AMK - Earnings call 3 2023 | AssetMark Financial Holdings, Inc.

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Operator

Good afternoon, everyone, and welcome to AssetMark's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Today's call is being recorded.Now, I'd like to turn the call over to Taylor Hamilton, Head of Investor Relations. Please go ahead, Mr. Hamilton.

Taylor Hamilton

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

AssetMark's Michael results Executive Financial me XXXX. update Chief Joining are outlook business Officer, quarter provide Zyla. for I'll to AssetMark's third Officer, Today, Kim; discuss the the for and an Gary Chief and

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

I'd have reference on remarks. started, prepared be represent accessed to during our the actual we this as an website like It materially. conference presentation ir.assetmark.com.Before date forward-looking only statements. Michael that certain call, and during earnings also These could that their We results and forward-looking will at IR statements statements Gary note this outlook of are can our get made call differ

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

Michael Kim

to Thank talk and excited you, and Good to our afternoon, honor you as CEO. third welcome Taylor. quarter call to first earnings and my I'm today.

and lives has group, spent Prior the Officer briefly a that most For helping XX I've those Board of mission to into CEO to and Chief services which is make in deepening is as and years difference helping years, almost AssetMark. to their grow me myself the introduce me with on some clients. success at the advisors our XX and September, AssetMark, in know I provide about been advisors' clients. role, do advisors In let taking of and you for the the at financial selected industry, served that lead me, advisors advisors.At firm's AssetMark perspective and their why recently in I've financial not client engagement our led future. over focused as I President I Client AssetMark

an the clients the lead decision success last solutions, make to is think we our what Every Having how group for have their adviser. technology need they the be of what decade adviser-focused are about best opportunity for a We clients successful. revolves I company. advisors plus, deep understanding tools and strategic and to the around

to believe committed values our advisors, we I'm our feedback been client I on very transition for advisors, excellence. scalability. value As to share I'm on values engage hyper a am value.Turning capital the perspective group, for with our my to on shareholders. our our which Not enhance experience of also strategic vision and I'm but first X a accelerated focus, Slide been will partners tour enhance focused has previous and I X, team my been and I growth, want deployment some priorities: shareholder leading clear. Coupled CEO, as and success listening with I've members.During our months deeply long-term create seamless to for X for firm how the define the excited our respect to result, set deeply leadership continue teams, our clients. their has the and their advisors continued These heart, to only committed integrity, clients mission, and to and

of these. details Let's dig of into each the

engaged number are platform. the focused the growth. and manically flows and on with advisors growth The the This I of starts hyper growing our on team net of business. First, accelerating

and get positions are acquisitions, that committed us compelling offering to to recent We to believe well enhancements XX% organic our return growth there. and platform outsourced

important. to getting to so you of why XXXX.Let end by me We share this with is X,XXX are committed advisors engaged

platform our know, to X,XXX you have make double grow of As engaged we of assets the low If enjoy engaged company. size of advisors advisors we benefits of north stickier outsourcing. more grow faster, the assets. advisors, XX% and These the up of

repeat me that. Let

the can of next AssetMark. size the double years, Over X we

focused on accelerated capital I'm Second, deployment.

X% many drive that percent generate we rate. cash. invest in more prepared CapEx discuss growth to will start, run of which a allow our third bit AssetMark's we are as is X% This we as scalability, company us the will from and speaking that M&A XX% is total To And scalability. strengths previous a in my and putting business, into revenue my to is our of of start are projects use. on our remarks.Next, increasing One to focus. focus that ability to to the time I better to X% a specifically increasing cash long-term It later partnerships,

has a up with scaling over points since basis AssetMark can done to scale. and job EBITDA IPO, continue XXX our great we margins

I for are heart how Slide record X, On on turn an provide we high presentation. the are approximately engaged. our let's results of I to million executing of areas today's many subsequent remove invest where X,XXX to continuing year focus is which We third our already then strategy. households service hope highlight was into and to ended over up of on some is $XX quarter industry-leading into you these of plus priorities quarter during our in per quarter another long-term as earnings One at costs take executive the I offering. XXXX in of operations will to the can we serving to me we XXX,XXX X,XXX our you of automation, advisors, all-time the and the on while an record committee especially what updating this AssetMark. function update calls.Now AssetMark quarter earnings future. gives insights important look forward

line year-over-year, $XXX to results $XXX top bottom year-over-year. XX% was decision high achieve record total all-time last XX% us Our advisors of of financial net to allowed with all-time while quarter.From million, outsource by highlighted up pleased their AssetMark XX, best-ever as extremely was up are our a record revenue NPS a results. a standpoint, to revenue which we evidenced line million, These high

