AMK - Earnings call transcript Q1 2021 | AssetMark Financial Holdings, Inc.

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Operator

Good afternoon, everyone, and welcome to the AssetMark's First Quarter of 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Today’s call is being recorded.

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

Taylor Hamilton

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

They results Joining Officer, provide the Chief Zyla. remainder Natalie remotely an Wolfsen, discuss me are business and Financial AssetMark's update to of Officer, outlook quarter XXXX. the first for Chief AssetMark's Executive will and the for Gary

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

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

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

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

Natalie Wolfsen

to perspective to of let about some roadshow has July have with and Taylor, of back XXXX, IPO AssetMark decades all I you of the and myself the so future. responsible clients. building talk lead and be they successful. solutions, call, had for for in think thank who their advisors current two-plus now, was today. services you have Officer, over our the AssetMark's in years AssetMark introduce of advisors as CEO at executing Board afternoon, to Thank and tools, much, I understanding the how a financial many and first I Prior and in industry my March, first for you me me good not clients and financial meet, I've and as to spent excited honored taking and everyone, for what about during Solutions and chance very selected but to joining helping I you need technology met strategy. and earnings quarter CEO. their I'm been why you I've briefly seven a Chief into provide deep AssetMark's those

our remain strategy and mission Our unchanged.

The As create our strategic set very has result, I'm to shareholders. been Board will associates, and advisors, prime for for I advisors, continue financial vision excited the to transition the have leadership clients, expertise recent continued seamless vision in announced to acquisition a leverage I on entire value expand our our capabilities further and growing solutions, offering. their the technology our our Voyant, their look wellness and my being to to and our a technology, for a firm clients. investment shared our and with example.

Lastly, and AssetMark to road yet. with and forward you those look team re-engaging the inclusion, I'm the this I I our work to I'm In area. with And met at industry-wide. met building leadership deeply you months, of expand focus only committed during show haven't I coming of who ESG the with AssetMark, but to here diversity not excited in at to those relationships

focus Now, today. earnings Slide on on heart cover Gary discuss like our the final the we're three and call key presentation. the X, I'd transition Starting during to will earnings two. today's I'll messages of to first five to going

clients, successfully a public since a advisors our a difference on First, and lives XXXX. going and shareholders, our delivered company result, mission, our as and making our unwavering in focus advisors their of strong the is has their in clients, of because AssetMark and our for

a larger future long than market addressable almost growth. our ago, times providing X.X runway was for years Second, is it two

have market industry. and We the TAMP the now are in grown also our share largest

priorities XXXX has our future a brighter. progress to great position, be soon. looked our making on We're Third, never strong maintain to events we'll financial returning strategic in-person and

help accelerate will to organic continue this gain of market share. new and advisors, attract growth, us All

has will all-time pre-COVID discuss organic for Gary levels. $X.XX to XX% are AssetMark. Next, our up growth, flows billion, returned which to quarter-over-quarter an Net high

last Gary the by update many also expectations spoke walk through and during you rest two years of us When Lastly, our results ago highlighted of has our our revenue He IPO progressed substantially. for quarter the will on strategy since for will our the financial you year. record EBITDA. I roadshow, then to

attractive pillars to our strengthened more We make platform advisors. our strategic to have

adding operating have our We business. our grown scale and while financial to metrics

expanded have addressable that market. M&A our has opportunistic markets total adjacent We increased into and pursued

discuss each bit a detail. these more Let's in of

So, X,XXX attract over advisors. turn Since we've Continual Slide slide public, new you platform. producing engaged evolution over our existing going the wallet our and to years. advisors, innovation to advisors us added to new of shows NPAs, X, the allows two to of capture almost greater offering if share from this or XXX platform last advisors and

of have XX. few six assets we a supported investment billion of as to strategies these new specific growth. new Since enhancements added provide examples how of have platform, our solutions me $X.X our platform for IPO, our account March Let and our

new Block backed year, goal. our over of which issued, S addition, introduced of program. In ahead launch, credit of offering, last August or our line of we have securities XXX lines is Since enhanced been well credit in

crucial to incremental revenue. advisors advisor formal to practice help credit our the we to helps to sources on not also it plan help and drive benefits a This will provides assets grow. long-term importantly, only and line January, will securities backed activities allowed that our AssetMark AssetMark of our us advisors platform are establish In The launched grow, stickier have advisors and More to benefits and our we clients improvements growth. AssetMark platform of our marketing and program growth the And growth on made X, Slide last XX% XXXX. since advisor Engaged see growth years. second platform XX% versus assets. account exhibit increased to more going levels is stickier public assets, two have dramatic the the for Engaged assets. advisors in over of total attract advisors, our plan, of more a impact grow and part and our AssetMark advisors XX% now platform business these growth as households, of more stronger you'll and of quarter of the

growth since have in and households, our allowed from assets acquisition. public. AssetMark flows net $X.X For also customer business, in the to Platform our increased platform of translated strong going offering single have of digits. has by on goals went increased billion driven example, $X.X billion market they've financials Slide redemptions but also and operating also can growth strong getting indicator The assets engaged XX,XXX public, evolution you in has of increased X, of their advisors increased dreams assets our to by growing. acceptance our not or The the by closer drive are our financial of high public. and amount we XX% since number our footprint, as because results. metrics, XX% of financial going only the people into is Households and reaching an On and important since of us platform. see serves of strength The the

absence from XX% spread the First and rates. lower declining the $XXX.X fund line, up of with XX% revenue even Trailing mutual is up revenue XX-month foremost, of our interest and and to we impact switch spread loss share cost revenue our net when to growing the of due top excluding to are classes, revenue. million

