WDR Waddell and Reed Financial

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2015

Commission file number 001-13913

WADDELL & REED FINANCIAL, INC.

401(K) AND THRIFT PLAN, AS AMENDED AND RESTATED

(Full title of the Plan)

WADDELL & REED FINANCIAL, INC.

6300 Lamar Avenue

Overland Park, Kansas  66202

913-236-2000

(Name of issuer of securities held pursuant to the Plan)

See accompanying notes to financial statements.

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See accompanying notes to financial statements.

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WADDELL & REED FINANCIAL, INC.
401(k) AND THRIFT PLAN

Financial Statements and Schedule

December 31, 2015 and 2014

(1)                      Description of Plan

The following brief description of the Waddell & Reed Financial, Inc. 401(k) and Thrift Plan, as amended and restated (the “Plan”), is provided for general information purposes only. Participants should refer to the Plan document for more complete information.

(a)          General

The Plan is a defined contribution plan covering substantially all employees of Waddell & Reed Financial, Inc. (the “Company”) and its subsidiaries who have one calendar month of service for the Company or a subsidiary. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Plan administration is accomplished through a committee that has authority to arbitrate disputes and settle claims arising under the Plan.

(b)          Contributions

Effective January 1, 2014, an auto-enrollment feature was added to the Plan whereby all eligible employees are automatically enrolled in the Plan unless they affirmatively elect not to participate in the Plan.  Unless a different percentage is elected, automatically enrolled participants have their deferral rate set at 3% of eligible compensation as defined in the Plan document.  This contribution percentage increases automatically in future years by 1% per year up to a maximum of 10% unless an alternative election is made.

Participants are allowed to make semi-monthly pre—tax and after—tax contributions not to exceed eligible compensation less required social security tax withholdings, subject to Internal Revenue Service (the “IRS”) annual limitations of $18,000 for 2015 and $17,500 for 2014; $24,000 for 2015 and $23,000 for 2014 if the participant was 50 years of age or older. The Plan provides for a matching employer contribution of 100% of the first 3% of compensation and 50% of the next 2% of compensation that the participant contributes. Employer matching contributions are pre—tax and begin immediately upon participation.  Participants direct the investment of participant and employer matching contributions among investment options available under the Plan.

(c)           Participant Accounts and Vesting

Each participant’s account is credited with their contributions, the employer’s matching contributions and earnings on their participant and employer account balances. Participants vest immediately in their contributions and earnings.  Employer matching contributions and earnings vest after the participant completes one year of service.

(d)          Participant Loans

Participant loans are not permitted.

(e)           Payment of Benefits

Upon termination of service for any reason a participant is paid a lump-sum distribution if their account balance is equal to or less than $1,000. During 2015 and 2014, former employees with an account balance greater than $1,000 could elect to remain a participant in the Plan until age 69, but could not continue to make contributions to the Plan.

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WADDELL & REED FINANCIAL, INC.
401(k) AND THRIFT PLAN

Financial Statements and Schedule

December 31, 2015 and 2014

(f)             Subsequent Events

The Plan has evaluated subsequent events through June 27, 2016, the date the financial statements were issued.

In January 2016, the Plan filed an Application for Voluntary Correction Program (“VCP”) and an Application for Determination for Employee Benefit Plan.  The VCP was filed when the Plan administrator couldn’t locate documentation regarding the designation of certain of the Company’s subsidiaries as participating employers under the Plan.  The VCP further details this matter and the Plan sponsor’s plan for correcting them.

In June 2016, the Plan administrator identified certain operational errors in administration of the Plan.  The errors relate to the calculation of compensation for purposes of employee deferral and employer matching contributions beginning in January 2014.  The Plan administrator is in the process of gathering data and correcting these errors to comply with the terms of the Plan document. The impact of these errors are not material and have not been recorded in the accompanying statements of net assets available for benefits as of December 31, 2015.

The Plan administrator does not expect the VCP submission or the operational errors to affect the Plan’s tax status.

