AMP - NYSE

Welcome to the Q4 2024 Earnings Call. My name is Mark, and I will be your operator for today's call. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] As a reminder, the conference is being recorded. I will now turn the call over to Stephanie Rabe. Stephanie, you may begin.

Thank you, operator, and good morning. Welcome to Ameriprise Financial's fourth quarter earnings call. On the call with me today are Jim Cracchiolo, Chairman and CEO; and Walter Berman, Chief Financial Officer. Following their remarks, we'd be happy to take your questions. Turning to our earnings presentation materials that are available on our website. On Slide 2, you will see a discussion of forward-looking statements. Specifically, during the call, you will hear references to various non-GAAP financial measures, which we believe provide insight into the company operations. Reconciliation of non-GAAP numbers to their respective GAAP numbers can be found in today's materials and on our website at www.ir.ameriprise.com. Some statements that we make on this call may be forward-looking, reflecting management's expectations about future events and overall operating plans and performance. These forward-looking statements speak only as of today's date and involve a number of risks and uncertainties. A sample list of factors and risks that could cause actual results to be materially different from forward-looking statements can be found in our fourth quarter 2024 earnings release, our 2023 annual report to shareholders and our 2023 10-K report. We make no obligation to publicly update or revise these forward-looking statements. On Slide 3, you see our GAAP financial results at the top of the page for the fourth quarter. Below that, you see our adjusted operating results, which management believes enhances the understanding of our business by reflecting the underlying performance of our core operations and facilitates a more meaningful trend analysis. Many of the comments that management makes on the call today will focus on adjusted operating results. And with that, I'll turn it over to Jim.

