Wealth Management Leads Ameriprise in 1Q

After a successful end to 2012, Ameriprise continued to build on its momentum with higher earnings and record assets under management in the first quarter.

The firm’s revenue advanced 4% since the year-ago quarter, reaching $2.6 billion thanks to a substantial boost from fee-based businesses, Ameriprise Chairman and Chief Executive Jim Cracchiolo said in a statement released with the firm’s first quarter earnings on Monday.  Revenue in the wealth segment topped $1 billion, a 7% jump from last year, and pretax operating earnings at the wealth segment rose 39% from a year ago to hit $131 million.

“Our fee-based businesses are leading out growth with a very good quarter for our wealth management business where we are generating strong advisor productivity and client net inflows,” Cracchiolo said.

Assets under management rose 11% to $372 billion “driven by strong net inflows and market appreciation,” according to Ameriprise. That helped to propel total assets under administration and management to a record high of $708 billion. It also offset a $10 million loss of earnings due to lower interest rates, the firm said.

Operating expenses increased 3%, due to “higher distribution expenses associated with business growth,” the firm said. But general and administrative expenses fell by 9% in the last year since Ameriprise announced it had completed a conversion of the brokerage platform and lowered costs associated with some discontinued banking operations. As a result, the division’s pretax operating margin rose to 12.9% compared to 9.9% a year ago.

Since the first quarter last year, the firm picked up 37 advisors in the employee channel, bringing that business’s total advisors to 2,303. The firm reported that it had lost 15 employee advisors in the first quarter, and retention was 91.2%. Including the franchisee advisors, the firm had 9,777 total at the end of 2013.

Operating net revenue per advisor ticked up by 9%, topping out at $104,000.

As a result of that growth, the firm raised its dividend 16% to $0.52 per diluted share. “Our operating return on equity hit a high of 16.4% in the quarter,” Cracchiolo said. “We see opportunities to continue to grow our return over time.”