Ameriprise Reports 17% Increase in Net Income and 4% Growth in Net Revenues
Ameriprise Financial Inc. (NYSE: AMP), one of the nation’s largest independent broker-dealers, reported its financial results for the second quarter of 2017 and held a conference call yesterday to discuss the results.
• Net income totaled $393 million, up 17 percent compared to a year ago, or $2.50 per diluted share, up 27 percent.
• Operating earnings totaled $441 million, up 16 percent compared to a year ago, with operating earnings per diluted share of $2.80, up 26 percent.
• Net revenues of $3.0 billion increased 4 percent, or $114 million, from a year ago.
• Expenses of $2.5 billion increased 1 percent, or $13 million, compared to last year.
• Operating net revenues of $3.0 billion increased 3 percent, or $94 million, compared to a year ago.
• Operating expenses of $2.4 billion decreased 1 percent, or $14 million, year-over-year.
• General and administrative expenses decreased 3 percent to $739 million compared to the second quarter of 2016 when they totaled $762 million. The company said the decrease was due to ongoing expense discipline.
On yesterday’s conference call, chairman and CEO James Cracchiolo noted that Ameriprise and its advisors were well prepared for the Department of Labor fiduciary rule and its June 9th implementation date.
“As part of our comprehensive adviser support plan, including the series of webcast and more than 100 training sessions over the last few months, we continue to provide clear direction and extensive training for our advisers so that they are well supported and able to continue serving clients and building their practices through this time,” said Cracchiolo.
He added, “We eliminated 12b-1 fees in advisory accounts earlier this year…and we’ve also streamlined our fund range like others. We’re currently working to be ready for any further requirements that may be necessary on January 1, and continue to have appropriate resources devoted to this work.”
Second Quarter 2017 Highlights
• Total assets under management and administration increased 7 percent to $835 billion from Ameriprise advisor client net inflows.
• The company repurchased 2.8 million shares of common stock for $352 million and paid $129 million in quarterly dividends.
• Advice & Wealth Management client assets increased to a record $512 billion from attracting more clients in the company’s target market of $500,000 to $5 million in investable assets and strong client net inflows.
• Fee-based investment advisory (wrap) net inflows were $4.5 billion in the quarter, bringing platform AUM to $222 billion, one of the largest in the industry. The company noted that wrap inflows grew for the fifth consecutive quarter and reached a new high.
• Advice & Wealth Management pretax operating earnings increased 32 percent to $291 million, which the company said was driven by asset growth, higher earnings on cash balances, and well controlled expenses. This resulted in 390 basis points of margin expansion and a record pretax operating margin of 21.6 percent, up from 17.7 percent a year ago.
• Total advisors were 9,640 and 81 advisors moved their practices to Ameriprise in the second quarter.
• Operating net revenue per advisor increased to $541,000 on a trailing 12-month basis.
• Operating net revenue per advisor on a quarterly basis increased 14 percent after normalizing for the net impact from eliminating 12b-1 fees in advisory accounts.
At the beginning of July, Ameriprise closed its acquisition of Investment Professionals Inc., an independent broker-dealer based in San Antonio with approximately 200 financial advisors and approximately $8 billion in assets. The acquisition will be reflected in the company’s third quarter 2017 results.
Ameriprise Financial oversees a nationwide network of approximately 10,000 financial advisors and has $835 billion in assets under management.