The operator welcomes participants to the Q2 2024 Earnings Call for Ameriprise Financial. Alicia Charity, along with the CEO and CFO, will be discussing the company's second quarter financial results. Non-GAAP financial measures will be mentioned and a reconciliation of these numbers to their respective GAAP numbers can be found in the presentation materials. Forward-looking statements will also be made, but they are subject to risks and uncertainties. The company's GAAP financial results and adjusted operating results will be discussed, with a focus on the latter.

Jim Cracchiolo, CEO of Ameriprise, discussed the company's strong second quarter results and highlighted the current external landscape, including market conditions, inflation, geopolitical instability, and the upcoming U.S. election. He noted that revenues reached a new record of $4.2 billion and earnings increased by 17%. The company also generated significant free cash flow, returned $693 million to shareholders, and maintained a best-in-class return on equity. Assets under management and administration also saw a 12% increase year-over-year. Cracchiolo emphasized the company's focus on quality engagement and client satisfaction, as well as their investment agenda and reengineering discipline.

In the wealth management division of Ameriprise, total client assets increased by 17% to reach $972 billion, with a focus on attracting new clients in the $500,000 to $5 million range. Total client wrap assets also saw a significant increase of 18%, with wrap flows growing by 34% and transactional activity increasing by 19%. The company is leveraging its CRM engagement tools and digital capabilities to enhance client relationships and drive efficiency. The advisor force grew to nearly 10,400, and the company saw a strong increase in net investment income. There is also a focus on banking solutions, with notable growth in pledge loan volumes. The CEO has recently spent time with the top 10% of the company's advisor force at a recognition conference.

The article discusses how Ameriprise has a supportive and caring culture that helps advisors have successful practices. The retirement protection businesses are consistently contributing to positive results, with strong sales in structured annuities and VULs. In asset management, the team is focused on generating attractive investment performance, with a majority of their funds outperforming industry benchmarks. While there were overall outflows, there were improvements in gross sales and the company is seeing opportunities to gain more flows in fixed income. Institutional flows were slightly positive, primarily in the APAC region, and there is a focus on models, SMAs, and ETFs to gain more traction.

The company is focused on transforming its global asset management business to gain operational efficiencies and has seen a decrease in G&A expenses. They have maintained good fee levels and margins and have a strong track record of performance and returns for shareholders. The company also celebrated its 130th anniversary and has consistently been among the best for ROE and TSR. Adjusted operating EPS grew 17% and assets under management and administration increased 12%, resulting in 9% revenue growth across all businesses.

The company has been managing expenses tightly to maintain strong margins, with G&A expenses down 2% and a focus on investing in areas that will drive future growth. The returns and balance sheet fundamentals remain strong, with a significant free cash flow contribution from all business segments. $693 million was returned to shareholders in the quarter and the company plans to return 80% of operating earnings in 2024. The Wealth Management segment saw a 17% increase in client assets and a 6% annualized flow rate in the quarter. Adjusted operating net revenues increased 13%, driven by growth in client assets and transactional activity. Revenue per advisor reached a new high and cash balances for clients were over 8% of their assets, with a preference for yield-oriented products.

The company is seeing an increase in clients investing in their platform and expects this trend to continue as markets and rates stabilize. Cash balances have also increased due to seasonal tax patterns and the transition of cash from the Comerica partnership. However, the company clarifies that their cash sweep is not meant for long-term investments and offers other options for clients with larger cash balances. Adjusted operating expenses have increased due to business growth, but the company has managed expenses well, resulting in a 31% operating margin. In the Asset Management sector, AUM has increased primarily from equity market appreciation, but there have also been net outflows in the quarter.

The operating earnings for the quarter increased by 35% due to equity market appreciation and expense management. Adjusted operating expenses decreased by 2%, with a focus on managing expenses globally. Retirement & Protection Solutions also saw an increase in earnings and free cash flow generation. The balance sheet remains strong, with excess capital of $1.7 billion. Ameriprise continues to prioritize returning capital to shareholders and investing for future growth.

Ameriprise had strong growth in the second quarter and has a track record of consistent growth over multiple market cycles. They have returned a significant amount of capital to shareholders and have a diversified business mix. The company is not planning on making any changes to their cash sweep rates, but they operate within regulatory and fiduciary standards. They cannot comment on the actions of other financial services companies.

