Executive Summary / Key Takeaways

• Diversified Resilience: Ameriprise Financial ($AMP) demonstrates consistent financial strength and shareholder value creation through its diversified Advice & Wealth Management, Asset Management, and Retirement & Protection Solutions segments, proving resilient in a fluid macroeconomic environment.
• Technological Edge & Advisor Productivity: Strategic investments in proprietary technology, including the new Signature Wealth platform and AI-driven insights, are enhancing advisor productivity (up 10% to $1.1 million in Q3 2025) and client engagement, solidifying a key competitive moat.
• Robust Financial Performance: The company reported strong Q3 2025 adjusted operating EPS (excluding unlocking) of $9.92, up 12%, with a firm-wide margin of 27% and a best-in-class Return on Equity of nearly 53%.
• Strategic Capital Allocation: Ameriprise maintains substantial liquidity ($2.5 billion available liquidity, $2.2 billion excess capital in Q3 2025) and is committed to returning capital to shareholders, targeting an 85% payout ratio for Q4 2025, supported by consistent 90% free cash flow generation.
• Proactive Risk Management & Outlook: Management is actively managing interest rate and market risks through hedging programs and strategic portfolio repositioning in its bank, while anticipating continued growth from client asset redeployment and targeted product expansion.

A Legacy of Resilience and Strategic Evolution

Ameriprise Financial, Inc. traces its roots back to 1894, evolving into a diversified financial services powerhouse. A pivotal moment arrived in October 2005 with its spin-off from American Express Company (AXP), marking its debut as an independent, publicly traded entity on the New York Stock Exchange. This independence set the stage for a focused strategy centered on financial planning, advice, and integrated solutions across wealth management, asset management, and retirement and protection.

In the two decades since its spin-off, Ameriprise has navigated numerous market cycles and macroeconomic shifts, from financial crises to periods of elevated inflation and fluctuating interest rates. Its consistent performance, including generating the #1 total shareholder return within the S&P 500 Financials Index since 2005, underscores a disciplined approach to management and a robust business model. This enduring strength is particularly relevant in today's fluid operating environment, characterized by ongoing market volatility, persistent inflation, and a dynamic interest rate landscape influenced by recent Fed rate cuts and geopolitical strains.

Technological Moats and Operational Excellence

Ameriprise's competitive advantage is significantly bolstered by its strategic investments in technology and operational efficiency. The company has cultivated an "integrated ecosystem" for its advisors, featuring proprietary client advisory systems, digital tools, CRM, and advanced data analytics. These technological differentiators are not merely operational enhancements but core components of its value proposition.

The tangible benefits are evident in several key metrics. Advisor productivity, a direct reflection of technological leverage, increased by 10% to a new high of $1.1 million per advisor in the third quarter of 2025. Clients are embracing digital solutions, with "record digital adoption" and mobile app satisfaction reaching an "all-time high" in the recent quarter. The "Practice Tech" platform, recognized with a February 2025 technology innovation award, streamlines key advisor actions, making operations more efficient and effective. Furthermore, the company's proprietary systems have demonstrated "excellent availability" even during periods of increased market traffic and volatility, a critical advantage in maintaining client trust and service continuity.

Ameriprise's commitment to innovation extends to its R&D initiatives. "Advice Insights," a next-generation capability, utilizes big data and machine learning to generate client-centric insights, driving engagement, saving time for advisors, and supporting business growth. The recent launch of the "Signature Wealth platform" is proving successful in enabling advisors to manage client assets more holistically and efficiently, attracting new assets and streamlining portfolio management. In its banking segment, the company has launched Certificates of Deposit (CDs), Health Equity Lines of Credit (HELOCs), and is rolling out checking accounts, expanding its product suite to enhance client experience and deepen relationships. The Asset Management segment is also actively expanding its offerings with active ETFs, SMAs, model delivery, interval funds, and new hedge funds. Operationally, an expanded partnership with State Street (STT) to establish a unified global back office for Columbia Threadneedle funds is expected to further strengthen profitability and reinvestment capacity. These technological and operational advancements are central to Ameriprise's strategy, creating a sustainable competitive moat by enhancing efficiency, client satisfaction, and product innovation, allowing it to compete effectively against both traditional and tech-forward rivals.

