Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from Jeff Hopson – Stifel Nicolaus.
Jeffrey Hopson – Stifel Nicolaus
Hello, good morning, a couple of questions here. Can you give us any sense on how some of the expense reduction efforts will effect the expense base going forward and then maybe Tom Butch can give us an update on his thoughts as far as wire house consolidation and the impact on distribution.
Daniel P. Connealy
This is Dan Connealy. I'll take the expense. In the – looking at the first quarter of ’09 the indirect underwriting and distribution charges should be somewhere between $31 and $33 million. That’s an area where we will have savings. The total compensation for the quarter should be somewhere between $26 and $29 million to give you an idea where those savings might be shaking out. And the tax rate we predict for next year will be about 37.5%.
Jeffrey Hopson – Stifel Nicolaus
Okay, great. Thanks.
Thomas W. Butch
Hi, Jeff, it’s Tom. I would say that it’s very early in the process of consolidation and we’re very watchful and mindful of what’s going on. We’re very much in close contact with all of our wire house partners, but for at least the moment it’s business as usual.
I think regardless of how it unfolds we’re confident that our relationships place us in good stead. We finished the year among the top five mutual fund distributors at four of the five major wire houses and we're in the top ten at the other. So our span of contacts, our penetration is such that however it unfolds, we're confident it will be significant going forward.
Jeffrey Hopson – Stifel Nicolaus
Any thoughts on kind of the current sales environment, other than subdued?
Thomas W. Butch
You took the word right out of my mouth. I would say it is subdued. The trend that we're seeing, relative to Q4 in both of our channels, that is Advisors and wholesale, is that there's not a substantial change in sales momentum, but in both channels, redemption pressure has abated considerably.
Henry J. Herrmann
Jeff, this is Hank. I was just looking at the net flow numbers so far through January, which pretty much gets me to guess rate of the day before, and we're in a mildly outflow position in the Advisors channel, a mildly positive position in the wholesale channel, and a pretty good, I'd say inflow position in the institutional channel. And so, relative to what we experienced in the fourth quarter wrapped into one simple little statement, it's a lot better, but it's still subdued, I guess is a fair word.
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