Ameriprise Financial Inc (AMP) — Q4 2023 Earnings Call Transcript

Thank you, 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'll be happy to take your questions. Turning to our earnings presentation materials that are available on our website. On Slide 2, you see a discussion of forward-looking statements. Specifically, during the call, you will hear reference to various non-GAAP financial measures, which we believe provide insight into company operations. Reconciliation of non-GAAP numbers to their respective GAAP numbers can be found in today's materials and on our website. Some statements that we make on the 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 2023 earnings release, our 2022 annual report to shareholders, and our 2022 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 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. I hope that 2024 started off well for each of you. As you saw in our earnings release, Ameriprise delivered a strong fourth quarter to complete an excellent year. I'm proud of our team and what we've accomplished. We've navigated the environmental uncertainty well, supported our clients, and further demonstrated the strength of our value propositions. Regarding the operating environment, it was more positive to end 2023 and start the new year. We know there are questions regarding the continuation of economic growth, inflation, and the timing of interest rate reductions. Of course, markets are unpredictable. However, at Ameriprise, our expertise is preparing both our clients and the business to be successful even in an uncertain climate. Now, with that backdrop, let's move to our results. For the quarter, revenue growth continued to be robust, up 8%, reflecting good organic growth and positive markets. We again generated strong earnings growth with EPS up 10% or 14% normalized for the items referenced in our press release. Our nearly 50% ROE is consistently among the best in the industry. We also delivered excellent full-year adjusted operating results. Excluding unlocking and the items we referenced, revenue was $15.4 billion, up 8%. Earnings increased 18% to $3.3 billion. Our EPS was $30.46, up another 24%. In fact, these are record results for Ameriprise, and assets under management and administration were near an all-time high at $1.4 trillion. Across the firm, we're very well positioned to help investors with our compelling client experience and complement the businesses, capabilities, and talented team. Regarding some business highlights, Wealth Management delivered another strong quarter. Our efforts are centered on engaging more people in our advice-based client experience, which helps our clients achieve more of their goals and creates higher satisfaction, net flows, and productivity growth. Client acquisition was up nicely in the quarter, especially in the $500,000 to $5 million client segment. Total client assets increased to a new record of $901 billion, up 19%, and client flows were approximately $23 billion. Total transactional activity picked up a bit in the quarter. However, given the environment, clients continued to maintain higher cash levels, with assets in cash products growing to about $82 billion. Over time, we expect these assets will be further deployed as clients return to the markets more fully. Year after year, our adviser productivity growth is consistently among the best in the industry. In fact, it increased another 11% to a new high of $916,000 per adviser in the quarter. Our field force is highly engaged, and they value the Ameriprise culture. As for the experienced advisers we recruit, in the quarter, we brought on board 166 productive advisers, which includes the Comerica advisers who joined us. Recruits tell us that associating with Ameriprise has given them a strong client value proposition integrated with technology and the leadership support they need to provide first-class service to their clients and grow their practices. Our bank continues to provide benefits and grow nicely. Bank and certificate assets increased 28% to $37 billion. We see good opportunities here to further deepen client relationships and bring in more of our client assets that they hold at other banking institutions. As you can see, our consistent focus and investment in the business is driving strong results. And we're not standing still. We continue to invest significantly to drive further efficiency and organic growth. Advisers using our integrated e-meeting capability, customer relationship platform, and online adviser dashboards find that these tools enhance their ability to deliver for clients and manage their practices, as well as identify growth opportunities. We're also leveraging advanced analytics and accelerating enhancements to our mobile and digital experiences on our public and secure sites to engage more clients and prospects. I'd also highlight that Ameriprise brand awareness is strong and steady, and our growth opportunity continues to be significant. Clients and prospects across segments need meaningful contact and advice more than ever, and that's where we're concentrating. Earlier this month, I met with our field leaders to kick off the year. They are highly engaged and energized about our position and ability to build on our success in 2024. Next, in Retirement & Protection, we're driving good sales. These solutions help serve our clients' comprehensive needs, and the business is consistently a strong earnings contributor. The team is focused on providing a best-in-class experience with ease of doing business, and it's resulting in better sales. Total variable annuity sales were up 15%, with good sales in our structured product. Protection sales were up 6%, driven by our higher-margin product. We just introduced new enhancements to our core product lines to help further serve our clients' evolving protection and income needs. Moving to Asset Management, we continue to serve clients in an evolving market. Assets under management grew nicely in the fourth quarter, up 9% to $637 billion, driven by market appreciation and positive foreign exchange. In terms of some color on flows, our U.S. retail mutual fund outflows were in line with the industry. Though they remained pressured, we had a bit of a pickup in gross sales, and redemptions have slowed from a year ago. U.K. retail remained soft, and we're seeing some improvements in Europe. For global institutional, our outflows were elevated as we expected due to the actions we set to realign resources, including portfolio management changes. Our product capabilities are extensive, and the team is concentrating on regaining sales momentum. Performance is critical to that, and we're delivering consistent competitive investment performance that reflects our research expertise. Our 3-, 5-, and 10-year numbers are very strong, and we saw a nice pickup in the 1-year fixed income numbers. I highlight that we continue to have 113 4- and 5-star Morningstar rated funds in our lineup. Like other active managers, we're managing industry pressure and doing a great deal to refine our operating processes while reducing expenses globally. We're enhancing our efficiency and effectiveness while making good investments, including in data and analytics. We're focused on leveraging our performance as well as our global distribution and servicing capabilities. For Ameriprise, it was another great year and a continuation of our significant growth over many years. In addition, we built on our record of strong financial performance, including generating one of the best ROEs in the industry. With that, we consistently demonstrate our ability to return to shareholders. In the fourth quarter, Ameriprise returned another $587 million, and for the full year, we returned $2.5 billion to shareholders. Over the last 5 years, we returned a substantial amount to shareholders that resulted in a share count reduction of 25%. As I look at Ameriprise, we continue to be well positioned. The strong performance we achieved is underscored by the industry accolades Ameriprise consistently earns. Over the course of the year, this is the type of recognition we received: 4.9 out of 5 stars in client satisfaction from our clients. Our employee and adviser engagement ranks among the best across all industries. We have one of the highest customer trust scores in financial services. J.D. Power has awarded us for outstanding customer service experience for our adviser phone support 5 years in a row. Ameriprise is the winner in the Wealth Management category from Kiplinger. Additionally, we've been recognized as a military-friendly employer for 9 years in a row and as a best place to work for disability inclusion. Finally, Ameriprise is among the Best Managed Companies of 2023 on the Wall Street Journal Management Top 250 list. For the firm overall, as we enter our 130th year in the business, our foundation and business are strong. I'm immensely proud of our people, and we have a great opportunity to continue our success together in 2024. Now I'll turn things over to Walter, and then we'll take your questions.

