Earnings call transcript Q1 2023

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Operator

Good afternoon, everyone, and welcome to AssetMark's First Quarter 2023 Earnings Conference Call. Currently, 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 first Thank

Joining Natalie Financial Wolfsen; are and me AssetMark's Chief Officer, Chief Gary Executive Officer, Zyla.

and the for outlook the will AssetMark's XXXX. results they update to discuss first Today, quarter provide an business for

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

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

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

today's our more information adjusted with required non-GAAP and which during revenue, are our for call, and earnings net SEC metrics. and to filings all discussing adjusted EBITDA non-GAAP refer Please factors press of Additionally, financial EBITDA, risk associated business, release financial related information. to we'll adjusted conference on be margin, net statements, forward-looking disclosures income,

with And the my to it over Natalie, call take colleague, away. I'll that, turn

Natalie Wolfsen

some quarter current quarter detailed well and progress then analysis our Taylor, first growth to highlighting record are our five discussion want pillars, call. for a with Today, and the market we I results environment. the welcome I you, on good to provide of the afternoon, as start Thank color, provide earnings given a as each. will of our making

update will our Gary, over quarter call who Finally, financial an to the the our XXXX results about I'll first and turn discuss and provide outlook. operating for

all-time engaged. which, ended X,XXX record quarter the was over households and of We around quarter AssetMark. three, X,XXX high slide Starting plus the another first XXXX are XXX,XXX on quarter serving an advisors, for of

results, net results. best-ever was a topline From a million, These with record allowed up achieve us million, of record XX% our disciplined bottom-line was also to standpoint, all-time management, $XXX up high while year-over-year. coupled expense year-over-year, total XX% revenue $XXX financial revenue

EBITDA while year-over-year. adjusted first up was up was XX% year-over-year, was up Specifically, the earnings -- up quarter, XX% $X.XX sorry, the for I'm Adjusted share income quarter, net million, adjusted year-over-year. XX% per $XX XX million $XX in

by pleased green results also we're some encouraged shoots seeing. by extremely I'm I'm these and

we've live know, webinars, our staying to advisors you through extremely education, As close events. been and

continue advisors to and to actionable and scale not also coaching grow their look to ideas, clients, Our help for us to businesses. their only but

seeing net we're area improvement One in is flows.

talked production reminder, because uncertainty. on sit by the for XXXX, had to last market about few continue caused XXXX, money a As of sidelines net relative quarters lower the flows of we to pressured as

first happy flows at of the improved and XXXX. to quarter quarter net the since have highest I'm that say month since XXXX November is of each XXXX sequentially fourth production level

April, to payments the in first Net quarter wanted from the the given years we with commonly tax know the month where tax in pressed to that previous flows line net average. In flows be seasonality expecting we let month. lower are you of was trend than the are

net also year and flows flows related respectively. by and XXXX the net the of pleased May payments. looks were tax As given in recall, in we're XXXX, April flows the with may by April, net this months And were month. and seasonality production last you tax strong impacted the of Gross impacted July, to

had since highest XXXX, quarterly uncertainty advisors, total of this, last NPAs, before to at have This in in XXX the in or half AssetMark. of producing they was new of their we earnest not historically. took the hold achieved market first at year. flows, contrast In in been advisors XXXX, relationships latter as the same half first quarter the rate net Like moving the platform

best years. In addition, in March the for last the two month was also NPAs attracting

experience AssetMark of and we remainder and to a and excellent the the with lot their client scalability. we were NPA, heading feel of results resonated All-in-all, to them and truly business consulting service look growth momentum who through have have first improve Personalized for help quarter year.

hiring Before last I'm Executive to of President Armey at month Josh the I and enterprise pleased the our Josh strategy served having also of most decades as Edward of who transformation, turn experience to joined AssetMark announce Vice growth brings Corporate as strategy, Strategy. Jones. in Transformation recently of Head

long-term of and serve committee across our with accelerate and will Josh organization maximize as a strategic the to leaders work our executive will performance. growth our member

five quarter, On in that how record on Now, our our slide bold. to I our growth place in that you a will the I well believe focused the in right how are in as tirelessly items you at focused of We are focus this we strategic each Today, we executing firmly then four having want in -- for to XXXX every an testament four, moving pillars. on This slide and update our give shows I we're forward on were results see on key do of strategy on each XXXX. can what year. strategy. strategy advancing

on and strategy continue Moving the advisors our Adhesion Wealth. sharing, working cross-selling of actively component closed we is five, ways acquisition with growth first opportunities, scale. where most to XXXX, they lead have grow to on meet RIAs the been we to are. to and the importantly, Adhesion of integration, slide In help Since late team then,

marketplace. Adhesion new adding to to focus on Wealth expanding start building bringing model firms. share RIA new model XXXX, of firms its technology, on investment platform, winning of new clients, out its Adhesion the a while wallet successful continues to to and had existing

to RIA brought assets over one new seven million $XXX platform. This April, of platform. existing saw Adhesion of the firms quarter, million their $XX Adhesion add which the to In added firms, RIA