Good morning, everyone. Thanks for joining our earnings call. As you saw, Ameriprise delivered a strong fourth quarter to complete an excellent year. We're building on our good client engagement and demonstrating the strength of our value propositions. Ameriprise also achieved a number of new records that we'll discuss with you. Regarding the external environment, equity markets were strong amid resilient U.S. economic growth and labor markets. As inflation cooled, the Fed lowered interest rates for the third time in late 2024. However, it looks like there will be a slower pace for rate cuts this year. With strong business growth and positive markets, assets under management, administration and advisement grew to $1.5 trillion, up 10%. And for our adjusted operating results, we achieved some new highs in the quarter. Total revenues were $4.5 billion, up 13% from strong asset growth and transactional activity. Earnings were $965 million, up 18%, with earnings per diluted share up 23% to $9.54, excluding items we noted. Once again, Ameriprise delivered industry-leading return on equity of 52.7%, up from 49.7% a year ago. Our excellent results demonstrate the strength of our overall business. In wealth management, our goal-based device value proposition continues to drive excellent adviser productivity, business growth and client satisfaction. Total client assets grew to $1 trillion at year-end, up 14% from good flows and markets. For the quarter, total client inflows were $11.3 billion, further strengthening from the third quarter. Wrap assets under management were also up substantially growing 18% to $574 billion, making ours one of the largest platforms in the industry. Wrap flows grew significantly up 59% to more than $11 billion, which marks an all-time high. This represents an 8% annualized flow rate. We also had another significant pickup in transactional activity, up 17% from a year ago. Clients continue to hold a higher level of cash. However, we're seeing a shift from term into wrap and other products. We expect more cash to be put to work and greater transactional activity as we move through 2025. With regard to our advisers, productivity grew nicely again, up 13% to a new record of over $1 million per adviser, reflecting our consistent investments, and best-in-class capabilities and support. A key strength of our adviser value proposition is our integrated technology platform and the outstanding value it creates. Our advisers are leveraging our digital tools, CRM, as well as our excellent data analytics and solutions to further serve client needs and deepen relationships. The team and I are proud of the recognition that Ameriprise consistently earns in the marketplace. Our client satisfaction is excellent at 4.9 out of 5. And for the sixth year in a row, J.D. Power recognized our phone support for providing an outstanding customer service experience to advisers. In addition, Ameriprise also received J.D. Power certification for our phone support for clients. And our advisers also continue to stand out in the industry for their exceptional service, leading growth in high-quality process. In fact, we had a record 427 teams on the Forbes Best in State Wealth Management Team’s 2024 ranking, which is terrific. Maintaining excellent engagement with our advisers is another key strength. A recent field survey indicated that 90% of our advisers recommend Ameriprise as a great place to work or affiliate with. This high level of adviser satisfaction with Ameriprise also benefits our recruiting efforts. In the fourth quarter, we attracted another 91 experienced productive advisers, marking a nice increase in what is a slower time of the year for recruiting. And we feel good about our pipeline. With regard to our bank, we continue to generate attractive earnings with balances growing to more than $23 billion. And we see further opportunity to expand our product set with CDs, HELOCs and checking accounts as we move through 2025. Speaking of products, our Retirement Protection Solutions continue to drive strong sales growth and earnings. As I mentioned, we have very good transaction activity in AWM. Part of that includes our strong variable annuity sales, up 15% for the quarter with robust growth in our structured product. And we also had good sales in our life business, where we focused on VUL and disability products that are appropriate for the environment. Life and health sales grew meaningfully, up 26%, and the team continues to enhance how we do business, including with accelerated underwriting. Our Retirement & Protection Solutions continue to help us meet clients’ comprehensive needs while generating substantial free cash flow. In Asset Management, we’re generating strong financial results as we leverage and evolve our global capabilities for greater efficiency and future growth. For the quarter, assets under management and advisement was $681 billion. The team is delivering consistent competitive investment with excellent research and thought leadership. At year-end, nearly 70% of our funds globally were above the medium across one-year and three-year time frames, and 80% or more of our funds outperformed for the five-year and ten-year periods. And we continue to have strong performance in key strategies, including our anchor and strategic funds in the U.S. In total, 108 Columbia Threadneedle funds earned four- and five-star Morningstar ratings. Regarding flows, we had net inflows of $1.3 billion, a more than $6 billion improvement from a year ago. In retail, we had total net inflows of $6.1 billion, reflecting stronger gross sales in North America and EMEA as well as higher reinvested dividends. In institutional, we had net outflows of $3.9 billion, excluding legacy insurance partner flows due to slower fundings and the expected inflows we’ve highlighted. To drive future flows, we continue to broaden our investment capabilities to both complement our legacy mutual fund business and meeting evolving market demand. This includes building out our active ETF lineup and further growing our SMA and model delivery businesses. In fact, we had nearly $3 billion of model delivery inflows for the year. And our assets under advisement are now over $35 billion, making us the seventh largest provider in the U.S. For Asset Management overall, we’re completing two years of transformational work that will provide benefits this year and beyond. This includes improved efficiency and evolving the business to better meet client needs, especially in EMEA. And you will continue to see us tightly manage expenses. At the same time, we're investing for growth. Consistent with our firm-wide investments in Asset Management, we continue to build out our product line, data analytics, AI and other capabilities. Reflecting on the firm overall, it was another strong quarter and year for Ameriprise. We built on a unique 130-year legacy and reinforced our ability to consistently achieve excellent results. Ameriprise continues to deliver strong organic growth and free cash flow with best-in-class capital returns and an excellent capital position. In the quarter, we returned another $768 million and $2.8 billion for the year. Over the last five years, we returned a substantial amount of capital to shareholders, nearly $12 billion, which resulted in a share count reduction of 22%. And our ROE is consistently one of the best in the industry and is now 52.7%. Another important differentiator for Ameriprise, we continue to stand out for our culture and how we operate the business. In fact, we were just recognized again as one of America's Most Responsible Companies in 2025 by Newsweek and one of America's Best Companies in 2025 by Forbes. I'm proud of what the Ameriprise team has accomplished, and we're in an attractive position for 2025. Now Walter will provide more detail on the quarter, and then we'll take your questions. Walter?

