Ameriprise managed to continue adding financial advisors in the second quarter of the year while client assets rose, but pre-tax adjusted operating earnings in the firm’s advice and wealth management unit dropped significantly.
The company says 75 advisors moved their practices to the firm in the second quarter, which it says is “a particularly strong result in the current virtual recruiting environment.” But the net difference was a gain of just 23 advisors, as the firm’s advisor ranks stood at 9,894 financial advisors at the end of June, up from 9,871 advisors it had at the end of the first quarter but still down from the 9,951 in the second quarter of 2019, according to the company’s second-quarter earnings report.
Adjusted operating net revenue per advisor on a trailing 12-month basis dropped from $680,000 in the first quarter of 2020 to $669,000 in the second, although that was 5% higher year-over-year, Ameriprise says.
Total client assets in advice and wealth management stood at $630.2 billion at the end of June, up 13% from $559.8 billion the company had at the end of March and also 4% higher year-over-year, according to the report.
Ameriprise says it saw wrap flows of $4.9 billion in the second quarter. And brokerage cash balances of $31.1 billion in the latest quarter were 5% lower than in the first three months of the year, which Ameriprise attributes to clients getting back into the mark after the volatility experienced in March. The balances were still 28% higher year-over-year, according to the report.
The advice and wealth management business in the second quarter posted $1.54 billion in adjusted operating total net revenues, a 9% drop from the prior quarter and a 7% decrease year-over-year, Ameriprise says. Adjusted operating expenses, meanwhile, slipped 4% in the second quarter to $1.27 billion, although that was still 4% higher year-over-year, according to the report.
However, pre-tax adjusted operating earnings plunged 28% in the second quarter, to $271 million, which was also 11% lower year-over-year, Ameriprise says. The company attributes the results to “an unfavorable impact of $122 million from the decline in the Federal Funds effective rate, lower transactional activity related to the pandemic and lower average equity markets.”
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