Ameriprise Financial’s advice and wealth management segment was the bright spot in the firm’s first quarter earnings report released Monday, with high advisor productivity, increased margins and record net inflows.
On a conference call Tuesday morning, Jim Cracchiolo, chairman and CEO, said wealth management’s pre-tax operating margin was 12.9 percent, up from 9.9 percent a year ago, driven by increased advisor productivity and lower expenses. Productivity rose to an average of $104,000 per advisor, up from $98,000 in the first quarter 2012.
“Our fee-based businesses are leading our growth with a very good quarter for our wealth management business where we are generating strong advisor productivity and client net inflows,” said Cracchiolo.
Improving advisor productivity has been a focus at the firm for the last few years. Since the second quarter of 2009, productivity per advisor has grown from $65,000 to $104,000. (Note: Ameriprise reports these numbers on a quarterly basis, unlike the wirehouses, which tend to report annualized numbers.)
The firm also reported record wrap account net inflows of $4.1 billion, up 41 percent from a year ago. Advisor client assets increased 11 percent to $372 billion, due to strong net inflows and market appreciation. Assets across the firm hit a record high of $708 billion, much of which is attributed to the net inflows in the wealth management segment.
Advisor recruiting, however, slowed during the quarter, Cracchiolo said. At quarter end, the firm had 9,777 total advisors, up slightly from the fourth quarter at 9,767.
Cracchiolo said the slowdown was consistent with the rest of the industry, however, saying that advisors were more focused on managing their clients’ portfolios through the fiscal and tax changes. The firm has also been focused on bringing on higher producers, which is more competitive.
Cracchiolo said the new compensation disclosure rules would have some affect on the firm’s recruiting, but not much. While a lot of movement between the wirehouses is related to compensation, he believes Ameriprise is attracting advisors with a different model, one focused more on advice. Therefore, advisors would have an easier time explaining to clients why they’re making a change—they’re moving to a different model.
Overall, the firm’s earnings of $1.59 a share beat analysts’ expectations. The firm’s stock price was up about 2 percent as of press time.