$XXX.X XX% XX-month income. are to when EBITDA. EBITDA of growing our in Trailing the We adjusted is investing future a up business million, spread up robust XX% also while and excluding

scale to margins. evidenced nicely continues as our growing business Our by

adjust We adjusted we EPS our income, have $X.XX. across XX-month line, over are to and business can also have but growing up margin XXX bottom environments, is adjusted and with excluding XXX when highly trailing two least, of we what as expansions points. flexible We realized seen remain years. basis basis different not Last, over focused EBITDA past market control, expansion our points, XX% the on spread we to

even XXXX than results Gary's spoke. we we he are that stronger During remarks year our this share later, raising as when prepared are will expectations expecting we last

adding wallet, gain all advisors which In us addressable investment our allowing offering, total solutions, platform, addition new of to our of expanded our and track features, market. also improving on increase and share we've to technology and help

and X. and retirement Let's digits advisors since went at When channels. advisor to dealer double the at public, increased we total oriented Slide we went $X.X of segment dealer extremely turn to independent the market retirement advisors. total broker affiliated the broker market committed majority independent in The affiliated trillion. addressable remain addressable areas trillion, We our were has $X.X those public, now clients two these with

trust of March billion. total expanding channels, market us IPO, $XXX the Financial, trillion. to added which addressable of In In OBS XXXX, market $X.X addition, new our by is we've opportunity, we a since explore bank our allowing approximately total acquired multiple addressable

addition, in Once to In opportunity addressable million a its between existing year revenue closed, vast add this market. Voyant total expansion we with and acquire Voyant, will of which of revenue provides March agreed $XXX markets. diversified

leader captured measured were market, AssetMark we assets, market by months XX than share. and When help by us, number only as will RIA market penetrate addressable which trillion. also two we addressable Just of an this have a Not few platform we launched billion. but X.X the public, ago, camp, trailed our Institutional, the we've further market. target the went we we for more us has And grown

focus the our of now by a coupled and spot mission, exceeding with a in result opportunistic and the space, this in relentless took the execution assets. top M&A, quarter our strategy largest second billion our TAMP are competitor on As the $X.X over on unwavering we

Even strong off you the a foot can and taking is gas. see, AssetMark we're so, our company. not growing As

XXXX road. our position have are making strategic progress to started maintain great to financial returning and the We strong priorities on a

advisors, of gain new continue accelerate attract us All our will growth. help market and this to share, to organic

Let's detail. further these in discuss each of

strategic the me a presentation, midyear to efforts. on you provide Slide our X let priorities Turning in support which our growth update

productivity. advisor First, always, look and and to as enhance we value

client. wellness wellness of step solutions be solution. a and Voyant to support are big building between will a announced We program financial in acquisition with wellness conversations advisor delivering forward the meaningful financial our their The

from solution. we to enhance the tools discussed, AssetMark features experience, manager to foundational tools to Voyant's planning and wellness financial our the announced plan e-wealth when As capabilities deal, financial integrate of we adding Voyant advisor key

offering these to RIAs early the addition, close foundational AssetMark the deal us still We In new Voyant attract also help summer. RIAs. in adding expect to will features

with offering. ways investor holistic exploring wellness Additionally, platform we financial We're provide will our to a redesigned an interactive are view a building life. out investors financial that enhance their other of dashboard

their engagement, conversations. timeline Investors advisor-investor which risk risk, facilitate able time clear view cash success risk added. interactively traditional We line, when The unexpected incorporating are life a and also easily changes approach. include view to timeline collaboration, and new the analyze investor to add outlooks, to will building comprising and are need, probability and tolerance capacity while timeline, of how and and will will interactive life a of events and a events both addition be goals holistic risk create in to to the flows also

second priority advisors attract to XXXX expansion. is Our adjacent channel for strategic through

Our biggest we RIAs. is March, AMI. AssetMark now In subscale right launched opportunity Institutional, or

very innings the we production are in XXX% this of running at are early still and strong already in launch, our interest of seeing AMI about AMI, While goal.

out RIAs Alternative forward you meaningful be high thought launched serve part you. RIA AMI of Later a critical is AssetMark not summit, clients, solution position our hosting becomes help to which space. and intend of we many with more AssetMark as a results make AssetMark advisors attract of help worth our to month, we'll part Institutional for Overall, AssetMark we introduce this leader Investments. are will we inaugural net all success offering. break but will updating Institutional, of This I a very Institutional, also look week, and more and in pleased business, Last the As RIA early also the as AssetMark will progress. only our we to these

is to XXXX to the invest platform our in for to growth. priority infrastructure strategic last and support continue future Our

from that our to security The have highlighted our us the position, already balance are to and of quarter, operations investments revenue, office, And total back the cash and reminder, spend sheet, previously future XXXX We enhance area cash these systems, our financial our remain about and strengthening by as a ability will currently net our million all capital trading is cash, next year. million the resilient sheet as you. are of of capital planned generate last the disclosed strong as We low our end of all $XX.X of balance of on have and $XX.X about in over debt. competitiveness. generated X% to about first excites expenses, our part

aggregate of as first facility XXXX, about debt debt which commitments revolving interest of to our $XXX principal in credit a million, of refinancing million drew in with have cost Due the on We our remains low. $XX the we amount very quarter.