(2)                      Summary of Significant Accounting Policies

(a)          Basis of Presentation

The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and present the Plan’s net assets available for benefits and changes in those net assets using the accrual method of accounting.

The Plan allows contributions to be invested in Company Class A common stock and certain mutual fund shares of (i) the Waddell & Reed Advisors Group of Mutual Funds and (ii) the Ivy Funds. Waddell & Reed Investment Management Company and Ivy Investment Management Company, participating employers in the Plan, manage the Waddell & Reed Advisors Group of Mutual Funds and the Ivy Funds, respectively. BMO Harris Bank N.A. serves as the trustee for the Plan.

The Plan had 2,172 and 2,104 participants at December 31, 2015 and 2014, respectively. At December 31, 2015, 490 of the 2,172 participants in the Plan were former employees who had elected not to withdraw from the Plan. At December 31, 2014, 479 of the 2,104 participants in the Plan were former employees who had elected not to withdraw from the Plan.

(b)          Use of Estimates

The preparation of financial statements in conformity with GAAP requires the plan administrator to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

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WADDELL & REED FINANCIAL, INC.
401(k) AND THRIFT PLAN

Financial Statements and Schedule

December 31, 2015 and 2014

(c)           Investment Valuation and Income Recognition

Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Plan’s investments in the mutual fund shares are valued at the net asset value of shares held by the Plan at year-end. Quoted market prices are used to value or derive the value of investments.

Purchases and sales of securities are recorded on a trade-date basis (the date the order to buy or sell is executed). Dividend income is recorded on the ex-dividend date. Net appreciation (depreciation) includes the Plan’s gains and losses on investments bought and sold as well as held during the year.  Other income represents settlement distribution funds received by the Plan for the benefit of certain mutual fund shareholders.

(d)          Payment of Benefits and Administrative Expenses

Benefits are recorded when paid. Administrative expenses are paid by the participating employers listed in note 4.

(e)           Early Adoption of Accounting Standards Update (“ASU”) 2015-12

In July 2015, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”) 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient. Part I is not applicable to the Plan. Part II eliminates the requirements to disclose individual investments that represent five percent or more of net assets available for benefits and the net appreciation or depreciation in fair value of investments by general type. Part II also simplifies the level of disaggregation of investments that are measured using fair value. Plans will continue to disaggregate investments that are measured using fair value by general type; however, plans are no longer required to disaggregate investments by nature, characteristics and risks. Further, the disclosure of information about fair value measurements shall be provided by general type of plan asset. Part III is not applicable to the Plan. The ASU is effective for fiscal years beginning after December 15, 2015, with early adoption permitted. Part II is to be applied retrospectively. Management has elected to adopt Part II for fiscal year 2015.

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WADDELL & REED FINANCIAL, INC.
401(k) AND THRIFT PLAN

Financial Statements and Schedule

December 31, 2015 and 2014

(3)                      Plan Investments

(a)          Fair Value

The following presents the number of shares and fair value of common stock and mutual fund investments held by the Plan as of December 31, 2015 and 2014.

*                       Cash equivalents consist of shares of the BMO Prime Money Market Fund Class Y.

**                Effective January 1, 2015, the fund changed its name to Global Growth.

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WADDELL & REED FINANCIAL, INC.
401(k) AND THRIFT PLAN

*                       Effective November 3, 2015, the fund was added to the plan.

**                Effective January 1, 2015, the fund changed its name to Global Growth.

***         Effective February 1, 2016, the fund changed its name to Ivy LaSalle Global Real Estate.

**** Effective February 1, 2016, the fund changed its name to Ivy LaSalle Global Risk-Managed Real Estate.

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WADDELL & REED FINANCIAL, INC.
401(k) AND THRIFT PLAN

*                       Cash equivalents consist of shares of the BMO Prime Money Market Fund Class Y.

**                Effective January 1, 2015, the fund changed its name to Global Growth.

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WADDELL & REED FINANCIAL, INC.
401(k) AND THRIFT PLAN

*                       Effective January 1, 2015, the fund changed its name to Global Growth.

