The operator welcomes participants to the Fourth Quarter 2023 Earnings Call and introduces Alicia Charity as the speaker. Charity, along with CEO Jim Cracchiolo and CFO Walter Berman, will discuss the company's earnings and take questions. The presentation materials and website contain non-GAAP financial measures and forward-looking statements, which are subject to risks and uncertainties. The GAAP financial results and adjusted operating results are shown on Slide 3, with management focusing on the latter during the call.

In the second paragraph, James Cracchiolo, the CEO of Ameriprise, discusses the company's strong fourth quarter and overall performance in 2023. He acknowledges the uncertainty in the current economic climate but expresses confidence in the company's ability to succeed. Cracchiolo then highlights the company's robust revenue growth, strong earnings, and record results, as well as their high ROE and assets under management. He also mentions the company's strong position in the market and their ability to help investors with their comprehensive client experience and talented team. Finally, he notes the success of the Wealth Management division in the quarter.

Ameriprise is focused on engaging more people in their advice-based client experience, leading to higher client satisfaction, net flows, and productivity growth. They saw an increase in client acquisition and total client assets, as well as an increase in adviser productivity. They also recruited 166 productive advisers and their bank assets grew significantly. Ameriprise is continuing to invest in their business to drive efficiency and organic growth.

Ameriprise advisers are utilizing various tools and technologies to enhance their ability to deliver for clients and manage their practices. The company is also focusing on improving their mobile and digital experiences to attract more clients and prospects. In the Retirement & Protection sector, the business is consistently performing well and the team is focused on providing a best-in-class experience. Asset Management saw a growth in assets under management due to market appreciation and positive foreign exchange. While U.S. retail mutual fund outflows were in line with the industry, there was an increase in gross sales and a decrease in redemptions. U.K. retail remained soft, but there are signs of improvement in Europe.

In paragraph 5, the speaker discusses the outflows in global institutional investments and the steps taken to realign resources. They also mention the extensive product capabilities and the team's efforts to regain sales momentum. The company's investment performance is highlighted, with strong numbers over 3, 5, and 10 years. The company is also managing industry pressure and making investments in data and analytics. They have a strong focus on leveraging their performance and global distribution and servicing capabilities. The speaker then mentions the company's strong financial performance and their consistent ability to return value to shareholders. They have received industry recognition and accolades for their performance, customer satisfaction, and employee engagement.

Ameriprise has received several awards and recognition for its customer service and workplace culture. The company's diversified business model has resulted in strong financial results, with underlying EPS growing by 14%. Assets under management and administration have also increased, and the company remains focused on managing expenses and maintaining tight margins.

In 2023, Ameriprise continues to invest in driving business growth, particularly in Wealth Management. They maintain a disciplined approach and plan to keep expenses flat for the year. Their consolidated margin is 26.4% and they have a strong return on equity of 48.5%. The balance sheet remains strong with excess capital and liquidity, and a significant reduction in net unrealized losses. Ameriprise's diversified business model allows for consistent performance and they were able to return $2.5 billion of capital to shareholders. Their partnership with Comerica Bank also contributed to their strong results. The key driver of growth for Ameriprise is their Wealth Management business, which saw a 19% increase in client assets due to strong organic growth and client flows.

In the past year, the firm had a net inflow of $53 billion, with $23 billion coming in the quarter from new clients, deepening relationships, and adding experienced advisers. Revenue per adviser increased by 11% due to higher spread revenue, productivity, and business growth. Adjusted operating net revenues increased by 8% in the quarter, driven by growth in client assets and improved transactional activity. The firm's total cash balance reached a new high of $81.5 billion, with stability in underlying client cash positions. Adjusted operating expenses increased by 9%, but G&A only increased by 4% for the full year. The firm expects to see continued growth in cash and opportunities for redeployment as markets normalize.

In 2024, the company plans to continue investing in their growing business while maintaining expense discipline. The underlying margin increased by 40 basis points to 30.3%, reflecting revenue growth and expense management. The Asset Management sector saw strong financial results, with a 9% increase in total AUM due to higher equity markets and foreign exchange translation, offset by net outflows. The company also experienced pressure on retail flows and institutional outflows due to market volatility and risk-off investor sentiment. However, long-term investment performance remains strong. In the quarter, operating earnings increased by $194 million, driven by equity market appreciation, expense management, and higher performance fees. The company notes that performance fees are important but recognized unevenly throughout the year.

The company is finalizing the integration of BMO and is focused on enhancing operational efficiency and managing expenses globally. They have seen a 4% decrease in G&A expenses and are aiming to preserve their target margin range. Retirement & Protection Solutions had a 2% increase in pretax adjusted operating earnings and strong sales growth. Ameriprise has consistently delivered strong growth and profitability over the years, with 8% revenue and 21% EPS growth in 2023 and 6% revenue and 15% EPS growth over the past 5 years. Their ROE has also improved significantly.

