Welcome to the fourth quarter 2021 earnings conference call. My name is Sylvia, and I'll be operating for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press star then one on your touch-tone phone. Please note that this conference is being recorded. I will now turn the call over to Alicia Charity. Alicia, you may begin.
Thank you, Sylvia, and good morning. Welcome to Ameriprise Financial 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 two 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's 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 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 2021 earnings release, our 2020 annual report to shareholders, and our 2020 10-K report. We make no obligation to publicly update or revise these forward-looking statements. On slide three, you see our GAAP financial results at the top of the page for the fourth quarter. Below that, you'll 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. With that, I'll turn it over to Jim.
Good morning, and thank you for joining our fourth quarter call. I hope you're all doing well. Ameriprise delivered another strong quarter, completing an exceptional year in 2021. We continue to execute well and produced record results. Importantly, we helped our clients navigate the environment while driving profitable organic growth, advancing key strategic initiatives, and reinforcing our strong position in the marketplace. At the same time, Ameriprise continued to generate excellent shareholder returns. In terms of the environment, with the economy continuing its recovery, U.S. equity markets finished the year strong. In Europe, the environment improved but continued to lag the U.S. As we've seen, higher inflation is pressuring the Fed to move on raising short-term rates, causing greater volatility in the equity markets. Let's move to the highlights for the quarter.
Total assets under management and administration were up 29% over last year and reached a new high of $1.4 trillion. In the quarter, we added $136 billion from our acquisition of BMO EMEA's asset management business and $40 billion in total client flows, also a new record. Turning to our fourth quarter adjusted operating results, revenues were $3.7 billion, up 18%, fueled by strong organic growth I've mentioned and equity market appreciation. Earnings rose 29%, with earnings per share up 36%, reflecting robust business growth and sound capital management. ROE, excluding AOCI and unlocking, was at a record 50.7% compared to 36.1% a year ago. Our fourth quarter results are consistent with the record results we delivered for the full year.
Excluding unlocking, revenues were $13.8 billion, up 17%. Earnings rose 29% to $2.7 billion, with earnings per share up 35%, $22.75. We continue to execute our strategy, investing strongly in our higher multiple businesses, which now represent 80% of our 2021 adjusted operating earnings for the year, while continuing to generate strong returns from our high-quality retirement protection solutions business. Let's move to Advice & Wealth Management, where we continue to generate strong momentum and growth. It was a standout quarter. Clients were active, working closely with their advisors, benefiting from our comprehensive advice and solutions and the strategic investments we've made over many years. Engagement is high, and a large number of our clients are utilizing our extensive digital capabilities to track and achieve their goals.
This is leading to robust client activity, asset flows, and client acquisition. For the quarter, total client assets were up 17% to $858 billion. Client inflows were up 29% to a record $12.5 billion, driven by strong client acquisition and deepening client relationships. Wrap net inflows remained strong at $10.5 billion, up 17%, driving wrap assets under management to a record $465 billion. Client cash balances grew to $43.8 billion. Transactional activity grew for another quarter, up nearly 9% over last year, with good volume across a range of product solutions. Our advisors are highly engaged. The training, coaching, and full suite of tools we provide advisors is helping them build and deepen client relationships, attract prospects, and run and grow their practices on our fully integrated platform.
This is driving strong advisor productivity growth of 18% to nearly $800,000 per advisor. With regard to recruiting, we added another 86 highly productive advisors in the quarter. Helping advisors grow their practices is a top priority, along with continuing to recruit experienced, productive advisors. We recently surveyed hundreds of advisors who joined Ameriprise over the last few years. 90% said they had better client-facing technology, financial capabilities, and are better able to serve and acquire clients at Ameriprise than they did with their prior firms. That's terrific, and it's an example of why we feel so strongly about our value proposition and the ability to grow. The strength of our value proposition is also reflected in the recognition we're receiving.
That includes being named the number one most trusted wealth manager and clients consistently rating us 4.9 out of 5 in overall satisfaction. In fact, we're showcasing this strength in our latest national advertising campaign that we launched this week called Advice Worth Talking About. It's a distinct platform that conveys how we help clients feel so confident with their experience that they're referring Ameriprise to their friends and family. Turning to the bank, total assets grew to nearly $12.5 billion in the quarter, up from $8.1 billion a year ago, and we feel well-positioned as we transition to a rising rate environment. We continue to have strong demand from our lending solutions, especially our pledged loan products. As we move through 2022, there's clearly an opportunity as interest rates rise.
We would have a direct benefit in wealth management, where in addition to what we currently have at the bank, we have our cash sweep deposits and certificate businesses that would benefit. To wrap up AWM, our metrics and financials are excellent. Pre-tax income was $472 million, up 34%, and margin was strong at 22.3%, up 250 basis points, which compares very well in the industry. Now I'll turn to our asset management business, where we delivered a strong year. We stayed focused on meeting our clients' needs and drove the business forward while completing a significant and complementary acquisition that added $136 billion in acquired assets, significantly expanding our capabilities and reach. Total asset management assets under management increased 38% to $754 billion, also a new record.