Thank you, Jim. As Jim said, strong results this quarter continue to demonstrate the leverage of our diversified business model across market cycles. Underlying EPS grew 14% to $7.75 after adjusting for items in the quarter that we called out in the release. These included $0.28 of expense related to a regulatory accrual, $0.14 from severance expense, and elevated mark-to-market impacts on share-based compensation expense of $0.13 resulting from Ameriprise's substantial share price appreciation. You would not have been aware of these items and their associated magnitude. Assets under management and administration ended the quarter at $1.4 trillion, up 15%, benefiting from $36 billion of client flows in 2023 and market appreciation. Across the firm, we continue to manage expenses tightly relative to the revenue opportunity within each segment. G&A increased only 2% normalized to the items I noted. We continue to take a disciplined approach on discretionary expenses across the firm to manage margins given the uncertainty in the macro environment, as evidenced by the $26 million of severance recognized in the third and fourth quarters. At the same time, we continue to make investments to drive business growth, particularly in Wealth Management. As we move into 2024, we will continue the same discipline and will maintain a flat expense base for the year at a minimum. Our consolidated margin was 26.4%, excluding the items I noted. We have a best-in-class return on equity of 48.5%. The balance sheet fundamentals remain strong. Our excess capital and liquidity positions remain strong, and we've seen a significant $1.8 billion reduction in the net unrealized loss position to only $1.5 billion. Our diversified business model benefits from significant and stable 90% free cash flow contributions across all business segments. This allowed us to return $2.5 billion of capital to shareholders in the year, a continuation of our differentiated track record. Lastly, I mentioned that Ameriprise successfully expanded its presence in the financial institutions channel. The closing on our partnership with Comerica Bank in November that added an initial $15 billion of client flows. Given the timing of the conversion, there was limited financial benefit in the quarter. On Slide 6, you'll see our strong results in 2023 were driven by business momentum across key measures. Assets grew 15%, with revenues up 8%. Pretax adjusted operating earnings grew 10%. The pretax adjusted operating margin was 26.4%. The diversified nature of our businesses strengthens our model and drives our consistent performance. It is this balance that enables Ameriprise to consistently drive shareholder value across market cycles. The key growth driver of Ameriprise is the Wealth Management business, as you can see on Slide 7. Wealth Management client assets increased 19% year-over-year to $901 billion, driven by strong organic growth and client flows along with higher equity markets. We had $53 billion of net inflows over the past year, with $23 billion coming in the quarter from new clients joining the firm, the deepening of existing relationships, and adding experienced advisers. Revenue per adviser reached $916,000 in the quarter, up 11% from the prior year, from higher spread revenue, enhanced productivity, and business growth. On Slide 8, you can see how the business performance drove strong financial results for Wealth Management. In the quarter, adjusted operating net revenues increased 8% to $2.4 billion from growth in client assets in both wrap and brokerage accounts and improved transactional activity. This included about $15 billion of initial flows related to the Comerica partnership, in addition to the $8 billion of underlying client flows. While markets were favorable in the quarter, we did not realize the full benefit of the market appreciation in the quarter given our beginning-of-month billing practice. We are starting the year with the wind at our backs with the significant market appreciation to end the year. Total cash balance, including third-party money market funds and brokered CDs, reached a new high this quarter at $81.5 billion. We have seen stability in our underlying client cash positions with free cash up 4% sequentially. This stabilization has continued into January. Additionally, we continue to see new money flowing into money market funds and brokered CDs, as well as into our certificates. This creates significant redeployment opportunities as markets normalize for clients to put money back to work in wrap and other products on our platform over time. The financial benefits from cash remain significant and will be a sustainable source of earnings going forward. Adjusted operating expenses in the quarter increased 9%, with distribution expense up 10%, reflecting higher asset balances. Excluding the regulatory accrual, G&A declined 1% in the quarter and was up only 4% for the full year. We will continue to invest in this