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Good afternoon, everyone, and welcome to AssetMark's Second Quarter 2020 Earnings Conference Call. [Operator Instructions] Today's call is being recorded.
Now I'd like to turn the call over to Taylor Hamilton, Head of Investor Relations. Please go ahead, Mr. Hamilton.
Thank you. Good afternoon, everyone, and welcome to AssetMark's Second Quarter 2020 Earnings Conference Call. Joining me remotely are AssetMark's Chief Executive Officer, Charles Goldman; and Chief Financial Officer, Gary Zyla. Today, they will discuss the results for the second quarter and provide an update to AssetMark's business outlook for the remainder of 2020. Following our introductory remarks, we will open up the call for questions. We also have an earnings presentation that Charles and Gary will reference during their prepared remarks. It can be accessed on our IR website at ir.assetmark.com.
Before we get started, I'd like to note that certain statements made during this conference call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as the date of this call. Actual results could differ materially. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise. Further information on these and other factors that could affect our financial results is included in filings we make with the SEC from time to time, including the section titled Risk Factors in our annual report on Form 10-K on file with the SEC and available on our Investor Relations website and in our quarterly report on Form 10-Q for the quarter ended June 30, 2020, which we expect to file next week.
Additionally, during today's conference call, we'll be discussing net revenue, adjusted EBITDA, adjusted EBITDA margin and adjusted net income, all of which are non-GAAP financial metrics. These non-GAAP metrics are not calculated in accordance with GAAP and may be calculated differently than similarly titled metrics presented by other companies. A discussion of why we use non-GAAP financial metrics and quantitative reconciliations of adjusted EBITDA, adjusted EBITDA margin and adjusted net income to the most directly comparable GAAP measures are available in our press release and our quarterly report on Form 10-Q for the quarter ended June 30, 2020, both of which will be available on our Investor Relations website.
With that, I'll turn the call over to my colleagues. Charles, take it away.
Thank you, Taylor, and good afternoon, everybody, and thank you all for joining our second quarter earnings call. We appreciate you taking the time to be with us today, and we hope that you and your families are safe and healthy. Also for those of you on the East Coast, please stay dry. We know there's a big storm there. Starting today on Slide 3, we are going to focus on 4 key messages during our earnings call.
First, our company is growing despite these challenging times. We are pleased with our performance in the second quarter, especially given this current environment. Second, the world is changing, and we will change with it. I'll take you through a deep dive into the changes that we are seeing for investors, advisers, industry participants and regulators as well as how -- as well as I'll comment on how these changes are creating opportunity for AssetMark. Next, I'll spend some time detailing some of the proactive decisions we are currently making that I believe will position us to weather these times and emerge as an even stronger company post the pandemic. Lastly, Gary will walk us through the 2Q '20 financial results, which were in line with our expectations. Our record platform assets of $63.2 billion set us up nicely for higher revenue in the third quarter. Turning to Slide 4.
You can see that we are growing despite these challenging times. We continue to grow organically in the second quarter with net flows of $907 million. Platform assets at the end of the second quarter were $63.2 billion, an all-time high. This was driven by net flow performance and the market recovery. During the second quarter, we added 178 new producing advisers. This is a good result given that we held no in-person meetings with prospects in April and May and very few in June. Additionally, all broker-dealer and industry conferences, which have been a valuable marketing opportunity for us were, of course, canceled. We credit our pre-pandemic sales pipeline and ability of our sales force to quickly shift and adapt to a virtual environment as key reasons for our success. Cash flow generation also continued to be a strength. We grew our cash position by $13.4 million and ended the quarter with $93.6 million in cash on our balance sheet.
Turning to Slide 5. While we are growing and financial performance remains strong, there is no doubt that we are growing at a slower pace than we were prior to the pandemic. When looking at our trend data, most of our key operating metrics, such as net flows, are down quarter-over-quarter. A key driver of this is adviser behavior. Let me dive into that a little bit deeper.
