Principal Financial Group, Inc. (PFG) Earnings Call Transcript & Summary

Thanks, and good morning, everyone. Welcome to the Third Quarter 2026 Earnings Conference Call for Principal Financial Group. Materials connected with today's call are, as usual, posted on our website at investors.principal.com. Once the safe harbor provision has been read, CEO Deanna Strable and CFO Joel Pitz pits will give their prepared remarks. After that, we'll open up the call for questions. Other members of senior management are also here for the Q&A. Certain comments on this conference call might include forward-looking statements as defined under the Private Securities Litigation Reform Act. The company does not revise or update them for new information, later events or strategy changes. The risks and uncertainties that might cause actual results to differ materially from those stated or implied are covered in the company's latest annual report on Form 10-K filed with the U.S. Securities and Exchange Commission. In addition, certain comments on this conference call might reference non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures can be found in our earnings release, financial supplement and slide presentation. Deanna?

Thanks, Humphrey, and good morning, everyone on the call. This morning I'll go over how we performed in the third quarter and the progress we continue to make on our strategic priorities. After that, Joel will give you more detail on our financial results and our capital position. Beginning on Slide 2, our third quarter results extend the strong performance we've posted so far this year and strengthen our confidence that we will hit our 2026 financial targets. Adjusted non-GAAP earnings per share rose 12% year-to-date, at the top of our target range, and that includes 7% growth in the third quarter against a tough prior-year comparison. In the quarter, our underlying performance remained solid despite a volatile and dynamic environment. Adjusted third quarter non-GAAP pretax operating earnings rose 3% on 4% net revenue growth. The main drivers were higher revenue, disciplined expense management in RIS, improved mortality experience in life, and growth in international pension. Adjusted non-GAAP year-to-date pretax operating earnings climbed 10%, helped by 5% net revenue growth and 120 basis points of margin expansion. We also continue to deliver strong capital generation results, with ROE above 16% and trailing 12-month free capital flow conversion of 77%, both within our targeted ranges. In Q3, we gave back close to $430 million in capital to shareholders, pushing our return so far this year past $1.2 billion. Our full-year capital deployment goal remains within reach. Moving to Slide 3, we continue advancing the 3 strategic growth priorities: the retirement ecosystem, small and midsized businesses, and Global Asset Management. The retirement ecosystem spans record keeping, asset management, income solutions and advice, and our scale plus the breadth of our capabilities open up many ways to create value and strengthen customer relationships. We keep expanding our participant base and helping those participants save more toward retirement. Recurring deposits climbed 8% compared with the same period a year earlier. Meanwhile, the count of people putting money into their retirement plans grew 4%, and average deferrals for each participant also increased 4%. On top of that, participants are bringing a larger share of their retirement assets together on our platform. During the quarter we recorded $1.8 billion in roll-ins, and $7.4 billion across the trailing 12 months — gains of 9% and 15%, respectively. Demand for our retirement offerings and know-how generated $1.5 billion in DCIO sales along with $900 million in PRT sales in the quarter. We are additionally broadening the investment management choices offered throughout our retirement platform, partly via our featured partner program, which today accommodates private market strategies and retirement plans. We work with top alternative asset managers — Principal Asset Management among them — and that allows us to deliver retirement accounts that are professionally managed, giving people more complete and creative options. It extends what we've done for years in supporting private assets on our record-keeping platform, and it's one more illustration of how our scale and know-how are put to work for the changing needs of plan sponsors, advisers and participants. The market keeps recognizing what we bring: at the 2026 Napa Advisors Choice Awards, Principal earned a top retirement service provider designation across every market segment, cited