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Why Ameriprise Is Making Big Investments in Tech and Recruiting

By Mrinalini Krishna February 4, 2019

The advice and wealth management business for Ameriprise Financial accounted for 48% of its pre-tax operating revenue for 2018. On its earnings conference call with analysts, company management says it is committed to recruiting and investing in technology to boost client engagement.

The Minneapolis-based company is betting on enhancing its technological infrastructure to help advisors do their job better. Ameriprise chairman and CEO Jim Cracchiolo said the firm was looking to make “additional investments” to improve the client experience and advisor productivity.

“This includes enhancing our digital and financial planning capabilities as well as upgrading to an advanced CRM system later this year to enable our advisors to work in an even more goal-based and integrated way with their clients," Cracchiolo said on a conference call with analysts Thursday.

Ameriprise is planning to adopt the Salesforce CRM in increments over 2019. The new system will offer more information to advisors and “make it even easier for them to engage clients through personalized contact,” according to a statement from Ameriprise sent via email.

But some industry watchers offer caution. Timothy Welsh, president of San Francisco-based consulting firm Nexus Strategy, says there’s only so much changing software can do. More benefit can be accrued if advisor behavior changes.

“I think it really has to do more with how are the advisors going to engage with their clients? Are they going to do a financial plan? Are they going to have a data aggregation discussion?... There’s nothing to do with Salesforce that’s going to make this happen, [it's] truly more about the advisor behavioral change and how they work for clients,” Welsh says.

The company is working on trying to boost engagement for advisors through digital tools and help FAs market themselves in their communities, said Cracchiolo.

Ameriprise ended last year with 9,931 advisors in all, comprising 2,176 employee advisors and 7,755 franchisee advisors. In 2018, the total number of advisors grew by just 35 compared to 2017. But the company chose to focus on a different metric during the analyst call: experienced advisors. Cracchiolo said Ameriprise had hired 335 experienced advisors for the whole year. The company defines experienced advisors as “those with established practices who’ve joined from other firms.”

“Recruiting is an important complement to retaining our top people,” said Cracchiolo, adding “experienced, productive advisors are consistently attracted to Ameriprise.”

The firm boasted of increasing advisor productivity by 9% to $620,000 on a trailing 12-month basis. And hiring experienced advisors is a part of the strategy the firm is following to grow advisor productivity.

“If they’re much more experienced, they can drive more revenue. That is the definition of advisor productivity. So, you definitely influence that number by bringing in more experienced, higher-producing advisors," says Welsh.

When asked on the call by analysts if any of these endeavors would impact how Ameriprise manages its expenses, Cracchiolo said, “The increases that you’ve seen were mainly due to types of investments that we think we'll get some good paybacks on as we continue to look to the future.”