Daniel Fannon: Thank you. That’s helpful. And then just as a follow-up, the $25 million in cost that you see in potentially removal from the cost base due to automation, what is the time period you think that might be realized? And then also in the context of, how you’re thinking about growth for next year for expenses. And I know you haven’t given formal guidance yet but just thinking about the setup for next year versus maybe where we’ve been the last couple of years.
Michael Kim: Yeah, Dan. Let me get the response started. And again I’ll look to Gary to provide additional details. So when we think about kind of the increase in CapEx spend to 8% to 10% of revenue, automation is going to be a key part of that allocation. And so, what we’re really focused on is for those processes, those operational transactions, we want to make sure that we automate as much of that as possible while at the same time, of course, continuing to deliver that world-class service experience. Part of what we’re thinking about is over the next three years or so, be able to implement enough of the automation to ensure that we take out — approximately about $25 million of annual costs. Key thing that I just want to stress though is that we want to make sure that all of our advisors continue to receive the best service experience possible.
That is the hallmark of AssetMark, and we want to make sure that they are continuing to receive the best service experience, but behind the scenes, through this type of automation, that we’ve realized the expense savings that we’re committed to. Gary?
Gary Zyla: Yeah. Thank you, Michael. And Dan, to address the second part of your question, which I think Michael was just talking about how our long-term aspirations for scalability, I think you asked, how does it look into more near term into 2024? And we’ll talk about a 2024 outlook at our next call, I’m sure. But just to give you some thoughts, right, our expenses have grown materially over the past few years partly driven by our two acquisitions, of course, and some really material investments we made. I would expect our operating costs to grow somewhere, certainly in the single digits next year. We are going to have a real focus on making sure that we are investing in what we need to invest in, while also making sure that we are pausing — not pausing, that’s the wrong word. We are being very thoughtful about that expense growth. While at the same time, on the capital side, growing our investment in those long-term spends that we can make.
Daniel Fannon: Great. Thank you.
Operator: Thank you, Mr. Fannon. Our next question is from Michael Bensi (ph) with Goldman Sachs. Please proceed.
Unidentified Participant: Hey, guys. This is Michael on for Alex Blostein. So maybe just a follow-up on some of the M&A questions. It sounds like you are — you guys are obviously more focused on consolidation and — consolidation opportunities near term. But maybe you can kind of talk about what you’re seeing on the non-consolidation more capability-focused side. And to what extent — to that end, to what extent would you guys leverage your stock as a currency? Obviously, you spoke to the 550 of purchasing power you have, but to the extent that you guys have public stock that you can use, how would you factor that into your kind of M&A outlook there?
Michael Kim: Yeah, Michael. Thank you for the question. Again, I’ll get the conversation started, and Gary will share additional details here. So when we think about the M&A and really under the broader context of accelerated capital deployment, Michael, you’re absolutely right. Consolidations and capabilities, those opportunities remain a core part of our focus as it always has been. At the same time, Michael, I do believe that we have an opportunity to expand our focus. And so, as examples, we talked earlier about our new partnership with Cheetah, and I — we believe that there are other partnerships — partnership opportunities out there where leveraging our capital, leveraging our balance sheet, we can go ahead and connect better with those firms, ultimately to drive growth.
I think there’s also firms out there where, based on sort of the synergies that exist, we may have opportunities to make some minority investments. Again, we are evaluating different opportunities on that front. And then, lastly, we’re also looking at various different advisor growth opportunities where, to the extent that we can strategically partner with the right firms to help them drive their growth, we believe there’s opportunities for us to leverage our balance sheet to help them grow as well. Gary?
Gary Zyla: Yeah, Michael. Just to your question about the stock and whatnot. The way we look at our dry powder, we have an unused line of credit of $375 million and we’re going to end the year with a little bit over $200 million, probably in excess cash or something around $200 million of excess cash. And so, that’s probably going to be our main source of capital for acquisitions. That’s about almost $600 million there. We have used our stock for one purchase for Voyant in a modest way, and I guess that’s not due in the future, but I would think of it more as cash acquisition.
Michael Kim: Michael, the other thing that I just want to mention here is that as part of our overall corporate development team, we’ve also added two senior officers to the team here as well. One really focused on new deal acquisition opportunities, and the other officer focused on the integration as well. We’re also collaborating with a number of other executives on the team to ensure that we have the best implementation and integration possible. So you’re absolutely right, we are extremely excited and focused on not only deploying capital in the right way, but really identifying the right opportunities and talking them into the AssetMark ecosystem.
Unidentified Participant: Great. Thanks, guys. And maybe as a quick follow-up, just in shifting gears a bit, in light of the recent DOL proposal, kind of wondering what you guys are hearing. I know it’s early days, but here to the ground last time around, we obviously saw a shift into advisory accounts, kind of pre-trading the proposed DOL rule last time. So anything you guys are hearing on the ground on that front, obviously early days, but do you guys — any commentary you might have around that would be great. Thanks.
Michael Kim: Yeah. Thanks, Michael for the question there. And I think, as we all know, there is a new proposal that I believe has been submitted to the White House for their review regarding the latest version of the DOL Fiduciary Rule. I’m not sure if there’s a lot of clarity, Michael, in terms of what that newest version of the proposal looks like. We’ve been in active conversations with number of different industry folks, our council regarding the interpretation. And I think the industry, at large, is sort of in a wait and see mode here. But even with that, our belief is that all advisors are fiduciaries and they have an obligation to put the best interests of the client at the center of everything that we do. And frankly, that is so consistent with how we think about supporting advisors.
And so we absolutely welcome the fiduciary rule. We absolutely support the advisors in their — in fulfilling their fiduciary responsibilities to the clients. And so, obviously, as we learn more about the latest DOL proposal, we’ll update not only this group here on their future earnings calls, but our advisors and our clients as well. And so we look forward to learning more about the finer details of that proposal.
Operator: [Technical Difficulty] question-and-answer session. I will now turn the call back to Michael Kim for closing remarks.
Michael Kim: Okay. Very good. Well, why don’t we wrap up with a big thank you to all of you that have joined us here today. We appreciate all your support and your engagement, and we look forward to seeing you on the road very soon. Thanks, everybody.
Operator: Goodbye. That concludes today’s AssetMark Financial Holdings, Inc. 3Q ’23 earnings conference call. Thank you for your participation. You may now disconnect your lines.