Thank you, Jim. Ameriprise delivered another excellent quarter across its operating segments to conclude a strong 2024. Adjusted operating EPS increased 23% to $9.54 in the quarter and increased 17% for the year, excluding severance expense, mark-to-market impacts on share-based compensation, our prior year regulatory accrual and unlocking. This demonstrates the strong underlying growth achieved in the quarter and in the year. Assets under management, administration and advisement increased 10% to $1.5 trillion, benefiting from strong client flows over the past year and equity market appreciation. This resulted in strong 13% revenue growth across our businesses. G&A expenses continue to be well managed and demonstrate our focus on operating efficiency and effectiveness while investing in areas that will drive future business growth, particularly in wealth management, to achieve sustainable shareholder objectives. And we delivered a strong consolidated margin of 27%. Our stable 90% free cash flow generation across our diversified businesses, coupled with strong balance sheet fundamentals, enabled us to return $768 million or 81% of the operating earnings to shareholders in the quarter. In 2024, we returned $2.8 billion or 78% of operating earnings to shareholders, and our ROE was best-in-class at 53.7%. On Slide 6, you'll see the strong metrics results from Wealth Management. Total client assets grew 14% to an all-time high of $1 trillion with strong client flows of $11.3 billion. Wrap assets were up 18% to $574 billion. Wrap flows were particularly strong in the quarter at $11.1 billion or an 8% annualized flow rate. Strong flows coupled with continued growth and transactional activity generated strong revenue growth, and revenue per adviser reached a new high of $1 million, up 13% from a year ago. Total cash balances, including third-party money market funds and brokered CDs, were $85.4 billion, which was over 8% of client assets. However, the pace in which money is flowing into money market funds has decreased significantly, and we're beginning to see clients put money back to work in wrap and other products on our platform. We expect this to continue over time as markets and rates normalize, which creates a significant opportunity. And in the quarter, client sweep balances increased $2.3 billion sequentially to $29.8 billion. On Slide 7, you see the strong financial results from Wealth Management. Pretax adjusted operating earnings increased 18% to $823 million driven by core business growth and strong equity markets, which more than offset the approximate $20 million impact from Fed funds rate cuts and the portfolio repositioning. Adjusted operating net revenues increased 18% to $2.8 billion growth combined asset and increased transactional activity. Adjusted operating expenses in the quarter increased 18% with distribution expense up 23%, reflecting business growth and higher transactional activity. G&A expenses were $438 million in the quarter and were up 5% to $1.7 billion for the full year. This was in line with expectations, reflecting investments for growth and higher volume-related expenses. Margins which remained strong at 29%. Turning to Asset Management on Slide 8. Financial results were very strong in the quarter. Operating earnings increased 29% to $251 million, consisting of full year growth of 28% versus last year. This strong quarter and annual performance was driven by proactive expense management related to our operating model transformation and strong markets, more than offsetting outflows similar to the industry. Total assets under management and advisement increased 3% to $681 billion. Revenues grew 10%, reflecting strong marks and performance fees as well as the impact from net outflows. Adjusted operating expenses increased 4%. General and administrative expenses, excluding higher performance fee compensation, improved 2% in the quarter and 3% for the year, reflecting benefits from the company’s initiatives to enhance operating efficiencies and effectiveness further strengthen the client experience and future profitability. Those transformation initiatives will continue to benefit results. Margins reached 39% in the quarter and 38% for the full year, up from 32% in the prior year with similar levels of performance fees in both years. Let’s turn to Slide 9. Retirement & Protection Solutions continued to deliver strong earnings and free cash flow generation, reflecting the high quality of the business that was built over a long period of time. Pre-tax adjusted operating earnings in the quarter increased by 5% to $213 million, reaching $816 million for the full year. The strong and consistent performance of the business reflected the benefit from stronger interest earnings and higher equity markets, partially offset by higher distribution expense associated with continued strong sales trends. Overall, Retirement & Protection Solutions sales were up nicely with Protection sales up 26% to $91 million primarily in higher-margin VUL products and variable annuity sales up 15% to $1.2 billion. In the Corporate segment, I wanted to mention Long Term Care pre-tax adjusted operating earnings were $21 million or $62 million for the full year, excluding unlocking. Results in the quarter reflected higher closed claims and new premium rate increases. Turning to the balance sheet on Slide 10. Balance sheet fundamentals and free cash flow generation remains strong with $2 billion of excess capital. Our diversified and high-quality investment portfolio continues to perform well. As I have noted before, we repositioned approximately one-third of our floating rate securities in the bank portfolio into fixed rate securities with a 5% yield and a three-year duration. This positions us well moving forward. We have diversified sources and dividends from all our businesses, enabled by strong underlying fundamentals. This supports our ability to consistently return capital to shareholders and invest for future business growth. Ameriprise’s consistent capital return strategy drives long-term shareholder value. In summary, on Slide 11, Ameriprise delivered excellent growth in the fourth quarter, which is a continuation of a long track record of outperforming our stated financial targets. In 2024, revenues grew 11%. Earnings per share as adjusted increased 17%. Return on equity grew 300 basis points, and we returned $2.8 billion of capital to shareholders. We had similar growth trends over the past five years with 8% compounded annual revenue growth, 17% compounded annual EPS growth, return on equity improved over 14 percentage points, and we returned $12 billion of capital to shareholders. These trends are consistent over the long-term as well. This differentiated performance across multiple cycles speaks to the complementary nature of our business mix as well as our focus on profitable growth. With that, we'll take questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And your first question comes from the line of Suneet Kamath with Jefferies. Suneet, please go ahead.

