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Revenues | 9 Months Ended
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Sep. 30, 2018
Revenue from Contract with Customer [Abstract] |
Revenues | Revenues Adoption of ASC 606, Revenue from Contracts with Customers The Company's revenues are recognized when a performance obligation is satisfied, which occurs when control of the services is transferred to customers. Investment management fees, distribution and service fees and administration and shareholder service fees are generally calculated as a percentage of average net assets of the investment portfolios managed. The net asset values from which investment management, distribution and service and administration and shareholder service fees are calculated, are variable in nature and subject to factors outside of the Company's control such as deposits, withdrawals and market performance. Because of this, they are considered constrained until the end of the contractual measurement period (monthly or quarterly) which is when asset values are generally determinable. Revenue Disaggregated by Source The following table summarizes revenue by source:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2018 |  | 2017 (1) |  | 2018 |  | 2017 (1)
($ in thousands) |  |  |  |  |  |  |
Investment management fees |  |  |  |  |  |  |
Open-end funds | $ | 62,466 |  |  | $ | 51,190 |  |  | $ | 174,032 |  |  | $ | 120,902 |
Closed-end funds | 10,614 |  |  | 11,243 |  |  | 31,161 |  |  | 33,495 |
Retail separate accounts | 19,532 |  |  | 14,686 |  |  | 53,152 |  |  | 38,879 |
Institutional accounts | 24,614 |  |  | 16,208 |  |  | 56,210 |  |  | 30,140 |
Structured products | 3,602 |  |  | 2,822 |  |  | 7,996 |  |  | 4,483 |
Other products | 885 |  |  | 1,146 |  |  | 2,806 |  |  | 2,729 |
Total investment management fees | 121,713 |  |  | 97,295 |  |  | 325,357 |  |  | 230,628 |
Distribution and service fees | 13,730 |  |  | 11,482 |  |  | 39,886 |  |  | 32,704 |
Administration and shareholder service fees | 16,567 |  |  | 14,699 |  |  | 48,272 |  |  | 33,156 |
Other income and fees | 200 |  |  | 199 |  |  | 655 |  |  | 1,095 |
Total revenues | $ | 152,210 |  |  | $ | 123,675 |  |  | $ | 414,170 |  |  | $ | 297,583 |
(1) | Prior period amounts have not been adjusted and are reported in accordance with historical accounting under ASC 605, Revenue Recognition.
Investment Management Fees The Company provides investment management services pursuant to investment management agreements through its affiliated investment advisers (each an "Adviser"). Investment management services represent a series of distinct daily service periods which are performed over time. Fees earned on funds are based on each fund’s average daily or weekly net assets which are generally received and calculated on a monthly basis. The Company records its management fees net of investment management fees paid to unaffiliated subadvisers, as the Company considers itself an agent of the fund as it relates to the day-to-day investment management services performed by unaffiliated subadvisers, with the Company's performance obligation being to arrange for the provision of that service and not control the specified service before that service is performed. Amounts paid to unaffiliated subadvisers for the three and nine months ended September 30, 2018 were $11.4 million and $36.6 million, respectively. Retail separate account fees are generally based on the end of the preceding or current quarter's asset values or on an average of month-end balances. Institutional account fees are generally based on an average of month-end balances or current quarter’s asset values. Fees for structured finance products, for which the Company acts as the collateral manager, consist of senior, subordinated and, in certain instances, incentive management fees. Senior and subordinated management fees are calculated at a contractual fee rate applied against the end of the preceding quarter par value of the total collateral being managed with subordinated fees being recognized only after certain portfolio criteria are met. Incentive fees on certain of the Company's CLOs are typically 20% of the excess cash flows available to holders of the subordinated notes, above a threshold level internal rate of return. Distribution and Service Fees Distribution and service fees are asset-based fees earned from open-end funds for distribution services. Depending on the fund type or share class, these fees primarily consist of an asset-based fee (12b-1 fee) that is charged to the fund over a period of years to cover allowable sales and marketing expenses for the fund or front-end sales charges which are based on a percentage of the offering price. Asset-based distribution and service fees are primarily based on percentages of the average daily net assets value and are paid monthly pursuant to the terms of the respective distribution and service fee contracts. Distribution and service fees represent two performance obligations comprised of distribution and related shareholder servicing activities. Distribution services are generally satisfied upon the sale of a fund share. Shareholder servicing activities are generally services satisfied over time. The Company distributes its open-end funds through unaffiliated financial intermediaries that comprise national and regional broker dealers. These unaffiliated financial intermediaries provide distribution and shareholder service activities on behalf of the Company. The Company passes related distribution and service fees to these unaffiliated financial intermediaries for these services and considers itself the principal in these arrangements as it has control of the services prior to the services being transferred to the customer. These payments are classified within distribution and other asset-based expenses. Administration & Shareholder Service Fees The Company provides administrative fund services to its open-end funds and certain of its closed-end funds and shareholder services to its open-end funds. Administration and shareholder services are performed over time. The Company earns fees based on each fund’s average daily or weekly net assets which are calculated and paid monthly. Administrative fund services include: record keeping, preparing and filing documents required to comply with securities laws, legal administration and compliance services, customer service, supervision of the activities of the funds’ service providers, tax services and treasury services as well as providing office space, equipment and personnel that may be necessary for managing and administering the business affairs of the funds. Shareholder services include maintaining shareholder accounts, processing shareholder transactions, preparing filings and performing necessary reporting, among other things. Financial Statement Impact of the Adoption of ASC 606 The adoption of ASC 606 resulted in a change from the Company’s treatment under ASC 605 whereby front-end sales charges earned for the sale execution of certain share classes were presented net of the amounts retained by unaffiliated third-party dealers and banks. These front-end sales charges earned are now presented on a gross basis under ASC 606. The impact of adoption of ASC 606 on the Company's condensed consolidated statement of operations was as follows:
| Three Months Ended September 30, 2018 |  | Nine Months Ended September 30, 2018
($ in thousands) | As Reported |  | Balance Under Prior ASC 605 |  | Effect of Change Higher/(Lower) |  | As Reported |  | Balance Under Prior ASC 605 |  | Effect of Change Higher/(Lower)
Revenues |  |  |  |  |  |  |  |  |  |  |
Distribution and service fees | $ | 13,730 |  |  | $ | 11,625 |  |  | $ | 2,105 |  |  | $ | 39,886 |  |  | $ | 34,451 |  |  | $ | 5,435 |
Operating Expenses |  |  |  |  |  |  |  |  |  |  |
Distribution and other asset-based expenses | $ | 25,386 |  |  | $ | 23,281 |  |  | $ | 2,105 |  |  | $ | 71,398 |  |  | $ | 65,963 |  |  | $ | 5,435 |

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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