Q3 2026 Ameriprise Financial, Inc. Earnings Conference Call - AMERIPRISE FINANCIAL INC

Financial Performance:

• Adjusted operating net revenues increased 10% YoY to $5.1 billion, driven by an 8% growth in total assets under management (AUM), administration, and advisement to $1.8 trillion.
• Earnings per share (EPS) rose 22% on an adjusted operating basis excluding unlocking; adjusted operating earnings increased 14% to reflect strong operating leverage.
• Return on equity (ROE) reached best-in-class levels of over 56% (excluding unlocking), up from 52.8% in the prior year.
• Wealth Management pre-tax adjusted operating earnings grew 12% to $989 million with a 29% margin; Asset Management earnings increased 18% to $308 million with a 46% margin.
• Retirement and Protection Solutions delivered strong margins and free cash flow, with sales increasing 24% driven by demand for structured variable annuities.
• General and administrative expenses increased 3% to $975 million; full-year G&A is expected to grow in the mid-single-digit range.
• The company returned $3.9 billion in capital over the last 12 months, including a new $5.5 billion share repurchase authorization approved through September 2028.

Guidance and Future Outlook:

• Management expects wealth management margins to remain in the ~29% range assuming normal market conditions.
• Full-year G&A expenses for Asset Management are expected to be flat, excluding settlement and performance fee compensation.
• 2027 outlook includes planned expansions in AI-powered meeting prep agents and service assistants with broader data integration.
• Long-term growth strategy focuses on organic net new asset growth and sustained advisor productivity without relying on non-controllable rate hikes.
• Management anticipates institutional outflows in Asset Management to improve as volatility subsides, with continued inflows in alternatives, ETFs, and the Signature Wealth platform.
• Revenue and EPS have demonstrated strong 5-year CAGRs of 8% and 17%, respectively, indicating confidence in continued trend stability.

Business Segments and Product Lines:

• Wealth Management: Total client assets grew 8% to $1.2 trillion; RAP assets reached $729 billion (up 12%). Advisor productivity hit a record $1.2 million per advisor (up 13%).
• Signature Wealth: More than half of advisors now utilize the platform for clients, gaining traction in institutional-quality investment management.
• Banking & Lending: Mortgage portfolio grew 74%, pledge lending increased over 50%, and total bank assets rose 2%. Cash balances remained stable at $81 billion (excluding third-party money markets).
• Inorganic Growth: Completed the transition of ~260 Huntington Bank advisors holding $28 billion in assets; an additional 29 advisors ($4 billion) to be added in mid-2027 following the Cadence Bank acquisition.
• Asset Management: AUM grew 4% to $743 billion. Retail flows outperformed U.S. peers in equities, though institutional outflows of $8.4 billion were noted due to allocation decisions. Launched two new premium equity income strategies and a collaboration with Hamilton Lane for a private growth equity fund.
• Retirement Protection: Sales grew 24% driven by structured variable annuities and variable annuities without living benefit riders; long-term care business performing as expected.

Market and Competitive Landscape:

• Client satisfaction scores remain at 4.9/5, driven by the value of personal advisor engagement in complex market environments.
• Brand awareness among affluent investors reached an all-time high following recent advertising campaigns; ranked on Forbes' "Most Trusted Companies" and "World's Best Employers" lists.
• Advisor retention remains high in the "high 90s" range, including for advisors with over 10 years of tenure.
• Recruiting environment remains competitive; the firm recruited 79 experienced advisors in the quarter, emphasizing support capabilities and technology over aggressive financial packages.
• Competition for advisors is described as "irrational" by management, particularly regarding extended cash payback periods (7-8 years) offered by some rivals.

Risks and Challenges:

• Market Volatility: Operating in an environment characterized by persistent inflation, higher interest rates, geopolitical unrest, and equity market volatility.
• Asset Flows: Institutional outflows in Asset Management ($8.4 billion) driven by client allocation decisions and legacy mutual fund pressure.
• Interest Rate Sensitivity: Potential for further Fed rate hikes could incentivize aggressive recruiting tactics by competitors, though management views this as non-controllable.
• Actuarial Assumptions: Completed annual actuarial review resulting in an unfavorable after-tax impact of $74 million, primarily due to behavioral assumption updates in variable annuities.
• Competitive Noise: Industry-wide noise regarding advisor movement and anonymous press reports regarding retention packages; management dismisses these as inaccurate.

Management Commentary and Tone:

• Tone was confident and focused on the durability of the fee-based business model and differentiated economics.
• Emphasis placed on the "trifecta" of trusted advice, broad capabilities, and excellent service as drivers of long-term value.
• Management expressed strong confidence in their ability to navigate changing markets and rate environments while maintaining high ROE and margins.
• CEO Jim Caracciolo reiterated that the firm's strategy is not based on commodity approaches or aggressive financial incentives but on sustained productivity and advisory support.

Analyst Questions and Answers:

• Recruiting & Retention: Analysts questioned press reports about broad retention program changes. Management clarified there are no widespread program changes; adjustments are made on a case-by-case basis for liquidity, succession, and practice acquisitions.
• Inorganic Deals: Regarding the Huntington deal, management indicated it is one of the largest in the industry but confirmed a pipeline of other opportunities, with Huntington serving as a proof of concept for larger bank partnerships.
• Cash Balances & Margins: Clarified that declines in cash sweep balances were seasonal and impacted by the Comerica transition; margins are expected to remain stable.
• Institutional Flows: Confirmed that institutional outflows are expected to improve as market volatility normalizes, with a focus on growing ETFs, alternatives, and model businesses.
• Interest Rates: Discussed the potential impact of rate hikes on competitive recruiting, noting the firm avoids relying on non-controllable rate assumptions in its long-term planning.
• Actuarial Unlock: Confirmed the $74 million impact was within expected behavioral boundaries and the portfolio is managed to withstand equity market appreciation.

Other Key Points:

• The company executed accelerated capital returns in the quarter, repurchasing 4.9 million shares at an average price of $491.
• AI capabilities are being deployed at scale, with practices using current tools gaining over 30 hours of weekly capacity; nearly three-quarters of practices utilize AI-generated insights.
• The firm's model allows for a balanced earnings mix (core and cash earnings) that differentiates it from peers, ensuring stability during market downturns.
• The Comerica transition is nearly complete, with only a small portion of the $19 billion asset base remaining to exit, stabilizing the organic flow profile.