Welcome to the Ameriprise Financial Investor Day conference call. My name is John, I will be your operator for today's call. At this time, all participants are in listen only mode. Please note that this conference is being recorded.
Ladies and gentlemen, please welcome Senior Vice President, Investor Relations for Ameriprise, Alicia Charity.
Morning, everyone, welcome to Ameriprise Financial's Investor Day. Before we get started, a couple of housekeeping items. There is a card on your table with information about the wireless. There is no password, so hopefully you shouldn't have any problems logging on. You will also find an agenda for today's meeting on the table. As you can see, we are going to be doing two Q&A sessions, so we ask that you refrain your questions until those portions of the program. Finally, if you would like a version of the presentation, it is on our website. Additionally, you will hear reference to various non-GAAP financial measures today, which we believe provide insights into our business and to the company's operations. Reconciliations of our non-GAAP numbers to their respective GAAP numbers can be found in today's materials.
Some statements that we make 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 and involve risks and uncertainties. A list of some factors and risks that could cause actual results to be materially different can be found in our SEC filings, such as our recent third quarter earnings release and our 2018 annual report to shareholders. We make no obligation to update publicly or revise these forward-looking statements. Finally, when you hear reference to certain 2019 financial metrics, we are referring to a trailing 12-month figure as of the third quarter. With that, I will turn it over to Jim.
Morning. How's everyone today? Beautiful day out, we're going to hopefully move along. We have a great agenda for you today. Very clearly, what we wanted to try to do, it's been five years since our last financial community meeting. We want to welcome you back to Ameriprise so that we can talk about who we are and what we've been doing. I know we speak a lot on the quarterly calls, we want to update on what our strategy is and how we're building on the foundation that we put in place to move forward. It has been five years. We wanted to update you of how we've been investing and how we've been building the business and the type of results that we're able to achieve so that we can carry that forward.
Today, in this agenda, you see that we're going to cover the AWM business, the asset management, the IA business, but most important, how they all work together as part of a diversified and differentiated financial services leader in the space that we're in. We have a record of outperformance since we became public, we can talk to that. We also are very well-positioned for future growth. We want to show you some of the things that we've been working on and what that could mean to our future to continue this track record and the story that we have in place today. As you think about it, what we're going to cover today, keep these thoughts in mind. There's a large and growing need for advice and solutions that serve clients' needs for the long term, particularly around retirement.
There's compelling and highly differentiated value propositions we have, in particular, how we lead and go to market with advice and develop very long-lasting relationships with our clients. We supply a level of solutions appropriate to deliver against it. When we put the combination of what we do together, led with our Advice & Wealth Management proposition, this is a very attractive capital-light model generating very strong, sustainable profitability, and significant free cash flow that we return to shareholders. We do have a proven record of performance since we became public. We've shown that over many years, we believe that we can continue on that journey.
When I think about Ameriprise, and as I work with my team, we do believe in what we're doing as Ameriprise at large, not just segment or the business or the product line that my people work with. As an executive leadership, we know that the Advice & Wealth Management business, it's a real go-to-market strategy for us. It's the front end of the business. It represents a significant part of the revenue that we ultimately achieve. Because of the way we go to market, that value proposition that we put in the marketplace causes very deep, long-lasting relationships. That's why our RiverSource products, we only really offer a solution set to complement what we do against retirement goals. You'll see why we have a differentiated formula there with differentiated returns and much lower risk than anyone that we get compared to in the industry.
For Columbia Threadneedle, remember, we were an asset manager as part of who we were as Ameriprise in our history, the IDS Mutual Funds. As we moved to open architecture, we wanted to take that capability, which is still a very important capability that we utilize at Ameriprise to really expand and diversify. Now we're a global asset manager, and we generate very good returns, and we feel that there is a good opportunity for us to further grow. You would say, "Well, I'm not sure what that all means, Jim. Your three segments, three different businesses." Let me tell you why it's actually one business and what we do generate. When you think about it, we have almost $1 trillion of assets under management and administration. We more than doubled our EPS since 2012. Our free cash flow is over 90%.
In fact, in many cases, over near 100% or more. We returned since 2012 over $15 billion to shareholders. Market cap at that time was much less than $15 billion. Very clearly, even today, we still generate that level of cash, and we still have a strong excess capital position to take advantage of opportunities in the marketplace or continue to return. When I think about the company and where I'm proud of the company, it's not just on the financial performance. It's really regarding what we do for clients, that client satisfaction and the advisor satisfaction that we have, the retention of our clients, the retention of their assets, the retention of our advisors, and how we help them develop over their careers. That, to me, truly differentiates Ameriprise. With that, what helps lead that? What causes it? It's really having the right employees.
It's people that really believe in our mission. They really have strong values. They're really talented, and they're engaged. We have some of the best engagement scores in the financial services industry since we've been public. In fact, our scores outdistance financial services at large, and we're with the best companies across any industry in the U.S., the best companies in engagement. What does engagement mean? It means our employees believe in the company, the focus on the client. They believe that they're getting strong and effective leadership, that they're clear on the direction that we're moving in. They have high integrity, and the company has high integrity. Those are the attributes that go into the employee engagement that we really review. I have an experienced leadership. If you look at the center of this room, this is my executive leadership team.
A few of them will be speaking to you today, they're a highly talented, highly experienced group that are really driven to perform for the good of the client, the good of the company, and the good of the employee. We have excellent governance and compliance. In a highly regulated world that we live in, Ameriprise always looks for its long-term existence. We don't look to take shortcuts. We don't look to actually just get product or service or distribution in the marketplace. We look to deliver it for the long term and do it in the right way. We invest heavily to keep a strong compliance structure, good governance structure, and ensure that we're meeting all regulations around the world. What does that really reflect in?
One of the values we have as a company is giving back to the communities in which we live and work. We've supported over 7,000 nonprofits this last year. Tens of thousands of hours of volunteerism that we support for our employees. It's very important to us in how we think about Ameriprise. Last but not least, we've created trusted brands. The Ameriprise brand in the marketplace stands for something. That's critical. We're not just a network, we're not just associate people. We develop strong retail client relationships. The last I remember in looking at it, maybe it's because I come from a company like American Express, is brands do matter, and they help sustain value over time. That's very important to how we think about Ameriprise. Remember, this is a 125-year-old company. How do I think about the business moving forward?
It's based on the foundation we developed. When I look at that foundation, it's all about the way we go to market and who we are, which is our Advice & Wealth Management business, which I think is positioned well for future growth. We are that leader in advice, and we're going to talk to you about how we continue to move that forward. When we talk about advice, we're not just talking about doing an asset allocation. We talk about real advice for the consumer against their goals and needs, against their lifestyle, and the needs that happen during their life. Very critically, that's why we invest in those relationships and the brand.
Even advisors, as we bring in advisors in or we develop advisors or we help them build books of business, it's not just to associate people and put them on a network and give them tech and tools. It's about delivering that client experience that you'll hear about. That's why our value propositions are strong, and that's why you'll see in a moment how high our satisfaction is. This is also, in a rarity, a network of 10,000 advisors about a branded value proposition serving consumers for the long term. Clients have stayed with us for decades. It's generational. There's no company out there in the banking world, in the financial services world that wouldn't want a business like this. Let me tell you, it's a rarity to have this with the size of network we have that's truly built around the client.
With that, we have about $600 billion of assets that we manage or administer. Almost $300 billion of that is assets under management in-house. Okay? That's very important. We get fees from that. With that, our average productivity our advisors is of $650,000. Very critically with that productivity growth has continued to be at the high end of anybody in the industry. The type of revenue we generate, there's always a question on that. 90% is fee-based. That leads to the client satisfaction. When I talk to my advisors, this is who I and why I'm proud of them and what we do as a company. We got rated number one in trust in the industry, multiple years. Number one in forgiveness. What does that mean, forgiveness? It means if we made a mistake, our clients would forgive us.
In this day and age in financial services, financial service companies are held in lower esteem than the Congress. Number 1 in customer loyalty. They'll stay with us a long time. Customer service, a top performer in ratings of unbiased, serving them in unbiased interest. This is from our clients, 4.9 out of 5, and they're able to rate us every day, rate us with high satisfaction. If you look at any business, any industry, you tell me who would not want these ratings and the value of what that creates. I know over the years, our insurance and annuity business one time says, "Well, there's too much risk.
Look at the industry, look at these other companies, look at how they got in trouble, look at the type of portfolios they put together." We're going to explain again to you why we are differentiated. Very critically, all of our products today, we got out of outside third-party distribution. We sold off our auto and home business. What's left, we reinsured our outside distribution of fixed- indexed annuities. What we have left here is only products that are sold and maintained and managed on behalf of our clients. These books weren't built in what I would call the time when people got aggressive with benefits and crediting rates and features that caused the exposure. They're built over decades. We position this book based on serving planning clients as part of a solution for retirement.
We're going to talk to you about that risk profile. More important, why this is not a detriment, but a value to us based on the cash flow it generates every year, consistently. Even if you said there was some kind of exposure, 1 year of free cash flow would handle anything possible you can find in the book. We don't think it's there. Now with that, we're a number 6 writer in VUL. These are asset accumulation vehicles. We manage the assets. We get fees from the management of the assets. The same thing with our variable annuity. We've just been rated number 1 in J.D. Power for satisfaction. Excellent credit ratings, strong returns, and over $100 billion of assets under management. Here again, think about our asset management business, what we created. We were a proprietary shop.
Now we're a global manager, over half a trillion dollars almost of assets, diversified assets, high performing, 107 four- and 5-star funds. A top 15 provider in the U.S., top 10 in the U.K. Very critically, very competitive margins. We'll show you over time, yes, we've been in outflows, no different than the industry, including with ex-parent activities. The fees we generated, what we've invested in, what we created as a global platform and capabilities gives us a good foundation, good free cash flow. Very important, we're 1 of the few in the industry that has proven we can actually do acquisitions, integrate them, and get a great return. Not that we're out there saying that's what we're going to do, but if an opportunity arises, we're ready and able and can do it appropriately.
Whether we do it 100% ourselves or jointly with someone, my only point is we have a great capability here, but a great foundation which we're investing to build, and we're going to talk to you about what that looks like. Why do I say we're an integrated, diversified firm? This slide tries to give you a little perspective. In the middle, 50% as a segment of our profitability comes from Advice & Wealth Management. Roughly a quarter each in asset management and the INA. If you look at the blue, dark blue circle around it, 85% of what's created through the solutions, the revenue, the distribution, and the manufacturing profits truly come from our wealth management business, from our network of advisor-client relationships. Instead of that being a negative, it's a real positive. I have the cost of those relationships.
I have the servicing of those relationships. I have the acquisition of bringing them in. Maintaining them. Not only do I get distribution revenue, but I get manufacturing revenue. Why is that different than any other company that you look at? A wire house is investment banking, principal trading, banking activities. Discounters have a large part of their activities now is coming from banking, balance sheet business. Some have commercial lending that we still consider as part of what I would call a wealth manager. We have packaged product, asset management product. Even our INA is more assets under management with assets in it that we get revenue and fees from. My only point is, the reason we have a good, successful business is the depth of our relationship. Some product we manufacture, a lot we network to outside parties.
If we don't want to participate in INA, we give it to third parties. Asset management's open architecture. They have every product they want. We also have good products and a great foundation and great relationships that sustains good, strong revenue. That's why Ameriprise works. There is no large bank financial institution that wouldn't want to own a company like this for that value. We capture those assets over time. Those assets persist. They generate large fee revenue. What does that mean? 18% EPS compounded annual growth since 2012. We wanted to give you a horizon, and to show you when we last spoke how we really delivered against what we said. There was a lot of questions. Could we deliver? Could we continue to grow? Could we get that type of return? 90-plus % free cash flow, and ROE at 38%.
You're not going to find that. Why do we put ROE there? Why is it still important? Because look at the type of businesses we have. It's not because we have an intense balance sheet. You can't do this. No insurer can generate this type of return. Even your discounters out there have ROEs of 20% based on the size of their banking businesses, or less. Remember one thing, including with discounting what I would call networks out there, we include all acquisition costs here. All depreciation, all amortization, all interest expense. This is true profitability. That caused us and helps us to return over $15 billion since just 2012, and much more since we became public. We talked to you back in 2012, 2014 about what we can deliver in growth. I want you to look at the slide on your left.
You can see that at that time in 2012, 49% of our business was INA, and 23% of our business was Advice & Wealth Management. Today, 51% of our business is Advice & Wealth Management, 27% is INA, and 22% is asset management. That's 73%, that is truly what you would consider asset light, but I will show you how INA is not asset intensive. Besides that, not only did we change the mix, but we grew by over $1 billion. What did that lead to? If you were an investor since we became public, through the ups and downs, the financial crisis. Remember, we came out one of the strongest and went in with no government support. You have the fourth-best performing stock in the S&P Financial. Not the insurance industry, not the asset management, the S&P.
Far outdistancing the S&P, or S&P Financials of 58%-449%. That's what our integrated business model, because we focus on long-term relationships. We focus on investing not for the next quarter, next year to get exorbitant growth. We could buy networks out there. I sold one of the largest independents because we weren't creating deep, long-lasting client relationships. We were just associating advisors. For me, having a high-performing fund is having strong relationships that last, delivering quality product and service to the marketplace, supporting a brand, and building equity over years. I want to maintain the legacy, not denigrate it. With that, the next question and the right question is, can you continue it? Where do you see opportunities for growth? I start with my wealth management business. We are the advice leader out there. We have deep relationships.
Based on what the consumer wants and need, the growth in the consumer segments that we're targeting, and what we deliver, there is unbelievable opportunity for us. We'll show you that. Second, we have transformed into a global manager, we know this is a very competitive marketplace. We know we have to continue to fine-tune our capabilities, our distribution, the value we add, and where we fit in. Let me be very clear. Yes, there has been a move to passive. If active manager goes away, most of you go away. Most of me go away. It's important that active management does deliver, and we know that. The question is, there is space to be carved out, and we believe we can carve out our fair share.
In our INA business, I know if you looked at stock price, you know those blips that go down? Well, people thought we had all those issues with annuities, and we didn't. People thought we had issues with long-term care, we didn't. People thought that we would be one of the most hurt with the DOL. No, we serve people in the best interest. My point is, that's why we run a highly compliant firm. That's why we really manage our risk as well. That's why we don't look for expanded short-term growth that spurs eyeballs. I'm glad people are finally recognizing what cash flow means. Recognizing that just getting growth without true sustainable profitability is not a long-term benefit. Because that's who Ameriprise is. I hope you look at your analysis from those mentions.
I hope you compare it against industry segments and industry players and put Ameriprise there. I think we'll stand up pretty tall. That's why in our insurance business, I want you to understand what John Woerner going to talk to you about today. That's why I believe on the path we're on, where we're making investments and how we're focused on the target of opportunities that we have, we continue to generate profitable growth for the future and give high return to shareholders. Listen, I can't predict. I have a crystal ball like you? No. We're not necessarily 100% on what we can see in the future. There will be market gyrations, there will be market cycles, there'll be interest rates up and down, there'll be market forces. At the end of the day, let me be very clear.
This is an unbelievable, solid company with very strong cash flows, with a solid balance sheet, we'll ride out those cycles and come out stronger just like we've have. I can say that because I've proven it, that we've been able to do it. We can take advantage of opportunities in the marketplace because we have the capital and the ability to do so. With that, I really want to talk to you why we're excited about our wealth management business. I do believe this is a crown jewel in the industry. I know that because when I speak to people in the industry, a lot of people would love to be who we are and what we do. We're going to talk to you about the significant opportunity against the market we're going after and what the consumer wants.
We're going to talk to you about all the investments we've made and how we made them and why we made them, more importantly, what they can lead to. We're going to talk to you about the five growth drivers. These are the main ones, but there are many more supporting that we believe are important to grow our client base and move further up market, to increase advisor productivity as we have in the past on the high side of anything in the industry, to deepen client relationships through our advice model so that we have those long-term relationships with highly satisfied clients, to grow the Ameriprise Bank as a complement. Wealth managers today, up to 60% of their revenue in one, two banks are coming from retail banking. Another one's coming from commercial banking.
Wirehouses, their margins, a lot of it's coming from banking activities from the big banks they're associated with. We think there's an opportunity for us because we had a bank. We know our advisors want it. We know the client needs it. They do want it as part of a deep relationship. How do we attract more advisors? How do we build teams? How do we continue to bring in novices in the industry? This is an exciting time for us. I love the pressure out there. I love the market forces changing because I think we have a solid platform and a solid foundation to build upon as we have in the past. With that, I'd like to introduce a few of my colleagues that are part of the AWM executive leadership team. Deirdre Davey McGraw, she's the head of marketing, communications, and community relations.
Bill Williams, who's the head of our Ameriprise Franchise Group, and Pat O'Connell, who's in charge of our Ameriprise Advisor Group. They're going to give you a little more of a perspective of who Ameriprise is, how we do business, what our advisors look like, what they really focus on, and how we continue to go to market. Thank you. Deirdre?
Morning. It's great to be here. I am going to cover those growth levers that Jim set up in terms of how we're going to continue to attract more clients, more affluent clients, and deepen those relationships through our advice value proposition. Beginning with the opportunity. We have a tremendously large, attractive, and fast-growing opportunity to serve these incredibly fast-growing asset tiers. You can see here great opportunity in the $500,000 to $5 million and the $5 million-plus wealth bands. We are very focused on growing here. Within that, I'm going to give you a bit of a flavor of how we think about we want to serve those clients, what their needs are, what the opportunity is, and how we're going to really wrap them in our client value proposition.
