Ameriprise, Raymond James report new highs in wealth management

With the stock market continuing to roar, the wealth management operations of brokerage firms Ameriprise Financial Inc. and Raymond James Financial Inc. reported record results for the quarter ending in June.

Ameriprise, with more than 10,300 financial advisors, on Thursday morning reported its Advice & Wealth Management group generated pretax adjusted operating earnings of $822 million for the quarter, a new high, and 12% above the same period last year. The group's margins were above 31%, driven by wealth management and banking.

Raymond James on Wednesday afternoon reported for the three months ending in June record net revenues of $2.42 billion, up 11% over the prior year’s fiscal third quarter and 3% over the preceding quarter. The firm has about 8,700 financial advisors under its roof.

Those results were driven by higher asset management and related administrative fees, reflecting growth of assets in fee-based accounts during the year, the company said in a statement.

"Ameriprise reported another strong quarter, with [earnings per share] growth in the high teens from continued strength in wealth management, expense initiatives, and high capital return," wrote analyst Jeff Schmitt of William Blair Equity Research, in a research note Thursday.

"Record wealth management earnings were mainly driven by strong client asset growth and transactional activity, expense initiatives, and stable spread income," Schmitt wrote. "In asset management, expense initiatives are driving strong earnings growth despite top-line weakness."

"Our advisor recruiting activity remains robust, and I am encouraged by a record number of large teams in the pipeline," said Raymond James CEO Paul Reilly Wednesday afternoon during a conference call with analysts. The firm generated domestic net new assets of $16.5 billion during the quarter, an annualized growth rate of 5.2%.

Meanwhile, senior Ameriprise and Raymond James executives commented during their calls with analysts to discuss earnings that they were tracking the increase of the cash sweep yields and rates at the wirehouses; they were satisfied that their own firms were taking care of clients' cash in an appropriate manner.

"We operate within regulatory and fiduciary standards," said Walter Berman, chief financial officer of Ameriprise, during Thursday's conference call. "Looking at [cash] sweep in its transactional aspect, it's totally appropriate and aligned. I can't really comment on... what's taking place with the wirehouses. I don't understand it." 

"I don't know what's happening in some of the other programs," Reilly said during the Raymond James call, referring to the increase in cash sweep yields at competitors like Wells Fargo & Co. and Morgan Stanley. "I can tell you ours are well thought through, and we think are very compliant. And as we look at the announcements and changes, they're not very specific yet."