As an active manager, we start with our research, which is excellent. It's foundational to our business as we focus on generating consistently strong investment performance for clients. That's across equity, fixed income, and asset allocation strategies. At year-end, well over 80% of our funds were above the median on an asset-weighted basis over 3-, 5-, and 10-year time periods. This is terrific performance. When we compare it to a broad group of U.S. peers we tracked, we performed at or near the top of the Lipper ratings for multiple time periods. Overall, we had net inflows of $27.5 billion. We're able to earn a significant level of flows from BMO's U.S. clients that elected to transfer their assets to us in both retail and institutional strategies. This is a great example of the value we can realize from our strategic relationship with them.
Global Retail net inflows were $13.6 billion, including reinvestment dividends, as well as strong flows from U.S. BMO clients. In terms of fixed income, our results were good and in line with the industry as we've made significant progress in increasing our market share. In equities, our flow rate declined a bit and is consistent with the industry average after outperforming in recent quarters. As you've seen, there has been more volatility given concerns about monetary policy and the pandemic. In EMEA Retail, we had inflows on the continent. In the U.K., market conditions remain challenging, and while we experienced some net outflows, flows continued to improve over the past two quarters. Looking ahead for Global Retail, as we navigate this period of heightened volatility, we have a strong lineup of high-performing strategies across equities, fixed income, and asset allocation.
13 of our U.S. investment strategies had over $1 billion in sales last year, and that's up from four just two years ago. We will continue to execute our successful strategies and reinforce relationships with advisors and our partner firms that have driven strong results over multiple years. Turning to Global Institutional, excluding legacy insurance partners, net inflows were $14.8 billion, driven strongly by U.S. BMO client transfers as well as mandate wins and top-ups from existing clients. In terms of our BMO EMEA acquisition, I feel good about how we're tracking and the teams we have in place. Executing the integration is a top priority, and I'm encouraged by our progress in these initial months together. We've seen that BMO is now in our numbers, and Walter will take you through that further.
To wrap up asset management, I feel good about the business, the progress we've made over recent years, and our priorities to drive long-term growth. Moving to retirement protection solutions. Our results were strong with strong sales in the quarter. Variable annuity sales were up 15%, driven by our structured product and traditional RAVA product without living benefits. In protection, sales were up 41%, driven by our VUL product, where sales nearly doubled as it is an appropriate product in this low-rate environment. As you know, we have been taking strategic actions within the annuity business, and that continued in the quarter as we further narrowed our variable annuity offerings. As part of our focus on products without living benefits, effective January 1, we discontinued three of our four living benefit riders. These three riders represented 98% of our living benefit sales for the past year.
By the end of the second quarter of 2022, we will have stopped all new sales of our one remaining rider, which represents a very, very small part of our business. On the insurance side, we're making similar moves in the product line, where we discontinued two products in our UL lineup. We've built differentiated retirement protection solution businesses over many years that deliver superior financial results, returns, and steady free cash flow consistent with our other business lines. Overall, Ameriprise delivered a record year, and we're positioned exceptionally well for 2022. Listen, across our business, we're driving terrific results. We ended the year with excellent organic growth, a strong balance sheet, and a significant excess capital position. Ameriprise continue to generate one of the highest ROEs in financial services, above 50%.
That's with our asset light and higher returning balance sheet businesses and while maintaining a strong excess capital position. To close, our team is focused on executing our successful strategy, delivering for our clients, and continuing to drive profitable growth. Now, Walter will review the numbers in more detail, and then we'll take your questions.
Thank you, Jim. Ameriprise delivered strong financial results across all our businesses. We reached new record levels of revenue, pre-tax adjusted operating earnings, and return on equity in the quarter and for the year. We delivered strong flows, earnings growth, and margin expansion in our core wealth and asset management businesses, with wealth and asset management now representing 81% of Ameriprise's earnings in the quarter. This compares favorably to 75% of total earnings a year ago. Our retirement and protection solution businesses continue to perform well as we further optimize our risk-return profile. We continue to generate robust free cash flow across all our businesses. Our balance sheet fundamentals are excellent, and we return nearly 90% of adjusted operating earnings to shareholders in the quarter and for the year, consistent with our target. We ended the year with a significant $2 billion in excess capital position.
Let's turn to slide six. We delivered on our profitable growth strategy in our core wealth and asset management businesses. In the quarter, our organic strategy was supplemented with the acquisition of BMO's EMEA asset management business, which added $136 billion of AUMA. In addition, we were able to add a net $15 billion of flows and AUM in the quarter, primarily from BMO's U.S. clients that elected to transfer additional retail and institutional assets to us. Overall, AUMA was up 29% to $1.4 trillion, and wealth and asset management client flows reached $40 billion. On a full year basis, our flows were up nearly 140%, representing the successful execution of our growth strategies in each of these businesses. Let's turn to slide seven, where you can see that we are delivering profitable organic growth.
Revenues and wealth and asset management grew 23% to $3.2 billion, with pre-tax operating earnings of $802 million, up 45%. This drove a blended margin of 28.3%, up 420 basis points from a year ago. Let's turn to the individual segment performance, beginning with wealth management on slide eight. Our strategy of providing best-in-class tools and technology to enable advisors to grow their practices has generated strong organic growth results. In the quarter, we generated record client flows of $12.5 billion, including $10.5 billion into our wrap program. Organic growth combined with strong markets led to client assets of $858 billion, up 17%.
