Ameriprise Financial, Inc.

Welcome to the Q3 2023 earnings call. My name is Chris, and I'll 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, and good morning. Welcome to Amerifrise Financial's third 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 see a discussion of forward-looking statements. Specifically, during the call, you will hear references to various non-GAAP financial measures. which we believe provides insight into the company's operations. Reconciliation of 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 third quarter 2023 earnings release, our 2022 annual report to shareholders, and our 2022 10-K. 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 third 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. We completed our annual unlocking in the third quarter. Many of the comments the management makes on the call today will focus on adjusted operating results. And with that, I'll turn it over to Jim.

Good morning and thanks for joining our call. Yesterday afternoon Ameriprise reported strong third quarter earnings. The business continues to perform very well in a fluid and uncertain operating environment. Across the firm, we're helping clients navigate external pressures with our high quality advice, solutions, and service. As you can see in our results, Ameriprise continues to benefit from the complementary strengths and flexibility of our business and our talented team. Regarding the economic landscape, while inflation has come down a bit, it remains elevated, so it's likely we'll see higher interest rates for longer. Economic growth in the United States continues to hold up well, even with increased rates. However, consumer sentiment in the United States is declining, and we may see softer economic growth in the future. Additionally, the geopolitical climate is causing further volatility. Equity markets have been resilient and were up year over year, but down slightly in the quarter. At the same time, many investors are holding greater levels of cash and feel comfortable earning competitive yields in cash products. Our assets under management and administration reached $1.2 trillion, up 12%, and financials were also strong. We delivered record operating results in the quarter, excluding unlocking and a regulatory accrual Total adjusted operating net revenue grew nicely, up 10% to $3.9 billion. And earnings were also quite strong, up 18%, with EPS up considerably, an increase of 24%. Additionally, our return on equity was 49.9% compared to 48% a year ago. Very few firms in our industry achieved nearly a 50% ROE on an ongoing basis. Our complementary businesses consistently generate strong financial results. Let's start with wealth management. Our advice value proposition is built for the current environment. Advisors are focused on ensuring clients are highly engaged and deepening relationships with them. Importantly, client satisfaction remains at an excellent 4.9 out of 5 stars. Total client assets increased 15% to $816 billion, with good client net flows of $8.9 billion in market appreciation. We continue to attract more new clients and move up market as we grow our client base. And we know from industry research that more investors need guidance. In fact, among affluent households, many investors in the marketplace still don't have a formal plan to manage assets, income, and expenses in retirement. As we highlighted previously, our advisors continue to hold the higher level of cash for their clients, with the highest short-term yields they're able to attain and the market uncertainty. Therefore, we continue to see a lower percentage of our assets moving into RAP, with $5.4 billion in the quarter. As markets settle, we expect that money will ultimately be redeployed into RAP and other solutions. Our reentry back into the banking business came at the right time and is very beneficial for the firm. Assets in the bank and certificate company continue to increase substantially, up 37% to $35 billion. With interest rates at this level, we're able to garner meaningful spread revenues that are sustainable when the Fed does start to cut rates. We will also be launching new products in the bank that will bring over additional client cash that they're holding at other banking institutions. And overall, after a bit of a slowdown last year, we saw a nice increase in transactional activity up 11%. As you know, we continue to invest to put great capabilities in advisors' hands to drive high satisfaction and growth and deliver an exceptional experience. We're using advanced analytics to deliver an even better client and advisor experience. This includes a complete practice dashboard to enhance practice management, prepare for client meetings more efficiently, identify opportunities to grow their business, and deepen their client relationships. In the quarter, we were back in the market with our successful Ameriprise brand advertising across TV, digital, and social channels. We also redesigned our client website to even be more engaging, highlighting the unique benefits of working with an Ameriprise advisor. Advisor productivity increased another 10% to a new high of $901,000 per advisor in the quarter. Our advisory retention and growth are both consistently among the best in the industry. Regarding recruiting, we