A Diversified Business Model Delivering Consistent Performance

Ameriprise operates through three primary segments: Advice & Wealth Management (AWM), Asset Management, and Retirement & Protection Solutions (RPS), complemented by a Corporate & Other segment. This diversified structure provides a balanced revenue mix and resilience across varying market conditions.

Advice & Wealth Management (AWM)

The AWM segment is the cornerstone of Ameriprise's business, driving significant growth and profitability. For the three months ended September 30, 2025, AWM reported adjusted operating net revenues of $2,990 million, a 9% increase year-over-year, contributing to $881 million in adjusted operating earnings, up 7%. The segment's pretax adjusted operating margin stood at a robust 29.50%. Total client assets reached $1,138.40 billion, an 11% increase from the prior year, with wrap assets growing 14% to $650.30 billion. While client and wrap flows in Q3 2025 were impacted by the departure of two large advisor teams, underlying client flows remained solid at $6.5 billion, and wrap flows were $8 billion when adjusted for administrative changes. Transactional activity remains strong, reflecting active client engagement.

The Ameriprise Bank, integrated within AWM, continues its deposit growth trend, with balances increasing 4% year-over-year to $22.60 billion as of September 30, 2025. The bank's net investment income remained flat in Q3 2025, benefiting from proactive portfolio repositioning that reduced floating rate exposure from 19% to 11% and maintained a portfolio yield of 4.6% with a 3.7-year duration. New investments in the quarter yielded 5.3% with a 4.4-year duration. This strategic management of the bank's portfolio is crucial for stabilizing net interest income amidst Fed rate reductions.

Asset Management

The Asset Management segment, operating under the Columbia Threadneedle Investments brand, delivered solid results. Adjusted operating net revenues increased 3% to $906 million in Q3 2025, driving adjusted operating earnings up 6% to $260 million, with a strong margin of 42%. Total managed assets reached $674.70 billion, a slight increase of 0.4% year-over-year. Net outflows improved sequentially to $3.40 billion, with retail flows benefiting from higher gross sales and institutional flows from lower redemptions. The segment boasts strong investment performance, with over 65% of funds outperforming their benchmarks over one year, and more than 80% over ten years. The completion of a two-year transformational effort, including a new global back-office partnership with State Street, is expected to further enhance efficiency and profitability.

Retirement & Protection Solutions (RPS)

RPS consistently generates strong earnings and free cash flow. In Q3 2025, adjusted operating net revenues grew 13% to $1,102 million, and adjusted operating earnings surged 84% to $217 million, reflecting unlocking impacts, higher investment portfolio yields, and market appreciation. Excluding unlocking, pretax adjusted operating earnings were $200 million. The segment saw solid sales of $1.4 billion, driven by demand for variable universal life, structured annuities, and variable annuities without living benefits. The company is strategically optimizing its business mix, with account values tied to living benefit riders declining to 47% from 51% a year ago. Management emphasizes that RPS is "one of the most profitable insurance businesses in the industry," generating excellent risk-adjusted returns.

Corporate & Other

This segment primarily includes closed blocks of Long Term Care (LTC) insurance and fixed annuity (FA) business. The pretax adjusted operating loss for Corporate & Other decreased by 19% to $116 million in Q3 2025, an improvement driven by lower severance and cloud migration expenses, and favorable share-based compensation. LTC insurance, however, recorded a pretax adjusted operating loss of $22 million in Q3 2025, compared to earnings of $9 million in the prior year, primarily due to unfavorable unlocking impacts from updated morbidity and mortality assumptions.

Financial Health and Capital Allocation

Ameriprise maintains an exceptional financial position, characterized by robust liquidity and a strong capital base. As of September 30, 2025, the company reported $2.2 billion in excess capital and $2.5 billion in available liquidity, including parent company cash, liquid securities, and credit facilities. This financial strength is underpinned by a "stable 90% free cash flow generation" across its segments.

The company is committed to returning capital to shareholders at a differentiated pace. In Q3 2025, capital return increased to 87% of operating earnings, with a target of an 85% payout ratio for Q4 2025. This includes a recently declared quarterly cash dividend of $1.60 per common share and a new $4.5 billion share repurchase authorization approved in April 2025, replacing a $3.5 billion authorization that was exhausted early. During the nine months ended September 30, 2025, Ameriprise repurchased 3.70 million shares for $1.90 billion. This consistent capital return strategy, coupled with a best-in-class Return on Equity of nearly 53%, underscores Ameriprise's focus on long-term shareholder value.

