Ameriprise Financial leaned on its wealth management division to help soften the impact of “an unusual tax related item” and “volatile equity markets” that seriously undercut its net income and revenues as the company reported that net income fell from $319 million in the second quarter of 2011 to $224 million, and net revenues dropped 3% to $2.5 billion.

“These market-driven impacts were partially offset by growth in fee-based revenues driven by Ameriprise advisor client inflows,” Minneapolis-based Ameriprise said in its report.

Pretax operating margins within the wealth management division increased 11.6% compared to 11.3% a year ago due to cost-cutting that “helped to offset the impact from low interest rates.”

In addition, pretax earnings within the advice and wealth management segment rose 3% over the year to $111 million, which Ameriprise attributed to asset-based fees as well as a $7 million cutback in expenses due to lower distribution costs.

Reflecting that growth, retail client assets rose 4% from $319 million in the second quarter of 2011 to $331 million.

Even so, overall revenue declined slightly from $957 million to $953 million. Ameriprise attributed the drop to a $10 million impact from lower interest rates and lower transactional revenues as investors pulled back from uncertain markets.

“Operating net revenues were essentially flat at $953 million, reflecting advisor business growth and client net inflows offset by the impact of a lower asset earnings rate on cash balances and lower transactional volumes due to volatile markets and the introduction of a new variable annuity rider,” the report noted.

In response to the difficult markets, Ameriprise said it cut sales of guarantee riders and add-on premiums and a new rider in May that requires asset allocation into a managed volatility fund “designed to provide clients with built-in flexibility and to adapt to volatile market conditions.”

Ameriprise had a strong showing in recruitment, adding 91 advisors for the quarter and more than 400 over the last year. However, the new additions did not offset the decreased transaction volumes as operating net revenue per advisor fell 2% from a year ago to $97 thousand.

“Our business results were solid considering the difficult markets during the quarter,” Ameriprise chairman and chief executive Jim Cracchiolo said in the release.