Ameriprise Earnings Rise in Q3 Thanks to Recruitment and Organic Growth


After adding double the number of experienced financial advisers compared to the previous quarter, Ameriprise’s wealth manager is targeting more potential recruits in the banking channel.

Unlike competing companies which have higher revenues per advisor with lower overall workforce, the number of advisors and their productivity both reached new highs in the third quarter for the Minneapolis-based consulting and wealth management division of Ameriprise, the company said in disclosure its yields on October 26. The wealth manager also boosted organic growth by almost two-thirds compared to the period last year, in terms of overall client assets and overall advisory flow.

“We have a long history of focusing on growth in advisor productivity and we are driving some of the highest growth rates in the industry,” CEO Jim Cracchiolo said on a call with analysts, according to to a Motley Fool transcript. “At the same time, we complement this with the targeted recruitment of experienced, productive advisors who are drawn to our brand and our value proposition. “

Recruitment: Ameriprise’s wealth manager added 168 net advisers compared to the period last year to reach 10,073 in the third quarter, a gain of 2%. However, its two channels were in contrast: the number of independent franchise advisers increased 2% year-on-year to 7,961, while the number of salaried brokers declined 1% to 2,112. recruited 104 experienced advisers over the period, compared to 42 in the second trimester. After Ameriprise Financial Institutions Group made a pair of big recruitment In recent months, Cracchiolo attributed the higher recruiting metrics to the company’s return to in-person recruiting and increased targeting of advisors based in bank and credit union wealth programs. “We took a little while to integrate this into our platforms and capabilities and now we are actually adding new banking partners and adding advisors to those partners,” said Cracchiolo. “And so it’s shaping up pretty well for us and we think there’s a good way forward in that direction.”

Customer assets and productivity: Based on the key indicator of total client flows, the asset manager’s organic growth rate fell from 4% in the third quarter of 2019 to 6% during the same period this year. Overall, net client asset flows jumped 64% year-on-year to $ 10.04 billion, while inflows to integrated advisory accounts climbed 65% to 9.40 billions of dollars. During the same period, client assets increased 22% to $ 811.19 billion and overall advisory assets under management increased 28% to $ 430.55 billion. Annual adjusted net operating income per advisor jumped 15% to $ 766,000. In addition to the appreciation in the value of the shares from the third quarter of 2020, the acquisition of new customers and additional services and products among the existing ones stimulated organic growth. Its parent company’s bank is also driving this growth, with nearly $ 11 billion in assets and $ 1.1 billion in cash transfer accounts entering the bank in the quarter, the director said. financier Walter Berman. “Ameriprise Bank contributes to the growth of wealth management primarily by enabling us to recover progressive spread cash deposits,” said Berman. “We are seeing good growth in banking products, including pawn shops which have gained ground with our advisor base since the product launched in the fourth quarter of 2020.”

At the end of the line: Ameriprise’s wealth management arm generated adjusted operating income before tax of $ 459 million on net sales of $ 2.05 billion for the third quarter. Profit grew 43% year-over-year for the period, while revenue was up 23%. The adjusted operating margin before tax of 22.4% increased by 320 basis points compared to the prior year. In addition to stock appreciation, the company derived higher profit from customer asset flows, higher sales volumes and expense management, according to Ameriprise. The wealth manager’s parent company is set to increase earnings per share in 2021 by more than 30%, according to a note after the call from William Blair analyst Jeff Schmitt. “Revenues and profits are at record highs, thanks to a leading wealth management franchise that continues to gain market share, an asset management business that is bursting after stagnating for several years, a discipline continued in terms of spending and favorable market conditions, ”Schmitt said. noted. “This fuels strong free cash flow generation and high return on capital, which continues to be a key driver of EPS growth.”


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