Competitive Landscape and Strategic Positioning

Ameriprise operates in a highly competitive financial services industry, facing off against a diverse set of players including large diversified banks, independent broker-dealers, and specialized asset managers. Key direct competitors include Morgan Stanley (MS), Bank of America (BAC) via Merrill Lynch, Charles Schwab (SCHW), and BlackRock (BLK).

Ameriprise's core competitive strength lies in its advice-centric model and integrated platform, which fosters strong client relationships and high advisor productivity. While competitors like Morgan Stanley and Bank of America offer broader global investment banking and retail banking services, Ameriprise's focus on personalized financial planning for retail clients provides a distinct market positioning. Its specialized Retirement & Protection Solutions segment, recognized as "one of the most profitable insurance businesses in the industry," offers a stable revenue stream and a differentiated product suite that rivals may not match in profitability or focus.

Against Charles Schwab, known for its low-cost digital brokerage and tech-forward platforms, Ameriprise competes by offering a more holistic, high-touch advisor experience, increasingly augmented by its own advanced digital tools and AI-driven insights. While Schwab may lead in sheer digital transaction efficiency, Ameriprise's integrated advice model aims for deeper client engagement and comprehensive financial solutions. In asset management, where BlackRock dominates with its scale and ETF offerings, Columbia Threadneedle Investments differentiates through strong active management performance and a growing suite of active ETFs, SMAs, and model delivery services.

The competitive environment for advisor recruiting remains intense, with some firms offering "irrational bids" for advisor teams. However, Ameriprise's value proposition, emphasizing practice support, integrated technology, and financial stability, continues to attract experienced advisors, with 90 joining in Q3 2025. The company's consistent investment in its platform and client experience is a strategic response to competitive pressures, aiming to enhance advisor retention and organic growth.

Risks and Outlook

While Ameriprise is well-positioned, it faces inherent risks. Market fluctuations in equity prices, interest rates, and foreign currency exchange rates can significantly impact its asset-based fees, investment income, and the valuation of market risk benefits and embedded derivatives. The company actively mitigates these risks through comprehensive hedging programs, which aim to match asset and liability sensitivities. However, "actual results could and likely will differ materially" from sensitivity analyses due to various assumptions.

Regulatory changes, such as the Federal Reserve Board's Building Block Approach (BBA) for savings and loan holding companies and international tax rules like Pillar Two, could also impact operations, though no material impact is currently expected from CAMT or the OBBBA. The "unlocking" process, an annual review of actuarial assumptions, can also introduce volatility, as seen in Q3 2025 with an unfavorable after-tax impact of $5 million due to changes in variable annuity surrender and utilization assumptions, and LTC morbidity and mortality.

Looking ahead, Ameriprise is focused on leveraging its core capabilities and strategic initiatives. Management anticipates that elevated client cash balances will gradually be "put to work" in wrap and other products as markets and rates normalize, presenting a significant growth opportunity. The company targets low to mid-single-digit growth in G&A for AWM for the full year, and a mid-single-digit G&A expense decline for Asset Management (excluding performance fees), reflecting ongoing efficiency efforts. The bank's net interest income is expected to remain stable or improve due to portfolio repositioning and new product launches. The declining trend in account values with living benefit riders is expected to continue, optimizing the RPS business mix towards lower-risk products.

Conclusion

Ameriprise Financial stands as a testament to strategic foresight and disciplined execution, celebrating two decades of independence marked by industry-leading shareholder returns. Its core investment thesis is rooted in a diversified business model that consistently generates strong earnings, robust free cash flow, and exceptional shareholder returns, even amidst a dynamic and competitive financial landscape. The company's ongoing commitment to technological innovation, from AI-driven insights to new advisory platforms and expanded banking products, reinforces its competitive moat and enhances advisor productivity and client satisfaction.

With a strong balance sheet, ample liquidity, and a clear capital allocation strategy, Ameriprise is well-equipped to navigate market uncertainties and capitalize on growth opportunities. Its ability to maintain strong profitability margins across segments, coupled with a proactive approach to risk management and a relentless focus on operational efficiency, positions it favorably for continued profitable growth. For discerning investors, Ameriprise Financial represents a compelling long-term opportunity, driven by its enduring value proposition, strategic adaptability, and proven track record of delivering superior financial performance.