Let's get started. I'm Craig Siegenthaler from Bank of America, and it's my pleasure to introduce Jim Cracchiolo. Jim has been the Chairman and CEO of Ameriprise since September 2005, when the company went public via tax-free spin-out out of American Express. He first joined American Express in 1982 before holding several senior executive roles from 1998 until 2005. Jim, on behalf of all of us at Bank of America, thank you for joining us. For those of you who are new to Ameriprise, it's a large cap financial services firm that operates three scaled businesses. Wealth management, which is about half the profits. Asset management, its second largest business. Asset and wealth management sum to about 80% of business today. The insurance business, which it has been limiting intentionally, growth. Let's start with business mix shift, Jim. Can you walk us through your business mix shift strategy and how it drives growth across different market cycles?
As Craig just mentioned, we started really as a manufacturer many years ago, the old IDS company. Over the years, we really created more of a distribution type firm in the wealth management. When I took over, we actually had losses in the wealth management as a profit cost center to the manufacturing side, asset management and the insurance business. Now our largest growth engine is the wealth management business. It's over 55% of the total of what the segment generates alone. It generates over 85% of the revenue of the company based on other revenue we get from the manufacturing side of the company. In that regard, we have made a dramatic shift. In the wealth management, we're one of the largest networks out there, over 10,000 advisors. Our core differentiation is advice and financial planning.
With that, we try to look at holistically how we actually manage the clients' assets and handle all of their financial lifestyle needs. From that, we then manufacture as well. The only products that we sell through third parties today globally is Columbia Threadneedle in the asset management space. The RiverSource or what we call the Retirement Protection Services are just solutions that we built books over many, many years, decades for our clients. The future of the company will continue to be the tremendous growth in the wealth management side, complemented by asset management. The RiverSource or the protection products will be a smaller and smaller part of the total. With that, we feel like the combination of businesses pays a lot of dividends going through market cycles.
Since we've been public, we actually, if you measure our financial shareholder return, our shareholder return across the S&P 500 was number one since we spun off in 2005. With that, we have generated consistency in our growth of earnings and earnings per share with less volatility, higher growth, less volatility in the segments that we play with because of the combination of businesses that we have and the depth of relationship we have with the clients. That's really the focus of the company to continue that. Of course, we would like to continue to grow the global asset manager as a complement to that. That will be a complement rather than we're looking to that to be the only growth driver of the company.
Jim, what strategic priorities are you focused on this year, 2023?
We're gonna continue really our focus on the wealth management. We have continued to drive great productivity in that channel. Last year, we had record inflows of clients over $42 billion. We actually have very high productivity, both from the advisor, but also from the idea of how we look at the financial life of the client that we can generate multiple revenue streams. As a perfect example, we went back into the banking business just two years ago. We're going on three years, and now the bank is paying very large dividends. We grew the bank to over $19 billion just over the last two years. That's been a nice now complement to great gain spread in this interest rate environment to complement the other activities in the wealth management space.
Moving on to the recruiting front, how does your value proposition resonate with advisors today, and why are you seeing them come to Ameriprise, and what distinguishes Ameriprise from your competitors?
What I would say there is first of all, we're very targeted in who we wanna bring on board. We want advisors that join us to have a good value proposition that can really gain from what they can do here at Ameriprise. They have more of a financial advice proposition, and we can bring more of the capabilities to bear to help them build that practice. With that, we look for good client focus and good client satisfaction and an advisor to operate in a very appropriate fashion.
Once they do that, the complement of what we provide them, both from a leadership, a training support, tools and capabilities, our integrated state-of-the-art technology, our digital websites and capabilities for social media, those advisors who've joined us, they actually, through research, we go back to them in a blind study. They don't know it's us coming to them. They actually have said that nine out of 10 of them say across the board, Ameriprise is a better, stronger value proposition than what the firm they left. If you look at it on things like technology, it's almost 10 out of 10. When you think about that holistically for a new advisor joining you, onboarding and moving their practice, and then to get rated that way, it really goes to our value proposition. One of those is actually how the company is perceived by the clientele. We get rated either number one or two in trust as serving clients with their best interest. That has been consistent over a good number of years, and that also adds to their own brand value.
