AMK - Earnings call transcript Q4 2020 | AssetMark Financial Holdings, Inc.

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Operator

Good afternoon everyone and welcome to AssetMark's Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. Today's call is being recorded.

Now I'd like to turn the call over to Taylor Hamilton, Head of Investor Relations. Mr. ahead, go Please Hamilton.

Taylor Hamilton

afternoon conference welcome call. Good quarter AssetMark's XXXX earnings everyone you. to and fourth Thank

Today the Joining Officer, and for Chief Zyla. XXXX. Charles remotely provide Goldman will me are AssetMark's and Financial AssetMark's an update Officer, business fourth for the results Chief to Executive they quarter discuss outlook Gary

Following remarks, open the up we'll introductory our call questions. for

at prepared on an and Gary during website their Charles our earnings accessed will be that remarks. presentation have can also We It ir.assetmark.com. IR reference

Before statements. get to outlook that statements we differ of I'd started, note could conference our results date materially. certain like this during this call statements actual call, only represent These made as the are and forward-looking forward-looking

factors adjusted of EBITDA income, our filings during adjusted financial forward-looking net are for and which with to business earnings EBITDA, non-GAAP SEC adjusted Please to call call away. today's press net Charles, Additionally, the Risk more my conference and on refer related all over colleagues, margin financial and take information will information. non-GAAP I'll metrics. be so turn it disclosure and similar statements. to that, And require release revenue, discussing

Charles Goldman

afternoon remaining hope for productive during today. on through Starting having call everyone. Gary and XXXX. on we're safe out fourth everybody messages quarter three cover while there our going key X, and messages to five. Slide start joining Taylor, you, possible. great Thank a Thank discuss our will messages hope I two focus five I'll one to masked is everyone good is strain all in I as you earnings call.

highlighted financial XXXX was AssetMark by operating strong and a results. First year momentous for

new growth. entering era is a AssetMark Second of

strategy attracting hybrid in being is RIA adjacent growth and advisors by existing Our RIA channels. the augmented

gain the quarter-over-quarter. up momentum Gary discuss quarter to flows were which billion, our organic fourth XX% $X.X net in will continues Third, growth

quarter another line walk fourth strong will for Next, quarter us bottom and highlighted and results Gary metrics EBITDA top record-breaking by our margin. through XXXX

the Lastly, and some year. financial on entering outlook context provide will our position XXXX Gary for provide an

X, lives of our is to make turning clients. mission difference Slide to So our advisors their and in the

I During was best terms our that shared mission. earnings last year quarter's ever to living call, our of in XXXX

like asset-based strong This by also in producing We further. saw quarter, the year-over-year XX%. year of EPS company's adjusted over which revenue net reported revenue, XX.X% to EBITDA million XX,XXX share in step class. for X.X% net grew households our strong financial lower We value and the operating revenue in full to XXXX our new XXXX, results spread-based revenue at we mutual despite results. platform. It net strong still year billion drive sorry, would $XX.X of operating to opening strategies the results. $XXX the dollars up advisors year, million. more. adjusted engaged platform that was company's $XX.X third-party headwind the driven million the grew assets, Net assets $XX.X income the increased asset-based all $X year, fund million I industry grew outsourcing I'm and to to our to $X the to cost and In In X.X% moving due XXX highest flows take one history. and Adjusted attracted terms translated and to were the was advisors, best and delivering in of who of have losing highest $XX.X help some We to for These the our strong added quarter, XXX financial end history. best and billion

points. of in our evidenced business, scale EBITDA adjusted by had basis XX also the continued success driving We margin in growth our

from XXXX, The our business, Lastly, closed February, our the and remains accretive. acquisition, testament financial OBS and our the a we strong highly In M&A strategy. employees. we're which results to advisors in of also we XXXX, the operating advanced strength our resiliency and

detail a starting business. in bit this discuss with Let's our more

platform time advisers Our outsource money. enables otherwise would of and investment to high-cost, that require significant non-core services

During an value. even importance of having provider outsource greater the showed the pandemic,

of loan Our pandemic to how advisors navigate to out through try their to their by really now way. the under step and Instead pandemic study look equity make clients they shelter-in-place spent volatile the for prospects and service orders. to clients found sense figure XX% and markets, their the of back had to non-client that office, facing us to activities. the of AssetMark every time Prior on advisor side, new

servicing albeit their virtually times. for and advisors time allows and was clients, time Our to more platform prospecting is spending spend new clients comprehensive crucial these existing clients, of with during

