Cash revenue helps AssetMark offset market losses for record quarter

While the choppy market performance dented total platform assets, rising interest rates have boosted the spread the TAMP earns on cash held by its proprietary custodian.

Turnkey asset management provider AssetMark continues to grow under CEO Natalie Wolfsen.

Though total platform assets have decreased $11.4 billion so far in 2022 due to markets, AssetMark still announced record quarterly revenue when it reported its Q2 results on Wednesday. Net revenue was up 21% year-over-year to $110.3 million.

Despite the choppy performance of the equity and fixed-income markets, rising interest rates have boosted the spread AssetMark earns on cash held by its proprietary custodian, Wolfsen said.

“That is something at AssetMark that we’ve planned for,” she told InvestmentNews. “We want this revenue diversification … it allows us to invest over the long term.”

The company is also focused on helping advisers work with clients worried about inflation, market volatility and a recession. “Great advisers, and great firms that serve advisers, are spending their time making sure clients have the information and context they have to make great decisions,” Wolfsen said.

Cash revenue and $1.4 billion in net flows helped offset AssetMark’s $10.1 billion of market losses in the second quarter. The company ended Q2 with a total of $82.1 billion of assets, 8,688 financial advisers and 220,172 households on its platform.

Charges related to AssetMark’s 2019 initial public offering and subsequent restructuring have also rolled off the books, helping boost some of the company’s bottom-line financials, Wolfsen said.

Wolfsen attributed AssetMark’s evolution from a traditional TAMP for independent broker-dealers into a full-service wealth management provider for all segments of the financial services industry as key to its ongoing growth. The June acquisition of Adhesion Wealth, a TAMP with $9.5 billion, expanded AssetMark’s presence in the registered investment adviser market, while the 2020 purchase of OBS Financial helped the TAMP grow in the bank trust channel.

Looking forward, AssetMark aims to enhance products and services around retirement, especially for small and midsize businesses. The company is currently strategizing how to help advisers better serve the SMB market and include retirement assets into the overall services they provide to investors.

Wolfsen wouldn’t rule out the company doing additional M&A in the near future.

“We’re absolutely always focused on finding either the right capabilities so we can enhance the offering we can deliver for advisers, or [increase] scale,” she said. “[M&A is] a big part of our growth strategy and something we’re working on every day.”