for participant experience capabilities and for the support given to plan sponsors and advisers. That honor reflects the partnership and strong dedication we offer the financial professionals we serve. Within small and midsized businesses, the distinctive strengths we bring to that appealing market continue to drive expansion throughout our operations. Though you won't find it on the slide, we just finished our newest well-being index—a survey of U.S. employers concerning business health and outlook. Findings collected during September and October show that smaller and midsized companies are becoming warier regarding the economy and prospects for future growth. Despite such caution, staffing and benefits remain a leading priority for owners; a comparable pattern appears among our own customers, where employment growth is positive in both BNP and WSRS. As Slide 3 illustrates, specialty benefits employment climbed almost 2% across the trailing 12 months. Within our retirement business, small and midsize business transfer deposits rose 21%, while recurring deposits increased 7% compared with the same period a year earlier—a sign that our offerings present a compelling value proposition for that segment. Over in Specialty Benefits, sales were 10% higher than in the prior-year quarter and 15% higher across the trailing 12 months, which helped produce a third straight quarter of sequential improvement in premium growth. We're eager to carry that momentum forward with Beam Benefits. We closed that acquisition on September 1, bringing in over 26,000 small business customers along with a digital-first, cloud-native platform. Beam enhances how we serve SMBs—with more speed and greater ease—widening our reach and speeding growth in this appealing market. Now moving to Global Asset Management. Before I turn to the wider platform's ongoing progress, let me start with net cash flow. For the quarter, net cash flow across the whole company came in at negative $11 billion, with the biggest factor being certain active equity strategies within investment management. We know this metric has to get better, and our attention is on what we can control—namely, improving investment performance and generating stronger growth as time goes on. Industrywide, active equity flows are still under pressure, and we anticipate that strain to persist in the near term. Even so, we are seeing demand in the areas where we have been putting investment behind platform growth. During the quarter, Private Markets brought in $800 million of positive net cash flow, while active ETFs contributed a positive $500 million. Each of those has produced roughly $2 billion in positive flows over the trailing 12 months, and we keep building on that momentum — most recently with the principal equity premium income ETF launch, aimed at meeting growing demand for income-oriented strategies. Importantly, our international capabilities remain another source of diversification and growth. International pension drew more than $400 million of positive net cash flow, with positive flows across every location and AUM rising 10% year-over-year. We are also extending the reach of our global capabilities. Earlier this month, we teamed up with ASP Capital in the Middle East to start a multi-asset fund combining what we know across equities, fixed income and private markets; and Broadridge rated us among the top 5 providers, best-in-class, for international fund distribution in Latin America. Each one shows how our worldwide investment capabilities plus local distribution know-how give clients ways to reach opportunities past their own home markets. There's still more work ahead, but the expansion we're seeing in private markets, ETFs and our international businesses shows the steps we've taken to diversify our platform and get it ready for long-term growth. Before Joel takes over, I'd also like to note that last Friday was the 25th anniversary of Principal turning into a publicly traded company; we IPO-ed at an initial stock price of $18.50 and have since delivered strong annualized returns of 10% to our shareholders; that was a pivotal moment in our history, opening new opportunities to grow, compete globally and serve our customers' needs. 25 years later, that same readiness to evolve keeps shaping the way we position Principal for the future. Today, our concentration on the retirement ecosystem, small and midsized businesses and Global Asset Management mirrors where we're best positioned to win, and we'll keep investing in these areas to drive growth at attractive returns and create long-term value for our customers and shareholders. Joel? negative $11 billion.

