Percent                   Percent
Year Ended December 31,                  2012           2011        Change        2010        Change
Revenues                             $  992,522     $  929,727         7  %   $  900,835         3  %
Expenses                                780,956        725,662         8  %      683,302         6  %
Income from operations                  211,566        204,065         4  %      217,533        (6 )%
Net gain from investments                14,067          3,360       N/A          48,533       (93 )%
Interest income, net of interest
expense                                   5,192          5,244        (1 )%        4,848         8  %
Other expense, net                            -              -       N/A            (590 )     N/A
Equity in earnings of
unconsolidated affiliates                98,671        105,818        (7 )%       99,457         6  %
Income before income taxes              329,496        318,487         3  %      369,781       (14 )%
Income taxes                            121,462        111,837         9  %      136,461       (18 )%
Net income                              208,034        206,650         1  %      233,320       (11 )%
Less: Net income attributable to
the noncontrolling interest              (1,186 )       (1,691 )     (30 )%       (1,633 )       4  %
Net income attributable to SEI
Investments Company                  $  206,848     $  204,959         1  %   $  231,687       (12 )%
Diluted earnings per common share    $     1.18     $     1.11         6  %   $     1.22        (9 )%

Significant Items Impacting Our Financial Results in 2012 Revenues increased $62.8 million, or seven percent, to $992.5 million in 2012 compared to 2011. Net income attributable to SEI increased $1.9 million, or one percent, to $206.8 million and diluted earnings per share increased to $1.18 per share in 2012 compared to $1.11 per share in 2011. We believe the following items were significant to our business during 2012:
• Revenue growth in 2012 was primarily driven by higher Asset management, administration and distribution fees from improved cash flows from new and existing clients and the net market appreciation during 2012. Our average assets under management, excluding LSV, increased $13.5 billion, or 12 percent, to $130.5 billion during 2012 as compared to $117.0 billion during 2011.

• Sales of new business in our Institutional Investors and Investment Managers business segments as well as positive cash receipts from new and existing advisor relationships in our Investment Advisors business segment contributed to the increase in our revenues and profits.

• Our investment processing fees in our Private Banks business segment increased due to new business, higher one-time project revenue and increased fees earned on our mutual fund trading solution.

• Our proportionate share in the earnings of LSV was $100.0 million in 2012 as compared to $105.8 million in 2011. The decrease in our earnings was primarily due to lower profits caused by increased personnel costs as well as a decrease in our ownership percentage from approximately 41.2 percent to approximately 39.8 percent beginning with the second quarter 2012. The reduction in our ownership percentage is described in greater detail under the caption "Equity in earnings of unconsolidated affiliates" later in this discussion.

• Our operating expenses related to servicing new and existing clients implemented on GWP increased during 2012 as we continue to build out the operational infrastructure. These increased operational costs, mainly related to personnel and third party service providers, primarily impacted the Private Banks business segment. The increased operational costs are primarily included in Compensation, benefits and other personnel on the accompanying Consolidated Statements of Operations.

• Our consulting costs incurred for the development of GWP, excluding amounts capitalized, have declined during 2012 as compared to 2011. These consulting costs, which are expensed as incurred, are included in Consulting, outsourcing and professional fees on the accompanying Consolidated Statements of Operations.

• Our operating expenses related to our hedge fund and separately managed accounts solutions of our Investment Managers business segment increased during 2012 as compared to 2011. These increased operational costs, mainly related to personnel, resulted from servicing new and existing clients and are also included in Compensation, benefits and other personnel on the accompanying Consolidated Statements of Operations.

• Sales events, net of client losses, were significantly higher during 2012. These sales events resulted in an increase in sales compensation expense of $12.8 million when compared 2011. Also, incentive compensation expense increased in the 2012 as compared to 2011.

• Amortization expense related to capitalized software increased to $32.6 million during 2012 as compared to $26.2 million during 2011 primarily due to continued releases of GWP. Additionally, we decided to discontinue the use of specific functionality within the platform and incurred $2.7 million of amortization expense related to the remaining net book value of the component during 2012. This expense was recognized in our Private Banks business segment.

• We recognized gains of $13.2 million in 2012 and $3.4 million in 2011 from structured investment vehicles (SIV) securities. In November 2012, we sold our remaining SIV security, the senior notes issued by Gryphon, and recognized a gain of $5.3 million from the sale. We no longer own any SIV securities at December 31, 2012 (See Notes 5 and 6 to the Consolidated Financial Statements).

• Our effective tax rates were 36.9 percent in 2012 and 35.2 percent in 2011. The increase in our tax rate was due to the accrual of taxes on the cumulative undistributed earnings of SEI Asset Korea (SAK) as well as the impact of the Domestic Production Activities Deduction which benefited our tax rate in 2011 (See the caption "Income Taxes" later in this discussion for more information).