We've been focused on these asset tiers for some time now. We've already made tremendous progress. You can see here nearly 70% of our client assets today are from the affluent and higher net worth households. We've already made tremendous progress here, but we also have incredible room to grow. Some areas in particular that we're going to be focused on from a client standpoint are first moving further up market beyond the $5 million-plus. Also transferring wealth among generations. As Jim said, our advisors have tremendous relationships with their clients, their families, and we have an opportunity to go deeper in terms of family planning and really helping through the entire life stage and long relationships that we have. To capture that wealth transfer opportunity. Also to continue to work with generations of families to come.
Also, we're going to continue to be appealing to the younger consumers who care about a digital experience, but also still very much want a strong relationship with the firm and the advisor. Fourth, we want to continue to serve, which we already do incredibly well, female head of households. That's a large and growing opportunity in the marketplace. We have the brand, we have the value proposition, we have the relationships with the advisors, and we know that women really trust and want to work with and rely on an advisor, and they are increasingly decision-makers in the household. We're really looking forward to some of these additional opportunities to build upon our capturing of the $5 million-plus and the overall responsible mindset, which I'm going to just give you a little bit of a flavor for.
Jim has talked about the responsible mindset in earnings calls and other communications. Within that larger opportunity that I just shared, we're really focused on the consumer, the client, the affluent client that wants to work with an advisor and a firm that they trust. They want advice beyond investments. They want holistic advice. When you think about the value proposition that we provide in terms of comprehensive advice and their preferences here, the vast majority want comprehensive advice. They want holistic advice. They want it underscored and integrated with a strong state-of-the-art digital experience, which we've been building, and we're really excited about where we're taking it. At the same time, they really want that personal relationship. These are not do-it-yourselfers. These are people who their number one priority is trust with the advisor, trust with the firm.
Jim talked about the reputation that we've built, that our advisors have built. It's a perfect opportunity for us to really take our value proposition to responsibly minded consumers who are focused on that long-term opportunity around advice for themselves to achieve their goals. They also consider it still essential to work face-to-face. While younger consumers, and it is trending, we are starting to see the average age of the responsible mindset a bit younger. You can see here about 25% are now under 45. They still want that relationship, yet they, of course, want increasingly that digital engagement. There's a combination of face-to-face and digital. Lastly, there's a level of contact that must be provided. There's a level of frequency of contact that they expect.
I'll talk about now how are we thinking about that opportunity, that client, and how well suited they are for our branded value proposition. At the core of that value proposition is advice, the advice that the responsible mindset wants and needs, the advice that we are the leader in providing. You can see here that 60% of Ameriprise clients overall receive a level of formalized advice. We are a leader in this space and have built that leadership over decades. However, the opportunity still remains in that we can take clients through the entire advice experience all the way to receiving comprehensive advice. At this point, 36% of Ameriprise clients receive comprehensive financial advice. There's a huge opportunity for us to take broadly our clients along that journey to realizing comprehensive advice.
When you think about the five to five that I just described and 5 million plus, you have over 90% of clients that are receiving a level of advice as well. It's very much in line with the expectations that they have, and they're engaged in that experience with us. However, we still have an opportunity to take them on that journey all the way through to our comprehensive advice. That's where our Confident Retirement approach, which really stands out in terms of addressing the holistic needs that they say they want addressed through all stages, from covering essentials all the way through to planning legacy and leaving a legacy. We're proud of what we've built here in our Confident Retirement approach.
You can see the results that it leads to, both in terms of impact for Ameriprise and importantly, the engagement, the satisfaction, the deepening, and the confidence that it brings our clients. What we've done with the Confident Retirement approach is we've taken it and really surrounded it and enabled it even further in the way our advisors deliver it to a level of consistency that we're now starting to really drive through the system, and I'll spend a little bit more about that, and my colleagues will continue to expand on it. How do we ensure that we take our clients through that journey? Well, very clearly, we're not interested in investment-only advice. It's very, very critical, the level of foundational advice leading to comprehensive advice.
Part of that is that ongoing ability to check in with your advisor, how you're doing against your goals, how you're moving along that continuum. Our goal is to, even though with all that leadership position, our goal is to deliver that level of advice to 100% of our client base, really starting to drive that transformational growth and deliver for the client against all of their needs, against their best interests. We have a huge opportunity in front of us to leverage our position and serve our clients even more deeply and serve more clients doing that. How are we taking that incredible advice experience, all the capabilities, all the tools, all the differentiating strengths that we have to serve the client? Well, this is the how.
We've taken the best of Ameriprise and really focused on beginning with the one-to-one financial advice against clients' goals and needs. That's the first commitment that we've made to clients, as I've just described, leveraging the Confident Retirement approach. We want to take this to our entire client base. Next Ensuring that we have a personalized plan and recommendations for the diversified portfolio to meet their goals, the solutions, the asset allocation, really the ongoing tracking of those investments against their goals. Importantly, as I said, we know that it is so critical that end clients expect a strong, compelling digital experience. That's underscored throughout everything we're doing in terms of the end-to-end holistic experience. Lastly, service. Strong service.
We know that referrals are the number one way that we acquire new clients, and it is absolutely critical with consumer expectations and demand that we provide superior service, ongoing contact. What we're doing is we're taking all of those pieces together and really integrating them end to end to deliver on that advice experience for every client, every time, through every advisor, driving a level of consistency that will continue to strengthen an already strong brand and relationship that we have with all of our clients. I touched on compelling digital as really a third commitment that we have in our client experience, and I just want to hit on a few areas. You know we've been investing in our digital capabilities and working with technology over many years. In many ways, we've been leading the way. We've had a mobile-first mentality for several years.
We are focused on ensuring that our secure client site is the gateway to that client and advisor experience focused on goals. We've integrated our account aggregation tool to ensure that we have a true hub and gateway into that experience. We want to ensure that advisors and clients can collaborate with each other online, anywhere, anytime. Importantly, we want to ensure that we have a level of security and engagement through all of the servicing capabilities and all of the touch points that we have. We've invested significantly to digitally enable that advice experience. I will tell you that when you look at external research, it's our performance here in terms of the responsible mindset utilizing our capabilities here leads the way. We have the best engagement in terms of e-delivery of any firm out there.
We're really proud of all the digital capabilities that we've built over the years, and now we're really excited about what that means in terms of the integration of them, the way advisors use them, the way clients use them, and the way we really continue to connect with our clients anywhere, anytime from any device. As I said, we've brought these pieces together, and earlier this year, we began rolling this out consistently through our advisors and really wrapping the firm around our advisors and our clients. Initially, early results are incredibly strong. These are some of the best satisfaction results we've seen with our client experience since we brought all of these pieces together to ensure we're delivering on that advice opportunity and that advice experience that clients expect and deserve. What's the opportunity as we move forward?
It's to ensure that every advisor, every client, every time experiences that client experience end to end, delivers that client experience end to end. Jim talked about our culture and the way we work together, and the Advice & Wealth Management organization is completely unified in terms of how we've built this, how we're delivering with this, and how we are driving this into and around our system to ensure that we truly get to 100% engagement in our client experience. It's an incredible commitment, and really seeing the organization work together to deliver on that has been gratifying. What's more exciting is where we can take it.
It's still early, but we're really building on that leadership position that we've had for so many years, how we've taken all the pieces, brought them together, and how we're going to take it forward, to really continue to build our brand in the marketplace, but also, most importantly, meet clients' needs where they are. Speaking of the brand, as you know, we've built the brand now over many years since our spinoff from American Express. What we've seen in more recent years is very strong growth in terms of brand awareness, in terms of consideration as you go through the client acquisition funnel, and general perceptions of the brand experiencing double-digit growth. Strong and stable company, a company for people like you, company that will act in your best interest. This is very much in line with that responsible mindset mentality.
Also rated a leader for likelihood to recommend. We know referrals are such a source for new clients. We feel really good about how we've strengthened, how we've evolved our brand, importantly, how we're telling our story along the lines of our strong brand and value proposition, and how we engage the consumer like no other. What are we doing? We're leveraging things like our credentials, that strong position. We continue to modernize the look, the feel, to make sure we're appealing to all generations whom we serve. Ultimately, when you think about that client experience, when you think about that client need, that opportunity that we have, what it all comes down to is that Ameriprise is helping our clients feel confident, connected, and in control.
Taking it a step further, and this is a differentiator for us, our branded value proposition engages clients and supports the client and the advisor experience incredibly well, like no other. We take the entire surround sound approach to the touch points that we use to engage clients, the consistency of that message, the contact that we deliver, the online engagement, whether it's through the Ameriprise website, whether it's through advisor sites. There's a consistent look and feel, but there's also a very strong integration of that experience end to end, regardless of how you're engaging with us. You're going to experience us consistently through this integrated surround sound omni-channel approach that we've taken, importantly also how we have represented our value proposition to consumers to really engage them. Really though, at the end of the day, it's how our clients say it.
They say it better than I certainly could. I just want to touch on, these are client quotes that are really powerful in terms of bringing to life what we do and how we do it. I'm going to touch on a couple here. "Bridget has been through every major milestone with us. I just don't know how people can plan and do without a Bridget." I know this story pretty well, actually. There's a lot more behind it. This is a woman who lost her spouse suddenly. Bridget, by the way, the advisor, is one of our champions of this client experience. She's out there training advisors. She believes in it. She's engaged in providing that level of advice. Multiply that story all the way through our system. My colleagues and I get emails almost every day with a story just like that.
We were recently in a meeting, Jim and I, with our agency, who said, as they were thinking about what we do, they had an aha moment about how our brand and our advisors stand out because they understand that when clients work with an Ameriprise advisor, they have aha moments. They have moments like Shonda did with Bridget when they had to prepare for the unexpected, and they were ready for it. Also, I'd touch on Jeff. Jeff is one of our top advisors across Ameriprise. Very affluent client here. "Jeff just has a way of making you feel like you're family.
I know that he has our best interest, not just because of the financial, but our health, our family, and our friends." What I would say there is that brings to life, to some extent, that level of care, that level of family, and the fact that the advisor is there to provide the support against that lifelong advice experience, but also is there for their well-being, part of their family. It's something that is unique in the industry, and what we're going to continue to do is make sure we tell that story, showcase that experience that we're delivering, and really continue to celebrate the strength of the Ameriprise relationships that we have with our clients. How does that all manifest itself in terms of taking our strong value proposition to the marketplace?
It's about working with the right advisor, getting the right level of advice, very important, and working with the right firm. It comes right back to the beginning of what I had talked about in terms of what the client need is and the expectation is. I'm just going to give you a look at one of our best performing television ads, and you will see that it covers across generations, and it touches on and captures a level of understanding of what I just shared in terms of the type of work our advisors and we do with our clients every day.
What's important to you?
Taking care of Dad. Saving for Ava's college. Traveling the world.
Financial security.
Get personalized, goal-based advice from a trusted advisor and customized goal tracking online. Ameriprise Financial.
You can see here, we're cutting across generations. We're hitting on the key needs from a goal-based advice standpoint. We're showing that we can engage digitally and develop strong relationships with advisors. As we continue to take our client experience deeper into the system and to more clients, we will continue to tell that story in the marketplace, both appealing emotionally and rationally to what clients expect and want, and how we want to continue to tell our story as Ameriprise. With that, I'm going to turn over to Bill Williams, our head of the Ameriprise Franchise Group, and he's going to show you how it all comes to life through our advisors. Bill?
Thank you, Deirdre, good morning, everybody. I'm excited to share with you the story behind the advisor group at Ameriprise. We have 10,000 advisors, as Jim mentioned, they're long-tenured, very successful, growing advisors. I want to share with you the secret behind that. It comes down to our culture, the type of company we've built, how advisors feel in being part of our system and part of our team, and how we've brought that about. I also want to share our growth in the past and why we've had very good growth, and how we're going to continue to maintain that growth going forward, and where we've made the investments to truly create a better client experience, not only for the advisor, but also for the client in a teamwork between us as a company and the advisors. Jim mentioned this before.
There are plenty of firms out there that advisors can affiliate with that are vendors, that will do the transactions, that will pay them, that will make sure the statements go to clients. We are a business partner. We're positioning ourselves side by side with the advisor to deliver a better experience. Our technology, our leadership, the culture, everything comes together to build a better model so that we can serve clients in an exceptional way. It shows up in our client retention. It shows up in the depth of relationship. It shows up in how advisors grow. I want to walk you through what that looks like. I do believe that it is critical we come back to this client experience.
This client experience is one that we've begun over the last year or so, more focused this year at helping the advisor to deliver all elements of this. As Deirdre mentioned, we've done the research. We know what the 500,000 to 5 million plus want. They've told us specifically what they're looking for. They want an advisor who is trusted, an advisor who cares. They want an advisor that understands their goals and dreams, what they care about. They don't want cookie cutter strategies. They would like investments and solutions tailored to their goals with robust asset allocation. They want to understand their portfolios and the products they own. They want a digital experience that's second to none.
They want to log in from anywhere, anytime, and see how they're doing against their goals, their performance, their holdings, both at Ameriprise and away. They want their advisor to reach out proactively four times a year or more, and meet with them face-to-face and give relevant advice. We have been rolling this out and helping advisors to do this. If you looked at our advisors and you said, "Don't they do this already?" For some of their clients, they do, but not all. Our mission is to make sure that every advisor for every client does it every time. If you talk to an advisor, they'll say, "I have an intention of doing this." What gets in the way?
What gets in the way is if the systems don't line up, if our back office doesn't support it, if they don't have the right team around them, it's really hard to deliver this for 400 clients consistently across a book of business. We are taking all of those issues out with what we're rolling out and how we're training it to make sure every client gets these four elements. We've trained 75% of our advisors on this so far. We piloted this starting last year. We're already seeing for those pilot initial advisors, we have a broad spectrum of advisors we picked, from solos to teams to newer advisors to older advisors. The increase in productivity is very encouraging. We're super excited about where this is going to go because the clients are loving it. We're bringing in more assets.
We're getting new clients, and the advisors are really experiencing a lift because of the way in which we're approaching this. Your question is, how do we standardize this, and how do we roll it out? Let me start, first of all, by just share a little bit about our culture. I've been here for 30 years. I came right out of college and became a financial advisor with Ameriprise. I built my book from scratch. I had one of the largest 1% practices in the company, and eventually was asked by the firm to sell that book and move into leadership to help lead the change and the support of advisors. You'll hear a similar story from my colleague, Pat O'Connell, in just a few minutes. He grew up here as well.
I came here because this is one of the only companies I interviewed with where they didn't talk about selling a product. They didn't tell me how much assets I had to bring on in the first year. They talked about the client experience 30 years ago. It was around advice. It was around comprehensive advice. I was going to bring on clients not because I was calling them up telling them to open a brokerage account, but calling them up saying, "I want to understand your goals and dreams, and we're going to do financial planning together to deepen." That was true 30 years ago. It's even more true today. Our advisors are proud to be here. They're long tenured. They're very loyal. They're very connected because we know them. They know us. We've been here a long time.
I can look them in the eye and say, "I sat where you sat. I know what you're going through. I know what it means to be an advisor." We build all the systems around them to help them realize their growth and their success in the client experience. You look at the elements around here. There are firms that say they've got this. I'm telling you they don't. There are firms that say, "We deliver advice." I'm telling you, we deliver advice. We actually do it. When I look at this, we have 90% of our advisors who do an annual business plan with us. From that, we understand where they want to grow, where are their pain points. We connect them to the right coaches. We have human-based coaches, not just online webinars for them to attend to help them improve.
We have local leaders in the marketplace that meet with them and help coach them through change. We have an integrated technology model. We have all the systems built around them to help them grow, and it's been in place, and that's why we've had some growth. Let me now introduce you to the investments we've made in technology. As I said before, if you ask an advisor, "Do you want to grow?" Absolutely. "Do you want to deliver the client experience?" Absolutely. Why do you not deliver it, and why are you not growing as much as you want to? Because the systems prevent me. It takes me too much time to fill out the paperwork. Takes me too much time to open accounts. Takes me too much time to balance and manage the portfolios. I'd spend more time with my clients if it was easier.
We said, "Okay, we'll do that. We'll take a look at everything that touches you and your work process, and we'll improve it." Let me walk you through what that looks like. Just one example of the integrated support model that we help our advisors with. We surround the advisor with all of the technology and the systems all linked together in an integrated way, so it's very seamless to operate their business. Just imagine you're an advisor. What's the first thing you think about doing when you get a new client? You have to open a new account. We looked at that process, and we automated that. Then you have to bring in the assets, and you have to manage the assets, and you have to set up the goals for the client online and through financial planning.
We automated that. How do you make sure that you are building and implementing an ongoing investment strategy with asset allocation rebalancing? We've invested in that. How do you prepare for service meetings? Look at all the information, make new recommendations, and prepare against the client's goals. We automated that. How do you conduct a meeting end to end? How do you set up the meetings end to end? How do you schedule the meetings end to end? How does your team find out about what they need to do to prepare you for that? All of that is in there. How do you make sure the client has a great digital experience, and you can see exactly what the client is seeing? We've built that. Let me just walk you through this quickly.
To open an account now, it used to be paperwork, signatures, send it into the home office with checks. Now, they literally can take their iPhone, and you take a picture of the check. They can then enter some data from the client once. The client can sign on either a tablet or on the computer or on their iPhone. The check gets deposited, and within minutes, they can trade the account, and they can get the assets working for them against the goals that they have. This is so fast. People come to us from other firms, and they go, "I can't believe how easy it is to open an account here." Deirdre mentioned this. Clients can see the goals that they have and the progress they're making against their goals updated to the minute.