revenue powerful Specifically, on you update was we history.Next, up best year-over-year. and the the adjusted strategic XX% up management.Adjusted on share third $XX for million, XX% year our we a year-over-year. quarter This up earnings for basis million also execution. testament to were in are our margin the points Adjusted adjusted was up was EBITDA in million, our XX% Net a $X.XX XX.X% marks the quarterly expense quarter an $XX quarter. diversified XX I to mix was give net $XX EBITDA the while per income year-over-year, of year-over-year. straight and was record sixth quarter, disciplined EBITDA, excellent, third want well for and record-setting income company's track feel Results

their focused, important Adhesion of strategy I As first experienced they component new of meaning from our share growth the it strategy are. Adhesion new toolkit out of added managers. the had able quarter earlier, firms Adhesion, managers assets continues firms is to is to adviser XX% enhancing of XX every quarters RIA firms. their alliance stated added X note existing growth. strategic make of year. with where their to million double-digit a the meet strong is with adding advisors we firms is and decision while in goals, total pilot of on of new Dashboard. Adhesion seeing focus third first API their and their mind.Moving strategic X, the In X expanding was significant TaxAlpha, Wealth adhesion models advance XXX% year-to-date growth around quarter, while to specifically building platform X with XX% of another platform, and Adhesion wallet that adviser on made our through RIA to the bringing to Slide $XXX new

look RIA to during in sharing Slide We future their gives continued calls.Turning are X. and excited advantage Adhesion forward market about the earnings that to us the progress

our component The second growth holistic advisors our a differentiated deliver is and clients. to strategy to their of experience

want exciting us to that news further some This channel. quarter, I bank's will penetrate share the trust allow to

ecosystem has Cheetah, evolving $X empower remained will to of onboarding partnership their integrated, of addressable We excited end AssetMark's model penetrate announce pleased from Cheetah the of provide let could this is are market. we trust will firm's accounting integral with trust start standards. I seeing represents a better and AssetMark company, plan in system technology a highlight $XX marketplace.Not get context. Together, XXXX. the solutions into be second service competition We wealth wirehouse trust who million banks banks with services upfront strategy. plus are wallet end Trust level a RIAs needs the $XX accounting management million entered that of how assets long-term Bank to Cheetah advisors investment by becoming wealth invest a a and advisors full an and half in Today, part of integral and It an and have between cloud-based about solution Accutech channel investment serve premier, modern to opportunity, allow the forecast accounting and am officers we XXXX.To anymore, raising to First, the share and potential the of accounting elusive and banks and clients, for the their wealth expect and an to to trust to total of billion clients serve their partnership competing some in continued capabilities. platform a clients. that client are $XXX to billion regional built not of more incremental opportunity. growth better the management me increased the Banks wealth trust offer capital as management expansion well-integrated

investors planning a enable at financial that most unlock has is we and their improve This investors.Let's to a a advisors law includes growth of makes tax at month, investment from Tax and their management to -- launched financial Last tax rebalances tax TMS XXX straightforward, existing transition tax TMS, strategy clients in may tax advisors Slide Nearly management an comprehensive AssetMark's activities. of service wealth tax and journey. returns worth The high X. proactive prominent and AssetMark. advisors benefits of and by step studies tax-efficient looking Services, direct or third more activity.The enables over considerations efficient process select seamless of net our a for of personalized investment half new show new component tax advisors. to advisors, a for strategy that for is play group management into Tax from soft serve efficiencies assets to turn service user-friendly are Management strategy, for X%. client support harvesting, clients after-tax role and ongoing efficient key every a tax-efficient their

allows basis points XX increased provide AUM wellness our TMS to year. AssetMark, financial additional revenue of on us offering fee with and For enrolled amplify opportunity per

turn XXXX.Let's X early a We expect out their advisors all component growth fourth to our business. of national the our in attention of roll to strategy scale to our Slide to and launch advisors help grow and

have has been to adopted offering. year on highlight the Today, programs the AssetMark's some quarter, I This I and adoption.First competitive of consulting client provide our had AssetMark. is I provide to on to differentiator update which Since of oversee is is update we to group, our want function by our rolled our close and it success consulting last advisors, out it for Previously marketing leading a advantage. business XXX an over over believe XXX% goal. an want that a privilege truly business launch,

this is consulting. AssetMark's investment Second

$X over has XX growth. results by that key accelerate been Investment business have been us commitment. consulting one of pleased programs advisors extremely billion the program has is as here will help of the with leveraged We over leveraged organic our with -- our total

Lastly, AdvisorLink.

