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Ameriprise Financial

Ameriprise Returns to the Banking Business

The move to offer banking services, like loans, would support the wealth management business, the firm’s CEO said during an earnings call.

During its first quarter earnings call, Ameriprise Financial said the firm will likely get back into the banking business, starting next year.

Jim Cracchiolo, chairman and CEO, said the firm, which still retains a bank trust charter from a previous foray into banking services, will work to build out its offering specifically to serve the wealth management business, which currently has 9,881 advisors across its employee and franchisee models.

“We’re not looking to do commercial lending like some institutions have,” Cracchiolo said, on the earnings call Tuesday morning. “We really want this to be more around supporting our clients’ activities and their individual asset loans. We’ve had the capability in the past to have done that. We have the knowledge, so we need to put that back in place and go through the appropriate approval and set up the various systems and capabilities for it.”

In the first quarter, the advice and wealth management segment had pre-tax adjusted operating earnings of $316 million, up 27 percent from a year ago, driven by asset growth and higher earnings on cash balances. Pre-tax adjusted operating margin grew 230 basis points from a year ago to 21.1 percent.

The firm added 79 experienced advisors during the quarter from wirehouses, regional firms and independent broker/dealers, bringing total headcount to 9,881.

Average advisor productivity was $586,000 after normalizing for the elimination of 12b-1 fees in advisory accounts, up 13 percent from a year ago.

Strong net inflows, client acquisition and market appreciation drove total retail client assets to $557 billion, up 12 percent from a year ago. Net inflows to wrap accounts were $5.7 billion during the quarter, up 44 percent from last year, with total wrap assets increasing 18 percent to $251 billion.

Cracchiolo commented on the SEC’s recent proposals to put forth a best interest standard for broker/dealers. He said the firm was encouraged by the move, and that it is a more appropriate regulation for the industry to conduct business.

“On the surface, it looks very good in that it is a bit more principles-based,” he said. “We think it is appropriate for the SEC to take the broader role and be consistent across all activities, so we’re very favorable to that.”

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