Historically, the most effective business development strategies for advisers have been in-person meetings and events. These have been hindered as a result of the pandemic. As a result, advisers that previously lacked digitally based meetings had no choice but to learn how to connect with clients and prospects in a virtual setting. While technology is prevalent in our daily lives, only 36% of adviser practices were heavily users of technology prior to the pandemic, according to a recent Cerulli study. Additionally, we found that a lot of advisers rationally were focused on existing clients in order to protect their businesses while few were focused on growth. Given the impact of the environment on advisers during the quarter, we are pleased with our 2Q '20 results, which demonstrates resilience of our business model.
Now let's turn to Slide 6 on our next topic. Over the course of my 30 years in financial services, I cannot think of a time where the industry is changing as dramatically as it is now. While we believe that these changes have been in motion for some time, we also believe that they are going to accelerate and accelerate rapidly. Those firms that fail to adapt are going to lose out. We believe that the most important changes are coming from investor demand. In summary, investors want a better experience from our industry.
Today, many advisers are focused on delivering model portfolios and talking about returns relative to benchmarks. This is not the conversations investors want. Rather, investors want to be deeply understood by their advisers, which means that the adviser needs to know all about the client's goals, aspirations, fears and challenges. Investors want conversations to be about how their portfolios help them reach their changing goals, not about the portfolio's attributes. This is a fundamental change in the way advisers build capabilities and interact with clients. As investors need change, successful advisers will adapt their value proposition as business -- in their business models. For the adviser, it is no longer about simply selling a product or managing money. Advisers need to become custodians of their clients' dreams and fears. They need to understand not just the risk tolerances of their clients, but their clients' true risk capacity, which has been brought into sharp focus given the current environment. Advisers need to focus on comprehensive financial planning and advice and an integrated experience for their clients. This is the new adviser value proposition.
To be able to do this, there will be an increasing reliance on technology and a greater demand for outsourcing value-added services. Outsourcing will help advisers provide a wider breadth of services to their clients, ensure they remain price-competitive, differentiate their offerings and most importantly, grow. Additionally, those advisers who were able to shift towards independence and fee-based practices will be the winners. This is a tremendous tailwind for AssetMark not just because of our outsourced platform, but also because our practice management and business consulting offers help advisers build more efficient and scalable businesses.
Next, let me turn to industry participants. As you all know, economics will be under increasing pressure across the broad definition of our industry. As we've seen for the last decade, there is a continuing shift towards lower cost investment solutions. We are witnessing this at AssetMark as we transition from retail to institutional share classes and as we introduce lower cost products onto our platform. With economics coming under increasing pressure, the ability to scale is critical for industry participants. At AssetMark, we are focused on building scale. This allows us to reinvest in our platform, which results in further growth and, of course, additional scale. At the end of the day, that is what our organic growth is all about. Lastly, regulators will focus on investor protections and conflicts of interest. The key message here is the world is moving towards fiduciary as we see with Reg BI and has always been the case with the Advisers Act of 1940. This is a good thing. We are proponents of fiduciary advice and helping build fiduciary practices. We are continuing to focus on advisers making this transition from commission to advisory and building that fee-based fiduciary practice. We are committed to win in this new environment. Let me turn to Slide 7 and discuss what we are doing to best position us for success.
First, we are continuing to invest in our strategic pillars. The pandemic has not changed our strategy. Instead, it has increased our strategic focus. Our agile business model ensures that we continue to grow and serve our advisers so that they can continue to grow. Let's briefly touch on each of our strategic pillars.
As you know, our technology suite offers fully integrated services. It is our core proprietary technology with third-party tools that help advisers get things done more efficiently and effectively. While we continue to regularly deliver new capabilities and features, given the COVID crisis, we also rolled out Zoom for our top advisers in April. These advisers have conducted nearly 12,000 meetings, 200-plus webinars and reached over 46,000 investors.
Second, we deliver personalized and scalable service. We have always provided best-in-class service, and we have continued to go above and beyond during the pandemic. Our sales teams have had 78,000 interactions with our advisers in the second quarter. This number is up 30% quarter-over-quarter. Additionally, webinars continue to be a valuable way we serve our clients. In the first half of the year, we hosted over 320 webinars, which were attended by over 15,000 advisers. Advisers have been highly complementary of our webinars, giving them a satisfaction rating of 4.3 out of 5. We continue to invest in our service as it is a key competitive advantage for us.
