Ameriprise Feeds Off Breakaway Trend

(Dow Jones) One winner in the movement of brokers away from the traditional large wirehouses and toward regional and independent firms has been Ameriprise Financial, which saw its advisor headcount from these channels rise by more than 400 last year and the average production of its advisors increase by a fifth since 2008.

To keep up with the growth-and the sophistication of the wirehouse support systems the brokers left behind-the Minneapolis financial planning firm is investing in new technology, opening up their product space, and giving advisors more tools to grow their businesses.

"A big part of the recruitment movement was that we had to move quickly to install brokerage capabilities to support advisors in a more effective manner," said Pat O'Connell, senior vice president of Ameriprise Advisor Group, the firm's 2,400-adviser employee channel, in a recent interview.

Along with the Advisor Group, Ameriprise Financial Inc.'s 12,000-advisor brokerage force includes the 7,800 advisors in its independent franchise business and 1,900 advisors at Securities America, an independent broker-dealer. Ameriprise advisors typically target clients with $100,000 to $1 million in investable assets. Average broker production ranges from $300,000 to $500,000 annually.

Ameriprise, which spun off from American Express in 2005, has spent the past couple of years trying to revamp its business-from the types of advisors it recruits to the kind of products it sells.

To bulk up its advisory force, the firm acquired 1,000 advisors from H&R Block Inc. in 2008 and about 550 brokers during last year's market dislocation. At the same time, executives say the firm has been pushing out lower producing brokers, leading to a 4% decline year-over-year in the number of advisors at the firm.

Now, to keep its top brokers, the firm will have to play catch-up with technology, says Bob Ellis, a principal with Fast Track Advisors, a financial services consulting firm.

For starters, the firm is ramping up its technology offerings.

In October, the entire firm will move from a platform-based workstation to a Web-based system. This way, advisors will be able to access accounts and portfolios while visiting clients at their homes or offices.

"We are ripping out a brokerage system inherited from Amex and expect to carry out a complete revamp from front to back office by February 2011," said John Iachello, head of the brokerage's clearing and operations, in a recent interview.

Iachello said the firm will begin implementing the changes in three phases, the first of which will begin this month and that "the introduction of the new system gave us a selling point for recruiting this year," he said.

The firm says it is also ramping up its product offerings.

With the purchase of the stock and bond mutual-fund business of Bank of America Corp.'s Columbia Management unit, which will close this spring, Ameriprise will become one of the biggest mutual fund managers in the U.S. The company already pushes its products through other subsidiaries, such as RiverSource Investments and Threadneedle, J& W Seligman & Co.

In addition, Ameriprise announced this month that it will open up its annuities platform to three additional carriers: AXA Equitable Life Insurance Co., Lincoln National Corp. and MetLife Inc. Previously the firm's advisors could only sell the firm's own proprietary investments.

The firm also created a new central annuities support desk to field phone calls from advisors about what kinds of products might suit their clients.

Despite the small opening of its annuities space, critics say Ameriprise is actually going against the larger trend of wealth-management firms moving to so-called open architecture, which allow advisors to use outside financial products and money managers instead of a firm's proprietary products.

"Ameriprise has given a lot of lip service to open architecture, but the truth is they're still pushing their proprietary products," Ellis says.