XXXX. We in improved also the platform significantly

some highlight of improvements. me these Let

the crucial review demonstrate million clearly advisors. For dedicated their advisors of tools the the strategies and enhanced proposed new client our year, development invested and we goals, chosen This clients advisors technology and Private our In are to retirement platform, months portfolio and proposal first AssetMark XXX $XX CIBC to example our to digital platform. our enhance In goal. investors. of based to assets help X,XXX effective empower ahead our the One liquidity February, how of provide lines and clients. in streamlined on supported our built we full with we added less back a team enhancing technology concerns expertise, month, solutions expanding In focus advisors solutions with which high on planning lending. wellness curated securities-back invest and been we've be rate than net Wealth faster August, by clients client expanded fixed-income robust in Trust vision. help, XXXX. services well in which our income advisors In and valuable investment block fixed efficient, and investment December, the billion. is building for issued, six invested customized have our tools PIMCO than of allows diversify which to and as to will interest management with needs of their Continuing more services credit a line security quickly to and help approaching and financial Wealth serve enhanced funds, advisors for which More added also their component from And credit worth Wright or these is portfolios. low investment meet dreams. a financial assets Dorsey is we solutions We've have $X their of access clients breadth Company introduced American of program gives needs the pipeline

their engaged our to them continuing advisors advisors, highly Speaking by of thanking and to trust our businesses. start complementary AssetMark. for to they help grow want remain I of AssetMark

our number to with XXX webinars outreach strong and educate marketing build advisors, that hosting through a relationships great inform, materials inspire over thought creating and initiatives. of sales continued and increased leadership We help

was year. during in sales compared while to this XXXX, to activity almost Our our XXXX advisors allows challenging our increased double activity serve us

and continue sales organization unit by also our to lower scale We XX%. drove cost

Over highly this phenomenal need. I from have have almost operating XXXX. for job they up be year. of done working during for to in clients our not Finally, doing home to to to associates time want fantastic employees by almost I this mention in all a financial our tirelessly crisis. AssetMark our platform our a to have would clients XXX our remiss to The dedicated contributed of make year, associate the who how been their great serving and great. to people a and right face and improvements rally dedication thank results our having face advisors And

front beginning Company's just we to scratch While in of best believe us. we of surface shaped up are right opportunity our year in last history, to this immense be is the the that

Let's our Page in turn next topic. X to

As amazing we already start. XXXX, we the we to look an excited to on about for what ahead deck Year. New off are And are is

advisor team will XX which meetings, of virtually. conducted events in host over highly advisor our weeks, will sales by largest finished Our just Gold two which Forum, course, attended we were be XXX premier advisors successful annual

We are three XX to best over be spend assets able excited on to represent of our platform. engaging our billion clients days with to

our and define pillars already Our client improvements core our new pipeline robust to investments. continue strategy guide projects, and of is is underway products our work as experience and

expanding on are focused digital advisor the We to experiences and engagement. continuing differentiate

planning emphasis outsource, financial services. reliance evolving the to value-added are include and We increased desire addressing on comprehensive which technology an our needs, advisors advice, and on

Our operations their our to of with record a in supported accounts, focus seems services business new while January. clients teams number applications and The and continue customer new obsession.

doing, and extending we off continuing We plan advisors platform scale. are are start growing to great in our ops results. business and their service while team achieving to growth still of we deliver work XXXX to outstanding all our reach the the support while Building

under growth adjacent expansion resourced pillars to advisors independent years we announced that one and last RIAs over Slide biggest our both opportunity XX our experienced growth being X. are to significant quarter RIAs to was hybrid XXXX the channel continue. trends have through attract and Turning Last RIAs, strategic and these expected of

As on since on and their up slide, RIAs platform, RIAs hybrid XX% XXX% our the XXXX. channels a have growth. of advisor independent from managed hybrid RIAs XX.X% in the production RIAs headcount outpaced RIAs grown advisor and since year and both XXXX other last on In made our in our have production seen asset XXXX. XX.X% platform, and

to and focus offering continue clients. to RIAs We on serve their our enhancing better

launching Institutional are AssetMark our AMI support we quarter to This these advisors.

X. Slide a take at look let's So

AssetMark's service events. and AssetMark to While Institutional will best-in-class offer access

provide to a AMI have right specifically scale. experience advisors RIAs know support Our value, the differentiated providing fully for offers support of to resources efficiency also for the holistic the products, it operational a technology, and community. will community assembled growth, their come solution built RIA and set

will to be Advisor investments the include Portfolios, other AMI a such Managed of successful. products they products RIAs, to products need alternative and First new suite provide as

relationships experience with communication. supports planning, client a reporting that offers digital AMI and stronger account Second financial

to community specific thought specifically designed tailored for Lastly, them. and host leadership we for have events the RIA materials plan

outlook over I'll to call performance that, turn now quarter share for with the fourth and discuss thoughts some for the financial Gary. So our the Gary on XXXX. to

Gary Zyla

Thank afternoon call. good all you, Charles, the on those to and

are a our year and margin and very our since quarter and public. the earnings As full best great growth, organic going by results with for pleased revenue strong fourth Charles discussed, we highlighted