You can link all the accounts you have at Ameriprise, all the accounts you have away, like your 401(k), and it will go out, pull the information, calculate it against your goals, when you want to retire, what your risk tolerance is, and it will give you a probability of success right down to the minute anytime you log in. I can pick my iPhone up, I can tap on the app for Ameriprise, I can hold it up to my face and log in, and then I can see all my accounts, all my accounts held away, how I'm doing on the performance, but then I instantly can see how I'm doing against each of my goals, education for my kids, retirement, planning for the future with buying a vacation home, all of the money accumulating right there.
If you see 76% and you're a client, you look at 76%, what's your first thought? How do I get to 90? What do I got to do to get to 90? You start working with your advisor to solve the problem. I add more money, and they change my investment strategy or portfolio. I can change my goal a little bit. I can use different products to get there. The conversation becomes about goal achievement, not a product sale, but the product sale becomes because you're now on the same page. I want to increase my number, and I want to maintain my number. That's what we're focused on creating in a one seamless way of operating. The client can see it, the advisor can see it, and now they're collaborating to create a better experience. This is new, folks, this year. Didn't exist before.
When they did financial planning behind the curtain, they came back and talked to the client. It's collaborative online, one hub. The other piece is they manage assets with and for their clients. Can we simplify that? Can we make it easier to do? Can we mobilize it so they can do it from anywhere they need to do it from? We've invested significantly in now the hub of the practice. It's powered by Salesforce, but it's our CRM system at Ameriprise. It's unique. They log in once, and they get everything they need to run their practice. Their calendar is in there, all their appointments, the preparation for all their appointments, delegating to all of their staff. Every report they need from every client.
They click on a client name, and all the portfolio information and everything they've done for the client, including all of the past financial plans, are all in one place. One login. This didn't exist before. They went to different systems to find it all. They log in once, and it's all right there. Helps them be highly efficient. Let's say they process business. Imagine for you, I use an example. You buy something from Amazon. You get an alert on your email or on your phone that says, "Your order has been received. Your order is being processed. Your order is being shipped. Your order has arrived. Your order has been signed for." You know exactly what's going on. We have enabled that for every single transaction for every client so that the advisor's getting alerts. We've received your paperwork. The account is now set up.
We've requested the wire transfer from XYZ Bank. The money is now at Ameriprise. The money has now been invested. They can track every step of the way where the money is and where the client experience is. If they want to talk to service delivery, which they don't need to be on the phone as much anymore because they can see it all electronically, they can click a button, and they can chat with a service delivery expert to figure out what's going on and what they need to improve. All right here in the hub. If you want to conduct meetings. Yes, there's still face-to-face that goes on in our business. It's a relationship-based business.
We've enabled Skype on every advisor computer so that they can instantly talk to their clients in a live format and share financial planning information so they can collaborate on the goal discussion and implementing their financial plans. This is second to none. When we bring advisors in from other firms, they're like, "We don't have this capability, and it's certainly not easy to use." We've built it into the hub through the experience at the client level and at the advisor level, and they can see exactly what the client is seeing. In addition to that, we've made sure that we have a digital experience that enables a great client and advisor experience digitally for efficiency across portfolio values, account details, portfolio progress statements on both sides of the equation.
I think you can see if you were an advisor and if you were working at Ameriprise from account opening to how you service clients to the goal capture to where it's seen, the collaborative nature of it, I'm telling you, it is second to none in the industry against anybody else that has an advisor experience. No wonder advisors produce so much more. A lot of this has been rolled out more recently. In fact, that CRM hub system was launched, and put in place this year in our last wave of advisors. We had 20,000 advisors and staff onto this thing in six months, and advisors are already sending me notes saying they're much more efficient. They love it. They're feeling like it's going to help drive their productivity and their effectiveness. Let me talk briefly.
If you've solved the problem for advisors of efficiency, you free up time. You want them then to use that time to go get new clients. Our advisors already acquire more new clients than almost any other firm out there because of the brand, the attraction of the brand, the systems they have, the referability. We're also trying to dovetail on the national brand that Deirdre talked about. We want to make sure that locally We've got advisors in all 50 states. In almost every single zip code across the country, we got advisors right there. We want them to be able to tell their unique story. What makes them want to be financial advisors? What value do they create? Who do they focus on? Who's their target market in their area? We help them build out the web presence.
We help them with their marketing collateral, tell their story. We help them with the digital presentations. We help them build that out with our coaching and our systems. We help them generate leads, whether it's seminars and events, or it's more electronic. Back when I was an advisor, you know how I gained clients? I picked up a phone, and I called strangers. 1,200 times a week, I dialed the phone to talk to 12 strangers I didn't know, to hopefully get a couple of them to come in and see me so I could build a client base. 1,200 dials a week for several years. Our advisors don't do that anymore. Caller ID has basically put that cold call world in the dead zone. It's gone. How do we help somebody get a new client? One is a great client experience, so it's referable.
Number two is, we can use social media. We've got a world-class social media lead generation system built that's proprietary in our system for Ameriprise on how we coach and how we use it. Imagine this, each advisor has a LinkedIn account, has a Facebook account, has a YouTube account around their practice, and they're able to tell their story online. We test posts to see what clients really want to hear about. What do they want to click on? What are they interested in? We make sure it works, they post it to their friends and family and connections, all the people they know in those environments.
At the end of the week, I can send them a list of their top 10 leads they should call who spent the most time looking at their posts and liked it, or spent screen time figuring it out, or clicked deeper for more information. Instead of calling a stranger, they're either emailing or instant messaging or calling up somebody that they know had an interest in a particular topic they posted about. I can get the advisor quality, hot leads every single week. It's not surprising that our advisors get more clients because of that. It's great to have efficient systems and great marketing tools, you also got to have a full suite of products. We have partnered with many firms across the industry. We have pretty much any product architecture.
We have the same product architecture of any other firm out there, whether it's independent firms or warehouses. You can get the same price here as you can anywhere else. We layer something else in here to support our advisors. We do exceptional due diligence on the investments, the solutions that are there to help advise our advisors on which ones they should be recommending to clients. We have our own proprietary research group that help build out portfolios and models, we do expert case consulting as well. We make sure we help them build out an asset allocation for every single client. All of our advisors are fiduciaries, folks. They must operate in the best interest of their client without regard to their own interests.
We help them build a portfolio, we help them build an asset allocation that's tailored for each client, we let the client know what that looks like, we help them rebalance it on a regular basis. That's all stuff we do at Ameriprise that doesn't exist in most other systems. They put most of the onus on the advisor in other systems. We bring it in-house and support them to get it done. That also results in almost every product we could think of that a client might buy to reach their goals. Life insurance, almost three times greater implementation. Annuities, double the implementation. IRAs, significantly greater implementation. Financial planning, almost three times greater financial planning in our system versus the industry. Use of mutual funds and ETFs, even greater.
Do you see that this starts to build out a revenue stream that's highly diversified at the level of the advisor? Yes, 61% is from wrap, but 14% of the revenue is from annuities, 10% from mutual funds. Brokerage, financial planning, insurance is all part of the mix. I look at lots of advisors that think about potentially joining Ameriprise, and we look at their book. It does not look like this. It's not as diversified. It's not as product-based. Because we're focusing on the client experience and what the client needs, it diversifies what we recommend. 61% is from wrap. We've made a lot of inroads with the advisor on our wrap platform, and I want to talk about that briefly. Advisors can choose from three different ways to serve the client under a wrap construct.
They can be the discretionary manager, they can partner with the clients, the client's making the decisions, or they can turn over asset management at a firm level. We have robust assets in all those areas and some of the best systems in the industry. We've accumulated $300 billion in wrap. We're an industry leader in this, and we've had a 12% wrap compounded growth rate over the last five years. 12% compounded. We expect that to continue. In October, literally last month, we just launched a total rework of the system to make it even better. Let me show you what that means. Our old system required the advisor to have seven different client agreements, seven workflows to manage the money, 13 different pricing schedules they had to know, and 30 different maintenance form systems to try to manage that old wrap system.
In October, we changed it completely. We invested a lot of money to revamp the entire wrap system to free up our advisors from doing all of that. Now we're down to one client agreement, one workflow, one pricing schedule that's consistent across all of them, and one managed account maintenance process. The advisors are cheering right now. They're absolutely writing us saying, "This is the best thing we've seen in a long time. 61% of my revenue comes from this. I use it every single day, and you just saved me tons of time." I believe they can turn that into revenue. I believe they can turn it into growth.
Through the technology I already went through before, the marketing systems that I talked about, as well as this, making it much more effective and efficient to run the assets for the client, backed up by our systems for due diligence, research, and investment portfolio management. It's not surprising when you put all these pieces together that our advisors outgrow everybody else substantially. A lot better than LPL, a lot better than Merrill Lynch. Our advisors are growing faster than anybody else and have been. This is from 2012 to 2019. I am absolutely confident this will continue. We're also adding a new element. While we have had banking products in the past, we launched our own bank this year. In the summer, we launched our own Ameriprise Bank.
Before, advisors used products from other companies, savings accounts from other companies, credit cards from other companies, and so forth, that created an integrated experience for the client. Now it's in-house, and they trust our ability for a great client experience. They trust our ability to develop products and services that are integrated. The client can see the same things online. The money can transfer back and forth. It's a seamless experience for the client. The card we just launched has some of the best benefits in the industry, from how they earn points to the fact they can cash those points in at a multiplier to go into Ameriprise accounts to get them closer to their retirement goals. We've linked that, and that's what advisors love about this.
Next year, we're going to be launching pledge loans, home lending, and savings deposits to complement along the lines of what our best clients really want from us, which is both cash management as well as lending options. We know that a lot of our competitors make a significant amount of their revenue from the banking side. We think we can make good progress in this, and we have an estimate that by 2024, this could be 10% of our earnings and rising. We have a lot of experience in investments and in banking in the past. We know we can make this work, and the advisors are excited about it.
When we look at where we've been and what we've done, when you take our culture, you take our branded value proposition, you take our unparalleled support, the leaders in the field helping advisors to grow, you take our technology I just shared with you that's fully integrated and easy to operate, and our robust solutions that we invest in and continue to expand with the bank, I have no doubt we're going to continue to expand the productivity of our advisors as we move forward. Don't take it from me. I've got advisors that came to us. We've hired 1,600 advisors from other firms in the last few years. I've got a couple of them that want to share why they came to us.
I also have a couple of advisors that have been with us for 30 years that want to share why they're excited about Ameriprise and our culture and what we stand for. I thought I'd share with you a brief video of interviews with a couple of them that are really proud to be part of Ameriprise and what it means. I'm going to invite Pat O'Connell up here to share how we're attracting more advisors to our firm and what that means. Let's roll with the video.
As a longtime leader in financial planning, Ameriprise is a destination for advisors who care about taking a holistic approach to their clients' financial lives. Our experience is differentiated in the industry and valued by advisors and clients alike.
When we started looking at firms that we might want to consider joining, we looked at all the top firms that you would expect. The decision to join Ameriprise was actually really easy once we had all the information in front of us. It rose to the top in every category that I care most about. I had really high expectations, I have to say, I've been blown away by the combination of support and resources that we have to take care of our clients.
Hands down, Ameriprise has offered me more in terms of growth and support and advice and solutions than any of the other firms that I interviewed with and that I vetted. Ameriprise Financial allows me the opportunity to champion my clients' needs, take ownership of them, and help them reach a solution.
We enjoy the benefits of being independent, but the support of a full-service firm. It's not just talk. The leadership is passionate about supporting their advisors to support their clients. It's in the culture. It's there. It's designed to help you grow so you can serve your clients.
Ameriprise provides us with the tools and the capabilities in the background, they allow us to do what we think is what our clients are looking for and what we think is best for our clients and what our clients are expecting from us as comprehensive financial planners.
I think what we're doing here is really exciting, it's game-changing for both my practice and for my clients. My clients love being able to access their goals on the secure site. This really enhances what we're already good at as a firm, is an entirely new level of service for our clients.
For many of my clients, I've been doing comprehensive planning for years. They've seen plans, they've seen projections and illustrations, showing them this tool and it syncing to their website changed the conversation. I really felt like it increased the level of service and just changed the relationship of it.
Scott and I dug into about seven different firms, the culture here at Ameriprise became crystal clear. Where we were at before, it was more of a culture of no, where you call up to the headquarters and the answer is no. No, you can't have a personalized website. No, you can't go out and do that marketing event. Where it seemed like here they're trying to figure out a way to help you grow. We saw solutions. We saw that they were looking
For doors and windows to help us find ways to grow our business.
Being able to have the integrated tools, being able to have the secure collaboration online for clients, and really having a great brand that Ameriprise is investing into, not just in technology, in the marketing and advertising, but really increasing the brand awareness of Ameriprise and making it a great place to do business.
We really do have a really sharing culture with Ameriprise, and we do a lot of sharing around practice management. It could even be a specific case we're working on for our clients. Making time for each other to really help us all grow is really important in our culture here.
I think you can tell from some of the people we've brought to our firm, and some of the ones that have been here a whole career, they value what we do, and they can see all the end-to-end, from the client experience, the digital, to how we partner together, to the sharing cultures, the family culture that we're building, and it matters to them, and that's why we have great retention and great growth. We want to tell the stories of why people come here, and how they're coming here, and how we're growing each of the platforms. To do that, Patrick O'Connell is the best person to do that. Pat, come on up.
Thank you, Bill. Good morning, everyone. As Bill said, I want to spend just a few minutes with the group and talk to you about how we've been bringing advisors to Ameriprise and how we're going to do that moving forward. I just want to put a finer point on what you've heard from Deirdre and Bill up until now, and from Jim as well. I hope you have a sense that we have built the products, the platforms, the systems. We have in place what advisors want and what they need to serve their own grow their business. When you hear Deirdre and Bill talk about advice, there are so many firms in the industry that talk about advice. They talk about financial planning. We actually deliver it. It's in our core, it's in our value proposition, and we've been doing it for a long time.
The one point I would want to make, though, is everything you've seen here related to technology, the vast majority has been put in just recently. We had a national rollout 6 months ago to our advisors, bringing the Ameriprise client experience out to everyone. We didn't change advisors' compensation plans. We didn't pay bonuses. We've watched in the last 6 months, over 200,000 clients be engaged by our 10,000 advisors in a way that is so different than they were doing it before. Not around the advisors, but having the technology enable that experience. Just in a 6 or 7-month period of time, it's been a terrific start. With over 2 million clients nationwide, we have a long way to go with this. Why is that an opportunity? Because we have been a leader in financial planning. We started as a mass affluent player.
As Bill said, he started 30 years ago. I started 27 years ago doing the same thing Bill did. We went from the mass affluent to affluent, now to high net worth. The one thing we realize is there might be pressure on margins and products and things like that. Clients will pay for advice. They want coaching, they want leadership, they want guidance, and that's our value proposition end to end. Why does that matter out in the marketplace? Because when the industry goes out to advisors and talks about, as an advisor, what do you need to serve clients? What do you need day to day? Not just Ameriprise advisors, but the industry. What is it that you need to bring your client experience to life? You'll see by looking at this slide. Things like communication, advice, value proposition.
Those are the things that stand out. You'll see at the bottom of this, a low-fee value proposition for the advisor going to their client. It's not that big of a deal because clients will pay for leadership. They'll pay for ongoing advice. That's why we've been a leader here and why we've invested so much over the last few years to bring this experience to a whole another level, which has created an opportunity for us to engage our clients, new and existing, in a whole different way. Let me now talk to you a little bit about how we've been bringing advisors to the firm and how we're going to do that moving forward. I'd like to start with our legacy platforms. The first platform is the Ameriprise Financial Group platform.
This is the platform that for decades we used to bring advisors into the business, to scale the business up. As the slide says, it's an incredibly strong platform. It's stable. It has incredibly attractive margins. This is not a platform where advisors come and go. Says on the slide, over 20 year average tenure for our Franchise advisors. We've had great success not just with retaining those advisors, but growing those advisors and attracting advisors into that platform. This is the platform that for 100 plus years is how we built this. As Bill said, it's how he came into the business, until I came into the business 27 years ago. Our branch business. Five years ago at this Investor Day, we talked to you about the progress we had been making with our branch business.
As some of you know, 10 years ago, we started transforming this business from what was a training platform to now a platform that can compete with any wirehouse, any regional firm. Five years ago, we stood here with a business that was on track, was making progress, but at that point, it wasn't even profitable. Here we are today, five years later, with a business that is incredibly strong, very attractive margins, growing at a really good clip, a very attractive platform for advisors. You also see from what the slide shows, we have capacity in this business. We have offices now, north of 175 offices across the country. Just in the last couple of years, as we built this business up, got scale into the business, kept bringing in more and more productive advisors, we started opening up new offices across the country.
As the slide says, just as we've got this going in the last couple of years, we've opened up 15 new branches across the country, bringing in more than $4 billion of AUM into those offices. We have the systems, the people, the process in place to be able to expand that as we move forward with the branch business. As we think about the Franchise Group business and the Ameriprise Advisor Group business and how we're bringing people in, Bill said this. We brought in 1,600 advisors over the last five years into those two channels. You'll see every year we consistently bring in more advisors and more productive advisors. The average advisor we bring in is more than twice as much as the advisor we lose. We have industry-leading retention, but we attract very talented people into our two channels.
You also see it's a mix across both of our channels. Advisors come in from wirehouses, from independent firms, from regional firms, from insurance organizations. The value proposition that we offer across the Franchise business and the Branch business is very consistent to the client. It's a seamless value proposition, and both platforms have had real strength with recruiting advisors in. I just want to hit on this one slide. Just in the last few months, what you'll see on this slide are some of the headlines that we've been able to get for people that we've brought in to the Franchise Group and the Ameriprise Advisor Group business. Why do they join us? I'll just hit on it again. It's our culture. It's the value proposition that we bring to them to operate their business day to day, and how they go out and serve their clients.