Great. Let's move on to your current client cash and interest rate opportunity. Can you talk about your overall cash strategy, how it fits into your overall product offering, with clients, and how this strategy is allowing you to benefit from higher interest rates?
Yeah. As we all know, clients keep a certain level of cash. You might keep a certain level in your own brokerage account, you might keep it in your own bank account for savings and checking. That has always been the case. There's a certain level of cash maintained. In addition to that, you're in a market cycle that people have moved a bit more out of the market or have not invested as much in the fixed income space. Cash levels have increased a bit. In our firm, we offer a wide selection of products for cash. Some that we have on balance sheet, some off balance sheet, some through other providers that with money markets as well as brokered CDs.
Over the years, cash has grown, particularly the last two years, and we have already had a level of sorting there. For the cash that stays with us, it's gone into two areas. One is into our sweep, and then we do that both off balance sheet, but also now in the bank. The other has been in our certificate business. It's almost like you would consider a brokered CD. We have a Certificate Company. It's actually the oldest Certificate Company, only one left in the United States. We grew that. It's about $10 billion now, and there's about $19 billion in the bank.
What we're going to do this year is we're gonna put a wide range of deposit gathering products in the bank, from a savings to a preferred account to even, other CDs and types of products that we think we can garner more cash that our clients may be holding out of the banking institutions. Also, if they want to go out on the positional cash curve, that we'll have more product offerings for them to utilize rather than take it off balance sheet into a brokered CD.
Sticking with product offerings, do you have any additional plans to grow the bank and particularly around your lending and kind of core banking products?
The answer is yes. One of the products we launched two and a half years ago is our pledge loan business. You might be familiar at the warehouses. That's a big business for them in complement to the margin business. We launched that business. It's growing nicely. We see a large opportunity for that to continue to grow. We tested out and we used to do mortgages and home equity loans before we debanked. We're gonna bring that back on the balance sheet, and so that will be launched later this year. We'll come up with some other lending products, lines of credits, and other things that we can both do for advisors as well as for their clients.
Got it. On the product offering side, just one more here. Where do you see opportunities to expand your distribution and product offerings outside of the bank? Because we just focused on the bank for the last two questions.
Yeah. If you're looking at product offerings to our wealth management, we have now a much larger selection overall of alternative type products, private credit, private equity, hedge funds or other alternatives, non-traded REITs, et cetera, et cetera. We're building out that, and we're actually putting it into a technology platform that will make it very easy for our advisors to both open those type of accounts and manage those accounts. With that, very clearly it's part of our strategy as we move further up market. Our sweet spot has been the 500 to the $5 million category, we will be this year really putting a bit of focus on the higher network segment that we will add to the base.
The tech platform that's linking all to your clients, is that built internally or is that something using externally?
No, it's actually the front end of that is coming internal, and then we're hooking into the various systems from the providers.
Okay. Let's move on to your capital return priorities. What is your capital return strategy today? How should we think about how much stock Ameriprise plans to buy back each year, especially in light of growth of the bank and the Certificate Company which is consuming capital?
I think if you follow this, over the years that we've been public, we have a consistent buyback dividend policy that we've deployed. Over the, you know, 17 years or so that we've been public, we have been one of the highest returners out there. That continues to be part of our philosophy. We have an ongoing perspective that we will increase our dividend nicely every year, which we have. In addition to that, buyback has always been a nice complement. The reason for that is we as a firm have generated a very good free cash flow. Some of it we freed up from as we reduce our footprint in the insurance and protection business.
Some of it has been based on growth and efficiency of our earnings and how we've actually done that across our asset light businesses. With that, we've been out always in the neighborhood of anywhere from 80 to 110, 20% return on capital. What we see going forward right now based on a combination of the environment, the mix of businesses, the growth of the bank and Certificate Company, we probably have targeted, and we've been targeting around 90%. Right now we're between the 80 and 90 on how we're thinking about the world. That still gives us good flexibility, on the capital side if we wanted to acquire. We have good ability to leverage the debt market if we needed to, and at the same time return very nicely in this environment to shareholders.