TaxAlpha and Alliance technological active introduces visualize tax derived Adhesive harvesting advisors to Account. clients. TaxAlpha value added it show enable long to of now from first the the ways history their a a in has TaxAlpha the value exciting Unified Managed Adhesion and to a standpoint, new Adhesion demonstrate Adhesion From way and creating a Adhesion has quarter. in to new ongoing, and

the insights. valuable usage adoption managers This Alliance, Asset for them a for other a asset is Adhesion on premium product providing with Adhesion and and is community, the hand, program Manager advisor offering working and in collaboration it underscores a manager what better, informed and simultaneously encouraging their make Adhesion more between is not advisor community. position to platform, on the while putting is decisions, the

and also strategies, managed cap added equity In quarter, dividend model ESG Adhesion equity core all added quarter. new parity models strategies, strategy. cap to marketplace its Adhesion suite, large this investment the core first strategies, an focused risk

to progress earnings future during pleased start We their are continued the to calls. very sharing year, we our with forward Adhesion look and

our deliver clients. to to experience Turning advisors holistic a to is slide their growth six, and the second differentiated of strategy component

Here, replacement we're trust which accounting of our system began continuing focused effort, on year. re-platforming with last the our

been grow able and with our trust scale, client have for cycle because times for advisors replacing we time accounting save By processing have requests. of faster to system, straight-through

efforts. to two our are we re-platforming want discuss I ways continuing more quarter, This

we First, performance rebuilding eWealthManager, proposal to and generation. platform features, power investment a are as with designed investment our our analytics, advisors of reporting, digital such range

create platform X.X all scalable and user compelling intersection experience. that is personalized data-driven modern and investor wealth compelling the with flexible will supported It's be a of and digital and eWealthManager advisor architecture reliable, to fast. a digital capabilities, a on scalable, intuitive data science focused analytics and by management experience

producing X.X all serve. the serve create while new will increased believe advisors, to opportunities and AssetMark cost markets, of attract wallet We eWealthManager lower we new help to advisors, share existing

over second launch X.X phase Subsequent This fulsome experience. half insights, include In navigation, a years. the launch. page new will one phase landing the XXXX, more will phases improved two of of personalized and advisor will and eWealthManager new next

of collection annually. the Second, totaling responsible in of asset-based collection are firm's and implementing $XXX million of July, a we for revenue billing disbursement advisory XX%-plus fees subscription-based the and system for over

also offering to The capabilities that's our will Our billing our provide scalable. new billing reporting with to advisors. system automated services highly billing enhanced valued are advisors processing highly

eWealthManager and X.X confines recent a These our platform spent X% billing we replacing the modernization spend over of in within enhancements systems. to lot examples time, capital of commitment are annually. all We in of our of time invest building X% how and resources

across to is varying wealth generation. serve component more enable investors and of The strategy stages, our third spectrum, growth advisors the to life

Let's seven. slide turn to

the bank We continue their prolonged to uncertainty, advisors recent clients failures. navigate regional market help and including

bond in interest investors been that to pain we from this seeking lock yields year's last the years. haven't strong markets, high following Additionally, are seen seeing in in

help been Our platform breadth address well-positioned liquidity to has diversification with investors and the needs. strategies fixed and of income cash

me few Let a examples first with share you and from quarter. results the

up average of the increased $X.X we points. rate of basis coverage which XXX First, our an on million by yield cash solution, FDIC high provides to

we had provides agency which laddered Savos $XXX gross and duration US Additionally, million Laddered our to securities. Bond in treasury short strategy, exposure sales of

to their provided timely were and prepared advisors actionable also the information have so bank following crisis. clients respond We that to

new we alone. by nearly attended growth fact, crisis this even advisors producing our our webinar from as advisors bank was nine NPA efforts supported webinar In XXX and added

interest, add Due our more expect While to higher strong are in retain quality investors of risk robust space. and/or short nearing. duration we've has the a inflows particular we offering, back seen increases platform to this the are to well-positioned rate at end we duration been

to we wealth serve enabling across curated evaluating them investments, suite more We constantly are to of investors our ensure our spectrum. investment the that offerings provide a advisors

quarter. it So, detail Investment to now I'd Last turn strategy. fourth of Consulting I our our and component slide let's program, briefly discuss the attention eight mentioned and growth more to quarter, our this like in