as ] am on wealth and space to saw announced is with over platform.Turning back. transactions. and access requested [ of to a management, a key what X. such is market advisors the our quarter leveraging have highly bouncing are in to set our have deals we committed The seeing follow-on I XXX is interest the majority to position. as our We effects I are and provide number component on model. of growth RI consolidation wealth sectors pursue adjacent business grow some we the as past sectors And business. strategic and up in Activity This strategy AssetMark. final want of color buyers seeing to component Slide tech our in to M&A the of M&A who CEO,

our and a powder increased interest have position encouraged partner. M&A debt, a seeking be in strong We're sheet We dry low successful a which by also the of strategic balance from warming and great us are many on peers. very businesses differentiates with to capitalize from significant market.We

value the significant business deep and us. Our their distribution by resonating buyers. They resources story we see see to technology next potential table. level our to bring Sellers opportunity to in with the capabilities, the market-leading is with take footprint, additive partnering corporate

the balance planning advisors We are our interest this also our great much use making and relationship area position creative a to in with to are help XXXX excited and acquisitions on We achieve some take we deep to our developing third crucial be our and are Overall, deepen of growth. to opportunity advisors. ways beginning and long-term sheet to see acquirer with about an results call.I I succession in right the on outlook will out Gary quarter call priorities will an the now turn dive the be the to at a to over of laid us through outlook. the provide

Gary Zyla

good role. call. those new afternoon and an Thank you, to here, It's on truly Michael, your be the to honor on and congratulations

the was quarter another mentioned, record AssetMark. quarter As for Michael third

During the provide platform XX% quarter XX, platform update Slide XXXX assets results an highlight slightly as then X.X%. increased $XX.X my a negative and remarks net quarterly by to to today, outlook.Turning flows impact, for net were of of annualized third beginning is the our partially billion. our I flows Quarter-over-quarter, of assets to $X.X down, year-over-year Year-to-date, billion, billion. will percentage by of our period offset net market fees $X.X assets quarter driven

there.Turning advisors we Michael advisors strategy growth flows dynamics, getting to committed we in plus current are added it, quarter. a Advisor quarter to to third Given back NPAs net our the about no market We organic mistake are producing or new get Metrics. XXX that have about -- XX% pleased to our and make said, as

last the third quarter, pleased yet Through this from NPAs of should are to We these the XX% NPAs is year's up NPAs than that year year. production NPA vintages. than past. status much NPAs lead in the in first rate down them higher previous compared has to X.X% to as quality year-to-date is at faster the been are improvement This from getting engaged over a production it year-over-year,

our just across on focused Premier close to are finished existing with We advisors. XXX advisors continuing meeting approximately Advisor attending quarter XX stay to our locations. third We

advisors, focused below third new a quarter. advisors, with impact advisors wallet third quarter both Slide and engaged positively share was the which existing X,XXX total took The adds. are which new threshold advisors winning platform show count. of $X in million slips.On from of XX, on engaged future though decline adviser was quarter We engaged X,XXX our We the second we the quarter-over-quarter can market organic engaged appreciation, down result of asset advisors offset XX the and XX by ended adviser

our is account assets, management advisors XX% it our number key of financials. for its XX% using up engaged the of focus our growth of and engaged all drive platform for and as advisors Our of platform crucial advisors and further to business make a growing

the while To more size achieve this, we will double of need focused convert end mentioned, which to is Michael advisors the crucial by to As at also more of also to rate engaged to our we get NPAs engaged platform. getting engaged advisors a the engage increasing are XXXX, on the speed X,XXX company. status, stats.M&A non-engaged which to and of part advisors we adding

households to are In number our number year-over-year asset up the million. Slide and we not let's to in asset-based, revenue, platform. is third addition measure households to record growth, of discuss a this to count, $XXX the $XXX,XXX.Now which of level is The is way XX% which quarter's turn adviser XX

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

components income $XXX robust XXXX, up All the spread details XX% record our XXX% up XX% our [ net X year-over-year year-over-year XX revenue walk. million, revenue respectively.Slide ] other with was our revenue of of and increased and year-over-year. third net For quarter a

offset billion Asset-based that for to were assets, revenue was an headwinds basis $X.X by for the fee revenue partially can approximately year-over-year. increases These incremental increase from in of to Wealth. expectations; and to million up be $X.X quarter expenses revenue million million $XX.X this attributed improvement X points. million $XX.X an in a billable Adhesion driven our our expense or to of X addition securities-backed asset-based compression line increase points. revenue XXX $X.X total program, which asset-based is SBLOC, shift yield credit asset-based basis XX basis relatively expense.Spread was due year-over-year, our higher second, SG&A from from up to basis points to Of with line in of point, XXX an yield, by in contributed

from exchange tailwinds. points. for basis Voyant revenue up Excluding revenue quarter contribution the SBLOC, foreign from and XX% yield was approximately Subscription in by XXX net year-over-year, the growth driven software was

on discuss higher Lastly, our by other let's corporate interest earned increased largely year-over-year million income driven income $X.X expenses. cash.Now