It's that advice value proposition, and that end-to-end experience enabled by technology. Finally, it's our financial strength. They don't have to apologize for the story. They don't have to explain the story. They love the fact that Ameriprise is behind them with an incredibly strong firm that continues to invest in a value proposition that they need to serve their clients really, really well. Across these 2 legacy channels, there's 3 ways that we have been building these businesses, and we will continue to build these businesses. Every year, both franchisees and employees coming in will bring in hundreds of advisors, experienced advisors from other firms, and end-to-end risk controls, compliance, financial, onboarding, that process, we'll continue to refine it and tweak it.
Over the last 10 years, in building out that process of bringing experienced advisor recruits, we have industry-leading ramp-up when we bring advisors to the firm, and we'll continue to bring in hundreds of advisors into these 2 channels that are experienced advisors. We'll also continue to build by bringing in novice advisors. This year alone, we'll bring in almost 500 novices across these 2 channels, many of them going on to successful teams that can support them, develop them, coach them. Because of how we have those novice programs set up, we also have very strong retention of the people we bring into that program. Finally, a few years back, as the industry was aging and people talk about the industry aging and the like, we started looking at how do we actually support our advisors and acquire practices?
Use the resources we have, the process we have, the capital we have to buy practices for advisors to help them continue to scale. As the slide shows, that's a process we've put in place over the last number of years, and it's already started to bring in a number of practices from external advisors that want to come here, transition their practices here, and have us be able to transition their clients over to an advisor that will continue those relationships and pay them for the work that they've done to build that business. Now let me talk to you about our newer platforms. Many people know about the franchise business and the branch business that we've built over the last number of years. We've also been investing aggressively in 2 newer platforms. The first one is the Ameriprise Advisor Center.
This is a platform that we have in place, Minneapolis-based, teams of remote financial advisors, many of them certified financial planners, that remotely can bring to life the same value proposition you've heard from the stage, can do that using our technology through a remote center. That business started as one that would serve lower-value clients that advisors didn't have the time, the resources to serve in the local marketplace. That's how it started. We've built the capacity, the ability, and are implementing to have that go out there, whether it's in the workplaces, affinity, co-branding with others to bring that value proposition to life, but not where you have to have an advisor on-site face-to-face. We have growth opportunity inside our Ameriprise Advisor Center. Our 4th platform is the Ameriprise Financial Institutions Group. We did an acquisition a couple of years ago.
We successfully acquired IPI. We've integrated that business. For anyone who knows this business, these are advisors That have a relationship with us, but work through a community bank or a credit union in a local marketplace. We spent the last couple of years building out the technology, the platforms in order to serve these partners. There are $6 billion of assets that's in this platform right now. 23,000 advisors right now are out there in the marketplace working in community banks, working in credit unions, and there are over 6,000 community banks and credit unions in the local communities that we are now working to approach, build relationships with. Some of them have programs in place, some of them don't.
For those banks and credit unions that don't have programs, there's nobody better positioned than us because of our value proposition around coaching and training and our consistent client experience to help them build a program. One of the biggest short-term opportunities is some of the competitors in the space that have been in the space for a long period of time, they don't offer a consistent client experience. The reason that pipeline has been growing with our bank partners is early signs are our value proposition of serving the clients from an advice-based relationship consistently resonates really well. Our opportunity to grow this business over the next number of years is meaningful. What does all this mean? As we look at our business, as we look at our platforms, I hope you get a sense that we know our clients incredibly well.
We know the marketplace that we serve incredibly well, and it's a growing marketplace. For the advisors, we have advisors that, as Jim said, they're not affiliates, they're not associates. They're here, and they're here for a long period of time because they want a value proposition based on advice, enabled by technology that leads to growth that, as Bill showed you, is different. The growth we get from our advisors has been, is today, and we are very confident will be different in the marketplace. Those advisors want that type of value proposition, and it's why experienced advisors, year after year, from where we were 10 years ago, when we never hired experienced advisors to where we are today, hundreds of advisors every year say, "That's what I'm looking for and the experience I want to bring to life to our clients." What does all this mean?
As we've talked about, there are multiple levers that we have been working on, we have been investing in to grow Advice & Wealth Management. We are confident based on the investments we've made, the plans we have in place, that our ability to deliver on this is very strong. That's why we have the confidence that when you look at the right-hand side of this, and you look at the profitability of this business, which has been outstanding growth year after year, we have the confidence that trajectory will continue as we move forward. Let me turn it back now to Jim to talk about Insurance & Annuities.
Let me thank Deirdre, Bill, and Pat on behalf of their colleagues for giving you a little flavor. There's a lot more that goes behind it, a lot more we can talk about, but we wanted to give you a little color. It's always easy for us to talk in earnings about what the quarter was or what we're doing, but it's hard for you to understand it. We wanted to really give you a better perspective and hope that was helpful there, and we'll continue to build upon that in the future. I'd like to turn to an INA business. Again, as I said, the INA business is not a standalone. It doesn't market and sell through third-party intermediaries.
It's really given solution set as part of a broader product line on platforms that they can get other competitive products to actually be part of the solution. The key for us in the differentiation is this, we understand the behavior of our clients. We understand how our advisors work with those clients according to the plans that they put in place for long-term retirement. We do not do products that we think are risky. I can understand fully the risk that you have identified if you're following the insurance industry over the years. I can truly understand the exposures that some of these portfolios have in place of what that caused it. We avoided all of that. We don't put a product in place that we don't think we can manage well, get a good return on, and have minimal risk exposure.
Let me turn it over to John to talk about that. These are great solutions. They deliver real good value, and it's not as though we have to sell them. We do it because we can get a good return as part of a lineup of external products that are on the platform for the advisors. These, we keep on replenishing the books. We get good cash flow, but I'd like John to give you a better understanding. John Woerner is the head of this business, President, but he's also my Chief Strategy Officer for the firm.
Jim, I'm just going to build on what Jim and Deirdre and Bill and Pat talked about in terms of our comprehensive goal-based approach and how Insurance & Annuities fit into that. You heard Deirdre talk about our Confident Retirement approach and how we serve clients comprehensively. This is where you see on the left and the right there where the different insurance and annuity solutions fit in. Let me just give you a little flavor of where it fits in, where we go beyond what as our clients, our prospects, increasing number of prospects come to us and the advisors that Pat talked about come to us see how we're different. We don't just talk if you're a wealth builder about sending your kids to college. We have conversations with you is how do you know with certainty that your children will have that funding, right?
Whether you're here or not, whether you're disabled. How do you know when you reach retirement as our affluent clients do with three, four, $5 million, that you can confidently spend your quarter million dollars a year on your lifestyle and not run out of money? With certainty, you can know that with the depth of advice that our advisors give to our clients and go beyond just investment advice. RiverSource plays a role in helping. The example on income. We don't just have a simple conversation around, have you saved enough in your nest egg as you approach retirement to have a enjoyable retirement? We develop an income plan. We work with our advisors to help clients develop an income plan that they cannot and will not outlive. To meet those essential expenses, to help them support their lifestyle, to deal with the unexpected on the solution side.
That's just an example on the income side of how complex our advisors go to generating that income plan for a client. As my colleagues talked about, we deliver comprehensive advice at a deeper level than any firm out there. What this chart shows is it asks clients, it asks American investors, who is their primary advisor, and then it asks them, do you get financial planning and advice from that provider? You see 60% of our clients say we do get that formalized advice that Deirdre talked about. Head and shoulders above our competition. We have the same products on the shelf from ourselves and from third-party INA providers as others do. What you see is our advisors use them effectively as solutions where they're needed to help clients meet those protection goals, their life goals, and their income goals in retirement.
We at RiverSource, how do we think about developing a strong and maintaining a strong insurance and annuity business to meet those clients' goals? We know we're serving a responsible mindset client. Those clients are planning decades and generations out into the future, and we take that responsibility seriously. We manage a very prudent company to meet those long-term goals. I'm very conscious as I'm signing those policies that some of those we'll be paying out 100 years from now. We designed a company and set of solutions that can do that. Our sales practices that we partner closely with our 10,000 advisors are goal-focused. They're around achieving that goal of retirement income. They're around achieving that goal of sending the kids to college, buying that retirement home, and how our solutions can help make those certain to happen.
In the product design, as Jim talked about, we're very diligent in our product design. We're constantly looking at our own products and our competitors' products, and we're very disciplined in terms of when we think our competition's getting over their skis. We don't go there. We deliver prudent solutions that are stable for the long term for clients. If we think certain risks are mispriced at a certain time, we'll cede that share to others and let them have that. As we did before the financial crisis, as we did when we exited long-term care in 2002, when we see things being mispriced, we'll pull back. Where we think we can continue to deliver a strong competitive solutions for our clients' long-term goals, we do. The proof as I'll take you through is in the results.
What we've delivered for our clients, for our advisors, and importantly for our shareholders over the long term. It's each of those elements. It's in the product design, it's in how we work with advisors on the advice and delivering those solutions against clients' goals, not just a commoditized product. It's with our finance partners in terms of how we hedge the pieces that need to be hedged, with our reinsurance partners, where we can facilitatively place some of the largest policies and have some of the largest policies in the industry for our affluent clients. We have a strong risk management discipline that enables us to deliver against our clients' goals and meet our shareholder risk and return objectives. What has that resulted in? It's resulted in an attractive solutions mix for our insurance and annuity company. On the left, you see our life and health mix.
75% of it is cash value focused, those long-term cash value focused solutions for our clients' retirement and asset accumulation goals. We have a healthy mix of VUL, IUL, and other cash value UL policies. On the right, you see the annuity mix with fully a third of our VA without guaranteed living benefits and a diverse book of business overall on the annuity side. What does that look like in terms of our revenue mix? Also very balanced. This is intentional. We balance our business year in, year out, and over time to have a diverse book of business. You see there a third of our revenue is market based. About a quarter is interest rate based. A quarter is account fee based. Again, a diverse sources of earnings and revenue in our insurance and annuity company to maintain our balanced and profitable business.
This results in a risk profile that is differentiated from standalone insurance and annuity competitors. This is just an example of our VA living benefit, net amount at risk relative to some other public competitors. You see, we're just in a different zip code. All those things lead to that. It's the product design, it's the sales practice, it's the responsible mindset client base in terms of how they're using these solutions against their long-term goals. It's all of that together that delivers that differentiated profile. You see it in our returns. Again, head and shoulders above the others. Now we are competitively offering solutions to our clients and our advisors, but it's that close partnership with the Ameriprise advisor. It's that strong risk profile of the client base that we're serving, the responsible mindset client.
It's all of that taken together that enables us to deliver these returns. That responsible mindset client has strong risk selection, whether that's into our disability solutions, our life solutions, as was talked about, our banking solutions that we bring to bear. We have an attractive client base that we serve. We're able to give them a very competitive solution and deliver strong risk and return for our shareholders. We continue to evolve that solutions mix as we have over the years. These are just two examples where we are right now. Our variable universal life policies are having very strong focus. We've introduced an index account option into that. It also gives the client some of the best of what index life offers with variable life.
Those sales are up 20% just year to date. We think that offers a continued attractive opportunity alongside IUL in our life business. These solutions are even less capital intensive than some other solutions in the industry. Structured annuities. Our annuities business has been hard at work developing our structured annuity solutions. These are non-living benefit solutions, again, less capital intensive, but offer very good accumulation solutions for our clients. We're very excited about what this could mean for our advisors and our clients. Some of our competitors that have introduced this, it's now 30%-80% of their sales. It'll take us some time to get there, but I think it has a tremendous amount of potential with our advisors as they serve those clients' needs. We fit in as part of a solution set that Ameriprise advisors provide to their clients.
Here in the center of this circle, you see all of our client assets in terms of what RiverSource holds. Around 15% of our clients' assets are the Advice & Wealth Management client assets are with RiverSource solutions. About a quarter of them have a life policy through Ameriprise, and about a little over 40% have an annuity solution through RiverSource. Strong penetration, but still opportunity to grow as my Advice & Wealth Management colleagues talked about Advice & Wealth Management growing, we have an opportunity to serve the growing client base within that. Those solutions, $88 billion of assets within our annuity business, $195 billion of face amount in force on the life side. Those are long-duration asset pools that are being managed to help clients achieve their long-term goals.
Those clients, on average so far, have been with us nearly 20 years. We partner with Columbia Threadneedle to develop effective solutions. Columbia Threadneedle manage our general account, but importantly also on the separate account, they bring some investment and risk expertise to bear. Third party, they have a $50 billion-plus multi-manager capability that helps us deliver great solutions. We partner with Columbia Threadneedle to deliver that. Each of those plays a role in serving those clients' long-term goals and to have assets that are really long-dated asset pools that Columbia Threadneedle can effectively manage on behalf of clients. Tremendous opportunity from those nearly $100 billion of assets that Columbia Threadneedle manages for us. As I said, long-duration asset pools that they manage. On the Advice & Wealth Management side, we help cement that long-term relationship that Jim and my other colleagues talked about.
When folks have those insurance and annuity solutions, you see even greater persistency in the client relationship because our advisors are talking to them about those long-term goals. They're talking to them about goals that are going to be fulfilled 20, 30, and 40 years from now. We're their partner, as Ameriprise, over those decades in fulfilling their goals. Jim talked about the cash generative capability of RiverSource. These are the dividends RiverSource has paid to Ameriprise just over the last six years. Consistently between $700 million and $1 billion of free cash flow coming from this business to Ameriprise each and every year. It is a strong and attractive source of free cash flow and capital to Ameriprise, which supports our growth across our businesses and supports share repurchase or whatever appropriate purpose we have as Ameriprise for that free cash flow.
A consistent generator of free cash flow. We evolve RiverSource and the insurance and annuity solutions as appropriate. As I talked about earlier, we were one of the first to exit long-term care back in 2002, where we felt that was not being appropriately priced in the industry. We began 14 years ago getting ahead of the need for appropriate rate increases in long-term care, long before many other industry-leading competitors in that space decided to get after it. We exited outside distribution of variable annuities and fixed annuities when we felt the risk-return trade-off wasn't appropriate there. Recently, we reinsured our fixed annuity business, we took a refreshed approach from long-term care. We manage this business dynamically and ensure that we're delivering constantly the risk-return trade-off that we're looking for. I'll speak briefly about long-term care. We've consistently and proactively managed that exposure.
As I talked about exiting in 2002, beginning the rate increases in 2005. This year, we took another step in that direction in terms of taking another fresh look at our rate increases, the appropriate rate increases that we needed to request, and helping clients and advisors understand the options they have for managing their premiums going forward. That's been successful, continued success in helping clients meet their needs at a level of premium they can sustain and making benefit adjustments as they see appropriate there. As I summarize across insurance and annuities, I'll just leave with these three messages. First, we meet the client's needs at a differentiated level. As I showed you, every firm out there has a similar set of solutions on the shelf as advisors.
Our advisors use them effectively as solutions to meet clients' long-term goals, whether it's those income goals, whether it's funding their kids' college, whether it's buying that retirement home, helping our affluent clients with certainty have the confidence they need that they're going to achieve those goals. We're unmatched. We're unmatched in meeting those goals versus any of our wealth management competitors. Secondly, for the advisor. We help that advisor enhance the persistence of their relationship. We complement their conversations and their advice around long-term goals. We help them have a level of productivity with protection annuity solutions that is head and shoulders above any of our competitors. We have a highly efficient and productive support model. Our ability to focus exclusively on Ameriprise advisors helps us deliver those services and that support model in a cost-efficient way and a very productive way for those advisors.
We know their advice approach. We know how they talk to clients. We know deeply what Deirdre talked about in terms of our responsible mindset clients and needs, and we help our advisors meet those clients' needs. Importantly for the shareholder, a business that is extremely cash generative and has been consistently since I've been here, we just showed you the last six years and was before then as well. Well-designed and risk-controlled solutions from the product design to our sales practices, to what solutions we choose to bring to market versus not, to our hedging capability, all very well risk-controlled and delivers the industry-leading returns that you saw. Finally, those strategic linkages to the Ameriprise advisor client base and to Columbia Threadneedle as a partner managing long-dated pools of assets.
I'll leave it there, invite our Chairman and Chief Executive Officer, Jim Cracchiolo, back up to the stage for our Q&A. Thank you.
Thank you, John. We're going to do a session on Q&A, and then we'll go to take a break, give you a little time, have a cup of coffee, and then we'll come back with our global asset management, the financial presentation, and then we'll do another Q&A. Let me see. Yes.
Yep. Jay Gelb from Barclays. Thanks. First question was just to clarify on the bank. I believe you said by 2024, the bank could account for 10% or higher of the company's earnings, or is that of AWM?
AWM.
Okay, thanks. Anything to add on that at this point?
We're just starting. As I said, we just started the bank. We've actually migrated $3 billion in already. We just put our credit card into the marketplace. We converted part of the portfolio that we had given up. We're going to launch new products. I actually believe there's a great opportunity. As you saw, some competitors are now 60% of their revenue. In our case, I think we're taking a very focused approach as a new bank. It could ramp up nicely.
My follow-up or separate question on insurance and annuities. You actually made a more compelling case than I would have expected in terms of why that business should remain as part of Ameriprise, including the free cash flow generation. Is it fair to say that there's no indication that the company could look to separate those businesses in terms of perhaps finding a better owner for those products or Ameriprise going external rather than exiting manufacturing of those businesses?