Thanks, Deanna, and good morning, everyone on the call. I'll take you through the main highlights from our third quarter financial results and give you an update on where we stand with capital. We're still delivering against our financial targets, with year-to-date EPS growth of 12% on both a reported and adjusted basis, which sits at the top of our 9% to 12% target. Beginning on Slide 4. Third quarter non-GAAP operating earnings came in at $482 million, up 2% from a year earlier, with earnings per share of $2.22, a 6% increase. You can find the details of our significant variances on Slide 9, and they were mostly driven by variable investment income and Encaje performance coming in below expectations; together these had an after-tax impact of $59 million, or $0.27 per share, in the third quarter. Leaving those items aside, non-GAAP operating earnings were $541 million, 3% higher year-over-year, while earnings per share of $2.49 rose 7%. Non-GAAP operating ROE, excluding significant variances, came to 16.6%, an improvement of 110 basis points year-over-year and above the midpoint of our 15% to 17% targeted range. Moving to capital and liquidity. We finished the quarter strongly, with over $1.5 billion of excess and available capital. That figure includes $1.15 billion at the holding company, $300 million in our subsidiaries, and $80 million above our targeted 375% risk-based capital ratio, which stood at roughly 380% at quarter end. During the third quarter we returned $429 million to shareholders, made up of $250 million of share repurchases and $179 million of dividends. Capital deployment has totaled over $1.2 billion year-to-date, and we're well positioned to hit our full year target of $1.5 billion to $1.8 billion. All year long we've had attractive opportunities for organic and inorganic growth, including our third quarter acquisition of Beam Benefits. Beam wasn't contemplated in our 2026 outlook, so as a result we expect full year share buybacks to land toward the low end of our target range. Last night we announced a dividend of $0.85 per share payable in the fourth quarter. That's a $0.01 increase from the prior quarter, 8% higher than a year ago, and consistent with our commitment to a 40% dividend payout ratio. I also want to call out the immaterial impacts of our actuarial assumption review, which you can find on Slide 11. Because of a prospective change in the definition of non-GAAP operating earnings, assumption review impacts are now excluded from that metric and reported separately as a reconciling item. Now turning to the businesses. The following figures exclude the significant variances found on Slide 9. In RIS, as shown on Slide 5, pretax operating earnings rose 5% year-over-year, driven by 4% net revenue growth and continued expense discipline. Operating margin was 42%, above the top of our targeted range, while we continue investing in the business. This quarter had strong underlying fundamentals, including record client retention and stable withdrawal rates, with recurring deposits up 8% to nearly $13 billion. In addition, PRT sales totaled $900 million in the quarter. With sales in the pipeline rising from the first half of the year, we keep clearing our return hurdles and stay disciplined about how we deploy capital. Moving to Slide 6. Principal Asset Management posted earnings growth this quarter, powered by strong expansion in international pension. Inside Investment Management, revenue fell 2% versus a year ago. Once you strip out the effect of divestitures, revenue was up 1% year-over-year, since higher transaction and borrower fees more than made up for the drag on management fees from net cash flow. Pretax operating earnings dropped 3% in the quarter. Year-to-date, earnings rose 2% and margin gained 40 basis points. Now to international pension. Adjusted pretax operating earnings grew 11% year-over-year, fueled by continued growth in Latin America. Operating margin widened 240 basis points, reaching the top of our 46% to 50% target range. AUM rose 10% from a year earlier, hitting $166 billion, and positive net cash flow in every location showed broad-based momentum throughout the business. We also closed the sale of our Chile annuity business on September 1, which further sharpens our focus on core pension and asset management capabilities. Moving to Slide 7. Benefits & Protection produced pretax operating earnings of $183 million, up 3% year-over-year, driven by Life Earnings growth and set against a very strong third quarter 2025 for specialty benefit results. Starting with Specialty Benefits, premium and fees rose 6% year-over-year, helped by core business momentum and a 1-month contribution from Beam. Earnings held roughly flat versus the prior year, as strong underwriting results this quarter were measured against a very favorable prior-year quarter; the current quarter also carried a slight earnings headwind from Beam. Although the acquired block is running at a modest loss right now, integration plans remain on track, and repapering should start driving value in early 2027. The Specialty Benefits loss ratio came in at 59%, helped by better results in dental and Group Life. Dental results this quarter marked a sixth consecutive quarter of year-over-year improvement. Those strong underwriting results were partly offset by individual disability, which saw a higher loss ratio because of claims volatility. The overall Specialty Benefits loss ratio keeps performing better than our long-term targeted range. Turning to life. Adjusted pretax operating earnings were $39 million, a 29% increase from the prior year, driven by improved mortality experience from lower frequency and severity. Operating margin rose 420 basis points year-over-year to 16.4%, above the top end of our targeted range. Now to the Corporate segment. Losses stayed within our targeted range. With year-to-date results in hand, we expect to land at or above the high end of our range for the full year. At the enterprise level, through the third quarter, we delivered 12% EPS growth year-to-date, ROE expansion and strong free capital flow generation, reflecting continued strength and momentum in our business. The moves we made strategically over the year have let us concentrate on opportunities with greater growth. The Beam Benefits acquisition in the third quarter, shifting our Hong Kong operations into asset management, and divesting our Chile annuity business have all further refined our portfolio. With the year's last quarter now underway, we're in a solid position to meet our financial targets, backed by robust fundamentals, a sound capital position, and an ongoing emphasis on our strategic priorities. That wraps up our prepared remarks. Operator, please open the line for questions.