Our advisor force continued to deliver exceptional productivity growth, with revenue per advisor reaching a new high of $796,000 in the quarter, up 20% from the prior year. Turning to slide nine, you can see that the results in the quarter are a continuation of our strong trends for the past two years. Flows increased, and we continue to see excellent transactional activity levels from a differentiated client engagement. Total client assets grew 33% to $858 billion over the past two years, with client flows more than doubling over the same period. Over the past two years, advisor productivity was up 28%. On page 10, you can see that our focus on profitable growth is showing up in excellent financial results in wealth management. In fact, revenue and earnings for wealth management reached record levels.
Adjusted operating net revenues grew 19% over $2.1 billion, fueled by robust client flows, an 8% increase in transactional activities supplemented by strong markets. Wealth management pretax adjusted operating earnings increased 34% to $472 million. Ameriprise Bank is a growth driver in wealth management. In total, the bank has $12.5 billion of assets after moving an additional $4 billion of sweep cash onto our balance sheet in 2021. Expenses remain well managed. G&A expenses increased 2% as higher activity-based expenses and performance-based compensation were largely offset by expense discipline. As we move into 2022, we will continue to manage expenses in light of the strong revenue environment and would expect proportional expense growth.
In the quarter, our pretax adjusted operating margin was 22.3%, an excellent result with an increase of 250 basis points from the prior year without a benefit from short interest rates. Let's turn to asset management on slide 11, where we continue to deliver excellent organic growth that was supplemented by the closing of the BMO acquisition in the quarter. Assets under management were up 38% to $754 billion, including $136 billion of assets acquired from BMO EMEA. Net flows were also strong at $27.5 billion in the quarter, up from $7 billion a year ago. Flows in this quarter included a net $15 billion of inflows in AUM related to BMO.
This included $16.9 billion of inflows in the U.S. from a decision by BMO U.S. clients to transfer retail and institutional assets to us, as well as $1.9 billion of outflows in EMEA, about 40% which was deal-related breakage. Margin in the quarter was quite strong, up 46%, up from just under 40% last year. On slide 12, you can see these strong results are a continuation of the trend over the past couple of years. Assets under management grew 53%, and underlying flows improved $35 billion, excluding BMO over this time period. The operating leverage in the asset management is significant, with margins from the trailing twelve months of 46%, up from 36% two years ago. Additionally, you saw in our press release that we made some enhancements to our AUM disclosure.
Specifically, we broadened our definition for alternative assets to better demonstrate our underlying business and the additional assets from BMO. Alternatives are an important part and growing part of our business, with about $40 billion of AUM across various strategies. Turning to page 13, you see that these organic growth trends are generating excellent financial performance in asset management. Adjusted operating revenues increased 33% to $1.1 billion. The acquisition of BMO's EMEA asset management business contributed about $60 million to our revenues for two months. Excluding BMO EMEA, underlying revenue growth remains very strong at 25%, reflecting the cumulative benefit of net inflows over the past year, market appreciation, and higher performance fees. The fee rate in the quarter was 54 basis points, which benefit from higher performance fees, partially offset by the negative impact of two months of BMO EMEA in our results.
Excluding the impact from performance fees and BMO, our fee rate was in line with our prior quarters at approximately 52 basis points. Expenses remain well managed and in line with expectations given the revenue growth. G&A expenses were up 12%, excluding BMO, as well-managed underlying expenses was elevated by performance fee compensation. Pretax adjusted operating earnings was $330 million, up $129 million from last year, including $22 million of higher performance fees and a $4 million pretax earnings contribution from BMO. This demonstrates the underlying strength of our asset management business. We delivered a 45.7% margin in the quarter, which included BMO EMEA for two months of the quarter. Excluding BMO EMEA, the margin in the quarter was 48.6%.
If BMO had been in our results for a full quarter, we expect our overall adjusted margin to decline by approximately 3-4 percentage points. With the BMO transaction closed in November and a couple of months with BMO under the Ameriprise umbrella, the business fundamentals and financial performance are in line with our expectations. This includes our expectations around accretion targets, synergies, and integration expenses. Let's turn to page 14. Retirement and protection solutions include blocks of business with a differentiated risk profile that generates substantial free cash flow. The business is performing well with pre-tax adjusted operating earnings of $183 million, up slightly from a year ago. As Jim said, we continue to focus on optimizing our risk profile and shifting our business mix to lower risk offerings.
We're accelerating that shift with our recent product announcements to exit VA Living Benefits, Universal Life with secondary guarantees, and our UL LTC combo product. These announcements caused an uptick in living benefit sales at the end of December, with a total of 67% of variable annuity sales without living benefits for the full quarter. Now value with living benefits represents only 61% of the overall book now, down another 240 basis points in the past year. In 2022, we would expect less than 1% of our new sales to include living benefit riders. We had a similar trend in protection with sales driven by higher margin VUL sales. This mix in sales and account values for both retirement and protection products are expected to continue. Now let's move to the balance sheet on slide 15.
