Q4 2024 Ameriprise Financial Inc Earnings Call
Stephanie Raby: Welcome to the Q4 2024 earnings call. My name is Mark and I will be your operators for today's call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press star 1 on your touchtone phone. As a reminder, the conference is being recorded. I will now turn the call over to Stephanie Raby. Stephanie, you may begin.
Speaker Change: and good morning. Welcome to Ameriprice Financials fourth quarter earnings call. On the call with me today are Jim Cracchiolo, Chairman and CEO and Walter Berman, Chief Financial Officer.
Following their remarks, we'd be happy to take your questions.
Speaker Change: Turning to our earnings presentation materials that are available on our website, on slide two, you will see a discussion of forward-looking statements.
Speaker Change: Specifically, during the call, you will hear references to various non-GAAP financial measures, which we believe provide insight into the company operations.
Speaker Change: Reconciliation of non-GAP numbers to their respective GAP numbers can be found in today's materials and on our website at www.ir.ameriprise.com
Speaker Change: Some statements that we make on this call may be forward-looking, reflecting management's expectations about future events and overall operating plans and performance.
Speaker Change: These forward-looking statements speak only as of today's date and involve a number of risks and uncertainties.
Speaker Change: A sample list of factors and risks that could cause actual results to be materially different from forward-looking statements can be found in our fourth quarter 2024 earnings release.
Speaker Change: our 2023 Annual Report to Shareholders, and our 2023 10-K Report.
Speaker Change: We make no obligation to publicly update or revise these forward-looking statements.
Speaker Change: On slide three, you see our GAP financial results at the top of the page for the fourth quarter.
Speaker Change: Below that, you see our adjusted operating results, which management believes enhances the understanding of our business by reflecting the underlying performance of our core operations and facilitates a more meaningful trend analysis.
Speaker Change: Many of the comments that management makes on the call today will focus on adjusted operating results.
And with that, I'll turn it over to Jim.
Jim Cracchiolo: Good morning, everyone. Thanks for joining our earnings call. As you saw, AmeriPrize delivered a strong fourth quarter to complete an excellent year. We're building on our good client engagement and demonstrating the strength of our value propositions.
Jim Cracchiolo: Ameriprise also achieved a number of new records that we'll discuss with you. Regarding the external environment, equity markets were strong amid resilient U.S. economic growth and labor markets.
Jim Cracchiolo: As inflation cooled, the Fed lowered interest rates for the third time in late 2024. However, it looks like there will be a slower pace for rate cuts this year.
Jim Cracchiolo: With strong business growth and positive markets, assets under management, administration, and advisement grew to $1.5 trillion, up 10%.
Jim Cracchiolo: And for our adjusted operating results, we achieved some new highs in the quarter.
Jim Cracchiolo: Total revenues were $4.5 billion, up 13% from strong asset growth and transactional activity.
Jim Cracchiolo: Earnings were $965 million, up 18%, with earnings per diluted share up 23%, to $9.54 excluding items we noted. Once again, Ameriprise delivered industry-leading return on equity of 52.7%, up from 49.7% a year ago.
Our excellent results demonstrate the strength of our overall business.
Jim Cracchiolo: And our advisors also continue to stand out in the industry for their exceptional service, leading grub and high quality practices in.
Jim Cracchiolo: In fact, we had a record 427 teams on the Forbes best in state wealth management teams 2024, ranking which is terrific.
Jim Cracchiolo: Maintaining excellent engagement with our advisors is another key strength a recent field survey indicated that 90% of our advisers recommend ameriprise is a great place to work or affiliate with.
This high level of advisor satisfaction with Ameriprise also benefits our recruiting efforts in the fourth quarter. We attracted another 91 experienced productive advisors, marking a nice increase and what is the slowest time of the year for recruiting and we feel good about our pipeline.
Jim Cracchiolo: With regard to our bank, we continue to generate attractive earnings with balances growing to more than 23 billion.
Jim Cracchiolo: And we see further opportunity to expand our product set with C. DS he locks and checking accounts as we move through 2025.
Jim Cracchiolo: Speaking of products, our retirement protection solutions continue to drive strong sales growth and earnings.
Jim Cracchiolo: As I mentioned, we had very good transactional activity in AWS.
Jim Cracchiolo: Part of that included large strong variable annuity sales up 15% for the quarter with robust growth in our structured products.
Jim Cracchiolo: And we also had good sales in our life business, where we're focused on V O L and disability products that are appropriate for the environment like.
Jim Cracchiolo: Life and health sales grew meaningfully up 26% and the team continues to enhance how we do business, including with accelerated underwriting.
Jim Cracchiolo: Our retirement and protection solutions continue to help us meet clients' comprehensive needs, while generating substantial free cash flow.
Jim Cracchiolo: In asset management, we're generating strong financial results as we leverage and evolve our global capabilities for greater efficiency and future growth.