Turning increased XX, and Quarterly driven total increased adjusted $X.X to or driven which from expenses SG&A. year-over-year of were X the we to third other increased sorry, employee preparation compensation both million of Employee compensation acquisition driven -- audit back and I'll run XX% $XX.X increased items. total headcount XX% $X.X million, $X.X or the by increased by costs, of year-over-year $XXX audit the comprised is preparation Adhesion. our expenses to in operating of SG&A the fees.Now added million is quickly XX% million through In professional year-over-year, year-over-year, the Adhesion, an quarter, Slide XX increased pre-tax, SG&A which adjustments of XX% addition quarter. million. increases up of for XX% by a costs, I'm

quarter First the per non-cash $X.X million of approximately compensation. and in million quarter XXXX. between share-based $X in anticipate and We million next $X.X $X.X million half first

for earnings the million costs; to let's and $X.X discuss XX integration amortization.Now acquisition-related of reorganization primarily $X.X quarter. to is turn related and our million adjustment lastly, to Second Slide

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

year-over-year a straight on share. $XX.X is reported EBITDA This is income our basis also income is to million, or disciplined net and a flexibility base. per was share based XX.X%.Our growing to adjusted margin up $X.XX a of quarter count XX million XX.X EBITDA third quarter management $XX record record the Michael a testament the record for million. As was points expense on diluted revenue of also adjusted sixth while the net the Adjusted diversification of quarter and mentioned, and record record, was this our

at Slide Our the items. X adjusted balance XX%, walk year on full the please highlight net I further estimated look is sheet. for color, tax reported income rate would let's third for XX.Now see quarter the

in a to million million In continue robust generating discuss $XX generated do scale capital In job which quarter, service. long-term great quarter, and was new X the revenue. activities.Now from we capital cash. First, operating In increase capabilities, creating cash third cash our X.X% we spend reflect $XXX expenditures, first we million in at have activities. over generated the the a third total the $XX.X our operating from year, let's primarily of quarters investments improving of or of

run we to mentioned increase Slide and As to to some and next scalability that. that projects.Turning on commentary to revenue revenue Michael earlier, XX% that to XX, I year invest provide planning how would our look to results total and we financial of to growth like continues more in are the we spread-based meaningful our on X% can maintain make impact rate CapEx

and and interest the Spread-based a percentage to ability market. cash result percentage X.X%. non-discretionary work held third discuss total trajectory the to at of been rates, first spread function strategists ATC cash let's while has ICD assets on revenue our balances.In money of X.X% a equity Company, more investors and Our at the AssetMark at fixed-income or put amount a more in of ATC platform of ATC. but and Trust the is cash by owning earn quarter, the direct is as was cash of Cash downward or was as assets custodian

quarter. rates in of increases high to growth cash during the attention will the the assets income, percentage the forever. once ICD return of expect and to rate Fed for rates agency These our more spread highly are our not beneficial stay historical levels interest of We increased rates, to X.X%.Turning

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

cash in term X.X with As of growth of rate X.XX%. ATC is average XX% at fixed September of rate maturity and an XX, of a years a

cash close now into our fixed-rate of target to We which XX% at ATC currently have threshold. is term

on XXXX on term to you will We to deployment our into fixed-rate to turn of revised calls.Finally, continue future the XX Slide update discuss cash outlook. earnings let's

will is flows. quarter asset to assets be Year-to-date market X% the third by addition net and impact quarter our in platform platform platform Our of guidance were the year growth XX%. full through up fourth impacted asset

previous We We revenue.Turning our to this the net of a on platform expenses, markets for will effect fourth on -- result and XX%. XX% as third of outlook to the are -- $X.X year expense our XX%. revising guidance in launched down from revenue revenue to billion XX% growth maintaining of an quarter, are is have the to -- our XX% this we adverse quarter assets our

expense adjusted the so we will outpace which believe maintaining to As the is this of at us the meaningfully XXXX. continue our given result the we growth.We XXXX, by revenue EBITDA in reminder, EBITDA future in XX-plus increase growth level in fantastic X/X a that business of maintaining to adjusted our the expense XX% percent of grew fact invest are not Adhesion. is of growth while discipline, addition about This allows of guidance

XXX Lastly, for year. expansion we adjusted the basis of targeting margin points are EBITDA

history.With are pleased best I to company's are our remarks. our financial for concluding about in and over will this results hand -- that, We year extremely the our for year the by his track Michael on

Michael Kim

our investors you investors. relationships Thank on call to call now look conference.This prepared concludes in US to road operator to remarks. always the all you, the I attending with you thank building turn of will Q&A. Sachs on Goldman and with Gary early everyone today. Services to line, to and Taylor the begin will I a the December on potential our open the and with back the conversation Gary, forward I'm I and be Financial

Operator

with from is of first Our the Instructions] Cho line question JPMorgan. Michael [Operator

Y. Cho

my your comments, just question, Gary, advisors. and to want Michael engaged on touch, around I first

engaged X,XXX And course to laid think look X just over next went about to don't know, that of the from So I kind about in X,XXX I X,XXX we're if the history, add, going you couple today over acceleration of driven toolkit and so you're really to and I'm trying it how the And capabilities years.And develop by understand is AssetMark's much today M&A things this mentioned just that think in as of how well. of to Michael, advisors hoping -- to out X much of future. I is years. I you from