Our balance sheet fundamentals remain excellent. We had holding company available liquidity of $2.4 billion and excess capital of $2 billion at the end of the quarter following the acquisition of BMO EMEA. Our diversified high quality double A-rated investment portfolio remains well-positioned, and our hedge program was 95% effective in 2021. These strong fundamentals allow us to deliver a consistent and differentiated level of capital return to shareholders. As I mentioned, we returned nearly 90% of earnings to shareholders in 2021, consistent with our target. Yesterday, we announced an additional $3 billion share repurchase authorization to be used through March 31, 2024, and feel good about our ability to continue to return capital to shareholders. With that, we'll take your questions.
Thank you. We will now begin the question and answer session. If you have a question, please press star then one on your touch-tone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. If using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star then one on your touch-tone phone. Our first question comes from Suneet Kamath from Jefferies.
Hi. Thanks. Good morning. Jim, I wanted to start on the U.S. retail flow picture. As we think about the past couple of years, you've had a pretty good run, sort of bucking industry trends in terms of inflows. Do you view what's happening in the fourth quarter here as a little bit of a bump in the road, where you get back on track, or is there anything that you need to do that's sort of more substantial?
I'm assuming that you're talking about the asset management U.S. flows.
That's correct.
Okay. Yeah. What we saw in the fourth quarter was that we had actually some good flows in our fixed income consistent with the industry. We're like right in there with the industry average, which we've been able to gain share, which is one of the things we wanna do, and we actually see stronger opportunity there as we move forward based on the funds and the performance of the funds and some of the categories that we know are in demand. I think that will be positive. In equities, there has been some rotation that occurred in the fourth quarter, value growth, et cetera, a little more volatility, a little sales slowed. I think you saw that in the industry. Our total sales were about industry average when we were above the previous few quarters.
We actually feel pretty good about the fund lineup, the performance of the lineup, which is very strong, and the number of funds that we're selling now versus what we did in the past. We had a little reduction in some sales as we soft closed our dividend income fund. We wanted to temporarily look at that as we got a lot of activity into it to digest it. We'll be reviewing that as we move forward, and that has been a good sales driver for us. I actually believe with the lineup and what we will do there and the continuation that equities will be in demand. I feel good about that as we move forward.
Okay, that makes sense. I guess one for Walter on expenses. I guess in the past when we've had these periods of market volatility, you sort of stepped up your cost savings. Just wondering if that's in play at this point. Relatedly, you know, we're hearing from other companies about expense pressure from inflation as well as people coming back to the office. Can you give us your thoughts on those impacts and your outlook for G&A overall?
Sure. Obviously, you know, with the markets dropping, you get a correlated reduction in expenses related to third party or compensation. That's gonna happen. As it relates to developing, we have strategies we have not certainly been implementing. We've had this event take place in 2019 through 2020. We wanna make sure we stay on track to get profitable growth and still invest in the business. We're gauging the situation. We feel comfortable as we navigate. We have, you know, our strategies to address it. You know, it's a leveraged business, but good about that. As it relates to inflation, we've looked at our expenses and certainly there is inflation in some of the wages, but it's totally manageable and it's been incorporated into our plan.
Do you have, like, an overall outlook for sort of G&A growth?
BMO growth we felt was going to be in, again, in the our targeted range, excluding BMO, of course, because that's add on from that standpoint. You know, we normally in, you know, mid- to low digits, you know. Again, at this stage, we feel comfortable from that standpoint, and we're just evaluating where the market's going. This year, and I'd also point out, we anticipate we could get a benefit coming from the Fed on interest rates, which would mitigate some of that.
Yeah, for sure. Okay. Thanks, guys.
You're welcome.
Our next question comes from Alex Blostein from Goldman Sachs.
Hi. Good morning. This is actually Brian Bedell on behalf of Alex. I was wondering, maybe if we could spend a second on the BMO flows for the quarter. The U.S. clients electing to transfer assets, and I think you said that was about $17 billion. Are there any more assets that you think could transfer? And then perhaps a second question. I think you said that there was some deal-related breakage on the EMEA part of the business. Is there anything else that you're expecting there?
On BMO, we do expect a few billion more, something along those lines. On the breakage, we started to see a bit of breakage in the fourth quarter, as we said. Probably of the $1.9 billion out from BMO, we can estimate is probably around 40%-50% or so. Now some of that was LDI, et cetera. We actually think that there will be. I mean, we always have to plan for a level of breakage. However, we saw that last year, clients stayed in pretty well. They really did like the acquisition that we did of the business and what we're doing in regards to putting it as part of our makeup.
We're not really in any way disrupting some of the investment areas, et cetera, that are important for that. We're trying to bring more capabilities to bear, greater technology, et cetera, et cetera, that would also be helpful. We will experience. I mean, it's an institutional business, so there may be up for review various things that they have to go through their processes. We have assumed a level of breakage, but we will be reporting on that as we go through. That's all in the assumptions that Walter mentioned, as we look at the business and what it will generate.
Got it. Completely fair. Okay. Maybe just one on the impact for higher rates, particularly the wealth management pre-tax income. Some of your peers have talked about sort of 100 basis points of sensitivity. Is there any color you can give us on how much pre-tax income we could be thinking about? Then also, sort of additional to that, how you're thinking about moving incremental cash to the balance sheet in 2022.
Walter, you can handle it.
Sure. Okay. 400 basis point increase, we will keep the majority of that but again, that's subject to doing competitor comparisons. That's been the normal trend line as it relates to that. You know, in that range, you should think about as we publish that we have basically off balance sheet right now. The most affected is LATES. That is been in the mid-20 range. We also have our service, which will be, we'll get benefits from it. That's the sort of map of it that we would get.
