What happened
It was a good year for Ameriprise Financial (AMP -3.25%): The wealth management firm saw its share price increase 55.2% in 2021, according to S&P Global Market Intelligence.
Ameriprise beat the S&P 500, which delivered a 26.9% return in 2021. The stock is currently trading at about $318 per share and is up about 4% in 2022 as of Jan. 6.
Image source: Getty Images.
So what
Ameriprise enjoyed tremendous success in 2021, generating record revenue, earnings, and assets in the third quarter. The firm took in $3.5 billion in adjusted net operating revenue in Q3 -- an 18% year-over-year increase. Net income jumped 59% year over year to $1 billion, and client assets in its Advice and Wealth Management (AWM) business -- its largest with about 57% of overall revenue -- reached $811 billion, up 22% year over year.
Through the first nine months of 2021, the company made $2.1 billion in net income, up 52% from the previous year. The gains were across the board; AWM saw a 24% revenue increase in Q3, while the Asset Management and Retirement and Protection Solutions segments each had 7% revenue increases year over year.
Overall, Ameriprise saw its return on equity increase to about 39% by yearʻs end. The company is seeing the fruits of investments made in its technology and training, as it was recently named the most trusted advisor by Investor's Business Daily. The investments have led to higher productivity among its advisors, an influx of new advisors, and large client inflows, which were up 64% in the quarter, CEO James Cracchiolo explained on the Q3 earnings call.
Now what
In addition to its growing AWM business, Ameriprise made a key investment in its asset management arm, acquiring BMO Financialʻs EMEA Asset Management business. The deal closed in late 2021, bringing $131 billion in assets under management to Ameriprise for a total of $714 billion. Further, it extends Ameripriseʻs reach into the European institutional market, where it had little presence. It also establishes a strategic relationship with BMOʻs wealth management clients to access its asset management services.
Analysts are bullish on Ameriprise in 2022. Piper Sandler raised its Q1 2022 earnings estimate and called for about a 10% EPS increase in 2022 and boosted the price target to $350 per share. Also, Goldman Sachs recently raised its price target from $350 to $385 per share.