I'm what just better in trying so ultimately, profile growth much So to ahead? accelerated understand this gives confidence you looking

Michael Kim

Michael, it's Yes. here. Kim started, don't here well. details in add and get Gary I Hey, Why Michael as the conversation additional please

engaged effectively So the during a us the over Michael, will advisors platform we advisors, right. engaged our march engaged remarks, mean, absolutely as the top the focus XXXX. mentioned assets. by double represent that towards I of prepared size the firm help for you're they XX% here. is of advisors, And X,XXX our top, the I as company And take

engaged I X driving how key stress the Michael -- growth the number we enough question, your that and X,XXX we terms of about the engaged so there's the to And cannot advisors on advisors.And how really accelerating areas the engaged focused the we part to of of when are get advisors. think in importance of

First non-engaged is we our call advisors. reengaging what

them area And million. to have represents have So clients a for towards time, alluded advisors time, this one around their focused and the work we the new this of the to more advisors a or alone. with not than X,XXX Gary over this At their NPAs quality reengage advisors, focused or engaged already NPAs. NPAs at value but accelerate group the is same only a an non-engaged board to X Gary opportunity these the of advisors opportunity we extremely outsourcing share with opportunity are we is year tremendous really from our to on Michael, from that production on than as journey believe XX% are actually -- us about decision AssetMark.And well, our have we're producing as there's less And status.We improved -- we represents prior that production. full believe made seeing huge group really this second AssetMark. them so that we higher on are of the NPA today, earlier to second platform. And talked quantity, of the alluded we for those are coming we really about and with

seeing to of we're we M&A. third us on engaged get as that drive as acquisitions, really focus our that and to count. We the momentum really us signs focus then advisors.And help to so will opportunities continue quality And area want improved around the we engaged is continue we X,XXX sure make M&A as well opportunities towards X,XXX believe consolidation help capability our advisor that on the to

details with Gary, So as see if to those are share can you Michael well. sort I'd on. other focused you of have that the X key we're areas love that here

Gary Zyla

and onboarded, lifecycle of the projects this but listening you share of them lifecycle to the multiple those is as like the well with focused us. said, And a as And Michael advisors on their in the under the both, very the producing are of way how group. our when [ Michael, well, in improving large relationship with we so as us advisors And age then to them, holistic starts one approach initiative onboarding And about ] process. advisor introduction there that we once methods it processes increase are we with numerous the and of talk have help call each with wallet engage them. are steps new they

Y. Cho

of half and few about switch the little bit the in any a bit just has on where's just the through think for operated a that question, partnership and the focus accelerated margin the CapEx or years? last period AssetMark the next gears of investment Cheetah's And the well. want For expansion And a I so? I in framework the We then just does increase investment the talked forward. mentioned under going over my CapEx terms year merit revisit But you to to as second heightened side. curious, level

Michael Kim

to at taking initiatives of then And of are the have amount during to right that X really rate return CapEx prepared to our mentioned really One get respect the so really sure about current capital. the really to look on budget to accelerate the that primary of X% revenue an actually of a sort with I actually we one X% that is of top the we and that's as of capital investments. make to X%.And goals drive very close increasing deploy. run from And there's remarks be will the in we And we about the the deployment to growth. capital XX% opportunity increase

the here it to help Trust into with are the capital excited us expand alluded we partnership. does in really You about footprint the channel, Cheetah. bring trust but very Bank additional us allow partnership of Not with as only some to channel Michael, Cheetah our our to to core $X $XX million million relationship well. capabilities the of investment even this that will this

group, focus automation, the And our especially that's will capital for in growth.The additional a drive to is objective other as I really capital to of And key us. mentioned, expense investment example drive -- service so and great operations scalability. is help a where our side continue

costs have pedal the to offering. taking We of on while, already of never off world-class service remove up annual to $XX the our million opportunity an year, per course, foot

our as through scale as earlier. have both the capital we we discussed investments drive that enhancing really well an so opportunity to And growth

Gary Zyla

said, about would know come that point. is, service. for last world-class. of which last like We us advisors quarter, to echo just score No. XX, our NPS We talked Michael I

the to continue engaged to all And as so amazing Michael, question the to -- are to first grow make, be the that able level same from future. to And the us head into want we them have scalably we allow advisors to that grow we now. of of service investments offer [indiscernible]

Operator

Our from Schmitt with Jeff is William next Blair. question

Jeffrey Schmitt

fixed you're too. near now, yield of Looking your at threshold net it's at rate the and then XX% X% mix,

that know considering increasing fixed are you're if how there, increasing go potentially you maintain want you curious just So of flexibility thinking you but there? allocations. to and high could I rate