Jim Cracchiolo: For the quarter assets under management, and advisement, what $681 billion.
Jim Cracchiolo: The team is delivering consistent competitive investment performance with excellent research and thought leadership.
Jim Cracchiolo: At year end, nearly 70% of our funds globally. We're above the median of course, one and three year time frames and 80% or more of our funds outperformed for the five and 10 year period, and we continue to have strong performance in key strategies, including our anchor and strategic funds in the U S.
Jim Cracchiolo: In total 108, Columbia Threadneedle funds earned four and five star Morningstar ratings.
Jim Cracchiolo: Regarding flows we had net inflows of $1.3 billion, a more than $6 billion improvement from a year ago and retail we had total net inflows of $6 $1 billion, reflecting stronger gross sales in North America, and EMEA as well as higher reinvested dividends.
Jim Cracchiolo: In institutional we had net outflows of $3 9 billion, excluding legacy insurance partner flows due to slower fundings and the expected outflows we've highlighted.
Jim Cracchiolo: To drive future flows we continue to broaden our investment capabilities. The boat complements our legacy mutual fund business and meeting evolving market demand.
Jim Cracchiolo: This includes building out our active ETF lineup and further growing our SMA and model delivery businesses. In fact, we had nearly $3 billion of model delivery inflows for the year and our assets under advisement are now over $35 billion, making us the seventh largest provider in the U S.
Jim Cracchiolo: For asset management overall, we're completing two years of transformational work that will provide benefits. This year and beyond this includes improved efficiency and evolving the business to better meet client needs, especially in EMEA.
Jim Cracchiolo: And you'll continue to see is tightly managed expenses.
Jim Cracchiolo: At the same time, we're investing for growth.
Jim Cracchiolo: System without firm wide investments in asset management, we continue to build out our product line data analytics AI and other capabilities.
Jim Cracchiolo: Reflecting on the firm overall it was another strong quarter and year for Ameriprise, we built on our unique 130 year legacy and reinforced our ability to consistently achieve excellent results.
Jim Cracchiolo: Ameriprise continues to deliver strong organic growth and free cash flow with best in class capital returns and excellent capital position in.
Jim Cracchiolo: In the quarter, we returned another $768 million and $2 8 billion for the year.
Jim Cracchiolo: Over the last five years, we returned a substantial amount of capital to shareholders nearly $12 billion, which resulted in a share count reduction of 22%.
Jim Cracchiolo: And our Aro is consistently one of the best in the industry and is now 52, 7%.
Jim Cracchiolo: Another important differentiator for Ameriprise, we continue to stand out for our culture and how we operate the business. In fact, we were just recognized again as one of America's most responsible companies in 2025 by Newsweek and one of America's best companies in 2025 by Forbes.
Jim Cracchiolo: I am proud of what the Ameriprise team has accomplished and were in an attractive position for 2025.
Jim Cracchiolo: Now Walter will provide more detail on the quarter and then we'll take your questions Walter.
Walter Berman: Thank you Jim.
Walter Berman: Ameriprise delivered another excellent quarter of course, its operating segments to conclude a strong 2024.
Walter Berman: Adjusted operating EPS increased 23% to $9 54 in the quarter and increased 17% for the year, excluding severance expense mark to market impacts on share based compensation.
Walter Berman: Prior year regulatory accrual in our market.
Walter Berman: This demonstrates the strong underlying growth achieved in the quarter and in the year.
Walter Berman: Assets under management administration.
Walter Berman: <unk> increased 10%.
Walter Berman: 215 trillion dollars.
Walter Berman: Benefiting from strong client flows over the past year.
Walter Berman: And equity market appreciation.
Walter Berman: This resulted in strong 13% revenue growth across our businesses.
Walter Berman: G&A expenses continued to be well managed and demonstrated our focus on operating efficiency and effectiveness, while investing in areas that will drive future business growth.
Speaker Change: Typically in wealth management to achieve sustainable shareholder objectives.
Speaker Change: And we do look at a strong consolidated margin of 27%.
Speaker Change: A stable, 90% free cash flow generation across our diversified businesses, coupled with strong balance sheet fundamentals available.
Speaker Change: <unk> enables us to returned $768 million or 81% of the <unk>.
Speaker Change: Operating earnings to shareholders in the quarter.
Speaker Change: And 2024.
Speaker Change: We returned $2 8 billion or 78% of operating earnings to shareholders.
And our ROE was best in class at 52, 7%.
Speaker Change: On slide six you'll see the strong metrics results from wealth management.
Speaker Change: Client assets grew 14% to an all time high of one trillion dollars.
Speaker Change: With strong client flows of $11 3 billion.
Speaker Change: Wrap assets were up 18% from 574 billion.
<unk> flows were particularly strong in the quarter at $11 1 billion or an eighth annual along the long slow room.