As $XX.X flows growth flows net XX% a billion, assets X. of our the while our assets our production highest and Fourth In quarter-over-quarter discussion and quarter of by Slide record monthly improvement we Company's fees. was earnings. in platform on platform have driven rates production quarter I increase our stable. This about net redemption our fourth usual, by expenses year-over-year. is start Starting then realize in The market a the will billion of relatively $X.X gain with history. $X.X remained from up December net billion driven were talk our revenue, then

target our of year, of million to year of full net assets the XX%. line flows $X.X X% beginning For our of platform in X.X% in or

and Our our continuing increase high three to level the flows net event provide service of result transition and and as past in-person advisors of events our ability to from a efficiently quarters while each in AssetMark. in effectively - of virtual to

to X. Turning Slide

of platform stated enter to were resulting as assets quarter excluding we the in As continued trend of flows quarter, net we in beginning great we strong record see discussed December to target core in the momentum fourth quarter Strong us XXXX as full in X% billion. continue XX.X% our excellent $XX.X in recent year from last period net a these acquisitions. fourth It the This gives Year. growth flows market the percentage above our in to business XX%. to New our assets

up We expect first X% quarter-over-quarter. our be to revenue quarter about

Additionally, to million metrics AMK in net organic and in our on continue January quarter report. our to of activity we disclosed flows based advisor expect January $XXX first as be yesterday approximately strong the growth

in we and outflows While from see our may core continue is strong, our of business first acquisition growth to GFPC quarter OBS.

and As who to engaged not these remain our do economics. have material deals outflows AssetMark accretive these have to Both discussed, impact advisors from on with AssetMark. a not highly outflows previously continue

in performing. our you know is these As shared, our give of core the investors AMK be understanding will in monthly to we disclose past, business an items report

XXXX. our for our metrics NPAs the XXX fourth in we to quarter business Turning entire added Advisor

for fourth at X,XXX defined which the base advisors little XX% advisors quarter X,XXX asset up of of platform. advisor the year-over-year and total of than more XX.X% are total end engaged advisors. Our with account the a on now Engaged as our were

$XX.X in the discuss our by a billion revenue. to to fourth meaning X.X% Now year's both variable the Slide revenue quarter's million XXXX, Entering decline decline. These revenue, rate offset increase million. the to our XX down year-over-year. was quarter, net on of net fourth let's $XXX.X This in revenues, last comes spread-based revenue our of revenue our quarter due at of reported were expenses, related turn to $XX.X asset-based assets strong reflects this

reduction XXXX year-over-year revenue reflects $X.X lower Asset-based our quarter. or this funds, X.X% revenue, cost a We million. which one to call million up mutual mid a was million $X resulted of to $XX.X net shift in out

our one due bit absent to product that course of - interest down decline little at asset time So base growth revenues materially share, about XX% aforementioned Spread-based the revenue in year-over-year XX%. rate.

turn to drivers yield of in discuss the XX change more let's net fully Now year-over-year. Slide to the

revenue the increase flat waterfall offset the decline asset-based with As shows was in relatively spread-based the year-over-year revenue by revenue. in

additional Our the fee $X It with on which the impact to revenue compression a about million. the was impact which basis important $X.X waterfall funds generate in reduced compression $X.X impact mutual than and revenue impact, about million growth, is fee net by the million of a of due was fee shift and the revenue waivers. On switch point better year-over-year asset basis expect impact to that $X.X compression our the X million point yield, remaining half each we to lower marginally of year. due note to cost this

X.XX% by to million yield decline from Moving year-over-year it revenue to decreased spread-based X.XX%. $X.X driven

total asset-based X point as points X.X income quarter income, quarter-over-quarter year-over-year related by driven on Slide and XX basis interest basis shows down in it basis X.X other by decline bottom platform in points, basis $XXX,XXX XXXX. The driven XX X the - points net of as basis yield revenue. the a overall fourth decreased down Lastly, the revenue with assets or in point percentage

our spread-revenue basis Slide about Now the basis X.X the mutual net points our on annualized in decline X decline presentation. in shift of lower of transparency yield. calculation revenue XX Clarity our in expenses, cost of the funds. to they during resulted yield on The a this appendix points show variable total earnings and

adjusted $XX.X shown expenses expenses year-over-year discuss X.X% Slide let's decreased is total on Now XX, million. to

the Our our efforts a XXXX. is operating hold in X.X% compensation, We which in operating employee expenses, year. by include line This costs and a X.X% about decline on compensation SG&A for year-over-year SG&A. in great driven declined decline X.X% to our feel the

adjustments pretax, through items. back million which we five run me a our comprised quarter, total In fourth now. added Let expense is $XX.X the of

First $XX.X of share-based non-cash million compensation.

Second of write-off internal acquisition costs. reorganization Fourth costs $X.X our million in $X.X primarily associated a of $X.X GFPC related million and sales, OBS. with our lastly to refinancing, million our in third associated year-end $X.X expense integration XXXX And amortization in related with to we acquisition-related expenses more million and debt shall discuss moment.

