Ameriprise financial

Ameriprise Downplays Impact of Shift Away from 12b-1s

The firm’s move away from 12b-1 fees resulted in reduced revenue by a net $54 million in the third quarter.

Ameriprise Financial’s move to share classes that do not have 12b-1 fees for advisory accounts and other associated changes reduced revenue by a net $54 million in the advice and wealth segment during the third quarter.

The firm downplayed the impact on its earnings conference call, emphasizing that advisors’ trailing 12-month production increased 12 percent year-over-year to an average $541,000, when normalizing for the net impact of 12b-1 fee changes, of course.

“The PTI and margin impact from 12b-1 fee changes remain marginal and within expectations,” said Chief Financial Officer Walter Berman.

“The larger part of that is really advisors actually continuing to deepen their book and grow their client base activities and focus a little more on clients that are actually bringing in more of the assets at a higher level, continuing to move up market,” said Jim Cracchiolo, chairman and CEO.

In the advice and wealth segment, pre-tax operating earnings were up 29 percent year-over-year to $298 million, driven by asset growth, higher earnings on cash balances and well-controlled expenses. Operating net revenues, normalizing for the 12b-1 fee impacts, were $1.4 billion, up 14 percent year-over-year. Berman attributed that to solid growth in wrap assets, client inflows, market appreciation and higher earnings on brokerage cash. 

The firm recruited 88 advisors and added 215 advisors through its acquisition of Investment Professionals, Inc. during the quarter, bringing total advisor headcount to 9,890.

Overall, the firm reported operating earnings of $548 million, or $3.53 per share, up $321 million from a year ago. That beat analysts’ expectations by 73 cents, according to SeekingAlpha.com. Net revenue of $3 billion, down 0.7 percent from the year-ago period, missed expectations by $10 million.

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