Great, thank you. Good morning. I wanted to start with the bank. The NII there was down sequentially and year-over-year. I know, Walter, in the past, you've talked about an expectation that maybe 2025 NII would be above 2024. Is that still your expectation? And can you maybe walk through some of the pieces that kind of get you there?

Sure, Suneet. So coming into the quarter, we were at 75% fixed in the bank and 25% floating. And during the quarter, we repositioned that down to 17%. So we've now, basically, have managed that aspect. And in the quarter, we also grew our base by about $2.3 billion from both seasonal and growth. So that's the positioning coming in. So going forward, I think we're sitting in a good position because of the fundamentals that we have right now. We also have taken January, we studied the client crediting rate, and we adjusted that accordingly with the change in the interest rate. So all the fundamentals that we see are positioning us quite well, I think, again, in the bank to certainly sustain and continue net interest income, but there's a lot of variables. But that – I think our positioning has – put us in good position. As it relates to now looking at sweep, obviously, that will be impacted by rate reduction. And on certificates, that's a spread business, and it will be adjusted as rates go. And – but normally, obviously, you're invested, and then you have to – if you drop your rates, you'll get the benefit. So I would say, we're well positioned as we go into 2025 to certainly continue to generate good net interest income.

Put it back, got it?

Yes.

I got it. Okay, thanks. And then, I guess, for Jim, you talked about this $85 billion of client cash being 8% of assets. And I think at that level, it's maybe 2 times the normal roughly 4%, I think, is what the historical level has been. So I guess, do you think that we ultimately get back to that 4% to 5% level? Or are we just going to be in this higher cash balance environment for some time? Just want to get a sense of how your advisers are thinking about it.

Well, Suneet, I mean, I think as you saw, you start to see money being redeployed back in, but we also got more flows in. The cash levels are higher than what it used to be. But remember, you're still sitting with interest rates pretty – in the short-term of the curve pretty high. And so it is a cash allocation because you're getting good spread – I mean, good rate for the consumer there. And – but as the stabilization occurs in the longer end of the curve, and that picked up a little bit, you should start to see some shift over time there as well. And more money is going back into the market, but not in a – like a dramatic way, right? It's more on average over time. And I would probably say, you'll probably see a continued pickup in fixed income-type product as well. But yes, I would say, over time, the cash position will come down. But it's – the rates didn't – they dropped 100 basis points on the short end of the curve, but they're still much higher than they were over the last 10 years.