Got it. Okay. Thank you.
Our next question comes from Ryan Krueger from KBW.
Hi. Good morning. Can you talk about the expected timing of the BMO related expense synergies and also is $85 million that you had originally targeted still a good assumption going forward?
Okay. It's Walter. The answer is yes. The good assumption is still a good assumption, and you should assume in the range of about 25% should occur in 2022 and the balance beyond that, mostly in 2023.
Thanks. Then I know it's still early in the year, but given the increased volatility we've seen in the first few weeks of the year, can you give any perspective on what you've seen from retail client activity and to what extent it may have been affected by this?
So far for the first few weeks, retail activity has seemed to hold up pretty well. Again, this always depends on what our expectations going forward and what the disruption may be. You know, I think there is still the opportunity for clients to appropriately allocate in their portfolios to add funds when necessary, et cetera. We haven't seen a dramatic shift there. I would probably say again, it depends on what they might be putting money into that may have adjusted a bit. You know, this market pullback may be an opportunity for some people. It depends on whether the projection out will be more of a more disruptive volatility versus one that people feel comfortable with. So far so good.
Thank you.
Our next question comes from Erik Bass, from Autonomous Research.
Hi. Thank you. Can you talk about the decision to stop selling the guaranteed VA and SGUL policies? Does this materially change the amount of capital you're allocating to writing new business?
Also, does it signal any change in your view on retaining the in-force block? Should we think of the announcement as a potential precursor to a reinsurance deal similar to what you did with fixed annuities?
Okay, I'll handle part of that, and I'll have Walter handle the capital side of it. As we said, we will continue to fine-tune our book to where we think both the products that are appropriate for clients in this environment, but also appropriate for the company as far as the risk-return rewards and the economics overall. We have continued to shift from living guarantees back to our RAVA product that has no living guarantees in our structured product. Those were actually the RAVA product was the core part of the business before guarantees came into favor, and we feel that they are very appropriate for a certain segment of the clientele base, particularly in this environment.
Structures is a way for us to give people a little more of the steady state that they're looking for in the variable side of the business. We feel very good about that and the shift away. In fact, you saw our sales in total actually went up last year, rather than down as we started to shift. We don't feel an issue that we need to provide those guarantees, and there are other providers on a shelf who offer those guarantees. The same thing in the insurance side of the business. We have turned up the dial for our Variable Universal Life or our disability products as we get to focus a little more on the younger part of the population.
These are products that, again, were the core of our business a number of years ago, and that we're putting more emphasis on as we, actually, turn off the dial on some of the universal life-type products in this interest rate environment. We feel very good about that. They're good products for the clients, it's good for the company, good returns as well, and ones we think are appropriate for the environment, and it does help us de-risk any tail risk for the future. With that, I'll let Walter handle the capital, and I'll come back with the idea of how we're thinking about the books going forward.
Yeah. Thanks, Jim. On capital, yes, and obviously in this environment, a base environment, it will certainly reduce, but the real reduction will come as you're selling less of the benefits in stress situations. It does certainly modulate that from a stress capital situation a lot more, but so that we did stop the sales.
You know, overall for the books, again, what we tried to convey to you last quarter and some of the information we released, as well as some of the details we provided in the past, we actually have very good books of business. Our at-risk is very low compared to what you've seen in the industry for various books in the VA category as an example. This just continues to add to that differentiation per se, as we manage and maintain these books. Now, in the environment we're looking, there's been greater levels of activity. They've been mainly at the start, just like we did in our fixed annuity reinsurance, namely moving assets to the general account that people want in VAs.
They've been deeply discounted books or unique capital requirements that have been sold recently. Our books are very well managed, very low risk, very capital efficient, very strong cash flow generators. We are having conversations. We're reviewing as the market evolves, and there's more of an interest strategically in the quality of book that we have and what it will generate for the future for earnings and cash flow for a provider or even from a sales perspective. We will continue to monitor the market, have discussions where appropriate, and it might be if there's a strategic or a value creation opportunity, both economic and from a shareholder and appropriate for the buyer as well as for us and our clients. We're very open to entertain that.
I would say that we continue to have very differentiated books, very strong cash flow. Our at-risk is very low compared to anyone out there and could easily be managed even in a volatile environment based on our excess capital position or even the call that there might be possibly on the capital, which wouldn't be that significant. We feel really good about it.
Thank you. I appreciate all the details there. Then if I could ask one follow-up just on the asset management margins. Is this the right way to think about it, kind of a low- to mid-40% margin for the business ex BMO is kind of the baseline entering 2022, and then factoring in a kind of a 3-4 point drag from BMO initially, and that would get smaller over time as the expense synergies come through?
I think that's a pretty good way of looking at it.
Thank you.
Our next question comes from Brennan Hawken from UBS.
Good morning. Thanks for taking my question. I wanted to start with a follow-up on a lot of that great color that you just gave on where you are in the process of selling RiverSource. You know, you spoke to the differentiated risk profile and that becoming appreciated in the market. Like, I guess, is your experience so far that the bids you received, you spoke to receiving bids from financial buyers as well as strategics on the October call. Do those bids align with your view of the lower risk profile? Are they in line with your expectation?
