Ameriprise Financial, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Wealth: Client assets grew to a record $1.1 trillion; 73 experienced advisers joined in the quarter. Launched Signature Wealth to enhance wealth management capabilities. Adviser productivity increased 11% to $1.1 million per adviser.
• Asset Management: Launched active ETFs in the U.K. and Europe, managed expenses well, and saw assets under management increase despite $8.7 billion in outflows.
• Bank: Total assets up 6%, loan growth driven by pledge; launching new products like CDs, HELOCs, and checking accounts.
• Awards: Recognized by Kiplinger's for outstanding overall satisfaction and Fortune as one of America's Most Innovative Companies.

Segment Performance

• Wealth Management: Client assets reached a new record of $1.1 trillion, up 11%; wrap assets increased 15% with wrap net inflows of $5.4 billion. Revenue per adviser was $1.1 million, up 11%. Adjusted operating net revenues for wealth management were $2.8 billion, up 6%, with a margin of 29%.
• Asset Management: Total assets under management and advisement increased to $690 billion, up 2% year-over-year and 5% sequentially. Operating earnings were $222 million, up 2%, with a margin of 39% at the top end of the target range.
• Retirement and Protection Solutions: Pretax adjusted operating earnings increased 9% to $214 million, with sales of $1.4 billion and strong performance in structured annuities.

Guidance

• Target an 85% payout ratio for the balance of the year.
• Expect low to mid-single-digit growth in G&A expenses for wealth management.
• Asset Management margin remains at the top end of the target range.

Risks

• Market volatility impacting client flows and investment performance.
• Uncertainty around tariffs affecting economic conditions and client behavior.
• Irrational behavior in recruitment packages potentially affecting distribution expenses.

Question and Answer

Q: Steven Chubak from Wolfe Research asked about software flows and M&A reacceleration.

A: Jim Cracchiolo discussed flows impacted by tax payments and Liberation Day, expecting recovery.

Q: Wilma Burdis from Raymond James followed up on recruiting strategy.

A: Jim Cracchiolo talked about focusing on the value proposition, adviser productivity, and competitive recruitment packages.

Q: Jeffrey Schmitt from William Blair inquired about outsourcing and recruiting.

A: Jim Cracchiolo mentioned focus on recruiting, centralized channel business, and institutional business.

Q: Tom Gallagher from Evercore ISI asked about RPS and risk transfer.

A: Walter Berman and Jim Cracchiolo discussed strong fundamentals in RPS, favorable mortality, and no updates on risk transfer.

Q: Alexander Blostein from Goldman Sachs asked about bank securities portfolio and funding.

A: Walter Berman talked about spread increase from portfolio roll-over and funding via liability products like CDs.

Q: Craig Siegenthaler from Bank of America asked about recruitment and M&A.

A: Jim Cracchiolo discussed competitive packages and the value proposition for recruiting advisers.

Q: John Barnidge from Piper Sandler asked about asset management flows and recruitment vs automation.

A: Jim Cracchiolo talked about redemption volatility, product launches, and the balance between human capital and automation.

Q: Michael Cyprys from Morgan Stanley inquired about recruiting pipeline and distribution expense.

A: Jim Cracchiolo and Walter Berman discussed pipeline outlook and drivers of distribution expense.

Q: Suneet Kamath from Jefferies asked about growth drivers and strategic pivots.

A: Jim Cracchiolo discussed organic growth from existing advisers and no significant strategic pivots planned.