table, be an For earnings our additional income statement expense item appendix in the reconciliation Slide presentation. line color on adjusted found in our can XX

view to turn of measure quarter. earnings to adjusted let's Now EBITDA XX discuss the important our an for We company. our Slide as

margin full teams in best EBITDA million, spread-based to fourth up is The our year, quarter adjusted future was to our income still Our was ability up despite management management reported. XXXX EBITDA quarter a management testament on $XX This almost Adjusted fee the of year-over-year. in XX.X%, the adjusted X.X% margin was XX.X% are our EBITDA XXXX. XX.X% we in expense growth. in margin investing have improvement and up year-over-year in focus from decline quarter

the million, adjusted result net share. is Our high or year-over-year of of million. lower quarter The of count of on margin lower sorry of was offset expense $XX.X the increase adjusted $X depreciation for $X.X higher I'm $X.X $XX.X of million $X.XX million, share quarter our EBITDA by diluted income for based million. per fourth million interest and the $X.X This taxes

the XX% marginal for for year quarter. and Our is the rate tax XX.X%

current of the of credits cash tax effective our at year now year-end reflects of to adjusted as rate applied hard adjusted efficiency always. to actual have worked catch-up we translates a in to about This We in up income quarters our XX.X% of million XX.X% fourth research gain recognized the rate reflecting and effective net this which development adjusted of the three our year. plan million XX.X% is benefit $XXX,XXX. an and create year income into rate use $X.X the the tax $X.X of the will of net and from for to true rate We adjusted this of XXXX the quarter first tax

color XX see the additional For please Slide appendix. in

look reported let's sheet. balance fourth quarter at Now

the At on balance us flexibility, new at done sheet credit grow and loan. on - strategic to secured balance objective credit well Our a scale. we to facility. strength cash million plus prior and our on down that position drew existing new $XX $XXX to million year-end XX, to $XXX we support This sheet revolving December retire our time million our term facility

our interest save less the in will expanding be to in million, interest one which will $XXX on pretax run basis percentage cash facility is million addition rate On LIBOR this available annually In our costs. $X.X facilities. all us new plus a by X%, cost point total

Following million the sheet, of million $XXX.X third compared our $XX.X at 'XX. with end to year the refinancing, we ended quarter on of balance the the cash

business. capital in our discuss Let's our expenditures

fourth of X.X% quarter, quarter of our as XXXX. total in the capital million last spend For or $X discussed revenue,

our about expecting X% business. the expenditures future to total are invest in our be continued revenue of as of capital to We we our

for I Now XXXX. our discuss expectations will

Let's Slide XX. turn to

the reflect call, this that There cautious. been still, about for we Our lot positive have talking are growth the a are on we of momentum variables. expectations year

market the that new impact our results. pandemic, the think I administration could

level asset mention as X that net comments mid this point growth and our assuming our while to modest by expectation. Our XX%, regular grow compression down expect asset model reiterating fee lift, We organic we driven our set financial have we is we to to X% to strong XXXX. high-teen, the growth with XX.X% certainly past to in XX.X% the for of the our assets and starts in be market revenue step between basis year often be then entering growth about

this interest will For higher levels our and expectation, XXXX cash increase as is rates spread-based in due revenue forecast see will a not the to we increased. growth modest assets in platform

expenses, mid expect increased operating during consist We to to increase in of investment which compensation teens due our SG&A and XXXX.

investment flexibility rough from we Understanding to spend expense and in give have buckets, three investment. near-term Now circumstances down three growth this increase, of adjust if break initial this the growth, these context help types investments volume warrant. we longer-term

First, expense our operating X% related. is of to volume approximately X% growth

our in to As and we business add and this grow, to need we growth. capabilities services staff more operations support

Second, of the our contribute XX% near-term growth. which investments,

These on product development initiative, is Here new and Institutional And for of some our investment. growth, even longer-term productivity lessons about AssetMark expense makes new we're XX% the third additional spending up which XXXX growth. revenue. in lead will our focused investments on will AssetMark into prepare transitioning digital and services always help improved generation, outsourcing beyond. margin And growth for on and be realizing

around we to XXX XX% concluding to goal, basis we our With in - basis the over previous his for I'll the Based remarks. expansion that, margin we in XX year-over-year. expect the adjusted target to than the higher much have have up year hand year. be we EBITDA laid it for So of about Charles growth on out, XX% outlook point expect

Charles Goldman

thanks And everybody to the Gary. on you, Thank call today.

excited As future have I subsequent AssetMark, had our earning I I conferences. mean a in by advisors never XXXX more associate. sharing look Gary to progress year calls have and never I for especially believe and and our forward future. our company's we our was described, been about great delivered

of - the the turn conclusion back I'll it that, those Q&A. remarks, our operator for are with prepared So to

Operator

question the our Sachs. from line Alex from Blostein have we of first Presenters, Instructions] [Operator Goldman

line is Your open.

ask You your question. may

Ryan Bailey

actually Ryan behalf This Alex. is on

guess about to probably then and just you're about a seeing and about there open First one, in space, you other to seen little and competition how you're adoption the I thinking tend start could that and you're talk I that? trends up bit the think how thinking if only AMP

