2010 Q4 Earnings: Ameriprise Misses Estimates as FAs Boost Results

The total number of its financial advisors declined by 554 to 11,482 in December 2010 from 12,036 in December 2009  by 126 from 11,608 in September 2010.

The number of employee advisors dropped to 7,488 from 7,658, while the number of franchise or independent advisors fell to 9,656 from 10,103. The number of Securities America FAs stood at 1,826 in December 2010 vs. 1,933 in December 2009.

Asset, Wealth Management

The asset management and advice and wealth management units had operating net revenues were $2.6 billion in the fourth quarter of 2010, up 19% from $2.2 billion a year ago "due to growth in asset-based fees driven by the Columbia Management acquisition, market appreciation and retail client net inflows, as well as increased client activity levels," the company said in a press release.

For the full year, the company reported net income of $1.1 billion. Excluding corporate and other segment results, advice and wealth management and asset management accounted for 54% of fourth-quarter 2010 pretax operating earnings compared to 30% in the same year-ago period.

"This quarter marked a good finish to a great year, with strong earnings in our advice and wealth management and asset management segments leading the

way," said Chairman and CEO Jim Cracchiolo, in a statement. "We continued to drive client asset growth and advisor productivity improvements, and we are realizing significant benefits from the Columbia Management acquisition."

Advice and wealth managementreported pretax income of $91 million for the fourth quarter of 2010. Segment operating earnings were $90 million compared to $35 million a year ago.

The unit's fourth-quarter 2010 pre-tax margin was 9.0% vs. 2.1% last year. The unit's pre-tax operating margin was 8.9% in the final period of 2010 vs. 4.0% a year ago.

Operating net revenues increased 16%, or $140 million, to a record $1.0 billion.

"Revenue growth was primarily due to higher management and distribution fees from increased client activity and higher assets under management," the company said in a press release.

Analysts at Keefe, Bruyette & Woods, however, point out that advice and wealth management earnings increased just 2% sequentially despite a 7% rebound in revenues from the strong Q4 equity market and an increase in client activity. In addition, the 8.9% pre-tax margin in Q4 lagged behind a 9.3% pre-tax margin in 3Q10 and the investment firm's 10.0% estimate

Advisor Productivity

Net revenue per advisor increased 21% compared to a year ago "due to increased client activity, higher assets under management from market appreciation and retail client net inflows, as well as the company's focus on experienced advisors," Ameriprise said in a statement.

In the fourth quarter of 2010, advisors has average sales (or fees and commissions) of $88,000 vs. $73,000 in the fourth quarter of 2009.

For the full year 2010, Ameriprise and Securities America advisors had total fees and commissions of $326,000 vs. $262,000 in 2009.

Total assets under management stand at $329.3 billion, or $28.7 million per advisor on average.  

Net Flows

Net flows, the KBW equity analysts say, were better than expected in retail, but worse than expected in institutional.

Columbia retail net outflows of $2.2 billion were an improvement from $3.2 billion of net outflows in Q3 and were ahead of KBW's $3.1 billion outflow estimate.

Threadneedle retail flows rebounded, with $1.2 billion of net inflows vs. $0.4 billion of net outflows in Q3.

However, Columbia institutional net outflows were $4.0 billion, and Threadneedle institutional net outflows were $1.8 billion, according to KBW.

Read AdvisorOne's 2010 Q4 earnings calendar for the financial sector for release dates and links to earnings stories.