Advisor productivity reached a new high for Ameriprise Financial (NYSE: AMP) in the second quarter, up 14 percent from a year ago to $99,000, driven by improved client activity and retail client net inflows, the company said in its earnings release. During a conference call Thursday morning, chairman and CEO Jim Cracchiolo told analysts that the Securities America sale, announced in April, was “proceeding well,” and that the firm would be announcing a buyer in the near future. Ameriprise reported Securities America’s financials as discontinued operations in its earnings report.
Cracchiolo said that on Wednesday, the U.S. District Court for the Northern District of Texas approved a $150 million class action settlement related to allegedly fraudulent private placements from Medical Capital Holdings and Provident Royalties the company sold to investors. The settlement brings Ameriprise one step closer to putting the SAI debacle behind it.
Otherwise, Ameriprise didn’t mention the independent broker/dealer unit in its earnings report, except in a few line items on discontinued operations. The firm reported $162 million in assets held for sale, which includes SAI, and a loss of $4 million in its discontinued operations.
Sophie Schmitt, analyst with Aite Group, said it was interesting that Ameriprise is already writing the unit off, but that this is business as usual for the firm. From a management perspective, SAI was never really integrated, except in its financials, she added. SAI reps are likely not helping with the firm’s productivity numbers, so that could be another reason they’re excluded.
There was no data on advisor count at Securities America, although it had about 1,800 reps at the end of the first quarter. Industry sources expected it to lose many of its large producers by the time a buyer was announced, as Registered Rep. has reported. Some have departed already. Barry Shevlin, one of the firm’s top 10 producers, left for Cambridge Investment Research a few months ago, and Cambridge said it expects to add other SAI reps with a total production of $8.5 million by the end of the third quarter.
Commonwealth Financial, meanwhile, announced recently it added former SAI advisors from Tonkinson Financial, Capital Wealth Management, and Smallwood Capital Management, who manage over $400 million in assets combined.
Meanwhile, Ameriprise added a net 10 FAs versus the prior quarter, bringing total headcount (excluding Securities America) to 9,663. Headcount is down 1 percent from the year-ago quarter, however. In its second quarter report, the firm said its advisor numbers were offset by the departure of lower-producing reps.
Improving advisor productivity has been a focus at the firm for more than a year. Since the second quarter of 2009, productivity per advisor has grown from $65,000 to $99,000, Cracchiolo said. (Note: Ameriprise reports these numbers on a quarterly basis, unlike the wirehouses, which tend to report annualized numbers.)
“Years ago, the advisor business was regarded primarily as a distribution platform, and not a profit center,” Cracchiolo said. “Today, we’ve transformed the business, both from an economic and operating perspective.”
During the quarter, wrap account assets, or fee-based assets, gained $2.3 billion in net flows to total $105.9 billion. Total client assets were up 20 percent from a year ago to $319 billion, which the firm attributed to market appreciation and strong retail inflows. But this was only 1 percent higher than the first quarter.
“I think that it’s positive, but it’s not overwhelming,” said Schmitt, who noted that Ameriprise’s 1 percent asset gain was actually better than the gains at many of its wirehouse competitors who posted slight reductions, such as Morgan Stanley Smith Barney.
During the call, Cracchiolo said the firm has been investing heavily into its advisory business, especially on the franchise side.
“We made very significant investments in our advisors and we are continuing to do so,” he said. “We’ve consistently supported them with local and national marketing. We’ve offered new products and enhanced existing options, and we’re delivering a number of important technology upgrades, including the new brokerage platform that we’re rolling out now.”
Overall, Ameriprise earnings were up 21 percent from a year ago to $328 million, or $1.31 a share. Net revenues totaled $2.592 billion during the quarter, a 14 percent gain from the year-ago period.