growing business while maintaining this expense discipline in 2024. In total, the underlying margin expanded 40 basis points to 30.3%, reflecting our revenue growth combined with expense discipline. This level is consistent with our margin for the full year. Turning to Asset Management on Slide 9. Financial results were very strong in the quarter, and we are managing the business well through a challenging environment for active asset managers. Total AUM increased 9% to $637 billion, primarily from higher equity markets and foreign exchange translation, partially offset by net outflows. Like other active managers, we experienced pressure retail flows from global market volatility and a risk-off investor sentiment. In addition, we had $3 billion of institutional outflows that included $2 billion of expected breakage from portfolio management changes made as part of our reengineering initiatives. Investment performance is another critical area of focus, and long-term 3-, 5-, and 10-year investment performance remains strong. We also had notable improvements in 1-year fixed income performance in the quarter from strength in mortgage opportunities, tax-exempt, and strategic municipal income strategies. In the quarter, operating earnings increased $194 million as a result of equity market appreciation, disciplined expense management, and higher performance fees which more than offset the cumulative impact of net outflows. Performance fees are an important part of our business and reflect excellent performance in our hedge fund and other institutional accounts, but the recognition of performance fees is uneven throughout the year. While we had $30 million in performance fees in both 2023 and 2022, the fourth quarter this year included $21 million in performance fees, while the fourth quarter of 2022 only included $5 million. We are finalizing the integration of BMO and are looking globally at areas where we can enhance operational efficiency and manage expenses so we are well positioned going forward. G&A was down 4%, excluding the impact from foreign exchange translation and performance fee compensation. The margin was in our target range of 32% in the quarter. Looking ahead, as Jim said, we will continue to take further expense action in 2024, given the environment, to preserve margin in our target range. Let's turn to Slide 10. Retirement & Protection Solutions continued to deliver good earnings and free cash flow generation, reflecting the high quality of the business that has been built over a long period of time. Pretax adjusted operating earnings in the quarter increased 2% to $202 million, reflecting higher investment yields. Overall, Retirement & Protection Solutions sales improved in the quarter, with protection sales up 6% to $72 million, primarily in higher-margin products. Variable annuity sales grew 15% to $1.1 billion, with the majority of sales in structured variable annuities. Turning to Slide 11. Ameriprise delivered excellent growth in 2023 and has done the same over the longer term and through changing market cycles, reflecting our focus on profitable growth. In 2023, revenues grew 8% from higher interest earnings, higher equity markets, and solid client net inflows. Earnings per share increased 21% from last year due to revenue trends, well-managed expenses, and differentiated capital return. ROE increased 290 basis points to nearly 49%. Over the past 5 years, we have generated 6% revenue and 15% EPS compounded annual growth and a 1,170 basis points improvement in ROE. This is differentiated performance across multiple cycles compared to our peers and speaks to the complementary nature of our business mix and the growth of our Wealth Management business. Turning to Slide 12. You can see Wealth Management was a significant contributor to Ameriprise's successful performance, driving two-thirds of the company's operating earnings. Our advisers are becoming more productive with the support of our advice model, with revenue per adviser of $916,000 this year, an increase of 8% annually from 2018. We are growing profitably with a 16% increase in pretax earnings since 2018. Over that time frame, our Wealth Management margin has expanded 840 basis points to nearly 31%, achieving industry-leading levels. Now let's finish with the balance sheet on Slide 13. Our solid balance sheet fundamentals and free cash flow generation have supported our ability to execute a consistent capital return strategy while continuing to invest for growth. In 2023, we returned $2.5 billion to shareholders, with $587 million in the fourth quarter. Over the past 5 years, we returned $12 billion to shareholders through dividends and share repurchase. This included the repurchase of 41 million shares at an average price of $215, resulting in a net reduction in our share count of 25%. Looking ahead, capital management will continue to be a point of differentiation for Ameriprise. With that, we will take your questions.

