Ameriprise Financial, Inc. Q3 FY2026 earnings call

• Advisor Productivity & Retention: Revenue per advisor grew 13% to $1.2 million, driven by strategic investments in the operating framework. Advisor retention remains strong, particularly among long-tenured advisors (>10 years), staying in the high 90% range.
• Organic Growth Focus: The company prioritizes organic growth over aggressive recruiting. Organic flow rates remained stable at approximately 4%. Inorganic recruiting was selective, with 79 new advisors onboarded despite a competitive environment.
• Cash Management: Total client cash decreased 5% year-over-year to $81 billion, primarily due to third-party money market fund shifts and the Comerica transition. Bank assets increased 2% year-over-year.
• Capital Return: The company accelerated capital returns, repurchasing shares worth $1 billion in the quarter (93% of operating earnings). Full-year capital return increased 24% to $2.9 billion, including the repurchase of 4.9 million shares at an average price of $491.
• Actuarial Update: An annual actuarial assumption update resulted in an unfavorable after-tax impact of $74 million, though the long-term care business is performing in line with expectations.

The Wealth Management segment demonstrated strong performance, with Revenue per Advisor growing 13% to $1.2 million. Client net inflows increased 56% year-over-year to $5.3 billion (excluding Comerica), and RAP net inflows rose 38% to $6.6 billion. Total Assets Under Management (AUM) and Advisement reached $743 billion, up 4% year-over-year. The Asset Management segment reported revenues of $990 million, a 9% increase, with pre-tax adjusted operating earnings of $308 million and an operating margin of 46%. Retirement and Protection Solutions generated pre-tax adjusted operating earnings of $198 million (excluding unlocking).

• General & Administrative Expenses: For the full year, management expects G&A expenses to be flat, excluding Sellequin and other performance fee compensation.
• Margin Maintenance: Management affirmed its commitment to maintaining strong margins across businesses while evaluating trade-offs between sustained profitability, flows, and risk.
• Growth Outlook: The company anticipates continued sustainable profitable growth, driven by organic net new asset growth and effective recruitment strategies that preserve margins.

• Competitive Recruiting Environment: The industry faces a competitive landscape with some firms offering aggressive, multi-year packages. Management views these as potentially unsustainable but acknowledges the need to selectively adjust offers to compete for top talent.
• Interest Rate Volatility: Potential Fed rate hikes are non-controllable factors that could influence competitor behavior and market conditions, though Ameriprise maintains a disciplined approach to risk.
• Asset Outflows: Variable annuity outflows and higher distribution expenses impacted Retirement and Protection Solutions earnings, partially offsetting market appreciation and favorable life claims.
• Market Sensitivity: The business is exposed to equity market fluctuations, which affect AUM growth and advisory productivity, although the firm has a proven track record of navigating market cycles.

Q: Analyst asked about press reports suggesting changes to advisor recruiting/retention packages and their widespread nature. / A: Management firmly denied making broad strategy changes, reiterating a focus on organic growth and advisor support. CEO Jim Cracchiolo dismissed press reports as noise from anonymous sources/recruiters, emphasizing that high retention is driven by technology, coaching, and practice management support rather than aggressive financial packages. CFO Walter Berman added that any adjustments are individualized based on specific advisor objectives (e.g., succession, liquidity) rather than a one-size-fits-all program, ensuring equitable treatment while maintaining firm profitability.

Q: Analyst inquired about the size of future Financial Institutions Group (FIG) opportunities post-Huntington Bank acquisition. / A: CEO Cracchiolo indicated that while Huntington was a large 'whale' deal, the firm already has experience with smaller acquisitions. He stated that the successful integration of Huntington demonstrates Ameriprise’s capability to support larger activities, potentially opening doors for similarly sized opportunities. The firm aims to leverage its differentiated advisor support services to attract more banking institution partnerships.

Q: Analyst asked if expected Fed rate hikes would change the competitive recruiting outlook or encourage more aggressive competitor packages. / A: Management acknowledged that rising rates might fuel more aggressive offers from competitors seeking to lock in advisors during a 'risk-on' environment. However, they emphasized that such deals often have extended payback periods (7-8 years) and rely on non-controllable market conditions. CEO Cracchiolo warned that rate environments are cyclical and that Ameriprise’s rational, value-proposition-based approach ensures sustainable productivity and advisor success, unlike competitors who may offer unsustainable terms.

Q: Analyst questioned whether stable AWM margins account for declining customer cash balances and potential pressure from money market fund shifts. / A: CFO Berman confirmed that stable margins incorporate current cash trends, noting that Q3 declines were partly distorted by the Comerica transition and seasonal factors. He assured that cash sweep balances are well-managed with ALM capabilities, and no unusual decline in margin from cash yields is expected. Additionally, regarding institutional flows, CEO Cracchiolo noted weakness in fixed income categories but expressed confidence in winning back business over time through underlying adjustments.

Q: Analyst asked about the impact of higher long-term yields on Retirement and Protection Solutions (RPS) earnings and details on the actuarial unlock assumptions. / A: Management highlighted that RPS provides stable contributions and counterbalances cyclicality, with investment strategies generating good spreads even in higher yield environments. Regarding the actuarial review, CFO Berman explained that behavioral assumptions for variable annuities and insurance remain within anticipated boundaries despite equity market appreciation. The unfavorable $74 million impact was fully expected, and the portfolio is managed comfortably within established risk-return parameters.