Our third strategic pillar is our holistic and curated investment solutions. One of the key takeaways many advisers have realized from the pandemic is that they don't have enough time or skill to be effective money managers. As a result, we believe more and more advisers will look to outsource this function to free up time to focus on building deeper planning-based relationships with their clients and finding new clients. In our impact of outsourcing study, advisers noted a time benefit of more than 8 hours per week when nearly all investment management tasks were outsourced. Imagine, if an adviser had an extra 50-plus days a year to focus on what they do best, which is working with their clients and then finding new clients to build their businesses.
Our strategy is working, as proven by our 2020 NPS score of 64, up 5 points from last year and 2 points away from our all-time high. Our net promoter survey was conducted between June 15 and July 20. Thus, the score is reflective of the time when advisers relied on technology more than ever. Our service and operations team saw higher trading and call volumes and uncertainty persisted in the markets.
In addition to continuing to invest in our strategy, we are also accelerating our investment in financial wellness. This is a response to the rapidly changing environment that I discussed earlier. So let's look at Slide 8.
Financial wellness interactions are centered around anticipating investor needs. To be able to anticipate investor needs, the adviser has to truly know their client and has to have a deep understanding of their client's goals. We are investing in the future that delivers what the investors really focused on, their aspirations, hopes, dreams and fears. We are building digital tools that help investors articulate their goals and emotions to their adviser. This will aid in creating a stronger client-adviser relationship, more invested assets and greater loyalty. The digital future we are building will make the planning experience, risk assessment and the portfolio come together so that it is a rich and dynamic discussion where the investor feels that their adviser understands them and is on top of all the changes in their lives.
Lastly, we are looking to get smarter about what we do and how we do it in all areas of our business. One example is improving our sales capabilities through digital lead generation. While still in its early stages, we feel this is an effective way to target advisers who will benefit from outsourcing to AssetMark. The investment in our strategic pillars, financial wellness and getting smarter in everything that we do in our business, all have one thing in common, and that is growth.
With that, let me turn it over to Gary to discuss our financial performance for the second quarter and our outlook for the remainder of the year. Gary?
Thank you, Charles, and good afternoon to all those on the call. As Charles has discussed, there is a lot to unpack in our second quarter results. We feel great about our continued organic growth in the business and the effectiveness of our expense management, given the slowdown of the overall economy. As usual, I will start with a discussion of our platform assets, then talk about our revenue, expenses and then our earnings. From there, I will discuss our balance sheet and other key financial highlights. I'll end my remarks with our outlook for the rest of the year.
Starting on Slide 9. Second quarter platform assets were a record $63.2 billion, up 12.8% year-over-year and 12.9% quarter-over-quarter. Market growth in the second quarter offset a large part of the market decline we saw in the first quarter. Year-to-date, though, the market has generated a negative $3.2 billion impact on our platform assets.
Net flows for the quarter were $907 million, in line with our expectations. Second quarter net flows are reflective of reduction and about 80% of pre-pandemic level, while redemptions remain relatively stable quarter-over-quarter. Year-to-date net flows are now $2.7 billion or 8.9% as a percentage of beginning-of-period assets. As previously mentioned, we think this strong organic growth is a positive sign given the current environment. Net flows as a percentage of beginning-of-period assets are expected to be 8% to 10% for all of 2020. In 2021, barring any dramatic changes in the macro environment, we will look back to get -- we will look to get back to our previous target of 10-plus percent.
As Charles mentioned, we added 178 NPAs in the second quarter of 2020. The total adviser base at the end of the second quarter from a little more than 8,400 advisers, of which 2,327 were defined as engaged advisers. Our engaged adviser count were up materially this quarter due to the market appreciation, bringing some advisers' assets above the $5 million threshold. Of our 189 engaged adviser net adds this quarter, about half or 90 engaged advisers were those who came back over the $5 million threshold due to the market appreciation. The other 99 engaged advisers were those who reached the engaged status for the first time ever.