allows not strategy. important strong only but also opportunistic platform, growth remains position a us to financial M&A, in Our to invest which our component of very pursue our

continue capabilities avenues: M&A. M&A We consolidation and to M&A view two in

great operations had and our diversification, through markets growth we've are planned announcement also cost total us Capability but expand the M&A only improve enhance and shareholders. well our in acquisition. our addressable to Capabilities recent M&A, clients, While to success the also our our Voyant open to organic M&A to platform. prospect our the growth helps has provide and technologies synergies. platform, of about about augmenting we as potential new encouraged especially has adding not our our consolidation given their to This accelerate revenue opportunity as market. AssetMark new for and advisors our M&A benefits

within be shareholders. strong a continue analyze advisors, fit We our for leverage all relationships their the our and to and that clients, of opportunities industry our the would AssetMark deep

believe economy our the will results with outstanding increased engagements. the we in-person of only accelerate Lastly, reopening and

advisor are hosting case this return started to we've meeting late and monitoring plan We in in have live every more we hosting vaccinations and larger advisors person rates, events. taking and with to begin again vaccination become summer events to the closely Beginning month, group associates widespread. road. as sales small vaccinated started While precaution

our in-person in to each and We coming advisors the are to see excited see other months.

last excited how the ahead first I about we've AssetMark the the I best just two and all for year mission, call Plan that future about this over about with such I the two before quarter over years. in and to to Because believe pleased past items want foreseeable you XXbX-X know us. AssetMark have final I to truly no our full emphasize of note, all extremely today, to On I in plans and vein another of the hand very to our transparency, belief discuss the Gary canceled the I we you are my future. days the tackle accomplished am of wanted to a strong have wanted of and let I'm implement

to off hand Gary. I'll that, with So

Gary Zyla

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

flows, our discussed, record highlighted outstanding, in an and platform the by results high adjusted are Natalie in first and quarter all-time As assets a revenue, number of EBITDA. net

with assets revenue, a will I our then I earnings. start usual, talk update with our on platform XXXX As discussion an of about and and conclude outlook. our expenses, will our our

flows billion redemption in our of net is flows first quarter X, the $XXX $XX.X we company's fees. flows net remained Slide our improvement record, XX% a the in billion, have quarter-over-quarter stable. our highest $X.X of of up assets relatively quarterly quarter net with starting X% This XX%. first So, alone, our rates assets XX.X%, The and platform percentage growth realized reflects guidance Annualized driven beginning year-over-year. month as of company's of $X.X history, gain, a of were to billion, net by again in ahead in net total highest increased market In production, our XXXX March period flows million, history. while

increased XXXX since each at to and by have quarter now flows levels. net back second pre-COVID quarter the of Our least now XX% they're

Slide business. XX, excellent in continue to see we Turning growth to our

acquisitions, we growth, out past our is broken excluding have core stronger. quarters, even the recent As few

two one total XXXX, In XXXX spirit growth and update on the ahead percentage platform of of our were do of we million rates more business assets annualized year beginning GFPC expect or of XX.X%. the $XXX a advisors a in third core second core net leave quarter first with or assets about large of transparency, we of this as such. you The XX.X%, as our flows period to will quarter

in growth be be in organic expect April the report. flows quarter We million, advisor of on metrics strong monthly next approximately and will net our week activity $XXX our based AMK continue disclosed second which to to

we last while near XXXX. total the first source metrics, the advisor the leveraging advisors to XXX Turning is since of This first the in quarter year. platform. our serve of NPAs growth remote highest new advisors still our NPAs, of of a a and as on quarter we producing or the by number growing added model in new encouraged business medium-term, are

the months NPAs best ever NPA our of one of for was and number month the production. March First, in best ever

Second, is also lead our and cohort. engagement recently upcoming year's year return digital our our to summit generation about in-person compared last with XX%, up were our more this to-date-production RIA launched from We to than excited year's capabilities, cohort advisors.

will to new advisors. relationships All us existing advisors of allow and attract our these with deepen

the Our Engaged XX% the total assets the our at of was is, quarter of advisors of our up over total and engaged end is were engaged advisors XXXX, Since the now quarters, number X,XXX. first up advisors on for year-over-year that XXX. XX% beginning platform. five the total of account

Now, We turn due discuss million. in in related revenue reported spread-based our the Entering $XX.X reflects quarter's base first the focus a our year's revenue a assets this expenses. to by decline were quarter, to on net This offset strong revenue variable billion, revenue, to last asset let's increase XX leading our $XXX to Slide revenue. decline. of rate at