What we have said is this, and we want you to understand. The reason we have these businesses and the reason we've kept them is they are really quality, differentiated businesses. I can truly understand what people would say, looking at the type in the industry at general large and some of the new firms that came out with the type of portfolios. The reason we don't have that concern is because of what we explained. Having said that, we agree that we could still look at opportunities like we reinsure the fixed income book, fixed annuity book. We started down that path. At the right time, we can accelerate that. We will look at other opportunities for LTC.
Regarding the book itself, hey, listen, if some quality strategic partner came along and it made the most sense, I got to look at it from a shareholder perspective. Having said that, I also don't want you to have a concern by us keeping this business because it's built over decades. It's a part of my client solutions, and the cash flow is unbelievable. You guys put a PE against this, I got to tell you, in 4 years, that's a payback of 100%. You can't get a better investment like that. My only question to you is look at the totality of it. Let me give you another thing.
People building commercial banks today, you don't really attribute that to their PE or the shareholder value creation, or even now a wealth manager becoming 60% the banking institution. My only question is, these are products and solutions, the returns, look at those returns, 27%. Do you see this in the insurance industry? I don't think so. Having said that, I'll always look for opportunities if it made strategic sense, but we would want that partner to maintain these strategic capabilities. If that is not there, these are integrated part of our business. Columbia manages assets. Our advisors love the support. Just got rated number one in client satisfaction from advisors. Yes. Let me go here and then here.
Jim, maybe you could talk a little bit about those 27% returns in the insurance and annuity solutions. What is it that allows you to get those higher returns? What portion of the business in the life and annuity is third party?
John, I'll let you or Walter comment. As I alluded to, it's all those. It's the product design, it's the channel focus
It's the responsible mindset client. All that contributes to those products. You can benchmark our products like others. The ones that we choose to offer were very competitive for the client. We also choose not to offer other things, right? Talk about VUL, right? Two-thirds of what's going on in VUL is secondary guaranteed death benefit VUL. We don't do that. We offer cash value accumulation VUL. It's dozens and dozens of those decisions over many years, and consistently delivers that level of return.
Third party, what % of the sales volume is third-party products?
It's 100% to the Ameriprise advisor.
Of RiverSource?
Yeah.
100% is RiverSource?
No, no, no.
Outside, we continue to have opened the channel more and more. It's probably 15%-20%.
Of the advisor sales, yes, 15% or 20%.
Yes, of advisor sales externally, yeah.
There'll be products where 50% is third party, depending on the market.
For instance, we're not big in fixed index annuities. Somebody wants, we put more people in the channel, and they can sell. It's more of what we want to do that we look for the share of, not the total share of what advisors want to sell.
They have choice then.
They have choice.
Okay, just one last one on advice and wealth. You talked a little bit about enhancements to the advisor platform, they started October 1st, and I'm just kind of wondering, is that very significant? Could we see a lot of impact come out of that?
Yeah, what you've heard, let me separate a little from Bill and Pat and Deirdre. Number 1, we started rolling out our enhanced digital goal experience with a more consistent of what we do from goals to investment solutions and asset allocation, to the digital and to the servicing experience mid-year this year across 10,000 advisors. We got about 75% trained. They're still going through training development. It takes time to change behavior and all that will continue to ramp up over the next few years. We are really excited about the feedback we're getting on that. The client assets coming in and the clients talking about it. The second thing we did, very important, is we put a new CRM platform. That's where Bill was talking about that hub attachment, and it's not just what's out there from a vendor.
It's integrated in with our capabilities, that's just rolling out, and we're actually finishing the conversion of that as we go through the end of the year and the first part of next year, across 20,000 people who will utilize it. The third is the CAR platform, which is the advisory. We've just actually put that in market on October 1st, and that's going through its period of roll out completely by the end of the year, 1st January. These are new, exciting, that's not in any of what we have reported in activity yet because they're just coming about.
Okay. Yes, Suneet.
Thanks, Jim. Suneet Kamath from Citi. Just to follow up on that, it sounds like there's been a tremendous amount of investing in technology, et cetera. Can you give us maybe a quantification of how much you've been spending, and should we expect any kind of drop-off in that now that you've kind of built these systems and have them in place?
Yeah. Very clearly, as you would imagine, we over the years continued to invest in our digital capabilities, our website, our cybersecurity, and all that's over multiple. What we had to do is because of all the focus that we have to put every one of our advisors serving clients consistently in best interest against possible DOL, SEC, et cetera. We're all set up. The SEC and what they came about, it's not a lot of work for us now. Change a customer agreement, whatever. We spent a lot of time and effort training, ensuring the compliance, ensuring the systems, the capabilities, all that. What happened is it sort of pushed some of the things we were working on to the last year and this year to accelerate that back against these investments.
Now a lot of that's gone through the pipe, so to speak. The total of these larger new investments will go definitely down next year. We'll still have investments. Deirdre is still working on the latest capabilities in digital of any firm out there. We're still putting our branding and building social media. It'll come down from it, and you'll see expense levels come down. The only one that will continue for a period is the banking, but we'll get good revenue and profit because we're rolling out those new products next year. That would be the one. Other than that, you'll see the expenses come back to where you're used to.
The advisor.
Okay, a follow-up just in terms of the advisors that you're recruiting. You had a slide up there where there were a lot of big-ticket advisors.
Yeah.
Can you just talk about the competitive environment to attract these advisors? Are there lots of guarantees that are in the marketplace? Just how you're stacking up against it.
Well, let me turn to one of my colleagues here.
Yeah. The short answer is yes. It's a competitive landscape. You have to be willing to invest a certain amount to bring these advisors in. Our experience has been you don't have to pay premiums. You don't have to pay up in any way. What most advisors are looking for, especially the ones we're attracting, and you saw it on the screen. We're not finding advisors and bringing in advisors that are chasing a check, right? The vast majority of advisors, they're stable. They've been with the firms they're with for a long period of time. It is competitive, but we're winning our fair share of those. The other thing we're using is, as much as it's emotional or anything else, systems and process, advanced analytics.
There's information out there now that we've developed that actually helps our advisors, or excuse me, our leaders go from targeting, there are 200,000, let's say, advisors out there. The ones that have the best fit with our organization
The best probability of making changes. We're using that intellectual capital that's being provided by John's strategy team to narrow down who to go after. When I said from the stage, we are winning, but also one of the things that helps us, and you heard a couple of them on the screen. McLagan tracks this, and we have the best performance related to ramp up right now in the industry. When one advisor has a great experience, they tell their friends, "This is a good place to be," and that's been helping us quite a bit.
Suneet, one thing I would say on the other side, there are people paying up. Some people who try to attract ours, we can't understand what they're doing. What I would say is we turn down probably more people than we recruit in, because if they're not of the culture we want, the type of book or the type of activity they have, we're not going to take that issue. Other people will definitely take them on board and associate them and say, "I'm going to provide you X, Y, and Z." When we bring in advisors like you saw on the screen, they're both happy to be here, but they reinforce that brand in the marketplace.
Yes.
I think whoever was first. There. Go right here.
Hi, thanks for taking my question. Kenneth Lee from RBC Capital Markets. You touched upon having done some acquisitions of whole practices within the advice and wealth business. Just wondering what do you expect to see in terms of activity levels, in terms of acquisitions in the near term? Also relatedly, what kind of criteria does it make sense to make an acquisition for a whole practice?
Let me start, but one of my colleagues might want to complement them. What we've done first is internally you look at some of our advisors and say, "Jim, you had some advisors leaving." The answer is yes, but most of when people leave, actually, it's succession planning that we do in-house and turn it over to other advisors. If they sell a practice internally based on our systems, our capability of the client experience, the revenue streams, they'll get more than 25% premium than anything you would market external. We said, "Hey, we got such a great environment here for that. Why don't we look at people who want to have succession planning in where they are, and we can bring them in and then help them actually do that and transfer it?" I don't know if, Bill, you want to chat?
Yeah. In both channels, the franchise channel where we match a franchisee that's younger, newer, growing in the practice with somebody who's older, we do that, and we help with the financing, either through outside banks or our own to make that happen, and then we get paid back by the advisor through that. We're very good at transferring the book, ramping it up. Most of the time that advisor comes with the book, and then they get the clients established over here, and then they have an exit strategy over three to five years. The same is true in the branch structure, where we'll help value the practice, we'll provide firm capital to it, and the advisor takes a payout rate against their book to pay us back for that experience. Your main question is, do we see that accelerating?
With the aging advisor group in the U.S. and the fact that there's about 300,000 advisors, we expect to be a major player as they continue to retire out. They're realizing, and as we brand ourselves in the marketplace, we're a great place to come for them to realize value and support the client experience. Most advisors want a good check, but they also want their clients taken care of, and that's what they're finding here. We expect it to accelerate.
Hey, thanks. A couple questions on advice and wealth. I guess first, I was hoping you guys could talk a little more to, I think it was slide 58 when you gave a breakdown of where the financial advisors are coming from. I guess number 1, what did that look like in terms of assets? I think you provided that in terms of the financial advisor headcount. If you think about that mix in terms of assets, what does that look like? I guess more importantly, given your pipeline, how do you sort of expect that to evolve, and is that tilting towards the franchisee channel or the employee channel?
Okay. The mix we gave you has a good diversification, wirehouses, independents, et cetera. Within the employee channel, of course, we attract a bit more from the wirehouse population because they want that full embedded branch support system. A number do migrate over to the franchisee. In the franchisee, we get more of that more complete mix of that you've seen, particularly around the independent space. The productivity, what we put there is on average now $600,000, $700,000. Now the mix, it's very important also that we look when we bring assets in. A lot of people want to associate people like independents and others, and the assets aren't really productive because the relationship's not productive, et cetera.
We really look at that because if we're bringing people on board, we want them to really have both the combination of solutions, productivity, but client engagement we need. I don't know if you want to add.
Just I'd add a couple things. To your question around assets, at $700,000 in production across both platforms, and that's about consistent. There's not a big variation per se. You can do a typical AUM calculation on that and whether that's $70 million, $80 million, $90 million per person. The interesting thing is with recruiting, and it's why it's so important to have an integrated branded value proposition. We have wirehouse advisors that you've seen this, that want to kind of break away and go independent. AFG. It's there. It's independent, but it's supported independence. Now I've got independent advisors that get to a certain point in their career and they say, "I don't want to deal with the real estate and the technology and the benefits and everything else," and they come into a branch.
That feels like what some of the older firms, like an A.G. Edwards years ago, used to feel like culturally. They can come into a branch business like ours and get that. That mix, Jim's absolutely right. There's a higher percentage of wirehouses coming into the branch, it's why it's so important to have multiple platforms. Advisors, depending on where they are in their career, they want choice, and that's what we can give them.
The one thing we won't do, that's why we sold Securities America, right? That was a complete network independent associate with, every advisor, it was their name, it was their activity, it's what they wanted to do. It was their client experience associated on a network, Securities America was one of the better ones out there. We knew that that wasn't where we would get the type of value, client relationship, branding that we could able to do with that deep consumer. With that, the profitability with less risk. That's why we're not playing in the arena, just gobbling up independents. We think there are some out there that would fit and appropriate, and there are advisors within the independents that definitely would fit and find us to be a value-enhancing network.
My other question was around the wrap account fee rate. If you look at the growth, obviously quite substantial over the last several years. If you look at the fee rate, it's been coming down pretty consistently, I want to say over the last 3 to 4 years. Is that related to the level of relationship that is underpinning that wrap account sort of allocation, and how do you guys expect that to evolve? Or are some of the things that Deirdre talked about in terms of comprehensive-
Right
level advice could actually stabilize that fee rate and maybe even improve it?
Yes. It's a combination. I'll turn to the side in a minute. There's a combination of factors here. Number one, we benchmark our rate against everyone, wirehouses, independents, etc., and we are very competitive depending on asset level and services provided. That's number one. Number two is, yes, it has come down. For us, as we move up market, the fee will be down based on assets, number one. Number two, a competitive frame, but what we do to complement that is exactly what you said. We build that deeper relationship, we give more comprehensive advice, and there are fees for that that we're able to charge to complement that. We get more assets from it so that even if the fee goes lower, it becomes even more efficient as a scale.
A wirehouse today, because they're serving clients at a bit more upmarket, right? You would say they don't have the depth of relationship, look at the revenue they capture for it. In our case, we don't have the clients all on the average as higher market, but we have the depth of relationship. A combination of fees, revenue, and profitability is really high per asset. What we're doing is moving up market. With moving up market, yes, it will be competitive, based on the services we render, we can get a good revenue and profit stream.
Yes.
Yeah, let me start here. I'll make my way around.
Humphrey Lee from Dowling & Partners. I think a couple years ago, or several years ago, you've talked about the kind of the difference in terms of productivity and margins at the franchisees and employee channel. Now with the two additional channels, I was just wondering if you can provide a refresh in terms of how the productivity and margins at the four different channels that you have, and what are the potentials that they will have eventually with some of the things that you have done?
We don't disclose detail, but let me give you a little perspective in the range. Our franchisee model across the largest of our network is highly profitable in the low 20s. Our employee channel now has made it up to close to 20% or so, and we think will continue to rise from here based on filling the capacity, the brand system, the productivity of the people that we're growing or bringing in and help their productivity. Our AAC group, which is a centralized site, their profitability is in the 40s. With the experience and the technology, we think this will be a great opportunity for us remotely to serve people. We have two service sites in the U.S. already, and we can build that out. The Financial Institutions Group we just took over. We're just implementing all the technology capability.
That one's in a low margin right now, but we think that can be scaled up very profitably over time.
That's helpful. Looking at the presentation today, you show us a lot of the technology that you've kind of focused on, and looks like you have a very good, attractive platform. How defensive it is or how easy it is to be replicated by some of your competitors?
The thing, and this is very critical, there are a lot of tools out there. Someone that says, well, they can get these tools and put them on there and put them on the desktop. They can license them themselves, and we'll do that and put it in the network. They have some of what they provide, let's say an independent. I would probably say the wirehouses are the ones that probably have more of the architecture and technology in a more integrated fashion. I would just say we're state-of-the-art around the whole makeup of the integrated with the advice and how that is. Wirehouse has probably got excellent ones around managing investments or even wrap accounts. We're putting it all together. Even where we added our CRM system of Salesforce, we took the latest of their software.
We upgraded for what we want to do with it, integrated into all the other streams with the data flowing, the client and the advisor experience is all around that hub. Other people can do it, absolutely. Having said that's how we've did it. A lot of people talk about, we put that tool out there. We can put tools on every day. This is all managed, all cyber secured, all data secured. That's what we've done. I'm not saying it won't go away or someone will catch up, but that's why we continue to invest to evolve. Yes. Let me start right here, we go here.
Thank you. Erik Bass from Autonomous Research. First, on advice and wealth, is there anything that you could look at from an M&A perspective to accelerate the advisor growth? I know that there's private equity platforms and other things that have been acquiring practices, and they may come to market. Is any of that of interest to you, or is it not the right fit?
We think there are certain aspects of some of the firms or some of the ones that may come to market that would fit in. I would also say, there were some larger ones even that people came to us when they were out there, and we passed on because we just don't want to associate a bunch of people. Now, at some point, they could be good advisors, and they were good firms, but it's very important that we want the consistency, the relationship, et cetera. We just don't want people associated. Yes, I think there are. We're going to be looking for them. We think people are starting to recognize the difference, but we wanted to invest to bring this to life more fully. Some of the advisors you just heard in those screens, they didn't know about us previously.
They didn't know what we had. Now we're starting to really market ourselves, to position, to get out there to explain it. I actually think there will be some very good opportunities for us.
Thanks. One question on insurance and annuity cash flows. If I look at the dividends you've taken out, the $700 million-$1 billion, that's either 100% or more of the pre-tax earnings you're getting. How are you doing that? Secondly, is that a sustainable kind of payout ratio going forward?
Walter will cover it, the reason is we continue to move away from more capital parts of the business. We de-risk it, we hedge it differently or better. We, for instance, like our fixed annuities, you saw that we went that. We didn't want to go out there with more spread business. Now we just reinsured it, that's why it's $1 billion versus the $750 million. That's all I'm saying, is that's what we continue. Those earnings that you see will continue to be cash flow.
Thank you.
Okay. Yes.
John Nadel from UBS. Thanks, Jim. The first question is just a housekeeping one. I think you had mentioned on a recent conference call that your expectations is that the bank could generate upwards of $200 million of PTOI within about five years. Is that still the case?
Yes. Walter will cover this a bit more later, I'll just leave it for him.
Okay.
You want to answer now? Go ahead.
Yeah, obviously.
Got it. That's perfect. Jim, it sounds like this morning there's going to be a pretty big merger. I don't know if it's actually been formalized yet, but obviously there's a lot happening in the sort of gathering of assets space. If a Schwab Ameritrade gets together, do you think it changes the landscape for your business in any way, shape, or form?
Well, what we try to explain to you, don't get me wrong, we know Schwab's a good competitor, TD Ameritrade's a good competitor. The wirehouses, the banks, big banks all trying to do. I would actually say is it makes my business more valuable. There's very few that has a network like us, a strong consumer value, deep relationships that we bring to life. I think the value proposition we do is well. It's differentiated. We invest in it. The consumer mindset really wants it. To me, there's going to constantly be changes out there. We could maybe look at us playing in the direct world more down the road. I would just say it just makes my company even more valuable.
Do you think that there's any chance that that kind of size and scale puts even further pressure on fee rates and-
Well, the fee rate's down to zero in what they do. I'm not sure who
Fair point.
Could be negative.
Maybe negative interest rates. I don't know.
