For Next-Gen Advisors, Some Traits Are More Important Than Salesmanship: AssetMark CEO

At AssetMark, which has more than $139 billion in assets, Kim played a key role during the company’s leveraged buyout transition to Genstar Capital, a private equity firm. He also was involved in the firm’s sale to Huatai Securities, its initial public offering and the subsequent acquisition by GTCR, another private equity firm, last year.

In the interview, Kim, who before joining AssetMark in 2010 was a senior vice president at Fidelity’s Institutional Wealth Services, also identifies what’s behind the “advisor-in-motion” phenomenon, as he puts it.

Here are excerpts of our conversation:

THINKADVISOR: What do you look for in younger advisors?

MICHAEL KIM: The qualities that an advisor should have and what we look for is a service mindset: serving others and helping them achieve their retirement goals and life goals.

No. 2 is the ability to teach and educate their clients. Third is being entrepreneurial. This industry is still one of fiercely independent entrepreneurs who put their clients’ interest at the center of everything they do.

Part of our coaching Gen-2 advisors is to help first-gen advisors look for these important key qualities. They go a long way to helping them become very successful advisors.

It used to be so important for an advisor to be a good salesperson. Is salesmanship still critical?

Advisors that have a business-development orientation is icing on the cake. The growth of this industry is based on referrals. The advisor [that I just described] is naturally going to get referrals and be introduced to others.

Salesmanship and business development are qualities that are nice to have. But our perspective is that a Gen-2 advisor who can serve others, educate clients and has an entrepreneurial spirit tends to be higher on the priority list. 

Please tell me about your succession planning program called Ascent.

We help advisors bring younger next-gen advisors into their office to partner with them and then become a, sort of, CEO of the business.

A third part is helping the [senior] advisor really think about their exit strategy options.

Why are so many advisors switching firms?

There are two major drivers for the advisor-in-motion phenomenon. One: massive consolidation within the wealth management industry because it’s all about scale, and scale matters.

Another big driver for some of these advisors is demographics. Over the next 10 years, a third of the advisors are going to retire. There are more advisors age 70 and older than advisors who are 30 and under.

That massive concentration of older advisors is looking for exit strategies.

“The great wealth transfer” and, with it, “the great opportunity transfer,” as you’ve dubbed it, are on the way. What’s the revenue-building potential for advisors?

It’s a matter of both defense and offense. On the defense side, it’s important for advisors to retain client relationships.

Over 70% of millennials will end up using a different financial advisor than their parents’ advisor. So advisors really have to develop deeper relationships with millennials and Gen Z.

The offense part is that advisors need to deliver personalized, tax-optimized portfolios to meet the needs of these new investors.

Personalization is a buzzword these days. But didn’t first-gen advisors provide personalization too?

It was available, but the level of awareness and the client appetite for it wasn’t high then. They were quite content with the usual stocks and bonds, and mutual fund portfolios.

But the newer investors are asking questions about investing in [say] private credit and private equity.

So this is an opportunity for advisors to make sure they can deliver on these requests so that the client has a well-diversified portfolio.

 Are those investments critical for a portfolio?

You can’t build a fully diversified portfolio without having exposure to private credit and private equity: Over 90% of all the large companies — those that generate at least $100 million dollars of revenue — are private companies [versus] public.

Also, today’s technology allows the advisor to scale the delivery of personalized portfolios. This means a home run for advisors delivering that comprehensive set of wealth management advice.

I assume that includes portfolio tax optimization. AssetMark won a ThinkAdvisor 2024 Luminaries award for innovation in tax management services. Please talk about that.

We believe that taxes is such an important area where advisors can add so much for clients. Our cutting-edge Tax Management Services is a fully automated turnkey real-time tax optimization tool.

Several clients who enrolled in it for 2024 realized tax savings of more than 120 basis points.

In most cases, that was greater than the advisor’s fee of about 1%.

We partner with different providers and add our secret sauce to deliver a tax-efficient, state-of-the-art tax management service.

It’s customizable for the advisors and for the end client, who have different tax levels or situations.

What’s a new program you’re set to introduce?

We’re launching an advanced planning program that has a team of unbiased experts representing estate planning, tax planning and tax efficiency, complex financial planning, retirement planning.

It’s a resource for our advisors to obtain objective advice on what the experts believe is best for their clients.