Ameriprise Financial, Inc. (
Credit Suisse Energy Summit Conference Call
February 8, 2011 8:00 am ET
Unidentified Host – Credit Suisse
James M. Cracchiolo – Chairman of the Board & Chief Executive Officer
Unidentified Host – Credit Suisse
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I am pleased to introduce Jim Cracchiolo, CEO of Ameriprise. In terms of the Ameriprise story, we like the combination of margin expansion and free cash flow that Ameriprise has delivered now for the last several years. I guess with that, let me just turn it over to Jim to tell us what’s next.
James M. Cracchiolo
We look at this as an opportunity to give you a further understanding of how we’re doing at Ameriprise and so what I’d like to do today is cover a few things first, our disclosure statements so please read it in our hard materials or here. Most importantly, what I’d like to talk about is how we’re situated. We believe that we’re situated in a terrific position to take advantage of an opportunity that continues to grow in our industry, really in the industry of retail financial services around the whole retirement market. The product, the service, and how we can deliver that to a growing population of people and a growing population of a transition of assets that they have in retirement.
We also would like to update you on the significant progress that we’ve made in executing our strategy. We’ve been very focused on this since we became public and through the entire financial crisis, the storm, the bit of recovery, etc. we continue to invest both organically as well as through acquisitions in helping our business grow and helping to create shareholder value. With that we know that this environment isn’t settled so we see the markets up now for the fourth quarter, they were down in the third quarter, interest rates are still at an all time low.
We feel that we have a good strong foundation, we have flexibility, we have a good position that we can navigate these markets and still create shareholder value and grow both our earnings and our returns over time. With that, as we continue to look at how we invest in the business we think that we’re on the right path and we’ll give you some of our what we would call post signs so that you can actually see that progress as well as what we’re targeting for the future.
If you look at how we’re positioned today since we spun off we are quite large as a diversified financial services company. We’re a Fortune 250 company. We’ve established a strong brand in the marketplace. That brand is continuing to grow in awareness and it has a good trust factor, one thing that the financial services industry loss during this last financial crises. We really are focused on the mass and mass affluent population, the people who we know are moving to retirement with their assets. We also, in that regard, have developed a very strong wealth management business. We’re the largest in financial planning, we’re the fifth largest network overall in the country, we’re a large provider to the retirement market today number seven in IRAs. Overall, about number five position across the industry against all players.
We’ve also invested and over time evolved our asset management business from a proprietary shop to now operating on a more global basis particularly to the third party channels. We’re number eighth in the United States in long term funds, number six in the UK in that market, and we’re expanding globally, we’re about a 27 on a global basis. Our position in our other products and services or annuities or insurance are really to our own channel and we have good positions in those businesses six, seven, eight, 10 but they’re namely focused on how we provide asset accumulation type protection, annuity type products for retirement and the longevity of our clients.
Our record of accomplishment, I think, over the last six years speaks for itself. Remember, we’ve gone through a tremendous financial crisis and we’ve come out stronger and so during that time our revenue grew by over 42%, earnings by 84%, our return on equity up 35%, and our assets under management and administration up 47%. So we think even as our markets continue to be somewhat volatile we can actually continue to grow and if markets stabilize or continue to improve we think that growth could even be stronger.
The shift in our business has also been significant. If you look at the shift in the mix of our earnings, not only did the pie grow tremendously but now over 50% roughly of our earnings come from our advice and wealth management and asset management businesses. You can see over that period that’s where all the growth has come from. That is what we’re focused on continuing. We’ll always have our annuities and protection as a key part of our business because we have great client behavior, great relationships, a great book established but at the end of the day where we’re investing for growth and accelerating that growth is really in the asset like businesses.
The opportunity, I think, is even greater today than it was five years ago. If you look at the retirement market, it continues to grow. The assets will continue to grow, by 2016 there will be $22 trillion dollars of retirement assets. IRAs are increasing, 401ks, but most importantly people are thinking about how do you put all those assets together, plus their own investable assets to actually get a retirement check. The mass and mass affluent populations in this case, is growing twice as fast and the need for advice has increased.