AssetMark planners lead in Q1 2023 earnings as advisor headcounts swell

AssetMark planners lead the way in earnings as advisor headcounts swell past 9,300

May 4, 2023 10:20 AM

AssetMark financial advisors are not only growing in headcount. They're also bringing even more cash into the Concord, California-based turnkey asset management program and outsourced investment technology firm.

While the firm saw its first quarter 2023 net income drop 22.5% to $17.2 million from the $22.2 million it brought in one year before, overall platform assets and platform assets from engaged advisors were up year over year.

In a prepared statement released alongside the financials on May 3, CEO Natalie Wolfsen said the firm also notched another record quarter despite tough market conditions, calling it a further demonstration of AssetMark's "strategic focus and commitment to flawless execution."

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She added that the firm's record results include total revenue of $177 million and adjusted EBITDA of $59 million.

"I am extremely proud of our results and, as I look ahead, I am encouraged by the early trends we are seeing," Wolfsen said. "Specifically, first quarter new producing advisors were the highest since the second quarter of 2022, and first quarter production or money onto the platform is at the highest level since the fourth quarter of 2021.

"Our strategy is designed to help our advisors grow and scale, which will in turn help AssetMark grow and scale."

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

Advisors on the platform

The total number of advisors working with AssetMark rose by a net 618 representatives to 9,319 by the end of Q1 2023. The new total represents a year-over-year increase of 7.1%. The number defined by the firm as "engaged advisors" with at least $5 million across its platforms was 2,976, up 5.7%, or 161 advisors, year over year. More than 2,700 new households and 166 new producing advisors joined the AssetMark platform in the first quarter, pushing the total number of households to 243,775 by the period's end.

Platform assets

Assets managed on AssetMark's platform rose 5.9% year over year to $96.2 billion. Quarter over quarter, platform assets were up 5.2% due to market impact net of fees of $3.1 billion and quarterly net flows of $1.6 billion.

At $88.6 billion, assets from engaged advisors were up 5.9% from $83.6 billion one year ago. Production lift, a measure of the annualized organic growth of the practices, was 18.8% in the first quarter, nearly flat from 18.7% in the first quarter of 2021. Assets under custody saw a small bump year over year to $70 billion from the $69.8 billion recorded at the end of the previous quarter.

Firm leaders said the production lift results are a sign that AssetMark advisors "continued to grow organically and increase wallet share on our platform."

The bottom line

AssetMark recorded net income for the quarter of $17.2 million, or 23 cents per share. Adjusted net income for the quarter was $39.7 million, or $0.53 per share, on total revenue of $176.6 million.

Adjusted EBITDA for the quarter was $58.8 million, or 33.3% of total revenue, and year-to-date annualized net flows as a percentage of beginning-of-year platform assets were 7.1%.

The results fell shy of some Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was for earnings of 54 cents per share. The posted revenue of $176.6 million also missed analysts expectations of $177.4 million.

AssetMark Financial shares have increased 25% since the beginning of the year.