Got it. Okay. All right, that's helpful. Thanks.

And your next question comes from the line of Brennan Hawken with UBS Financial. Brennan, please go ahead. Brennan, your line is now open.

Sorry, had mute on. Thanks for taking my question. Good morning, Jim and Walter. Walter, would love to put a finer point on the NII at the bank commentary. So it sounds like now you’re working towards stability in that NII number as a constructive outcome and just wanted to make sure I interpreted that correctly. And then also, I know you lowered the crediting rate here January 8th, but it looked like it was about 15 basis points for most of the tiers. Do you expect that’ll be enough to keep the yield stable here in the first quarter or is it more of a partial offset? Thanks.

So as I indicated, Brennan from a standpoint we did adjust a rate, we felt that was appropriate looking at what would happen on the deposit base. So we will continue to evaluate that. Obviously, we go through a competitive process and assess. But we did absorb in the fourth quarter a 100 basis point drop, effective 61% in the bank. And so – but we did add deposits, and those deposits are, like I said, seasonal and growth. And so I say – I think we’re – as I indicated, we’re in a good position, and we’ll navigate as we go through 2025. So I’m quite confident where we’re at now, sitting with 87% in fixed in the bank and high quality and high-yielding investments.

Okay. And then when we think about loan growth, so rates coming down could make, particularly the pledge loans, security-based loans more attractive. But it’s been – the loan growth story within the bank subsidiary has largely been a residential mortgage story. Do you expect that to continue? How should we be thinking about the loan growth as maybe also a partial offset within the bank as we move through 2025?

We’ll be looking to – I think it’s scheduled to launch later in the first quarter, fixed pledge. And that’s the – we haven’t had that yet. And we know that’s something that’s sought after in the wires. So we’re adding that to the product portfolio. We’ll also be coming out with HELOCs later in, I think, the second quarter, along those lines. We’re also going to be adding some other products on the deposit side, CDs in the bank, as well as launching a checking account later in the year that would bring more balances into the bank and more utilization of the engagement with the bank that would also help on the loan side for some of the products we’re coming out with. So we feel that there is an opportunity to increase the lending part of the portfolio as we go on. But remember, we’ve been really focused on getting the bank really set up and established. And we’re launching products periodically in them. But over time, we feel like we can build a nice loan portfolio.

Okay. And the residential mortgage will probably still lead? Or is there an expected shift?

Yes.

Okay. Thanks for taking my questions.

And your next question comes from the line of Alex Blostein with Goldman Sachs. Alex, please go ahead.

Hi, all. This is Luke here on for Alex. Thanks for taking the question. Could you help us frame how you’re thinking about the firm’s capital strategy, and particularly inorganic opportunities? Appreciate how consistent the repurchase cadence has been. But how are you thinking about inorganic opportunity, specifically within AWM, where it feels like wealth peers are beginning to get more acquisitive? Thanks.

Yes. So we feel like we have a consistent ability to redeploy capital through the buyback and dividend increases that we have based on the cash flow generation we have across the business. And remember, in our RPS business, which is a very well-established business that has very good returns, that really gives us a lot more ability in that sense. From a perspective of acquisitions, we – the market is a little bit pricey right now. I think private equity has been up things, if you’re looking at the Wealth segment. We focus more on bringing in appropriately – appropriate types of advisers that have a good sort of perspective on how they want to do business on a client experience, on a an advice-based solution, et cetera. And so we still see opportunity there. But from an acquisition perspective, we’re more targeted in that regard. We also are investing to broaden out our channels. We have a number of opportunities, whether in AFIG or in our own AAC and our central [ph] sites working more direct. And we have some opportunities that we're looking at right now. So I feel good about our ability to continue to grow both organically as well as looking at some of the newer channels that we're establishing, probably less so in the larger inorganic space right now based on what's happening in the marketplace.

