Record Year

In 2021, AssetMark reached new highs and achieved a list of firsts. We served more advisors and investors than we ever had before, supporting over 8,600 advisors, more than 2,800 of which were engaged. Our advisors, in turn, used our platform to help nearly 210,000¹ investor households. Net flows exceeded $9.9 billion, an increase of 81% from prior year, and we recorded our first billion-dollar net flows month in December. Platform assets grew to over $93 billion, more than double what we had just three years ago. We experienced record financial performance, delivering annual net revenues of $378 million, while expanding margins by more than 300 basis points². Additionally, we completed our first financial planning capabilities acquisition with Voyant, enhancing our ability to deliver financial wellness.

Throughout the year, we focused on our five key areas of growth and delivered platform enhancements and launched new solutions that are core to our advisors’ businesses. The first is meeting advisors where they are. In March 2021, we introduced AssetMark Institutional, a fully assembled holistic offering that provides Registered Investments Advisors (RIAs) with a comprehensive set of solutions to support their growth. At year end, RIA assets were over $20 billion. The second is delivering a holistic, differentiated experience. Immediately after we completed the acquisition, we began integrating Voyant’s income and planning capabilities into our core platform to enable comprehensive advice. In addition, we launched Voyant Australia to expand access to financial planning. The third is enabling advisors to serve more investors across the wealth spectrum. We added new products, features, and tools to our platform to allow for greater personalization through the introduction of a curated suite of Separately Managed Accounts and Alternative Investment solutions. The fourth is helping advisors grow and scale their businesses. We continue to expand our specialist teams to better serve advisors. In 2021, our business consulting team served over $26 billion of platform assets, an increase of 33% from 2020. We also piloted a turnkey marketing program to help advisors promote their brand and attract new clients. The fifth area of growth is pursuing strategic transactions to further enhance advisor capabilities and scale. To ensure we can respond to more M&A opportunities, we expanded our access to capital and reduced our ongoing borrowing rate through a $500 million five-year credit facility that closed in early January 2022.

We could not have had our record year and accomplished what we did without our dedicated team members. They are the foundation of this company and as they have dedicated their time and lives to the success of our advisors, we, as a company, must do the same for them. To ensure our teams have the support they need, we enhanced our benefits to further promote mental, emotional and physical well-being. Additionally, we introduced the Advanced Leadership and Emerging Leaders Programs to foster talent and develop leaders to positively impact the organization and their communities. Equally as important in building a people-first culture is to recognize contribution and impact. Last year, each team member received an Excellence Award to acknowledge dedication and unwavering commitment to our clients.

Respect and Heart are core values at AssetMark. Our program, Respect at AssetMark, strives to create a culture where everyone feels welcomed and where different ideas, experiences, perspectives, and backgrounds are encouraged. We remain committed to diversity and inclusion and work to improve representation. Within our industry, we supported the Center for Financial Planning and its efforts to increase diversity and access. Internally, each of our three Employee Resource Groups (ERGs) nominated and voted for a local charity whose mission aligned with that of the group. The charities supported provided scholarships to women pursuing a career in the financial industry, education to under-resourced groups and social programs that promote empowerment among the LGBTQIA+ community. Additionally, we supported disaster and pandemic relief and social impact organizations focused on revitalizing impacted communities. We continue to expand our impact through volunteer efforts and charitable giving. Each year, we target to donate about 1% of reported profits to support the communities in which we live and work.

A Connected and Evolving World

As our world becomes more connected, how we engage with one another becomes more important. Our industry is at a pivotal moment, fueled by a confluence of strong markets, shift in engagement preferences and demand for advice. Following a volatile year, 2021 was filled with hope for recovery. Throughout the year, financial markets rose, reaching record highs, buoyed by increased consumer demand and access to capital. For the year, the 60/40 global and domestic portfolio returned 9.1% and 15.9%, respectively, while the S&P 500 index returned 28.7%³. Along with buoyant markets came labor shortfalls, supply chain challenges and rising inflation. There are still about 3.5 million fewer people employed than there were two years ago⁴. Supply chain constraints impact more than $9 billion worth of goods each day⁵. Inflation, whether transitory or persistent, rose to approximately 6.8% over the last year, the highest since 1982⁶. The full, longer-term effect to the economy, and subsequently, consumers and investors, is yet to be seen.

