Ameriprise Financial, Inc.

Welcome to the Q4 2022 Ameriprise Financial Inc. Earnings Conference Call. My name is Dennis, and I will be your operator for today's call. At this time, all participants are in a 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, this conference is being recorded. I will now turn the call over to Alicia Charity. Alicia, you may begin.

Thank you, Operator, and good morning. Welcome to Ameriprise Financial's fourth quarter earnings call. On the call with me today are Jim Cracciolo, Chairman and CEO, and Walter Berman, Chief Financial Officer. Following their remarks, we'd be happy to take your questions. Turning to our earnings presentation materials that are available on our website, on slide two, you will see a discussion of forward-looking statements. Specifically during the call, you will hear references to various non-GAAP financial measures which we believe provide insights into the company's operations. Reconciliation of the non-GAAP numbers to their respective GAAP numbers can be found in today's materials and on our website. 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. These forward-looking statements speak only as of today's date and involve a number of risks and uncertainties. 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 earnings release, our 2021 annual report to shareholders, and our 2021 10-K report. We make no obligation to publicly update or revise these forward-looking statements. On slide three, you see our GAAP financial results at the top of the page for the fourth quarter. Below that, you'll see our adjusted operating results. followed by operating results, excluding unlocking, 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. 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.

Good morning, everyone, and thanks for joining our fourth quarter earnings call. As you saw in our release, Ameriprise delivered a strong fourth quarter, completing an excellent year in 2022. We continue to navigate uncertainty and serve our clients exceptionally well. I'll give you an update on the business, and then Walter will discuss our financials. Let me start with the market environment. Equity markets were down 19% year over year, with the average equity markets down 3% sequentially. So far this year, we're starting to see markets rebound to some extent as inflation eases. However, inflation is still at a high level. The question is, will the Fed have to continue to raise rates a bit more, or will they maintain higher rates for longer if inflation remains stickier? With that backdrop, Ameriprise continues to be in a strong position. Revenues were good at $3.6 billion, only down 2% from a year ago, relating to the impact of the equity and fixed income markets. Earnings were up nicely with EPS up 13% for the quarter and 11% for the year. Both are new records and ROE continued to be excellent among the best in the industry. Importantly, we're also managing expenses well with total expenses down 5% compared to a year ago. Assets under management and administration were down to $1.2 trillion largely driven by the steep decline in equity markets, lower fixed income markets, and a difficult foreign currency translation and asset management. As in previous quarters, our combination of businesses generates a consistent level of free cash flow and good returns across market cycles. We're able to consistently invest in the business, which is strengthening our competitive position and our ability to deliver differentiated results. Now I'll talk more about our businesses. In advice and wealth management, we continue to deliver very strong results and build on our leadership positions. We had good client flows in the quarter as clients remained engaged, working closely with their advisors and benefiting from our comprehensive advice and solutions. Total client flows for the quarter were more than $12 billion, which is very strong and, in fact, the second highest quarter we had and just below our record fourth quarter last year. And I'll highlight that client flows were a record for the year at nearly $43 billion. With the investment climate this year, we've seen an even split into the mix of flows into advisory and non-advisory accounts, which is appropriate in this environment. We're maintaining an appropriate level of cash balances with good growth in our certificate business and the Ameriprise Bank, which is a key growth area for us. With regard to the bank, We've been consistently investing to expand our capabilities. The bank provides important flexibility in this interest rate environment and enables us to further engage and deepen our relationships with clients. Our bank has grown more than 50% this year to nearly $19 billion. We have good growth in our pledge loan business and we're on track to launch more deposit and lending-based products this year. Our certificate company has also grown to nearly $10 billion, up $4 billion for the year. Clearly, 2022 is a very challenging year for investors to navigate the market volatility. That's why our high level of engagement and advice is so important. Clients highlight the positive experience they're having with Ameriprise and our advisors, and that satisfaction leads to a strong level of trust, which we're being recognized for. And just recently, we ranked number two for trust in 2022 in Forrester's new financial services customer trust index, and that complements our Newsweek rating as one of America's most trusted companies last year. Let's look at advisor productivity, which also remains strong, up 4% to nearly 830,000 per advisors in a challenging market environment. One of the reasons our advisors are so productive is the level of support and tools we provide. We're making important investments, including our branding, marketing, and integrated technology. We're helping advisors engage clients really well and driving growth in their practices. And for the fourth consecutive year, Ameriprise was recognized by J.D. Power for providing outstanding customer service experience for phone support for advisors. Turning to recruiting, we had another good quarter with 72 highly productive advisors joining the firm. Advisors are attracted to our value proposition and the strength and stability of the firm, and the pipeline looks good. So overall, we are consistently investing in the business, including the bank, which is helping to drive organic growth and continually generate strong results. Advice and wealth management continue to drive the firm's results with earnings up 41% year over year. Now let's turn to retirement and protection solutions, where earnings were up 25% in the quarter due to the improved rate environment and our ability to invest out. As part of our strategy, we focused on products that meet our risk tolerances. Overall, sales were down consistent with the industry. We're very much focused on variable annuities without living benefits, our structured products, our variable universal life and DI products given our move away from fixed products. This business is very stable and delivers a very good cash flow and returns. I've note that RiverSource was recently ranked as one of the most profitable life insurers. Now I'll cover asset management. 2022 was a tough year when navigating the volatility as we focused on our clients and execute our strategic priorities. Similar to the industry, Our asset management business faced significant headwinds due to markets depreciating in the U.S. and globally, which pressured earnings. Equity markets were down 19%. With this, assets under management were down 23% to $584 billion driven by market declines as well as a negative FX impact. Overall flows in the quarter were $0.4 billion out that included $1.7 billion of legacy insurance partner outflows. In retail, overall, we were in net outflows of $3.7 billion, including reinvested dividends, which were driven by the weak market conditions that both pressured gross sales and increased redemptions. In addition, in the U.S., we believe there was a heightened level of tax loss selling in December. Turning to global institutional, we were in net inflows of $5 billion, excluding legacy insurance partners with some nice wins in LDI strategies. With regard to investment performance, we continue to have solid 3, 5, and 10-year numbers. However, we have weakness in one-year numbers given market volatility. In asset management, we are maintaining our expense discipline while continuing to invest in long-term priorities. They include our investment research, alternatives, responsible investment, globalizing our operations, and BMO integration, which is on track. We have a strong lineup of products and capabilities, a clear focus on serving our clients, and as the environment improves, we will be well situated. Overall, Ameriprise is in a position of strength entering 2023, and we're very much focused on engaging our clients and continuing to execute well in this environment. And with the strength and diversification of our business, including the growth of the bank, we continue to be able to invest across the firm, while continuing to return capital shareholders at a differentiated level. In the fourth quarter alone, we returned $610 million to shareholders. I'll turn it over to Walter, and then we'll take your questions.