Consulting Investment guidance program direct a The a advisors portfolios comes for customized new consistent The with select away access in team efficiencies of bring to business customized advisor to on their investment the models strategies for and client model AssetMark experience. practice using their to provides our platform. available creating suite

to a is story why and proposed investment control why made by the and model advisor explaining advisor the a the backed of client all portfolio, outcomes The their options. investment his provided simple comprehensive clarifying behind her with or analysis

exclusive helping engage grow their a business from advisors, differentiate their this competition, and meaningfully be stay changer their offering clients. believe scale also helping We and game with for them will them

launch, In advisors. our over take win. have the our why in and we three and have since to new before, they months I had in were why Investment take XX grow And great it said as part win producing of which ability advisors help first pride is we scale. XX% We ongoing Consulting, advisors

Turning transactions the adding expand improve their capabilities by is strategic of our and to to investors businesses. slide serve assets and strategy advisors' to ability pursue component nine, growth to final

future generation. opportunities great a for power purchasing in of each power M&A million our $XXX strong and approximately purchasing because job of doing are increasing quarter have our We cash

proactively our clients. advisors at will opportunities benefit and looking are We their that

and for in quarter. we million note, $XX seen this last you accrual already a a may put As up have as our financials,

XXXX. alleged As and program ICD activities disclosed third-party we discussions SEC and have under since XXXX, alleged in ceased regarding we support incomplete our disclosures custodial the with have All past to filings between our been in SEC review relating XXXX payments.

the clients. resolve lives are of further to of fully to with Transparency with believe matter of difference that to its are today, come more we in we share working in advisors we resolution we SEC, matter this provide resolved. After their will our Because once AssetMark a want we trust paramount the and discussions this, to a mission and soon. this and making updates are and able you as will also provide information is to the and

over Gary the on through I'll first an update XXXX a to take call to our now and deeper results dive on quarter us our provide to outlook. XXXX turn

Gary Zyla

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

quarter mentioned, As was the quarter first AssetMark. another record for Natalie

XXXX and outlook. our our remarks my update I today, quarter an for results the will then During for highlight provide

increased platform our market impact of $X.X on XX, percentage flows fees assets up a quarter Year-to-date, year-over-year Quarter-over-quarter, annualized and driven $X.X of as flows by X%, beginning-of-period to billion of Turning of billion. assets platform net were is net slide $XX.X net first X.X%. assets quarterly X% billion.

less production the As onto off are comprised the you money net know, flows platform. redemptions platform, or of or money

environment. of the are net that a first still our in of coming satisfaction. sign XXXX, quite platform, given since to current quarter low, on the the First with All-in-all, the been strong sign production while has redemption new of we pleased money strong quarter quarter, highest market fourth are is rates flows advisor a our

added now in just NPAs, XXX quarter. metrics. producing new the advisor our discuss advisors, Let's We or

XX is this number NPA in mentioned, highest highest the Natalie NPA of months. is last year, As while since the second quarterly March's quarter count the

of digital are events in-person wallet on to close areas focused these our well continuing We share our to position and can focusing both existing strategies. which us on new advisors acquisition doubling win on positively advisors, and to stay of flows. We future net existing marketing believe down advisor impact advisors from and

quarter the the On was X,XXX. first engaged slide count. XX, our of we engaged show advisor advisors Total at end

those XX Of a back XX status platform asset advisors During for appreciation. that engaged XX million and above result the qualified threshold for were XX, quarter, were we core added advisors. market the $X were first who engaged the advisors of time as

advisors and Our engaged all account of of advisors assets. XX% platform our for platform using XX% make our up

advisors the its as always, financials. of growing growth further for drive management, our is number As a focus to of engaged it business crucial key and is

In our households our count, not and addition households way of XX% advisor platform. to The are up asset number asset-based, third number in measure to XXX,XXX. almost the on level is which of growth, we year-over-year the

Now, to let's million. turn discuss to a revenue, $XXX which slide XX quarter's this record was

know, you expenses. on focus revenue related net our of As variable we

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

This than revenue, was ago. which million depreciation. revenue, This from was is up decline by primarily asset-based in approximately or times XX impacted year the by market offset which $XX a driven more spread-based

