest distributors, whether it's Morgan Stanley, Merrill Lynch, UBS, and others. It's now gone to the next level down, and it's deepening. Mass customization where we're really able to design more customized benchmarks for people who want exclusions or single states or whatever. We do it on an automated platform that's working. One of the things we got back from the RAs was you don't have a vehicle. We can't use SMAs for the smaller children accounts that often are a part of this. Our national muni SMA that we've, I'm sorry, our national muni ETF that we've launched this year is a natural complement to those things. So it fits a need. It's speaking to the same client. That's important, and that is resonating with our clients. In addition, we think it's going to be in more thematic stuff like Security of the Future, which we've raised $2-point-something billion in a 1.5 year on, where people are thematically thinking about supply chains and defense and other areas that are really important, are ultra-short and sort of Short-Duration Fixed Income products. Those are areas where we will continue to focus it. In the United States, in particular, the only places we're going to issue Mutual Funds going forward, I think, is where there's a particular restriction which causes us not to think the asset's suitable for an ETF vehicle or where in 401(k) plans where adoption is restricted for silly reasons, but it would really be by exception that you would be using it going forward. But I think it will be a continuing area of innovation for us. And I'm really kind of interested in Asia having a much bigger potential interest in ETFs than potentially even Europe does. And I think part of that's because of digital engagement in Asia is so high. Build it yourself is more important than it is with the Promotori in Italy and stuff like that. Yeah. That makes sense. One of the, look, one of the features I really like about your guys' story is during earnings calls, you guys do take the time to feature different businesses, which I feel like has been always really helpful to spotlight various attributes of the firm. One of the recent ones you talked about was your presence in the defined contribution market, which is a big business for you guys, right? It stands about $105 billion in assets. It seems like sales momentum has been also building quite nicely. Can you expand on how the recent advisory opinion from the DOL regarding lifetime income, and for those who don't know, maybe spend a minute on what that really is. Yes, sure. And really just help us think about how you're trying to further commercialize this model because those are also tend to be maybe fee dilutive? Yeah. So let's talk about it because I think it's a complicated sector. Look, as everyone in this room knows, unless you are a municipal or federal employee, you don't have a DB plan for the most part, right? So DC is the preponderant non-real estate asset that most people in the United States have. They have to manage it. Most people do not have the skill set and really shouldn't be trying to build an asset allocation and build the underlying verticals of that. And so target dates make enormous sense. There still need to be changes in them. And just an aside that you didn't raise, target dates, if they're really to serve the purpose, need to go through retirement rather than end at retirement. Because the last thing, frankly, someone my age, 64, wants is to look at their 401(k) plan and notice that it's in cash or near cash holdings. That's a crazy construct when I hopefully have 30 years more of my life to live, right? That takes a fiduciary who's willing to own you as a client through your retirement. So you have a bit of an agency risk in the United States, which, frankly, the Australians and some others have been very good at adapting through building the super funds because there is an institution actually thinking about you. A part of that element that was important is that annuities for most Americans should play a very important part of their retirement because most Americans will outlive their income from their assets. People overvalue security. People overvalue certainty. Annuities give them that capability. Annuities get a bad rap, maybe fairly, historically, because they were laden with fees and complexity and you have counterparty risk and everything else, but if you can put them into a target date, price it institutionally rather than for a retail audience with no broker's commission and everything else embedded in it, and frankly, buy those annuities further out, i.e., when you have a much deeper pool of demand to buy those annuities, you might find that it can become a meaningful portion of somebody's retirement pool. The opinion that the Department of Labor gave us gave us a safe harbor from a litigation perspective for a plan sponsor to include that. We've been working on this for 10 years. We were, if not the first, amongst the first. You just saw Vanguard announce with TIA a similar kind of structure. BlackRock went into this two or three years ago in this opinion. I think it will be slow to move because DC's plan sponsors, by their nature, are really risk-averse. They're