Ameriprise Earnings: Asset Prices to Be a Bigger Driver of Earnings Than Interest Rates

As investors, we're constantly on the lookout for trends that can shape the performance of our portfolios. One such trend that's been gaining traction is the influence of asset prices on earnings, particularly for companies like Ameriprise Financial, Inc. In this article, we'll explore how Ameriprise's earnings have been impacted by asset prices and interest rates, and why asset prices might be a bigger driver of earnings in the future.



Ameriprise Financial, Inc. is a leading global financial services company, offering a wide range of products and services, including advice and wealth management, asset management, and insurance. In the fourth quarter of 2024, Ameriprise reported strong earnings, with adjusted operating earnings per diluted share increasing 23 percent to $9.54, excluding severance expense, mark-to-market impact on share-based compensation, and a prior year regulatory accrual. Full-year 2024 adjusted operating earnings per diluted share increased 17 percent to $35.79, excluding unlocking and the items noted above.



So, what's been driving Ameriprise's earnings growth? While interest rates have played a role, asset prices have emerged as a more significant factor. Here's why:

1. Assets under Management (AUM): Ameriprise's AUM grew to $1.5 trillion, up 10 percent, with strong client net inflows of $35 billion over the past 12 months. This growth in AUM has been a significant driver of earnings, as it increases the company's revenue through management fees and other related services.
2. Advisory Accounts: Client inflows into fee-based investment advisory accounts grew to an all-time high, contributing to the overall increase in AUM and earnings. This trend is likely to continue, as Ameriprise focuses on providing a differentiated client experience and maintaining strong balance sheet fundamentals.
3. Wealth Management: The wealth management segment has also been a significant driver of earnings, with strong flows and positive markets contributing to record levels of total client assets.

Looking ahead, Ameriprise's earnings are likely to continue being driven by these asset classes and sectors, as the company maintains its focus on client engagement, operational efficiency, and strong balance sheet fundamentals. However, the company's ability to navigate shifting market environments will be crucial in maintaining this growth.



To navigate potential market volatility and maintain earnings growth, Ameriprise's management plans to focus on several key strategies:

1. Diversified Business Model: Ameriprise has a diversified business model that includes advice and wealth management, asset management, and insurance products. This diversification helps to mitigate the impact of market volatility on any single segment of the business.
2. Fee-Based Investment Advisory Accounts: Ameriprise is focusing on growing its fee-based investment advisory accounts, which provide a more stable revenue stream compared to transaction-based accounts.
3. Strong Balance Sheet and Free Cash Flow: Ameriprise maintains a strong balance sheet and generates significant free cash flow, which allows the company to invest in the business and return capital to shareholders.
4. Adaptability and Client Focus: Ameriprise's management emphasizes its ability to adapt to shifting market environments and maintain a strong client focus. The company's initiatives to enhance operational efficiency and effectiveness, as well as its focus on delivering a differentiated client experience, contribute to its ability to maintain earnings growth despite market volatility.

In conclusion, while interest rates have played a role in Ameriprise's earnings growth, asset prices have emerged as a more significant driver. As Ameriprise continues to navigate shifting market environments, its diversified business model, focus on fee-based investment advisory accounts, strong balance sheet, and adaptability will be crucial in maintaining earnings growth. By staying attuned to these trends and implementing strategic initiatives, Ameriprise is well-positioned to capitalize on the opportunities that lie ahead.