AssetMark(US:AMK)2020-08-05 04:00Financial Data and Key Metrics Changes - Platform assets reached a record $63.2 billion, up 12.8% year-over-year and 12.9% quarter-over-quarter, driven by market recovery and net flow performance [22][27] - Net flows for the quarter were $907 million, reflecting a reduction to about 80% of pre-pandemic levels, with year-to-date net flows totaling $2.7 billion, or 8.9% of beginning-of-period assets [23][24] - Adjusted net income for the second quarter was $15.1 million, a decrease of 16% year-over-year, while adjusted EBITDA was $25.3 million, down 11.4% year-over-year [34][35] Business Line Data and Key Metrics Changes - Asset-based net revenue increased by 3.2% year-over-year to $64.6 million, while spread-based net revenue decreased by 56.8% year-over-year to $3.1 million due to lower rates [27][28] - Production lift from existing advisers was 16.3%, down from 23.3% in the first quarter of 2020 and 24.9% in the second quarter of 2019 [26] Market Data and Key Metrics Changes - The average client cash for the second quarter was $2.9 billion, with an annualized net yield of 43 basis points [28] - The net yield on total platform assets was 49 basis points, down 1 basis point quarter-over-quarter and 5 basis points year-over-year [29][30] Company Strategy and Development Direction - The company is focused on adapting to changes in investor demand, emphasizing the need for advisers to understand clients' goals and aspirations [12][13] - Investment in technology and outsourcing services is seen as critical for advisers to provide a broader range of services and remain competitive [13][14] - The company continues to invest in strategic pillars, including technology, personalized service, and holistic investment solutions, to enhance adviser capabilities [15][16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to grow despite the pandemic, highlighting resilience and adaptability in the business model [6][40] - The outlook for the remainder of 2020 includes expectations for net revenue to be flat year-over-year, with adjusted EBITDA projected between $107 million and $113 million [38][39] Other Important Information - The company filed a shelf registration with the SEC, a standard practice for public companies to facilitate future offerings, though no specific date has been set for any offering [39] Q&A Session Summary Question: What is the expectation for net sales recovery as brokers acclimate to remote work? - Management noted that while predicting recovery is challenging, there are signs of advisers adapting to the new environment and focusing on growth [42][43] Question: Is there a concept of pent-up demand for production post-pandemic? - Historical trends suggest that after periods of distress, production often accelerates, and the company is preparing for such an outcome [44][45] Question: What is the potential for increased competition in the TAMP space? - Management acknowledged increased competition, particularly from broker-dealers building internal TAMPs, but emphasized the company's differentiated service and technology [47][48][50] Question: Are there any trends in household growth? - The company reported a 0.5% growth in households in June, indicating organic growth and adviser engagement [51][56] Question: Will the Schwab-Ameritrade merger impact the adviser pipeline? - Management indicated that while there is concern among advisers, the decision to outsource is not primarily driven by custodial changes but by broader trends in adviser practices [62][64]