Ameriprise Financial, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Overall Performance: Ameriprise had a strong start to 2025 with assets under management growing to $1.5 trillion. Adjusted operating results were positive: total revenues up 5%, earnings up 8%, EPS up 13%, and return on equity ex AOCI at 52%.
• Wealth Management Details: Clients were highly engaged with assets up 7% to $1 trillion and $10.3 billion in inflows. Wrap activity and transactional activity were robust. The company launched Signature Wealth, a new UMA. Adviser productivity rose 12% with 82 experienced advisers recruited.
• Asset Management Efforts: Focused on positioning strategies, launching active ETFs, SMA model delivery, and an interval fund. Despite net outflows, margins remained strong due to expense management.
• Bank Performance: Assets grew to over $24 billion. The bank launched CDs and will add HELOCs and checking accounts, minimizing rate cut impacts.
• Client Satisfaction: Ameriprise had a 4.9 out of 5 client satisfaction rating and earned Hearts and Wallets top performer recognition, with advisers recognized in various rankings.

Segment Performance

• Wealth Management: Assets under management, administration, and advisement reached $1.5 trillion. Total revenues grew 5% due to positive asset growth, flows, and higher transactional activity. Assets in wealth management were $1 trillion with $10.3 billion in inflows. Wrap activity saw flows up 34% to $8.7 billion, total wrap assets at $573 billion (up 10%). Transactional activity rose 6% year over year. Client cash levels were $86 billion. Margin for wealth management remained strong at 29%.
• Asset Management: Assets under management and advisement decreased to $657 billion due to net outflows of $18.3 billion. Operating earnings increased 17% to $241 million, but revenues fell 1% due to slower market appreciation, net outflows, and fewer fee days. Adjusted operating expenses decreased 7%, and margins were 43%.
• Retirement and Protected Solutions: Pretax adjusted operating earnings increased 8% to $215 million. Retirement and protection sales were $1.2 billion, driven by demand for structured variable annuities and variable universal life products.

Guidance

• Capital Return: Announced an 8% dividend increase and a new $4.5 billion share repurchase authorization.
• Business Outlook: Confident in navigating market volatility with diversified business, strong client value proposition, and financial strength. Expected to manage bank net interest income and benefit from Signature Wealth launch.

Risks

• Market Volatility: Elevated market volatility due to tariffs and economic uncertainty poses risks to financial performance.
• Fed Actions: Uncertainty around Fed interest rate decisions impacts earnings and net interest income.
• Competitive Landscape: Increased competition in financial services, including competitive TA and compensation packages, affects adviser recruitment and retention.

Question and Answer

Q: Talk about AWM NII and bank earnings outlook.

A: Walter Berman said they should improve by shifting portfolio mix and adding liabilities, managing net interest income despite Fed actions.

Q: Details on Signature Wealth.

A: Jim Cracchiolo explained Signature Wealth is a comprehensive UMA platform with flexibility for advisers and clients, incorporating various models and expected to be state-of-the-art.

Q: Adviser recruiting and retention.

A: Jim Cracchiolo mentioned 82 advisers recruited in Q1, good pipeline, and retention is strong with no slippage, following peers in not disclosing certain numbers.

Q: Opportunism in acquisitions.

A: Jim Cracchiolo said it's a general statement about flexibility due to strong capital position and board-approved buyback program to respond to market opportunities.

Q: G&A expenses and client behavior.

A: Walter Berman said G&A expenses are expected to be flat, and Jim Cracchiolo noted client behavior is consistent with long-term focus despite April volatility.