Speaker Change: Strong flows coupled with continued growth in transactional activity generated strong revenue growth.
Speaker Change: Net revenue per advisor reached a new high of $1 million up 13% from a year ago.
Speaker Change: Total cash balances, including third party money market funds and brokered Cds.
Speaker Change: Were $85 4 billion.
Speaker Change: Which was over 8% of client assets.
Speaker Change: However, the pace in which money is flowing into money market funds.
Speaker Change: <unk> significantly and we are beginning to see clients put money back to work in rats and other products on our platform.
Speaker Change: We expect this to continue over time as markets and rates not a loss, which creates a significant opportunity.
And as the quarter clients sweep balances increased $2 3 billion sequentially to $29 8 billion on slide seven you see the strong financial results from wealth management.
Speaker Change: Pre tax adjusted operating earnings increased 18% $822 million driven by core business growth and.
Speaker Change: Strong equity markets, which more than offset the approximate.
Speaker Change: The impacts on fed funds rate cuts and the portfolio repositioning.
Speaker Change: The adjusted operating net revenues increased 18% to $2 8 billion of growth growing earning assets increased transactional activity.
Speaker Change: Adjusted operating expenses in the quarter increased 18% with distributional expense up 23%.
Speaker Change: Reflecting business growth and higher transactional activity.
Speaker Change: G&A expenses were $438 million in the quarter and were up 5%.
Speaker Change: <unk> 7 billion for the full year.
Speaker Change: This was in line with expectations, reflecting investments for growth and higher volume related expenses.
Speaker Change: Margins remained strong at 29%.
Speaker Change: Turning to asset management on slide eight.
Speaker Change: Financial results were very strong in the quarter operating earnings increased 29% to $251 million consistent with full year growth of 28% versus last year.
Speaker Change: This strong quarter and annual performance was driven by proactive expense management related to our operating model transformation and strong markets.
Speaker Change: More than offsetting outflows similar to the industry.
Speaker Change: Total assets under management, and advisement increased 3% to 681 billion.
Speaker Change: Revenues grew 10%, reflecting strong walks in performance fees as well as the impact of net outflows.
Speaker Change: Adjusted operating expenses increased 4%.
Speaker Change: General and administrative expenses, excluding higher performance fee compensation improve.
Speaker Change: Improved 2% in the quarter and 3% for the year.
Speaker Change: Reflecting benefits from the company's initiatives to enhance operating efficiencies and effectiveness.
Speaker Change: <unk> strengthened the client experience and future profitability.
Speaker Change: Those transformation initiatives will continue to benefit results.
Speaker Change: Margins reached 39% in the quarter and 38% for the full year.
Speaker Change: Up from 32% in the prior year.
Speaker Change: With similar levels of performance fees in both years.
Speaker Change: Let's turn to slide nine.
Speaker Change: And then in protective solutions continued to deliver strong earnings and free cash flow generation.
Speaker Change: Reflecting the high quality of the business that was built over a long period of time.
Speaker Change: Pretax adjusted operating earnings in the quarter increased 5% to 213 million, reaching $816 million for the full year.
Speaker Change: The strong and consistent performance of the business reflected the benefit from stronger interest earnings and higher equity markets, partially offset by higher distribution expense associated with continued strong sales trends.
Speaker Change: Overall retirement protection solutions sales were up nicely with.
Speaker Change: We're protection sales up 26% to $91 million, primarily in higher margin products and variable annuity sales up 15% to $1 2 billion.
Speaker Change: In the corporate segment I wanted to mentioned long term care pre tax adjusted operating earnings were $21 million or 62 million for the full year excluding unlocking.
Speaker Change: Results in the quarter reflected higher close claims and new premium rate increases.
Speaker Change: Turning to the balance sheet on slide 10.
Speaker Change: Balance sheet fundamentals and pre cash flow generation remained strong with $2 billion of excess capital.
Speaker Change: Our diversified and high quality investment portfolio continues to perform well.
Speaker Change: As I have noted before.
Speaker Change: We repositioned approximately one third of our floating rate securities in the bank portfolio into fixed rate securities with a 5% yield and a three year duration.
Speaker Change: This positions us well moving forward, we have diversified sources of dividends from all our businesses.
Speaker Change: Enabled by strong underlying fundamentals.
Speaker Change: This supports our ability to consistently return capital to shareholders and invest for future business growth.
Speaker Change: Ameriprise is consistent capital return strategy drives long term shareholder value.
Speaker Change: In summary on slide 11, Ameriprise delivered excellent growth in the fourth quarter.
Speaker Change: Which is a continuation of a long track record of outperforming our stated financial targets.
Speaker Change: In 2024 revenues grew 11%.
Speaker Change: Earnings per share as adjusted increased 17%.