You mentioned acquisitions in there, which could move things around a little bit, but how should we think about your M&A objectives and, you know, how likely is it that you would buy something over the next few years? If you did, you know, what would you be looking to buy?
We are just right now sort of digesting our acquisition in Europe, which was the BMO European Asset Management Company. We are now in the full scale integration of that activity. Right now that's what we're working on internationally. Domestically, we haven't acquired in a while, and we feel like we have a good makeup. I don't see anything right today that we're out there looking to acquire. Opportunities come along depending on market conditions, and if they came along that for something that would nice ideally fit, we would have an interest. Having said that, we have enough scale globally.
BMO actually added some great capabilities to us on the institutional space, and some of the alternative space that we're focused on growing and bringing and carrying some of those capabilities here to the United States and more integrating our ability to offer to their client base. We feel good about where we're focused right now in this environment. Again, we have flexibility. Sometimes opportunities arise, sometimes they're not. We're not necessarily out looking to acquire per se, but there may be some other types of things that come along that fit complementary that we would be interested in.
Jim, there's all these small cap banks, community banks out there, you know, they have some advisors that work for them. They're running pretty inefficiently. You have an effort where you can kind of come in, take over that business and sort of white label inside the firm. Smaller effort for you guys, but picking up some momentum. Can you update us on that business?
We bought a smaller firm a number of years ago, and what we wanted to do is put that capability on our platform, leveraging our technology, our financial planning activities, how advisors operate, digital capabilities or websites, et cetera. We're now at a time and a frame that we're now bringing banks on board, and we're starting to bring in even larger institutions onto that platform. We feel good about that as being another opportunity for us to both add advisors as well as to partner with local community banks, and help them with their wealth management business.
Jim, thank you for that. Last question here, then we can take some questions from the audience. I wanted to get an update on the reinvestment opportunity. You know, as assets are repricing, especially, in the wealth management business, you know, rates are much higher than they were a couple of years ago. How should we think about that trajectory and increasing the profitability of your client cash?
What I would say is if you look at us today, we're able to continue to move our sweep activities to the bank. We're not at where some other institutions that have their banking business at that level. We're probably around more like 50% or so we could easily get that to 60% and 70% or more. We also know that part of the portfolio we invested in one year or two or three years ago is rolling off, and so we can then reinvest that at much higher spreads based on where the interest rate market is today. In addition to that, as I said, I feel like there is an opportunity to grow the deposit base over time, in which case that could add to the amount that we have in the institution.
I feel good about where we are from a cash perspective, and what that spread business will be as a complement. As you remember, our margins were over 20% with zero interest rates. And we didn't really have the bank at that time rattling just the sweep. To me, we have an opportunity to continue to drive productivity and ensure that we have strong margins, where margins today are probably one of the best out there.
Great. At this, time, let's take a moment and see if there's any questions in the audience. Please raise your hand, and we will get you a mic. We have one up here in the front.
From all your different advisor channels, where are you seeing the most strength with the current market backdrop, and where are you guys kind of focusing on with recruitment efforts?
We have been attracting advisors both to our employee and our franchisee channel. We're attracting advisors from a combination of it could be the wires, it could be, other regionals, as well as independents. We're actually bringing back people from the independent space and RIAs because they want our value proposition and the support. We feel good about that, and there's a nice complement going into both channels. We also see, as you mentioned, the opportunity to bring in advisors from the banking channel and community banks, to put them on our platform and work with those banks. We also have a bit of a direct channel. We call it our centralized sites that we're building out that we think we can go to market with those as well as a complement to our local advisor branches. It's a combination of where we're seeing it. We also do bring in new recruits that we train and help build, both for their own books as well as complement to teams as assistant advisors.
Great. One last chance. Raise your hand, please, if you have a question. With that, I think we're out of questions. Jim, just on behalf of everyone here at Bank of America and Merrill Lynch, just want to thank you for your time. Thank you for coming.
Thank you.