Let's start with the first question: can you explain why you chose to place the assumption review below the line this quarter? I understand the effect is minor this year, though I believe it has perhaps been bigger previously. And I know the bulk of your core operations aren't truly long-duration, volatile insurance lines, but I think this approach may differ somewhat from what most peers do.

Thanks for the question, Wes. Joel will take that one.

Correct, as you said, it had no material effect this quarter. And honestly, our focus has always been on operating earnings with the actual assumption review left out, because that annual review happens only once a year. For that reason, we have in the past actually set our probability metric for incentive comp and similar items on operations, with AAR excluded. So because we have always taken it out of how we define OE, we took a step back and asked why it should be in that OE definition at all, and after looking at the treatment again, we decided the change would take effect in 2026. And importantly, we will keep highlighting the onetime AR impact the way we have in the slides; we will be very transparent about the impact in the reconciliation from OE to net income so there is full transparency going forward; but we do think this gives investors a more meaningful presentation, and that the OE metric will better reflect the underlying performance of the operations.

Thanks, Wes, do you have a follow-up?

I do. The second question concerned international pension. Regarding Brazil, there was a recent reelection, and the stock market there as well as the real have come under fairly considerable pressure. I'm curious whether you could share any sensitivity of international pension earnings to Brazilian equities and currency.

Yes. I'll have Joel walk through the sensitivity part from a financial standpoint, but perhaps I'll first briefly cover the wider effects we're seeing from the Brazil election. Let me begin with Sunday's results. That outcome reversed the first round, and I believe the market will need some time to digest that reversal and eventually unwind some of the gains that had flowed in from the first round. One upside, though, is that it permits continuity for our operations in Brazil, thanks to stable leadership at our JV partner, Banco do Brazil; market volatility is likely as investors weigh both the fiscal and interest rate outlook, yet Brazil stays a highly attractive market over the long term. Our relationships there are strong, and we have successfully steered through numerous political and economic cycles. We're confident in our continued ability to execute our priorities and generate growth in our market-leading business. But Joe will provide a bit more on sensitivities around some of the financial effects.

Absolutely. Wes mentioned during his opening remarks that we’ve been a publicly traded company since 2001. Our presence in Brazil actually goes back further than that. The joint venture we launched dates to 1999, and that collaboration has delivered very strong results throughout that span. Still, it’s worth remembering that interest rates in Brazil are quite different from those in the U.S. So what we are observing is volatility in the equity market, especially in October. Within our pension plan, though, Brazilian equities account for under 1% of AUM. That’s what you’d expect when rates sit in the mid-teens. So again, for the growth outlook of our asset-based fee business, rates will matter far more than what happens in equity markets. That part of our business doesn’t concern me. Given our small equity allocation, we see no meaningful effect at all from the equity market shift since the election, and we remain very confident about Brazil’s continued growth prospects over the intermediate and long term.

Thank you, Wes.

I'd like to begin with investment management revenue. Camel, could you break down what drove the additional decline in fee rate this quarter? And could you also explain what's behind the increase in other revenue? And any insight into how we should think about growth in that revenue stream as private markets AUM expands?

Appreciate the question, Joe. Tom is going to cover that.

Joel, thanks for asking. I'll begin with the fee rate dynamic. Clearly, over the near term, it's been a headwind to the rate we reported to you, especially since the pressure has mostly been concentrated in active equity strategies carrying higher fees. Yet at the same time, much like UAS, the business has grown considerably more diversified, I'd say, in terms of both geography and capability. You pointed to private markets, but that's not the whole story. One illustration I'd offer, as you consider this, is that even our active ETF business keeps expanding year-over-year and has produced positive earns at a premium over the base fee rate shown in our earnings. So we keep underwriting genuinely good business, and our aim is to hold that fee rate high relative to both the market and competitors. The key point I'd stress is that one fee statistic might not fully reflect the earnings power of the business, since many nontraditional fees keep growing — you mentioned real estate as borrower transaction fee scale up, given market volatility and capital being put to work as we keep expanding our infrastructure business, the character of those fees will shift over time. So without question, the nontraditional fee component will increase, and capturing it in a single statistic will be difficult. So you should focus on the total line, not merely the management fee line. And the other dynamic fueling our revenue growth is that custom mandates keep growing. Many of these aren't traditionally in fund structures; and so certainly, that propels the fee growth rate — you saw some of that show up this quarter, given your question.

Thanks, Joe, do you have a follow-up?

Yes; now that Beam is first with the deal, could you give us a bit more detail on what we should expect for the earnings impact? I believe you mentioned it was something of an earnings drag this quarter. How large a drag was it? And then how should we think about earnings emerging as you shift the business onto your paper and over to your dental network?

Yes; so I'll begin there. We're very excited to have closed the Beam Benefits acquisition on September 1. That came a little earlier than we had actually anticipated for closing, and it really positions us to keep integrating this at an accelerated pace as we head into 2027. I'll ask Amy to go into somewhat more detail on the actual impact on both the top line and the bottom line.

