The Ameriprise Challenge
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Now that it's standing on its own two feet, Ameriprise Financial is ready to spend some dollars — and it's got more than a few to spare, thanks to a $1 billion bequest from former parent American Express.
The firm, formerly known as American Express Financial Advisors, officially struck out on its own on Monday, Oct. 3, when it debuted on the New York Stock Exchange.
Close to $300 million of the Amex seed money will go to the rebranding of Ameriprise. While the firm wants to grow organically, CEO Jim Cracchiolo says the $1 billion cache puts the company in a good position to make acquisitions in the future. He is particularly interested in asset-management businesses, as well as distribution channels for Ameriprise products.
Ameriprise is one of the largest financial advisory firms, with more than 10,500 financial advisors and over $410 billion in assets. Still it's got a lot to prove. The firm is trying to do something that other firms don't seem to think they can make money at: providing face-to-face advice to the mass affluent (those with $100,000 to $1 million in investable assets.) And now that it has gone public, the new firm will have Wall Street breathing down its neck.
Already, some analysts have expressed their doubts. In an analyst report, Deutsche Bank says in order to grow, Ameriprise needs to expand and increase the productivity of its sales force. The firm had operating after-tax operating margins of 10 percent as of June 30.
Cracchiolo says he's working towards increased productivity by raising performance thresholds for its advisors, recruiting more experienced advisors, grabbing greater wallet share with existing clients and continuing to move its client base upscale to the mass affluent segment and beyond.