**                Effective February 1, 2016, the fund changed its name to Ivy LaSalle Global Real Estate.

***         Effective February 1, 2016, the fund changed its name to Ivy LaSalle Global Risk-Managed Real Estate.

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WADDELL & REED FINANCIAL, INC.
401(k) AND THRIFT PLAN

Financial Statements and Schedule

December 31, 2015 and 2014

(b)                Fair Value Measures

Accounting standards establish a framework for measuring fair value and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of the asset. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset. An individual investment’s fair value measurement is assigned a level based upon the observability of the inputs that are significant to the overall valuation. The three-level hierarchy of inputs is summarized as follows:

·                                           Level 1 — Investments are valued using quoted prices in active markets for identical securities.

·                                           Level 2 — Investments are valued using other significant observable inputs, including quoted prices in active markets for similar securities.

·                                           Level 3 — Investments are valued using significant unobservable inputs, including the Plan’s own assumptions in determining the fair value of investments.

Investments classified as Level 2 can have a variety of observable inputs. These observable inputs are collected and utilized, primarily by an independent pricing service, in different evaluated pricing approaches depending upon the specific investment security to determine a value.

Investments classified as Level 3 are valued primarily through the use of a single quote (or multiple quotes) from dealers in the investment securities using proprietary valuation models. These quotes involve significant unobservable inputs, and thus, the related securities are classified as Level 3 investments.

At December 31, 2015 and 2014, all of the Plan’s investments were Level 1 investments.

(c)                 Change in Fair Values

During 2015, the Plan’s investments (including gains and losses on investments bought and sold as well as held during the year) depreciated by $10,386,240 as follows:

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WADDELL & REED FINANCIAL, INC.
401(k) AND THRIFT PLAN

* Effective January 1, 2015, the fund changed its name to Global Growth.

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WADDELL & REED FINANCIAL, INC.
401(k) AND THRIFT PLAN

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WADDELL & REED FINANCIAL, INC.
401(k) AND THRIFT PLAN

Financial Statements and Schedule

December 31, 2015 and 2014

(4)                      Contributions by Participants and Participating Employers

The contributions of participants and each participating employer to the Plan for the year ended December 31, 2015 are as follows:

(5)                      Related-Party Transactions

Plan investments include shares of mutual funds managed by Waddell & Reed Investment Management Company and Ivy Investment Management Company, as well as shares of Company Class A common stock. The Company and its affiliates are the sponsors, as defined by the Plan, and therefore, these transactions qualify as party in interest transactions. Fees incurred by the Plan for investment management services are included in net appreciation/depreciation in fair value of investments.  Plan investments also include shares of the BMO Prime Money Market Fund Class Y.  BMO Harris Bank N.A. serves as trustee for the Plan, and therefore, is a party in interest.

(6)                      Plan Termination

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. All Plan assets would be distributed in the event of Plan termination.

(7)                      Tax Status

The IRS has determined and informed the Company by a letter dated May 9, 2012 that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code of 1986, as amended (the “Code”). See note 1(f) regarding subsequent events. The Plan administrator and the Plan’s tax counsel are not aware of any activity or transactions that is expected to adversely affect the qualified status of the Plan.

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WADDELL & REED FINANCIAL, INC.
401(k) AND THRIFT PLAN

Financial Statements and Schedule

December 31, 2015 and 2014

In accordance with GAAP, Plan management is required to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2015, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan currently has no audits for any tax periods in progress.  The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2012.

(8)                      Risks and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.

(9)                      Reconciliation of Financial Statements to the Form 5500

At December 31, 2015 and 2014, the Plan had  $47,877 and $7,475 in benefit payments that had been processed and approved for payment, but had not yet been paid. This amount is presented herein as a component of net assets in the accompanying financial statements, but is presented as a liability of the Plan on the Form 5500.

The following is a reconciliation of net assets available for retirement benefits per the financial statements to the Form 5500 at December 31, 2015 and 2014:

The following is a reconciliation of benefits paid per the financial statements to the Form 5500 for the year ended December 31, 2015:

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*  Indicates party-in-interest investment

See accompanying report of independent registered public accounting firm.

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