XXXX, $XX.X net up of quarter was million of year-over-year. first revenue the For our X.X%

reflects course, Spread aforementioned XX%. decline that rates. due based our at product revenue share lower to shift, million resulted $X.X mid-XXXX growth revenue up per Recall, interest have a net which fund is one-time to about cost XX.X% in quarter. in was $XX.X revenue of would our revenue year-over-year, Asset this reduction classes, shift based million. the of mutual down, XX% been After materially based to asset

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

revenue revenue asset waterfall year-over-year spread decline was the the As outpacing in up based shows, the in revenue. increase with based

Our revenue to waterfall classes, important due this compression compression by $X.X splits generated cost $XX.X the net growth, compression. million in-line reduced and about had million. that remaining impact to which which the note revenue point fund the of to $X.X was impact year-over-year fee the set in with additional of mutual to was the Of impact basis the again $X.X year. with the million share our It's fee shift of due we revenue, lower X asset this million, impact yield,

to revenue, to yield decline based spread due from million $X.X Moving it decreased year-over-year to the X.XX% X.XX%.

yield our in decreased XX a it income our XXXX about points, for spread of The detail as XXXX. driven by lower is year-over-year X.X corporate based platform assets. down X a cost in decline was $XXX,XXX decline points Lastly, point mutual decline or basis by due X yield. X.X of bottom the revenue and helps revenue as basis the quarter and basis this, Overall, other income based funds. interest-related XX of X.X basis to to points total revenue, net quarter-over-quarter basis shift percentage down shows X of driven primarily the in on first Slide resulted the The about basis points, our points total asset assets in basis on

calculation our takeaways is two-fold. annualized earnings XX of revenue For this appendix of transparency, in shown the from clarity and presentation. Slide The of net yield variable slide expenses is our on the

mitigated revenue importantly, to the share and the and and rates. First market our loss the growth most lower interest and move mutual gains fund have cost classes strong declined organic

quarter-over-quarter. X is from down interest Second, lower point rates yield only compression basis stabilizing,

expenses. Now, let's discuss

driven by $X.X as strong by increase is comp million, over to we compensation a excellent X.X% As as our to Operating of by decrease down $XX.X year-over-year The Total offset company the X% sales were shown driven result incentive an year-over-year adjusted our our in quarter. expense, our we million decreased of continue in increase a have maintaining in expenses sales grown the past largely million in $X $XX in year. compensation a variable even do job [expenses] SG&A. million. XX, significantly to expenses Slide expense

costs. SG&A course, online in will the client in largely it from lower quarters. our in Our realize was decrease Also event strong generating environment, travel February, the in count expense and by increased X.X%. fact XXXX. compensation driving increased benefit results driven increased The compensation annual head our driven sales year-over-year event, revenue we, is that our and by We savings the successfully of upcoming costs entirely our material business Gold held new Forum, the

back As operating always meet increased have on expected That changes discussed previously, there travel and to and permanent spend expenses. business we've clients to in the the we are made model absorb eager said, person. our our we are get road related to in to

become We a virtual and that in more will much a have efficient advantage. effective not and to learned lose environment competitive

expense were adjustments, vesting which large In our Let change. four first acceleration me pre-tax and the result a the and of $XX compensation of run through million quarter, back share-based as of the items. unusually due this our February of a added cost to total is CEO comprised we

related to driven as as the quarter, in stock the First, of our recognition Of [indiscernible], the our non-cash share-based $XX.X grants. related February, million due due charge pre-IPO the and well the ongoing a the first due to compensation, of again event and restricted change. to equity large of million program, was largest to as incentive part total the was was the to vesting million [since] CEO accelerating amortization in the $X.X result pre-IPO equity of $XX.X awards costs pre-IPO acceleration in million $XX.X of

million should $X As rest block the a per expense you, to of you quarter. to related To of see equity cost million for the to remainder see the fixed grants. year, between expectations result, expect set far will less of $X year drop this for

XXXX, we've million million to reflect into per costs discussed. will previously ongoing settle equity and to only $X quarterly programs range quarter the $X ahead our Looking the

XXXX. also expense charges, be our to by adjustment amortization of second $X.X this is the of equity end expense The to sale. the million amortized Like fully expenses the related will XXXX

this million to CEO costs, the $X.X related and integration to of the transition. related majority primarily Third, cost reorganization

our Lastly, OBS. of announced expenses with acquisition and and of associated related $X.X Voyant acquisition million the GFPC in integration

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

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

EBITDA year-over-year. up in Our margin a Adjusted of for XXX record year-over-year year-over-year. XX.X% was our up million, while management income EBITDA growth. This $XX.X future the was despite ability first investing is spread-based adjusted expense testament decline margin a team's management XXXX quarter points XX.X%, to quarter improvement the basis to focus on in

per Our quarter net the based for $X.XX income This of was a on $XX.X quarter adjusted diluted or XX.X million share million. share. is first account

two first look quarter the at I items. let's Now, highlight would balance sheet, reported

ended First, $XX.X in we quarter million the cash. with

As and to ability us remarks, low Natalie cash to in cash pursue generate opportunistic the positions M&A. her our mentioned position, debt well prepared

this our Our use acquisition [$XX Voyant we our that from of million] close will revolving expectation later corporate facility, about is we credit of $XX cash, million when year. our plus

to expenditures create capabilities, capital scale, investments reflect service. and primarily Second, increase technology our new long-term and improve