Yes, loud and clear. Appreciate the color. Maybe just switching gears for a minute to Asset Management. Do you see a path towards driving the business to closer a neutral organic growth rate longer term? And I know you touched on it on the top of the call, but what would you say are the biggest drivers to improvement to getting back there? Thanks again.

Yes. So, listen, I think the Asset Management business overall has been a bit more under pressure, unless you have moved to passes or some of the alternative space and where that growth is. So in our case, what we've been doing is really transforming the business, getting a lot more efficient. We took out a lot of cost, and that will pay some dividends as we look at the flow rate that we've been experiencing. On the positive side, we see that our sales are increasing a bit on the growth side both here and Europe. We are branching out in different formats. So our model delivery, our SMAs, et cetera, that we think will be a growing part of the franchise. That business in models and SMAs have grown over $35 billion already. We think there's a bigger opportunity for us there. We are launching and have launched a number of active ETFs as the format has changed. People are starting to think moving from passive now back into ETFs more in the format of active, which I think is good as pressure has come under the mutual fund part of the segment. But we have some excellent products in the mutual fund area, four- and five-stuff funds that are really attracting some – especially in this changing environment. And we see an opportunity for us to gain a little bit more traction in Europe. But again, that will take time. I think you can see that across the industry. But we feel like there is a path forward for us in the things I've mentioned. Institutional is a little more lumpy, but we are getting many more consultant approvals. We are branching out. We have gotten some nice flows in Japan right now as we set up there. So I think that's going to be a little more lumpy, but I think over time, we'll be able to build that out in a better way.

Okay. And your next question comes from the line of Steven Chubak with Wolfe Research. Steven, please go ahead.

Hey good morning. This is Michael Anagnostakis on for Steven. I just wanted to touch on M&A here. Organic growth has been more resilient despite the industry seeing moderating flows in 2024. Some of your peers have been more optimistic that could accelerate in 2025 with a higher recruiting backlog, with better market backdrop. So how do you see organic flows playing through based on that outlook and your recruiting backlog? And do you see a near-term path to getting back to the 5%-plus level you had seen in 2022 and 2023? Thank you.

So, I think overall, we've seen a nice pickup in the flow picture, both new net client flow coming in, but also more flow going back into the wrap programs. We probably – as we look at it, we think that the wrap business will continue that type of flow picture as we move forward. I can't sit here to sort of say, what that looks like quarter-to-quarter just based on market conditions and changes that occur. But I think people got a little more comfortable after the election, a little more that there'll be more solid GDP growth, the idea that things are a little more from a company earnings picture and other things and the employment picture. So I would probably say, it's a positive environment there. From an idea of the pipeline for our recruits, as you saw, it was good in the fourth quarter. Our pipeline looks good going into the new year. It's a very competitive marketplace, so – yes, you sort of can't predict. But again, recruiting is only a small part of what we do. We are bringing in a lot more people in – adding to teams as well as newer people. And we also try to grow the productivity across our channel, which is very important for us. And so with our enhancements in technology, in capabilities, in our client experience, I think we're gaining some nice traction there that we think will be beneficial for us.

Very helpful color. So thank you for that, Jim. And just moving over maybe one on sweep cash. Solid growth in the quarter. There are some seasonal elements. I think you had mentioned in the prepared remarks, those tend to reverse during January to some degree. Understanding we still have a day left in the month, can you give us a mark-to-market on sweep cash January to date? Thanks so much.

It's Walter. It's been fairly stable from that standpoint from the endpoint of December.

Got it. Thanks so much.

You're welcome.

And your next question comes from the line of John Barnidge with Piper Sandler. John, please go ahead.

Good morning. Thanks for the opportunity. A question about Long Term Care, and there was a benefit from premium rate increases in the quarter. With the decision to retain those Long Term Care assets a quarter ago with the actuarial assumption review in those premium rate increases, should we expect a higher level of Long Term Care earnings to be borne out of Corporate? And how do we view run rate there? Thank you.