Turning to Slide 10. I want to talk about another of our key operating metrics in more detail this quarter. As a reminder, production lift from existing advisers was calculated by dividing the production attributable to existing advisers for a given period by the platform assets at the beginning of the period. This metric represents both the organic growth of these advisers as well as any incremental share of wallet of the adviser's business that is added to our platform.
In the second quarter, our production lift was 16.3% versus 23.3% in the first quarter 2020 and 24.9% in the second quarter of 2019. This metric was found due to the fact that advisers and client activity was muted due to shelter-in-place orders and the volatile equity markets. This trend has continued in July as money movement for now remains lower than pre-pandemic level. Next week, we will release our July AMK Report, which will show about $300 million in net flows for the month. We feel positive about our adviser engagement and in the future, we have set our production lift to again be north of 20%.
Now let's turn to Slide 11 to discuss the quarter's top line results. Entering the second quarter, our assets were at $56 billion, leading to reported revenue of $99.1 million, down 5.1% year-over-year. As a reminder, about 85% of our revenue for the quarter is based from the beginning-of-quarter asset level. As previously discussed, we focus on our revenue net of related variable expenses. In the second quarter of 2020, our net revenue of $68.6 million was down 3.7% year-over-year.
Let's turn now to the components of our net revenue. Asset-based net revenue was up 3.2% year-over-year to $64.6 million, driven primarily by the growth in platform assets. This has been bolstered by a strong organic growth over the last 12 months, outweighing the negative market impact. Spread-based net revenue was down 56.8% year-over-year to $3.1 million. The decline in spread-based net revenue was the result of lower rates, offset slightly by higher cash balances.
Our average client cash for the second quarter was $2.9 billion, on which we received an annualized net yield of 43 basis points. For the remainder of 2020, we expect an annualized net yield on cash to be around 30 basis points. End of second quarter cash at AssetMark Trust Company was $2.96 billion, up 98% quarter-over-quarter. Of the $2.96 billion in cash at ATC, approximately 15% was in our high-yield cash program.
Turning to Slide 12. Let's discuss our net yield on total platform assets, which was 49 basis points from the second quarter, down 1 basis point quarter-over-quarter and 5 basis points year-over-year. The year-over-year decline was driven by 3 factors. First, net spread yield declined 3 basis points as a result of lower spread income due to lower rates. Second, 1 basis point is attributable to the addition of GFPC and OBS, which had lower yield on assets compared to AssetMark's core business. The additional 1 basis point is due to normal yield compression as a result of our mix shift.
As a result -- I'm sorry, as we have noted in the past, we do expect a 1 basis point decline in our asset-based net revenue each year. This is driven by the growing platform and the mix shift of assets and lower cost options growth. In addition to this regular trend, we will experience a 3 basis point drop in asset-based yield next quarter, primarily driven by our shift out of higher cost mutual funds. As of June 30, we completed the conversion of all our open third-party mutual fund strategies from retail to institutional shares. As mentioned in prior calls, this change will reduce AssetMark's revenue about $10 million to $11 million on an annualized basis. As a result, starting in the third quarter, this will impact our revenue by approximately $2.5 million per quarter.
For clarity and transparency, the calculation of our annualized revenue yield net of variable expenses is shown on Slide 17 in the Appendix of our earnings presentation.
Before we turn to earnings, let's discuss expenses on Slide 13. We remain laser-focused on our expense management, especially in these uncertain times. AssetMark approaches our expenses with a disciplined growth mentality, balancing the desire for top line growth with expectations for earnings targets. In the quarter, we took a number of actions to manage expenses, such as the elimination of a handful of roles and the reduction of travel, events and conferences. As a result, adjusted expenses for the quarter were down 3.7%.