For our was revenue. quarter, the capital total $X.X spend X.X% of or million first

be expecting this in business. we mentioned, future XXXX we capital the continue expenditures previously Natalie as to Now, revenues total to invest X% [of] our as of are about

Now, our let on expectations XXXX. you me update for

impact do these include close. into the not to numbers, Before given be the I those of I that Voyant, expectations timing the unknown get clear of want

of by and to the to XX% to for driven Let's turn to the previous compared growth for gains. market expectation momentum strong a XX%, quarter year, We're our XX% first Slide to net XX. XX% outlook flows revenue increasing net

growth expenses, not outpace discipline increase to to note our continue consists It mid-teens increased is important which We expense of will expect to in SG&A, that compensation investment due growth. revenue we to and operating as in maintain to our so XXXX.

As business noted by assumes mid-year. this expense outlook previous earlier and calls, on fully re-opens

expansion top-line to to XXXX we the ability a XX% above revising EBITDA to range the growth As momentum scale laid in our previous our Natalie significantly guided we I'll expectation basis targeted basis revised find out, our we points given our phenomenal year, our is over basis result, in basis XX to we the XX% and years. ways expectation are XX%. our that, in This of to are previously still first points strong margin had XX%, reflects set Based the have in XX range the points our confidence which hand growth XXX higher previous her about XXX business. from concluding outlook for than investing of outlook goal quarter, it adjusted points much remarks. This growth, we to on With business. to have is of and

Natalie Wolfsen

the call on sharing look earnings Q&A. We updates begin Thank Gary and and the we've pleased extremely at as value shareholders. everyone, the to back and I'm for turn call thank the you, our conferences this today. on we're prepared and you operator calls. future upcoming their all forward to you. subsequent Thank as accomplished with to clients, to And feel concludes advisors well-positioned our create remarks. further well will I

Operator

Instructions] line coming with have Goldman Thank from the you. question [Operator of Ryan We Bailey Sachs. our first

open. is line Your

Ryan Bailey

breaking get about or us how are any meaningful, the many if said, from it out was maybe more give a those of gains bit afternoon. seen the indication advisor just it, platform wondering quick thinking advisors you on sit an I know pricing good share you're Hi, how start can and but a are how you'll the how those advisors, once wallet now and going? whether then many we can becomes managed using I you've conversations assets portfolios. update if you on

Natalie Wolfsen

Managed AssetMark question the Thanks, Ryan. about Appreciate Portfolios.

so, as with of offering. said we've happy and XX on our portfolio we're solutions, to from really ability need And means important platform, services is our know, things a you specifically RIAs is, place investment Institutional, AssetMark, And I those Portfolios, is Portfolios, that on the in access the going of Even our are as RIAs. RIAs it for participate subset offering the from relates are and piece to the providing which only Managed trade a the AssetMark pricing. their What platform. and of subset we're Portfolios, the on particularly put is attracting my conversations to ahead Managed The all of that AssetMark AssetMark RIAs those that within our in the focused of AssetMark we to the in to it community, are the to AssetMark offering but ability RIAs adoption of we're larger points platform tracking fantastic. they're focused Institutional subscale the programs, by Institutional no own a piece. growth RIAs, have and on plan, that going prepared remarks, is of are well so a our as seen sleeve AssetMark how Managed

pricing isn't whole for the and make then relationship trying look achieve. relationship also our specific they're the to and the for at us to and approach for works technology advisor price whole the margins pricing and what itself, Our but to sure

And say so pricing much pricing I them well, growth. the attracts negotiations offer. help Managed Portfolios, to can on solutions and AssetMark RIAs entirety outsource are that can just would the because our that then time their How what the going and business we isn't platform we conversations but refocus of

many months. the is metric AssetMark any Managed And the we advisors now of so while I right attracted in two nicely using of of specific use, on that first is Portfolios, growth how didn't advisors the I platform, to know give the which number the and you, top-line quite numbers Ryan, number our growing are

Ryan Bailey

Got it.

offering investments about way Was there you maybe a maybe AMI an Thank And wondering, over that, is mentioned that's alternative then time? specifically for we revenue coming you through well. think as Okay. just that that contribution from should have you.

Natalie Wolfsen

Yes.

for offerings alternative iCapital for we of with to been to it diligenced that provide Institutional with announced have easier Because would advisors them does platform, As relationship important direct. relates Alternative the are What's go that an if than partnership array our and AssetMark but we it's to RIA more investments Investments access holistic be a it offering, advisor. contribute to administer with it they the are partnering really revenue, that is immaterial.

Ryan Bailey

the back you. in Got I’ll it. queue. Thank jump

Natalie Wolfsen

Sure. Ryan. Thanks

Operator

the line Bryan We Suisse. have our Wynn next question coming Credit of from with

Your line open. is

Unidentified Analyst

up you investment, revenue it think should us Gary. over from step that about XXXX? it's investment? and impact Natalie, into a the a to Natalie the the here how Quick you question I how from to some of sense Bryan. up Gary performance Congratulations opportunity [Kevin] as gave we can an revenue XXXX but I about mean Hey, of with relates thinking wonder, give perspective are stepped and the

Natalie Wolfsen

so question, take much the one? Gary, to do Thanks Kevin. that want you for

Gary Zyla

are Sure, Hey How Kevin, you doing?

