Patrick O’Shaughnessy: Got it. That’s helpful. Thank you. And then obviously, some big news in the RIA space this past quarter was the conversion with Schwab and TD Ameritrade. Was there any impact on AssetMark, either positive or negative?
Michael Kim: Yeah, Patrick. Why don’t I start that, and Gary, please feel free to add any details. But leading up to the Labor Day conversion, one of the custodians that we had a very large relationship with was TD Ameritrade. And maybe just by way of context, given really the open architecture nature of our platform, not only do we have AssetMark Trust as a main custodian, but we also offer Fidelity, Pershing, and Schwab, and of course, TD Ameritrade prior to the conversion as really RIA custodial options. We’ve been planning for this conversion for months and months and months. And on one hand, we were actually quite thrilled to get the conversion completed. On the other hand, we work — we’ve been working very closely with our partners at Schwab to work through sort of the post-conversion details.
And this is for both AssetMark and for — and for Adhesion as well. And so we are going through some of the post-conversion operational kinks. Nothing that is really bubbled up to the level where it’s of major concern. What has been interesting, Patrick, is really the number of new RIA opportunities that our teams have encountered as related to the TDA to Schwab conversion. Whether it be our Adhesion folks as well as the AssetMark folks out in the field. Given the conversion, that has really raised the awareness and really sort of reinstalled the importance of kind of having that platform that is the easiest to do business with. And of course, we take a lot of pride in that ease-of-use experience. And so that has actually led us to a number of new RIA opportunities as a result of this TDA to Schwab conversion.
So obviously, we’ll provide additional updates during future earnings calls. But on the operational front, the conversion went well. We’re working through some post-conversion operational kinks, but on the business development front, sort of many newfound opportunities related to the conversion.
Patrick O’Shaughnessy: Great. Thank you.
Operator: Thank you, Mr. O’Shaughnessy. Our next question is from the line of Dan Fannon with Jefferies. Please proceed.
Daniel Fannon: Hi. Thanks. Good afternoon. Wanted to follow up on the organic growth returning to 10%. Maybe some context as to what’s been a challenge or why you haven’t been there in more recent quarters since Michael you’ve been there. And then also if the bulk of doubling or a large percentage of doubling engaged advisors going to come through M&A, we’re still trying to bridge the organic side of the story here and why that’s going to reaccelerate.
Michael Kim: Yeah, absolutely. And thank you, Dan, for the question here. And Gary, why don’t I get the conversation started and please chime in here as well. So Dan, you’re absolutely right. I mean, our organic growth focus and our commitment to getting back to the 10% plus level, it is definitely one of our top, top initiatives. And as you know, when we think about organic growth, it is really about both share of wallet growth from our existing advisors, and the same-store sales, and of course the new producing advisors in new store sales that we’ve been able to garner over the years. Yeah, when we think about how do we drive both share of wallet growth as well as new producing advisors, there’s probably three key areas that we are extremely focused on.
One is really around the product and the platform enhancements. You heard us reference capabilities like tax management services, TMS, as an example. Not only will it yield additional 10 basis points of revenue opportunities for us, but we absolutely believe that TMS will unlock kind of the asset opportunities for our advisors, whether it be sort of growing the existing clients of our advisors but also the ability for our advisors to acquire new clients using a service like TMS. And of course, our ability to attract new producing advisors to our platform leveraging these types of services. I mean, these are all going to yield to that incremental organic growth that we’ve been talking about. Second area is really around continued RIA focus. Adhesion is we are building up great momentum within Adhesion.
We alluded to over $480 million of net new assets just from their new advisors alone this year and the pipeline looks great. And so we absolutely believe that Adhesion is going to be a key part of our 10% plus organic growth rate. And then of course, as we’ve been talking about sort of the accelerated capital deployment, not only M&A opportunities, but examples like the Cheetah partnerships that we alluded to, we absolutely believe that that’s going to drive — help us drive towards that 10% plus organic growth.
Gary Zyla: Yeah. Hey, Dan. This is Gary. Hope you’re doing well. Meetings is flying by. So I wanted to point out a couple of things, Dan. First, yeah, when we were talking about the engaged advisor growth, what I was trying to lay out was just sort of, around 600 are going to come from our new producing advisors somewhere. Let’s call — I said 600 to 900 would come from existing. And so if you take those two together that should be about two-thirds to three quarters of that gap we have for 2,000. And so I know I mentioned that because I think I heard you say something that a majority of the growth would come from M&A. And I don’t mean to convey that. The majority of the growth from engaged advisors are going to come from new producing advisors as well as our existing book.
Talking about the existing book, our — we have a statistic in our key operating metrics that we don’t talk about enough but it is something we always show which is the production lift from our existing advisor book. This quarter it was 18.7%. Last year at this time it was 14.9%. We feel great about that improvement, of course, year over year, but that number should be over 20%. And what Michael was talking about in terms of the initiatives we’re taking to what we’re investing in and — but even to add to that, finding solutions for cash is going to be really key over the next 18 months or so as more and more folks are [indiscernible] in cash, and Michael alluded to a number of initiatives that we have already on that, that should be a real key component in increasing that share of wallet growth.