Speaker Change: Return on equity grew 300 basis points, and we returned $2 8 billion of capital to shareholders.
Speaker Change: We had similar growth trends over the past five years with 8% compounded annual revenue growth, 17% compounded annual EPS growth return on equity improved over 14 percentage points, and we returned $12 billion of capital to shareholders. These.
Speaker Change: These trends are consistent over the long term as well.
Speaker Change: This differentiated performance across multiple cycles speaks to the complementary nature of our business mix as.
Speaker Change: As well as our focus on profitable growth.
Speaker Change: With that we'll take your questions.
Speaker Change: Thank you.
Speaker Change: Again, the question and answer session. If you have a question. Please press star one on your Touchtone phone.
Speaker Change: We used to be removed from the queue. Please press star one.
Speaker Change: Using a speakerphone you may need to pick up the handset Christi broke pressing the numbers. Once again, if you have a question. Please press star one on your Touchtone phone.
Speaker Change: And your first question comes from the line of soon need to come up with Jefferies. Please go ahead.
Speaker Change: Great. Thank you good morning.
Speaker Change: I wanted to start with the bank.
Speaker Change: The NII, there was was down sequentially and year over year.
Speaker Change: I know Walter in the past you've talked about an expectation that maybe 25 2025.
Speaker Change: It would be above 24.
Speaker Change: Is that still your expectation and can you maybe walk through some of the pieces that kind of get you there.
Speaker Change: Sure so coming into the quarter you know we were at 75% fixed in the bank and 25% floating and during the quarter, we repositioned that down to 17%. So we now are basically you have managed that aspect then in the quarter. We also grew.
Speaker Change: Our Oh base by about $2 3 billion.
Speaker Change: All from both seasonal and growth so that's the positioning coming in so.
Speaker Change: Going forward I think we're sitting in a good position because of the fundamentals that we are we.
Speaker Change: We have right now we also have taken in January we studied the client crediting rate and we adjusted that accordingly.
Speaker Change: Accordingly, with the change in the interest rates. So all the fundamentals that we see our position us quite well I think again.
Speaker Change: The bank to us certainly sustain and continue our net net is net interest income.
Speaker Change: There's a lot of variables, but that I think our positioning is.
Speaker Change: Put us in good position as it relates to now looking at sweep obviously there'll be impacted by rate reduction and on certificates, that's a spread business and it will be adjusted as rates go.
Speaker Change: But normally obviously you're invested in then you have to if you drop your ratio you'll get the benefit. So I would say we are well positioned as we are.
Speaker Change: As we go into 'twenty five to certainly.
Speaker Change: Continuing to generate good net interest income.
Speaker Change: Put it back on it.
Jim Cracchiolo: Yep got it okay. Thanks, and then I guess for Jim.
Jim Cracchiolo: You talked about this 85 billion of client cash being 8% of assets and I think at that level. It's maybe two times the normal roughly 4% I think is what the historical level has been so I guess do you think that we ultimately get back to that 4% to 5% level or are we just going to be in this higher cash.
Jim Cracchiolo: <unk> environment for some time, just want to get a sense of how your advisers are thinking about it.
Jim Cracchiolo: Well I mean, I think as you saw or you start to see money being redeployed back and you know, but we also got more flows in.
Jim Cracchiolo: The cash levels are higher than what used to be but remember you're still sitting with interest rates pretty you know on the short term of the curve pretty high and so it is a cash allocation because youre getting good spread I mean good rate.
Jim Cracchiolo: For the consumer there.
Jim Cracchiolo: But as the stabilization occurs in the longer end of the curve and that picked up a little bit you should start to see some shift over time, there as well.
Jim Cracchiolo: And more money is going back into the market, but not in a.
Jim Cracchiolo: Dramatic way right, it's more on average over time.
Jim Cracchiolo: And I would probably say, you'll probably see a continued pickup in fixed income type of product as well, but.
Jim Cracchiolo: But yes, I would say over time, the cash position will come down, but it's you know the rates that they dropped 100 basis points on the short end of the curve, but theres still much higher than they were over the last 10 years.
Speaker Change: Got it okay, alright thats helpful. Thanks.
Speaker Change: And your next question comes from the line of Brennan Hawken with UBS Financial O'brien. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Brendan Your line is now open.
Speaker Change: Sorry.
Speaker Change: On thanks for taking my question good morning, gentlemen, Walter.
Speaker Change: Walter would love to put a finer point on the NII at the bank our commentary so it sounds like now you're working towards stability.
Speaker Change: That NII number as I said, a constructive outcome and just wanted to make sure I interpreted that correctly and then also I know you lowered the crediting rate here January 8th but.
Speaker Change: It looked like it was about 15 basis points for most of the peers is do you expect that will be enough to keep the yield stable here in the first quarter.
Speaker Change: Or is it more of a partial offset.
Speaker Change: Okay. So so as I indicated Brian.