I'd like to start with the bank. So we've got $3 billion. I believe you've indicated that there's expectation for $3 billion of maturities expected. Can you give a sense, given where rates are in the market today, what kind of yield pickup you're likely to see on those balances? And whether or not you have visibility into what those maturities might be in 2025.

In 2025, we expect the amount to remain at $25 billion. These figures reflect the projected outcomes. From a net interest income perspective, we have assessed several scenarios based on the forward curves. We anticipate that the generation in 2024 and 2025 will surpass that of 2023 due to our additions, which are nearing 6%. This runoff will be factored in. Our reinvestments and the differing rates will enable us to achieve a higher net interest income in both 2024 and 2025, which will be $3 billion each year.

Okay. I have a mechanical question. The quarter-over-quarter yield from the off-balance sheet broker-dealer has decreased significantly. My understanding is that this is related to the $2.5 billion cash sweep with Comerica. Is that correct? Did this happen because of some sort of promotional or temporary crediting rate? When can we expect this to return to normal levels?

So if we're talking about the off-balance sheet rate on a sequential basis, is that what you're referring to?

Yes, exactly.

Yes, we did take on a $2.5 billion from Comerica, and that will transition over the next 6 months. The use of that certainly will work toward the rate increasing. But our base rate has basically stayed the same, ex-Comerica. There's been no change.

First, I just wanted to follow up on the comment about net interest income. Regarding the expectation for 2024 and 2025 to be higher than 2023, could you provide any insight into the forward rates you assumed when you made that statement? Was that based on the forward curve, or is there additional information you can share?

We are using the forward curve, and we run sensitivity. But what my statement was referring to was the forward curve with the latest adjustments.

Okay. Great. Can you provide any insights on expectations for potentially moving some of the cash sweep balance into the bank and how you envision the bank's asset size might grow throughout 2024?

