Dear Shareholders,
I am pleased to report that Ameriprise Financial had another excellent year in 2022, building on our proven track record as a financial services leader. The strength of our diversified business and dedicated team once again ensured that we could perform well in a challenging and uncertain global operating environment.
The Ameriprise team worked diligently to help our clients and the firm navigate difficult markets, and for the first time in decades, a rapidly rising interest rate environment. Both equity and fixed income markets in the U.S. and Europe declined significantly, particularly in the first half of the year. Geopolitical risk was front-and-center and inflation remained high and persistent. This resulted in significant volatility and a more bearish sentiment among many investors.
Our clients — both individual and institutional investors globally — relied on us for our thoughtful perspective, market insights and broad capabilities to help them achieve their financial goals. Throughout our 129-year history, Ameriprise has successfully navigated tough market cycles, and that certainly held true in 2022. Importantly, Ameriprise continued to evolve and grow during this period as well, reinforcing our strong position in a highly competitive industry. As the environment shifted, we benefited from the extensive capabilities we’ve put in place while we continued investing for growth — always focused on our mission to help clients feel confident about their financial futures.
DEAR FELLOW SHAREHOLDERS,
JAMES M. CRACCHIOLO
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Generating differentiated results
The financial strength we consistently demonstrate reflects both the effective execution of our strategy and steady investment in the business. We have continued to grow and transform our business, which is built on delivering an exceptional experience for our clients while generating attractive returns for shareholders.
Advice & Wealth Management is our core growth driver with the expansion of Ameriprise Bank, FSB, as an important current and future contributor to our results. These businesses are complemented by the stability of our high-quality Retirement & Protection Solutions businesses and our Global Asset Management business.
In terms of 2022, adjusted operating results before annual unlocking were strong.
- Revenue increased 3% to a new record of $14.3 billion as significant growth in our spread-based businesses more than offset lower fee and transactional revenue.
- Operating earnings increased 5% to a record of $2.9 billion, and we generated a new high of $25.14 for earnings per diluted share, up 11%.
- We again delivered an industry-leading return on equity, at more than 48%.
These are excellent financial results, especially considering the headwinds from market depreciation and a difficult foreign currency translation that negatively impacted our total assets under management and administration, which ended the year at $1.2 trillion.
Each of our businesses made important contributions to our financial results in 2022, with our advisor network driving approximately 85% of firm-wide revenues given the linkages in our integrated model.
STRONG FINANCIAL PERFORMANCE IN A CHALLENGING YEAR
Creating differentiated shareholder value and reinforcing our strong financial foundation
Ameriprise generates significant shareholder value, and in 2022 we added to our exceptional 17-year record since becoming an independent, public company in 2005.
- The total shareholder return of our common stock in 2022 was 5%, far outpacing the double-digit negative returns of the S&P 500 Financials Index and the S&P 500 Index.
- Since 2005, we ranked No. 1 in terms of the total shareholder return among all firms in the S&P 500 Financials Index.
Ameriprise is highly regarded for the strength of our balance sheet, our ability to generate free cash flow and our capital management. We have a high-quality investment portfolio and maintain substantial liquidity, as well as appropriate excess capital.
As we’ve steadily grown our business and increased our earnings over the years, we have made strategic decisions that have reduced the capital intensity of the firm and freed up capital to return to shareholders at an attractive rate.
- 2022 was the 12th consecutive year we returned approximately 85% or more of our adjusted operating earnings to shareholders.
- We raised our dividend another 11% in 2022, our 18th increase since 2005.
- Over the past five years, our consistent focus on capital return has reduced our total share count by 28%.
Importantly, Ameriprise was able to achieve this high level of capital return and maintain strong balance sheet fundamentals while continuing to invest consistently in the business to serve clients’ needs.
The following is more detail and perspective on our businesses, our results, the team and our commitment to engagement in the community.
CONSISTENT RECORD OF OUTPERFORMANCE ACROSS MARKET CYCLES — NO. 1 IN TOTAL SHAREHOLDER RETURN IN S&P 500 FINANCIALS INDEX SINCE OUR DEBUT IN 2005
Beginning with Wealth Management, we have a clear focus on serving clients’ needs exceptionally well and building on our leadership position.
At Ameriprise, we develop personal, long-term relationships with our clients that often span generations, helping individuals and families reach critical goals and milestones and protect what matters most. For decades, we’ve focused on serving clients’ financial needs holistically in advice-based relationships. It’s a legacy that we’ve continued to build upon.