really attuned to costs, and this will take time. I think those barriers will impact the adoption of private into the 401(k) space, but that doesn't mean it's not a reasonable home for privates. It's going to be at a lower cost than it is being sold to retail today because that's just part of the trade-off that's going to get it into these, but frankly, as a public policy matter, it's probably a good home for it, properly sized, properly accumulated. Yeah. Great. No, look, it looks like a really interesting opportunity. And to your point, there's been others that try to have these kind of guaranteed accumulation. So having some safe harbor language would be helpful. The sale process for these kinds of target date and customized target dates can be two, three, five years. Now, we have two big ones coming on for next year. We are having more conversations than we've had maybe ever since the advisory opinion because people don't want to be the first ones at the station. And again, I think 10 years- 15 years from now, you're going to see this as a very significant part of people's retirement that is having an annuity built into the plan itself. It's still very early days, and this sector is slow adopters. Do you think it's the existing target date firms and people with already big DC footprint that will ultimately be also the winners here and own this? Obviously, it will be good for insurance companies, annuity riders, because that's a new sort of TAM for them to go after. But who wins in that marketplace? I think it is the existing ones, but the composition is going to change. It's going to be much more passive in the traditional segments. And you're already seeing that, whether it's JP Morgan or others who have adopted to do it. And they'll leave active where they have a more symmetric payoff pattern to having active in it, privates being an example of where that I think will be manifest. So I think it will be the cost of transition is so brutal. And remember, you're not selling necessarily to the treasurer, the CFO. You're selling it to the human resources group, right? And you're dealing with tens of thousands of retirees and current employees. That has a way of sucking up management time. So their appetite to make these changes is incredibly low. Right. Right. Okay. Well, speaking of private markets, let's talk a little bit about that. So you guys have a target obviously out there. You're aiming to be at about $90 billion-$100 billion in private markets that you want by 2027. Clearly on your way there, I think you're about $80 billion? I think we're closing in on $90 billion. I think it's a big number. There you go. There you go. Right. So certainly on your way within the range. Did I mention that we're going to make that target? Yeah. I think you've said that a couple of times. Even last year, I think you did. So I'm glad you stayed true to your story. Now, look, can you talk about the path of going kind of beyond that, right? To your point, you're already sort of at target. What's growing quickly? Where do you guys think the next leg of growth is within five years? Okay. So I mean, there are a number of pillars. First, let's just go back to Equitable for a moment because they've given us $20 billion, of which I think we have $3 billion yet to spend approximately or deploy. But that's not the cap on it. We will have more assets from Equitable next year and the year after as they grow their general account, but also because they're going to move more of their assets to us over time in that space. So whether it's refinancing or other stuff, we will have that opportunity. So that continues to grow, and they will continue to seed new strategies to the extent it makes sense for them and us to do that. There's things they can do and can't do, but they're there to stand by to make that happen. Secondly, third-party institutional. We've gotten a lot of support this year from consultants, particularly for PCI, which is our middle market lending, which has led us to a number of wins that have been really satisfying for us to get both in the U.S. and elsewhere, but also for CarVal as well. We see that as an important growth vector. Thirdly, third-party insurance. Our insurance vertical, we have, I think, nine new insurance clients this year, two of whom we've done sidecar deals with, and we continue to look at sidecars. That's part of why the flywheel with Equitable works because we rely upon them for the underwriting, the understanding, the insurance lending underwriter who is there. I don't want to go and outsource that. I want that person aligned with me because that's the risk I don't understand and don't have the experience with. But that has continued to grow at a pretty good rate. We continue to talk to other parties, most of whom are not predicated on a sidecar relationship or anything else. That arose from the fact that we merged both Equitable's and AB's insurance capabilities, whether it's their general account or what we're doing, under one team led by Jeff Cornell, who used to be the CIO of AIG's U.S. Business Corebridge. He's part of a much broader network of AIG people who, by the way, are everywhere. And I think it's given us