Thanks. Thomas Gallagher, Evercore. Just one follow-up question for AWM. Just the comment that was made that the pricing schedule is going to go from 13 schedules to one schedule starting October 1. What would the aggregate impact on revenues to Ameriprise be when those changes are put in place? Is it up or down or flat?
It's up a bit because of the different ways when the different schedules, SMAs were priced differently, discretion was priced one way, firmed this way. What we did is we evened it across, and it actually gives us a little incremental benefit. It's very immaterial to either a client or advisor. You're talking a half a basis. We got $300 billion of assets. It's pretty much neutral to slightly positive.
Got you. Then just question on, as you bring on and recruit advisors, how should we think about kind of marginal margins, if you will? You're in the low 20s in that business. Fully loaded year one after you hire these new FAs, does that put pressure on it? Is there an acquisition cost we should think about? How would that compare?
It's a great question, let me give you this. Some people, when they're talking to you about their expense in recruiting, they say, "Well, the cost of that acquisition, the amortizations, is separate from my EBITDA." All those numbers you see with all the recruits, it's all buried in that profitability. All the expense, the amortization, the startup cost, the transfer cost, the payback of what those loans are and what we amortize is all there. It should be no different than what you're seeing. In fact, as we ramp up further, part of the increased expense you saw this year was part of bringing in more recruits and bigger recruits. To me, that's what we have in that expense base. We don't put that someplace else. We don't say the amortization cost is below the line. It's all in there.
The profitability and the return is very good because, again, we look at the type of advisor, we look at how their productivity can be part of it and grow, and we look at the risk profile of the advisor.
Got it. Just final question, Jim. I know you had mentioned that one of the differentiating factors is tail risk is low in your business and the cash flow is very high. The fact that even if you were to deal with the more extreme scenarios, you think it would be taken care of with the cash flow in a year in the life insurance business. That being said, have you looked at potentially reinsuring long-term care in the sense that recognizing it could be expensive versus retaining it could also improve your multiple? Have you taken a serious look to that? Because Wilton Re is a counterparty that's done some deals. You have a mature book. It would seem like there could be a potential transaction there for you.
Tom, listen, we are seriously looking at what the options may be. We're not wed to anything. As I said, if there is a reasonable price to risk transfer that we could be done with a solid provider, we will look at it or do it. We're not concerned that we would take a short-term adjustment based on it. We can afford it. That's all I'm saying is some of the things initially of people, whatever, just like it gets confusing. You got to have people who are truly informed, understand how to evaluate it, and that's coming about. I do believe there will be opportunities, and I do think that you will see that we will look at it very seriously.
Okay.
Okay. Question over here, I think. Sure. Okay. Anybody else before we take a break? I'm out of time, actually, but we're going to do more Q&A at the end after the next two presentations. I appreciate your time and attention. Okay, we'll break, and I think there'll be refreshments out in the lobby.
Our meeting will resume at 11 o'clock. Thank you. Ladies and gentlemen, our program will begin in five minutes. Please begin taking your seats.
Ladies and gentlemen, may I have your attention? Please take a moment to silence your mobile devices. Our program will begin momentarily. Please take your seats. Okay. We're going to get started again. As I said, we're going to cover now the asset management business, then the overall financials for the company, then we'll do another Q&A session. We're right on target, right on time, we'll just continue to move along. I want to introduce the next section and the team. Very clearly, as I said, we've built a very strong global asset management. We understand the competitive pressures.
We understand the dynamics of the industry. One of the things that I want to just convey to you is that as a firm, we moved from a proprietary asset manager, we did a number of acquisitions, we grew through third parties. There is a lot of good opportunity as we refined our platform, expanded and continue to expand our distribution. We're made up both U.S. also internationally, not just selling products abroad, but really established in the U.K. and Europe. From my perspective, there is a lot for us to continue to do. We know the passive pressure in the U.S., we can carve out good space if you got good solutions.
The teams really worked on what are the client needs, what are the solutions and capabilities we have, how do we maintain good, consistent competitive performance, how do we expand through those distribution channels, retail, institutional, how do we build from those capabilities solutions that we think will be in demand? One of the things I will say as a capability, we're not going to spend a lot of time on it, is, again, this was a firm that we know how to re-engineer. We know how to deal with cost structures. We know where to invest. We've been doing a lot of investment over the years, taking out costs at the same time, maintaining good margins.
With that, I'm going to turn it over to Ted. Him and a few of his colleagues are going to walk you through the global asset management business. Ted.
Jim. Morning, everybody. I wanted to start with just a few overarching themes that I'd like you to take away from the presentation. The first is, as Jim mentioned, we are a global player. We've got a very good business that's integrated with Ameriprise. You heard a number of my colleagues talk about that earlier. Obviously Ameriprise is a very significant client for us. We have really good product and capabilities, and we're going to talk about products and capabilities a little bit. Very good investment performance, very strong distribution. We've made a number of changes that are starting to take hold in our active space. We're not there completely yet, but we've got a lot of opportunity going forward, and that all leads to a very strong foundation on which to build. We have great culture. We have great people.
Our hiring records suggest that there are plenty of people that want to come work for Columbia Threadneedle Investments, and they know that we've got a good game plan going forward in which to compete. If you take a look at where we're at right now, we've got through organic growth, through acquisitions and other investments, we have a very good business that's diversified across clients, across geographies, and across different types of assets. We're well-known in equities, and we have a really great opportunity in fixed income, particularly in the credit space. We're very excited about the opportunities that are in front of us there. One of the other things that you need to know is that we have a really foundational investment approach that's based on research. If you're out there seeking Alpha today, it's quite frankly, all about the research.
Our investment approach is unique, in that we have a micro view, we have a macro view, but we do not have one overarching house view. Our five P governance system allows us to have multiple strategies across multiple different locations and yet be able to govern it under one framework. That's pretty unique in our industry. More importantly, we share information globally, and Colin's going to talk to you more about this. The information gets shared seamlessly across the platform. We are a global investment organization. This is a set of products and capabilities, and I'd urge you to think about this 616 different ways that we can go to market as a set of capabilities across a broad set of distribution methods.
It really boils down to 110 strategies, and the bold on these slides indicates to you where we've added a capability or where we've redesigned it. We're going to take you through that a little bit more, but importantly, sitting within those boxes are franchises. We have places where we're really strong and where we have grown the business, and where we can continue to grow the business as part of the active space. On top of that, we've been building our brand. We started to do the work. We've done the work to be a global asset manager before we ever adopted the brand. We launched the brand in March of 2015, and we really began to do a really aggressive set of print, digital, and TV advertising starting in 2017, and it's having an effect on brand awareness.
You can see that the U.S. brand awareness has grown very strongly over the last couple of years. We enjoyed a lot of brand awareness in Europe and the Asia Pacific region, largely because of the Threadneedle name, where it was pretty well-known. We're going to continue to invest in our brand. Brand reputation recognition is very important in our space. We're not going to stop where we are right now. This is a graphic of our distribution capabilities. Scott Couto and Nick Ring are going to take you through this in deeper fashion. I mentioned to you that we're a global organization. We run the business regionally for the retail side of the business. Our institutional business is global. We run it globally. We will take you through the institutional side of this through Bill Landes.
Importantly, underneath this though are a series of anchor clients. I just call out Ameriprise and Zurich as two of the primary ones there. We've had a long association with Zurich since we acquired Threadneedle. We continue to do a great job for them. They continue to allow us to manage their U.K. assets. Of course, Ameriprise, you saw the multiple places that we are integrated across this ecosystem that we derive great benefit from. That collaboration allows us to get better, allows us to serve advisors, allows us to serve their clients. That's very, very important and quite often underestimated in terms of what we do. Behind the scenes here is a very important thing. As I mentioned, we did the work first to become a global organization.
One of the things that doesn't get talked about enough in this business is how people are putting together their operating environment. We have an integrated middle and front-office operating environment that is absolutely essential to, one, being able to share the information as a global firm, two, be able to compete in the solutions business. If you talk about bespoke solutions for clients, you're going to have to be able to process efficiently across your middle office and front office. Our back office is a combination of outsource and insource. It works really well for us. We're going to continue to drive operating efficiency into the business. A lot of folks out there who've done acquisitions just don't spend the time in their middle and front office. We've done that. It's going to make a big difference for us going forward.
We are not immune to any of the things that are out there affecting the asset management industry. We want you to know that we recognize this. The overarching theme across all of this is value for money. We're hearing that from clients. We're hearing that from regulators. It permeates all of these challenges to the industry out there. We think we've got a game plan that will allow us to grow within the context of a very challenging environment. It allows us, quite frankly, to also deal with an evolving regulatory environment. We actually look at the evolving regulatory environment as an opportunity, not so much a challenge. Jim mentioned earlier that we are very good about re-engineering across our business, that expense management is part of our skill set.
We all know there's pressure on the business. As you can see, we've been able to achieve margins in the mid-30% range, and that is looking at the business holistically that allows us to do this. We manage the expenses. We manage the fee rates. We decide where we're going to put valuable investment dollars to work to try and get greater efficiency in the business to drive better performance for our clients. We do all of that, and that's not just a recent phenomenon. We've been doing this for years. It's part of the operating ethos of Columbia Threadneedle Investments. Our flow rate, and by the way, this includes ex-parent activity. Our flow rate is in line with peers. We're not satisfied with this, though. We're just letting you know that we're in line with our peers.
The key is on the next slide is we're beginning to gain traction. We've been able to do a number of things across the distribution side of our business that Scott and Nick and Bill will talk to you about that has allowed us to make meaningful improvement. We have also navigated Brexit. We were ready for Brexit on March 29th. That work is all done and ready to go, and we're poised to continue to take advantage of opportunities for us in the U.K. and continental Europe. The active management business still is a good business. I want you to be able to see that there are a lot of opportunities across a business that will roughly grow at about 5% cumulatively over time.
We play in these spaces on this slide, and we think there's a tremendous opportunity for us to be able to grow within this environment. Active is still a very, very good business. Finally, I wanted to just focus on these four boxes in terms of how we're going to drive growth. Each of my colleagues is going to take you through these boxes to talk to you in greater detail about how we intend to drive growth here, and how we intend to take advantage of the opportunities that sit in front of us. I'm going to introduce our Chief Investment Officer, Colin Moore, who will take you through the investment side of our business. Colin, come on up.
Thanks, Ted. Thank you. As Ted mentioned, we very much view some of these challenges that you hear about as the opportunity. How do you tackle them? It's very clear if you think about the challenge from passive, that the active industry needs to improve its value add. We can pretend we do a great job, but we really have to start delivering higher value add. How do you do that? That really centers around research. I strongly believe that research has been the key and the driver of our value add so far, in which we've been quite competitive. How do we begin to improve that from here and deliver what the market is evolving towards? We've been investing in our research group. We want to have more proprietary research.
We've been adding to the number of analysts and the associates that back them up. We've also been maintaining and developing our quantitative research. People were into quantitative research 20 years ago around the crisis. Around 2008, a lot of people got out. We maintained our effort there and have continued to develop it. We've developed our data science. We understand that that can help us in a number of ways. Let me give you a quick example. When we surveyed our fundamental analysts, they were spending between one-third and two-thirds of their time collecting and collating data. That is not what we want talented people to be doing. We want them to be driving insight.
Now that we've developed more tools of helping them to collect that data for their industry, whether it be transport or medicine or whatever it happens to be, they are now spending more time in developing the insight. We called it not artificial intelligence, but augmented intelligence. How do we help and support our research teams to get more insight of what we're doing? As you can see from the slide here, one of the most interesting things that we've been developing over the last few years, and we still more to do, is we took an inventory of the number of research outputs that we have globally, and it's around 10,000. Almost no one, including me, knows where they all are or what they're all saying.
As you develop data science, it's not just about all the cool stuff about how to read every medical journal that's out there, which we're doing, but it's also about how to bring all that information together. There is tremendous insight in what we're producing if we could all share it better and debate it among ourselves and garner more insight from that information. That process underway is bringing people together, and that's what Ted was referring to when he talks about us becoming a truly global organization as opposed to an organization with a lot of international offices. Our performance has been quite good. I'm very proud of the research we've already been doing, and it's already been driving, as you can see from the left-hand side here, pretty competitive performance.
Again, as a starting base, I am very proud of that, but it is not sufficient to drive us forward. We need to continue to enhance that. The other thing that we're looking to do is broaden the areas in which we have expertise. Ted mentioned that we are known for equity, and I would say we had, at least in the past, been known for quite narrow areas of equity. We've broadened that out. We've broadened our product ranges in fixed income and other areas, and now have some pretty leading performance records in those spaces. We increasingly have to be able to offer a suite of strategies to folks to be able to answer the client need, not just an individual product.
Build research, build a wider range of strategies, but even so, those strategies on their own are not sufficient to help us drive the business forward and solve the client need. We have to think about what those are more holistically. One example that's shown here is income. As I'll get onto in a moment, but what I might mean by income may not be the same as what you might mean by income. You cannot just create these single generic terms and hope to solve that. Bill Williams, in his presentation, mentioned he joined Ameriprise because they thought about the client holistically and not about selling an individual product. That was his initial interview. AWM is a leader in that area of thinking about the client.
Frankly, the asset management industry and Columbia Threadneedle needs to get to that point, and we are continuing to evolve towards developing research and strategies that are aimed at solving the client need, such as how to generate income, how to navigate volatility in the marketplaces. Many people, they don't achieve their goals because, in fact, they react badly to the volatility. You can try to coach them out of that, and that's what advisors do, but you can also try and create products that naturally dampen some of that. We're very keen to see that we are developing a range of strategies that aren't just because we want to advertise having the best five-star small cap growth fund, but that how it fits into solving a client need going forward. Let's take a look at this income area that I just mentioned.
Depending on your age, you may have a very different requirement. You may be ready to actually draw your capital down to help fund your income. If you were younger, you might still need to preserve your capital because you have to allow for inflation over time. It's not sufficient to just create a five-star equity income fund or a great yielding high yield strategy. You've got to be able to think how you blend those together so that when our teams go outside and begin to talk to the distribution partners about it, they have a range of offerings, a menu that they can select that allows that advisor to actually deal with the specific needs of their client. The one-size-fits-all era is over, and we have had to evolve towards that, and I think we're making tremendous progress in that area.
I would love to tell you, of course, as the CIO, that the only thing you need is good investment performance. That is now the necessary but no longer sufficient condition for helping solving the client's need or driving a successful business. Think about that suite of products that we looked at a moment ago around how to develop equity income, or I'm sorry, how to develop an income strategy.
If you look at the flows here, by partnering with our colleagues in distribution, and then they in turn partnering with advisors, et cetera, we're beginning through selling the income concept to sell in dividend income, to sell in mortgage opportunities, which is structured products, to sell in the municipal area, which obviously brings in a tax efficiency to it, and to sell in what we call strategic income, another one of our successful fixed income strategies. Again, this idea that I mentioned earlier of having a suite of products that's able to be offered as a menu is quite critical in helping to deliver those solutions. I'll turn it over to my colleague, Scott, now to talk about the work that's being done on the distribution side.
Colin. Good morning, everybody. A pleasure to be with you. My name is Scott Couto. I lead North America for Columbia Threadneedle. Between institutional and intermediary, investors have entrusted us with about $340 billion of their capital. As Colin mentioned, we offer a broad range of very high-performing investment capabilities to meet a variety of different solutions within this space. In fact, it's one of the several reasons that I'm proud of what the team has delivered to the end investors, the results that we've delivered to the business, and really excited about the future growth potential going forward. As you can see, our capabilities are distributed across multiple disciplines in equity, fixed income, and increasingly multi-asset solutions. About two-thirds of our North America business is what's characterized here as retail. This is intermediary advisor-driven business. One-third is going to be driven by the institutions. I'll cover intermediary.
My colleague, Bill Landes, will cover institutional later on. Within the intermediary business in North America, it's about $230 billion of total AUM. At the core of that business are the nearly 90,000 advisors representing 700 different firms who we serve every single day. Our size gets us to a top 15 rank in terms of long-term, and we're a leading provider in SMA as well as model delivery, which I'll talk about as increasingly important and will be a growth driver for us moving forward. I think our position within North America helps us to address some of the challenges that Ted talked about earlier in his remarks and also provides some compelling opportunities for growth moving forward. In total, we think the intermediary market, advisor-driven, is about $38 trillion in North America, and there are several reasons why we think we can grow significantly from here.
The first, Colin, you did a great job talking about this, the partnership between asset management and distribution is critical to making sure that our best investment capabilities are very purposefully aligned to meet client objectives. I think that's a really big point of differentiation. I think it's something we do well, and it's starting to show up in areas like equity income as well as certain areas of the fixed-income marketplace. Secondly, the investment in deepening of partnerships with our key distribution wealth management firms is going to be a critical driver for us, and I'll speak more about that. The growing demand for models. Lastly, we've begun to use data and analytics in segmenting our marketplace. I think this is going to create a good foundation for future growth. We're starting to see results today.
Ted mentioned this. When you look at the several last quarters of flow, you see an improving profile. Within our competitive set, we're a top one-third player in equity, and specifically a lot of strength in income-oriented equity, which I think has a strong demographic tailwind behind it. Now we're about at our peer median in fixed income. This is an opportunity where we have a lot of room to grow, and I think we've got a great set of capabilities to do it. How are we doing it? Packaging, pricing, and delivering a variety of different investment capabilities aligned to the needs, investing in partnerships, data and analytics at the core of that. Let me give you some examples, three that will drive growth moving forward. Specifically, the deep and select partnerships we have with the street, some of your firms, in fact.
