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    AMP
    Earnings call· Mar 2025(Q1 FY25)

    AMERIPRISE FINANCIAL INC AMP

    Apr 24, 2025 Source

    Executive summary

    Ameriprise Financial, Inc. Q1 FY25 — Strong Start with Diversified Business and Capital Return

    Ameriprise Financial delivered a solid Q1 FY25, leveraging its diversified business model to achieve strong financial performance despite market volatility and slowing equity appreciation. The company's wealth management segment saw robust client engagement and asset growth, while asset management faced elevated outflows. Proactive expense management and strategic investments in technology and new product offerings position Ameriprise to navigate the uncertain economic landscape, supported by a strong capital position and commitment to shareholder returns.

    Highlights

    5

    • Adjusted operating EPS increased 13% to $9.50.

    • Total revenues increased 5% from positive asset growth, flows, and higher transactional activity.

    • Assets under management, administration and advisement grew to $1.5 trillion.

    • Wealth Management client assets grew 7% to $1 trillion with $10.3 billion in inflows.

    • Return on equity ex AOCI remains best-in-class at 52%.

    Concerns

    3

    • Asset Management experienced higher outflows of $18.3 billion, including $5.8 billion retail and $11.5 billion institutional.

    • Slowing equity market appreciation and lower Fed funds rates impacted revenues.

    • Elevated and ongoing market volatility due to lack of clarity around tariffs and general economic uncertainty.

    Guidance & targets

    1
    CategoryTargetConfidence
    Total G&A expense
    Flattish
    medium materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Wealth Management
    Strong growth driven by higher client assets, increased transactional activity, and adviser productivity. Core contributions saw double-digit increase, while cash experienced a single-digit decrease due to Fed funds rate reductions. Margins remained solid.
    Client assets: $1TClient asset growth: 7%Client inflows: $10.3BWrap assets: $573BWrap asset growth: 10%Wrap flows: $8.7BAnnualized wrap flow rate: 6%Transactional activity growth: 6% YoYAdviser productivity: $1.1M per adviserAdviser productivity growth: 12%Recruited advisers: 82Client satisfaction: 4.9 out of 5Bank assets: $24BBank investment portfolio yield: 4.6%Bank investment portfolio duration: 3.6 yearsFloating rate securities: 15% of securities portfolioAdditional bank balances: $500MInvested yield on new balances: 5.5%Duration on new balances: 4 yearsG&A expenses: $424MG&A expense growth: 1%Pretax adjusted operating earnings: $792M
    		$2.8B9%—29%
    Asset Management
    Solid financial results despite elevated net outflows, driven by institutional repositioning and Lionstone exit. Strong operating earnings growth and margin expansion due to equity market appreciation and expense management actions. Fee rate was stable.
    Assets under management and advisement: $657BNet outflows: $18.3BRetail outflows: $5.8BInstitutional outflows: $11.5BOperating earnings growth: 17%G&A expenses decrease: 12% YoYOperating earnings: $241M
    		$846M-1%—43%
    Retirement & Protection Solutions
    Continued strong earnings and free cash flow generation, reflecting high quality of business and benefits from stronger interest earnings and higher equity markets. Sales fueled by client demand for structured variable annuities and variable universal life products.
    Pretax adjusted operating earnings growth: 8%Total sales: $1.2BTraditional VA without living benefits growth: 28%VUL sales growth: 22%
    		———$215M
    Corporate (Long Term Care)
    Specific earnings contribution from Long Term Care within the Corporate segment.
    		———$14M

    Operational metrics

    25
    Adjusted operating EPS
    $9.50Up 13% YoY
    Q1 FY25
    Total revenues
    5%YoY
    Q1 FY25

    Increased from positive asset growth and flows and higher transactional activity.

    Earnings
    8%YoY
    Q1 FY25

    Up from strong business growth and ongoing expense discipline.

    Return on equity ex AOCI
    52%
    Q1 FY25
    Client cash levels
    $86B
    Q1 FY25
    AWM cash balances
    $40BDeclined 8% YoY
    Q1 FY25
    Consolidated margins
    27%
    Q1 FY25
    G&A expenses
    5%Down YoY
    Q1 FY25

    Due to transformation efforts.

    Capital returned to shareholders
    $765M
    Q1 FY25
    Dividend increase
    8%
    Q1 FY25
    Share repurchase authorization
    $4.5B
    Q1 FY25
    Excess capital position
    $2.4B
    Q1 FY25
    Available liquidity
    $2.5B
    Q1 FY25
    Total revenues
    10%YoY
    LTM

    Over the last 12 months.

    Adjusted EPS
    16%YoY
    LTM

    Over the last 12 months.

    Return on equity
    280 bpsYoY
    LTM

    Grew over the last 12 months.

    Capital returned to shareholders
    $2.9B
    LTM

    Over the last 12 months.

    Compounded annual revenue growth
    8%
    5 years
    Compounded annual EPS growth
    15%
    5 years
    Return on equity improvement
    13 percentage points
    5 years
    Capital returned to shareholders
    $12B
    5 years
    Distribution expenses
    14%Up YoY
    Q1 FY25

    Reflecting business mix and higher transactional activity.

