New AssetMark CEO says TAMP on track for best year in company history, aims to double size in 3 years

November 7, 2023 3:32 PM

Despite major shifts in its C-suite during the third quarter of 2023, AssetMark's quarterly financials tell a familar story of record setting and growing advisor headcounts.

The firm saw its third quarter 2023 net income climb 27.6% to $38.4 million from the $30.1 million it brought in one year before. Overall platform assets, net flows and assets from engaged advisors were also up year over year.

In a prepared statement released alongside the financials on Nov. 6, new AssetMark CEO Michael Kim said by adding to its tally of consecutive record-setting quarters, the company is now cruising to an all-timer.

"The third quarter was another record quarter for AssetMark, highlighted by all-time highs across many financial and operating metrics. We realized our sixth straight quarter of record adjusted EBITDA, while also expanding margins 90 bps year-over-year to a record 34.9%. Simply put, the results for the third quarter were excellent, and we feel we are well on track for the best year in our company's history," Kim said. "We are focused on continued execution of our strategy and three long-term priorities: hyper growth, accelerated capital deployment and enhanced scalability, which we believe will create continued value for our advisors, their clients, and our shareholders."

The quarter was also one of significant changes for the California TAMP. September 2023 began with longtime AssetMark leader Natalie Wolfsen exiting to take over as CEO of Orion Advisor Solutions in the wake of Eric Clarke's retirement announcement.

Kim, a 13-year firm veteran with more than 25 years of collective industry experience, was selected as Wolfsen's successor. He most recently served as AssetMark president and chief client officer. Prior to joining AssetMark, Kim was an executive at Fidelity Investments, overseeing RIA sales management, relationship management and practice management.

To see the key takeaways from AssetMark's earnings statements for financial advisors and other wealth management professionals, scroll down our slideshow. And check out the company's Q1 and Q2 earnings by clicking here and here.

Advisors on the platform

The total number of advisors working with AssetMark rose by a net 652 representatives to 9,354 by the end of Q3 2023. The new total represents a year-over-year increase of 7.5%. The number defined by the firm as "engaged advisors" with at least $5 million across its platforms was 2,995, up 15.1%, or 394 advisors, year over year. More than 3,400 new households and 158 new producing advisors joined the AssetMark platform in the third quarter, pushing the total number of households to 251,424 by the period's end.

Kim also made it clear that adding more advisors to the AssetMark family is one of his top priorities as he takes the lead, stating that accelerating the growth of the business "starts with growing net flows and the number of engaged advisors on our platform."

"We are committed to return to 10% organic growth and believe that our recent acquisitions, platform enhancements and compelling outsourced offering positions us well to get there. We are committed to getting to 5,000 engaged advisors by end of 2026," Kim said during Monday earning's call, according to a Seeking Alpha transcript. "Let me share with you why this is so important. As you know, engaged advisors make up north of 90% of our platform assets. These advisors grow faster, have stickier assets and enjoy more of the benefits of outsourcing.

"If we grow to 5,000 engaged advisors, we'd double the size of the company. Let me repeat that. Over the next three years, we can double the size of AssetMark."

Platform assets

Assets managed on AssetMark's platform rose 25.5% year over year to $99.6 billion. Quarter over quarter, platform assets were down 1.2%.

At $91.9 billion, assets from engaged advisors were up 27.3% from $72.2 billion one year ago. Production lift, a measure of the annualized organic growth of the practices, was 18.7% in the third quarter, up from 14.9% in the third quarter of 2022. Assets under custody also saw a bump year over year to $73.4 billion from the $61.5 billion recorded at the end of the previous quarter.

The bottom line

AssetMark recorded net income for the quarter of $38.4 million, or 52 cents per share. Adjusted net income for the quarter was $46 million, or 62 cents per share, on total revenue of $190.5 million.

Adjusted EBITDA for the quarter was $66.5 million, or 34.9% of total revenue, and year-to-date annualized net flows as a percentage of beginning-of-year platform assets were 7.1%.

The results surpassed some Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was for earnings of 59 cents per share. The posted revenue of $190.5 million also topped analysts' expectations of $189.7 million.

AssetMark Financial shares have increased 5% since the beginning of the year, and have experienced a climb of 2% over the past 12 months.