Good performance in U.S. equity markets doesn’t always make life easy for advisors.
Last year, for example, a globally balanced 60/40 portfolio returned less than 4 percent, according to AssetMark President and CEO Charles Goldman—a full 10 points less than the S&P 500. And since clients tend to benchmark their own results to U.S. stocks, advisors can find themselves in some hot water when U.S. equities outperform other asset classes.
A hot U.S. market will cause clients to point to U.S. stocks and ask, “’Why didn’t you have me in more of that?’” Goldman said.
AssetMark wants to make those explanations easier. Goldman's promise to about 220 of AssetMark’s top advisor clients, meeting this week at the Ritz-Carlton in Dana Point, Calif., was to move beyond just showing the “what” of a portfolio and to offer tools to help advisors show the “whys” of an asset allocation plan in a way clients will understand.
The $25 billion turnkey asset management program wants to improve the visualization of the data it provides advisors “to make it intuitive,” Goldman added. “Portfolios are evolving to make them simpler, easier to understand and perform better.”
Goldman, who formerly ran the RIA custody units for Schwab and Fidelity, took over AssetMark a year ago after the TAMP (then known as Genworth Financial Wealth Management) was sold to several private equity firms. That change in ownership has loosened up the purse strings.
“We’ve tripled the investment in the business,” Goldman told advisors.
Last year, its first full year as an independent company, AssetMark grew top-line sales 11 percent, Goldman said, and more importantly, net sales were up 500 percent due to slowed redemptions.
Goldman figures he can grow Assetmark by gaining scale and adding capabilities, with advisor support delivered by an extensive field force.
“There are 70 to 80 TAMPS out there,” he said. But broker-dealers, the primary market for TAMPs, want to deal with someone with size and scale. Many B-D’s have multiple TAMP relationships built up over the years as they sought to build fee businesses, but that gets confusing and difficult for B-Ds to oversee, Goldman said.
His biggest competitors are proprietary TAMPs developed internally by broker-dealers. B-D’s, looking for ways to boost profits, have been bringing more asset management in-house.
But Goldman isn’t too worried. His ultimate clients “are independent advisors who don’t want to be told what to do” by their brokerage firm, he said. And “B-D’s know they need to have multiple choices.”
Since heading up AssetMark, Goldman has been building out his executive ranks with many of his former colleagues.
In September, Jerry Chafkin was brought in as chief investment officer. Chafkin was most recently a portfolio manager and CEO at AlphaSimplex Group, a liquid alternatives firm, and was formerly president of Charles Schwab Investment Management.
Natalie Wolfsen came on board last May as chief commercialization officer, a role with broad responsibilities for managing products and marketing. Wolfsen was formerly head of marketing for First Eagle Investment Management, with prior stints at both Schwab and Pershing.
In April, Goldman landed Cathy Clauson as director of sales strategy, operations and administration. Another Schwab alum, Clausen was most recently a vice president for RIA sales at Advent Software/Black Diamond.
Last month, AssetMark closed its first acquisition, of Aris Corp., a $1.8 billion TAMP serving the high-net-worth and retirement-plan markets.