Sure. So right now, we are seeing stability and really little growth in our sweep accounts. So we feel very comfortable about it. We still have buffer there. We are evaluating that, but we'll be more measured as we go forward because we've certainly placed and shifted a substantial amount. But you would see that it will be increasing but at a slower pace as we evaluate these sweep balances that support that. So I would say that it will be increasing but at a slower pace.

Can you guys hear me?

Yes.

I wanted to ask you guys a question around a substantial amount of cash that you guys have on the sidelines. I think it was north of $30 billion. I know you sort of talked about some of that coming into some of the investment products. But as you sort of think about where are the likely areas where this capital could go into with respect to wrap accounts or something else, how would you frame that? And maybe talk through some of the revenue lift that you could get from that?

You're talking about where our cash sits today on...

So not stuff that's in the sweep, right? But there's been other capital that I think is actually earning you guys not a whole lot, whether it's the CDs or money market funds. Where do those balances are and where that could shift?

Yes. So those balances are in money markets and brokerage CDs short term that will roll off. As they do, I think advisers will evaluate whether they put that back into the market. If they did, I would say a reasonable portion will go back most likely into wrap-type programs, imbalanced type portfolios, which would include both equities and fixed income, et cetera, alternatives. On the other side, we've seen a bit of a pickup in some transactional activity as well in the fourth quarter. Some of that will go back into transactional activities as they look at longer-duration products. So again, that's really as advisers look at the market and they put money to work over time for their clients.

I got you. And then my second question was just around operating leverage for the firm and obviously encouraging to hear your comments around G&A outlook. If you roll that through, it seems like the margin in the asset management business could be materially higher than sort of your longer-term ranges. Obviously, not a terrible thing. But as you sort of think about those historical targets, are they still something you're trying to manage the business to? Or is it really just kind of more of the output because the fees are obviously off to a very good start in 2024 and expenses are going to be very tightly managed?

Yes, we have been proactive in managing our controllable expenses not only in Asset and Wealth Management but across all areas. It will depend on various factors related to market conditions and other dynamics that affect margins. While I won't predict exactly where it will go, we are confident that we have established control over general and administrative expenses in Asset Management. With the right market conditions and progress on our flows, there is certainly potential for an increase. Currently, we are comfortable with our existing levels, but we see room for growth.

So wanted to start off with just a question on the AWM margin. Just given some of your larger wirehouse peers have guided to lower wealth margins for the next few quarters, given the absence of NII tailwinds, and incremental investments to sustain organic growth. You noted, Walter, that your spread revenues will be more resilient in '24. But do you believe you can sustain that north of 30% pretax margin in AWM even in the face of rate cuts in line with the forward curve?

Yes. So I think that we have reasonable confidence that we will be able to sustain. Obviously, there are variables that go into that. But as I indicated, our net interest income in 2024 will certainly be higher than in '23. So yes, I think we have a reasonable level of confidence in that.

That's great. And just for my follow-up on capital return, the payout came in below the 80% target. Apologies if I missed this. But just wanted to get a sense as to how we should be thinking about the payout trajectory over the next few quarters, especially in light of the robust excess capital generation that we've been seeing.

Yes, we came in at 79%, I would agree with you, for the year. Our capacity and capability certainly remains very strong, as you can see from the elements and certainly generation. I would think that a continuation of that strategy is probably a reasonable expectation.

Just wanted to start with the Asset Management business and the expense reductions that you're doing there. Clearly, you're trying to defend your margin, which I understand. But it feels like we're starting to see potentially some commercial impacts there. I think you alluded to some outflows related to headcount reduction. So I guess my question is, how are you thinking about balancing that, right, where you're cutting expenses but at the same time potentially seeing some negative commercial impacts?

From our assessment of the breakage, we made a proactive decision regarding the payback we were receiving. We have carefully evaluated our expense plan with a focus on improving efficiency and reviewing processes, and we feel confident about it. While there are some spillover effects as we manage the return, we anticipate some breakage, particularly in 2024, but we believe it will be manageable. This decision was intentional, allowing us the opportunity to redeploy funds into other products.

