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July 27, 2017

Ameriprise Financial wealth arm pre-tax operating earnings surge 32% in Q2

The advice & wealth management division of Ameriprise Financial has reported pre-tax operating earnings of $291m for the second quarter of 2017, an increase of 32% compared to $221m a year ago.

The company attributed the rise in earnings to asset growth, higher earnings on cash balances and well controlled expenses.

The division’s pretax operating margin stood at 21.6%, versus 17.7% in the previous year.

Operating net revenues increased 8% to $1.35bn from $1.25bn a year ago, driven by strong net inflows into wrap accounts, higher earnings on cash balances and market appreciation.

Operating expenses were up 3% year-on-year to $1.05bn, due to higher distribution expenses related to growth in client assets. General and administrative expenses remained flat compared to the last year.

Total retail client assets were $512bn, an increase of 11% over $462bn a year earlier. The company said that rise was due to client net inflows, client acquisition and market appreciation. Wrap net inflows were $4.5bn, resulting in a 17% year-over-year rise in balances to $222bn.

The company’s total advisors at the end of the quarter ended 30 June 2017 were 9,640.

Asset Management

The pre-tax operating earnings at the asset management unit were $176m for the second quarter of 2017, an increase of 19% from $148m in the corresponding quarter of 2016.

The company said that the rise in earnings at the unit reflected market appreciation that was partly offset by the cumulative impact of net outflows.

The unit’s operating net revenue rose 1% year-on-year to $748m, due to asset growth from market appreciation.

Operating expenses at the division dipped 3% to $572m from $591m a year ago, due to well managed general and administrative expenses, lower distribution expenses, the impact of foreign exchange rates, and a legal expense in the year ago period.

The unit’s AUM totalled $473bn as at 30 June 2017, up 3% compared to $460bn last year.

Ameriprise chairman and CEO Jim Cracchiolo said: “Ameriprise delivered strong results in the second quarter led by significant gains in wealth management. We’re generating good growth that reflects the value of the advice and the solutions we provide our clients.

“In this low volatility environment, clients are putting their money to work, which fueled a record quarter for net inflows in fee-based investment advisory accounts at $4.5 billion and nice gains in advisor productivity.”

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