Slide year-over-year our walk. net details XX revenue

was by on basis spread shows, which just mainly yield waterfall spread the XXX driven we As year-over-year, net Year-over-year, improved points. to up income, discussed. revenue

a Asset-based million of of primarily financials driven This an last offset billable Wealth, $XXX,XXX revenue assets million revenue revenue due $X.X from down $X $X.X not is as negligible and time result core of Adhesion was by decline year. compression. $X.X part fee decrease in this our which year-over-year, by billion to was an million in

-- was Voyant up X% up I'm year-over-year Voyant subscription revenue from from X% Subscription year-over-year. sorry, was

of XX% subscription up Excluding year-over-year. FX, was the impact revenue approximately

by potential in both are encouraged and in Voyant's geographies. We prospects existing high geographies expansion growth

small increased business by medium-sized licenses XX% licenses the enterprise XX% increased same year-over-year, they more X,XXX while frame. XXX time or and Voyant over or than by

income other million income $X.X interest Lastly, driven by higher the increased on corporate our year-over-year largely cash. earned

serve which to to as markets a well will base, continue do We continue diversifying great revenue job our us fluctuate.

expenses. let's Now, discuss

both or of Turning XX.X% operating year-over-year from to increased which Adhesion. XX.X% XX.X% to slide year-over-year, headcount acquisition compensation expenses compensation Quarterly were driven increased driven an by $XXX Employee million, XX, in of is and up of XX, by $XX total million SG&A. employee million. adjusted half year-over-year to increased expenses increases about the $X.X

million SG&A volume-related increased increased or and $X.X travel, XX.X% driven year-over-year, by events, items.

Gold the our elevated it advisor quarter As expense as is a for event, Forum. largest SG&A annual first our expense reminder, includes

for As always, I adjustments the quickly will quarter. run through our

of Excluding reserve million items. the of Natalie million four back $X.X added $XX is a we discussed, that total already which comprised pre-tax,

the compensation, share-based per million $X.X just this XXXX. million First, second anticipate $X of half to non-cash increase of we under quarter in

related to acquisitions. adjustment Second is to $XXX,XXX expenses

adjustment to $X.X million primarily integration Third reorganization and is related costs.

to -- of XXXX, Lastly, set amortization. $X.X In million the acquisition-related acquisition-related run this lastly, $X.X million have rate. of our quarterly be we

discuss Now, let's quarter. XX turn the to slide in to our earnings

XXXX million and quarter up record $XX.X then than record $XX.X XX% million, a was adjusted quarter. $X last the EBITDA more year-over-year First million

our to pleased extremely revenue our and which are with our and the growing diversification a adjusted this testament management EBITDA flexibility disciplined of We quarter, base. is expense

basis points robust Adjusted EBITDA to margin up XXX a year-over-year XX.X%. was

record the record XX.X $X.XX income share $XX.X diluted share. based is while a was on This Our net first quarter or of in count quarter net per million was reported million. million, $XX.X income the adjusted a

the now XX%. Our adjusted tax is rate full for effective year

slide For net the see the color, income please on adjusted XX. walk

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

which used we're is continuing we $XX First, but the million flat the to operating with million ended down of $XXX our generating job debt. first a of reflects do in a cash. portion first We great cash $XX activities. to cash, million quarter quarter, from In long-term of quarter-over-quarter, we generated pay

to $XXX the Additionally, in still our available that we million facility is credit have company.

and balance, key deals, for dry an growth operations, us from strategy. M&A future credit cash give of which meaningful powder our strong remains a generate to lot component our important cash a and our ability focus of facility Our

expenditures Second, on or total and service. capabilities, primarily million long-term capital increasing quarter, new our focused first spend our the investment, capital scale, creating reflect X.X% $XX revenue. improving In of was

her In re-platforming detail in initiatives, discussed build XXXX, productivity our advisors. for remarks. will this efforts, solutions we Natalie during our continue new and other prepared

all to expect between to rate of X% X% revenue. do a maintaining this run We while

on Turning results that financial like to how would to impact to on our make we spread some and to commentary meaningful continues slide I maintain provide XX, the that. look

is ability AssetMark custodian, to earn our direct of our or owning ATC. Our result spread a Company, own Trust

is function by at ATC and investors spread-based you the cash As rates. revenue held amount know, of a of interest

quarter, percentage discuss In elevated a as ICD, cash First, was let's of or balances. the at cash total ATC non-discretionary remained first X.X%, cash, while assets at X.X%.