Amid uncertainty, the pandemic accelerated investor trends that were already underway, and it brought about seismic shifts in investing, including increasing accessibility and personalization. While existing investors continued to expand their needs, a wave of new investors emerged and began investing during the pandemic⁷. Trading volumes skyrocketed. In early 2021, retail investors generated about as much equity trading volume as mutual funds and hedge funds combined⁸. These emerging investors digest information and engage differently. For better or worse, social media and the internet play a vital role in their financial education and investment decisions.

The retail frenzy has highlighted the need for more education and advice and created an opportunity for financial advisors. These investors want more—from greater access to information and tools to do their own research to customized solutions. By 2030, up to 80%of new wealth management clients will want to access advice in a data-driven, personalized model⁹. While advisors have begun to shift their focus to comprehensive planning, they will have to continue to do so at faster pace to compete. Their role as investment managers will evolve to wealth coaches, responsible for every aspect of their client’s financial life.

More Than a TAMP

As the demand for the breadth and depth of advice evolves, advisors will need to continue to do more. They are tasked with running a business effectively—managing everything from investing in ever-changing technology to hiring talented people to serving their clients. With AssetMark as an ally, they are not alone in helping their clients. Advisors who outsource investment management deliver better investment solutions, spend more time strengthening existing and building new client relationships, and grow the value for their businesses¹⁰. AssetMark’s core purpose is to empower advisors and investors of all sizes to reach their goals. Therefore, it is our responsibility to help our advisors and investors navigate the evolving landscape—so we too must evolve.

This year, we are delivering more for our advisors to help them serve their clients in building a better, more secure financial future. We are redefining the advisor experience, providing a technology-enabled advisor management platform focused on bringing value to financial advisors. For advisors who continue to seek independence, we are enhancing our client experience and investment solutions available to ensure that we provide the support they need. We continually advance our technology to further our efforts in transforming advice towards financial wellness, helping differentiate the way advisors interact with their clients. Our curated investment platform enables advisors to serve investors across the wealth spectrum and address varying needs. In the first half of 2022, we plan to expand our personalized, values-based solutions to provide advisors with the tools they need to further deepen their relationships with their clients. As advisors increasingly focus on serving their clients, we are enhancing our turnkey business programs to provide ongoing support and services to help manage and grow their businesses—from prospecting to administration, ensuring our advisors’ businesses continue to flourish.

In the year ahead and years to come, we look forward to continuing to build a strong, vibrant community of advisors. We look forward to entering the next phase of our evolution to deliver more for our advisors, shareholders, and team members and to continue making a difference in the lives of our advisors and their clients.

Thank you for continuing to put your trust in AssetMark and its people. Together, we can achieve more.

• ¹ As of December 31, 2021, investor households were 209,900
• ² 2021 full year adjusted EBITDA was $157.2 million
• ³ 60/40 global portfolio uses MSCI ACWI and Bloomberg Global Aggregate. 60/40 domestic portfolio uses S&P 500 and Bloomberg U.S. Aggregate
• ⁴ Washington Post: The Most Unusual Job Market in Modern American History, Explained, December 2021
• ⁵ Approximately $9 billion worth of goods passes through the Suez Canal. CNBC: The Ship that Blocked the Suez Canal, March 2021
• ⁶ Increase from November 2020 to November 2021. U.S. Bureau of Labor Statistics: TED – The Economics Daily, December 2021
• ⁷ Fifteen percent of all current U.S. stock market investors say they first began investing in 2020. Schwab: The Rise of the Investor Generation Study 2021
• ⁸ Deloitte: The Rise of Newly Empowered Retail Investors, 2021
• ⁹ McKinsey & Company: On the Cusp of Change: North American Wealth Management in 2030, January 2020
• ¹⁰ Based on AssetMark’s Impact of Outsourcing Study, 2021