AssetMark posts record quarterly revenue, passes 8,700 advisors in Q1

April 29, 2022 4:52 PM

After a 2021 of new records, AssetMark kicked off 2022 by surpassing Q1 earnings estimates, setting a new revenue record and adding more advisors to the platform.

The Concord, California-based turnkey asset management program and outsourced investment technology firm saw year-over-year increases in client assets, net flows and total revenue as its advisor headcount climbed past 8,700.

In a prepared statement, CEO Natalie Wolfsen said AssetMark’s strong first quarter was a “testament to the value we provide our advisors and their clients.”

“Our latest outsourcing survey shows that advisors who outsource reported stronger client relationships, increased acquisition and retention of clients, and higher asset totals. For these reasons and more, we expect outsourcing growth to continue, and we are well positioned to capitalize on the trend,” Wolfsen said in a statement. “Year over year, we saw double-digit growth in key operational and financial metrics, and we will look to continue this momentum through 2022.”

To see the key takeaways from AssetMark’s earnings statements for financial advisors and other wealth management professionals, scroll down our slideshow. For coverage of the company’s earnings in the prior quarter, click here.

Advisors on the platform

The total number of advisors working with AssetMark rose by a net 52 representatives from last quarter to 8,701. The new total represents a year-over-year increase of 2.6%. The number defined by the firm as “engaged advisors” with at least $5 million across its platforms was 2,815, down 43 for the quarter but up 204, or 7.8%, year over year. More than 5,700 new households and 195 new producing advisors joined the AssetMark platform in the first quarter, pushing the total number of households to more than 215,000.

Platform assets

Client assets managed on AssetMark’s platform grew 15.1% year over year but dropped 2.9% quarter over quarter to $90.8 billion because of negative market impact net of fees of $4.8 billion, partially offset by quarterly net flows of $2.1 billion.

At $83.64 billion, assets from engaged advisors were up 16.8% compared to one year ago. Production lift, a measure of the annualized organic growth of the practices, was 18.7% in the first quarter, down from 24.6% in the fourth quarter of 2021. Assets under custody climbed by 20.7% year over year to $69.8 billion, but represented a drop from the $71.32 billion recorded at the end of the previous quarter.

The bottom line

AssetMark recorded net income for the quarter of $22.2 million, or 30 cents per share. Adjusted net income for the quarter was $28.8 million, or $0.39 per share, on record total revenue of $148.3 million. That was better than Zacks Equity Research consensus estimates of 38 cents per share. Adjusted EBITDA for the quarter was $44.5 million, or 30% of total revenue, and year-to-date annualized net flows as a percentage of beginning-of-year platform assets were 9.1%.

Expenses on the rise

AssetMark officials said operating expenses were up 28.2% year over year, driven by a 47.5% increase in selling, general and administrative expenses. The company also posted a 17.5% increase in employee compensation compared to the previous year. The increase in employee compensation is driven by increased volume, merit increases and headcount. The increase in SG&A is primarily driven by increased travel and events, including the return of in-person events for AssetMark.

Back in the office

During an earnings call with analysts, Wolfsen celebrated a hybrid return to the office in Q1 that included Gold Forum, AssetMark’s largest advisor event. She said the gathering attracted close to 500 advisors representing about a third of AssetMark’s platform assets. “Our entire company is energized by seeing colleagues, advisors and partners in-person,” she said.