to a on percentage of more return As past previously discussed as ATC at levels cash about historical expect of X.X%. to we calls, ICD assets earnings

Turning Fed are our but stay These the rates quarter. our forever. of for not spread beneficial during first times increased increases high rates interest attention will growth to rate the two highly rates. income, The

discussed insured to cash deploy started a last deposits agreements. to fixed-term quarter, As portion we have of our

In of first as term rate is of cash term average the X.X%. new of March X.X a of And with an contracts. fixed XX, rate and ATC of growth million $XXX we quarter, rate years XX% added maturity fixed at in

a we to rate As XX% optionality of ATC up the term. at cash into have placing fixed reminder,

We will term of deployment fixed continue on to future rate the earnings cash calls. update into on you

turn to guidance. XX reaffirming let's XXXX discuss outlook; are Finally, our slide we to XXXX our

plus driven platform reminder, growth, extending XXXX, which As is by a two we XX% are asset components. in

First, high platform period of assets the beginning a have of single-digits. net flows in we percentage as

by And be our a expect about revenue, of point growth is basis market fee second, we full regular assumes our asset growth appreciation driven to compression, in of one This slightly the revenue, expectation. the XX%. have assumption about revenue was we offset Adhesion year of revenue, a which net subscription spread X.X%, growth by and

the in increase to compensation consist mid- our have set to teens. We operating which expenses, of SG&A high

of of Adhesion. due the full impact XX% to year-over-year clarity, is increase year For about the

is of the strategic system due growth our by acquisition, talent investments and replacement. third advisor and increase billing technology volume in to Benefits as remainder the is the such initiatives, a and driven program Advisor About

and As expenses not and let a outpace our reminder, closely will revenue disciplined we our expense growth managed, is growth.

As always, margin on improved revenue we on focused earnings. and are realizing our growing

We and and between XX up the margin we XXX EBIT expect be year-over-year, adjusted XX%-plus to points expect be to expansion our for basis year.

our will call. second again outlook earnings during We the quarter update

I concluding to for back remarks. Natalie will that, her hand With over

Natalie Wolfsen

and our Gary, seeing forward at person Thank you, conferences. everyone on to I call to the look thank you in all investor today. upcoming you

to back Q&A. This the concludes begin will operator our I remarks. prepared call to turn now the

Operator

Thank you. comes JPMorgan. Michael Cho Please [Operator proceed. Instructions] with Our first question from

Michael Cho

for my I growth I to first question. of on good wanted the and kind afternoon Thanks was kind organic platform. the pipeline Gary. of on taking Natalie guide around the guess touch and in Hi, of terms you're seeing topic, just the just

just the pretty realized ahead, environment sounds about feel as But I a posted you well. it good X% annualized. you like looking

So, you're seeing the for a to I'm remainder of sense just how the kind trying landscape get of of the year?

the inflecting of of kind also then existing as advisors. advisors production touched kind new well you And as on of

from as trying get Thanks. versus split I'm sense well? that the existing a of new to So, of advisors the growth

Natalie Wolfsen

Great.

with take to will to versus first we're advisors. I'm second the growth then start production Gary going seeing, and from related related advisors So, existing what organic the we're to how and question which is seeing new

a in movement to the organic lot we're XXXX that a growth, not. in we in half did our related second So, of way pipeline seeing of

volatile clients their they the weren't As giving turning market much and and environment, to providing the their growing them year, the quarters in them were their discussed advisors last earnings we information and time managing spending comfort very business. the in as in --- business of time serving as calls latter

the stay things years services tense to have you which are we to this And help invested, where helps give that advisors, proactive, guidance them investors honestly degree and that in confidence are ways. time, provide and the leads portfolios with you over referrals business investors, existing existing advisors, then advisors existing investors for with their more their to both community, and in to grow from so their also in that investors advisors is

end our to offense reasons they that that. year, with started defense and advisors there our in At move conversations the from for them, were last in from tail we really hearing to wanted XXXX, of some

become market bond healthy first is more is, the and little a The understood.

volatile much trends additionally, geopolitical inflation to-date. actions were had hands And at things was better their environment, based least understood, interest concerning, The rate understood those on the they and the still environment Fed investors the and while and the direction. around all

offense advisors, to we've what seen is, in advisors worth And high more part net activities with of wallet way. going as of client, advisors, of so activities related to partnership us, in campaigns, and share you'd a I'll the that related the Gary. first some new all just existing in Related hand over specifics activities more the like them in growing growth, to on XXXX see numbers from to they're from the to healthy

