Stifel and Ameriprise buoyed by rising interest rates as client assets fall

July 27, 2022

as their greatest wirehouse competitorsregional brokers Stifel Financial and Ameriprise Financial relied on interest income to weather choppy markets in the second quarter.

Profit for Stifel’s Global Wealth Management business rose nearly 8% to $245 million from $227 million a year ago, according to its quarterly results report. Revenue rose 9.5% to a record $697 million from $637 million, primarily due to an increase in net interest income which offset double-digit declines in fee income and fees.

“Financial conditions in 2022 have been challenging to say the least,” Stifel chief executive Ron Kruszewski said during the company’s earnings call. “These results are attributable to the growth of our balance sheet and the rise in interest rates, as well as the addition of productive financial advisors. »

Overall, wealth management remained a bright spot on Stifel’s balance sheet, with revenue from its institutional division falling 21% in weaker capital markets. The Wealth Division accounted for 63% of the company’s revenue and included all of its profits.

Global Wealth net interest income increased 57% to $196 million. High net worth customers also added $1.4 billion in net new loans during the quarter, Kruszewksi noted. Fees, core transaction revenue and asset management revenue fell about 12% as clients moved to cash and assets under management fell 6% to $378 billion.

St. Louis-based Stifel, which highlights recruiting as a key revenue driver, added 41 Consultants during the quarter, including 23 experienced Consultants, who had generated combined revenue of $24 million in the last 12 months in their previous companies. Fourteen of the experienced hires joined its main employee channel and nine joined its new independent brokerage unit.

Hiring rebounded from the prior year quarter when only 14 experienced brokers joined and from the first quarter of this year when 13 moved to Stifel. Kruszewski had said last year that brokers were concerned about returning to offices as Covid-19 restrictions were lifted last year and noted last quarter that market volatility had slowed moves early in the year. the year.

Stifel ended June with 2,230 brokers, up 1% year-over-year. Only 100 of those brokers are in the independent sector, which Stifel revamped last year after letting it languish for many years. His hires this quarter included a Wells Fargo Financial Network Team with $720 million in assets.

Ameriprise Financial, Stifel’s Minneapolis-based competitor, said in its second-quarter report earnings Tuesday that it added 99 experienced brokers, more than double the 42 counted in the year-ago quarter.

During the previous quarter, the company had experienced a slower rate of hiring, mainly due to certain headwinds created by market volatility in January. However, Ameriprise CEO James Cracchiolo said on the company’s earnings call on Wednesday that its “value proposition is even higher in more choppy markets,” as evidenced by its recent recruiting success.

Ameriprise ended the quarter with 10,245 brokers in its employed and franchised independent contractor channels, a year-over-year increase of 2%. Growth came from its franchise business, with a 3% increase in its workforce, or a net 206, to 8,149 advisers. Its independent chain ranks were flat, with the number of employees down less than 1%, by a net 8, to 2,096, according to the company’s results.

Ameriprise’s advisory and wealth management division had $735 billion under management at the end of June, down 9% year-over-year. The company attributed the decline to a 15% decline in the market which was partially offset by net inflows of $8.6 billion during the second quarter. Flows were down 10% year-over-year but still represent “a strong result in the face of volatile markets,” the company said.

Despite the decline in assets, second-quarter revenue for the company’s Advisory and Wealth Management unit rose 4% from the year-ago quarter to $2.06 billion, while profit before tax rose 16% to $492 million over the same period.

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