Well, okay. So as we look at our benefit this year – this quarter was from claims and from getting additional benefit rate increases. We certainly have been active in – out there with pending benefit request. We have a process that it has to go through to see if it gets approved and then how we reflect it. The thing I'd say, all the fundamentals are very good, and they look good. From that standpoint, I think we're on a good trajectory, and we see it in a positive light. So can't give you an exact number on this, but the trajectory of it is good. And like I said, we’re coming into 2024, $61 million we generated is certainly a very good positive element for that, and we anticipate we'll be continuing good growth and profitability.

Thank you. And my follow-up question, for the Advice & Wealth Management channel, can you talk about the alternative and product – private asset product portfolio and if that is becoming more demand by advisers? Thank you.

Yes. So we have added a good nice digital alternatives platform for our advisors. We've done a lot more due diligence and adding products to the platform. I would probably say on the private credit side in our channel right now, it's small and – but one that I think will start to grow. And I think there's an opportunity for us in the alternatives for our clients, particularly as our clients on the upper market start to look more for some of those product categories. So I would probably say we're at the early stages of that in our channel, but one that over time will probably add, as we add the capabilities and really have advisors start to think about where that fits in. But it's not going to be, as you would say, in an ultra-high-net-worth area, a large part of our activity, it will be part of a portfolio allocation because a lot of those assets are illiquid.

Thank you.

And your next question comes from the line of Wilma Burdis with Raymond James. Wilma, please go ahead.

Hey, good morning. Corporate costs came in a bit lighter than we expected. Some of that was the performance in LTC, but could you help us think about the first half of 2025 given the ongoing cloud conversion and severance costs? Thanks.

Corporate expense, okay. As you saw, if you – we had those elements that we mentioned in the earnings release. And we do see it on, if you were basically – just for those that it's on the trajectory that you would think as go forward into 2025. That range of [indiscernible] in that range.

Okay. So maybe something more similar to 4Q? Is that fair for early in the year?

Yes, pretty much. Yes.

Yes. So it will come – we – there'll be a bit less severance coming in. And as we go through the first and second quarter, some of that technology, yes, change that we did on the transformation to the cloud for some of the mainframes, et cetera, will start to dissipate.

And we'll work through it in the first and second quarter.

Yes.

Okay. Thank you. And could you give us a little bit more color on how you're thinking about G&A in 2025 across the segments? Thanks.

As you know, we manage G&A quite well. And certainly, we – as we looked at our programs this year and we started, you saw we've taken action on transformation to adjust the expense base as we look at processes and other changes. So we've accomplished a lot in 2024. Certainly, we're going to be continue – some of that will continue to carry over into 2025, and we're constantly looking to reengineer. As it relates to AWM, AWM certainly we're very prudent on managing our expenses, but we have expenses associated with activity and investment in growth. So it will be measured as related to looking at revenue generation. But we feel very good about our ability to certainly demonstrate – continuing the demonstration of how we manage those expenses.

Yes. In the Asset Management business, some of the transformation that we did will move into 2025 and give us some benefit as well. So overall, from a company perspective we feel very good about how we're managing expenses. To Walter's point, we are making good investments in the business, in technology AI capabilities. We also are having volume-related, particularly as you think about AWM, where we have good growth. And part of that variable expense for that is in the G&A. So it's not something, as you would say its fixed overhead-type things.

Certainly. Thank you.

And your next question comes from the line of Ryan Krueger with KBW. Ryan, please go ahead.

Hey. Thanks. Good morning. My first question was a follow-up on the wrap flow trends. So you saw a pretty big increase in organic growth in the fourth quarter to 8% from the more recent 6% trend. Can you comment on if that has continued at a similar pace so far in January?