Charles Goldman

Happy New doing hope well. Ryan, Year, you're

in brand had the and early product in in believe with excited that results of AMP all, in Advisor-Managed manage the a Gold really are launch. the allow other Those talked first The in well. brand the is and who the go there. their that understand marketplace we're trading - technology publicly at value This we've through our see those it. for folks at grow just discussions that time but with and to providing beta weeks plan we're really for. the for being RIAs overwhelmed Forum outsourcing The and part is we launch, we're overtime. know are own name going works and a So business who and growth, the the folks going for formally about or that there key want had those to products build their the test advisors AMI of and key their talk But see of that about launched is We've don't couple the of be is to going and capability some help manage value have our Portfolios more are more to value there thrilled where out that through to sleeves. wrapper clients that, portfolios themselves, future. also looking that product to of sold that hybrid about experience of you along RIAs for that's product our to very we're advisors that I research good importantly, And the through the overwhelmed types trying and advisors we some good of growth, we're or with the to event. a going believe We're

buy CRM looking do that in planning accounting, if the has portfolio software core close are for the to relationships. The mean really everything where and is together deep that for all probably industry for XX% not money that looking, interesting about the we're RIA with investors are the their advisors. they're In to gobble starting to large, stuff think investor, you due-diligence, but seeing and things I themselves. change it's trading, approach planning and sea those The terms always to competition, RIAs buy of Ryan to do majority construct portfolios, today, been the and advisors managing to vast

of to really all work work investors everything the value and not the on trying on and diligence that everything so back all perspective. is due And do else office from that added

our doing is doing in custodian are how using trade When ways and bet right one over we're belief the think want outsource to it portfolio to want going there lots no competition, I'm own say, every look of there is hey, does every I their sure what advisors at that to system our not approach amp of So I capability. exact the advisors more keeping but that that quite transition same can has offer, accounting manage that is sleeves, management does we that.

the toward is So more opportunity towards much to is and the going for to community that's experience back move really what opportunity here integrated and getting office more we getting capability, and and where the an be and outsourcing think partnering much AssetMark. move

Ryan Bailey

- assets the beliefs through the I of or processes were with RIA time. lot go they books, sort that a more guess, that that they kind of since the had I sticking and is XXXX. grown previously them the that of the had in being to guess question they resourced platform passing because taken think platform OpEx that and kind or under growing had giving discussion, they said Maybe you had grown have XXX% and on of on they platform of AssetMark platform and I to part pure RIAs is, on grown

Charles Goldman

way grow. the we of So it's function a

to advisors more the on they growing our are platform assets are existing AssetMark. bringing So because

gather our net them rather function that new worth high using of is a capabilities Some clients. of capabilities, to

producing is Some then call of and advisors, of joining RIAs, new new growth it we share platform. of them wallet course the

the So it's of all above.

Ryan Bailey

it. Got

Gary Zyla

is this Gary. Ryan,

doesn't two-year Charles the it is why all it's over that reasons be you doubled current to make sure that same want - clear, change metric. to has Just the saying just the not and I have AUM period, and production was growing,

Operator

sir. you, do another question from have the Truist Young Michael of line Securities. We Thank from

open. is line Your

your You may question. ask

Michael Young

as to business? versus but more I RIA the disaggregating Wanted and growth bit the maybe is just legacy you outlook much at drill the sort are from of obviously a to overlay macro kind of a kind challenging, core know you adjacency RIA for in look that, of expecting little into how comp XXXX, the

Charles Goldman

one, want to do Gary, that you

Gary Zyla

Sure.

I think a quite - so understand first baby Michael, imminent. I is congratulations,

best very luck the with exciting. of that and sounds So

to question, figure to So trying to it. your I'm how to how put

RIA organic in breakout I'm you in to are for might we detail of IBD So upcoming coming metrics the growing talking stake is the our rent that's I'm more if still group metric. Charles you is more focused production quarters a of comes core to don't from I X% you what talk convert call will, say about growth we AMI, larger IBD who the than in of and more, about other say a what from X% now. is versus we that I to will from we terms block subset in our to of in some which it, fit coming growing start talking general, how about gross growing serve. on growth what's percentage as percentage when that that RIA would and saying. the growth constituency trying majority here have The in our

Charles Goldman

that that, uses different, has which talk add minutes a groups that do on I with segment, assets hybrid important join for platform. endeavor RIA as are We'll go we an and or would toward growth is. language I numbers RIA think about expect us, is The that which when different there people production hybrid to as - into what certainly would are to our the AMI, about launch and bit segment, to see Gary, gave Today, registration. I those IBD the to would just little that on some own, XX% guess the that differences and are we that growth expect terms fluidity segment, by amp, to wholly about looks everyone I combination. rate because growth what more as What is allowing or work new We'd fluidity advisers expect are ago. to see quickly hybrid. groups our segments this is see OSJ a RIAs like rate people their the independent few more how that producer dynamics. see we some the communities But

at obviously now, going are think performance to number year mean the the our are looking that ratio look rates long how to kind year looking dimensions we more It's beginning right there that of it's of in at advisors. that it's many of drive does It's I COVID our so XX%. registration. I the we've history at beginning X% registration. looking at last across when It's is, than had, there how the big really base way

It's is stick, there growth deliver. that based in we've been that what hockey tough number. on some to able we've in history environment. to of this the kind deliver really able been not RIA macro So And

Michael Young

understood. Yes

the and is if low end, the of message core end year-over-year adoption a that on on see look basis high various we'll more optimism of organically and kind just So macro we range based at characteristics?