On this slide, asset-based expenses and spread-based expenses are down due to the same drivers affecting revenue: lower assets in the platform due to the market and a much lower interest rate environment. The next 2 lines in the red box, compensation and SG&A, impact our adjusted EBITDA. Employee compensation was flat year-over-year, while our headcount grew by 3.7%, reflecting the effort we are making to control our people costs. SG&A is up $1 million, or 7.2%, with the increase primarily driven by the cost of being a public company, which we estimate to be about $6 million annually. We feel very good about our effort to hold the line on our compensation and SG&A call.
Also shown on this page are our expense adjustments. In the second quarter, we added back a total of $24 million, pretax, which is comprised of 4 items: first, $13.9 million of noncash share-based compensation; second, $5.1 million of amortization expense related to our 2016 sales; third, $3.6 million in acquisition-related expenses associated with our acquisition and integration of GFPC and OBS; and fourth, $1.3 million of add-backs related to reorganization costs and business continuity plan costs in response to COVID-19. As mentioned previously, we expect the full -- we expect the expenses for the full year 2020 to be relatively flat to 2019.
For additional color and adjusted expense reconciliation table for income statement line item can be found on Slide '18 in the Appendix of our earnings presentation.
Now let's turn to Slide 14 to discuss our earnings for the quarter. Our adjusted net income in the second quarter was $15.1 million or $0.21 per share, a decrease of 16% year-over-year. This is based on second quarter diluted share count of $72.6 million. The year-over-year decrease in adjusted net income was driven by lower adjusted EBITDA of $3.3 million, higher amortization of $1.1 million, while offset by lower net interest expense of $2.1 million and lower taxes of $837,000. Our marginal tax rate year-to-date is 25.0%.
In addition to adjusted net income, we view adjusted EBITDA as an equally important measure of our company's health. For adjusted EBITDA, we add back the same expense items mentioned, except the amortization of related items. Our second quarter of 2020 adjusted EBITDA was $25.3 million, down 11.4% year-over-year. Adjusted EBITDA margin for the quarter was 25.6%, in line with our expectation, given the current environment and down 180 basis points in the second quarter of 2019. As a reminder, our model in normal times is to invest incremental profits back into the business while achieving 50 to 75 basis points of margin expansion. During these volatile times, we will be less focused on margin expansion but, as always, fully focused on the need to serve our clients, maintain our organic growth and generate cash.
Now let's look at the second quarter reported balance sheet. I would highlight 2 items. First, as Charles noted earlier, we added $13.4 million to our cash position quarter-over-quarter and ended the second quarter with $93.6 million in cash. Initially, we still have a $20 million credit line that is available for the company. Our cash balance as well as low debt leverage will give us flexibility in deploying cash. And thinking about our cash, we are, first and foremost, focused on growth, either organically or through M&A. In the future, we may look at ways to return capital to shareholders.
Second, capital expenditures primarily reflect our long-term investments in technology to create new capabilities, increase scale and improve service. For the second quarter, our capital spend was $6.2 million or 6.3% of total revenue. This is up 5.3% year-over-year as we are committed to continue investing in the future.
Now I will discuss our expectations for the remainder of 2020. Let's turn to Slide 15. As a result of building in advance, we have collected approximately 3 full quarters of our revenue for the year as of the end of July. The revenue shown reflect -- the revenue shown on the slide reflects the range of outcomes if the market is down 5% versus up 5% in the third quarter. The fourth quarter market will have very little impact on our 2020 results due to our advanced billing. Given that market range and the yield expectations discussed earlier for spread income, we expect net revenue for the second half of 2020 to be about equal to our first half or between $286 million and $293 million for the full year. We will continue to be judicious with how we spend during these unprecedented times to ensure that our expenses are relatively flat year-over-year. As a result, we expect our adjusted EBITDA for the year to fall between $107 million and $113 million, and variability in the range based on the third quarter market impact, which will offset our fourth quarter revenue.
Our margin year-to-date is 25.1%, and we expect that for the full year 2020, our margin will come in around this level. This is down approximately 100 basis points from 2019 margin levels, with the decline driven by the absence of spread revenue. We view 2020 as a reset year. More than ever, we are focused on organic growth. In our 2020 outlook, our key financial metrics, such as net revenue and adjusted EBITDA, are expected to be flat year-over-year despite the absence of spread revenue in this difficult operating environment.