Gary Zyla

the for Thanks Natalie. question, Mike. Thanks

for So, year. our as best flows mentioned our and in was net lift we the a X.X% quarter lift that's

a and seen also -- have uptick advisors our We we year. in our existing best talk quarter really sides, we in that in both lift our about our and that on it's maybe on nice producing production business gross come new report, NPAs, a

was When existing think XX% first the quarter XX% and new our advisors. came from about production saw that split, our in from our what the about book we producing of came you

since pretty reflects a advisors from stronger than late trend. pandemic This that we so seen, about new we're excited probably and period have contribution the in producing much

Michael Cho

I of just on some you're trends. us you've new about to And could Adhesion, put new much. in going Great. in these Thanks the clients if quarter. types like wins and sounds guess to squeeze it more one some And tell I so or statistics up continue

that should the broadly, of from in there from, guess pace white is well. this growth think kind of expect terms of you add have joined us we why kind or of you. Adhesion platform and that But space they I to the opportunities as just Adhesion into, and is wins you was joined continuing the just Thank kind they and where tell these more of can nature do might

Natalie Wolfsen

process. their they services the as to speaking, Adhesion, and selection relates RIAs automate Yes, provide is investment it to help to them and broadly they largely trading financial advisors, scale

the model the services where of marketplace, them Adhesion, them and the managing the trading marketplace the from with provides point, at that. give a investments retains in the a to models advisor then they're related starting and So, Adhesion selection discretion, rebalancing

In addition, scalable provides indexing, for services support financial also scalable Adhesion management and advisors. tax direct other

are advisor time on duties for and So, independent spend these Adhesion to growing individual their able their the business to effort, them, for and highly items save so and that their own, advisors those they an do is services. expanding time-intensive their perform can time

And have or to many that's what these incredibly community, Adhesion either on the don't capacity it's on interest own. and in RIAs powerful time trading does, or the RIA because responsibilities themselves to their do the it execute

outsourcing trend activities as of RIAs, This we assets a the in outsourcing this to mega great a feel and is is for types RIAs, towards from they capture market, the fashion. so in Adhesion move place in

we're very with Related from Adhesion. what happy activities to today, we we're Adhesion very, the that see with seeing

trend share will this hope we time. continue at As and guarantees that grows, trend clearly, no this of Adhesion grow. to expand But

Michael Cho

much. great. so you Okay, Thank

Natalie Wolfsen

You're welcome.

Operator

Jeff from proceed. with Blair. comes question William next Our Please Schmitt

Jeff Schmitt

afternoon. good Hi,

they're X.X% at mentioned would yield as or percentage to bottoms you bump Does that because guess cash a $XXX not, around would think I client custody million think of X.X% account, I high percentage up historically. -- savings the that if that maybe? add X% around the I assets include

Natalie Wolfsen

million. our add and Jeff. it right. correct, number, include you yield $XXX about The high not That's would did are program

Jeff Schmitt

in even was you rates to sort obviously, you here, up levels, Okay. remaining could these be competitive, are it And your fourth fairly sweep consistent that then they today, with force of if rate sort sort getting at could and increase quarter, moved see points. June. to think more looks around sweep But that if see Currently, or that interest but I'm around XX could again of I peers remaining hand do basis the correct the rate wrong, me they that? of

Natalie Wolfsen

to the each related our what's our commensurate with rates rates, environment. in competitive quarter, happening we So, raise do

So, solution quarter, rates quite XXX our we in high this about in bit a the as my basis prepared points, said remarks. raised I yield

that to our ICD are foregoing clients at make competition, anyway relative to advisors' use we working by addition, AssetMark. in In who sure with look rates advisors yields our

single amount, as not expect from the competitive same environment and to every increase increase with around generally And specifically be so them. the what although speaking, you is, rate rates our should us and for Fed the time absolutely

with so Additionally, to consistent on in the tiering clients the ICD we're the client across be with and the platform, that AssetMark balance where generally our the this the larger going our the and the see lower the pricing strategy you'll program, rates in higher AssetMark, price implementing or program, dependent different households have is rate. the

want plan Gary And that balance Trust small depending went to through earlier. different I of And when say you sorry, all not those operating the or at at actions larger so those that XX -- basis just are -- you a whether just on or want have points, AssetMark look say, balance. it's to all I all that of actions built into

