AssetMark posts record net income, passes 9,200 advisors

March 2, 2023 11:27 AM

Once again, AssetMark is walking into a new year with a string of new records at its back.

Despite difficult market conditions, the Concord, California-based turnkey asset management program and outsourced investment technology firm posted record net income of $103.3 million in 2022 as its advisor headcount climbed past 9,200.

While the firm saw its net income climb a staggering 302% from the $25.7 million it brought in one year before, overall platform assets and platform assets from engaged advisors were both down year over year.

In a prepared statement released alongside the financials on Feb. 22, CEO Natalie Wolfsen said AssetMark continued its trajectory of growth while helping more than 241,000 investor households and achieving record financial and operational results.

"AssetMark continued its evolution from a TAMP to a holistic, full-service wealth management platform oriented around what advisors need to deliver resilient investor outcomes while successfully growing their practices," Wolfsen said. "Despite a challenging macro-environment, we truly made a difference in the lives of our advisors and their clients. 2022 was a strong year at AssetMark.

"We are well positioned to help our advisors grow in 2023 and beyond, which in turn will help AssetMark grow. I could not be more excited about the opportunity ahead."

To see the key takeaways from AssetMark's earnings statements for financial advisors and other wealth management professionals, scroll down our slideshow.

Advisors on the platform

The total number of advisors working with AssetMark rose by a net 648 representatives to 9,297 by the end of Q4 2022. The new total represents a year-over-year increase of 7.5%. The number defined by the firm as "engaged advisors" with at least $5 million across its platforms was 2,882, up 0.8%, or 24 advisors, year over year. More than 17,900 new households and 143 new producing advisors joined the AssetMark platform in the fourth quarter, pushing the total number of households to 241,053.

Platform assets

Assets managed on AssetMark's platform dropped 2.2% year over year to $91.5 billion. Quarter over quarter, platform assets were up 15.2% due to adding $6.9 billion from the December acquisition of the Charlotte, North Carolina-based wealthtech firm Adhesion Wealth and quarterly net flows of $908 million.

At $83.8 billion, assets from engaged advisors were down 3% from $86.4 billion one year ago. Production lift, a measure of the annualized organic growth of the practices, was 16.3% in the fourth quarter, down from 24.2% in the fourth quarter of 2021. Assets under custody dropped 7.2% year over year to $66.2 billion from the $71.3 billion recorded at the end of the previous quarter.

"Our engaged advisors account for 30% of all advisors using our platform and make up 92% of our platform assets," AssetMark Chief Financial Officer Gary Zyla said on an earnings call, according to a transcript from Seeking Alpha. "As always, growing the number of engaging advisors is a key focus for management as it is crucial to drive further growth of our business and its financials."

The bottom line

AssetMark recorded net income for the quarter of $25.6 million, or 35 cents per share. Adjusted net income for the quarter was $34.3 million, or $0.46 per share, on total revenue of $164.1 million.

Adjusted EBITDA for the quarter was $52.9 million, or 32.2% of total revenue, and annual net flows as a percentage of beginning-of-year platform assets were 6.0%.

Remarks

"While 2022 was a record year, there were challenges, and we are not taking our foot off the gas," Wolfsen said during last week's earnings call. "Investors need more guidance, support and advice than ever before. A recent study found that 44% of investors agree that they need more advice than they received in the past. In 2023, in response to this and other trends, we'll continue to focus on executing our growth strategy."

Wolfsen said 2023 priorities include expanding AssetMark's offering with Adhesion; continuing the firm's replatforming efforts; expanding fixed income and SMA offerings; and helping advisors grow and scale their business through enhancements to AssetMark's advisors benefits program.

"Our strategy is working. We are well positioned to help advisors grow which in turn will help AssetMark growth," Wolfsen said. "I cannot be more excited about the opportunity ahead."