Workplace and Managed Portfolios are both asset-based products, however, net flows in each product line are subject to different underlying dynamics by virtue of the types of clients we serve. In Workplace, our record-keeper clients may add new plans into the mix, which bring on new assets, plus existing plans experience continuous investment via 401(k) additions each month. Generally, 401(k) plans face less outflow risk relative to Managed Portfolios due to withdrawal and distribution restrictions, but outflows in Workplace can increase as plan populations age. Advisors offering discretionary investment management use our Managed Portfolios; thus, these assets under management are more exposed to outflow risk since investors in these accounts tend to be more sensitive to market movements. The impact of market performance on assets can also diverge between Workplace and Managed Portfolios assets, as each employ various investment strategies that can over or underperform in any given quarter relative to each other and the overall market.

As we mentioned in our second quarter 2019 earnings release, positive equity market performance was a key driver of growth in assets under management/advisement in our asset-based products. Net flows in Managed Portfolios, however, underperformed our expectations and largely explain the divergence in asset growth relative to Workplace in the quarter. Net flows in Workplace benefited from growth in Managed Retirement Accounts. In Managed Portfolios, our equity strategies reported positive net flows in the quarter; however, in a highly competitive environment, we experienced softer sales than expected in our mutual fund and ETF strategies. We recognize that quarter-to-quarter flows can fluctuate. We actively monitor these trends to ensure we’re making the appropriate decisions to execute our strategy while providing the right solutions for investors over the long term.