AssetMark Report Reveals Evolution of OSJs and Opportunities in New Business Models

CONCORD, Calif., July 6, 2016 /PRNewswire/ -- AssetMark, Inc., a leading provider of innovative investment and consulting solutions serving financial advisors, unveiled today the results of a study on broker-dealers' Office of Supervisory Jurisdictions (OSJs). The study revealed how OSJs, which are responsible for compliance supervision, are evolving in response to major industry changes such as new competitors, technology innovations, recent regulation and continued consolidation.

The study shows that OSJs' business models are transforming to expand their service offering for clients. The three main business models that emerged throughout the course of the study were:

1. Traditional OSJs: Primarily focused on supervision and promoting their personal relationships, reputation and referral network as drivers of value
2. Facilitators: Taking the traditional OSJ model a step further by providing business-building services such as practice management or marketing support to facilitate the advisor experience
3. Business Builders: The most proactive in expanding their services, these OSJs are engaged in providing services to advisors on a turnkey or customized basis

"An unexpected finding of this study runs counter to the concept of the 'Super OSJ' frequently referred to in the industry," said Matt Matrisian, Senior Vice President of Strategic Initiatives at AssetMark. "Among the Business Builders identified in this study, we found that small firms were equally equipped to deliver a consulting model to advisors as their 'super-sized' peers."

Impact to Business Performance

While evolving an OSJ model requires the OSJ to work within the framework of what is permitted by their affiliated broker-dealer, the OSJs that most aggressively expanded their services tended to perform better from a financial standpoint.

Revenue Sources: All OSJs have a portfolio of advisors with both fee and commission-based revenue. Business Builders, however, generate a majority of their revenue from recurring AUM-based fees as opposed to commissions, the only segment to do so. For Traditional OSJs, 74% of their advisor's revenue is commission-based. Conversely, Business Builders foster advisors with a 61% fee-based revenue stream.

• Revenue Growth: Fee-based revenue streams have greatly benefited Business Builders' revenues. Traditional and Facilitator OSJs indicated a 12% 3-year growth rate, while the Business Builder model indicated a 32% 3-year growth rate.
• Assets and Revenue per Advisor: Managed assets and revenue per advisor grows progressively from Traditional, Facilitator, and Business Builder OSJs. The average AUM per advisor is $12M, $23M and $38M for each, respectively. Average annual revenue per advisor for Business Builders is $279k compared to $199k for Facilitator and $118k for Traditional OSJs.

The study was conducted in conjunction with the Aite Group, a global research and advisory firm delivering comprehensive, actionable advice on business, technology and regulatory issues, and their impact on the financial services industry. Findings are based on in-depth interviews with 25 principals responsible for managing an OSJ branch.

AssetMark also recently conducted a year-long study revealing the most effective practice management strategies that successful advisors use to drive firm growth.

About AssetMark, Inc.
AssetMark, Inc. is a leading independent provider of innovative investment and consulting solutions serving financial advisors. The firm provides investment, relationship and practice management solutions that advisors use to help clients achieve their investment objectives and life goals. AssetMark, Inc., including its Savos and Aris divisions, has approximately $29.9 billion in assets on its platform and a history of innovation spanning over 20 years. For more information, visit https://www.assetmark.com and follow @AssetMark on Twitter.

MEDIA CONTACTS:
Andrew Jarrell, Group Gordon
(212) 784-5721
[email protected]
Ben Johnson, AssetMark
(925) 521-2750
[email protected]

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SOURCE AssetMark, Inc.

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