Absolutely. Thank you for that question. Let me step back for a moment and begin with a brief reminder: at its core, when I think about what this is, it's genuinely a capability and growth acquisition — one that widens the way we serve small and midsized businesses, and then reinforces the capabilities we already have in that smaller market. So throughout all of this work, our number one priority will be making sure we deliver continuity and improve the products and experiences we provide to employers, brokers, and our own employees. So with that strategic rationale in mind — you brought it up, and I'll go ahead and size it for you — Beam was a modest headwind to earnings. For context, that came to roughly $1 million or $2 million in earnings this quarter. So the mechanism here will be moving Beam policies onto our paper and our dental network. We like to call that repapering, and that's the mechanism that will first reduce and then eliminate those losses; Deanna mentioned she was pleased we closed on 9/1, and one reason we're pleased is that it let us begin this repapering process on 1 of 27; broker and customer notices are already going out, and we view our repapering timeline as at or ahead of plan. Keep in mind, though, that these are largely case policies, which tend to have policy anniversaries spread across the calendar year rather than mostly on 1/1; so this repapering activity will take place throughout 2027 and will start to noticeably lessen the earnings drag in the first half of 2027. I'd expect us to provide more detail and more guidance on how this integration work will affect full year 2027 results at our next earnings and outlook call. But for now, I'm quite comfortable sharing that our plans are on track, that we're slightly ahead of our plan, and that we remain pleased with the transaction.

I have a question about net flows in Investment Management. Do you anticipate that headwinds will persist in the U.S. active equity business over the coming quarters? And I'm curious whether you can share any update on the pipeline as we head into year-end. I believe last quarter you provided a figure of roughly $10 billion.

Yes, I'll have Thomas address that.

Let me begin by addressing your question about the quarter, then CF, and after that I'll give you a sense of the pipeline question as well. As I mentioned last quarter, the second half of the year is still challenging. The net outflow level in this third quarter, while improved versus 2Q, remains significant, as you pointed out. As you noted, at this stage it is largely concentrated in our U.S. retail active equity strategies, along with some institutional withdrawals overseas. What I would point out is that it stays concentrated, and there is a strong bias against those kinds of products in the wealth business and the retail business. You can even observe that in industry flows this quarter. So we are not immune to it. Where we keep seeing constructive trends over time — first, I would point you to our ETF business; this quarter, we hit a high point of $14 billion in AUM. That business has grown 84% year-over-year. So consistent net cash flow and growth have contributed. I continue to see good momentum in that business, and so you should keep tracking it. On your pipeline question, as you suggested last quarter, I highlighted the pipeline number, and it has also risen this quarter by another $700 million, while we actually put a significant amount of capital to work during the quarter as well — some of the committed mandates we put to work, and then we added new mandates too; so overall the pipeline grew by that amount. And what I would tell you is those 2 measures keep trending in the positive direction, and our goal remains to align with where the vectors of client demand are while we continue to manage through the industry-wide transition of these traditional active products.

Thanks, Jack. Do you have a follow-up?

Yeah. Perhaps only one thing regarding the free capital conversion metric, which sits at 77% — a healthy figure inside your target range — though it has trended somewhat lower across the last couple of quarters. I'm just curious whether there are any drivers you'd highlight. I would have imagined that maybe time market performance remains pretty solid. That would sort of support your fee-based businesses and keep conversion perhaps toward the upper end of that range; but I'm just wondering if any moving pieces exist there that you'd point to?

Yes. I'll ask Joel to speak to that. That metric does carry some seasonality. And clearly, some of the organic opportunities can be a bit volatile from quarter to quarter, but I'll have Joel answer your question.