Okay. Got it. And then just a level set on that $82 billion cash number that you talked about. If I think about that relative to total client assets, it seems like it's upwards around 8%, 9%, which is almost 2x what you guys normally would expect. Is that the right way to think about it? And then over time, as rates normalize, that kind of 8% to 9% cash balance would probably trickle back down to somewhere in that 4% to 5% range, and that's really the opportunity set that's in front of you in that business?

Yes, Suneet. It is sort of like double the amount that clients are holding usually compared to where they used to be. Again, advisers look at it with their clients, and they're getting a 5-plus yield on it, just to sit tight, with uncertainty about market moves, etc. I believe that over time, that money will be redeployed, but holding at higher rates right now is not uncomfortable for clients that are advised by us to keep extra cash there.

And is there any reason why that money wouldn't come to Ameriprise? I mean it sounds like it's in products outside of your firm, but obviously, your advisers do holistic financial planning. Is there any reason why, either from a diversification perspective or anything, why that money might want to stay outside of Ameriprise?

In fact, the money is at Ameriprise. The advisers have just put it into either money market or brokered CDs, where there was a bigger lineup of brokered CDs before we had our bank and CD offerings that we'll be launching. I think it varies. As we put more bank products in, as we develop the bank, some of that will go into our bank products. We think there's also an opportunity for us to capture more cash from our clients holding it at other banking institutions. The money that's currently that $81 billion is at Ameriprise. As that rolls over or opportunities arise, the advisers will rebalance accounts and put that money to work.

First question, just on the layoffs in Asset Management. I think it was 12 PMs. Can you comment on the size of the AUM that they were managing, and what exactly happened there? Did you merge or close any funds? Did you replace them? Just a little more color there.

Well, with the breakage, it was basically on that one we closed upon. We've looked for alternatives and that was on the institutional side. The other funds, we feel there are opportunities where we can merge them into other products that we have to get efficiencies and effect on that. It was a capital review, and we felt that based on payback, it would make sense to do that.

And Walter, the total AUM related to the layoffs, are you able to provide that?

Right now, the $2 billion was the amount in that fund primarily.

Right. But regarding the 12 PMs that were let go, can you provide a full overview of that?

I would have to get back to you exactly on the 12, but the majority of it is still related back to the breakage that we saw. Let me get back to you on that.

The redeployment out of corporate into the segments, I think it's around $15 million. Can you explain what happened there? Was it all NII or what happened on that reallocation of the segments?

Yes. What we have, obviously, intercompany cash transferring that goes between segments. We evaluated AWM that the crediting rate that we were giving was not really market-driven. We adjusted it based on the condition sets that we saw today. It will remain in AWM's profitability going forward.

Just a reallocation among segments, that makes sense. And then just final follow-up. This 90% sustainable free cash flow conversion, you returned to 80% in '23. Do you plan on stepping that back up to 90% in '24? Or should we expect it to remain closer to 80%? Do you have an idea of where...

As we said, opportunistically, we have the capacity, as you see, we generate a lot of free cash flow, and we evaluate that looking at the opportunities. We are continuing to invest within our business. That's not a constraining factor. I would say right now, it's reasonable to assume the level we just had, and then we will adjust to be opportunistic about it.

I have a question about the expense management initiatives. Could you elaborate more on this, specifically if there are other areas beyond Asset Management? Also, could you provide some details regarding the timeline for these actions? Will they all be completed within this year?

Yes. What you saw with the $26 million severance and certainly our plans, these are all actionable and have already been put into play. You should see the benefit of that materializing. We're essentially looking at our expenses for 2024 to be flat at a minimum. Obviously, we continue to make substantial investments in the various businesses, especially in AWM. We have high confidence in this.

Got you. Very helpful. And then just one follow-up. Any updated thinking in terms of potential reinsurance transaction on the RPS side, just especially given recent industry developments and the rate environment?

We have observed the recent transactions, and we feel that it creates an opportunity. As we always said, we're always looking for the bid-ask. I think those bid-asks are certainly coming into alignment and providing an opportunity.

I believe in your opening remarks, you had mentioned you were seeing a stabilization of cash levels through January. I was just curious if you had any more color year-to-date on that. I would have expected more redeployments just from seasonality rebalancing and distributions and the like.