credibility, whether it's in public markets or private, to have a right to win around that table. So that's been a third important pillar. Private wealth and the broader wealth channel have been growing this year. We were named Interval Fund of the Year for CarVal's new, well, it's 2025 Interval Fund, which we're excited to have. The Credit Value Fund VI has launched an up and out. We've seen real demand in Latin America and in the Middle East and Asia for it. So I feel that's been a pretty good launch for us. And I guess finally, as we were just talking about in the retirement space, we absolutely see private credit in particular being part of a customized glide path. And we've already started doing that in a couple of our client mandates, and we've done it outside the U.S. as well. Yeah. So it feels like lots of room beyond this $90 billion-$100 billion. Yeah. I don't know what the number is. I would be disappointed if it wasn't. Right. Right. So in your answer to some of this, you talked about private credit, and I think it's worthwhile spending just a couple of minutes on that. You guys run a wide range of private credit strategies. Obviously, there's middle market lending, asset-based finance. I would put real estate lending in the same general category. Although there are a lot of different flavors of real estate lending. Totally. But when we sort of zoom out, there's been relative to the actual issue, the number of headlines and clickbaits has been kind of enormous in the last few months related to private credit. Anything on the ground you've seen that you find worrisome, anything within your portfolios you'll say, "Hey, that's worth paying attention to." And as you kind of survey the landscape and things that you do within private credit, does anything particularly stand out? Look, I think we'd have our heads in the sand not to acknowledge that there are many more competitors out there with a lot of capital being thrown around, and terms are weaker than they were three, five years ago. That's just undoubtedly true. In which part? When you kind of think of direct lending mostly or where you? Principally in direct lending. Lower middle market is still in pretty good shape because the banks really don't play in that space, and the larger private equity firms don't really play in that space on the loan side as much. There are a couple of exceptions. In securitized, people have been stretching for yield and taking more risk, whether it's in CLOs and BB Bs and below. You know that individuals without a social safety net were beginning to see deterioration in ABS. We're beginning to see it in subprime mortgage space and everything else. We've tried to stay away from those areas generally. It doesn't mean we don't occasionally have exposure to them, but they've been really pretty nominal and manifest typically at CarVal and their opportunistic strategies where we have it. But I would say to you, when we look at the big blow-ups, they seem to us to be idiosyncratic rather than systematic. Some of it because of sloppy underwriting for sure. And we're not immune to it. We have exposure to First Brands but it's an exposure that we've had for 3+ years. We've been in the warehouse. We've counted our inventory. We didn't lend against receivables. We have the inventory, and we've counted it. We see it. We know it's there. It's going to be a long workout. People are going to attack us, but we're feeling pretty good. And that's been the 13% yielding investment for CarVal for a number of years. And we're pretty comfortable. Our clients are going to see their money back from that particular piece of the investment. But there's stuff out there that we have to be careful. We have to focus not on pushing our people to deploy the money, but to do it in a thoughtful way and to elevate and raise issues quickly rather than hide them because nothing gets done when you sit on this sort of stuff. It's take action quickly to mitigate it. Is that starting to impact your conversations with LPs at all in a negative way? Because it feels like LPs are asking questions, but we haven't really seen any material pullback from allocation towards private credit. So any of those concerns popping up? Well, our principal clients are insurers who tend to be more knowledgeable and sophisticated. We haven't seen it yet because we haven't really seen it emanate into those portfolios yet. But it's no question. It's clickbait, as you said. People are talking about it. And I would just say to you, if there are problems emanating there, there are problems emanating in credit markets everywhere, and we just need to manage them. It seems manageable at the moment, but we need to be attuned to it. Very fair and balanced answer. Let's pivot to maybe P&L for a couple of minutes. I wanted to start with a question around institutional pipeline. You guys, I think as of the last quarter, were at around $12 billion of wins. I think private credit is probably a decent part of that as well. It sure is. That'll turn out to get deployed. How are you thinking about that flowing into management fees, just the pace of deployment, pace of those mandates closing? In the RGA, for example, we've funded