Ameriprises wealth management segment continued to build on a strong year of growth in the second quarter.
While rising markets lifted results for many brokerage firms, Ameriprises wealth unit, which includes both the firms employee and franchise advisor channels, reined in $152 million in profit from $1.08 billion in revenue. The segment boosted profits 37% from the second quarter last year despite a 10% increase in expenses and taking a $15 million dollar hit from low interest rates.
It is a sign that some of Ameriprises fee-based lines of business are paying off, according to Sophie Schmitt, a senior analyst with Boston-based consulting firm Aite group.
Theyre continuing to be leaders in the financial planning area, she said. Theyre in a really good position because a lot of competitors are catching up in this space. They essentially invented the concept of financial planning.
In the second quarter, the firm launched its Confident Retirement planning software that helped to build out its planning tool kit. It also expanded its annuity offerings with three new managed volatility funds. Its life insurance and health insurance cash sales, which benefit from referrals from the wealth unit, grew 32% from a year ago.
Revenue from fee-based business rose 17% from the second quarter last year to $505 million, comprising almost half of the total revenue in the division. Branded financial plan net cash sales were up 9% year-over-year to $61 million.
With growth in those areas, the firm is positioning itself to capture demand from baby boomers, Schmitt said.
The advisor who knows how to go through this planning process will be at an advantage, she explained. Demographics are outweighing day-to-day market performance.
Client assets under management rose 13% from last year to $373 billion, mostly from net inflows, the firm said.
Ameriprise also upped its investment in its advisor force. Operating expenses rose 10% to $924 million as business growth resulted in higher distribution expenses and higher accruals for retention and performance-based compensation, the firm said in its earnings statement. That was despite a 6% decrease in general and administrative expenses.
Retention was flat at 94.3% in the employee brokerage channel, and recruiting was up as the firm brought on 88 experienced advisors over the course of the quarter. Forty-one of those were in the employee side, which had 7,499 advisors at the end of June.
[Advisors] are going to come to Ameriprise from other firms for the financial planning process, the access to products and annuities, Schmitt said.