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October 25, 2017

Ameriprise wealth unit pre-tax operating earnings surge 29% in Q3

The advice & wealth management arm of Ameriprise Financial has posted pre-tax operating earnings of $298m for the third quarter of 2017, a jump of 29% compared to $231m in the year ago period.

The company attributed the surge in the unit’s earnings to asset growth, higher earnings on cash balances and well-controlled expenses. The unit’s pretax operating margin rose to 21.5% from 18.2% in the third quarter of 2016.

For the quarter ended 30 September 2017, operating net revenues increased 9% to $1.38bn from $1.27bn a year ago. Operating expenses rose 4% year-on-year to $1.08bn.

Total retail client assets increased 13% to $539bn from $476bn in the year ago third quarter.  The company said that the rise was due to client net inflows, client acquisition, market appreciation and the acquisition of IPI.

Wrap net inflows were $6.1bn, contributing to a 19% year-over-year surge in balances to $235bn.

Asset Management

The pre-tax operating earnings in the asset management unit were $200m, a surge of 29% compared to $155m in the third quarter of 2016. The company said that the rise in earnings at the division was driven by market appreciation and expense discipline.

The unit’s third quarter operating net revenue increased 5% to $778m from $740m a year earlier, due to asset growth from market appreciation.

The division’s operating expenses rose 1% year-on-year to $578m, due to well managed general and administrative expenses, lower distribution expenses and ongoing investments in the business.

The unit’s AUM totalled $484bn at the end of September 2017, up 3% from $468bn in the year year ago period.

Ameriprise chairman and CEO Jim Cracchiolo said: “Ameriprise delivered a record third quarter driven by significant momentum in our Advice & Wealth Management business and asset growth across the firm.”

“We reported new highs in retail client flows, assets and advisor productivity, and for the sixth consecutive quarter, increased client net inflows into fee-based investment advisory accounts. We’re serving more clients in our target markets of the affluent and mass affluent, as well as attracting quality advisors to Ameriprise. In Asset Management, we’re consistently delivering strong investment performance for clients while managing industry change and generating competitive financial results,” Cracchiolo added.

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