Unidentified Analyst

Hi Gary.

Gary Zyla

So, look, trying you, context to of for in right. to it I'm way – we the are think put right Kevin,

to new do we the margin our in that expansion is our So, to advisors target with offering, on as so in mid-teens advisors. they growth broaden investment well existing resulting What EBITDA we as investment we're creating bring both for double-digit wallet, that with focused grab growth year. share every the trying double-digit, top-line are of can

go way we're going to we're that So, attract are the as bringing I on bring All advisors, RIAs. as in. ahead. to well a designed – the Is investment to in not be existing can advisors, there investments IRR able you making an [Indiscernible] give assets we're particularly from new

Unidentified Analyst

drive nice is step up which you've investment, rather, outcome a was thinking the the more, how also it's No. with nice Gary. but I to incremental is EBITDA, whether obviously associated adjusted incremental revenue you it? able about Yes. way think associated then percentage or any is investment, with Because That's much been for to a maintain the what's – there investment, folks. was also some but helpful,

Gary Zyla

That's Yes. very managed platform, new exactly absolutely right. right incremental way I it mean, high, coming it. call, in, the is on our to characterize think you assets you're margin, about right. a The is, would particularly way what the we

it view in investment our much better a margin overall That's margin book. create expansion. have as, And at to recognize can asset we so that that bring how that the you so, in the we revenue more we

Unidentified Analyst

just then of too it about That's thinking Gary, helpful. And just any thinking as rates early relates given recent quick, real impact or of around rates, interest shifts some maybe just in is the activity? it XXXX to start to

Gary Zyla

exciting. was Janet You up? mean that saying rates today Yellen That go like might

basis a think it. our little earning. now. earned the talk do and what always about early cash right We cash I points disclose to So, it's XX on We we're

not So, for it baking ourselves. a we're into outlook near-term

to any we’d by movement. hope XXXX some on XXXX add the but talk rate XXXX for in that? we can that interest do So, anything Natalie, one have or see numbers you assume do improvement, not about

Natalie Wolfsen

in it. capture be we've might to that, for to but every future, of what increase rates, at in in No. exactly shy Other a handle past, basis least than the what for it, or in say done we just happen isn't as the XX we've that's points XX-ish way modeling will disclosed that purposes, of past Clearly, the past. equal to

Unidentified Analyst

That’s all. awesome. you Thank

Operator

We question of coming the have from with James. Patrick Raymond line O'Shaughnessy next our

line Your is open.

Patrick O’Shaughnessy

believe I guys. your last AssetMark's afternoon affiliated touch I to your directors light and want are composition good week, five on Board Hey, ownership. being base proxy In of filed that of close update owns relationship around Can plans? your you Huatai and an shares. with which how is XX% still update any AssetMark's on Huatai, on there's Huatai's whether of ownership with provide

Natalie Wolfsen

take I'll that Yes. one.

much the so question. for thanks Patrick, So

A that by in of the on the Huatai, of Board You are to note members employed that. one and U.S. couple five correct the others U.S. our are outside of things

you the are shared The not and including then involves priorities, XX% demand mine about this improving And us. for the excited are Board's, phenomenal drivers finally, are strong volume, investor With our really issues and the and long-term year. results of underlying right results that these one for and as low that as mission they this just our price And the delivered AssetMark the and improving and top trading mentioned. Huatai as in you well Huatai's, that They as they Gary's reflected shareholder, agree relatively with stock our of is them. fundamentals fixing now, with top I'm incremental working over financial about strategy we're and having right and great I of and shareholders. first XX%, their they on has strong now something to our to offering. dialogue the That's need and controlling And majority now. our And you to AssetMark status the in for know we with pleased both ownership plans of shareholder, shelf our we own is remain little and said, and clarity right very and our a provide shareholder the performance. Board believe our our about the operating that that we

terms summary to given that of AssetMark a is guess of about is, shelf and fundamentals, where need the in working that excited incredibly we and understand I that. know it are the So, right and as on the we its relates we're clarity question company filing now to provide

Patrick O’Shaughnessy

you. time? you then engaged a detail. question where estimate stands where Thank for that over share Got your you. wallet realistically your that Maybe it on ago? would do advisors, appreciate you Really today? guys And think can of year And a go that was it where

Natalie Wolfsen

one, So, I then why provide that Gary, start can details? don't you more and

Gary Zyla

Sure.

Natalie Wolfsen

at that engagement, which tiers, is million. for XX% So, At highest depending we of our the is many it that that with tiers, the potential $X engaged ranges, We from the wallet it of adding the Managed of our varies We've it's ranges clients level AssetMark our solutions Portfolios there's lowest the engagement, our advisors. some it that offering. solutions It income you share lower new Alternative can wallet over have offering. wallet to be $XX our to on on well are news that our growth types XXX%, which one share share know, share level our actually above relationship like And and the that. platform and have of we much above so to wallet of Alternative becomes of formerly engagement. higher to million, potential then unaddressable smaller. level with advisors, of of Investments did look platform, of reasons Investments is our about fixed addressable. main by We from done The great add

share And I'll the ranges know more have wallet that quite hand All Gary, on specifics. to of that expands wide level engagement. you of are the if maybe addressable of you depending off the wallet. But

Gary Zyla

Sure.

