Ameriprise Financial’s total loans to advisors rose 29% year-over-year to $2 billion at the end of the third quarter, according to a regulatory filing on Friday.
The balance increased by $447 million from around $1.55 billion one year ago. That reflects a faster increase from the prior year’s term when it increased by $246 million, or around 19%, from roughly $1.3 billion.
In the past three months, the balance increased by $81 million, or 4.2%.
The advisor loans cover “transitional cost assistance and practice operations” and are forgiven as long as the advisor remains with the firm, according to the filing. The figures reflect outstanding balances rather than new loans granted during the quarter.
The jump comes as Ameriprise’s recruiting and retention costs have come under scrutiny. Bank of America analysts last month downgraded the company’s stock to Underperform from Buy citing the departures of large teams and pressure on margins from efforts to retain others.
On an earnings call on Thursday, prior to the filing that included the $2 billion figure, Chairman and Chief Executive James Cracchiolo denied that Ameriprise was rolling out a broad retention program. He cited “a lot of noise out there from anonymous thoughts, from recruiters with their own agendas.”
“I would just say there’s no program,” Cracchiolo said. He left the door open for arrangements with individual advisors, including those who have received offers from rivals.
Cracchiolo also described the company’s efforts as providing capital for succession and practice acquisitions “to help them accomplish their objectives at the same time accomplish our firm objectives.”
Ameriprise Chief Financial Officer Walter Berman also said that the company had selectively adjusted recruiting offers to match increased competition.
A spokesperson for Ameriprise, which has around 10,000 employee and independent advisors, declined to comment beyond the CEO’s remarks on the earnings call.
Ameriprise is not the only regional brokerage firm facing questions about rising recruiting and retention costs. Raymond James executives last week defended their strategy to analysts after retention and transition-related compensation rose 28% year-over-year to $125 million.
That total reflects amounts paid, not outstanding balances. CEO Paul Shoukry said that the firm’s plan would generate longer-term returns in five or more years.
For the third quarter, Ameriprise’s Advice & Wealth Management division reported a 12% increase in pretax profit to $989 million and a pretax margin of 29.3%.
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