Speaker Change: From our standpoint, we did adjust the rate we felt that was appropriate looking at the what will happen on the deposit base.
Speaker Change: So.
Speaker Change: We will continue to evaluate that but obviously, we go through a competitive process and assess.
Speaker Change: But we did absorb and in the fourth quarter 100 basis point drop as effective 61 in the bank and so, but we did add but.
Speaker Change: <unk> and those deposits are like I said, its seasonal and growth and so I say I think we as I indicated were good position and to.
Speaker Change: To navigate as we go through 225 or so.
Speaker Change: Is it.
Speaker Change: Quite comfortable where we're at now sitting with 87% in fixed in the bank.
Speaker Change: And our high quality high yielding investments.
Speaker Change: Okay.
Speaker Change: And then when we think about loan growth so rates coming down could make a particularly this pledge loans securities based loans more attractive but.
Speaker Change: It's been good loan growth story within the bank subsidiary has largely been a residential mortgage story.
Speaker Change: Do you expect that to continue.
Speaker Change: How should we be thinking about the loan growth.
Speaker Change: As may be also a partial offset within the bank as we move through 2025.
Speaker Change: We'll be looking to I think it's scheduled to launch later in the first quarter our fixed pledge.
Speaker Change: And that's we haven't had that yet and.
Speaker Change: And we know that's something that's a sought after in the wires, so adding that to the product portfolio. We.
Speaker Change: It will also be coming out with Helocs.
Speaker Change: Later in the second quarter.
Speaker Change: Along those lines.
Speaker Change: We're also going to be adding some other products on the deposit sides Cds in the bank as well as launching a checking account later in the year that would bring more.
Speaker Change: Balances into the bank and more utilization of the engagement with the banks that would also help on the loan side for some of those products were coming out with so we feel that there is an opportunity to increase the lending part of the portfolio as we go on but remember we've been really focused on getting the bank really.
Speaker Change: Are really set up and established and we're launching products periodically in them, but over time, we feel like we can build a loan for a nice loan portfolio.
Speaker Change: Okay and then.
Speaker Change: The residential mortgage will probably still read or is there an expected shift okay.
Speaker Change: Okay.
Speaker Change: For taking my questions.
Speaker Change: Okay.
Speaker Change: And your next question comes from the line of Alex Bluestein with Golden Goldman Sachs. Alex. Please go ahead.
Speaker Change: This is Luke here on for Alex Thanks for taking the question could could you help us frame, how you're thinking about the firm's capital strategy and particularly inorganic opportunities appreciate how consistent the repurchase cadence has been but how are you thinking about inorganic opportunities specific with specifically within AWS, where it feels like wealth.
Speaker Change: Peers are beginning to get more acquisitive.
Speaker Change: Yes, so we feel like we have.
Speaker Change: Our consistent ability to redeploy capital to the buyback and dividend increases that we have based on the cash flow generation, we have across the business.
Speaker Change: And remember in our Rps business, which is a very well established business that has very good returns that that really gives us a lot more ability in that sense.
Speaker Change: From a perspective of acquisitions.
Speaker Change: We you know the market is a little bit pricy right now I think private equity has been up things are if you are looking at the wealth segment.
Speaker Change: We focus more on bringing and appropriately.
Speaker Change: Appropriate types of advisors that have a good sort of perspective on how they want to do business on a client experience on it and advice based solution.
Speaker Change: Cetera, and so we still see opportunity there, but from an acquisition perspective with more targeted in that regard.
Speaker Change: We also are investing to broaden out our channels, we have a number of opportunities whether in <unk> or in our own AAC and central sites working more direct and.
Speaker Change: And we have some other opportunities that we're looking at right now so I feel good about our ability to continue to grow both organically as well as looking at some of the newer channels that we're establishing a probably less so in the larger inorganic space right now based on what's happened in the marketplace.
Speaker Change: Yeah.
Speaker Change: Yes, loud and clear I appreciate the color, maybe just switching gears for a minute to asset management do you see a path towards driving the business to closer to a neutral organic growth rate longer term and I know you've touched on on the top of the call, but what would you say are the biggest drivers to improvement to getting back there. Thanks again.
Speaker Change: Yeah, So listen I think the asset management business overall has been a bit more under pressure you know unless you have moved to passives or some of the alternative space and where that growth is so in our case, what we've been doing is really transforming the business getting a lot more efficient we took out a lot of <unk>.
Speaker Change: Cost and that will pay some dividends as we look at the flow rate.
Speaker Change: That we've been experiencing on the positive side, we see that our sales are increasing a bit on the growth side, both here and in Europe.
Speaker Change: We are branching out in different formats. So our model delivery Rs amaze et cetera that we think will be a growing part of the franchise.
Speaker Change: That business models, and that's amaze have grown to over 35 billion already we think theres a bigger opportunity for us there.