So, reiterate have self-fulfilling at the probably it's in naturally you I say, saying a almost large thing. I who a a high-end. of if about, with the generally wallet would advisors, though, would they XX% Natalie what share us, to of sort on that, say, engaged their look higher with have advisors somewhere us. because speaking we amount was Those level, wallet X,XXX average, share us XX% [indiscernible] at but with of

on, of say starting those are focus on you assets to new more At – the lower advisors those the same of how on platform? the the having end. out engaged we We focused wallet, can advisors producing bring our advisors you're class share help let’s let's and in X,XXX; coming new use time, the

you what of their moved more we well. our let's percent evidence and them is along that has about platform, our advisors But the in to seeing, overall and when XX% And that, ladder percentage moving engaged are growth runway future the call with XX%, so, XX%, it, up for range. in talk on the growth you're give new the existing we're as advisors replacing advisors the who us

Patrick O'Shaughnessy

very Thank you. That’s helpful.

Operator

Worthington the JPMorgan. coming of question next line our have with from Kenneth We

is line open. Your

Kenneth Worthington

Hi, good afternoon.

the recovered sales wanted more bit into factors few next a quarters. growth organic dig target above net rate. over to of So, your I the the that to might growth influence

number you one, I over this fast. guess, So, went

departures $XXX take of of might as and I outflows a place it and handful result. maybe might another million mentioned You thought that XQ be

you tax remote about extent seems of positive adapted you have have or well might So, Maybe, to being AssetMark it if significant? checks a – either I'm thought thanks. might more face-to-face the or advisors impact the sales noticeable, does any it the just both your and have on Just environment. there. be that more likelihood curious is talk to what like migration face-to-face a to to work [indiscernible] had in little stimulus positive net see when flavor that XQ. back refunds meetings, Then,

Natalie Wolfsen

question appreciate XQ those to one. on and sales Then Thank return more Sure. about take road and it much, detail why the the on impact, the and results. Gary, relates I stimulus checks the so question the don't and questions. take you as outflows impact and we'll I'll share that on the you Ken. then to outflows, refunds

Gary Zyla

of to XQ. in two that They was and mentioned because things go quarter, are those happen are were back XQ. will most How quarter actually It thought you it assets. of Ken, What Ken, that bleed to but we that, advisors. could in you're Yes, million We I sounds delayed great. believe was We ago, We over do offices. two said doing, we whatnot. advisor have going doing often a $XXX about first well? as [believe there's hope they’re]

happen part of certainly break they out a is core. our our will one-time XQ. core and We not in do feel those part if of numbers, a numbers, of but our do that's but thing we So, part

the delayed. because time hopefully so a it's going quarter. first thought Again, to one-offs we that been And last happen closed the in will talk and the be we was story, basically It's acquisitions, color. that these we again, but it believe the gives you about

Kenneth Worthington

Got Thank you. it.

Natalie Wolfsen

can't checks And are and tax didn't We it of in specifically of and the refunds increase results, one I first assets quarter what say then on the either those other two their unusual quarter things, in. are stimulus our relates while opened in that new as platforms the can any accounts on results rather assets much transfers I transferred is to with the say related first how than They're typically cash. cash. see first impact to quarter of

– in saw broad advisors with I improvement clients. from size, we from accounts our are different places, providers various engaged increases or all contributions or from advisors us, meaning various broad former of our fact, mean, different who instead In of of suppliers

that before non-cash in you to anything the growth the there's didn't attracting the get assets clients advisors from always that clients at add been, are more a and to growth growth of if that that them to returning larger cash, advisors the Gary, sales same I then of contributions of to and advisors, advisors, there impact attracted advisors, road. platform and existing to I than to know from transferring So, attracting Then, we've in us, has specifically then new new rate past. wanted the the

Gary Zyla

it. got No, you

Natalie Wolfsen

sales very is clients well few as a goes, returning us. to the road the road thing our and the of important returning because of the as to in safety associates, a we most as far their are way As to obviously careful the things, impact measured

the as the to their be you'll and a experience. to vaccine return second schedule in it we the gain associates we clients. to progress to And expect third quarter, the and so, vaccinations the is seeing return completes approach second with quarter road each then road their accelerate and gradual, meetings waved as the In of these

our with to and also teams provider person. in for very impact, are will but vaccinations on together clients. to to and outsource change reengage new We're anything then see other completely excited sales a members work are clients without were incredibly Our know advisors meeting be, initiatives this hesitant because who their as that we more each can't say don't our complex. And the team little the associates, our what of have both as hopeful clearly that will exact positive we a to rate of well

Kenneth Worthington

so you Thank much. Great.