• We continued our stock repurchase program during 2012 and purchased approximately 7,528,000 shares at an average price of $20.62 per share for a total cost of $155.3 million. Our stock repurchases during 2012 significantly contributed to our growth in earnings per share.

Significant Items Impacting Our Financial Results in 2011 Revenues increased $28.9 million, or three percent, to $929.7 million in 2011 compared to 2010. Net income attributable to SEI decreased $26.7 million, or 12 percent, to $205.0 million and diluted earnings per share decreased to $1.11 per share in 2011 compared to $1.22 per share in 2010. We believe the following items were significant to our business during 2011:
• Revenue growth was primarily driven by higher Asset management, administration and distribution fees across the business segments from improved capital market conditions. The majority of our asset-based revenues are based upon average assets, which increased during the year despite the sharp decline experienced during the third quarter. Our average assets under management, excluding LSV, increased $9.8 billion, or nine percent, to $117.0 billion during the year as compared to $107.2 billion during 2010.

• New business coupled with asset funding from existing clients for our hedge fund solutions and increased accounts for our separately managed accounts solutions in our Investment Managers segment also served to drive revenue growth.

• Revenues in our Private Banks business segment were negatively impacted by lower investment processing fees from price reductions provided to existing clients that recontracted for longer periods, lower transaction volumes and lower one-time project-related fees. Furthermore, the full impact of previously-announced client losses in the segment were reflected in 2011 as the associated recurring and one-time revenues from the client losses were recognized in the preceding year.

• Our proportionate share in the earnings of LSV in 2011 was $105.8 million as compared to $99.5 million in 2010, an increase of six percent. The net market appreciation in LSV's average assets under management during the first half of 2011 as well as increased performance fees resulted in an overall increase in their revenues. Although ending assets under management declined to $53.7 billion, LSV's average assets under management increased $5.2 billion, or ten percent, to $58.5 billion during the year as compared to $53.3 billion during the prior year.

• Our operating expenses related to servicing new and existing clients implemented on GWP has increased as we continue to build out the operational infrastructure and add new functionality to the platform. A higher portion of these costs are not capitalized. These increased operational costs primarily impacted the Private Banks and Investment Advisors business segments. The increased operational costs are included in Compensation, benefits and other personnel, Consulting, outsourcing and professional fees, and Data processing and computer related expenses on the accompanying Consolidated Statements of Operations.

• Our operating expenses related to servicing new and existing clients of our hedge fund and separately managed accounts solutions of our Investment Managers business segment increased during the year. These increased operational costs are also included in Compensation, benefits and other personnel, Consulting, outsourcing and professional fees, and Data processing and computer related expenses on the accompanying Consolidated Statements of Operations.

• We recognized $3.4 million in gains from SIV securities in 2011 as compared to $44.2 million in gains in 2010. Of the net gains recognized during 2011, gains of $10.6 million resulted from cash payments received from the SIV securities that had been previously written down offset by losses of $7.2 million which resulted from a decrease in fair value at December 31, 2011.

• Stock-based compensation costs declined in 2011 and reflect the return to normal levels of expense amortization as compared to the level in 2010. Stock-based compensation costs decreased during the year due to the acceleration of stock-based compensation in 2010 due to a change in management's estimates of the attainment of certain performance vesting targets, net of the reversal of $6.2 million in stock-based compensation costs in the third quarter 2010.

• We continued our stock repurchase program during 2011 and purchased approximately 11,109,000 shares at an average price of $19.01 per share for a total cost of $211.2 million.

• We made principal payments of $95.0 million during 2011, including a final payment of $20.0 million in the fourth quarter, to fully repay the outstanding balance of our credit facility.

• Our effective tax rate in 2011 declined to 35.2 percent from 37.0 percent in 2010. Our tax rate in 2011 was favorably impacted by tax planning strategies implemented during 2011.

