Ameriprise Financial 2026 Q3 Earnings Call

Stephanie, you may begin. Welcome to Ameriprise Financial's third quarter earnings call.

On the call with me today are Jim Cracchiolo, Chairman and CEO, and Walter Berman, Chief Financial Officer. Following their remarks, we'd be happy to take your questions. Turning to our earnings presentation materials that are available on our website, on slide 2 you'll see a discussion of forward-looking statements. Specifically, during the call you'll hear references to various non-GAAP financial measures, which we believe provide insight into the company's operations. Reconciliation of non-GAAP numbers to their respective GAAP numbers can be found in today's materials and on our website at ir.ameriprise.com. Some statements that we make on this call may be forward-looking, reflecting management's expectations about future events and overall operating plans and performance. These forward-looking statements speak only as of today's date and involve a number of risks and uncertainties.

A sample list of factors and risks that could cause actual results to be materially different from forward-looking statements can be found in our third quarter 2026 earnings release, our 2025 annual report to shareholders, and our 2025 10-K report. We make no obligation to publicly update or revise these forward-looking statements. On slide 3, you see our GAAP financial results at the top of the page for the third quarter. Below that, you'll see our adjusted operating results, followed by operating results excluding unlocking, which management believes enhances the understanding of our business by reflecting the underlying performance of our core operations and facilitates a more meaningful trend analysis. We completed our annual unlocking in the third quarter. Many of the comments that management makes on the call today will focus on adjusted operating results and adjusted operating results excluding unlocking.

With that, I'll turn it over to Jim.

Good morning, everyone, and thanks for joining us today. Ameriprise had a strong third quarter. Our results reflect the quality of our business and the value we bring to clients and advisors. We are performing well in an environment that remains positive but uncertain. In the quarter, equity markets advanced despite periods of volatility, persistent inflation, higher interest rates, and geopolitical unrest. Clients want to work with an advisor and a firm they can trust, with the advice, investment expertise, and solutions to fully serve their needs. That matters even more when conditions are complex. For the quarter, total assets under management, administration, and advisement reached $1.8 trillion, up 8%, and the financial results we generate continue to be very strong.

Excluding unlocking on an adjusted operating basis, net revenues increased 10% to $5.1 billion, supported by higher asset levels and transactional activity, with earnings per share increasing 22%, continuing our consistent record of earnings growth over time. This resulted in our best-in-class return on equity, which rose to over 56% from 52.8% a year ago, reflecting our differentiated economics. We are helping clients achieve their goals, growing earnings, and investing in the business, all while returning substantial capital to shareholders. Let's turn to the business and our progress in the quarter. Our wealth management business is high quality and high returning. Client satisfaction continues to be excellent at 4.9 out of 5, reflecting the value of the advice and experience our advisors deliver. Information is everywhere. What makes the difference is the personal engagement and judgment our advisors bring.

Understanding each client's goals and putting the right solutions into action, that's what drives satisfaction, and that's our sweet spot. As investors seek help with important financial decisions, our advisors are well-positioned. Our continued investment and support translated into more successful advisor practices and have helped Ameriprise advisors grow faster than competitors for many years. Strong organic growth led to advisor productivity increasing another 13% to a record $1.2 million per advisor. Total client assets increased 8% to $1.2 trillion. Wrap assets reached $729 billion, up 12%. The continued growth in assets reinforces the durability of our fee-based earnings. Our investment and banking capabilities give us more ways to meet clients' needs and deepen relationships that drive long-term growth. To that end, Signature Wealth continued to gain traction in the quarter, with more than half of our advisors now using it for clients.

It gives clients access to institutional quality investment management and helps advisors serve them more efficiently. We continue to add features and investment choices. Greater adoption can support asset growth across both wealth management and asset management. Our bank helps us meet clients' broader financial needs and brings assets to Ameriprise. More advisors are incorporating deposit and lending solutions in their practices. As an example, pledged asset lending increased more than 50% and our mortgage portfolio grew 74%. Cash balances remained stable, consistent with how clients and advisors utilize our cash offerings, and transactional activities continued to increase. Also in the quarter, we recruited another 79 experienced advisors to Ameriprise. They are attracted to our culture and advice-based approach. Advisors who join us tell us our support is superior to where they came from, in particular, our integrated technology. Our recruiting momentum continues in a highly competitive market.

There will always be advisor movement and noise in this industry, particularly as people compete very aggressively for business and publicity, and our retention remains very high. Every advisor's practice is different. We bring the strength of Ameriprise to each relationship to support growth, create value for clients, advisors, and the firm. That brings us to our recent win in financial institutions. Earlier this month, we welcomed approximately 260 Huntington Bank advisors with $28 billion in client assets, our largest AFIG deal, and one of the industry's most significant partnerships of its kind. This relationship expands our presence in the bank channel and demonstrates the competitiveness of our business. Huntington advisors now have our integrated technology, planning capabilities, and investment solutions to deepen client relationships and grow assets.

With Huntington's recent acquisition of Cadence Bank, we'll add another 29 advisors and $4 billion in assets moving from another program to us in mid-2027. These partnerships, along with our advisor productivity growth, reflect the strength of what Ameriprise offers from a client and advisor perspective. We see more opportunities ahead to help advisors grow with our premium brand, integrated technology, and support. Following our fall ad campaign, brand awareness among our target audience has reached an all-time high. The Ameriprise brand rates very well with affluent and high net worth investors alongside other leading brands serving this target market. This recognition, together with our credentials, helps attract new clients and advisors. Technology and AI remain significant investment priorities. Our early investment in data systems and safeguards allow us to deploy AI at scale, helping advisors serve clients, gather assets, and reduce administrative work.

In fact, practices using these current capabilities can generate more than 30 hours of additional capacity each week. That's time advisors can put towards clients and business growth. With the additional time, advisors and teams can use AI to bring even more recommendations to clients. In fact, we delivered tens of millions of AI-generated insights, and nearly three quarters of practices are using these insights. This quarter, we're beginning the early release of an AI-powered meeting prep agent and AI service assistant. In 2027, we plan to expand these capabilities with broader data integration and more automated guided workflows, building on the investments we've made, and in addition to the other capabilities that we previously introduced. We invest thoughtfully and strategically in capabilities that work together on an integrated platform. That's a key advantage at Ameriprise.

For example, our technology can connect client insights, meeting preparation, and follow through to help advisors move from identifying a need to taking action. Because we don't simply want advisors to affiliate with Ameriprise, we want them to achieve here. Turning to Retirement & Protection Solutions, the business delivered very good results, including strong margins and good free cash flow generation. As we help more advisors incorporate these solutions for clients in their practices, sales increased 24%. This was driven by high demand for structured variable annuities, variable annuities without living benefit riders, and VUL. RPS strengthens our client experience, and we continue to enhance our product suite. AI is helping us to accelerate underwriting and lowering processing costs while we maintain disciplined risk management. We're also simplifying the digital sales process to make it easier for advisors to bring these solutions to clients.

Turning to asset management, we're delivering attractive investment performance and profitability while expanding our capabilities and distribution to support growth. Assets under management and advisement rose to $743 billion with growth in equities and alternatives. Strong investment performance is key. We offer 92 four and five-star funds globally, and 78% of our retail funds are above median versus peers over three years, 74% over five years, and 87% over 10 years. Having good long-term track records is important in our business. Turning to flows. Our flows were $8.4 billion, excluding legacy insurance flows, primarily driven by certain larger institutional mandates, largely due to client asset allocation decisions. Overall, our retail flows continue to compare consistently with U.S. peers with outperformance in equities and more opportunity for us to gain traction in fixed income.