Charles Goldman

Totally right.

look high we're period and resulted environment, fantastic obviously market So core XX XXXX business number just X.X% stuff the If without not, we're the noise in of a we weird you M&A kind not at asset did XXXX forecasting market right, some to some in a was of $XX.X December number year in really this at the billion And fourth December, there. because is return. quarter toward beginning market with of

The function of that to Right. get that. a somewhat it's XX%. So higher end,

we added X very new and then products RIA saw good a all to what new think to then get our new of in market, end to core doing that results, to and January And performance outstanding you going and within what very hybrid support get number our to being So capabilities markets we're XX we're is the and result. to to strong. have higher that's course,

Michael Young

Okay. and EBITDA support and strong I of through very curious of question just maybe I a from in strategies that outlook, or very mean learned you've business And is environment the I'm if some that's operating as think just on there domestic maybe that? helping work pandemic home second just a the new looks lessons positive. kind implementation discovered some that's

Charles Goldman

a great, question. it's great Yes,

different about industry, in Services I'll think certainly every want learned every I say, to I see a lot executive. has but operating Financial environment.

figured and all much that travel we out we've all, first So be can more of productive. less

to all to doesn't events, not learned at want around rest want thought, much be more Right. live than much and that's all. we as out and going forever. the field, the having to of mean in that we've stick productive Not back by can will Now travel. we it drive that be but we to We we

we I content a think and very of that another based kinds clients that remotely. events like are thing is in company in getting learned certain event contact we've

with other deliver kind investment but community of it's closer It's don't things way well. content it better - really are if digest, trying it they we to really much advisors discussion So or to just a work. require engagement that assume works

that had advisor shorter So - time the content meetings in you grew up. quarter We I first mentioned the do that our in Los earlier, and in from if much we meetings - can here. Angeles premier live can

car have XX each way. Angeles, from to about you're probably miles If half Los hour in and you drive talking the an

content return to really investment that digest kind delivering easy so way. of thing. And for this It's

one much do smaller group more out then it is that the be content things much And that and much lower of I will interaction a more think way. when that will content deliver cost. And will field, And will will regular and of stick. community that, we're stick more much the way about is so by we way that the

living that and to may happy but and I so as people. are in we've highly the productivity I a but to obviously one remote make cost mention is thing not but want per enhancer, or a great better living disaster I great just other that we as which think in there well enhancer others. mean, mean recruit where have that you're get geographies more of that cultural people a going trained person a is COVID The by that live, or great can also constrained nightmare many hire of lot be are and their of because I big is we attract learning lot are not a and that there learned experience occurring recruit is you fit. a our COVID, business changes there that it's

Operator

Shutler Our line next Christopher William the from of comes Blair. from question

is open. line Your

Christopher Shutler

world? what RIA want invest medium main in, are that more the you out looking items Charles, technology into to you the the over as move especially term,

Charles Goldman

to sir. Chris. Thanks Good talk you, to

mean office subject? So you all advisor that facing and not back

Christopher Shutler

yes. Exactly,

Charles Goldman

scenario manager the complicated advisor period take risk But approach deal human is Job that and whether a one know the way it, there's partnerships number the risk, Yes, more financial and about. wellness launched major planning, three One is people of elements industry to a success than what of risk portfolio, is on like some the financial six-eight so visual our the entire of job Monte really e-wealth Carlo think planning think investors the to goals, wellness tolerance. way but flow planning the your story we've we what that's XX% visualization with visualization the planning, basically I your of a firms. We know view of concepts meeting three compensation it, about the time? thematic risk other. but two, their somewhat about integrating planning. theme to the deep You view it's that about need and talked simple the incorporating you importantly or Can our questions, drawdown the one one. page is believe element that into ask that likelihood more is tolerance. We've into in not we beings which is planning cash the with and as it's experience really of number we that risk of broader,

other are and The two capacity. risk needed risk

of the need one-page, I or need. life need here's to my of my our So is a portfolio all tying interaction planning take much lot I the lot third talk less is risk then other visualization How to or need manager to of automated to that to that And the about that what's take the our a and you've that and you income construction way risk into take? a wellness course a about part of back there's integrated make And issues, low. airplane. want and my new and think compliance dialog the these tolerance then me part if to visualization be of second proposal But e-wealth portfolio works that because XX a elements capacity large, and then other construction heard that proposals may risk visualization course conversation in an and to us have more engine, heard portfolio need capacity, us. maybe things. of old and year, be may take tools my you've huge, to integrating and lot making I my if Google employee experience I'm of proposals and years maybe sort about Maybe for of of $XXX,XXX

investing in if think going perspective financial wellness an we're tools and it's that's a facing advisor individual about to in there, the So you technology multiyear be from where investment.

