Ameriprise Pushes Back on Retention Bonus Reports
During a third-quarter earnings call on Thursday, equity analysts pressed Ameriprise Financial management on reports about changes to retention packages. But CEO Jim Cracchiolo and CFO Walter Berman firmly denied that there was any programmatic shift in the firm’s retention strategy.
Berman said the firm’s advisor retention remains in the high 90% range, and Cracchiolo said the firm’s headcount has been consistent year over year.
“There’s a lot of noise out there from anonymous sources, from recruiters with their own agendas,” Cracchiolo said. “You can write into anything today, and it gets published. We work with advisors to understand what they’re looking to do and grow, including people that maybe get an office out there.”
The firm is focused on individualized, partnership-based arrangements tied to succession, practice acquisition and liquidity needs, he said.
“Whether it’s going to an RIA or another firm, we look at the comparison,” he said. “Some advisors don’t understand. They think there’s something that’s rosier or whatever until you really have to explain to them and understand what the difference is, what they give up and what it might mean to them. People will always move, right?”
In September, Citywire reported that Ameriprise was offering retention bonuses and advisory platform fee discounts to select advisors to prevent teams from leaving for independent RIAs. AdvisorHub followed with a similar report.
In response to analyst questions, Berman said the firm is focused on organic growth, and that has contributed to strong performance.
“What’s in the press, I guess, from my standpoint is not dealing with our organic approach to it and not a churn factor to it,” he said.
Cracchiolo also pointed to strong margins and advisor productivity, and he said that will benefit Ameriprise in the long term over private equity-backed firms in the wealth space. Advisor productivity grew 13% to a record $1.2 million during the quarter, while its pretax adjusted operating margin was at 28%.
“Private equity may move someplace else quickly if they can’t get their multiple return,” he said. “Ameriprise is going to be here. But more importantly, our advisors are going to be highly productive and supported, and that’s what we do.”
Ameriprise lost a few large teams during the quarter, including a Bloomington, Minn.-based team with about $1.3 billion that left to launch their own RIA, Fathom Advisors. A Bedford, N.H.-based team with about $4.3 billion in assets also jumped ship to start Rise Private Wealth Management, an RIA.
Overall, the firm posted third-quarter non-GAAP earnings per share of $11.26, missing analysts’ expectations by $0.51, according to Seeking Alpha. Revenue was $5.19 billion, up 6.1% year-over-year, beating expectations by $110 million.
