(Citywire) Fee-conscious advisors, historically a drag on AssetMark’s performance, proved to be a benefit in the second quarter of 2021, with record net inflows of roughly $2.2 billion in the quarter, up 145.6% relative to the second quarter of 2020.
The company had roughly $84.6bn in assets on its platform as of the end of the second quarter of 2021.
In an interview, AssetMark chief executive Natalie Wolfsen (pictured) said the flow figure could partially be chalked up to advisors looking to avoid mutual funds which carried 12b-1 fees, which are marketing and distribution fees attached to a mutual fund by an asset manager. The Securities and Exchange Commission’s new standard for broker-dealer conduct, Regulation Best Interest, has put these fees under greater scrutiny.
‘Because of Regulation Best Interest and concerns that they have about 12b-1s, many advisors are moving from commission-oriented relationships with investors to more fee-based relationships with investors,’ Wolfsen said. ‘AssetMark’s platform is fee-based, and we provide consulting services to advisors to help them understand the benefits of moving to a fee-based business for themselves and their investors.’
‘We’re having a lot of momentum in the move between commission to fees, and our platform is benefiting from that.’
AssetMark’s revenue figures less cost of revenue grew 33.1% year-over-year to $91.4m in the second quarter of 2021, with overall asset growth doing more than enough to combat a $4.9m hit from fee compression and advisors converting to lower-cost mutual funds.
In the first quarter of 2021, AssetMark reported 4.3% year-over-year growth in revenue less cost of revenues to $82.2m, with fee compression and mutual fund conversion providing a $5.2m hit.
In March of 2021, AssetMark opened up its RIA-specific offering, AssetMark Institutional. The Concord, Calif.-based company won’t break out specific results for the division until next year, though Wolfsen said that the new business is growing at the same rate as its core independent brokerage and retirement plan business.
‘We’re seeing both movement from existing RIA advisors who are already using the AssetMark platform doing more business with us because of the enhanced services we offer,’ Wolfsen said. ‘As well as new advisors being attracted to our platform because they like the mix of support and service they get from us.’