Christopher Shutler

it. Got

And you me helpful. update give now. deals to an us right us then capability at And let deals. you, actively or can super Okay, what's how on just types of more capital it you is are remind consolidating looking interesting allocation, M&A most

Charles Goldman

that. do to happy Yes,

our of M&A, me very we remain Corporate personally, some of on key members connect are we ahead focused So Development. team

and we We flow, relationships think deal a I deal see get flow. across we of industry great have to are and love lot connected seeing the

done deals, way order. number quite done two other smaller prevalent not were have been the attractive just If as a is relatively one they that as one but is think we you we they them has were. number Our move think Number still of very, two that for the complicated look out for strategy, and able By if investors. is saying to recently, it - we've we've ones consolidation, once buy there all And important the those number our pretty small is it deals side is at deals. players needle. if strategy we straightforward There can in few will than be there, one. multiples relatively aren't the accretive, very consolidation deals the more the on

that's Chris to and there, financial And on how get of complicated you so, is between effort those time it we done heard is spending if move what a and do trade-off capabilities does we'll keep have it you side, wellness. at always do But the lot and consolidation the you and my looking description a needle. are it pay to

You are those of can that imagine might tools our get how do businesses are on platform. We side. things out capabilities tools into that there the them kind some they entire the - integrated thing and are across you And know, landscape. done, all at either suite and that of are look all the wealth they're of bleed nose that as multiples deals difference competitive to sooner are

lot we done. of things be a will will get and capability disciplined, something that side So at look on but hopefully

Operator

have another of line James. Thank the question do from Patrick We O'Shaughnessy you, sir. Raymond from

Your line is open.

Patrick O'Shaughnessy

and make continue about for up to RIA independent a it picking or So is it consolidation irrelevant. opportunity you like see lot harder and what you we and to seems it's the things means does it increase space of talk for Can of in of broker-dealer late. that kind AssetMark even

Charles Goldman

environmental and competitive is calls, the to. the paying of one trends, trends trends Those of we're so trends. our industry major fine talked advisor about Patrick, scale hear major attention we voice, good and across and trends, I'm consolidation your to one a the ones drive issues are lower sure trends either growth investor pretty watching consolidation or we're we to cost four services big major, financial that regulatory

the side On are matter, doesn't number the it deals of happening are low. RIA actually that

is RIA and to. There's lot produce of on So hybrids obviously these form, groups there groups opportunities lot of a those groups, of lot is if of XX,XXX there just us for those a consolidator RIAs a but sub-scale out for that a something you there matters like there are XXX,XXX OSJ there, some XX,XXX, big is lot advisors, RIAs But that. and is is these we us. call people there lot a groups producer are there,

what we excited there. see about we're And so

broker-dealer side, life. in both it's many guess like it's the On things I interesting, threat, opportunity and

do, hard many provide to that experience On side is advisors - a get are larger hard level don't the as do very to community, we it. dealers connective And scale broker like high that larger tissue there the seek these connective they and opportunity the others most and just tissue do that isn't for and able anymore. to

And an for opportunity so that's us.

work to together, as on - fee from ones move larger and own their supports and most those to helping we're would independent dealers side, about recognize money of consolidated a partnering find very And to scaled to managing them commission come some and partner help broker there prefer actually that also a They provider addition, the platform. their quite really on In is that for helpful. reason. a good and the having broker-dealers from wants does ways advisors outsourcing own these be advisors broker-dealers excited while

real opportunities So all are us. for those

as internal threat grow revenue larger folks with they've killed larger of else on capabilities, to because they've grid get revenue find the where on they these got in there and product course tougher they investing want is in to and spread, anything and side killed the sources a world sharing tougher. gotten On want

to more I competitive we've guy, of got so so is So get to that makes adding course, that, larger there. them and firm something a us better last and am to do capabilities win, threat TAMP a is better make type of investment because that to makes three capabilities like and believes might full better quarters in

particularly, invest to or see money to and for and other a we own many in to other seeing opportunity, broker I related that's outside don't provider real set that opportunity. their would there other adding think technology is, real capabilities things platform like this multi-model we bifurcation bring - you're to some to of the broker-dealers be that these say, out a we're The do that to dealers, opportunity, were build have of

We opportunity like competitive better well. of but Patrick, increasingly TAMP, full is world right. to us So, growth great as things, make dynamics, the see all big

Patrick O'Shaughnessy

or And the RIAs the independent how differ from more bit two platform. functionality, RIA we're bit that's gusto then, space more portion here, talk little about from a need different a that to require and needs your about to as Yes, insight. what you can broker-dealers with appreciate your thinking of little going

Charles Goldman

Yes.

you the independent that deal, broker assuming say when Right? advisor. So

Patrick O'Shaughnessy

Correct.

