Ameriprise Financial, Inc.

Welcome to the Q3 2024 earnings call. My name is Audra 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 one on your touch tone phone. As a reminder, the 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 Ameriprise 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 will see a discussion of forward-looking statements. Specifically, during the call, you will hear reference to various non-GAAP financial measures, which we believe provide 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 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 2024 earnings release, our 2023 annual report to shareholders, and our 2023 10-K report. We make no obligation to publicly update or revise these forward-looking statements. On slide three, you will see our GAAP financial results at the top of the page for the third quarter. Below that, you see our adjusted operating results, which management believes enhances the understanding of our business by reflecting the underlying performance of 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. As you saw, we had another very good quarter building on another strong year. The business is performing quite well. In terms of the external environment, as we know, the Fed lowered interest rates for the first time since 2020 as inflation moderated. Equity markets appreciated, even with short-lived spikes of volatility that occurred in the quarter. And investors continue to manage uncertainty related to the U.S. election and heightened geopolitical risk. While the environment is fluid, Ameriprise is extremely well positioned, and we're helping our clients navigate what's ahead. For the quarter, assets on the management and administration increased to $1.5 trillion, up 22%. And in terms of our financials, adjusted for unlocking, total adjusted operating net revenue increased 11% to $4.4 billion. Earnings were up 11%, with earnings per share up 17%, excluding the severance expense. And we again generated an excellent return on equity. It was 50.7% for the quarter compared to 49.6% a year ago. The power of Ameriprise comes from our client relationships and the consistent success of our complimentary businesses that continue to deliver strong results. In wealth management, our goal-based device value proposition is helping to drive excellent client satisfaction and practice growth. Total client assets hit a new record, passing the $1 trillion mark, up 26% from strong flows in markets. In fact, We had $46 billion of client net inflows over the past year, including $8.6 billion in the quarter. With guidance from our advisors, clients are putting money back to work. Flows into fee-based investment advisory WRAP flows were up significantly, nearly 50%, to $8 billion for the quarter. This marks our highest level in more than two years. Total WRAP assets reached $569 billion in the quarter, up 28%. and transactional activity increased significantly, up 19% year-over-year. While cash balances overall are still elevated, we've seen some shift from term products to money market funds, and there's additional opportunity for clients to redeploy their money into WRAP and other solutions over time. At the bank, assets grew nicely, up 7% year-over-year to more than $23 billion. There are further opportunities to expand the bank, and we're coming out with new savings and lending products next year. In addition, we're supporting advisors to take advantage of our powerful CRM client meeting preparation capabilities and data-driven insights from advanced analytics and AI. As advisors uptake these capabilities even more, it should provide further growth opportunities. And Ameriprise advisor productivity growth remains among the best in the industry and increased another 11%. to a new high of $997,000 per advisor. Regarding recruiting, we had a good quarter with 71 experienced, productive advisors joining the firm, and we feel good about our pipeline. I'm pleased to see Ameriprise and our advisors stand out in the industry for excellent client service, leading growth, and overall quality of their practices. In fact, we had a record 21 Ameriprise advisors ranked in the Barron's Top 100 Independent Financial Advisor list that recently came out. And Ameriprise has consistently scored very well in terms of overall trust for many years. Last month, I spent time with our top advisors at a Chairman's Advisory Council conference. They appreciate the environment we created and how it helps enable both clients and advisors alike to achieve their personal goals. They're proud to be part of Ameriprise and energized about our direction and the opportunities in front of us. In retirement and protection solutions, we again drove good sales and consistent earnings. In variable annuities, our structured annuities and variable annuities without living benefits continue to attract strong interest with combined sales up 13% for the quarter. And in our life business, we focus on variable universal life and disability products that are appropriate for this environment. Life and health sales were up 25% with the majority of sales in accumulation-focused VUL products. We've also continued to see positive results from automated accelerated underwriting that's driving nice efficiencies. And we've been named one of the most profitable insurers in past rankings. These high-quality books of business consistently generate strong free cash flow and return on capital with a differentiated risk profile. Moving to asset management, we're generating strong financial results as we continue to adjust the business. Assets under management increased 14% to $672 billion in the quarter. We have excellent performance across equities, fixed income, and multi-asset strategies across three, five, and ten-year periods. And we've seen a nice pickup in fixed income in both taxable and tax-exempt. and this level of performance is reflected in the 118 4 and 5 Morningstar funds we offer globally. With regard to flows in the quarter, net outflows improved 40% year-over-year to $2.4 billion, which included about $900 million of outflows from legacy insurance partners. Retail and model delivery net outflows were better at $1.5 billion due to improved gross sales in both North America and EMEA as well as net inflows into ETFs and model delivery. We continue to evolve how we deliver our investment capabilities, and over the last few years, we have successfully built out our SMA businesses with both traditional and tax-efficient strategies, and we are a top-ten player in model delivery. We've also been building out our ETF business and just added four active ETFs to leverage our investment strength in equity income and credit. We're beginning to gain a good level of flows in these areas and we'll look to further expand our product line over time. And an institutional excluding legacy insurance partners flows look flat in the quarter. As we discussed, the team is very focused on positioning the business for future growth. We're driving operational improvements and making necessary adjustments that include streamlining the organization, in particular in the EMEA region. In addition, we're improving and better leveraging our processes and technology systems globally. We're redeploying these savings to invest in the areas that will drive profitable growth. Ultimately, we're focused on better positioning asset management to adapt to changing market dynamics. You can see some of the benefits in our results for the quarter that we will build upon next year. Bringing things back to the firm level, Ameriprise continues to consistently generate strong results. Our long-term record is excellent. As an example, just looking back over the last five years, we've delivered 16% compound annual growth in EPS and a return on equity consistently among the highest in the industry, and our balance sheet remains a clear and important differentiator. We're proud of the level and consistency of our results that reflect the unique combination of capabilities that we have across Ameriprise. and the operating leverage and benefits that result from our teams working together firm-wide are key to delivering our excellent client value proposition. We are one firm using the strengths and activities of the business working together, and that's reflected in the consistency of the results we've delivered. Before I close, you've asked about long-term care and whether there's an opportunity to do a risk transfer at this time based on market changes. We thoroughly reviewed our options and believe that keeping the book at this time is in the best interest of shareholders. Walter will discuss this in more detail. In closing, last quarter we shared that Ameriprise recognized 130 years in business. How we manage the firm is key to our longevity and legacy. Ameriprise regularly earns awards in the marketplace for our culture and how we operate, including being recognized among the best managed companies on the Wall Street Journal management top 250 list. Forbes magazine named us as one of America's best large employers. And Ameriprise has also been ranked as one of America's greatest workplaces for women by Newsweek. We also earn excellent recognition with our people internally year after year. And our annual engagement scores that we received in the quarter continue to exceed external benchmarks across industries. Across Ameriprise, we focus on serving clients well as we continue to build, invest in, and take the business forward. I'll now ask Walter to provide his perspective and more detail on the quarter, and then we'll take your questions.