The speaker discusses the actions the company has taken to ensure that their money is in sweep for transactional purposes. They feel comfortable with their current level of cash and believe their bank NII will continue to grow, driven by investments and measured additions. They also disclose that $12 billion of their client cash is held in wrap advisory accounts. The speaker also mentions that recruiting experienced advisors has slowed down, but does not comment on the competitive environment for hiring.

In the paragraph, Jim Cracchiolo discusses the slowdown in the second quarter and the reasons for it, mentioning market conditions and the seasonal shift. He also mentions a pick up in the pipeline and expects an improvement in the future. In response to a question about client cash flows, Walter Berman explains that the total cash is around $80 billion, with $40 billion in money markets and third-party CDs. He notes a shift towards shorter investments due to the yield curve.

The analyst asks if the company expects the $12 billion of sweep within advisory accounts to put pressure on the $40 billion balance in their certificates business. The CEO states that they anticipate this to be beneficial for the company and that it will likely be a source of repositioning. The analyst also asks about the company's G&A expenses and the CEO states that they are well-managed and will continue to be so, but they will be investing in the business for growth. The analyst then asks for more details on the $12 billion sweep within advisory accounts.

During a recent conference call, Jim Cracchiolo, CEO of Ameriprise, was asked about the portion of their $12 billion revenue that includes them as a fiduciary or investment advisor. He stated that a majority of their central models are run by outside managers and that their fees are around 2%. They have not broken down the revenue between employee and non-employee channels, but they manage it carefully and feel comfortable with their disclosures. Cracchiolo also mentioned increased engagement in their banking offering and noted that they have seen nice increases in pledge loan growth, with plans to launch another rate one in the coming quarter.

The company has seen an increase in assets from clients through direct CDs and savings programs. They believe that as they continue to launch new products, advisors will be interested in them and this will lead to asset growth. There was a pickup in the pledge run, but no specific numbers were mentioned. The company also addressed competition and net new asset trends, stating that wrap flows were strong but consolidated flows were weaker due to lapsing. However, they feel comfortable with their growth trajectory and believe it is aligned with the industry. There was a slight slowing in the second quarter, possibly due to market conditions.

The speaker discusses the Asset Management margin and how it has maintained above the target despite pressure on fees. They believe they can sustain this margin in the future due to their investment in technology and global resources. They also mention gaining traction in SMAs and ETFs, and potentially pursuing active ETFs. They also mention cutting expenses and using resources globally to increase efficiency.

The company is making changes in their Asset Management business to improve processes and efficiency. They are also seeing growth in their insurance and annuities business, with good rates and strong earnings. The company is not focused on what their competitors are doing with cash sweep crediting rates.

The speaker is responding to a question about the drivers of changes in rates for Ameriprise, and he clarifies that their evaluation of the rates includes consideration of competitive factors. However, he cannot comment on specific drivers. Another speaker adds that they feel comfortable with their current rates and do not see any issues with the new VUL fiduciary standards. They also mention that their low balance and low percentage of wrap accounts contribute to their confidence in their rates.

The speaker is discussing the increase in NII for a particular segment and questions why it hasn't translated to a higher bottom line. The CEO responds that there are no unexpected factors affecting the business and promises to look into it further. Another analyst asks about the impact of the upcoming election on operations and planning, and the CEO clarifies that it is more about client perception and understanding.

The speaker discusses how changes in policy and elections can affect investments and market strategies. They also mention leveraging global operational efficiencies in the Asset Management business through integrating acquisitions and using global platforms to increase efficiency.

The company is focusing on leveraging technology and streamlining processes to increase efficiency. They couldn't do this previously due to overlaps from an acquisition. The CEO discusses the compensation of advisors on cash sweep balances and potential changes in how customers pay for services. The company closely monitors cash levels in accounts and encourages moving excess cash.

The speaker discusses how people are moving out of fixed income instruments and investing in cash instruments, which has caused the sweep to decrease. They also mention that there are always adjustments in pricing and they are monitoring the situation closely. In terms of the APAC region, they have a small presence and are mainly focused on institutional clients. They see opportunities in core products such as equities in both Europe and the U.S.

The company has been seeing growth in areas such as fixed income, investment-grade, and real estate. They have expanded into Japan and other countries and are receiving interest from larger institutions such as pension funds and sovereign wealth funds. The conference call has now ended.

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