As we look at – January is a little because of a combination of the beginning of the month with some of the things that have occurred out there, so I would probably say things look consistent. But it's hard, January is a little at the start to the year. So it's not a perfect science for the rest of the quarter. But I don't see anything fundamental. I would probably say but January is always a hard month to take a flow from.

Got it. And then on the AWM margin, the 29% in the fourth quarter following the Fed rate cuts, do you feel that's a pretty reasonable expectation going forward from here?

Yes, I do.

Okay. Great. Thank you.

And our final question comes from the line of Kenneth Lee with RBC Capital Markets. Kenneth, please go ahead.

Hey. Thanks for taking the question and I apologies if this was covered before, but I'm just juggling a couple of calls this morning. In terms of the bank assets, the portfolio there, the bank fees were probably a little bit lower than I would have expected. Is there any kind of expectation around portfolio allocation across the assets in the business, perhaps a change in mix of fixed versus floating, and additional color over the near term? How are you thinking about that? Thanks.

Sure. So listen, our mix has pretty much stayed the same. It's high quality and duration is in the 3% to 5% range. We did as I indicated, we came into the quarter with 75% on fixed at the bank, and we adjusted that to 87% fixed. So it – and it's, again, the same quality and duration. So we feel that is – we garnered good rates. So from that standpoint, that's the only change. We again in the quarter, it was a 61 basis point impact from the Fed, and the impact for the bank was almost 30-some-odd basis points based on that mix.

Got you. Very helpful there. And just one follow-up, if I may, just on the RPS side. Fair to say that over time higher/elevated yields could translate into higher earnings over time. Just want to check in on that. And what are your expectations or outlook for the run rate earnings for 2025 there? Thanks.

Yes. I think I covered that from the standpoint that certainly, we feel comfortable with the – at the bank...

RPS.

Excuse me?

RPS.

Oh, RPS. I'm sorry. On RPS, based upon the fundamentals we're seeing both – again, we had a very good sales year, which obviously reduces the earnings and certainly, from that standpoint, of course, the time to sale. But we do see the fundamentals there, good transactional growth. And so – and we're managing the – the liability base is quite solid. So I feel from that standpoint, it's a pretty solid number.

Got it. Very helpful there. Thanks again.

We have a new question from Michael Cyprys with Morgan Stanley. Michael, please go ahead.

Oh great. Thanks so much for squeezing me in here. Just a question as we think about expense efficiency efforts that you guys have executed quite well on in recent years. Just curious how much of that would you say is attributable to deploying AI versus maybe some of the Generative AI tools. And as you look forward from here, how do you see the potential of greater deployment of those capabilities to unleash incremental expense efficiencies? Maybe you could talk about some of the use cases you see on the horizon, including maybe even AI agents. What's that journey look like for Ameriprise? And then with the recent DeepSeek announcement, it seems like maybe there could be prospects for faster, broader deployment. Just curious how you're thinking about that.

Yes. So we've been deploying intelligent automation, robotics for a while, and we continue to increase the number of areas that we deploy that in across the business. And so we see further opportunity for greater efficiency in that regard. We've also done a lot of work on Generative AI, and we're running a lot of different cases that we're seeing some nice benefit from that we will be growing things out further. As an example, we've already gotten a level of efficiency, but we're working now to help advisers do business more easily, more productively, identifying opportunities in their book with clients. We're working with a lot of – improving the client experience regarding our call center interactions and how we reach out to people. In Columbia, we've tested a lot in enhancing our research capabilities and utilizing that to drive efficiencies. So there's a number of things that we're looking at across. Now, you also have to recognize that we're in a highly regulated space. So we have to really look at how you use that, what information is there, et cetera, et cetera, which we do. And we have a good governance process. But as we get more learnings and more test results from what we do, we can start to expand that and roll that out further. So I think that will be something that will be added. But if you say, are you getting great efficiencies yet from it? The answer is no. But we've gotten it for the things that we've really tested and learned and deployed over time like intelligent automation, but not yet on the Generative AI. But that's been starting to be deployed now.

Great. Thank you.