Jeff Schmitt

you. Thank great. it, Got

Operator

proceed. comes question Please with Alex from Goldman Blostein Sachs. next Our

Unidentified Analyst

Hey guys, Michael is Alex. for this on

quarters of one it quarter-over-quarter, yes, I volatility the the recent share it slower So, was of absent think on at of seems, some since pre-pandemic. questions wallet growth looking lot a household's the

wallet the expansion? that So, what topic, for of is like kind on share greenway

average do what the there? is terms whatever pieces missing with of and the other and maybe incremental wallet obviously remaining adding currently you of some add you are kind capabilities you of in you're things advisors of capture to can guys have much think How doing, Adhesion you what

Natalie Wolfsen

was start the me we let quarters had this lower that by not saying, So, pandemic. since the of one

to you to So, details clarify I Gary, related he want then, give And that. going is that. just some to

Gary Zyla

each to look I of hundreds survey share doing? and year. the is, you them think a we year do we a serve the of understand it are how wallet of way Mike, Hi and So, once at trying our we advisors

from here's engaged So it's never almost we advisors. take X,XXX advisors, engaged a But our precise that, what from science.

has XX% as course, We that universe because adding an through platform, been being giving our to new XX% their and consistent averages over That of share we time, of and much them That are them are have obviously and opportunity we XXX, grow believe generally, at advisors some some close XX%. of on grow. about to lower. out wallet to about are some

so And we is the we you book and of could about $XXX and about assets you -- our That of their billion. have right, half advisors, advisor engaged our base, -- about existing say terms the have of from basically -- are of half XX% if the assets in book.

advisors production our right, dates many of lower. our X,XXX but And by we lift platform, quarter in the -- the other divided that the which is much is way, guess who wallet do that using EV of don't by the metric, I of share out every assets coming are companies under the report there. The not, measure in, that, money coming is the

generally And XX%, the been book's about our our the And platform. annual has that past that quarters, over existing definitely been for couple target generally around lift of to XX%. is lower lift

Natalie Wolfsen

And Michael -- then

Unidentified Analyst

Go ahead Natalie.

Natalie Wolfsen

than X.X% on XXXX, basis XXXX, XXXX it higher it's the first had the also first one of the third flows the just was X.X%, thing existing at and X.X% of highest producing and in net business which other add, makes lift the our respectively. the much new which fourth and quarter, to Gary is quarterly it of and since quarter of lift a been combination just quarter quarter with from I in mentioned, a which advisors

recent that's I to experience seeing great we're relative this quarter, by, So, and EB mean what performance in actually NPA.

Unidentified Analyst

Yes, change, but Got Thanks. that's think I I household the representing been helpful. clarified. it, that's was

touch did I to M&A. on want follow-up, the For

you Maybe up terms kind what reserve that availability? seeing guys in here. can you're out of comment mentioned on You you're there building the of

guys there? terms but volume like been missing deal the maybe that in you Thanks. been slow, to ball has rolling of and has maybe how add, would Obviously, capabilities

Natalie Wolfsen

Yes.

sure as good our capabilities make to capabilities AssetMark, we M&A, and that M&A, activity about continue our have grow our capabilities to call, and absolutely because advisors to So, both earnings M&A. on serve. committed we've to cost we to that to talked the in way access reduce the a And on past see they platform, scale and to in scale M&A scale our we're to view we need for past M&A key platform pipeline, want continue continue as to because at

to small from start and in of markets you firms, they small become it conversations. to engaged -- a feeling to to scale may cap cap that for activity those partner need As actively we're like as relates obviously that continue challenging, compete, all are see M&A,

to to as on be come mentioned it you disciplined never You relates will price, be to incredibly never before, if if you're you chosen we partner and and going the continue can know agreement know we've also pricing. to as

that On out to integrated clients, with the fully access second pillars technology advisors capabilities how help and there electronic provide trade simplify our our to portfolio. and/or to a our in Adhesion, and build how of like pillar strategy. their services way, would two in Voyant both still the are other us the looking technology round and of capabilities or for they capabilities front, that strategy, they first we're services construct,

targets in continue to say of sorts just that provide pillar to need we help their to also look related These business. there's we they financially area; And help can financial all I'll for strategy. offerings them run Lastly, and potential their this with advisors that -- capabilities compete. of our are the how advisors fourth scale service

need ones, plans. Advisors they the implement with services. how and they compliance help, create need how with help Advisors' financial build especially smaller

And to at. that so those look continue are level we high overview services the of just the

Unidentified Analyst

Thanks guys.

Natalie Wolfsen

Thank you.