brought in another 64 experienced productive advisors. We had a bit of a seasonal slowdown of activity to begin the quarter, but saw a nice pickup in September, and we believe that we'll return to more normal levels as we move through the rest of the year. Our reputation is an important differentiator. We recently learned that Ameriprise is being recognized for both a high level of customer trust and service. We received one of the highest customer trust index scores among financial services firms in Forrester's 2023 U.S. Customer Trust Index. And for the fifth consecutive year, J.D. Power has recognized Ameriprise for providing outstanding customer service experience with phone support for advisors. These awards build on the external recognition we have received over the years and are a testament to the dedication and expertise of our team. Finally, in terms of profitability, wealth management continues to generate strong pre-tax adjusted operating margin at more than 30% and earnings growth of 23%. Now let's move to retirement and protection, which is part of our wealth management solutions offering. We're driving good sales in targeted, focused areas that serve our clients' comprehensive needs and generate good risk-adjusted returns. In our life business, we focused on variable universal life and disability products that are appropriate for this environment. Life and health sales were up nicely, increasing 22% with the majority of sales in high-margin accumulation VUL products. We're also seeing positive initial results from our accelerated underwriting modeling that's highly automated and will drive further efficiencies as we roll it out more fully. In variable annuities, our structured product continues to attract good interest. Combined with our variable annuities without living benefits, sales are up 18% from a year ago. In the quarter, our RiverSource retirement interactive tool, which helps advisors create customized client presentations, was recognized with several industry awards for innovation and ease of use. With the increase in rates, we're able to garner improved yield in our high-quality investment portfolio, excluding unlocking pre-tax adjusted operating earnings with more than $200 million. Our RPS business has been highlighted as one of the most profitable in the industry. Let's turn to asset management. As you saw in the quarter, assets under management were $587 billion, up 7%. It remains a challenging time both in asset management and the active space in particular. Our flows were largely consistent with the industry. In retail, as we know, people are still hesitant to put money to work, so gross sales are a bit weaker. However, redemptions have improved and our overall flow rates in the U.S. are in line with active managers for the product disciplines we compete in. And in Europe, our flows have improved a bit from a year ago. Institutional mandates can be lumpy, but we were in net flows excluding legacy insurance partners. We're earning mandates in a number of areas, though LDI flows in total were down compared to a robust quarter a year ago. In regard to our investment performance, we have strong short and long-term performance across equities, fixed income, and asset allocation with a nice pickup in the short-term fixed income. And now, about 70% of our asset-weighted funds were above the median for three- and five-year periods, and more than 85% for the 10-year period. This is a positive and will help our ability to garner flows in the future. Also, in the quarter, we completed one of the largest aspects of the EMEA integration, the transition to our global order management system. With that, we have now completed all of the large integration activities. We are now focused on adjusting our global operating model and expenses so we can continue to generate good margins in a tough climate. For asset management, adjusted operating margin was 36% and above our targeted range. G&A was down 3% adjusted for foreign exchange. We also have taken action to tightly manage expenses and we're looking more fully across the business to continue to reduce expenses and leverage more operating efficiencies for the rest of this year and into 2024. I'd like to now come back to center stage and the total firm. Our complementary businesses continue to give us the ability to deliver for our clients and generate very strong financial results over the years. Our capital strength and flexibility remain excellent. Our capital return to shareholders is among the highest in the industry, and we have consistently generated strong financial returns over the years, including with our best-in-class ROE of approximately 50%. Ameriprise is situated very well, including with the complementary addition of the bank, which allows us to sustain the benefit from higher rates. We're not standing still. We're focused on areas of opportunity for growth, and at the same time, We're examining the entire expense base across the firm to further prepare if the economic environment slows as we move into and through 2024. In closing, it's the totality of our complementary business and the benefits that it provides, backed by our excellent team, that enables us to consistently achieve this level of results. Now, Walter will elaborate on our financials. Walter?