Speaker Change: We are launching and have launched a number of active etfs as the format has changed people.
Speaker Change: Starting to think of moving from passive now back into Etfs more in the format of active which I think is good as you know pressure has come under a mutual fund part of the segment, but we have some excellent products in the mutual fund area four and five star funds that are really attractive.
Speaker Change: Some especially in this changing environment and we see an opportunity for us to gain a little bit more traction in Europe, but again.
Speaker Change: That will take time, I think you can see that across the industry, but we feel like there is a path forward for us.
Speaker Change: So I've mentioned institutional is a little more lumpy, but we are getting many more consultant approvals. We are branching out we've gotten some nice flows in Japan right now as we set up there so.
Speaker Change: So I think that's going to be a little more lumpy, but I think over time, we'll be able to build that out.
Speaker Change: <unk> way.
Speaker Change: Yeah.
Speaker Change: Okay and your next question comes from the line of Steven <unk> with Wolfe Research Steven. Please go ahead.
Michael: Hey, Good morning, this is Michael <unk> on for Stephen.
Speaker Change: Just I just wanted to touch on M&A here.
Speaker Change: Organic growth has been more resilient despite the industry seeing moderating flows in 'twenty for.
Speaker Change: Some of your peers have been more optimistic that could accelerate 25 with a higher recruiting backlog with better market backdrop.
Speaker Change: How do you see organic flows planning through based on that outlook and your recruiting backlog and do you see a near term path to getting back to the 5% plus level you had seen in 'twenty, two and 'twenty three thank you.
Speaker Change: So I think overall, we've seen a nice pickup in the flow picture.
Speaker Change: <unk>, new net client flow coming in but also more flow going back into the wrap programs.
Speaker Change: We probably as we look at it we think that the wrap business. We will continue that type of flow picture as we move forward I can't sit here to so to say what that looks like quarter to quarter, just based on market conditions and changes that occur, but I think people got a little more comfortable after the election and a little more that there'll be more.
Speaker Change: Solid GB GDP growth the idea that things are a little more from a company earnings picture and other things.
Speaker Change: And the employment picture, so I would probably say, it's a positive environment there.
Speaker Change: From an idea of the pipeline for our recruits as you saw it was good in the fourth quarter, our pipeline looks good going into the new year.
Speaker Change: A very competitive marketplace. So you sort of cancer deaths, but again recruiting is only a small part of what we do we are bringing in a lot more.
Speaker Change: People in adding to the teams as well as newer people.
Speaker Change: And we also try to grow the productivity across our channel.
Speaker Change: Which is very important for us and so with our enhancements in technology and capabilities and our client experience I think we're gaining some nice traction there that we think will be beneficial for us.
Speaker Change: Alright very helpful color. So thank you for that Jim and just moving over maybe one on sweep cash.
Speaker Change: Solid growth in the quarter. There are some seasonal elements I think you had mentioned in the prepared remarks.
Speaker Change: Those tend to reverse during January to some degree.
Speaker Change: I understand that we still have a day left in demand can you give us a mark to market on sweep cash January to date.
Walter Berman: How much it's Walter it's been fairly stable from that standpoint from the endpoint of December.
Walter Berman: Got it thanks, so much.
Walter Berman: Sure.
Speaker Change: And your next question comes from the line of John Barnidge with Piper Sandler John. Please go ahead.
John Barnidge: Good morning, Thanks for the opportunity.
John Barnidge: Question about long term care and there was a benefit from premium rate increases in the quarter.
John Barnidge: The decision to retain those long term care assets, a quarter ago with actuarial assumption review and those premium rate increases.
John Barnidge: Should we expect a higher level of long term care earnings to be borne out of corporate and how do we view run rate there. Thank you.
John Barnidge: Okay. So as we look at.
John Barnidge: Our benefit this year or.
John Barnidge: This quarter was from claims and from getting additional benefit.
John Barnidge: Increases are we.
John Barnidge: We certainly have been active and are out there with pending benefit request.
John Barnidge: We have a process. It has to go through to see if it gets approved and then how we reflect it.
John Barnidge: The thing I would say all the fundamentals are very good and they look good.
John Barnidge: From that standpoint, I think we're on a good trajectory and we see it in a positive light. So can't give you an exact number on this but the trajectory is good and like I said, we're coming into 2024.
John Barnidge: We have $61 million, we generate as certainly all very good positives.
John Barnidge: Element for that and we anticipate we will be continuing.
John Barnidge: Good growth and profitability.
Speaker Change: Thank you my follow up question.
Speaker Change: For the advice and wealth management channel can you talk about the alternative and product private asset product portfolio and if that is becoming more demand by advisors. Thank you.
Speaker Change: Yes so.
Speaker Change: We have added a.
Speaker Change: Good nice digital alternatives platform for our advisers, we've done a lot more due diligence and adding products to the platform.