Product Development - Global Wealth Platform Much of our product development efforts have been focused on building and delivering GWP. GWP is a business solution heavily supported by technology to drive our entry into the European private bank market, improve client experience capabilities, and strengthen operating efficiencies. GWP combines internally built functionality and third party applications and integrates them into a single solution with a single user experience. The goal is to provide straight through business processing and transform the middle and back office operations that exist today. The capabilities of GWP will expand our service offerings to include large financial institutions, investment advisors, insurance companies, brokerage houses, and other similar institutions. In addition, the capabilities of GWP provide us the opportunity to enter into new global markets.
The initial version of GWP was offered in July 2007 in the United Kingdom. Since then we have signed about 20 independent wealth advisors and other wealth managers in the United Kingdom, converted a small, select group of investment advisors in the United States and implemented our first U.S. bank in late 2012. We firmly believe these are encouraging signs of progress but acknowledge GWP is still in the early stage of deployment. We will continue to focus our development efforts on enhancing the functionality of GWP and building the operational infrastructure for a wider deployment of GWP to financial institutions and investment advisors in the United States. The aggregate cost attributable to GWP, including amortization expense, may increase in 2013. An area of continued focus is improving the operational efficiency of GWP that would promote scale more quickly. Our operational costs consist mainly of third-party vendor costs and SEI personnel. We are investing in the operational infrastructure that will attempt to provide a sustainable operating model that minimizes cost as revenues increase. However, if we are unable to price our services correctly and to provide an attractive value proposition for our prospective clients, the incremental rate of revenue and profits may be hampered.
As we progress through these initial stages of deployment of GWP to a broader market, we expect to encounter numerous challenges; however, in our opinion, GWP promises to provide a significant opportunity to expand our services into new markets that will increase revenues and profits in the long-term. Until we attain a level of revenues that technological and operational scale can be achieved, we expect continued pressure on our operating margins in the Private Banks business segment and a modest level of pressure on our operating margins in the Investment Advisors business segment.

Ending Asset Balances
This table presents ending asset balances of our clients, or of our clients'
customers, for which we provide management or administrative services through
our subsidiaries and partnerships in which we have a significant interest.
Ending Asset Balances
(In millions)                                             As of December 31,
                                                                Percent                     Percent
                                     2012           2011         Change         2010         Change
Private Banks:
Equity and fixed-income
programs                         $   18,862     $   16,435          15  %   $   13,512          22  %
Collective trust fund programs           11            450         (98 )%          626         (28 )%
Liquidity funds                       6,008          5,553           8  %        5,120           8  %
Total assets under management    $   24,881     $   22,438          11  %   $   19,258          17  %
Client proprietary assets
under administration                 12,178         10,355          18  %       10,672          (3 )%
Total assets                     $   37,059     $   32,793          13  %   $   29,930          10  %
Investment Advisors:
Equity and fixed-income
programs                         $   31,220     $   26,639          17  %   $   27,680          (4 )%
Collective trust fund programs           14          1,298         (99 )%        1,820         (29 )%
Liquidity funds                       2,514          2,505           -  %        1,641          53  %
Total assets under management    $   33,748     $   30,442          11  %   $   31,141          (2 )%
Institutional Investors:
Equity and fixed-income
programs                         $   62,160     $   49,051          27  %   $   48,699           1  %
Collective trust fund programs          102            492         (79 )%          623         (21 )%
Liquidity funds                       2,454          3,888         (37 )%        3,382          15  %
Total assets under management    $   64,716     $   53,431          21  %   $   52,704           1  %
Investment Managers:
Equity and fixed-income
programs                         $       67     $       57         N/A      $        1         N/A
Collective trust fund programs       16,197         11,255          44  %        8,177          38  %
Liquidity funds                         408            152         168  %          313         (51 )%
Total assets under management    $   16,672     $   11,464          45  %   $    8,491          35  %
Client proprietary assets
under administration                244,671        221,198          11  %      233,079          (5 )%
Total assets                     $  261,343     $  232,662          12  %   $  241,570          (4 )%
Investments in New Businesses:
Equity and fixed-income
programs                         $      513     $      515           -  %   $      569          (9 )%
Liquidity funds                          43             37          16  %           65         (43 )%
Total assets under management    $      556     $      552           1  %   $      634         (13 )%
LSV:
Equity and fixed-income
programs                         $   60,947     $   53,712          13  %   $   60,058         (11 )%
Total:
Equity and fixed-income
programs                         $  173,769     $  146,409          19  %   $  150,519          (3 )%
Collective trust fund programs       16,324         13,495          21  %       11,246          20  %
Liquidity funds                      11,427         12,135          (6 )%       10,521          15  %
Total assets under management    $  201,520     $  172,039          17  %   $  172,286           -  %
Client proprietary assets
under administration                256,849        231,553          11  %      243,751          (5 )%
Total assets under management
and administration               $  458,369     $  403,592          14  %   $  416,037          (3 )%