When you consider and have dialogue with, you know, private equity or financial buyers, is there interest in the idea that there could be a distribution arrangement to allow for their products to be sold into your wealth distribution channel? Could that be an attractive component for that cohort? Thanks.
Let me start, I'll have Walter really respond. I don't know what you mentioned in October. We didn't really put the books out for bid or receive bids on them for the current things. You know, what we did was finalized and did the transaction for the fixed annuity in the summertime. What we are doing is exploring that, having those conversations, to see whether the type of books and the type of economic returns we generate would be of interest to various players out there. We are exploring that. More importantly, we look at that from all aspects as we've mentioned, both strategically, economically, and from a client perspective.
I do feel like if someone really is looking for a high quality, something that they can build upon, something they want to be in the business for longer term, there would be some good opportunity. This is probably one of the best books you'll ever find out there, probably one of the best type of clients if you want to continue to sell to them, for the type of products. I think as this market data crystallizes, there will be some good opportunities. We will look at it strategically to see if two and two equals five. That's the way we're proceeding. Walter, do you want to say anything on that?
Yeah. The only thing I would say is, as Jim has indicated, certainly people recognize the quality of the book and from that standpoint, it's been a given. And from a standpoint, yes, people do look at distribution side deals to some of them from that standpoint. It's a whole potpourri of variables that have gone into discussions.
Got it. Thanks for that. Then when we think about cash in the bank, that saw a nice increase and a bit of an acceleration from the prior pace this quarter. Clearly what we've seen in the rate market is an increase in the hawkishness and the outlook and the forward curve. With the acceleration in transfers of deposits over to the bank due to the improving environment, do you have an ability to accelerate the pace ahead of the $3 billion-$5 billion pace per annum that you've previously indicated? Where do reinvestment rates stand within the bank at this point?
Sure. We certainly have the ability, and we certainly have a plan to increase the amount of transfer from off-balance sheet to on-balance sheet, really. With the current environment and looking at this, and especially with the anticipated Fed increases, you can get high quality investments the way we do it and go into 100%. That's an opportunity. You also now have the situation because you'll measure it. Even though we have the capacity, we'll be getting lift coming in on the off-balance sheet. Yes, the answer is, we have capacity with picking up a yield curve, but now you also get the variable of having higher earnings coming from the off-balance sheet on the Fed funds side.
It's going to be an interesting evaluation point, but certainly, it is positive for us in all aspects.
Great. Thanks for the color.
Our next question comes from John Barnidge from Piper Sandler.
Thank you very much. I had a question on an advisor recruitment. It's really strong at 2% up year-over-year. Could you, one, talk about maybe average trailing revenue for new advisors versus existing? Then back to your comment about better financial technology being attractive, can you talk about what you have versus where they're coming?
From a production level, the quality of our recruits are pretty consistent now with the averages that we've given you. We have a mix of those advisors, but we also as part of that mix have million-dollar-plus producers. Teams are very large coming over. On average, across the entire recruitment spectrum, I would probably put it in the average of our production levels right now, which is good. I would also say that the survey we did of all the recruits we brought on board come from a combination of wirehouses and independents. It was very strong. There's a long detailed list of the questions asked about technology, capabilities, tools, thought on branding, marketing, client acquisition, deepening, all that stuff.
Very clearly it was 90% or so, in some areas, 90+% , 95% of how well we were able to both support them, give them capabilities to grow, the use of the technology, the technology itself, et cetera. We feel really good. It was from a wide range of people joining us from very good firms as well as independent firms.
Thank you for that. My follow-up question. In the deck it says activity-based expense likely to increase for, you know, from just more people going out, but you also call out expense discipline. Can you maybe talk a little bit about how certain prior expenses may not be returning at the same time that you do have activity-based increase? Thank you.
Yeah. We continued, and I'll let Walter get to the actual expense rate, but we continued even last year and the year before, et cetera, to invest strongly in the business. You know, with the technology, with the capabilities, with data analytics, et cetera, with robotics, with AI. We've been doing a number of things across the firm. We expanded our product set. We really feel good about what we've been doing. Yes, we have a level of investments that we will continue to do moving forward. You know, you have to always sort of keep up and evolve, enhance with the digital capabilities of cybersecurity, things like that. We feel very capable of managing that.
Maybe the level of investment we do this year might be a little less than we did last year, as an example, that will offset some of the expense that we do see from inflation or wages. You know, we think that we'll be very well able to manage that expense against the revenue growth that we have. We will modulate it. If we feel like the markets have come down a bit, if there's some compression that way, we will look to manage the expense base in a similar fashion. We're doing a lot now around, you know, what will the workforce continue to evolve to be? What's hybrid, what's not? What level of travel needs to come back versus not.
We know that working digitally and through video does help in various fashions and reduces some of the T&E activities and the travel. We also feel that is necessary face-to-face meetings and support and group activities. Some of that, yes, will come back in, but we think we'll be able to modulate it okay, and have a reasonable expense picture.
Thank you very much.
Our next question comes from Steven Chubak from Wolfe Research.