Gary Zyla

managing we're have with first client. in but program the ICD obviously, concern not -- ensure for that obviously every is cash So to our that liquidity the we

in so that why out started that's XX% threshold. And we've

the little evaluated and could duration higher if that really do years we've and our extend that.You're is approaching the to we rate also X% allow have bit rates go us We higher. right that could overall that about. We pricing past both a the talked going out X.X cap have we

will And overall as through cash growth our at our so custodian. that just we growth, growth look offering, be well other alternatives, as high-yield further cash as for our

Jeffrey Schmitt

that? level. up cash are that's these X.X%. think operational cash And seeing transactional or of I to savings. sort slowing? you we're earlier needs? I to around go then this you mean, speak look stabilizing you would be percentage Because sorting think I $X.X client to of Do balances had billion high-yield the Could mentioned presume you Gary, that I that think X sort approaching

So maybe if you could speak that. to

Gary Zyla

quarters.Now, does of program, get is It non-discretionary can which We the we Yes, But X.X%, over Michael, yes, give and is we out I our strategists program.I sorting lower historically, remarks, leave the it been that next now, well. is money when because declined we year. putting think more little of less. about item little onto than couple actually at Jeff, non-discretionary this our cash, into to and the It primarily we're because I but this a the you kind expect in how you and believe to platform rate back work ICD less long-term money impact at the X.X%. looking your this cash. is it into that in do impacts and think it perspective account, as coming start as impacts past noted cash the in that rather believe I'll there or when least has flows issue a works, that so, it's our at numbers, are our regarding prepared to bit when bank ICD think just planning overall a that its bit it this

Michael Kim

point would other related add is only the that Gary, to sorting. I Yes, cash

heard their kind platform. just really what search is been solutions the yield set terms on clients. of We delighted they've in with from for have of additional definitely really for curated advisors of And their our around

be recently a ladder and/or money U.S. and strategies we've So whether cash, treasury high-yield launched as short-term it pilot well. market our

needs services products relates that as towards so and their those gravitating to of the clients the our are are it the some of really And meet advisors yield. to

Operator

question Patrick is Raymond Our next James. from with O'Shaughnessy

Patrick O'Shaughnessy

there from engaged to goals, step up terms M&A on advisors, get X,XXX follow is in to Maybe cetera? XXXX up from on expected question your contribution et market appreciation it the how you by non-engaged advisor get earlier to of quantify any way to the or doubling

Gary Zyla

we're engaged let's knows about aspire it's Yes, And out, we're rate. to Patrick, right? who you mid-teens let rough how that. to going those a a advisors to We new to year. XXX at status play But right? currently give it double attracting, producing call me math, XXX And converting exactly

you're said, we XXX could that, in we're over NPA if let's out XXX rough so advisors There the fills going to can from M&A X-year great then, XXX XX% home group.And range, rate that the increase believe call to be as each at to so about to talking and somewhere the part. math, Michael there. can the year.Then large from XXX advisors to that's are advisors, that -- between to engaged When And of done it, our for if to XXX period non-engaged that, you plans range. add look you're play consolidation that non-engaged is you We going that X,XXX going advisors, X,XXX advisors that, capture XX% We've you're going look a a engaged double group again, hole. -- our before. rough in

But Michael numbers sort little you breaking could that paradigm those of or a out. higher the lower. out laid any of are be that's yes, from so And how

Michael Kim

here. kind that for the of just Michael that point focus of key the TAMs advisors. to we've access ensure that of can platforms have It's maybe the subscale focused Patrick. number scaled Hey, the to yield really M&A, to we consolidation one other on And underscore about is opportunities on and really, last areas been that

And so we towards absolutely do X,XXX believe that acquisitions is going to be advisors. a meaningful march part engaged of our

Patrick O'Shaughnessy

positive And conversion was in Schwab impact RIA the or Ameritrade. and negative? this some quarter space there either Was news then with AssetMark, obviously, the TD on any big past

Michael Kim

do any Yeah, we to leading were really only to I but course, the free for as feel also one up add conversion, Ameritrade thrilled conversion really options.We've a that, and as we Pershing, we just a had the completed. Fidelity, context, maybe main And Schwab, open details. and the platform, get Why of And relationship custodial not planning offer that conversion large prior But Day and with TD have quite months actually please to the start and AssetMark RIA by Ameritrade. the don't Patrick. for months. one of custodians TD architecture our and was this very custodian, we conversion hand, Trust Labor to Gary, been of given nature way on of months