about 40% of that original sidecar mandate, which would have been in the backlog. We haven't funded the other sidecar, which is $1.5 billion. There's a third sidecar that Equitable did that is beginning to fund now as well. It's translating fairly quickly. We see it as sort of the next 12 months-18 months of a lot of that being deployed. Could it stretch out? Sure. That's sort of where we see it. We've had pretty good visibility on the fundings to date, particularly where there are existing blocks of business rather than where it's there as people are continuing to write new risk. We've won some interesting Equity and Fixed Income traditional mandates. We have some lumpy, as I mentioned before, customized target date stuff on the pipeline. But I think it's in sort of that region. I mean, there's no blockbuster I'm aware of that we haven't really disclosed to the market. Yeah. When we think about the revenue base and the fee rates in the business, you guys have been fairly steady in this kind of 38-39 basis points range, and there's a little bit of a barbell effect, right? Because on the one hand, I feel like you guys have a lot of Alts that are growing. The Retail business seems to be growing, and if Global Equity starts to contribute, that's pretty attractive, but then at the same time, SMAs and some of the lower fee dynamics are also contributing, right, so as you think about the evolution of that fee rate over the next couple of years, knowing what you're kind of hoping to accomplish from an organic perspective, how does that fee rate evolve? I think your characterization is correct. We have higher fee Privates coming in. We have higher fee Public Equities going out, although that's tempering a bit. We're going to have down months, down quarters. It's just how it is, and it's going to be lumpy as it goes. I would say we think it's a pretty durable fee rate. We can continue to hold in here. Of course, that can change in any given quarter around those numbers. We did a little better in the third quarter than we did in the second quarter. I don't know what we're going to do in the fourth quarter, and that's that. I think it's pretty durable. Yeah. Great. Also remember, performance fees and derivatives fees we make on shares. None of that fits into our base fee rate. That's separate and apart. Yeah, well, and the performance fee angle had a really nice story for the last couple of years as well. It has. I mean, we benefited. Last year. That was pretty strong for it. But yeah. Great. All right. So to just maybe wrap it up, question on profitability. I know that's been obviously a focus for you guys for the last couple of years, given some of the action steps you've made, also the divestiture of the research platform. So there's a few things that have come together to now kind of having this 33%-34% overall operating margin. I think this year is actually tracking a little bit below what the target was in the beginning of the year, marginally so. No, I don't think so. I think it is sort of where we said. I was looking at like 40 basis points, but call it rounding. I know. I think we're pretty close, but we're not on it. Fair enough. Basis point here and there. Yeah. Okay. But I guess if you think about similar to the fee rate, sort of the evolution of business and where you're allocating your resources, how much runway do you still see in the operating leverage in the franchise and what drives that? Ignoring markets. Right? Because that's really the principal driver? Yes. Flat markets. Yeah. Look, I think the positives that we have working for us is pretty strong non-comp expense control. Two, we've made a big investment in building out India as a platform for us, and we're hopeful that, frankly, we're going to move much of our new hiring offshore from the U.S. and minimize hiring here. That will take some time to show, but I think it's there. Thirdly, we will continue to be pushing Private Alts pretty aggressively, and we have a pretty good pipeline of visibility to new opportunities there. So I think we feel pretty comfortable in this margin range right now. Private Wealth is a lower margin business. It's a gem of a business, and it's less than 20% of our assets. It's a third of our revenue. It's an important part of the business, and we want to grow it. You're asking where I want to spend time. We are not going to participate in auctions for RAs. I can't make the math work. But I think there are going to be real opportunities there. And we're going to continue to accelerate the growth of organic hiring in the business. But we've been looking a lot at RAs as an area for us. I think if we really had a market correction and it sustained for a while, you've got to get people off their anchor, their valuation, what the buyout firms paid for these things. Because I just don't understand how the math works, absent markets continuing to grow. I'm boggled by it. Yeah, and I think you and many others as well. Great. We're actually right at time, so thanks so much. Thank you. Great to see you as always. And you. I can't promise you a different venue next year, but I will still be here. But this place is still in town. Thank you. Good to see you.