Before I end, I would like to make a comment on the shelf registration that AssetMark filed yesterday with the SEC. As you know, this filing is a standard practice for most public companies to facilitate the easier go-to-market for any future offerings. That said, no date has been set for any offering. And to be clear, it may never happen, depending on circumstances.
And with that, I'll hand it over to Charles for his concluding remarks.
Thanks, Gary. Well done. Appreciate that and appreciate everyone joining us for the call today. Really, if there's one message I'd like you all to take away from this call is that we are growing through the pandemic, and we are well positioned to grow in a post-pandemic world. We're making decisions to strengthen our company, which will benefit our advisers, their clients, our employees, our partners and, of course, our shareholders.
So that concludes our prepared remarks. I'll now turn it back to the operator to begin the questions and answers. Thank you.
[Operator Instructions] Your first question comes from the line of Ken Worthington from JPMorgan.
Going to production, if the pandemic continues to force people to work remotely and meetings are not held by, to what extent should we expect to -- or can we expect to see net sales recover as brokers further acclimate to the environment? And are there any positive signs or green shoots that you're seeing now that tax season has ended that might conclude that, that acclimation process is taking place and things are getting better?
Ken, thanks for the question. I appreciate you joining the call today. It's Charles. It's interesting as we prepared for the call and thought about how would we respond to predictive questions? The challenge in this environment is it is really hard to predict. The data coming in on COVID and spikes we're seeing in different parts of the country are hard to interpret in terms of activity, particularly as we see people going back to sheltering in place. Having said that, our sales teams are out in the field and the number of meetings and engagements that we're having, both with new advisers -- new producing advisers as well as our existing advisers are fantastic. As I quoted earlier, I've been doing quite a few meetings myself. I had one with a group of New York prospects today. They were -- you could see them on Zoom. So they were sitting in their homes, mostly some in their offices, very engaged. And the dialogue was really about growth in this environment. And it's -- what we're seeing is in the first part of COVID, people were frozen. About 1/3 of advisers according to a J.D. Power study, said they weren't even contacting their advisers -- I'm sorry, their clients according to their clients. And then we saw quite a few advisers who were just in sort of, "I'm going to just communicate with me my existing clients and see what happens." Now what we're seeing from a lot of advisers is, "Okay, this is a reality. We're going to be at this for a while. We've got to start building our capabilities to reach out to talk to people to talk about growth." And so the green shoots, as you asked, we're seeing, we're hearing, but I think it's too early to be predictive about that. And it's also quite difficult to be predictive, given the different dynamics and different statistics in different part of the country.
Okay. Fair enough. And then given that production has been weaker in the quarter, is there any concept of pent-up demand and that weaker sales 2Q and during this pandemic may be made up by stronger than typical production in the future? Does that -- do you think that concept sort of exists here or might lower production? Has that sort of gone forever and you can move forward at a bigger pace? But the foregone production just never really reappears. Does that make sense?
Yes, I understand the question. History tells us that in periods of stress and distress, things slow down, and in post periods of distress, things speed up rapidly. And that those firms that are prepared, whether it's an adviser or people like us or other providers that are prepared that are doing the work to continue to invest in capabilities, they continue to reach out and touch clients, touch prospects, bring intellectual capital, bring capabilities, accelerate out of crisis. It's -- as I said a minute ago, always hard to predict the future. But if you look at past performance, you look at what happened after pretty much every crisis, money goes in motion, people are interested, meaning investors are interested in different perspectives, different advice, different capabilities. So money goes in motion for advisers. And we definitely see advisers say, "Gosh, what was working before isn't working now, and I want to do something different." And they really appreciate those firms that have delivered during the crisis. And so I won't be predictive and give you a number, but the history would tell us that we do see that kind of acceleration, and we are investing for that and preparing for that in everything we do each and every day.
Your next question comes from the line of Ryan Bailey from Goldman Sachs.
