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Ameriprise sees wealth management growth despite slowing inflows

By Dan Shaw
October 26, 2023 12:50 PM
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Ameriprise Financial's wealth management unit reported another strong quarter Wednesday as both its net revenues and earnings posted double-digit year-over-year percentage increases.

The Minneapolis-based firm's advice and wealth management segment reported $729 million in net earnings for the third quarter, a figure up 23% year over year. The haul would have been even bigger, the firm said, had it not been for the need to set aside $20 million "for an industry-wide regulatory matter relating to electronic communication recordkeeping requirements."

Ameriprise and other industry players have been dogged for the past year or so by Securities and Exchange Commission investigations into financial firm employees' use of WhatsApp and similar services to discuss business matters with clients and amongst themselves. Also reporting its results Wednesday, St. Louis-based Stifel said it had to set aside $67 million in the third quarter for legal charges mainly arising from a similar probe. 

As at Stifel, Ameriprise's advice and wealth management segment was the standout in an otherwise difficult quarter. Ameriprise has estimated wealth management constitutes 85% of its business.

"Wealth Management remains our primary growth driver with good client flows and excellent client-advisor engagement," Ameriprise Chairman and CEO Jim Cracchiolo said in a statement.

For more highlights from Ameriprise's third-quarter earnings, scroll down. To read about its second quarter, click here. For its first-quarter results, follow this link.  

Financial advisor headcount

Ameiriprise added 64 advisors in the third quarter, bringing its total count to 10,258. That number was essentially unchanged from the 10,282 Ameriprise had on staff at the end of the third quarter of 2022.

Amerirprise's independent arm reported essentially no year-over-year change in its headcount, ending the quarter with 8,154. Its tally for advisors who are direct employees of the firm meanwhile rose by 1% to 2,104. Ameriprise reported a 92% retention rate in its W-2 channel and nearly 93% rate for its independent channel.

Productivity and revenue

The firm reported a 10% year-over-year increase in its advisors' average productivity. That brought the total to an annualized $901,000. Ameriprise said the increase resulted "from enhanced productivity, business growth and market appreciation."

All told, the advice and wealth management segment reported a 13% increase in net operating revenues of $2.4 billion. About $1.4 billion of that came from management and financial advice fees.

Client assets

Ameriprise reported a 15% year-over-year increase in its total client assets to $816 billion. That figure was pushed up in part by $8.9 billion in inflows, a figure down 20% year-over-year.

Advisory assets under management rose 15% to $439.3 billion. That was benefited by $5.4 billion in net inflows but offset by $16 billion in market depreciation. Walter Berman, Ameriprise executive vice president and chief financial officer, said the firm held a record high of $72.5 billion in cash accounts, including money markets and certificates of deposit.

"This creates a significant redeployment opportunity as markets normalized for clients to put money back to work in wrap and over products on our platform," Berman said.

Clients' cash held in so-called "sweeps" accounts meanwhile fell 13% year over year to $40.5 billion. These accounts are often lucrative for firms because they pay interest at a higher rate than what clients receive.

Berman said Ameriprise's sweeps accounts hold $6,000 on average. Of the aggregate cash, he said, 67% is in accounts worth less than $100,000.

Expenses

The advice and wealth management segment's operating expenses came to nearly $1.7 billion, showing a 9% year-over-year increase. That was driven by distribution expenses of nearly $1.3 billion, which were also up 9% year over year.

Remark

In an earnings call Wednesday, Cracchiolo said he doesn't think Ameriprise's slight dip in wealth management inflows is a sign of things to come.

"I think people — for the summertime — things slowed a bit," he said. "But we don't see that as sort of a trend line down. We see it as more sustainable based on what we're doing, how advisors are engaged and how they're attracting clients and activity in the marketplace. So we still feel very good about our ability to continue on the client flow rate."
Dan Shaw
Reporter, Financial Planning
Industry News Earnings Investments Investment returns Ameriprise Financial
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