Nothing RIA some hand, has TDA the other of very with work we this we as the new AssetMark our where -- post-conversion the as conversion. And opportunities as be it well.And teams field. level that Patrick, that Adhesion really Schwab operational well the Whether been related the the to we've through of through in sort Adhesion What to out encountered major for really are our is kinks. for On and up working closely to details. the of the number of so as to bubbled have interesting, it's work partners folks at concern. folks both our going Schwab post-conversion been is is AssetMark

importance sort that in the that Given really pride experience. having kind of that to the has of platform that really is we ease-of-use do of easiest the the course, business conversion, of lot reinstalled and of with.And raised a take awareness

to conversion. a And as has number result that us opportunities actually new a led so RIA TDA to of Schwab of this

additional during working the through related went business the on opportunities conversion the kinks, front development well. operational calls. but the future earnings conversion. we'll We're newfound obviously, operational of provide front, sort So on post-conversion But some many updates to

Operator

is next the with of Our from question Jefferies. Fannon line Dan

Daniel Fannon

Michael through organic to been trying to you there bulk some going M&A, of what's been going Wanted follow advisors in here the up or challenge a engaged since we're And to a to or to haven't the growth recent the story to then been returning if also of why why bridge Maybe you've come there. quarters XX%. and more percentage on organic doubling as of the that's reaccelerate. still large doubling side context

Michael Kim

And started and get chime why please the well. conversation in don't I Gary, here as

really XX% getting as initiatives. do on. when advisors, new the as And to around plus course product there's mean, the it I in as that platform we've extremely share the over you're been store and one both think new from wallet absolutely our focus share commitment growth level, of we growth is of about of So sales, the focused right. well and organic are years.Yes, is new it drive producing enhancements. both existing about One key that same-store really our top when top, advisors, Dan, we wallet producing areas organic sales advisors and of to about and we to X able definitely garner think the growth how probably back is our we growth, the our

area believe it our sort like absolutely tax example. we asset our clients incremental really year great for Adhesion services, an net us kind are ability new unlock growth that is opportunities talking the million our advisors points to will within to the their are growing new focus. advisors mean, and this TMS, assets momentum continued pipeline of the these RIA ability our Not to for looks yield types over Adhesion. us, $XXX acquire whether only but reference for revenue around just going all like platform of building TMS capabilities additional of to to that alone that up advisors, advisors management I alluded of will yield heard attract our organic been You of leveraging but existing it service to the as is about.Second basis these be we've new XX clients We we producing And a opportunities services. course, of TMS. advisors new also great. using of from

we capital organic course, that drive not deployment, of we And that XX% to, the believe then examples accelerated plus -- of Adhesion talking that's help drive organic but rate. M&A towards as the growth XX% be part only about And is to Cheetah we've going our so key been of plus that to going growth. we partnerships absolutely a sort us absolutely like opportunities, that alluded believe

Gary Zyla

Dan. couple point to of wanted out I So things, a

trying XXX First, producing new yes, were what XXX -- I when was advisor growth, XXX to to the about somewhere, advisors from would from we our just let's around are talking I out come sort come going was of said engaged to lay existing. call

gap And for you so X,XXX. be quarters take to that if of should that X X/X [ have about together ] we those X

something don't talk producing advisor which advisors about statistic our in book, existing existing metrics as show know the from I about a we mean a heard come of lift from going is I that think from something say advisors growth as the enough key it don't book.Talking new majority always to production M&A. I well that the you majority mentioned come we of the I would book. is convey our I engaged so from because our growth that And we -- that. have The are operating to And existing our but

that at about increasing XX.X%. is cash should that improvement, months or that be it the was but on as that, in add for course, was of the wallet in and to key cash, have quarter real what we're to even Michael talking We we're finding and investing year initiatives solutions a terms already of we XX%.And over feel are number that more growth. time alluded going Last was great it taking about that XX.X%. but over to to folks to key year be Michael a so year, initiatives that, really component -- number share next of more of should in This over this and be what XX [indiscernible]

Daniel Fannon

years. that thinking the is cost in versus thinking $XX for follow-up, be given a growth then but couple the potentially in year time just see And where maybe from for you also you the yet removal you're in of we've I then And might expenses. know about formal to year what And that the as setup cost been haven't context you million about automation, just how think realized? guidance next last the base due the next period of for

Michael Kim

let additional get Gary response provide details. the me started. Dan, I'll again look to to Yes, And

that about know, to think of of kind key X% going allocation. we of you increase in revenue, CapEx So XX% to when automation to is part the spend a be

that sure committed so operational to of really savings we're that on all experience And we those we're that service for experience, the is course, the we've focused stress our continuing to That to annual time, to automate the what service this as best processes, sure want make of those as much just same to want advisors while hallmark of we transactions, possible that at of thinking Key approximately of AssetMark the make experience.Part about over costs. so, take we service continuing enough thing that realized want about want world-class scenes, is we're the to continue what automation, receive though through I are of they $XX be is that that the the able possible. to best implement to X to that deliver automation next that years out million sure make type -- to. of we ensure behind but is of receive that expense the and Gary? we or

Gary Zyla

it right, just certainly to But and you scalability, Michael XXXX call, materially next of was you acquisitions, talking And past our made.I how question, your for next costs digits about thoughts, grown our which single our asked, we'll to expenses driven near would I address operating in how few somewhere, long-term some does about just the term material X part at years into expect And by over of Dan, course, give I'm look the have more to year. sure. a second outlook I think aspirations into our our talk XXXX? some we investments really think the partly grow

making in making also that's -- need pausing, sure not are to going the a are that while focus are We pausing real word. to wrong we we invest on in, what have investing we sure that

growth. expense that about thoughtful very being are We

in the side, we growing While at can those same spends long-term the investment our on capital that time, make.

