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

Explicit Guidance:

• 2027 Full-Year Expenses: Expects General & Administrative (G&A) expenses to increase in the mid-single-digit range for Wealth Management; expects G&A expenses for Asset Management to remain flat for the full year, excluding settlement and performance fee compensation.
• 2027 Full-Year Margins: Expects Wealth Management margins to stay in the current range (approx. 29%) assuming normal market conditions.
• Capital Return (2025 Full Year): Accelerated capital return by 24% year-to-date to $2.9 billion (93% payout ratio in Q3).
• Share Repurchases: Board approved a new authorization of $5.5 billion valid through September 30, 2028.
• Return on Equity (ROE): Targeting and maintaining ROE above 56% (excluding unlocking).

Business-Segment Outlook:

• Wealth Management:
  • Advisor Productivity: Revenue per advisor grew 13% QoQ to a record $1.2 million; expects continued growth driven by investment in operating framework.
  • Client Assets: Total client assets grew 8% to $1.2 trillion; Wrap assets grew 12% to $729 billion.
  • Inorganic Growth: Targeting "selective adjustments" to offers in the recruiting environment; expects organic net new asset growth to remain in the 4% range.
  • Banking Solutions: Pledge lending grew >50%; mortgage portfolio grew 74%; expects continued adoption of deposit and lending solutions by advisors.
  • Signature Wealth: Adoption now exceeds 50% of advisors; expected to support asset growth across wealth and asset management.
  • Institutional Banking: Transitioned 260 Huntington Bank advisors ($28B AUM); expects to add 29 advisors and $4B assets from Cadence Bank transition in mid-2027.
• Asset Management:
  • AUA: Total AUA grew 4% YoY to $743 billion.
  • Flows: Expects institutional outflows to improve next year as volatility subsides; focusing on gaining traction in fixed income and expanding active ETFs, SMAs, and models.
  • New Products: Launched two new premium equity income strategies in the US; plans to launch more ETFs next year.
  • Partnerships: Collaborating with Hamilton Lane to launch a public-private growth equity interval fund in the coming months; targeting opportunities in UK and European real estate.
• Retirement Protection Solutions (RPS):
  • Sales: Sales increased 24% driven by demand for structured variable annuities and VUL.
  • Margins: Delivers "strong margins" and "good free cash flow generation"; expects contributions to remain stable and provide a counterbalance during cycle changes.
  • Long-Term Care: Business is performing well and in line with expectations.

Market and Competitive Outlook:

• Advisor Recruiting: Competitive environment remains "aggressive" with potential for "irrational competition" (e.g., 7–8 year cash paybacks on retention packages); Ameriprise plans to evaluate trade-offs individually per advisor/practice rather than broad program changes.
• Retention: Advisor retention remains in the high 90% range; firm expects to maintain this through differentiated support, technology, and practice-building loans for succession/acquisitions.
• Competitive Positioning: Advisor productivity growth expected to continue outpacing competitors; brand awareness at an all-time high among affluent/high net worth investors.
• Product Adoption: "AI-generated insights" used by nearly three-quarters of practices; practices using current AI capabilities gain >30 hours of additional advisor capacity weekly.

Macro / Industry Outlook:

• Interest Rates: Management views potential Fed rate hikes (2 more in next 12 months) as a non-controllable factor; expects higher rates to potentially fuel "risk-on" behavior and aggressive recruiting packages from competitors relying on long-term cash projections.
• Market Environment: Anticipates markets to be "positive but uncertain"; views cycles as containing volatility that could cause "cracks in the environment."
• Cash Balances: Expects client cash balances to remain stable in the long term; notes that Q3 decline was driven by seasonal patterns and specific transitions (Comerica/Huntington).

Strategic Initiatives:

• AI Deployment:
  • 2026 (Current): Early release of AI-powered meeting prep agent and service assistant.
  • 2027: Plan to expand AI capabilities with broader data integration and automated guided workflows.
  • Goal: AI to be used for underwriting acceleration, cost reduction, and generating tens of millions of insights.
• M&A/Partnerships:
  • Huntington Bank Transition: Completed (Oct 19, 2026); full integration of technology and solutions.
  • Cadence Bank: Expected asset transfer of $4B/29 advisors in mid-2027.
  • Hamilton Lane: Strategic collaboration for a new fund launch in the coming months.
• Technology Investment: Continued focus on integrated platform connecting client insights, meeting prep, and follow-through to drive advisor action.
• Capital Allocation: Accelerated share repurchases in Q3 ($1B) and committed to the $5.5 billion authorization through Sept 2028.

Risks and Headwinds to Outlook:

• Macro Volatility: Equity market volatility and geopolitical unrest could impact client asset levels and transactional activity.
• Interest Rate Sensitivity: Potential rate hikes could alter competitor recruitment strategies and market dynamics.
• Institutional Flows: Continued pressure from legacy mutual fund franchises and closed blocks, though management is mitigating this with alternatives and active strategies.
• Competitive Recruiting: Aggressive packages from peers with extended payback periods (7–8 years) could create noise or pressure on retention if not managed selectively.
• Actuarial Adjustments: Annual unlocking/assumption updates can cause short-term volatility (e.g., $74M unfavorable after-tax impact noted in Q3).

Management Tone on the Future:

• Confidence Level: High confidence in the business model's durability; management describes the environment as "positive" despite uncertainty.
• Stewardship: Emphasis on "sustained profitability" over short-term growth; willing to make selective adjustments for complex advisors rather than adopting a "one-size-fits-all" retention program.
• Differentiation: Strong belief in the "value proposition" and integrated technology as key differentiators against competitors offering higher immediate cash but lower long-term support.
• Strategic Patience: Willing to navigate cycles and wait for "risk-on" moments to pass; focused on the long-term (10+ years) value of the firm.

Miscellaneous:

• Earnings Quality: Excluding unlocking, adjusted operating earnings increased 14%; EPS up 22%; adjusted operating revenue up 10% to $5.1 billion.
• Cost Management: G&A expenses increased 3% to $975 million in Q3; margin maintained at 28% (excl. unlocking).
• Balance Sheet: Closed quarter with $2 billion excess capital and $2.3 billion holding company liquidity.
• Advisor Metrics: Recruited 79 advisors in Q3; total advisor count remains consistent year-over-year at 10,000 (due to succession offsets).
• Recognition: Ameriprise named to Forbes' Most Trusted Companies list and World's Best Employers for 2027.