Charles, you mentioned a scale on Slide 6. So I was wondering if you could speak to the potential for increased competition in the TAMP space. There have been a couple of announcements about consolidation or seeking capital and then an increased focus on the stage from the larger broker-dealers now that they're not earning as much in spread revenue. So I was just wondering if you could elaborate on some of the competition you're seeing.
Yes, Ryan. There is no doubt that we are seeing an increasingly competitive environment. And we think that a competitive environment is accelerating. I think there's a number of drivers associated with that. One is the broker-dealer community that you talked about. So for those advisers that are affiliated with a broker-dealer, we've seen broker-dealers change ownership. We've seen scale build in those broker-dealers. We've seen the economics of those broker-dealers shift as they lost spread revenue and as the revenue inside products has started to decline rapidly. And so what we're seeing is broker-dealers building internal TAMPs. We've talked about this before. And we think that, that competition is frankly good for advisers, it's good for investors as we all have to get better at what we do. But we definitely see that. And we see those broker-dealers looking to build managed account platforms, build some level of technology and build some level of practice management.
Now we think we differentiate from that dramatically. And you can see it in our Net Promoter Scores and our positive net flows. We think we're able to deliver a better and more integrated technology experience. Our curated investment platform is quite different. Most or all the broker-dealers are offering a massive, massive set of investment choices and limiting that down, and curating is actually quite hard to do. And then the magic of our model, the scalable service experience is very hard to replicate because it's hard to build, it's hard to put it into your culture, and it's hard to deliver on. So to your point, we do see increased competition. We do see increased aggressiveness, and that's going to make us better at everything we do. And that scale, as we're seeing less fragmentation in the industry, less $1 billion, $2 billion TAMPs, and more stronger, larger players, we're going to expect to see continued investment out of pretty much everybody.
Got it. Maybe if I could switch gears a little bit and ask you a question about household growth. It looks like that reaccelerated into June. So just wondering if you've seen any trends, and maybe any color you can provide on July in some of new households, kind of the same-store sales dynamics that existing advisers that actually we think is doing perhaps a little bit better than what you might be seeing in the net floors. So just wondering if you could comment on that.
So just, Ryan, I'll repeat that. So you're asking about the existing business for advisers and their ability to bring on new households?
Right. So I guess, as we look at kind of the growth in households count between April and May and then May and June. It looked like June saw a reacceleration in new households. And I was just wondering if you could elaborate on any of the trends that perhaps happened in July and if advisers were actually able to connect with sort of newer clients even in the COVID environment?
Yes. Let me answer that generally. And Gary, I suspect that there's an acquisition element to this, the GFPC and OBS element to that. So maybe to supplicate that number and to that at the end. But the key issue here, Ryan, is that we are seeing a limited set of advisers who are focused on growing their businesses right now. My gut, and this is my personal estimation, is it's somewhere in the 15% to 20% range of advisers. And we're seeing about 1/3 have really, basically, sheltered in place and aren't really doing a lot. We're seeing about half, 50%, that are focused really on their existing clients and making sure those existing clients are pretty darn stable and engaged and feeling the love. And then 15% to 20% of advisers are just saying, "You know, what, the money is going to be in motion. Now is the time." And that 15% to 20% are technology-enabled. They figure out how to communicate with people, use Zoom, use webinars. We've, in fact, in the summer, launched a summer camp set of webinars that are geared towards advisers and their clients, and we're seeing advisers going, "Wow, that's a great thing. I can go out to my clients with content." And prospects, by the way, to go out with prospects. So I think the way I would put it is a little bit the way Ken put it earlier is sort of green shoots. People starting to accept the reality. And those that are aggressive go-getters that are really focused on growth are finding ways. And the big middle are going to have to find ways, and we're going to help them do that.
Gary, do you have a sense of the household number?
Sure. So as we noted, Ryan, in the AMK Report we do, our households grew about 0.5% in June from May. I think that goes along with what Charles is talking about, right? We certainly are bringing on -- they certainly are growing. And if you go back over the month, generally, our growth rate is going to be somewhere about 0.5% to 1% households jumped in February due to our acquisition. But that is a great indicator. One of the main reasons why it's one of our core indicators on our AMK Report. It is -- I think you're absolutely right in focusing on that. That's a great indicator that, yes, organically, we are growing and households are coming on to our platform. And that is a sign that advisers are bringing these households on.