Hi, good morning. I wanted to start off just with a, you know, a follow-up related to the question or line of questioning around RiverSource. I know you guys have talked about the quality of the book. I was hoping you could speak to, with the improving rate backdrop, how that could impact or inform the perceived attractiveness of the asset, and is there any change in demand or interest from the sponsor community just given the improved rate backdrop, or how that's informing some of the conversations?
Yeah, it's Walter. Yes, the answer is yes. Certainly from the standpoint of long-term care and looking at basically our own book. That would certainly increase the attractiveness at that standpoint as people would have the opportunity to evaluate the base and then the potential of the base. Certainly it's a lot of people's thinking.
Okay. Just for my follow-up, I wanted to dig a little bit deeper into your equity market sensitivity. You provide that great disclosure, reflecting the impact of a 10% market correction. I know it's a relatively static analysis, but I was hoping you could speak to some of the natural hedges in the business that could mitigate some of those pressures, both in terms of increased retail engagement, something you alluded to a bit earlier, and more importantly, the increased allocation to cash as investors look to de-risk their portfolio.
Yeah. Obviously, listen, these are leveraged businesses. If you look at asset management, there is an equity box will have an increased impact. This year, I think because of what's causing it, the Fed and certainly the potential increase in interest rates, that will certainly give us a wind at our back on sweep accounts and on certs and certainly on yield curves. That is the other aspect that would be beneficial within it. That's the area that we see offsetting it. Of course, our ability to adjust some of our expenses as Jim has previously done. As far as, yes, people shifting into sweep or into cash and the Fed increases the rates, that will certainly be.
Great call, Walter. Thanks so much for taking my questions.
You're welcome. Thank you.
Our next question comes from Tom Gallagher from Evercore.
Good morning. Just a first question on the economics of the BMO U.S. assets, you know, almost $17 billion that you had transferred, and I guess you have $2 billion more you think might come in 1Q. Just wanna make sure I understand how the economics works here. I believe you get close to 30 basis points on the assets. How much of that fee are you sharing with BMO? And what is the alternative for these clients? Meaning like, why are they moving their money to Ameriprise at this point? Did the ownership of the U.S. asset management business change hands or a little bit of an explanation for what's going on behind the scenes there? Thanks.
What it is is really these are both retail and institutional accounts. The clients themselves have made that choice to move over to CTI. In the retail areas, there were some mutual funds adopted. The mutual fund boards made that decision as well. Clients had a choice. You know, there were other assets and activities that did not move over or that we didn't feel appropriate to move over. We feel for the ones that we had very good lineup, very good investment capabilities, as well as assuming some of theirs, that would be great for the clients and good for us. As far as the revenue type of arrangement, Walter, I'll let you handle that.
Yeah. Obviously, from that standpoint, you're right on the 30 basis points in that approximate range, and there is a revenue. But it's economically profitable for us and we feel comfortable with certainly taking care of that. But it's been really interesting. They certainly signed on to be with us. I think, as Jim said, capabilities that we provide.
That was mainly driven by an offset to nominal cost for what they had to do in their current business activities to wind that down, et cetera. We feel it was very appropriate for both of us, both parties.
Okay. Okay, thanks. Is the revenue share 50/50, or are you keeping the majority of the fee?
I think it's reasonable. It's certainly from our standpoint. I don't want to get into the terms, but it is certainly, I think, a good arm's-length transaction.
Okay. Just a follow-up on the whole process for, you know, I guess, what you're doing with the life and retirement business. Based on what I've heard you describe, it sounds like this is a pretty comprehensive process. By that, I'm just assuming it's probably going to take the full year of 2022 for this whole thing to play out. Is that fair from a timing and process standpoint?
First of all, we've listened to you as the analysts, investors, et cetera. I spoke to my board. We're doing a thorough analysis in regard to evaluating our business. What we love about the business and what we try to explain to you as the analysts and investors, that this is a very good business built over many decades, very solid books of business, very consistent books of business, mostly all to my clients, who actually take these as solutions against their planning activities for their retirement, et cetera. We are very comfortable with the books. We're very comfortable with the risk profile. We're very comfortable with the economic returns.
I mean, when you generate a 50% ROE and you have this balance sheet business and a strong excess capital, you can see how those returns are quite good and don't negatively impact the business. With that, the free cash flow we use to buy back stock, which helps us just like to generate the free cash flow from the other asset light businesses that go along with that. It's not a where some others had to get rid of this business. They needed capital. They had a long tail risk that they needed to get out of, to invest in their other businesses. That's not our issue. What we're looking at is to say, this is what we have. If that can add and someone can do better with it, we manage, you know, we invested short.
If they can have other opportunities with their capital structure, with their investment structure, that's appropriate. If in a certain sense that they're interested in growing the business or want those capabilities or that this would add a quality dimension to what they're doing and the values there, we're very open to explore that. In things like long-term care even, you know, we haven't invested out in that book. There's a lot of opportunities for someone coming in to do something like that if they want to, or the types of investments they could make. So that's what we're exploring. Yes, it will take probably a while, but, you know, I think the market is continuing to evolve. There's a lot of money out there, and there's some strategic players that might be interested. So we're having conversations.
We're very open to that dialogue, and we'll explore it. If something is there, we will proceed. If it's not, we feel very comfortable maintaining the books.