Speaker Change: I would probably say on the private credit side and our channel right now its small and but one that I think we will start to grow.
Speaker Change: And I think there is an opportunity for us in the alternatives for our clients, particularly as our clients on the upmarket.
Speaker Change: Start to look more for some of those product categories. So I would probably say we're at the early stages of that and our channel, but one that over time, we'll probably add as we had the capabilities and really help advisers start to think about where that fits in but it's not going to be.
Speaker Change: As you would say.
Speaker Change: Ultra high net worth area, a large part of our activity it'll be part of our portfolio allocation because a lot of those assets are illiquid.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: And your next question comes from the lineup with <unk> with Raymond James <unk>. Please go ahead.
Speaker Change: Hey, good morning, corporate costs came in a bit lighter than we expected some of that was the outperformance in LTC, but could you help us think about the <unk>.
Speaker Change: First half of 'twenty five given the ongoing cloud conversion in severance costs.
Speaker Change: Okay.
Speaker Change: Corporate expense, Okay. As you saw or if you had those elements that we mentioned in the earnings release, and we do see it on if you will basically.
Speaker Change: Just for those that is the trajectory that you would think as we go forward into 2025, Oh that range.
Speaker Change: $85, 90% to 95% is not in that rig.
Speaker Change: Okay. So maybe something more similar to <unk> is that fair for early in the year.
Speaker Change: Yes pretty much yes, yes, so it will come.
Speaker Change: There'll be a bit.
Speaker Change: Less severance coming in and.
Speaker Change: As we go through the first and second quarter some of that technology.
Yeah change that we did on the transformation to the cloud for some of the mainframe et cetera will start to dissipate and we'll work through it and the person every quarter.
Speaker Change: Okay.
Speaker Change: Okay. Thank you and could you give us a little bit more color on how youre thinking about G&A twenty-five across segments.
Speaker Change: As you know, we manage G&A quite well and certainly.
Speaker Change: We.
Speaker Change: As we looked at our programs. This year and we started you saw we've taken action on transformation to address the expense base as we look at processes and other changes. So we've accomplished a lot in 2024, certainly we're going to be continued some of that will continue the carryover into 'twenty five and we're constantly look.
Speaker Change: To reengineer as it relates to AWS AWS, certainly we're very prudent manner.
Speaker Change: Expenses, but we have extensive associate with activity and investment in growth. So it will be measured as it relates to looking at revenue generation, but we feel very good about our ability to certainly demonstrate continuing to demonstration of how we manage those expenses.
Walter Berman: And the asset management business some of the transformation that we did will will move into 'twenty, five and give us some benefit as well. So overall from a company perspective, we feel very good about how we're managing expenses to Walter's point, we are making good investments in the business.
Walter Berman: And technology AI capabilities. We also are having volume related, particularly as you think about it.
Walter Berman: AWS, where we havent good growth and part of that variable expense for that is in the G&A. So it's not something as you would say is fixed overhead type things.
Walter Berman: Okay, great. Thank you.
Speaker Change: And your next question comes from the line of Ryan Krueger with gave you W. Brian. Please go ahead.
Ryan Krueger: Hey, Thanks. Good morning. My first question was a follow up on that.
Speaker Change: Wrapped slow trends. So you saw a pretty big increase in organic growth in the fourth quarter to 8% from the more recent 6% trend can.
Ryan Krueger: Can you comment on that.
Speaker Change: It has continued at a similar pace so far in January.
Speaker Change: As we look at January is a little because of combination of.
Speaker Change: The month with some.
Speaker Change: Things that have occurred out there so I would probably say things look consistent but it's hard because January was a little.
Speaker Change: As the start to the year. So it's not a perfect science for the rest of the quarter.
Speaker Change: But I don't think.
Speaker Change: Anything fundamental.
Speaker Change: <unk> say, but January is always a hard month to take our flow firm.
Speaker Change: Got it and then.
Speaker Change: On the AWS margin.
Speaker Change: The 29% in the fourth quarter following the fed rate cuts do you feel thats, a pretty reasonable expectation going forward from here.
Speaker Change: Yes, yes, I do.
Speaker Change: Okay, great. Thank you.
Speaker Change: And our final question comes from the line of Kenneth Lee with RBC capital markets. Kenneth. Please go ahead.
Kenneth Lee: Hey, Thanks for taking my question and apologies. If this was covered before but I'm just juggling a couple of calls this morning.
Speaker Change: The bank assets the portfolio there.
Speaker Change: The bank fields were probably a little bit lower than I would've expected.
Speaker Change: Is there any kind of expectation around portfolio allocation across the assets and the business, perhaps a change in mix of fixed versus floating.
Speaker Change: Any additional color over the near term.
Speaker Change: Are you thinking about that thanks sure. So listen our mix is pretty much stayed the same it's high quality and duration as you know in the.
