AssetMark overcomes market losses to post record revenue in 2022

Not even a historically challenging market last year could slow the rapid growth at AssetMark Financial Holdings Inc.

The turnkey asset management and technology provider brought in record revenue of $456 million in 2022, up 20% year-over-year and nearly 50% higher than in 2019, when the company went public. Net flows and the acquisition of Adhesion Wealth, a deal which AssetMark announced in June and closed in December, helped offset $14.5 billion of platform assets lost as a result of market performance.

The company ended the year with $91.5 billion in total platform assets, a decrease of $2 billion, or 2.2%, from the end of 2021.

Even after buying Adhesion for $46 million, AssetMark has about $450 million in purchasing power and could be active in the market in 2023, CEO Natalie Wolfsen said on a call to discuss the company’s earnings.

“We are also doing a great job of increasing our purchasing power each quarter because of our strong cash generation,” Wolfsen said. “As always, we are proactively looking at all opportunities that we feel will benefit our advisers and their clients.”

When asked for specifics, Wolfsen said the company is looking into invest in creating a shared client experience between AssetMark and Adhesion, which could expand the company’s total addressable market by 60%. AssetMark is also looking to extend its capabilities in tax management and fixed income, as well as invest in improved productivity for advisors and client experience around things like account opening.

At the end of the year, AssetMark counted 9,200 financial advisors and more than 241,000 households on the platform. That’s an increase of 1,400 advisors and 85,000 households since the company’s 2019 initial public offering.

“We’re focused on our strategy, and we’re consistently investing in the growth and success of the advisors that use our platform and the clients that they serve, and that’s what’s yielding these results,“ Wolfsen told InvestmentNews.  

Beyond the Adhesion acquisition, Wolfsen attributed the company’s ongoing success to some of the programs it offered advisors to help them navigate surging inflation, increasing Federal Reserve interest rates, historic losses in bonds and high volatility in equities. For example, AssetMark launched a “market volatility toolkit” that has attracted 1,800 unique users, and in October it offered three new market volatility investments that have attracted 900 proposals totaling $82 million.  

AssetMark also reported continued growth in Voyant, the financial planning software it acquired in 2021 for $145 million to provide holistic wealth management to advisors, though primarily outside of the U.S. market. Advisor licenses of the software are up 54% year-over-year, including a deal with TD Bank in the fourth quarter that added 5,000 licenses in Canada.

Looking forward, the company plans to expand its ability to serve the registered investment advisor market with Adhesion, expand its fixed-income and separately managed account products, and focus on advisor benefits and service capabilities, Wolfsen said. AssetMark is also transitioning to a new billing system, introducing new features to its Wealth Manager advisor portal, and focusing on improvements to trading.

She doesn’t see the trend of advisor outsourcing slowing down any time soon. “The reason outsourcing is such a strong mega-trend is because of the increasing demand clients, investors, have of their advisors, and the fact that the industry is rolling up all over the place,” Wolfsen said. “In order for [independent advisors] to compete, they need to outsource. It allows them to get the scale of the outsourced provider and maintain their independence.”

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