The Wealth Management division of Ameriprise has been a major contributor to the company's successful performance, with 2/3 of operating earnings coming from this sector. The company's advisers have become more productive and revenue per adviser has increased by 8% annually since 2018. The Wealth Management margin has also expanded significantly, reaching industry-leading levels. Ameriprise has a strong balance sheet and has returned $12 billion to shareholders in the past 5 years through dividends and share repurchases. The company expects to continue its strong capital management strategy. During a Q&A session, the company was asked about the expected yield pickup on $3 billion of expected maturities in 2025, to which they responded that they anticipate it will still be $25 billion and did not provide further details.

The speaker explains that the bank's net interest income will be higher in 2024 and 2025 compared to 2023 due to the rates they have been adding at, which are close to 6%. This will be supported by reinvestments and differentials, resulting in $3 billion in net interest income in both years. They also mention a $2.5 billion cash sweep tied to Comerica, which will affect the off-balance sheet rate for the next 6 months. The speaker clarifies that they use the forward curve and run sensitivity when evaluating net interest income, and their statement about 2024 and 2025 being higher is based on the latest forward curve.

The speaker discusses the company's current cash balances and plans for potential growth in the future. They mention that there has been little growth in sweep accounts and that they are evaluating options for shifting more cash into the bank. They also mention that there is a substantial amount of cash on the sidelines, which could potentially be invested in wrap accounts or other products, leading to a revenue lift. This cash is currently held in money markets and brokerage CDs, but may be put back into the market by advisers as they roll off.

The speaker says that if there is an increase in funds, a portion of it will go into wrap programs and balanced portfolios, as well as transactional activities. They are managing expenses tightly and are comfortable with the current levels, but there is potential for an increase in margin with the right conditions and progress on flows.

In a conference call, Steven Chubak from Wolfe Research asked about the sustainability of AWM margins in the face of rate cuts. Walter Berman expressed confidence in sustaining margins above 30% in 2024. Suneet Kamath from Jefferies asked about expense reductions in the Asset Management business and potential commercial impacts, including outflows related to headcount reduction.

The speaker discusses the company's decision to cut expenses while also acknowledging potential negative impacts on commercial aspects. They mention a conscious evaluation of payback and a focus on improving efficiency. The company is controlling expenses and believes they can redeploy money into other products. The speaker also mentions a cash balance of $82 billion, which is double the usual amount, and notes that advisers are getting a 5-plus yield on it.

The CEO of Ameriprise, James Cracchiolo, believes that the excess cash held by clients will eventually be redeployed, but for now, it is not a concern for clients. The money is currently held at Ameriprise, but some of it has been put into brokered CDs and will likely be moved into the company's own bank products as they become available. In terms of the recent layoffs in Asset Management, 12 PMs were let go and one fund was closed, with the company looking for alternative options for institutional clients.

The company has decided to merge some of its funds into other products in order to increase efficiency. The total AUM related to the layoffs is estimated to be around $2 billion, but the exact amount is still being determined. The redeployment of funds from corporate into segments was due to a reevaluation of the crediting rates and models, and will have no effect on the company's overall profitability.

The company has a goal of achieving 90% sustainable free cash flow conversion, but returned to 80% in 2023. They plan to remain at this level for now, but may adjust opportunistically. They are implementing expense management initiatives, which are expected to be completed within the year and result in flat expenses for 2024. The company is also considering a potential reinsurance transaction on the RPS side, taking into account recent industry developments and the rate environment.

During a recent conference call, a question was asked about the stability of cash levels and the yield for net investment income in the retirement and protection segment. The company's CFO, Walter Berman, stated that there has been a stabilization of cash levels and a pickup in yield, and that the company has taken advantage of favorable rates in their investment strategy. He also mentioned a recent reduction in Asset Management, which followed a thorough review and allowed the company to focus on areas of growth and improve performance.

The company has reviewed their front office and products, and sees potential for growth in the equity, fixed income, and credit areas. They have evaluated both domestic and international opportunities and are focusing on specific areas for growth. They are not interested in third-party sidecars for risk transfers. The team is also focused on the RIA channel for distribution capabilities.

The speaker discusses the various technology initiatives in place for advisers at Ameriprise, including a CRM platform, e-meeting capabilities, and AI. They feel confident in their suite of capabilities and are continuing to invest heavily in this area. The gross fee yield on client cash is around 5-5.25%, with new money yields at a tad under 6%. They are investing in maturities in the 3.5 range.

During a conference call, an analyst asked about the high percentage of cash held by Comerica Bank and whether there are plans to put more of it to work. The company's CEO confirmed that the percentage is high, but they are working to bring it down and expect it to decrease in the future. The CEO also clarified that their previous statement about NII expectations was only for the bank, not for all cash economics. When asked about cash trends in January, the CEO stated that the previous statement was only for the bank and could not provide further information. The conference call ended with no further questions.

This summary was generated with AI and may contain some inaccuracies.