Recent examples of this would include aligning with Pat, Bill, and Deirdre's team as they rolled out the Ameriprise Client Experience. We spent the better part of 2019 side by side with our colleagues in AWM, talking about how the experience would matter for advisors and illustrating the appeal of the Columbia Threadneedle solutions through this lens. That's one example, but it doesn't stop at Ameriprise. With a major national broker-dealer, they had made a big investment in wealth management tools, and they asked us to partner with them as we roll that out, so we were able to illustrate within their tools the power of the Columbia Threadneedle offering. Another firm asked us for help similarly on their mobile applications.
In every case, what we try to do is understand the capital markets views for our partner firms and align where we can to create a differentiated experience for the end investor there. What does this mean when we differentiate and partner by aligning with our firm's objectives? It means that we had significant market share growth over the last several years, more than 15% in sales at six out of our top eight focus firms. We had a record year in terms of model maps, about five times ahead of where we were last year. We also had a record year in terms of product placements or when we have capabilities up and approved for sale within our distribution partners. We were the first open architecture, non-prop model selected at a major broker-dealer. This is our Adaptive Risk Allocation Portfolio, what we call ARAP for short.
I think that the strategic and select partnerships that we're engaging in and investing in will make a difference. Secondly, model growth. Big opportunity. About $9.5 trillion in advisory today, we think across the business. Compare that with what's still in brokerage, a little over 11. There's significant room to run. We're a top 20 player in SMA, a top six player in model delivery. We think that this is going to be a key driver as advisors look to differentiate their practice, and they're coming to us increasingly to do this. Last point that I'll make before I turn it over to my colleague, Nick Ring, who's going to talk to you about EMEA, is the investment that we've made in data and analytics. I think this is rapidly becoming table stakes for people in our business.
It was transformational for the 2019 results, I think creates this great platform for growth. What did we do? We want to find those best fit advisors with whom we can partner. They want a relationship. They want to own more than one capability, and they tend to have longer holding periods. We've got a lot of data on these advisors internally, externally. Some we buy, some we get from our partners. We've got a robust process that builds that into a segmentation. What does that all mean? It means that our segmentation drove an 11% improvement in gross sales. If you were a prospect in our system, you were 11 times more likely to become a client. If you were a client that wasn't engaged, you were seven times more likely to re-engage with us.
I think, I'm proud of what the team's done in terms of serving investors. I'm happy with the results that we've delivered, I'm really excited for the future growth that some of this can deliver over the long run. With that, I'd welcome my colleague, Nick Ring, who can talk about the EMEA business.
Thank you, Scott. Perfect. Good morning, everyone. I'm going to start off just talking about the view from the Pan-European perspective, I'll drill down a little bit more into the U.K., From there on to the continent. Firstly, the headline here is that there are $128 billion of Pan-European client assets and EMEA client assets. We are an at-scale and diversified business. That is predicated on a large number of both local and global investment capabilities, which we run from our London office. Very importantly, our London team is a fully integrated part of the investment platform that we've heard both Ted and Colin talk about. At the overall EMEA level, you can see that we have over 800 employees, of which over 20% are investment professionals. They are providing that local and global engagement to our clients through their local knowledge.
In terms of diversification of our business, you can see that we're around two-thirds institutional and one-third retail. Within that, we have a few of really significant anchor clients. We heard about Zurich, also LV= and St. James's Place. These firms provide us with significant stability and scale from which to drive the business. Also, we have great diversification by asset class in terms of being both equities, fixed income, and alternatives. If I move on now to focus a little bit on the U.K. marketplace. Firstly, we are a very well-known and respected player in the U.K. market based on the fact that we have been in this marketplace for multiple decades. We look after almost $100 billion of U.K. client assets, That is supported by a very broad range of intermediary clients.
I am going to focus now more on the retail side of our business because Bill, my colleague, will be coming up and focusing more on institutional. Given that breadth of intermediary relationships, we've been very proud to develop a top 10 position in the retail market. We have been paying very close attention to the development in the U.K. market and the shift away from the purchase of pooled funds to the use of sub-advised accounts. There, through the credibility of our proposition and the focus on delivering against the client's needs, we have been able to gain a dominant position and actually being the number two in that market in terms of wholesale sub-advised mandates.
All of that, of course, is underpinned by the breadth of our track record, the range of capabilities that we have, and the consistent outperformance that our investment professionals have been able to deliver. If we look at the U.K. landscape, I think there are a couple of big themes that have been going on here. Firstly, from our kind of client and intermediary perspective, we've seen a continuing shift towards that sub-advisory model and one that we've been able to exploit and will continue to do so. We've also seen consolidation amongst the intermediaries, that means that it's far more important that we understand how our intermediary partners are working and being able to work with them in advance so that we remain a winner and continue to grab a proper share of their clients' wallets.
At the more macro level, I think there have been two very significant kind of factors driving the market. The first has been the regulatory agenda. The regulatory agenda has been significant at the industry level. I have to say, at Columbia Threadneedle, we have taken that in a very positive way. The regulatory agenda is really driving towards ensuring that our clients have a better outcome in terms of the client experience and in terms of the risk control around everything that we do. We have absolutely embraced this agenda, it has been a very extensive agenda, it's required us to dedicate time and resource to get ahead of it. I'm delighted to say we are now in a very robust position to be able to exploit that, leverage off that, and continue to grow our business.
I guess the key point here as we look to the future and where we see some opportunities both in the U.K. and outside the U.K. is around Brexit. We've heard Ted talking about the fact that we see Brexit as a positive catalyst for change, absolutely, we see the opportunities for this in the U.K. market. This is primarily because whilst the U.K. market had been growing very significantly pre-Brexit, since Brexit, it's pretty much flatlined. In addition, what we've seen is that clients have moved away from some of those core asset classes because of the level of uncertainty around how they're likely to develop. As we move into 2020, we feel pretty confident that there will be resolution to Brexit.
With that resolution, we will see greater confidence, and that confidence is likely to evidence itself in clients moving back into some of those core long-term enduring asset classes such as U.K. equities, European equities, and U.K. real estate. These are three particular asset classes that Columbia Threadneedle has built a very significant franchise on over many, many years. As we see that movement back into the markets, we feel very strongly that we will be able to gain a bigger share of that movement because of the strength that we have in those core franchises. Also, we see the continuing movement towards sub- advisory. Again, because of the strength of our position there and the work that we've done, we feel we will be able to leverage off that.
Finally, we have been, and as we've heard before, been spending a lot of time developing our brand, getting that awareness, that comfort, the alignment between what the client's looking for and what we know we need to deliver for their benefit. That will allow us to continue to benefit from the growth in the defined contribution plans that we are seeing in the U.K. Now let's move on and focus a little bit on the continent. I think the key thing here to emphasize is the fact that we have been on the continent for many years. We have been growing our business gradually by investing in it and committing to it. We now found ourselves with close to 70 professionals, client servicing professionals on the ground supporting our intermediaries and their end investors.
At the same time, we've been using Brexit as a catalyst to help support and extend our platform on the continent. Specifically here, we have launched a range of new vehicles on our CCAP platform, such that we have a much broader range of capabilities that we can now take in a very local sense to our clients on the continent. As part of that project, we've moved EUR 14 billion of continental European client assets from our U.K. platform to our European platform. Very importantly, those 14 strategies that we now offer that we didn't previously, they are strategies. They are capabilities that we have been running out of London for many years.
What that means is that we can leverage off those track records, many of which have been in existence for three or five years or more, such that we can gain instant traction across our continental European marketplace through the utilization of these strategies now delivered via a localized platform in Luxembourg. It's that combination of local engagement and support, combined with the breadth of our global investment capabilities, which allows us to really exploit this market. As we continue to invest, we really see growth. Why is that so important? Well, if we look at these two graphs, what we see on the right-hand side, I think as you ought to be looking at them, is the fact that the continental European market is a substantial market. We have over a trillion euros of addressable assets that we can target.
We also see, if you look at the left-hand side, that the compound annual growth rates of many of these markets is very substantial. Also, there's an opportunity to drive the client engagement into the use of mutual funds. Those two factors suggest that the European marketplace will continue to be a very strong market. We've identified these opportunities, and over the last few years, we have continued to invest in these marketplaces, by adding more resources on the ground, more local expertise, so that we can be more relevant and provide a greater range of capabilities to support our intermediaries and their end customers. In conclusion, I think that the European business has been a business that we've been focused on and developing for many years. The U.K. provides many opportunities, and I think coming out of Brexit, we will see that momentum growing.
On the continent, based on our footprint, the breadth of capabilities we now have as we re-engineered our European platform, we'll be able to see and accelerate that growth. With that, I'm going to pass over to my colleague, Bill, who looks after and is responsible for our global investment solutions business and North American institutional sales. Bill.
Thank you, Nick. Good morning, everyone. As you listened to my colleagues, you had the opportunity to hear about our powerful investment story. You also have had the opportunity to hear about our very strong foothold in EMEA from a business standpoint, and you had the opportunity to come to understand the strength we have in intermediary distribution. What my role is to take you through how we have re-energized our institutional capability and all the things that go along with that, and especially the way we've aligned institutional distribution with our solutions capability to make sure that we are contemporary in the ability to drive growth within the confines of the asset management business. Just telling you a little bit about our institutional business first, we actually have a very strong footprint. We have $197 billion worth of institutional assets globally.
We have had a significant expansion in our institutional sales capability in the U.S. We have expanded our presence in APAC significantly as well, and we've entered new markets. Canada, we've just opened an office within the last year in Sydney to carve a place in new markets. We recognize the landscape that is out there in institutional, and it's gotten more competitive, and we've been responding to that more competitive nature. Asset management firms have to evolve to a client at the center mandate. Colin mentioned that, others have mentioned that. You have to begin with the needs of the client, the challenges that they face, and you have to build partnerships institutionally. In order to do that, there's a growing demand for what we call bespoke solutions and marry those with our individual capabilities that we've already developed a lot of great expertise in.
The other thing that's happening in the landscape in institutional is the performance standards have been raised. It requires a broad, coordinated approach, including what you do in your consulting activities. We continue to enhance those capabilities as well. What we want to do is take advantage of the compelling opportunity. We've actually aligned institutional distribution with solutions. We've actually incorporated those into one role. The idea there is to be able to offer very powerful individual strategies, because we still are a business of individual strategy delivery, but being able to build custom bespoke solutions side by side to those individual strategies. The rest of my presentation is going to be how we're weaving those together and how we're taking advantage of data analytics and other contemporary technologies in order to build a bigger, better, broader business. Why are we doing this?
I don't have to tell all of you, because I used to be one of you in terms of doing analytical work. You want to be in arenas that are going to grow. One of the areas of asset management that has been growing and continues to be anticipated to grow is actually the bespoke solutions opportunity. While single strategies have been invaded by passive, bespoke custom strategies give you an opportunity to grow. We're taking advantage of that. If you look at the history of the asset management business, I've been in it for a while, way back when asset management firms were parts providers. You had to manufacture those parts and do them really, really well. We happened to do that. That evolved then to a platform of needs-based part providers.
The first time that people started to think about, I'm just not manufacturing widgets, I'm going to come to understand what it is that people want to do. That evolved then to multi-asset providers, where you started packaging pieces of things together. That has now given way to where we are as a solutions provider with the full range of capabilities that you would expect a solutions provider to have. That's the area where growth is going to happen, and that's where we positioned ourselves. Some insights into how we approach solutions. We have to be able, alongside of delivering the really strong individual strategies that we have, you have to be able to build to suit custom strategies. What differentiates the way that we do it? First of all, we take an open architecture approach.
We have to be able to deliver outstanding capabilities internally. We actually have an $82 billion third-party manager business that not many people know is a part of Columbia Threadneedle that we can use to build any type of integrated portfolio that a particular institutional or intermediary client may want to have. We have a quant capability that allows us to customize any range of portfolios. As a firm itself, we have a broader set of capabilities than most organizations. We can do traditional alternatives. We can do active and passive. We can do tax efficient. We do real assets and do them really well. Our Lionstone real estate capability based out of Houston is an outstanding capability in the real asset space. We do indexing and strategic beta.
We do responsible investing in ESG, we have a wide range of capabilities beyond the things that we bring to the table in asset management. I would challenge you, in particular, those of you in the analytical community, there's only a small handful of firms that can deliver this range of capability. We've actually been a solutions provider now for about 20 years, and we've got a formidable business, depending on how you want to measure it. A 20-year legacy, $150 billion multi-asset business, a substantial multi-manager capability. All those things have mixed together. We have an insurance capability that is second to none because of the close working relationship between John's firm and our firm and the other things that we're doing. How do we go about executing this strategy?
We have redesigned our approach to institutional distribution to think in terms of consultative sales, because that's what you have to do. You begin a conversation with how can we partner with you? What needs do you have? What are the challenges that you face? How can we help you and meet those challenges? Sometimes that conversation ends with, we have a really good small cap value II strategy, and that's the best thing for you, and we deliver that in. Other times, it results in building regulatory sensitive regional insurance portfolios that are broad and complex, designed specifically to the needs of an insurance company. We can use our open architecture approach. We can tap into markets that are broader than what many people think.
We use the technology and solutions, we deliver needs-based outcomes, we leverage it off of the flexible operating platform that Ted was making reference to earlier. Not only do we have a wide range of capabilities within this wide range of capabilities, there's actually a significant number of them that over a three and five-year period of time have top quintile performance relative to their competitors. That's a powerful statement just in itself. What's been the result of all this? We've actually been gaining some pretty good momentum. Momentum that you may actually not know that we've been gaining in terms of driving growth into the asset management business. We've been delivering multi-manager portfolios. We've been delivering custom fixed income. We've already heard Scott talking about building multi-manager models. We're a leader in thinking about that.
On the right-hand side of the slide, you'll see that we've had a big win this year with a substantial Asian insurer, we're building off of that. We've had a big win in the model delivery business within solutions on a large broker-dealer platform and a large win on a major retirement platform. All in all, we have, in the last 18 months, entertained $11 billion incrementally of solutions-related mandates that two or three years ago we could not have competed for. That's something we wanted all of you to see because that's the platform we're building off of. Pulling together everything from my colleagues who have spoken so well before me, as an asset management firm, we're taking a leading position in the U.S. and globally. We have broad, strong investment capabilities.
We're focused on multiple opportunities to drive growth, and we'll continue to drive strong margins and profitability. As you step away from the asset management part of this presentation, please keep those things in mind, and it is only appropriate at that time that I introduce my colleague, Walter Berman, the CFO. Walter?
Thank you, Bill.
Here you are, sir.
Okay. Hi. I'm the last one, let me try and provide the context as from a financial standpoint. Here you see the slide that brings together what my colleagues have discussed with you today. It doesn't say one thing that I want to make sure you guys walk away with. This makes me a happy CFO. The reason why this makes me a happy CFO is because when you have a firm that actually recognizes the value of meeting and exceeding your clients' needs and executes on that efficiently and effectively, that makes my job very, very easy. What I mean by that, if you just take a look at our performance in 2016, obviously our performance over longer periods has been similar. You can see why I'm happy. Adjusted operating earnings up 13%, $650 some odd million.
EPS growth from $933 to $1,583 in that period, up 21%. Adjusted return on equity, 38%. Shareholder return, $2.3 billion, which should make everybody happy. Free cash flow, 150% in 2019, obviously take into consideration the auto and home and the reinsurance, and then our excess capital position in the range of approximately $2.3 billion. These are excellent performance measurements, and I think these are the things that we have continued to deliver. This is from an AMP standpoint. When you start talking about the key drivers of that from what you've heard today, looking at Advice & Wealth Management, where we are a leading Advice & Wealth Management company that has delivered continuous performance, you see we are large. We have $612 billion of assets. Half of those are in the wrap business.
We have grown profitability to $1.5 billion, and our basic 90% of our revenue is fee-based. The key element, we've done this as we talked about by managing margin and taking that margin up from 17.7% to almost 23%. Very good. That's good on an absolute basis, but it's also very good on a comparative basis. You can see here AMP Adjusted pre-tax operating income up to 23%, I mentioned. Revenue per advisor versus peer growth, 8%. How does that stack up? If you look at the regionals, the independents, we've grown almost twice as much, and not just on the margin, but our earning size is substantially higher. Regional independents on growth, 3% over this timeframe. Moving to the warehouses, a lot of their earnings come from, as Jim has mentioned and others have mentioned, from banking and other activities.
Yes, they've grown their margins by 28%, but their revenue per advisor has grown by 3. Where is this going to go? When you bring all these components that you heard today together, the opportunities are clearly there. We have the base. You can see that base and where the opportunities are to grow that base. We also, by penetrating our clients and certainly providing the comprehensive advice that we've talked about, will allow us to meet their needs and certainly meet our shareholders' needs. Growing the bank. We talked about growing the bank, $200 million. That is actually, I believe, at the lower end of the scale as we lay to it based on the opportunities that we see, and then attracting more advisors and exploring into additional channels. We will continue to focus on our fee-based business.
We will certainly manage our expenses well, both from an expense standpoint and relative to its revenue to ensure that balance between growth and prudence. Then maintain our target for 20-plus. Not changing anything. It's just maintain this over a longer period, 20%-plus. We know we're at 23, please take it in the context. You move on to asset management. Asset management has also demonstrated in a very tough environment how it can perform extremely well. During this timeframe, its assets have grown to almost $470 billion. Our adjusted pre-tax at $636 million is quite strong. Our margin's maintained at 36%, and with strong expense management, and as Colin has said, foundationally being the capabilities of investment performance, and that continuous, and it's investment performance that sells. The fee rate has remained constant as you look at 2016 to 2019.
