Despite an optimistic start, 2022 was a year defined by extraordinary turbulence. Significant geopolitical challenges, record inflation, and recession fears sent markets into prolonged turmoil, ultimately wiping out billions in U.S. household net worth.

Equity and bond markets declined simultaneously for the first time in fifty years (Business Insider, 2022). Inflation rose to a forty-year high. In December, the Federal Reserve raised its benchmark interest rate to the highest level in 15 years, capping off a year that saw the most aggressive policy moves since the early 1980s. 2022 also marked an inflection point for digital currencies. The collapse of cryptocurrency exchange FTX surprised many and deepened broader market uncertainty. As investors grew increasingly unsettled throughout the year, they relied heavily on their financial advisors for sound guidance. Their advisors turned to AssetMark to help them navigate the environment and serve their clients. And AssetMark delivered.

In the face of persistent and unexpected challenges, agility proved essential. With our mission rooted at the center, we moved forward instead of looking back. We embraced a flexible mindset and turned obstacles into opportunities to drive our strategy and our business forward.

As a result, we ended 2022 stronger than ever. We generated record financial and operating results despite the depressed market environment, and we matched our all-time high Annual Net Promoter Score.

2022 Highlights

In fiscal 2022, we continued our evolution from a turnkey asset management platform to a holistic, full-service wealth management solution. We served over 9,200 independent financial advisors, who in turn served over 241,000 investor households. Despite market conditions, the company’s full year net revenue was a record $456 million, an increase of 21% year-over-year and a result of our diverse and complementary revenue streams. Our proprietary trust company enabled AssetMark to capitalize on higher interest rates and offset market-based declines. While asset-based revenue only increased 5%, spread-based and subscription revenues increased 673% and 104% yearover-year, respectively. Our disciplined approach to expense management facilitated an adjusted EBITDA margin expansion of over 260 basis points. For the year, adjusted EBITDA was $199 million, an increase of 27% year-over-year. Adjusted net income available to common shareholders was $131 million, 27% higher compared to fiscal 2021. We generated $140 million in cash from operating activities, which enabled us to accelerate investments into the business at a time when many businesses were pulling back.

Throughout the year, we made significant progress deploying capital to invest in short- and longer-term initiatives that are core to our advisors’ business and to generate attractive returns for our stakeholders. Our growth strategy is guided by five key pillars that are fully oriented around what our clients need. As advisors and investors needs changed amid the tumult, we met the moment and enabled our advisors to do the same. I’d like to share the following highlights, which exemplify how our focused flexibility led to record results in a year defined by uncertainty.

Starting with meeting advisors where they are, we completed the acquisition of Adhesion Wealth, a leading provider of wealth management technology solutions. Through the acquisition, we welcomed more than 560 advisors and nearly 15,000 households to our platform. Adhesion is the second largest model marketplace with over 400 asset managers and provides its clients—primarily RIAs and RIA enterprises—with outsourced overlay portfolio management services, client engagement technologies and tailored managed account solutions. The addition of Adhesion Wealth further strengthens our ability to serve the rapidly expanding RIA market, and ultimately increases our total addressable market by nearly a trillion dollars in eligible assets, as it enables us to reach more advisors across the spectrum of profiles and outsourcing preferences.

The second component of our growth strategy is delivering a holistic, differentiated experience to advisors and their clients. In 2022, we primarily achieved this in two ways: (1) the continued re-platforming of technology and (2) the growth of our proprietary financial planning software, Voyant. We have begun optimization of our back-end technologies to build a scalable, more efficient platform and we expect to deliver front-end enhancements starting later this year. In addition, Voyant was focused on deeper integration with the AssetMark platform and organic growth. Year-over-year, revenue increased approximately 13%¹ due to the increase of enterprise and advisor consumer licenses. Enterprise advisor licenses increased more than 50%, driven by an accelerated international enterprise and small business sales pipelines.

The third element of our strategy is enabling advisors to serve more investors. We launched a Values-Driven Investing program to support financial advisors in meeting the personalized needs of clients seeking to align their investments with their values. We also developed a market volatility toolkit to help advisors navigate market uncertainty. Finally, we launched investment strategies that met the needs of investors during the highly volatile markets of 2022.

The fourth pillar of our strategy is helping advisors grow and build sustainable businesses. Our advisor engagement model is focused on helping advisors grow and scale by taking non-value adding activities off their plate so our advisors can reallocate their time where it really matters—serving their clients. In 2022, we introduced digital operational enhancements and we launched new digital tools, including Marketing Advantage and WealthBuilder Prospecting. These solutions enable advisors to prospect and market their practice in a scalable, targeted way.

Lastly, we continue to pursue strategic transactions that expand AssetMark’s reach and improve advisor capabilities. At the end of 2022, after the close of Adhesion Wealth, we had approximately $450 million in purchasing power for future M&A opportunities.

Our accomplishments and success would not be possible without our nearly 1,000 employees who come to work every day focused on our mission to make a difference in the lives of our advisors and the investors they serve. We strive to uphold our core values of heart, integrity, excellence and respect in everything that we do. We are also dedicated to responsible corporate citizenship. Through volunteering, charitable giving, community recognition, and promoting diversity, we strive to give back to the vibrant communities in which we live and work. In 2022, we proudly donated over $630,000 in support of 175 organizations and together, our team members volunteered 851 hours supporting causes they believe in. We continued to enhance our formal diversity and inclusion program, and in 2022, we established our Diversity Council and launched an employee library to further educate our team on allyship and advocacy.

Each year, we honor the incredible impact that our financial advisors make in their communities through our Community Inspiration Award. The award recognizes a selection of advisors who are deeply committed to supporting non-profit organizations. Together with our advisors, we supported causes dedicated to improving education and health in our shared communities. Finally, this year, we are excited to launch Future Advisors, a program that aims to facilitate meaningful connections between advisors and high-performing college students interested in exploring careers in financial planning. This program provides mentorship and employment opportunities for the next generation of advisors who aspire to create a better financial future for their communities.

Looking Ahead

While last year was a record year, we don’t take it for granted and recognize the uncertainties ahead of us in 2023. However, we are confident that the flexibility of our business combined with our strategic approach and dedication to advisors provide a strong foundation for our success.

I’m proud to have kicked off this year as the top independent turnkey asset management platform, with AssetMark earning first place in The Wealth Advisor’s twelfth annual America’s Best TAMPs ranking. But our work is never done. As independent financial advisors are asked to do more, AssetMark must also continue to deliver more. This year, we will further capitalize on our momentum to transform the advisor experience across all five pillars of our strategy.

Growth and success happen when commitment is met with flexibility. In the year to come, we are dedicated to building a stronger, more nimble business and delivering more for our advisors, shareholders, and team members.

Thank you for your continued support, trust and confidence in AssetMark. We look forward to the opportunities ahead and our journey together to transform independent advice.

Natalie Wolfsen
Chief Executive Officer

• ¹ Excludes foreign exchange impact