Your next question comes from the line of Chris Shutler from William Blair.
This is actually [Dave Chaudhary] on for Chris Shutler. So our first question is, I think your exclusive relationship with Clark Capital and it's Navigator Personalized UMA offering is so small. So first off, is that correct? Second, can you give us a sense of what percent of your assets are invested in that offering? And lastly, do you expect the end of that exclusivity to impact flows in any type of way?
Yes. So Dave, good to talk to you. Clark Capital is a great partner of AssetMark. I joked with Brendan Clark, their CEO, that it's the best deal I've ever been involved with ever in my life because it was such a huge win for Clark. It was such a huge win for AssetMark, and it was a huge win for our clients and their clients, the investors. And our relationship is deep with Clark. Clark has a dedicated sales force that works with our advisers, their distribution and other platforms is an important part of their business, but the core of their business, the core growth in their business is really with AssetMark. And so we like the relationship we have there. We like the partnership. We work aggressively and carefully on that relationship.
I'm not sure we disclose any particular strategies. I'm pretty sure we don't. So Gary, I'll let you talk to that, but I don't think we disclose any strategists and their particular assets on the platform. But we are actually quite excited about that relationship and the continuing focus in the field from both parts of our organization, continuing the delight advisers have with their capabilities.
Yes. Dave, this is Gary. And just to add a little more color. Well, Charles is right, we don't talk about the asset levels of individual strategists. Clark is one of our favorite strategists on our platform. It's part of our portfolio, what we've kind of semi-group together is kind of a high network offerings. So we have multiple high network offerings on our platform on AssetMark. We are not expecting any impact into our flows and our modeling and the outlook I gave you from -- we don't, as Charles mentioned, we're not anticipating a change in the relationship.
Okay. Great. And second is, based on the discussions that you're having with some of your advisers today, are you expecting the Schwab-Ameritrade merger to be more of a catalyst for your new adviser pipeline?
Yes. The question that's, I think, a lot of speculation in the press that, that is going to create a lot of disruption. So far, I would tell you that there is concern among the advisers about what's going to happen, particularly with TDA advisers. But the adviser business tends to be, particularly as it comes to straight custody, pretty darn sticky. And Schwab has done a nice job, and TD has done a nice job on their custody of the assets. So we'll have to see what happens for the custodians if RIAs make a pure custody choice. And I think if it does happen, it will be driven only because service levels deteriorate meaningfully. And we'll see if that happens or not. I've not heard that, that's happening yet, but we'll see if that happens.
For our business, the driver is not a change in custodian. The new producing adviser decision and the adviser decision about outsourcing or not is not really a custodial decision. We offer open architecture custody. You can offer -- you can offer us more trust. You can -- because we have Fidelity, Pershing, TD Ameritrade with Schwab. And we integrate -- we create that experience. Really, at the end of the day, it is about the adviser saying, "Gosh, I need to spend more time understanding my clients, helping my clients plan for the future, visualize that plan. I need to help my clients understand not just their risk tolerance, which is what we all do in the industry, but their risk capacity. How much risk could they actually take relative to what they can tolerate? And what does their risk need to meet their goals? And how do I visualize that and think about that and model that into the portfolio." And for the advisers that is spending all their time doing due diligence and trying to model and figure out how to construct portfolios from an unlimited universe, the adviser that's trying to buy all the technology to do all that work and to make their practice more efficient, the adviser that -- particularly the smaller advisers that are looking for high service levels and deep practice management capabilities, those are the advisers that we want and that we can serve best. And custodial choice isn't part of that as a driver. It's really those mega trends around the change in the consumer, the change in the investor and the change in the adviser practice that is leading advisers to think about how do we outsource our business and how do we build a better business and serve clients better.
Okay. Ladies and gentlemen, there are no further questions at this time. This does conclude today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.
Thanks to everybody on, and thank you, operator.