Ameriprise Financial Inc. (NYSE: AMP), one of the nation’s largest independent broker-dealers, reported strong growth during the third quarter 2017 across a number of metrics.
“I’m pleased to share it was an excellent quarter for Ameriprise, continuing the trend set in the first half the year. In terms of operating numbers, excluding unlocking, we set record results,” explained Ameriprise CEO James Cracchiolo. “Our target market has increased significantly and the largest wealth transfer in U.S. history will take place in the coming years. That’s where we’re focused. And we see in the results client assets grew significantly in the quarter. In fact, Ameriprise client assets increased 13 percent to $539 billion, a new record.”
According to the company’s quarterly filing, third quarter 2017 net income totaled $503 million, up $288 million or 134 percent compared to a year ago, or $3.24 per diluted share, up $1.94 per share.
Operating earnings were $548 million, up $321 million or 141 percent compared to a year ago, with operating earnings per diluted share of $3.53, up $2.16 per share.
Excluding the non-cash impact of annual unlocking in both periods, operating earnings were up 27 percent to $484 million in the quarter and operating earnings per diluted share increased 36 percent to $3.12. According to the company, unlocking represents the annual review of insurance and annuity valuation assumptions and model changes and the long-term care review conducted in the third quarter.
Net revenues were $3 billion, an increase of 5 percent compared to last year, after normalizing for the impacts from unlocking and 12b-1 fees, the company said.
Expenses of $2.4 billion decreased 15 percent, or $407 million, year-over-year.
Operating net revenue increased 6 percent to $3 billion after normalizing for the net impacts of unlocking and 12b-1 fees.
Operating expenses of $2.3 billion decreased 16 percent, or $428 million, from a year ago, largely due to unlocking impacts.
According to Cracchiolo, Ameriprise enjoyed a record-breaking quarter in which earnings were up 27 percent, year-over-year, return on equity was up 30 percent, and assets under management increased 9 percent to $869 billion.
“Net inflows into our fee-based investment advisory accounts were $6.1 billion, another all-time high. Inflows more than doubled what we brought in a year ago. And this is our sixth consecutive quarter of increasing growth in wrap net inflows,” said Cracchiolo. “Adviser productivity also reached a new high in the quarter. Normalized for the net impact of transitioning advisory accounts share classes without 12b-1 fees and IPI, productivity was up 14 percent on a quarterly basis.”
Third Quarter 2017 Highlights
· Total assets under management and administration increased 9 percent to $869 billion.
· Advice and Wealth Management and Asset Management generated 68 percent of pretax operating earnings this quarter, excluding unlocking.
· During the quarter, the company repurchased 2.3 million shares of common stock for $333 million and paid $129 million in quarterly dividends.
· Advice & Wealth Management client assets increased 30 percent to a record $539 billion, which the company noted is the result of client engagement and net inflows, as well as its acquisition of IPI.
· Fee-based investment advisory (wrap) net inflows were $6.1 billion in the quarter, bringing platform AUM to $235 billion, one of the largest in the industry. Wrap inflows grew for the sixth consecutive quarter and reached a new high.
· On July 1, the company closed its acquisition of IPI, an independent broker-dealer specializing in the delivery of investment programs for financial institutions, including banks and credit unions. The acquisition added 215 financial advisors and $8 billion in assets.
· 12 Ameriprise advisors were named to the 2017 Barron’s Top 100 Independent Financial Advisors ranking, 13 advisors were named to Forbes America’s Top Next-Generation Wealth Advisors list, seven advisors were named to the 2017 Barron’s Top 100 Women Financial Advisors list and eight advisors were recognized on a new ranking, Working Mother Top Wealth Advisor Moms.
· Advice & Wealth Management pretax operating earnings increased 29 percent to $298 million, which the company said is driven by asset growth, higher earnings on cash balances and well-controlled expenses. This resulted in 330 basis points of margin expansion and a pretax operating margin of 21.5 percent, up from 18.2 percent a year ago.
· Total retail client assets increased to a high of $539 billion. Wrap net inflows reached a new high of $6.1 billion in the quarter, which contributed to a 19 percent year-over-year increase in balances to $235 billion. Client cash balances were $25.5 billion, up from a year ago, and certificates balances grew 13 percent to $6.4 billion.
Operating net revenue per advisor on a trailing 12-month basis increased to $541,000 after normalizing for the net impact from eliminating 12b-1 fees in advisory accounts and IPI. Operating net revenue per advisor on a quarterly basis increased 14 percent after normalizing for those items.
Total advisors increased to 9,890 reflecting good recruiting and retention of advisors, with 88 advisors moving their practices to Ameriprise in the quarter and 215 joining through the IPI acquisition. Last quarter, Ameriprise had a total of 9,640 advisors.
Ameriprise Financial oversees a nationwide network of approximately 10,000 financial advisors and has $869 billion in assets under management.