To my fellow
shareholders:

Every year presents challenges and obstacles and 2021 was no different. As always, we led with our mission and our values and focused on our key business fundamentals.

AssetMark realized organic growth of over 13% in 2021, which was over 30% more than our expectations. Additionally, buoyed by a strong equity market, AssetMark was able to deliver record revenues and earnings for the year while also investing in future growth of the company. We completed our largest acquisition ever with Voyant, a global financial-planning technology, which joined AssetMark mid-year and helped further our Financial Wellness offering. We also launched AssetMark Institutional, our customized offering focused on the RIA segment. This helps advance our expansion into serving the pure-RIA channel.

In 2021, AssetMark achieved all-time highs across our key financial metrics

• Revenue at $530 million, up 23% year-over-year
• Adjusted EBTIDA at $157 million, up 37% year-over-year
• Margin on adjusted EBITDA at 29.6%, up a robust 300 basis points year-over-year
• Adjusted net income at $103 million, up 41% year-over-year

Additionally, we achieved all-time highs in key non-financial performance indicators:

• Assets on Platform of $93.5 billion, up 26% year-over-year
• Number of engaged advisors¹ at 2,858, up 13% year-over-year
• Team member count at 885

In 2021, our customer satisfaction, as measured by our net promoter score, was 67, indicating that our strong focus on serving our clients and making a difference in their lives has been executed and is well-received.

The financial stability of the company has also never been better. We ended the year with $76.7 million in cash and refinanced our long-term debt just after year-end, which both lowered our interest costs and increased the capital available to the business. After this refinancing, AssetMark’s new revolving credit facility has $375 million of unused capacity.

Every year, we are focused on our mission while delivering on revenue growth and margin expansion. Let me discuss our results in more detail with you.

Assets on Platform

Asset growth on the platform was the best ever for the company, increasing $20 billion during the year. This was driven by strong organic growth and the tailwinds of a strong equity market.

The organic growth of our assets was 13.3% for the year, one-third more than our stated annual goal². Our strong organic growth came as AssetMark and financial advisors continued to adjust to new ways of doing business as a result of the COVID-19 pandemic. We welcomed 811 new producing advisors to the AssetMark platform in 2021, a 9.2% increase from 2020. The vast majority of AssetMark’s business is with engaged advisors and by year-end, we had 2,858 engaged advisors on our platform, up 12.7% from the beginning of the year.

Revenue

Our revenue was up 22.7% year-over-year led by our asset-based revenue, which was up $100 million to $512 million. Spread-based revenue, driven by interest rates on the cash assets held by investors at our proprietary trust company, was down $8 million to $8.6 million as a result of lower interest rates year-over-year. In 2021, AssetMark had $6.4 million of subscription-based revenue compared to zero in 2020. This new revenue stream was a result of the Voyant acquisition.

Expenses

In 2021 our reported operating expenses, excluding variable asset-based and spread-based costs, increased 22.1% to $220 million. Compensation costs were up 20%, while payments to third-parties (professional fees) and SG&A were up 40% and 21%, respectively.

As a result, AssetMark’s margin on adjusted EBITDA increased 300 basis points from 26.6% in 2020 to 29.6% in 2021.

AssetMark maintained its focus on expense discipline in the year through active management of costs, while investing in the future. Investments in AssetMark Institutional and other advisor-focused benefit programs were made with an eye to the future. Our capitalized investments for the year total almost $35 million, with the vast majority of that spent on investments in, and development of, software and technology that is focused on improving our client experience, creating scale, and giving AssetMark capacity for growth in the years ahead.

AssetMark’s employee base grew approximately 20% during the year to 874, with about one-third of that growth due to the Voyant acquisition. We continue to be focused in attracting and retaining the excellent talent that has enabled AssetMark to grow and create the high client satisfaction scores we are seeing.

Earnings

As a result of strong revenue growth, coupled with our ability to maintain discipline with our cost structure, our earnings for the year were impressively up over 40% to $103.3 million of adjusted net income, or $1.40 per diluted share. In addition, we viewed adjusted EBITDA as an important measure of the company’s strength. Our adjusted EBITDA for 2021 was $157 million, up 36.6% from 2020.

Looking Ahead

As we enter 2022, the challenges in the market will not get any easier. It is in these periods of uncertainty and volatility where AssetMark and independent financial advisors really bring value to their clients by providing consistent, thoughtful guidance backed by well-researched investment managers and strategists.

We are very much looking forward to 2022. We are hopeful our economy and country can continue to open up and we are energized by the impact we can have on investors. AssetMark has been and will always be a mission-driven, client-focused business. We have continued to invest in the future and are well-positioned to have another great year with sufficient capital, low leverage and strong earnings momentum.

Gary Zyla
EVP, Chief Financial Officer

• ¹Engaged advisors are defined as an advisor with over $5 million of assets on the AssetMark platform
• ²This is a measure of net flows as a percentage of beginning of year assets