In the sweep accounts, as of 2 days ago, we have seen complete stabilization from that standpoint with a little increase. We understand the seasonality of it. But certainly, it's as I indicated, and that's through 2 days ago.

Awesome. And then my other question had to do with retirement and protection. You guys had a pretty sizable pickup in the yield for your net investment income. I was curious if you could give us an update on any color on the investment profile of that book. Just trying to get a better idea of sensitivity to rates there.

No, that's invested out now. We took advantage of the rate situation as we saw. That is pretty much completed at this view. Additionally, as I indicated, it will get to pick up going forward with intercompany cash.

In this PM reduction in Asset Management, it clearly followed a thorough review. In that review, were there areas of growth identified? Are you looking to get larger in any specific products that may have come to the surface out of that PM review?

Yes. We had some teams that we felt were managing small levels of assets, and it wasn't economical for us in those areas. But we have good teams that could have assumed those assets and had good performance. We made adjustments there. But in so doing, we have reviewed our overall front office and all of the products and the portfolios and capabilities that we have on the investment side. We feel there's a good opportunity. We always have that in the equity part of the arena. We have a solid fixed income and credit shop and think there's an opportunity for us to actually get a greater fair share as we continue to evaluate the environment. We're picking our pockets of where we want to double down.

And then my follow-up question is around the risk transfers and the comment about the bid and ask. You've seen the market change a little bit to include third-party sidecars. Would that be an area of interest?

We've looked at it, and candidly for us, probably not, because most people enter into that for growth purposes, and we have a fairly large share. So probably not. But we continue to look.

This is stepping in for Mike Cyprys of Morgan Stanley. Just wanted to ask a big-picture question about the opportunity set for broadening out to affiliation options. We've clearly seen a lot of growth coming through the channel, in particular. I'm just curious how you guys are thinking about the opportunity to capture some of that growth.

Yes. The team is focused on the RIA channel as well in developing our distribution platform capabilities there. We will put some emphasis there as we move forward as part of our intermediary distribution capabilities.

Excellent. And as a follow-up, somewhat related, can you tell us a little bit more about what tech initiatives you have in place at the moment for advisers in terms of what you're doing to help the Ameriprise platform stand out and differentiate itself in the marketplace, and particularly what you have coming over the next, say, 12 to 24 months in terms of the tech pipeline?

Yes. We feel incredibly good about our total platform for the advisers, from our combination of CRM platform, which is the latest and greatest of all the capabilities with all the integrated technology and data that they can use on their client portfolios and engagement, to our e-meeting capabilities that actually help them put together their actual proposals and engage with clients regarding their needs. Furthermore, our AI capabilities help them identify opportunities in their book. We feel really good about the suite of capabilities we have, which are all integrated, making it much easier for advisers with their dashboards to engage their clients, manage their books, and have deeper engagement with them through the advice planning models. We feel that we have a state-of-the-art type of system, and our availability is very strong, making it a differentiating point for us.

The gross fee yield on client cash looks to be around 5% or maybe 5.25%. But what are new money yields at right now, I guess, on that $3 billion that will roll over, and what type of maturities are you investing in there?

Well, we're still staying in the maturity range of the 3.5 range. Right now, it's a tad under 6%.

Under 6%, okay. And then any sense on why that Comerica Bank cash was kind of so high as a percentage of assets? And I guess, will your advisers be advising them to put more of that to work so we could see that come down?

Yes, there's a significant opportunity, and it's a large percentage. I believe this is part of the reason. With the engaged arrangement, we provide them with the chance to improve. We do anticipate that it will decrease.

I just wanted to double click on the NII expectation and confirm when you said that you expect NII to be up in 2024 versus '23 and then '25 versus '24. Is that for all cash economics both on and off the balance sheet, or is that just a part of it?

That was for all.

All, okay. Excellent. Can you speak to cash trends you've seen in January? What expectations for balances or betas underpin that growth because it's better than we were expecting?

Hold on, let me go back. That was actually for the bank. I was giving you the bank on that one. I apologize.

It's for the bank. Okay, got it.