Wealth firms across the industry just reported earnings for the first three months of 2020. Here are the highlights:
The firm’s Advice & Wealth Management unit brought in about $1.7 billion of revenue, up 9% from a year ago, thanks to “strong client activity and higher average equity markets that more than offset the decline in short-term interest rates,” the firm said.
Its pretax adjusted operating earnings were $378 million, up 8% from a year ago. “The company’s business continuity capabilities ensured that advisors have the tools and information necessary to meet and exceed client needs in this volatile environment,” it added in a statement.
The business includes 9,878 independent (or franchisee) and employee advisors — up 7 from the prior quarter and down 101 from a year ago; 7,726 are indie advisors, and 2,100 are employees. The firm said 80 veteran advisors moved their practices to Ameriprise in the first quarter.
Total client assets for the quarter were $560 billion; client inflows were $6.1 billion in the quarter, while client brokerage cash balances grew almost 30% from a year ago to $32.7 billion.
Adjusted operating net revenue (or fees and commissions) per advisor on a trailing 12-month basis were up 8% from last year to $680,000.
The independent broker-dealer said its net income rose slightly from last year to $156 million, while earnings per share jumped 7% to $1.92. Total revenues improved 7% from last year to $1.5 billion, with commissions up 9% to about $503 million and advisory revenues (or fees) up 28% to $579 million.
Its assets fell 2% from a year ago to $670 billion, though fee-based (or advisory) assets, jumped 3% to $322 billion. Net new asset inflows in the period were $12.5 billion; recruited assets were $8.4 billion for Q1’20 and $36.2 billion for the past four quarters.
The number of affiliated advisors totaled 16,763, up 574 from a year ago and 299 from the prior quarter. Total client cash balances were $47.8 billion.
The IBD recently rolled out a new affiliation model aimed at attracting wirehouse and other employee advisors. “The first team to move to this solution did so April 1,” said Rich Steinmeier, managing director of Business Development.
The firm had a 35% year-over-year drop in net income to $169 million for the period ending March 31 — mainly due to the bank loan loss provision of $109 million tied to the coronavirus fallout. Revenue, though, rose 11% from a year earlier to $2.07 billion.
This growth, the firm says, came from higher asset management and related administrative fees in Private Client Group fee-based accounts — which have $384 billion of assets — and higher brokerage revenue in both PCG and Capital Markets.
PCG advisor headcount jumped 286 from last year to hit 8,148 on March 31, which is up by 88 from December 2019. The number of independent advisors is 4,772, while employee advisors total 3,376.
The unit’s net revenue was up 18% from last year to $1.50 billion, and its pretax income jumped 29% to $170 million. Cash sweep balances were nearly $53 billion.
Private Client Group assets under administration of $734 billion weakened 3% from a year ago. They are roughly 52% fee-based.
Its advisor headcount grew to 17,646. That’s up 111 from a year ago and 188 from the prior quarter. At the same time, the average 12-month fees and commissions per advisor were $1.14 million vs. $1.04 million in Q1’19 and $1.1 million in Q4’19.
But this type of growth may be unlikely for Q2’20, based on the impact of restricted recruiting, face-to-face meetings with clients and prospects due to the coronavirus and market-related issues.
The wealth unit’s revenue was $4.936 billion, up $116 million from a year ago and $23 million from Q4’19. The pre-tax margin, though, fell to 23% vs. 29% last year and 28% in the prior quarter.