Operator

question next with Raymond from O'Shaughnessy Our James. Please proceed. Patrick comes

Patrick O'Shaughnessy

afternoon. good Hey,

are So, terms obviously, of right duration sorting and investors mismatch cash now. mind are that top for

how you cash is in terming comfortable out balances? can your walk through backdrop, that AssetMark client Given

Natalie Wolfsen

current about very Clearly, I'll also and clear, determining the looking really was Gary always liquidity starting I'll when being and given to top was Fed to with Yes, to and market start hand ensuring very market we what of off great the serious that could rates, environment to current the it cash Fed then portfolio our started add environment, was that. previous rate right the and for and provide do, a at clients. we mind that raising we interest our the

just not cash a but investing And at different of Taking cash balances process at that our in sensitivity step detailed environment, look differently. the also like the cash first view interest very doing analysis. investors very, a how rate what look was program, ICD balances

in added we short last platform, our to the solutions mid-part cycle, to of early solutions year, more duration the fixed platform. So, in oriented our proactively income

other ICD were income. funds were XXXX, at addition relative program where be, we attractive they fixed our in balances that, to if options in they In in there the where could through to or marketplace, money looked rate the

understanding clients. assumptions serving the their of plan, we're those we've operating the our business built And and into with that in advisors

client gatherers. advisors So, help those those assets. want We the we're asset and our want to attract solutions make has relationships to we grow sure platform that that

platform, fleet cash in past, and what those operating based it experience distribution assets the we our the the that's positions on will in built in the our we of be What is fixed for that means think model. in income on of that

specifically, time. We in changed time. cash relates to the comfortable in adding term solution ICD high program how it That's why at program look the the feel balances sensitivity this at that for fixed took program to we where program. comes As analysis the in specifically, has and our over particular a yield

not were We also balance and $X.X look a insured, level at insured vast the look way, because the insurance insured like. majority of took the are of is what could movement and balances that percentage or the of million, our balances by

took make the three and term managing calculated, we much could and and mind, portfolio be conservative that, client. term percentage those for the fixed how nature, we're and in in events, we is the Then deviation fixed sure with again, to of the that liquidity two standard rate

wanting took flow that at we balances our we're reasons, a also I'll how keeping time. of The last right be And we now, about hard you're our two also off now right curve duration to very the but of is say make work portfolio. hand defensive, about I'll to were the then just one the look over given done, is sure duration, being the short attractive the duration part we've Gary. for paid that thing And conservative to that's vast

Gary Zyla

few points again. and nice Patrick So, hear just from you, more to a

it ICD of every requirement because is a think that and point is, I we to hold script, the X% called our cash is program non-discretionary there in that one account in cash.

we averages the higher so of total has of it say so cash, $X that base -- as X% And recent, been historically and asset and about be a function X.X% that much will in it while billion? than

Natalie Wolfsen

for I'm purposes-- is X% sorry. billing The

Gary Zyla

sorry, I'm sorry, yes. I'm Yes,

is forward. cash So, X% that going there will that in and be

cash is we not as work we upwards have we and great banks our with partner well. balance vet Additionally, regarding have, that sheet the XX of on which banks, partner this gives us diversification a

Patrick O'Shaughnessy

Great. of technology of last solutions, those is you've your changed how to in terms three the service that that platform, relative advisors over then Appreciate spoken engaged investment few attracting today, And about years? your and client and importance factors, how investments answer. has importance the relative in

Natalie Wolfsen

help results, is to construction on advisors It's scalable interesting, I long-term speaking illuminate relative and services the would a allocation that and important their platform. investment importance helps broadly the of technology to well portfolios technology in investors importance portfolio and the as how solutions say for the that understand has that the of as increased, way, for asset

that's compete much management If because years competitors I in a comprehensive wealth investment back, relative what need points you product solutions, larger we for access were are the ago, go ago, don't much, platform, XX now years market. know five the TAMPs and to to advisors

their can just to their of solutions, to set to in relative servicing, advisors financial technology if not and broad their in investment see and technology remain solutions independent, what so sure you'll need to clients, clients advisors platform other also competitors And so independent these advisors us a small, that extensively and the make access are but can in have serve our market. even new adding they that access to so investing

Patrick O'Shaughnessy

Terrific. Thank you.

Operator

time. you no question. registered questions at for are Thank are this your questions. There Instructions] further There no [Operator

back pass over remarks. the management for will to I team So, conference further the any

Natalie Wolfsen

to look seeing and Have a talking your conferences. investor future I say great to we you day. for just everyone time forward at thank want you to today. you It's great

Operator

call. today's lines. you concludes disconnect your That may you your participation, for Thank now

AssetMark Financial (AMK) 3 May 232023 Q1 Earnings call transcript