Operator

Bensi question Michael with ] next from is Goldman Sachs. Our [

Unknown Analyst

is on for Michael Alex This Blostein.

a just It extent would your you obviously power and maybe the extent factor -- have, you you of follow-up some -- that guys more kind public what use, like spoke your But are can purchasing side. consolidation questions. And guys non-consolidation seeing what outlook to you that what as how to can opportunities of to a of focused would currency? capability-focused end, that extent are you you you stock but more So guys on you talk Obviously, you to you're stock consolidation term. the on of the on there? have maybe leverage -- the that M&A kind near M&A XXX sounds to about into

Michael Kim

Again, details I'll share Gary here. conversation additional get the will started, and

broader capital we those been. always when the focus. of remain has to opportunity our have as So same At think M&A our of the absolutely context do an we focus time, and about expand that the believe deployment, opportunities really and accelerated Consolidations under a core part Michael, it Michael, capabilities, you're right. I

on may examples, them that exist, the also partnerships firms, we looking we our other also to for about have -- there ahead opportunities the on grow of to extent our opportunities there's those as partnership leveraging well. -- growth, we talked balance And them believe believe based where, sort can go there new where, as And drive balance opportunities make lastly, to firms growth right Gary? front. that help are at growth.I us strategically help advisor investments. partner with their we're evaluating minority various leveraging to Again, out then our there's out that to are Cheetah, so, and better we connect opportunities leverage some sheet that synergies different ultimately there drive different to opportunities our we can partnership with with think and sheet, firms the we where earlier we capital, I

Gary Zyla

$XXX powder, in million, of year to the unused just or about the we we're million probably of Yes, stock Michael, to we look going a question bit over the end little credit something line $XXX an with have of at our $XXX way excess around your cash. dry and cash and excess million whatnot,

our going main And that's acquisitions. to for of probably capital almost so $XXX there. about source That's million be

way, in for due for and I more cash purchase stock it in of I as not used acquisition. have our a would but We one future, Voyant guess modest the that's think

Michael Kim

the well. also to as the team, on possible. is of Michael, officer other X the One of I senior ensure here we've as mention thing want part new with development team and deal that acquisition executives added that We're to other and our really officers we as also that best on overall corporate team the have just the opportunities, focused to a well. focused on integration implementation other the number integration here collaborating

are and the on the extremely So way, not capital right, excited right ecosystem. and you're opportunities the into right we them talking really deploying absolutely focused in only but identifying AssetMark

Unknown Analyst

rule of a in DOL time the light bit, gears kind in the kind just saw a it's maybe early know And I but days, of of you accounts, last guys the quick proposed to last proposal, obviously advisory into what recent DOL shifting as are we a follow-up, shift pre-trading here time. ground wondering around, hearing.

on be So might that guys do the anything you commentary have any around guys are hearing great. obviously on -- early that ground would but you front, you days,

Michael Kim

there belief advisors we like. of Michael, I know, so clarity, they sort folks, proposal and is Rule. of the the that different put in is all to that in at a interpretation. all industry, We is fiduciaries think regarding proposal has advisors -- rule. the of been looks version center we White best of House even their believe advisors.And sure DOL responsibilities so And of We've I their the wait-and-see new we But And regarding council support in if at newest client of terms for number active with what been in how in frankly, absolutely have large, with the of Fiduciary we clients. the everything fulfilling think obligation that with lot as the a I'm our think, to latest supporting the industry mode submitted is an consistent our to here. review that the interests the fiduciary version of conversations that there's absolutely are their not fiduciary a I the that welcome about the do. And

future DOL learn our we as on their clients proposal, well. and latest obviously, so, this our only about but here we'll more calls, update And the not earnings group as advisors

more And about look the finer to of we learning so forward proposal. that details

Operator

remarks. will [Technical turn now Difficulty] to Kim back question-and-answer closing session. call the Michael I for

Michael Kim

Well, good. have very thank you Okay, up everybody. seeing forward big we today. wrap engagement look soon. a and with support all your don't to that We you to very and all why Thanks, appreciate you we on joined road here of the us your

Operator

Goodbye.

AssetMark Financial (AMK) 6 Nov 232023 Q3 Earnings call transcript