The broad stock market was down almost 20% last year but some wealth management companies have been able to insulate themselves from the impact of stocks on their advisors, including Ameriprise Financial Inc., which reported Wednesday that its average revenue per financial advisor increased almost 4% in 2022 compared to the year earlier.
In its earnings report for the fourth quarter, Ameriprise Financial said that adjusted operating net revenue per advisor was $827,000 at the end of December, compared to $796,000 at the end of 2021, which was a year of records in the wealth management and financial advice industry due to stocks' performance, with the S&P 500 up almost 27% that year.
The increase in revenue per advisor at Ameriprise Financial is even more dramatic when compared to 2020. That year, the firm reported $674,000 in revenue per advisor, which means that figure has climbed 22.7% in two years. That not only spells increased wealth management revenue for the firm, but puts more income in the pockets of financial advisors who, at firms like Ameriprise, are paid a percentage of each dollar of revenue they generate through fees and commissions.
Wealth management firms that collect revenue from cash sweep programs obviously benefited from the series of increases to short-term interest rates made last year by the Federal Reserve, which was aggressively adjusting rates with the intent of cooling down the economy and quashing inflation.
Net revenues at Ameriprise increased as "client inflows, higher investment income from bank growth and rising interest rates more than offset lower fees related to market depreciation and lower client activity, consistent with industry trends," according to the company.
Net asset flows into the firm, cash balances and the head count of financial advisors all increased during the fourth quarter, the company reported.
Total client net flows of assets were $12.4 billion, evenly split between flows into advisory and non-advisory accounts, according to Ameriprise. For the full year, total client asset flows hit a new high of $42.5 billion.
Cash balances in the advice and wealth management group increased 8% to $47.2 billion when compared to the end of 2021. "These cash balances provide important flexibility to drive sustainable financial benefits," the company reported.
The firm's total financial advisor head count rose 2% to 10,269 compared to the end of 2021. Ameriprise Financial said it had recruited 72 experienced financial advisors in the fourth quarter.
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