A shift toward fee-based business is boosting Ameriprise's profits.

Earnings for Ameriprise Financial's wealth management unit surged 35% year over year in the third quarter.

Ameriprise CEO Jim Cracchiolo credited growth in the firm's fee-based businesses and wealth management unit for the company's robust overall performance.

"I feel good about our current position," Cracchiolo said during a conference call with analysts on Wednesday.

The company said pretax earnings for its Advice & Wealth Management unit grew to $205 million for the third quarter from $152 million for the year-ago period.

The unit's net revenue increased to $1.21 billion from $1.074 billion, a 13% increase from the prior year. That growth outpaced costs, which climbed 9%, growing to $1 billion from $922 million.

Total assets under management grew 11% year over year, the company said, rising to $433 billion from $389 billion. The amount of money in wrap accounts surged 23%, increasing $167 billion from $135 billion.

Net flows into those accounts remained strong, rising to $3.8 billion from $3.01 billion for the previous quarter and $3.02 billion from the previous year. (This stood in contrast to some of Ameriprise's competitors; Morgan Stanley, for example, reported that third-quarter fee-based asset inflows slipped.)

MARKETING PUSH

Cracchiolo said that the firm was focused on deepening existing client relationships and establishing new ones. To that end, the firm in September launched a retirement-focused advertising campaign, which Cracchiolo said tests well with mass affluent and high-net-worth clients.

The firm is also trying to bring in new assets through social networks. "Our social media capabilities can help advisors build a robust presence with prospective clients," said Cracchiolo.

The firm is also attempting to grow its bottom line by bringing in new advisors. Ameriprise has raised its signing bonuses to match offerings from other brokerage firms and lure away advisors from rivals, an Ameriprise source said.

ADVISOR GROWTH

The firm has seen stronger growth in its independent advisor channel, where headcount edged up to 7,596 advisors from 7,577 in the previous quarter. The number of employee advisors, meanwhile, fell to 2,100 advisors from 2,115.

Year-over-year, Ameriprise's employee channel shrank by 135 advisors.

Cracchiolo said that advisor retention remained high, and the firm expected strong recruiting in the fourth quarter.

"We feel good about our pipeline, from the independents and the wirehouse channel," he said.

Another factor in the company's revenue growth: At the same that the firm is attempting to enlarge its advisor force, those advisors are becoming more productive.

Net revenues per financial advisor rose 13%, increasing to $483,000 from $427,000 in the same quarter last year.

Companywide, Ameriprise reported third quarter profits of $565 million, up 26%.

Total revenue at the Minneapolis-based firm increased 11%, rising to $3.111 billion from $2.813 billion. This beat analyst estimates of $3.097 billion according to Bloomberg, which surveyed four analysts. Costs rose at a slower pace, reaching $2.391 billion from $2.211 billion, an 8% increase.

Earnings-per-diluted-share increased to $2.17 from $1.86. Shares were up 2.5% in late morning trading on Wednesday; the stock is up about 8% for the year to date.

 

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