Speaker Change: Three to five range.
Speaker Change: We did as I indicated we came into the quarter with a 75% on fixed at the bank and we adjusted that to 87.
Speaker Change: 87% fixed.
Speaker Change: And it's again the same quality and in duration. So we feel that as are we.
Speaker Change: We garnered.
Good rates so.
Speaker Change: That standpoint, that's the only change again in the quarter, where it was at 61 basis points impact.
Speaker Change: From the fed and the impact for the bank was almost 30, some odd basis points based on that mix.
Speaker Change: Yeah.
Speaker Change: Gotcha very helpful. There and then just one follow up if I may just on the Rps side.
Speaker Change: Sure.
Speaker Change: Fair to say that that over time a higher.
Speaker Change: Higher slash elevated yields could translate.
Speaker Change: Into higher earnings over time.
Speaker Change: Just want to check in on that and what are your expectations or outlook for the run rate earnings for 2025, there. Thanks.
Speaker Change: I think I covered it from the standpoint that certainly we feel comfortable with at the bank.
Speaker Change: Excuse me Rps.
Speaker Change: Oh, yes, I'm sorry.
Speaker Change: Our rps.
Speaker Change: Based upon the fundamentals we're seeing both again, we had a very good sales year, which obviously reduces the earnings and certainly from that standpoint of course, the time of sale, but we do see the fundamentals there good transactional growth and so and we're managing.
Speaker Change: The the liability base is quite solid so I feel from that standpoint, it's a pretty solid number.
Speaker Change: Yeah.
Speaker Change: Got you very helpful. There. Thanks again.
Speaker Change: We have in your question from Michael Cyprus with Morgan Stanley Michael. Please go ahead.
Michael Cyprus: Alright, great. Thanks. Thanks, so much for squeezing me in here just a question as we think about expense efficiency efforts that you guys have executed quite well on in recent years, just curious how much of that would you say is attributable to deploying AI versus maybe some of the generative AI tools and as you look forward from here, how do you see the potential of greater depth.
Michael Cyprus: Appointment of those capabilities to unleash incremental expense efficiencies, maybe you could talk about some of the use cases, you see on the horizon, including maybe even AI agents. What is that journey look like for Ameriprise and then with the recent deep seek announcement it seems like maybe there could be prospects for faster broader deployment, just curious how youre thinking about that.
Michael Cyprus: Yep.
Michael Cyprus: Yes, so we've been deploying intelligent automation robotics for a while and we continue to increase the number of areas that we deploy that in across the business and so we see further opportunity for.
Michael Cyprus: For greater efficiency in that regard. We've also done a lot of work on generate generate of AI.
Michael Cyprus: And we were running a lot of different cases that we were seeing some nice benefit from that we will be rolling things out further as an example.
Michael Cyprus: We've already gotten a level of efficiency, but we're working.
Michael Cyprus: Now to help advisors do business more easily more productively identifying opportunities in their book with clients where.
Michael Cyprus: We're working with a lot of improving the client experience.
Michael Cyprus: Regarding our call center interactions and and how we reach out to people.
In Colombia, we've tested a lot and enhancing our research capabilities and utilizing that to drive efficiencies. So theres a number of things that we're looking at across.
Michael Cyprus: Now you also have to recognize that we're in a highly regulated space. So we have to really look at how you use that what information is there et cetera, et cetera, which we do and we have a good governance process, but as we get more learnings in a more.
Michael Cyprus: The test results from what we do we can start to expand that and roll that out further.
Michael Cyprus: So I think that will be something that will be added, but if you're saying are you getting great efficiencies yet from a the answer is no but.
Michael Cyprus: But we've got enough of the things that we've really test and learn and deploy it over time like intelligent automation, but not yet on the general generate of AI, but thats being starting to be deployed now.
Michael Cyprus: Great. Thank you.
Michael Cyprus: Yeah.
Michael Cyprus: Okay.
Michael Cyprus: We have no further questions at this time. This concludes today's conference. Thank you for participating you may now disconnect.
Michael Cyprus: Okay.
Michael Cyprus: Yeah.
Michael Cyprus: Okay.
Michael Cyprus: Yeah.
Michael Cyprus: Okay.
Michael Cyprus: Okay.
Michael Cyprus: Okay.
Michael Cyprus: Yeah.
Michael Cyprus: Okay.
Michael Cyprus: Yeah.
Michael Cyprus: Yeah.
Michael Cyprus: Yes.
Michael Cyprus: Yeah.
Michael Cyprus: Yes.
Michael Cyprus: Yes.
Michael Cyprus: Yeah.
Michael Cyprus: Yes.
Michael Cyprus: Yeah.
Michael Cyprus: Yeah.
Michael Cyprus: Okay.
Michael Cyprus: Yeah.