Charles Goldman

revenue. broker Independent

that there, on highest the IBD are advisors not right Right. or commission. the are so not, at much, right, level reps is not most is are So that difference are there

that the a [indiscernible] itself, RIA world because RIA RIAs world, in say, mutual the own IBD selling still are insurance. the okay, less are So on But there's in the big their has managing difference. commission compliance, advisory, IBD the thinking fee-based - support advisors and are let's life then That's and really much has about that many much are that fund really the do providing IBD The Right? those broker-dealer everything. portfolios. for many platform many is where construction difference. not There's the more services still

at RIA doing has while the time the are it highest or And plan I'm fee-based very those a of level, the so that with - sort approach, client I'm little and same, the helping support help.

real outsourcing and All bring create to bring think so more believe management, the those support more actually to that going things We help to the needy practice there. And tools, opportunity are community. opportunity. greater more that we

who that's not been of the different, difference. has is who so outsourcing, history as biggest the Although

to broker-dealer discussion. The for trade outsource for an add of want us capabilities all Wrap the it at can the do I and they would platform of other thing to use that is own they IBD their staff to our share then if just

for in platform Their more easier don't we For do say, and like to start for Portfolio most we the not that way tools, hey, management how the a is is much own critical, amp fleet really your trading - order net their just so value what thinks the added. them about about bring make life book really manage Advisor-Managed believe do advisor completely my do allowing my I there, I is critical time mindset custodian their RIAs, that. mindset to high or they it's to are for and and most to sell buying, using worth, trade using of them ours how

Operator

Thank you, the line another of sir. JPMorgan. We [indiscernible] question from from do have

Your open. line is

question. your ask may You

Unidentified Analyst

understand It the number significantly can these on an firm using can and how to interest and Can these framework a services most a an create comfort about could interest you arm conflicts interest. of pretty help of address advisor mitigate vary conflicts financial asset AssetMark times of significant that and the at as us example. would seems file interest like management think you conflicts affiliated disclosure. of the products solution conflicts depending Often of have do

Charles Goldman

of answer a dig to that me and little give bit. in let So little bit in structure try a then first,

quality relationship us at way. choosing supervise of them our the we're advisor So work. on The in us - a hiring our our solutions based firing with we AssetMark and affiliated advisors - us not competency we're one advisor and the the of is the is with any so the of advisor, not provider, don't service

is I'm not with and the I'm of that natural not of money a that and product a getting if making interest in that's describing. conflict conflict So making I'm like broker-dealer a, therefore interest, products there you're a the affiliate somehow like trail, even if broker-dealer the on money

We're and because For that. fee that like advisors completely fully don't their right, our have doing anything they the us, we fee, there not charging and we're disclosed paying charging are are the or client, different.

conflict So, a conflict there revenues. What it is see is by our force. isn't field force starts that field that with to incented we product hate we Where of interest. have would

our field So a goal. in force our consultants field percent as we pay to the as

the of table. advisor care they they on base make the side don't a care. And They we and lot on, money, on have focused they money if are they are asset goals make don't advisor it's the of something so lose and money on,

that mutual the So do of job stuff that avoiding everything, any Obviously avoid in well. conflict and I family we to there think all a mutual we fund good try as very and there. rules and our fund all conflict

you'd to I think. if Gary, anything I know don't add So, that but

our in very the of helpful think fundamental that. structure I very are relationships

Gary Zyla

vehicles coming, types we of our party pay are percent new earn our products, them, your position you're echo provider folks we, customers again sales absolutely guess about that a does of outsource we I of being of and eliminate and and a assets right does the Charles, lot some amount you structured value the the we on service some our learn, hear point would whatnot. make third our the regardless goal, also the based chain do things because Yes, different just provider in different and I

that's directing So great reality. a that since But anything we there, not we're feel about center.

Unidentified Analyst

platform And back think term that potential broker that's comment business. dealers we made, longer sub-scale. of to your near a fruits could response AssetMark the then want term that you that potentially go I in question to about Is a underway initiative that for are Charles, the or Patrick's and currently to to selling options is I see

Charles Goldman

as We've full - job, more had full in could space - said of kind what ago, if a is afford six of three, at least, that of many leader a group strategy kinds can I and back will at I'd as the job. big we that got - ago say, is broker and to that thinking time have through latter, bimodal certainly consolidation we're different been have with two a accounts seeing broker-dealers there certainly or he a of great been a the the invest, ones team nine strategic least this about ones and four focused he that IBDs through the question say on history months to that new years are for very thinking we're out this the dealers have there, has months small opportunities we've maybe cannot. could their brought in

broker-dealers the or that's lot sell think and things And value need instance question going on have can partner more of to smaller ones they way more that they do to proposition are alignment. they're it AssetMark of it. selling been of would offering, going would those do still really on to of we value and going is they need added, it the going just that that AssetMark AssetMark and like don't go a different the competitors need but is, technology what's of while so to to changing a be instances be closer kind And the as partnerships kind they're and we closer

some trending going at year, as kind that really to think where we do trend would in we hockey I that it an sort about not answering a that return I opportunity. but and this place was and Patrick's more when stick see of say the was big what's point, we're of to going industry to, see so you're And

Operator

[Operator Instructions] further no questions the from There presenters. are line

continue. may You

Charles Goldman

to engagement, from what great today. so time. Great, got as call spend We the this thanks, need time, appreciate really questions your we're they usual, and excited everybody hope your

talk to So you. we'll Thank you all soon.

Gary Zyla

Bye-bye.

Operator

gentlemen, this call. Ladies you, Thank presenters. today's concludes conference and

disconnect. now participating. may You Thank for you

have You good day. a

AssetMark Financial (AMK) 12 Feb 212020 Q4 Earnings call transcript