Raymond James, Ameriprise deliver higher profits, helped by adviser growth, wealth management

Raymond James Financial Inc. and Ameriprise Financial Inc. — owners of two of the largest publicly traded, full-service broker-dealers in the U.S. — posted quarterly profit gains, helped by adviser growth, robust markets and wealth management.
Late Wednesday, Raymond James said it recorded its best quarterly profit ever, with net income rising to $136.4 million, up 16% year-over-year, on revenue of $1.29 billion for its fiscal fourth quarter.
In a statement, Raymond James chief executive Paul Reilly said the profits were due in part to the strength of the private client group, which also recorded record revenue of $861.1 million, also a 16% increase from the year prior.
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“Growth in client assets was driven by market appreciation and near-record levels of financial adviser recruiting and retention, resulting in the number of financial advisers increasing to 6,265,” he said. “Fiscal 2014 was the firm’s second best year for financial adviser recruiting, and activity remains extremely robust.”
Minneapolis-based Ameriprise said overall profits in its third quarter rose 10% to $420 million.
Its advice and wealth management unit generated $1.2 billion in revenue and $205 million in profits in the quarter ended Sept. 30. Those earnings were up nearly 35% from $152 million in profits on $1.1 billion in revenue in the same period last year. That growth came on the back of inflows of $3.8 billion into broker wrap programs, up 27% from a year ago.
Overall client assets in the unit rose 11% to $434 billion. Productivity rose 13% to $483,000 in total trailing twelve month revenue per financial adviser, Ameriprise said.
In a conference call, Ameriprise chairman and chief executive James M. Cracchiolo said the firm has a continued opportunity to grow its base of wealthy clients because most lack financial plans.
“We think there’s a greater opportunity for us to serve more of the affluent customer base,” said Mr. Cracchiolo.
He added the firm recruited 81 advisers last quarter and that its pipeline from other independent firms and wirehouses looks strong for the current quarter.
Meanwhile the firm’s asset management unit grew its pretax operating profit margin to 41.3% from 38.7% a year ago despite continuing outflows from the unit that includes Columbia funds, which totaled $4.1 billion in the quarter.
Mr. Cracchiolo attributed those outflows to some defined-contribution retirement plans, as well as to registered investment advisers and loss in outsourcing business, or “subadvisory,” from other money managers.
Revenue in that unit grew nearly 8% to $839 million with assets as U.S. equity markets delivered positive returns. Profits were $208 million in the quarter, up more than 20% from $172 million a year ago.

Related Topics: Ameriprise Financial, Raymond James & Associates Inc.