That's very helpful, Jim. Just one final follow-up, if I could. I guess the perception in the market that I hear right now is that lower quality variable annuity books have generally gotten pretty good bids, like better prices than most investors were expecting. We have not yet tested the market with higher quality books. Yours would certainly fit that bill. It's much better quality, I think, on most measures than a lot of the other ones out there. And so the concern is that there may not be the same level of attractiveness of bids on the higher quality books, but I guess you'll be the test case of that.
Do you have any sense for whether at least even very initial price discussions you've had would appreciate the quality of your book and give you know, we'll say, proper value for that? Or is it just too early to tell?
You're 100% right in your sort of look at the idea of what's been sold out there or what's been done so far. We would definitely be on the quality end of the annuity spectrum. Now, having said that, what I would say is, I think there is an interest as people think about long-term flows and where they want to put money to work over many years and having that quality as well. It's a little different. It's not deep in the money discounted. It's not just the general account, there's variable accounts, et cetera. I actually believe that as people start to evolve their thinking or corporate or strategic players have more of an appetite, again, I do believe there might be some good opportunities that could be a win-win.
Yeah, I think those things are forming. That's why we're having conversations as the marketplace evolves and as people get a better understanding of how to differentiate. That's what I would say, but that's a positive, that's not a negative. As I said, I think you're looking at our returns, our cash flow, et cetera, that's more of we will make the right decision for shareholders. If that comes along tomorrow or the next day, we'll see. I feel good about it.
Great. Thanks a lot.
Our next question comes from Andrew Kligerman from Credit Suisse.
Hey, thank you. Glad I made it in. Question around advice and wealth management where wrap net flows were another record $10.5 billion, four quarters in a row above $9 billion, and yet just two years ago, before the pandemic, I think most investors would have been happy seeing somewhere in the $4-$5 billion range. The question is, what's kind of changed here? Is this the new normal?
Andrew, as we would probably say, we do feel like we are and have been able to generate more flows through our client base and our advisor. Our advisor productivity has picked up. Our capabilities are we feel very good and very strong. Even as I've mentioned, for advisors that we recruit in, we've enabled them to really get more clients appropriately, move up market, actually to deepen those relationships quite well, with the technology and the capabilities and the relationship management, tools we've been giving them. We're actually adding to that as we go forward, with the use of AI and capabilities of looking at further opportunities, segments of their book that they can even focus on even more appropriately.
We feel good that we have been helping them pick up a level of that activity, and that has translated to the flows that you're seeing. Our client acquisition was up strongly this year, including in the segment that we really wanted to grow, which is the $500,000-$5 million category. We're starting to work on moving even further upmarket to higher net worth. We're also focused on some of the younger generation as we bring in through the remote and digital capabilities that we've been investing in. We're also, as we develop the product solutions or integrated wrap programs and how they can move money and do it across multiple types of their portfolios, for a client and how we're looking at that.
We're developing a new retirement solution for the long term for them to optimize returns for the clients and longevity income. I feel really good about what we've been able to do is help advisors grow and the flow picture that will result in. Of course, as I said last year, markets always help a little bit when there's a positive environment, so that's part of the base. I can't tell you regarding volatility and other things whether that will slow down a little bit, but I think the base of activity is much stronger than it was two years ago and three years ago because of what we've been doing.
Got it. I think that helps somewhat with my second question. You know, I looked at your advisor count. I was just checking my model, and I looked in 2016, and advisor count was down one, and then 2017 it was up two, it was flat in 2018, down one in 2019, up one in 2020, and then this year it's up 2%. In a business, Jim, that you know, advisors in general appear to be in secular decline, do you think you could kind of at least grow, continue to grow in the low single digits or is it gonna be very tough? The answer to the prior question was great, and you mentioned that 90% that were very happy with the technology. What about the other 10%?
Why were they not that happy?
Well, it wasn't that they weren't that happy. What we had asked them is across all these dimensions. That's why I said there were a number of things that were above the 90%. And above all the things we asked them, whether we gave them and the capabilities, the support, the brand, et cetera, help them grow better, work with clients better, help them, you know, get better client satisfaction, all those things, grow their businesses. That's like an unbelievable. That's nine times out of ten. Now, there might be certain things in certain firms for certain of those activities might have been good or the technology for that capability might have been good. Or, you know, or a solution set that they provided.
It's not like we're gonna be best in everything, but when you get nine out of ten across a whole bunch of dimensions.
Got it.
I would say we were very pleased. I think that you'll find, I don't know if you'll find that with other firms recruiting people in. I, you know, I'll be interested. What I would tell you is, you know, as we look at the business, we do feel good about our ability to continue that, along those lines. Now, as far as the number of people, there are people out there that have been buying up networks and rolling in advisors, and it doesn't matter what their productivity levels, it doesn't matter how they wanna do business, et cetera. We don't really wanna play that game.
We feel if we can bring in good quality people, if we could help them grow their productivity, and if I can grow the productivity across 10,000 advisors, and I can replenish that and grow it 1%-3%, I'll do really well, and I'll continue to give a very strong client value proposition. My client satisfaction is 4.9 out of 5. I mean, that to me makes it a branded value proposition is adding value to clients, adding productivity to advisors, and I got a really good branded company that I think is valued more than you know, just an independent or someone on a process or a network and giving them technology support. That's really what we focused on.
Very helpful. Thanks.
This is all the time we have for questions. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating.