Ameriprise sees impressive growth in third quarter

Client assets are up 15%, while cash sweep and certificate balances are down $5.8 billion from the year-ago period.

Ameriprise Financial Thursday announced a big hike in its adjusted profits for the third quarter and and attributed the success to a significant expansion in client assets and a surge in assets under management.

In a robust performance, the firm saw total client assets swell by almost 15%, reaching an impressive $816 billion, up from $711 billion in the same period the previous year.

The company’s assets under management and administration experienced a 12% jump to total $1.23 trillion at the end of the third quarter. This growth was fueled by what Ameriprise described as robust net inflows from clients and favorable market trends.

Jim Cracchiolo, CEO of Ameriprise, expressed his satisfaction with the results, highlighting the wealth management sector as a pivotal force driving the company’s growth. He underscored the strong interactions between clients and advisors as well as the healthy influx of client assets as key contributors to the firm’s success.

“Our advisors are focused on ensuring clients are highly engaged and deepening relationships with them,” Cracchiolo said in the conference call. “Importantly, client satisfaction remains at an excellent 4.9 out of 5 stars.

“We continue to attract more new clients and move up market as we grow our client base,” he said. “We know from industry research that more investors need guidance. In fact, among the fluid households, many investors in the marketplace still don’t have a formal plan to manage assets, income, expenses and retirement.”

When looking at the adjusted operating earnings, excluding unlocking, the firm reported $823 million, or $7.68 per share, for the quarter ended Sept. 30. This marks a notable increase from the $716 million, or $6.35 per share, reported during the same period in the prior year.

Cash levels for the firm also reached a new high for the third quarter, at $72.5 billion, up 35% from a year ago. Cash sweep and certificate balances were the firm’s hardest hit, as sorting slowed in the latter half of the year, and ended the quarter at $40.5 billion, which was down $5.8 billion from the year-ago period. Walter Berman, chief financial officer at Ameriprise, said cash levels have been flat since August.

The average size of cash sweep accounts is about $6,000, while 67% of cash sweeps are in accounts under $100,000. However, Berman said movements out of these accounts have been limited.

“Financial benefit from cash remains strong,” he said during the conference call. “This will be an important and sustainable source of earnings going forward.”

While the firm’s financial advisor head count was down in the third quarter along with franchise retention, it started to bounce back toward the latter part of the quarter. Cracchiolo said the decline was due to summer months, with many taking time off.

Earlier this year, Ameriprise struck a deal with Comerica bank that saw it take over management of more 100 advisors and $18 billion in customer assets.

“It’s the totality of our complementary business and the benefits that it provides, backed by our excellent team, that enables us to consistently achieve this level of results,” Cracchiolo concluded.

Ameriprise Financial specializes in wealth management services, catering predominantly to households possessing between $500,000 and $5 million in investible assets.