Ameriprise advisor loans rise 29% to $2 billion

Ameriprise Financial held $2 billion of loans to its advisors at the end of the third quarter, up 29% from a year earlier, according to a regulatory filing on Friday.

The balance rose by $447 million from about $1.55 billion, a faster climb than the prior year's increase of $246 million, or roughly 19%, from about $1.3 billion. In the third quarter, the balance grew $81 million, or 4.2%. The filing describes the loans as transitional cost assistance and practice operations. The figures are outstanding balances, not new loans written in the quarter.

An advisor holding one of these notes is carrying the price of leaving: the loans are forgiven only while the advisor remains with the firm, according to the filing. A note large enough to fund a practice purchase or cover a transition raises the amount a breakaway must clear before leaving, and the years of forgiveness not yet collected sit on the advisor's side of the ledger as an unpaid cost of moving. For a team weighing an offer, the useful comparison is the unforgiven balance against the rival's transition check, not the headline package.

“I would just say there's no program,” Chairman and Chief Executive James Cracchiolo said on Thursday's earnings call, describing “a lot of noise out there from anonymous thoughts, from recruiters with their own agendas.” He said the firm's spending was aimed at providing capital for succession and practice acquisitions. Chief Financial Officer Walter Berman said Ameriprise had selectively adjusted recruiting offers to match increased competition.

Bank of America analysts downgraded Ameriprise shares to Underperform from Buy last month, citing the departures of large teams and margin pressure from efforts to retain others, AdvisorHub reported.

Raymond James executives last week defended their strategy after retention and transition-related compensation rose 28% to $125 million from a year earlier, a figure that reflects amounts paid rather than outstanding balances. CEO Paul Shoukry said the plan would generate returns over five or more years.