Average Asset Balances
This table presents average asset balances of our clients, or of our clients'
customers, for which we provide management or administrative services through
our subsidiaries and partnerships in which we have a significant interest.
Average Asset Balances
(In millions)                                      For the Year Ended December 31,
                                                                Percent                     Percent
                                     2012           2011         Change         2010         Change
Private Banks:
Equity and fixed-income
programs                         $   17,434     $   15,891          10  %   $   12,579          26  %
Collective trust fund programs          282            526         (46 )%          772         (32 )%
Liquidity funds                       5,332          5,145           4  %        5,247          (2 )%
Total assets under management    $   23,048     $   21,562           7  %   $   18,598          16  %
Client proprietary assets
under administration                 10,873         10,672           2  %       10,907          (2 )%
Total assets                     $   33,921     $   32,234           5  %   $   29,505           9  %
Investment Advisors:
Equity and fixed-income
programs                         $   29,611     $   27,274           9  %   $   25,832           6  %
Collective trust fund programs          728          1,497         (51 )%        2,118         (29 )%
Liquidity funds                       1,970          1,970           -  %        1,986          (1 )%
Total assets under management    $   32,309     $   30,741           5  %   $   29,936           3  %
Institutional Investors:
Equity and fixed-income
programs                         $   56,584     $   49,895          13  %   $   45,926           9  %
Collective trust fund programs          312            542         (42 )%          649         (16 )%
Liquidity funds                       3,415          3,453          (1 )%        3,358           3  %
Total assets under management    $   60,311     $   53,890          12  %   $   49,933           8  %
Investment Managers:
Equity and fixed-income
programs                         $       63     $       39          62  %   $        2         N/A
Collective trust fund programs       13,873          9,978          39  %        7,687          30  %
Liquidity funds                         276            199          39  %          467         (57 )%
Total assets under management    $   14,212     $   10,216          39  %   $    8,156          25  %
Client proprietary assets
under administration                233,024        235,096          (1 )%      225,045           4  %
Total assets                     $  247,236     $  245,312           1  %   $  233,201           5  %
Investments in New Businesses:
Equity and fixed-income
programs                         $      537     $      545          (1 )%   $      520           5  %
Liquidity funds                          35             47         (26 )%           73         (36 )%
Total assets under management    $      572     $      592          (3 )%   $      593           -  %
LSV:
Equity and fixed-income
programs                         $   57,935     $   58,478          (1 )%   $   53,345          10  %
Total:
Equity and fixed-income
programs                         $  162,164     $  152,122           7  %   $  138,204          10  %
Collective trust fund programs       15,195         12,543          21  %       11,226          12  %
Liquidity funds                      11,028         10,814           2  %       11,131          (3 )%
Total assets under management    $  188,387     $  175,479           7  %   $  160,561           9  %
Client proprietary assets
under administration                243,897        245,768          (1 )%      235,952           4  %
Total assets under management
and administration               $  432,284     $  421,247           3  %   $  396,513           6  %

In the preceding tables, assets under management are total assets of our clients or their customers invested in our equity and fixed-income investment programs, collective trust fund programs, and liquidity funds for which we provide asset management services. Assets under management and administration also include total assets of our clients or their customers for which we provide administrative services, including client proprietary fund balances for which we provide administration and/or distribution services. All assets presented in the preceding tables are not included in the accompanying Consolidated Balance Sheets because we do not own them.
Business Segments
Revenues, Expenses, and Operating Profit (Loss) for our business segments for the year ended 2012 compared to the year ended 2011, and for the year ended 2011 compared to the year ended 2010 are:

                                                             Percent                  Percent
Year Ended December 31,             2012          2011        Change       2010        Change
Private Banks:
Revenues                         $ 364,788     $ 348,122         5  %   $ 346,668         -  %
Expenses                           357,001       339,339         5  %     310,633         9  %
Operating Profit                 $   7,787     $   8,783       (11 )%   $  36,035       (76 )%
Operating Margin                         2 %           3 %                     10 %
Investment Advisors:
Revenues                           202,703       189,780         7  %     183,378         3  %
Expenses                           120,146       110,438         9  %     110,388         -  %
Operating Profit                 $  82,557     $  79,342         4  %   $  72,990         9  %
Operating Margin                        41 %          42 %                     40 %
Institutional Investors:
Revenues                           227,889       210,027         9  %     206,531         2  %
Expenses                           116,546       106,585         9  %     106,934         -  %
Operating Profit                 $ 111,343     $ 103,442         8  %   $  99,597         4  %
Operating Margin                        49 %          49 %                     48 %
Investment Managers:
Revenues                           193,484       177,975         9  %     160,159        11  %
Expenses                           127,525       115,963        10  %     103,421        12  %
Operating Profit                 $  65,959     $  62,012         6  %   $  56,738         9  %
Operating Margin                        34 %          35 %                     35 %
Investments in New Businesses:
Revenues                             3,658         3,823        (4 )%       4,099        (7 )%
Expenses                            14,954        11,559        29  %      12,676        (9 )%
Operating Loss                   $ (11,296 )   $  (7,736 )     N/A      $  (8,577 )     N/A

For additional information pertaining to our business segments, see Note 13 to the Consolidated Financial Statements.

Private Banks
. . .