Natalie Wolfsen

from Ken, you. hearing Thanks nice

Operator

Gerald question We coming line O'Hara the Jefferies. from of have with next our

Your line open. is

Gerald O’Hara

curious of that and kind you. put you playing OBS, behind of see entry to Maybe your addressable I'm trust quick talking from of of kind market highlight you little low if kind channel bit what about into me. but, highlighted on that to here thanks. bank through channel of in and this perhaps just presumably more you talk out could it wallet about one hear might some how your Thank the share? you kind but Great, know a you slide, risk a thoughts a accelerate resources

Natalie Wolfsen

question. the for much so Thanks

is we want OBS because that correct. a entry and to The are You channel talk served one at trust a about low that, serve. was risk that reason bank AssetMark, as we

over like clients learning We trust in trust we’re successfully the the services that provider a onto clients, trust trust learned from those transition of clients, we And see we've – they’d how the and use bank from existing an several bank have outsource lot platform. about like OBS and bank bank to they potential and transitioned so, AssetMark. from relationships. technologies process clients, is, done what And the our

channel to to work new us and we've sales to AssetMark. bank specialist trust a addition, help In on bank attract trust opportunities the hired

types need we're of in AssetMark to very incremental As what trust make. bank Institutional, we and offering, much our we'll learning of with determining are the early and investments innings

real time, to than the and many have, no transitions say this where And are. happy transitions of at completed many so have the we're other specifics of that with we

Gerald O’Hara

months, the more sort with on road have you in of gotten road you six home a expectation for suppose do you comfortable there's motion, or the opportunity staying meeting more as and incremental uptick of the or get over more then of the the work I kind assets all? an advisors with current or on on just slide growth environment past out for same follow-up, advisors it'll out what in kind an anticipate, for you be moment, the from associates have advisors,

Natalie Wolfsen

you quite understand I I'm repeating didn't sorry. that? you're Would mind asking. what

Gerald O’Hara

Sure.

you're out move be recruiting on be there's willing there's blocks just bit to going of might think recruiting. to in bit that, otherwise, of more an a business do a I whereby, of front of it'll little opportunity advisors and as the way sort little broker or of RIAs, has move, flip regular was side a already of thesis more, what moved to type dealers,

Natalie Wolfsen

Yes.

they can affiliated dealer So, a outsource. those that [sales advisor or make team person our opportunities to broker of because we would combination RIA see decision stalled absolutely in and like think know a the we big to that the funnel], before of meet have in it's

our In addition, in remote effective we've very recruiting. gotten

is transition, business in feels the larger meet important the seen it And it The so, we've success. to more person.

I attract medium-term. new say for believe And help how will they sales are excited our that know I to advisors them person. so, folks team that in in meeting I They entire begin speak the when

Gerald O'Hara

for questions. my great. Okay, Thanks taking

Operator

next with our coming the have Young from question Truist Securities. We of Michael line

open. is line Your

Michael Young

growth Hey, thanks ahead It with the opportunity good outlook for wanted year, share like you for gain the market of that there's start sounds taking a laid out. Gary to my I questions. reopening, some that just well? sorts of about lower stimulus, from as from savings does qualitatively? lower you contemplate guidance but the Could maybe things rates, talk the macro those maybe impacts you

Gary Zyla

what's X.X%, kind think so, of it's market kind average I just quick The the growth unknown going of no, is answer about so Yes, of Mike. And outlook right? contemplates a if these what like government to billion economy, to T, right? for the trillion – the Into with gets and a another do savings happen $X that's $X stimulus, whatnot. with going

So, have We a forecasting it right beginning recognized right? feel market, market good first right? starting to the conservative almost now appreciation year. great the because – on built just of you our the outlook more quarter our annualized give when half, actually, to rate we've going other that following a already year quarter, we billing] X.X% or outlook we year, we is, the the assume collected revenue year, little assets for in half appreciation standing And half tailwind going second in lock for of I of for the the in our side. and in because so forward. we're a today, we're steady did [huge We the think, opposed current that's to As April, the growth about you

Michael Young

of higher a or higher tax rate, it potentially We've you that, rate; to sense. products your current tax makes done process around impacts whether gains would capital another that if heard That maybe that take Right. I picture to cetera, et guess, any advantage have all changed? sort question, new thought review business, look bigger something of be you or like

Natalie Wolfsen

Yes.

on offer accounts the as account provided solutions XXXX, separately like incredibly Already begin advisors direction. important. individual direct clearly, for our at is to need services, tax clients, on about will understanding working to macro So, we XXXX, managed expanding their advisor's roadmap enhanced from so trends can where think our the services there tax that that in is be with the

will important and In more transition become increase. taxes that, services addition tax to even as if

can tax our they to questions services on thought eye make to and on changes emerging and leadership, any delivering include prepared or they support well client's department and emerging we’re working outsourcing. consulting for our sure we're our so feel and are might that keeping our clearly, answer compliance so delivering And come. we're whatever trends regulatory services their advisors And we expanding to any then themes

Michael Young

you. Thank great. Okay,

Operator

time. call are there will questions at over I now this And Natalie. back to the no turn Instructions] [Operator further

Natalie Wolfsen

so And in looking much. you for know months you talking forward just Thanks. to I And I'm all third the and the getting to again thank call you you coming the of you to all of joining say Thank today. in to quarter. wanted to

Operator

This call. today's participating. concludes conference Thank for you

disconnect. now may You

AssetMark Financial (AMK) 9 May 212021 Q1 Earnings call transcript