In 2022, we again rose to the occasion, helping clients understand the market volatility and remain on track to achieve their goals. Client satisfaction remained very high at 4.9 out of 5 stars, reflecting our steadfast focus on delivering a differentiated and referable client experience and ongoing investments we have made, including in our:
- Robust technology platform
- Extensive digital capabilities
- High-performing products and solutions
- Award-winning client service
Consistent high level of client engagement and satisfaction*
Clients rate Ameriprise as 4.9 out of 5
In 2022, we delivered excellent results in Wealth Management despite the volatile environment.
Client net inflows were at an all-time high of $42 billion as clients remained engaged and worked closely with their advisors.
Given the climate, the mix of our flows shifted during 2022 due to the rising rate environment and volatility. We saw strong growth in flows into brokerage, cash, certificates and other products.
Our comprehensive, personal approach and broad capabilities ensured we could help clients adjust their portfolios for their specific risk tolerances, including higher-net-worth investors, among whom we are seeing good traction in client acquisition.
ADVICE & WEALTH MANAGEMENT TOTAL CLIENT FLOWS
Serving millions of clients across the U.S. with a premier advisor force
At Ameriprise, our advisors are passionate about serving clients and building exceptional, growing practices. We surround our advisors with extensive support, leading technology, dedicated leadership, training, coaching, compliance and marketing programs.
We consistently invest to help our advisors deepen client relationships, attract new clients and expand their practices. This includes our national advertising, which continues to tell the Ameriprise story boldly in the marketplace.
In 2022, we launched a new national advertising campaign, “Advice Worth Talking About.” It highlights our exceptional client satisfaction, personalized advice and referable experience. And we’re adding to this successful campaign in 2023.
Ranked as the No. 2 brand among Financial Services firms for Customer Trust according to Forrester’s 2022 U.S. Customer Trust Index*
Ameriprise advisors are highly satisfied with the firm and appreciate our exceptional support. Our approach led to continued advisor productivity growth, up 4 percent from a year ago to $827,000 in adjusted operating net revenue per advisor.
Ameriprise complemented our organic growth in 2022 with advisor recruiting efforts, growing our total advisor force to 10,269. We were pleased to welcome 340 experienced advisors from across the industry, and the advisors who joined us in 2022 were some of our most productive in recent years. New, experienced advisors who join Ameriprise consistently tell us they appreciate the strength of our value proposition, the brand and the stability of the firm. In fact, we surveyed advisors who have recently joined us and nearly 9 out of 10* would refer us to other successful advisors.
Growing Ameriprise Bank, FSB, in a rising interest rate environment
Ameriprise has a legacy in banking and trust developed over many years, and we re-established Ameriprise Bank, FSB, in 2019 to be in a strong position when interest rates returned to more normal levels. Today, the bank provides important flexibility in a rising interest rate environment and helps our advisors further engage with clients.
Total bank assets grew significantly to $19 billion. We moved additional deposits to the bank, adding $6.5 billion in 2022, and adjusted our investment strategy for the rate environment, garnering additional spread. We also drove good growth in our lending solutions, including our pledge loan product, and are on track to launch more lending products in 2023.
Generating record financial results in Wealth Management
With regard to Wealth Management financial results, including the strong growth of the bank, we had a record year. This included new highs for net revenue, pretax adjusted operating earnings and overall margin. We feel very good about the results we achieved and the opportunity in front of us to continue our progress.
AMERIPRISE BANK, FSB, ASSETS
Differentiated Retirement and Protection Solutions businesses that provide stability and generate solid earnings and free cash flow
As interest rates rose in 2022, we were well positioned to serve client needs and generate very good returns that also reflected the meaningful progress we have made in recent years to appropriately risk-adjust these businesses.
- Among the most profitable U.S. life insurers*
- $199 billion in life insurance in-force
- $74 billion in variable annuity account balances
In addition to stopping sales of fixed annuities in 2020 and reinsuring the fixed annuity book, we also discontinued sales of variable annuities with living benefit guarantees in 2021. And in 2022, we continued to narrow our focus to concentrate on products that can both meet client needs and our shareholder return expectations in a challenging interest rate environment. This included:
- Focusing on variable annuities without living benefits and our structured products
- Moving away from fixed insurance products to emphasize products such as variable universal life and disability insurance that are appropriate in the current environment
While sales were down given the climate and our strategy, we feel good about these businesses overall and the retirement income and protection capabilities they provide to our wealth management clients.