    Performance fee compensation
    Lower
    Q1 FY25

    Contributed to G&A expense improvement.

    Fee rate
    Stable
    Q1 FY25
    Wrap flows
    $35.3B
    Past year

    Product announcements

    5
    ProductTypeDetails
    Signature Wealthlaunch
    CDslaunch
    HELOCs and checking accountsroadmap
    Interval fund (public and private market)launch
    Hedge fundlaunch

    Risks & headwinds

    4
    Market volatility and economic uncertaintyongoing

    elevated and ongoing

    Mitigation: Diversified business, strong client value proposition, financial strength, proven risk management, flexibility to be opportunistic.

    Impact of lower Fed funds ratesQ1 FY25 and ongoing

    full impact of the Fed funds rate reduction since September

    Mitigation: Proactive changes to bank's investment portfolio (shifting fixed floating to fixed, reducing floating rate securities to 15%, investing new balances at 5.5% yield), crediting rate changes on cash sweeps.

    Asset Management net outflowsQ1 FY25

    $18.3B in Q1 FY25, including $5.8B retail and $11.5B institutional

    Mitigation: Focused on positioning appropriate strategies, building momentum in active ETFs, SMAs, model delivery, and launching new products like interval funds and hedge funds. Cost base transformation and operational efficiencies.

    Lionstone business exitQ1 FY25 and ongoing (another piece to exit)

    Contributed to institutional outflows; another piece of Lionstone to go out

    Mitigation: Previously disclosed exit, impact already factored into expectations.

    What to watch in Q2 FY25

    5

    Signature Wealth platform launch

    Later this quarter (Q2 FY25)
    CurrentCurrently testing
    TargetBroad launch

    Why it matters

    This new UMA platform is expected to enhance the advice value proposition and potentially drive asset flows and adviser productivity.

    We're currently testing it and plan to launch it more broadly later this quarter.

    Q&A highlights

    7

    Inquired about the outlook for Net Interest Income (NII) in Advice & Wealth Management and the bank's cash levels and earnings for the year.

    Walter Berman stated that NII should improve due to proactive actions taken, such as shifting from floating to fixed-rate investments and increasing liabilities. He expects the bank's earnings to be stable and well-positioned to manage net interest income despite potential Fed rate changes.

    “I see it right now, based on what we've done, that it should actually be improving as we look at basically what actions we've taken first from shifting fixed floating to fixed and shifting the portfolio mix and also adding more liabilities onto the balance sheet.”

    asked by Suneet Kamath · answered by Walter Berman

    2 min read6 chapters

    Detailed Narrative

    01

    Market Environment and Strategic Positioning

    Jim Cracchiolo noted elevated market volatility🌐 and economic uncertainty, with the Fed still navigating inflation and interest rates. Ameriprise remains well-positioned due to its diversified business, strong client value proposition, financial strength, and proven risk management, enabling it to navigate market cycles and be opportunistic. The company's financial strength is highlighted by $2.4 billion in excess capital and $2.5 billion in available liquidity.

    02

    Wealth Management Performance and Adviser Productivity

    The Wealth Management segment saw client assets grow 7% to $1 trillion, with strong inflows of $10.3 billion. Wrap activity was robust, with flows up 34% to $8.7 billion, representing a 6% annualized flow rate. Client cash levels remained high overall at $86 billion, which represents a significant opportunity for future investment. Adviser productivity increased 12% in the quarter to approximately $1.1 million per adviser, reflecting strong asset growth and capabilities.

    03

    Investment in Technology and Client Experience

    Ameriprise continues to invest in its advice value proposition and practice support. This includes a new comprehensive UMA called Signature Wealth, currently being tested and planned for a broader launch later this quarter, designed to streamline investment management. The company earned the 2025 Technology Innovation Award for its adviser PracticeTech platform and maintains high client satisfaction, with clients rating them 4.9 out of 5.

    04

    Bank Expansion and Contribution

    The Ameriprise bank's assets have grown to more than $24 billion, generating attractive earnings and minimizing the carryover impact from rate cuts. The bank recently launched CDs and plans to add HELOCs and checking accounts later this year. The overall bank investment portfolio has a yield of 4.6% and a 3.6-year duration, with floating rate securities reduced to 15% of the portfolio to mitigate lower rate exposure.

    05

    Asset Management Challenges and Efficiencies

    Asset Management experienced a challenging quarter for flows, with $18.3 billion in net outflows, driven by $5.8 billion in retail redemptions and $11.5 billion in institutional outflows due to a large client repositioning into passive and the exit of the Lionstone business. Despite this, operating earnings increased 17% to $241 million, and margins reached 43%, benefiting from significant cost base transformation and operational efficiencies.

    06

    Capital Management and Shareholder Returns

    Ameriprise returned $765 million to shareholders in the quarter through dividends and share repurchases, representing 81% of operating earnings. The company announced an 8% increase in its dividend, marking the 21st increase since its spin-off. A new $4.5 billion share repurchase authorization was approved through June 30, 2027, as the previous authorization was completed early, providing flexibility for continued capital return.

    AI-generated summary of the company’s earnings call. Not investment advice.