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Ameriprise wealth unit’s growth offsets equity volatility with ease

ByTobias Salinger
April 26, 2022 10:05 AM

Ameriprise’s wealth manager is building on its steady recruiting last year after its fifth straight quarter adding at least a net 100 financial advisors to its more than 10,000.

The growth of the Minneapolis-based firm’s Advice & Wealth Management unit offset the impact of stock volatility in the first quarter on the strength of its higher headcount and the growth of advisors’ practices, according to the firm’s April 25 earnings statement. After slightly thinning headcounts in 2019 and small increases in 2020, Ameriprise’s recruiting efforts are attracting more experienced advisors and enabling it to retain more of its productive practices.

“Ameriprise delivered another good quarter during a period of heightened market volatility and geopolitical uncertainty. We remain focused on providing an exceptional experience and strong solutions to our clients to help them achieve their goals,” CEO Jim Cracchiolo said in a statement. “As I look ahead, we are well positioned to continue to drive organic growth and will benefit from the rising rate environment in the U.S.” 

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To see the key takeaways from Ameriprise’s earnings statements for financial advisors and other wealth management professionals, scroll down our slideshow. For coverage of the company’s earnings in the prior quarter, click here.

Financial advisor headcount

The number of advisors associated with Ameriprise increased by a net 118 registered representatives, or 1%, from the same time a year ago to 10,149 in the first quarter. While the amount of employee advisors ticked down by 1%, or a net 18 reps, to 2,088, independent franchisees climbed by 137, or 2%, to reach 8,061. The headcount gains display “excellent advisor retention” of 92% in the employee channel and 94% among franchisees, according to the firm. Ameriprise recruited 80 “highly productive experienced advisors” in the first quarter.

Productivity

Practice growth and higher sales levels pushed up adjusted 12-month operating net revenue per advisor 18% year over year to $810,000 in the first three months of 2022. Management and financial advice fees surged by 15% to $1.4 billion. While equity volatility led transactional activity to fall by 6%, it also drove up client cash balances by $5.3 billion to $45.7 billion. The moves run “contrary to normal seasonal patterns” for the first period of the year, opening “an opportunity for clients to put cash back to work in the future as volatility subsides,” according to the firm.

Client assets

Despite declines in stock values during the quarter, total client assets in Ameriprise’s wealth unit rose 8% year over year to $823 billion. Advisory account balances tumbled by 12% to $442.1 billion due to the impact of equity volatility in the period, with incoming assets to wrap advisory accounts slipping by 17% to $8.7 billion. However, total client net flows grew 12% to $10.4 billion. The overall higher in-flow for the quarter stemmed from the expansion of advisors’ practices from new incoming clients and larger accounts among existing ones, along with the recruiting of experienced reps, according to Ameriprise. 


Expenses

The rising advisor productivity resulted in higher expenses for the firm relating to the elevated level of business. Distribution costs including compensation jumped 9% year over year to $1.2 billion, and administrative, general and other expenses grew by 4% to $370 million. 


Revenue and earnings

Ameriprise’s Advice & Wealth Management unit earned $440 million in pretax adjusted operating earnings on net revenue of $2 billion, a margin of 21.5%. The profit climbed 9% from the year-ago period, revenue rose 9% and the margin widened by 80 basis points. Market appreciation from prior quarters, growing profitability for the unit’s bank and the firm’s control of expenses boosted the wealth manager’s business in the quarter.
Tobias Salinger
Chief Correspondent, Financial Planning
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