The businesses consistently deliver strong financial results, generate good earnings, and provide stability, solid returns and free cash flow as a complement to our more fee-based businesses.
HIGH-QUALITY RETIREMENT AND PROTECTION SOLUTIONS BUSINESSES
Navigating the environment as a global asset manager
Columbia Threadneedle Investments is a top 35 global asset manager with a strong reputation as an active manager grounded in research intensity. Clearly, the market environment was difficult for the industry globally in 2022. Given the declines in equity and fixed income markets, as well as negative foreign exchange impacts, our AUM was down 23 percent to $584 billion. Importantly, we stayed focused on our clients’ needs and provided informed perspective.
The foundation of the business remains strong, and we are well equipped to navigate headwinds.
- Through steady investment and acquisitions, we’ve significantly enhanced our investment capabilities, distribution reach, operational strength, digital presence and analytics.
- Importantly, we maintained our effective expense discipline to help offset some of the market-driven revenue pressure.
As equity markets and interest rates stabilize, we believe Columbia Threadneedle will capitalize on the opportunity given our global reach and broad equity, fixed income, alternative and real asset investment capabilities.
In terms of investment performance, our teams continue to generate solid performance over 3-, 5- and 10-year time periods, understanding that our 1-year performance was challenged given the volatility. We ended the year with 131 four- and five-star Morningstar-rated funds globally, which demonstrates the breadth of our capabilities and the strength of our performance.
From a flows perspective, it was a challenging year for the industry and Columbia Threadneedle. Excluding legacy insurance partner strategies, we experienced net outflows of $2 billion in 2022 as a good year in Institutional was more than offset by industry-wide pressure in global retail.
Integrating our strategic acquisition in EMEA
A key highlight in 2022 was the progress we made integrating BMO Financial Group’s EMEA asset management business, a highly complementary acquisition that we completed in 2021. We’re benefiting from our expanded European presence, particularly in the institutional market, as well as our additional key investment capabilities and solutions.
In Asset Management, we have the right focus, distribution priorities and capabilities to serve clients now and into the future.
A TOP 35 GLOBAL ASSET MANAGER
Earning industry-leading employee engagement and fostering a diverse, equitable and inclusive culture
Our caring culture is firmly grounded in our values: Client-Focused; Integrity Always; Excellence in All We Do; and Respect. Our teams embrace these values and are highly engaged.
We are proud to consistently score above financial industry benchmarks in our annual engagement survey and earn some of the highest scores across all industries.
This was true again in 2022, when we saw particular strength in the metrics of integrity, leader effectiveness, respect and client focus.
We are also proud of our work to support diversity, equity and inclusion (DEI) across our global firm.
Through diversity, we access talent, innovative ideas and varied perspectives to deliver solutions that meet client needs and make a difference in their lives.
DEI is embedded in our culture, values and how we operate, and we are committed to continuing to make progress and maximizing the unique contributions of everyone at Ameriprise.
Managing our business responsibly
At Ameriprise, we have always managed our business responsibly and remained focused on the interests of all of our stakeholders. In 2022, we again were included in a number of ESG indices and rankings, including the Bloomberg Gender Equality Index, multiple FTSE4Good indices and the Disability Equality Index. Our top sustainability priorities include ensuring strong talent development and retention, advancing our DEI programs, maintaining excellent compliance programs and good governance, and operating with strong data privacy and security.
We also continued to evolve our environmental reporting, further demonstrating how we operate as an environmental steward. To learn more about our corporate social responsibility reporting, view our 2023 Responsible Business Report on ameriprise.com, which outlines our approach to sustainability and our progress.
Looking forward
At Ameriprise, we have built a powerful value proposition supported by a highly dedicated and talented team focused on serving clients’ needs exceptionally well while delivering excellent results. Looking forward, our focus is to build on our strong record and to create further value and serve even more investors.
I am proud of our Ameriprise team and all that we accomplished in 2022 in a challenging environment. I believe we are in an excellent position to continue our progress.
On behalf of all of us at Ameriprise — our more than 20,000 employees and advisors and my fellow members of the Board of Directors — thank you for your trust and belief in Ameriprise. We will continue to do everything we can to earn it.
Respectfully,
James M. Cracchiolo
Chairman and Chief Executive Officer
RECOGNIZED FOR MANAGING OUR BUSINESS RESPONSIBLY
Read the original letter here.