Jack, as you pointed out, 77% falls well within the 75% to 85% range we target for free capital flow. And really, excess and available capital looks largely in line with what we saw last quarter. So standing here today with $1.53 billion in the third quarter is a very strong position; for some context, though, a lot of favorable developments happened during the quarter. Take the strong free capital generation this quarter — which, as we routinely point out, usually leans more toward the latter part of the year, and we definitely saw that in the third quarter; we also had significant organic deployments during the quarter. As pointed out, we had $900 million in PRT sales along with the $500 million MTN issuance that we didn't do earlier in the quarter. We also directed $430 million of shareholder deployments toward share buybacks and dividends, and lastly, we completed 2 relevant inorganic transactions during the quarter. So what all that means is we still have the same capital coming into the quarter as going out of it. But I want to call out a couple of things on the inorganic side, just to make sure it's clear from a capital standpoint. On September 1, we completed the acquisition of Beam Benefits and also completed the sale of our Chile annuity business. While the capital effect was mostly offset, the Chile proceeds had actually been factored into our outlook guidance, whereas the beam purchase had not. So the reality is that we funded the beam transaction without having it contemplated in outlook, and we are still delivering on our share buyback plans and still delivering on our overall capital deployment, which stems from our privileged position: we have a good business mix that lets us direct capital toward great inorganic opportunities like Ben while also continuing to meet our capital deployment objectives for the year. So again, a very impactful quarter, a very busy quarter, but again, we feel really good about our TTM 77% free capital payout ratio. I hope that helps, Jack.

Could you give us a bit more detail on the disability experience within specialty benefits — is there anything worth noting about the somewhat higher loss ratio on those products?

Yes, I'll have me address that. And just to be specific, was it the group disability side that you were focused on, Wilma?

Yes.

So Amy to address that.

Absolutely, and thanks for raising it. Let me begin by pointing to the total loss ratio, which came in at 59%. In my view that represents a genuinely solid underwriting outcome, and it sits beneath the bottom of the 60 range we reference. As noted, dental and Group Life—and I believe Joel touched on this during his remarks—made truly meaningful contributions to those underwriting results, and dental, the biggest piece of our block, has now posted its sixth quarter in a row of better loss ratio performance; that's essentially the context behind my answer here. Turning to group disability, the trends I'm observing in this product leave me at ease. By its nature, this line can show some quarter-to-quarter volatility, and I think that's something we all grasp quite well. Over the last 2 quarters, results have come in ahead of expectations despite that volatility, and ahead of historical trends as well. Given that inherent volatility, though, I do believe examining trailing 12-month patterns for this block is the more useful approach. One point I'd like to flag—I was reviewing some of the write-ups—is a reminder that our supplement contains a loss ratio illustration that strips out significant variances, which affected the group disability loss ratio in the third quarter of the prior year. So on a trailing 12-month basis, once AAR impacts are excluded, the group disability line is slightly up and broadly consistent with what I view as a gradual shift toward more historical disability performance. It's likely a fairly sensible signal for near-term results too. My takeaway on group disability is that we're seeing this gradual climb back toward that historical disability performance, and I'm quite comfortable with the fundamentals as you start to examine things such as frequency and severity—the performance of that block sits well with me. 60% to 64% range.

Wilma, I'd add that handling this as one block matters too. A lot of the employers we serve buy several products from us, and we approach it in a way that works for that employer as a whole; so I'd ask you to return to the 59%, which looks very attractive against both our past results and the performance level we target. And as Amy mentioned, on a TTM or year-to-date view, group disability continues to perform at a very healthy level. Wilma, is there a follow-up?

Yeah, sorry. In your private fixed income funds, are you noticing any gains tied to the AI demand out there in the market?

Yes. Let me check whether Kamal would like to take that one.

That's a good question to get, Wilma, and it comes at the right time. In particular, I'll answer it in terms of the private infrastructure debt business we began building a few years back. One choice we made — knowing we could be in for a long decade of rising rates with inflation returning — was to construct that business around strategies with more floating rate exposure rather than fixed rate. And we're beginning to reap the rewards of that choice, both through client demand and through the results it has delivered, including on our own balance sheet. That asset class, as you know, is entering a genuinely strong cycle for global infrastructure investing. What we're starting to observe is that more clients want infrastructure exposure rather than private credit, and more of them want floating rate rather than fixed rate. In fact, during this quarter we won our first large institutional mandate in that business we launched a few years ago — the one we essentially built from scratch organically. So we do see that as a favorable tailwind for our private markets business.

Thank you, Wilma, for those questions.

My first question concerned expense seasonality in Q4 — you usually see somewhat higher costs toward year-end; and since you're also tracking toward the high end of your EPS growth target, I was wondering whether you might consider speeding up any other kinds of investments in the business that we should think about this quarter?

Yes, Ryan, I believe if you look at our expense line, it really does show that we continue to have strong discipline and expense management relative to our revenue growth, but some seasonality does occur quarter-to-quarter. So I'll let Joel address how we are thinking about this coming quarter.