AssetMark Financial Holdings, Inc. provides wealth management and technology solutions. It also provides end-to-end experience, spanning nearly all elements of an adviser's engagement with client, from initial conversations to ongoing financial planning discussions, including performance reporting and billing. The company was founded by Ronald Dennis Cordes, Brian O'Toole and Richard Steiny in 1996 and is headquartered in Concord, CA.
We operate in an intensely competitive industry, with many firms competing for business from financial advisers on the basis of the quality and breadth of investment solutions and services, ability to innovate, reputation and the prices of services, among other factors, and this competition could hurt our financial performance.
We derive nearly all of our revenue from the delivery of investment solutions and services to clients in the financial advisory industry and our revenue could suffer if that industry experiences a downturn.
Investors that pay us an asset-based fee may seek to negotiate a lower fee percentage, choose to use lower revenue products or cease using our services, which could limit the growth of our revenue or cause our revenue to decrease.
Investors may redeem or withdraw their investment assets generally at any time. Significant changes in investing patterns or large-scale withdrawal of investment funds could have a material adverse effect on our results of operations, financial condition or business.
Changes in market and economic conditions could lower the value of assets on which we earn revenue and could decrease the demand for our investment solutions and services.
We must continue to introduce new investment solutions and services, and enhancements thereon, to address our clients’ changing needs, market changes and technological developments, and a failure to do so could have a material adverse effect on our results of operations, financial condition or business.
We could face liability or incur costs to remediate operational errors or to address possible customer dissatisfaction.
We may be subject to liability for losses that result from a breach of our fiduciary duties.
If our investment solutions and services fail to perform properly due to undetected errors or similar problems, our results of operations, financial condition or business could be materially adversely affected.
Our failure to successfully execute the conversion of our clients’ assets from their existing technology platform to our platform in a timely and accurate manner could have a material adverse effect on our results of operations, financial condition or business.
Our business relies heavily on computer equipment, electronic delivery systems and the Internet. Any failures or disruptions could result in reduced revenue and the loss of customers.
Inadequacy or disruption of our disaster recovery plans and procedures in the event of a catastrophe could adversely affect our business.
We are reliant on our relationships with certain broker-dealers and strategists, the loss of which could adversely affect our results of operations, financial condition or business.
We are dependent on third-party service providers in our operations.
We rely on our key personnel and principals.
Principal, employee or third-party provider misconduct could expose us to significant legal liability and reputational harm.
We could face liability related to our storage of personal information about our users.
We could face liability for certain information we provide, including information based on data we obtain from other parties.
If we are not able to satisfy data protection, security, privacy and other government- and industry-specific requirements or regulations, our results of operations, financial condition or business could be harmed.
If third parties infringe upon our intellectual property or if we were to infringe upon the intellectual property of third parties, we may expend significant resources enforcing or defending our rights or suffer competitive injury.
Confidentiality agreements with employees, consultants and others may not adequately prevent disclosure of trade secrets and other proprietary information.
We may become subject to liability based on the use of our investment solutions and services by our clients.
Lack of liquidity or access to capital could impair our business and financial condition.
We may not be able to generate sufficient cash to service our indebtedness and may be forced to take other actions to satisfy our obligations under our Credit Facility, which may not be successful.
Restrictions in our existing and future debt agreements could limit our growth and our ability to engage in certain activities.
We may make future acquisitions which may be difficult to integrate, divert management resources, result in unanticipated costs or dilute our stockholders.
Our insurance coverage may be inadequate or expensive.
Our controls and procedures may fail or be circumvented, our risk management policies and procedures may be inadequate and operational risks could adversely affect our reputation and financial condition.
Our controlling stockholder is required by the stock exchanges on which its shares are listed to disclose and obtain approval from its board of directors or shareholders for certain corporate actions that we undertake.
Changes to the laws or regulations applicable to us or to our financial adviser clients could adversely affect our results of operations, financial condition or business.
If we experience material weaknesses or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.
We are subject to litigation and regulatory examinations and investigations.
Failure to properly disclose conflicts of interest could harm our reputation, results of operations or business.
The price of our common stock may be volatile, which could cause the value of your investment to decline.
Sales of a substantial number of shares of our common stock in the public market by our existing stockholders could cause the price of our common stock to decline.
If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we are no longer an “emerging growth company.”
Delaware law may delay or prevent a change in control, and may discourage bids for our common stock at a premium over its market price.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States as the sole and exclusive forums for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
Asset-based revenue increased $11.0 million, or 13.3%, from $83.2 million in the three months ended June 30, 2018 to $94.3 million in the three months ended June 30, 2019. This increase was primarily related to increased platform fees and advisory fees of $10.4 million associated with growth in platform assets. Administrative service fees from ATC also increased by $0.6 million due to growth in mutual fund assets.
Spread-based revenue increased $4.1 million, or 86.1%, from $4.7 million in the three months ended June 30, 2018 to $8.8 million in the three months ended June 30, 2019. This increase was primarily due to higher cash balances held at ATC and increased interest rates on cash invested through ATC’s insured cash deposit program.
Other income increased $0.6 million, or 73.0%, for the three months ended June 30, 2019 compared to the three months ended June 30, 2018. This increase was primarily related to higher interest income of $0.3 million attributed to higher interest rates and higher cash balances generated from our operating activities, $0.1 million higher termination fees collected by ATC and $0.1 million from other miscellaneous income.