Ameriprise Financial executives see some competitors offering advisors recruitment packages that might be too good to make sense.
Executives at the Minneapolis-based life insurer, asset manager and wealth management firm suggested that experienced, service-oriented advisors will gravitate toward less showy, more stable firms.
Some recruitment packages out there are rational, "but there're still some people who are irrational, particularly for certain advisors," Ameriprise CEO Jim Cracchiolo said last week during a conference call with securities analysts.
"Unless you have a perfect market going forward, and high short-term rates, etc., the economics have got to look a little iffy," Cracchiolo said. "But sometimes people will take a huge check, particularly if it's way above what the normal economics will call for."
At Ameriprise, "we do look to track certain types of advisors," Cracchiolo said. "We're not looking to associate with just anyone by giving them a big check. And so we do have to raise our packages a bit to be based on the competitive frame, but that's where we bring it in alignment with how we can help people really grow and become more successful."
"We are focused on making sure our transition packages are attractive to experienced advisors that share our values and commitment to the client experience," according to Walter Berman, the chief financial officer.
What it means: Ameriprise executives think some advisors can get richer recruitment packages from other companies, but they're skeptical about how things will work out.
The conference call: Ameriprise held the conference call to go over earnings for the second quarter, which ended June 30.
The Minneapolis-based company streamed the call live and posted a recording on its website.
Advisor recruiting details: Ameriprise has synced up with its competitors and stopped providing the kind of detailed recruiting statistics it used to put in its quarterly earnings reports.
But Cracchiolo did say that the company has about 10,000 advisors, attracted 73 experienced advisors during the second quarter and increased advisor productivity 11% year over year, to $1.1 million per advisor.
"We feel good about our pipeline, as well as our differentiated adviser value proposition," Cracchiolo said during his opening remarks.
Experienced advisors like the training, technology services and other support services Ameriprise offers, he said.
Insurance and annuities: Ameriprise executives also talked about the company's life and annuity operations.
Cracchiolo said the company is happy with writing registered index-linked annuities and investment-only variable annuities and is also happy to have other companies write the other annuities its advisors sell.
Berman said, as he has during many Ameriprise earnings calls, that the company is not rushing to make a deal to pass its long-term care insurance arm to some other entity.
When looking at the long-term care insurance block, "we feel very good about the overall underlying profitability drivers within the business," Berman said. "And, as it relates to risk transfer: The business is solid. It really does contribute."
The prices that would-be dealmakers are offering Ameriprise for the LTCI business wouldn't be good for shareholders, Berman said.
Craccchiolo said Ameriprise is happy with both its LTCI business and its variable annuity business.
"We built good books over time," Cracchiolo said.
The earnings: Ameriprise is reporting $1.1 billion in net income for the latest quarter on $4.5 billion in revenue, up from $829 million in net income on $4.4 billion in revenue for the second quarter of 2024.
Total assets increased to $1.6 trillion, from $1.5 trillion, and assets at the Advice & Wealth Management unit increased to $611 billion, from $531 billion.
Variable annuity deposits fell 9%, to $1.2 billion, but investment growth helped increase total variable annuity contract accumulation values 4%, to $88 billion.
Pretax adjusted operating earnings at the long-term care insurance unit fell to $7 million on $67 million in revenue, down from $12 million on $70 million in revenue.
Ameriprise CEO James Cracchiolo. Courtesy photo
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