Ameriprise's profits and advisor productivity continued to gain momentum in the second quarter.
The Minneapolis-based firm's advice and wealth management division saw pretax operating earnings rise 13%, increasing to $220 million for the quarter from $194 million last year. Net revenues increased 6%, rising to over $1.2 billion. The pre-tax operating margin rose to 17.3% from 16.2% last year.
Advisor productivity reached record heights in the second quarter after an 11% jump in the first quarter, rising 9% from last year. The firm reported operating net revenue per advisor rose to $512,000 for the quarter from $468,000 for the year-ago period.
"Our second quarter results reflect good performance with continued strength in advice and wealth management," said Jim Cracchiolo, chairman and chief executive officer in a statement. "We posted new records for client assets and advisor productivity from strong client net inflows in fee-based investment advisory accounts, client acquisition and experienced advisor recruiting."
Advisor headcount remained stable at 9,721, an increase of 29 advisors across both the independent and employee channels. Advisor headcount in the firm's independent channel rose to 7,639, up 62 from the previous quarter, while the employee channel lost 33 advisors since last quarter. Employee headcount zeroed in at 2,084.
The firm said it was pleased with its recruiting momentum this quarter. "This was one of our best quarters for recruiting. We're bringing in more advisors in a very competitive marketplace," Cracchiolo said during the firm's earnings call, adding that 93 experienced advisors with existing books of business moved their practices to the firm this quarter.
Retention rates remained relatively flat across both channels: Ameriprise's employee advisor retention rate is identical from a year ago at 91.1%, while the independent advisor retention rate fell just .5% from the year-ago period.
Total client assets rose to $453 billion, a 4% increase from the year ago period with inflows up $3.3 billion for the quarter. Inflows to fee-based wrap accounts went up 8% from last year from over $167 million to nearly $182 million in assets.
Overall, the firm's net income rose 11% to $415 million from the year ago period, with operating earnings raising 6% to $434 million.
DoL FIDUCIARY RULE: 'WELL SITUATED'
During the earnings call, Cracchiolo and CFO Walter Berman remained positive as they fielded several questions regarding the Department of Labor's proposed fiduciary rule. Cracchiolo stressed that there was no noticeable early impact on advisor retention and recruitment based on the discussion surrounding the proposal.
The firm's general position is that while they support the DoL's objectives, the proposal itself still needs work.
"Our advisors feel really good about what they do for the consumer," Cracchiolo said during the call's Q&A session. "The products that we sell are needs-based. At the end of the day, I think we're doing what we need to do, appropriately consistent [with the] regulatory, but more importantly from the client need and disclosure perspective."
Cracchiolo added that the firm's strong compliance structures, client value proposition and adoption of the fiduciary standard across the brand should support Ameriprise's recruiting measures when the final rule is announced.
"We've seen a very strong, good pipeline of highly productive people both in our employee and franchisee channels," said Cracchiolo. He added that he hopes the DoL will pay close attention to advisor and regulator response during the comment period. "We're very supportive of [the DoL's] objective and we think we can satisfy that objective very well. How they do it is where the rub is."