Ameriprise Financial’s wealth management business has achieved significant growth despite the challenging operating environment, according to CEO Jim Cracchiolo. In the third quarter, the company saw a decline in GAAP net income of 18%, amounting to $872 million, compared to $1.06 billion in the same period last year. However, the wealth unit’s adjusted net revenues experienced a 13% year-over-year increase, reaching $2.41 billion, primarily driven by growth in client assets and higher investment earnings from cash products, as stated by Ameriprise.
Maintaining its position as the primary growth driver, wealth management delivered promising client flows and exceptional client-advisor engagement, added Cracchiolo.
Closing at $316.34 on Thursday, the company’s stock recorded a 3.00% gain from the previous day.
During this quarter, total client assets witnessed a 15% rise, reaching $816 billion. However, net flows experienced a decline of 20%, amounting to $8.9 billion. The number of advisors also decreased slightly to 10,258, down 24 advisors from the same period last year. Additionally, wealth management cash balances decreased by 13%, totaling $40.5 billion.
Similar declines in cash balances have been observed among other wealth management firms. Investors have been reallocating uninvested cash from bank accounts into higher-yielding products like money-market funds. Ameriprise highlighted that its clients remain predominantly invested in yield-oriented products and have not yet reinvested their cash due to the current market environment. However, the company noted that the pace of cash sorting slowed down throughout the quarter.
Jeff Schmitt, an analyst from William Blair, identified Ameriprise’s robust wealth management results as a highlight this quarter and expressed optimism about the company’s improving outlook. In an Oct. 26 research note, Schmitt shared that spread income is expected to reaccelerate now that cash balances have stabilized.
Ameriprise reported adjusted operating earnings per diluted share of $7.68, representing a 21% increase from the previous year. The company’s total net revenues also grew by 13%, reaching $3.93 billion.