Again, when you look at this from a standpoint of asset earnings per AUM, we stack up well. Certainly looking at, from our standpoint, from 13%-14%, and when you compare that to peers, we are performing well within that group. Looking at the opportunity, again, linking the strong capabilities that we have, the strong performance we have, and what you heard today from my colleagues about both expanding in Europe, certainly looking at the solutions and different elements we can do, and the foundational element of continuing our strong performance will allow us to continue to grow that business. It also will stay focused on our expenses. We invest for the future, but we have leveraged the investments we have made, which have given us operating and technological capabilities. Then again, talking about maintaining the margins from the 35%-39%.
Unique because it not only meets our clients' needs, and it meets it in a way that meets our shareholders' needs. This is a business that is stable from its earnings characteristics. It is stable from its growth characteristics because it only serves our clients, and its account value is large. From our standpoint, we believe the generation, both from annuities of $500 million almost, and protection of $276 million, is certainly a testament to the way we look at it, and it is an important element in our business mix. Again, on a relative basis, strong performance from a risk characteristics that you heard John talked about, and certainly from a return standpoint. With this business, as we talked about, you have seen the dividend flow. It is consistent.
Certainly as we go through it, maintain our strong RBC capability. Where are we going at this business? Our focus is to maintain steady profitability. We are looking, as we talked about, reinsuring parts of this business where it makes sense. The focus is on fixed annuities, and we believe that is certainly something that we will execute within the near term at rates that are acceptable and impacts that are acceptable from a shareholder perspective. We are shifting, as John said, the focus on our variable annuities to meet our clients' needs, but meet them in a way that certainly manages our shareholder perspective. The risk-return disciplines are part of the way we operate the business. It is an integrated way we focus, and then continue to manage our LTC exposure, which John went over, and then look for where it makes sense for additional opportunities.
Now, this is a slide I am going to slow down a little because I changed the word re-rated. I had a very interesting moment a couple of months ago. I got a call from a rating agency. Normally, you do not like calls from rating agencies because they are not calling to say hello. But this was actually a great call. This rating agency said, "We have been evaluating, looking at." We meet with them annually, and they have assessed that the current basis in which they rate us needs to be reevaluated. What do I mean by that? Well, today, they rate us as an insurance company. They analyze the insurance, they look at the strength of it, and they say, "Gee, quite strong." Then they cascade the rating down for the holding company. What they said is, everything is fine on the ocean, okay. Things are good.
I'm not calling about that. What they are saying, they recognize that the growth of the firm, the positioning of the firm, is now focused more on advice wealth management and on asset management. They are going to reevaluate that. That was actually a pretty good message to me because we've been explaining that to everybody for a long time. Insurance is important to us, but Advice & Wealth Management, a high multiple business, is where we've been growing. Again, asset management, a very good business where we have strong capabilities and we have strong potential.
With that as a backdrop, and looking at the growth that you just heard about, the potential you heard, the ability on the free cash flow, the return of over $6 billion to our investors, and certainly maintaining our excess capital position, I felt very good from that standpoint that the message is getting out. It isn't too often I get calls from rating agencies to tell me the message has gotten out. It's a positive. If you look at this from a company perspective and what drives then the value that I believe that, I'll use the word undervalued, is our higher growth and our lower volatility. We've shown this slide before. Going back over the timeframe, because you look at us over a longer timeframe, 2012 to 2019, we have demonstrated pre-tax earnings of 18% with volatility of 20%.
If you go to the bottom, our peers are 37% on the volatility side, substantially higher than us, and their earnings from a growth standpoint is lower. If you peel the pieces of this, you can see that certainly wealth management is equal to us on our EPS CAGR, but they are substantially higher on the volatility side. You look at our insurance and our asset management peers, clearly way lower on the earnings and higher on the volatility. Very good. The cash flow to me is critical because it's our ability not only to generate it's our willingness to ensure that we return it.
Here you clearly see, and that is driven by the soundness of our businesses, the mix shifts within that, and the capabilities, the way we manage our balance sheet, and the way we look at ensuring that we are looking for future growth and the capability. This is a strong story. You can see this is over multiple years. It's not just over the timeframe I'm talking about, but this pattern has evolved over multiple years. Our famous chart, I'll take it from where Jim ended. I'll give you a little more color. We continue to focus on growth and aggregate growth, but obviously we anticipate and we're planning for advice wealth management to take a larger share of that. Asset management to also increase, and it's not that insurance has decreased, it's just not growing as fast. This is our perspective as we look forward.
Here looking ahead, I will tell you what these are and what they're not. The 12%-15% as we believe on EPS is what we say, and that's consistent. The adjusted operating return, we are at 38%. What I'm factoring over on average over time, where we look at inorganic or we look at different capital structures, that's all saying the base is still there. Operating percent return to shareholders, 90%-100% plus because certainly we are sitting on a strong capital capability and risk capability. Leverage, this is coming down, we believe because we don't necessarily believe as we look at the businesses, as we evaluate today, that the 36%, 37% is warranted. Again, it's part of the strategy. We're putting in a 30% factor, and then the free cash flow at 90% plus. In conclusion, it comes back to the same thing.
We think we have, and we know we have a strong, profitable, high multiple growth potential in our businesses. We've demonstrated, we've discussed that today, and hopefully people are recognizing the insights into that. Our strong margins, certainly we'll maintain them. Continuing our ability, and this is something obviously falls directly to me, working with Jim and the ERMC group, our Enterprise Risk Management group, ensuring we are able to navigate situations that evolve, but also ensuring that we're running a business and investing in those businesses for the future. The flexibility to return capital. This is all based on our proven track record. I think this creates a very compelling story for us as a company. With that, I'll bring back the person that drives the company.
Thank you, Walter. Thank you, Ted, Colin, Scott, and Bill. I think you did an excellent job of conveying what we're doing in the asset management world as well. I just want to close, and then we'll go to your Q&A, is we do have a significant opportunity to continue to grow in the wealth management business. The responsible mindset is growing. They want and need advice. They're living 30 years in retirement. It's around their goals and needs, not beating a benchmark and not just an asset allocation. Our asset management business, yes, we understand the challenges out there. We're dealing with those challenges. We've effectively invested over the number of years to create what we just showed you. We believe we can compete. We're not going to be ever the largest.
We're not looking for that, but we want to be a quality player, and we do believe we have capabilities that will continue to give us a good situation and foundation to play in. The insurance and annuities, listen, I truly understand the industry. I understand the risk and trade-offs, but this is a very different book. Any insurance company, if they took this book over, their quality of their total portfolio would improve tremendously. For us, we don't look at it as a high growth business. We look at it as continued satisfied solutions. We let other players get a lot of solutions in our network. Very clearly, this generates excellent cash flow. It's books built over decades, and we feel very comfortable with it, but we'll always look at ways to reinsure or even de-risk further and transfer that.
Last but not least, Walter just covered it. I don't know any firm out there that has returned more than its value since we started here. I can go back to when we became public. I've been leading this firm since 2000, but as a public company since 2005. We rode every wave from the financial crisis through the up market. You see, I know firms always talk about the growth if everything continues well. I look at the growth when nothing continues well, and to sustain what we have, and this is a firm that does that. I ask you are smart people. You do a lot of analytics. I take any firm, compare it to all the metrics, look at the cash flows, look at the return and say, where are we situated? We're not an insurer.
We have a great insurance business. We're not an insurer. Every wealth management has other capabilities where they get revenue like banking, capital markets, commercial lending. We have this. We'll grow a bank. It'll be a small set of the total, maybe even larger over time. Our insurance business has higher returns than banking. Our asset management business is truly an asset manager. A lot of people are trying to get in the asset management as part of the distribution. We manage not just what Columbia does, but over $300 billion of client assets in wrap that are really fee-based that we get a piece of. When you put that together, that's why this is a strong company, and we do believe it has strong growth opportunities. I appreciate giving you an update of where we are.
It's always hard to do that on a quarterly call. We're all going to get the vagaries of a quarter, of interest rate adjustment, of a market move with things. I want you to look at us not just that way, but over the cycle, over the long term, and over the foundation that's in place that can continue to generate. With that, I'll open up to any questions you have. Yes.
Andrew Kligerman, Credit Suisse. Walter had a slide up where it showed earnings as a percent of AUM, or it was 14 basis points, which was considerably higher than competitors. We're looking at a business where that number is going in one direction, and it's not up. Why should we feel good about 14 basis points when it compares so favorably to competitors? Wouldn't that likely go down, Jim?
What we're saying here is we know that there will be pressure in the fee base in the industry. This is a change for us. We had a lot of assets from some of the partners that we've had business from the acquisitions we did. As we replace those assets, we are bringing in higher fee-based business. We have a strong equity platform. As Bill even mentioned, as we look at institutional fees will come down. As we become more of a solutions provider, there's other fees there. We're even getting fees now, as Scott mentioned, on models. We don't put that into the AUM, but that's fee also that we get on models like more of an institutional business with the assets not being in the flow situation. The combination of those things have offset.
Now, having said that, we realize the fees won't go up but will come down, and that's why one of the few asset managers out there, as part of the Ameriprise expertise and capabilities, Ted and team have been able to take out a huge amount of cost. In the numbers we talked to you about, they made huge tens of millions of dollars in investments. All the regulatory change in EMEA, in Brexit. They've put in the new systems and platforms. They've developed new products that they've mentioned and where we're gaining some flows. We're expanding our distribution capabilities. We understand there's pressure in this industry. The only thing I would say is we're starting from a good profitable base with good margins. You saw in Walter's slide, since 2012, the earnings in asset management has gone negative.
In our business, even from 2016 to now, it's been flat when the pressure is there even more so. We understand the pressure, but again, we're not a standalone asset manager. You look at the totality of what we generate, we can handle that very well, and we can capitalize using what we generate as a company to even try to firm that up if we needed it or to venture it where necessary.
Just a second question. Unlocking value and reinsurance, I just saw that slide up as well. Is there anything imminent coming up, or would it be just simply a fixed annuity block?
I'll say something, and then Walter. We have the fixed annuity. There's over $800 million of further capital we can release. Yeah, we can do it today. If interest rates move, we'll get a little better price on it, but nothing's holding us back for when we're ready for it to execute it. There are different ways out there, people are looking at variable today. We're looking at reinsurance of LTC. There are different things that we will look at or consider if it's right for us against the type of return in cash flow that we currently get. Okay. Let me do one back here, and then come up here, and then I'll turn over here.
Thanks very much. Jay Gelb, Barclays. The label for looking ahead in terms of future, particularly for EPS growth, 12%-15%, obviously very robust growth rate. What type of time frame are you talking about there, Jim?
For us, Walter and I, you know that's been our commitment since we came public. I think you'll see that we achieved 18% since 2012. I can go back, you'll find it's pretty consistent. We're still targeting the 12%-15%, but it's continued going out. I don't see it changing. I think we have good opportunity to continue. Listen, in a big down market for a cycle for a period, yeah, you're going to get hit, but over time, I think just like we showed you, it's been consistent.
Okay. I'm just trying to square the comment with potentially taking leverage down to 30% from around 37% while still having operating earnings return to shareholders at 90% or even over 100% and still a very high return on equity. Are you trying to deliver a message there in terms of focusing on de-levering at all or-
No. I think I'll let Walter.
Listen, as we basically shift our business and the requirements of those businesses change, you obviously then take a look at your capital structure that supports it, and that's all that it was saying. We're not trying to de-lever. We're just trying to balance off to, again, as we go to lower capital, different aspects of it, that is something. If you look at it again, that is strictly all that we'll reexamine our capital structure and look at that trade-off. That's all.
We just got rid of the auto and home business, get rid of a transaction. We had some debt associated with what that is. We'll pay some of that down come due, we'll determine. We can always get out if we want to actually take out more for some things we could want to do. It's more of just bringing it back to a rational basis based on unloading a capital-intensive business.
Is there any potential message there as well as if there were to be a charge associated with exiting LTC? Are you trying to embed some element of that in these numbers?
I will tell you that based on what we do know in the book, et cetera, you can probably go through what our discount factors that people toss around, but I would say we don't see that in our book, and even if we unloaded it's easily handled at an excess capital or even the cash flow that we get. You want to handle it?
The only thing I'll say, no. I'm serious. Again, we're trying to give you guidance as with, and please, and that's why I said what it is and what it's not. That is clearly not what it's not.
Thanks, Jim. Suneet Kamath from Citi. On the Advice & Wealth Management margin, I think you said 23% today and 20% plus is the target. You've talked about productivity improvement. You've talked about the bank coming online. I would think of those things as sort of accretive to the 23%. When you say 20% plus, what's kind of potentially going the other way as you think about that margin?
Walter put those numbers up.
Oh, yeah. All right. I said, Suneet, please, I know where we're at, and they're saying from that standpoint, it's a plus, and I'm not signaling that we're going down. It's just, again, you're talking on average over time, and I'm just saying it's a pretty good neighborhood to be. Whether it's 24, 25, 22, that's what I'm signaling. Please. No hidden message.
Maybe 23% plus might have been a better-
Okay.
Yeah.
I guess for Jim, in the asset management business, I think at one point in your prepared remarks, you talked about growth, and you'd mentioned either we could do it ourselves or jointly with somebody. Can you just drill into what that-
The only thing I'm saying, and Ted was the chair of the ICI, so he knows this better than anyone, I think, is there is a lot of change happening in the industry. We don't have a perfect crystal ball of how that will change. There'll be consolidation. There'll be players rationalizing where they should be. There are big banks figuring out what they should do and not do, both domestic and European and et cetera. That's all we're saying is we feel we built a really good business, that we generate good returns, we got good capability, we've been able to integrate. If something comes along that makes sense different than us having 100% of something, we might entertain it. Having said that, go in a down market, we'll do what we did with Columbia.
We were successful with Seligman, Columbia, Threadneedle. We can do it again, that's all I'm saying is the world's changing in such a way, there are large players out there. I just don't need to actually do something myself if not necessary.
No. Understood. I'm just more curious if those types of conversations-
There's nothing imminent or anything.
I know. Just are people talking like that? I mean, it's sort of-
I don't know. I think, Ted, do you want to respond?
No, I think that
Lots of conversations going on, not a lot getting done at the moment. I think part of it is that people do see the pressures out there, and so they're being extra cautious. I think some people are looking at tuck-in stuff. I think some people are looking at big stuff. Some are more targeted. I think the main thing is that there are some people out there who just don't feel compelled to do anything yet, Suneet, and maybe if the financial pressure ratchets up a little bit more, there might be a little bit more activity.
Yes, Alan.
Thanks. Just one question around asset management. I wanted to dig a little bit deeper in your guys' distribution strategy. I think you said there's $230 billion of intermediary assets. How much of that is through AWM? As you look out, what is the plan to further penetrate third parties? Within that, I was hoping you could comment to the changes in the economics you're seeing between the manufacturers and distributors, seeing how it feels like there might be, obviously, additional consolidation on the distribution side.
We don't break out individual clients because we've got a lot of large clients in the warehouses, et cetera. What I would say is Ameriprise is one of the largest intermediaries that they deal with. We have a very good foundation of assets, do you want to comment beyond that?
Yes. We've got eight firms that we focus on. You can probably guess who they are between broker-dealer and the independents. We have very strong relationships starting at the top of the house with Ted all the way through research. We're making big investments in how we face off against your research teams to make sure that we can articulate our messages well. It ties into our solutions effort also. When we enter into one of these discussions, it's not what we have. It's talk to me about what you're trying to solve on behalf of your investors, that gets right into the solutions business that we have. That's why the models, that's why certain pieces of what we do fit well into the wealth management platforms.
As far as the fee differential or fee splits you're asking, I think a lot of that has to do with what the model business is. I think it's advisors looking to manage their practices more efficiently, they look to firms like Columbia Threadneedle to help them do that more effectively. The progress that our team's making in AWM in terms of financial planning and delivering value add up the value chain, if you will, is paying a lot of dividends. People who are looking to get more efficient models is a big part of that.
I would just imagine that the net economics from Ameriprise as a whole are likely stronger within AWM just because of the netting dynamic. Is there lots of room to penetrate AWM further, or do you guys think incremental growth will really come from third parties?
We're putting a lot of our resource right now in third parties and growing there where we've got a smaller market share. We're excited about the potential to grow within AWM as well, and that partnership is as strong as it's been in years.
Thanks. Ryan Krueger, KBW. On capital return, Walter, you talked about 90%-100% over time. You're ending this year with a larger than normal excess capital position. Can you give any perspective on 2020 specifically?
Yes. What we put is, there was a little plus at the end. In that little plus, based on our excess position today, based on what I've just mentioned to you about the value of the company, I think the plus will actually hold. We just don't normally do that on an average over time. We did add the plus this time. Usually, we'll say 90%. We went 90%, 100% plus, to your point.
Thanks. On asset management, you showed that the fee rate has been stable. I know you have some mix shift. There is also fee pressure in the industry. How do you see that playing out going forward?
Yeah. I would say there, as I said, we were just highlighting to you that we do garner good fees based on the mix of assets, the retail, the equity, et cetera. I wasn't making a prediction that that would stay exactly. I think over time, we are seeing a level of fee structure. As I said, we do have an opportunity to get into areas that do have good fees. I will give you a perfect example. If Brexit finally gets resolved, U.K. assets, European assets are higher fees than U.S. Even if pressure and the mix changes, there is some offset there. That is why we are not saying that we think there will be major erosion in any near term, but we think part of that erosion could be made up based on where we can grow.
Thanks.
Yes.
Thanks. John Nadel from UBS. Just a quick one, I guess, along the lines of Suneet's question about the Advice & Wealth Management margin of 20%. The 30% ROE on a total company consolidated basis, I think you are running-
38
far closer to 40.
Yep.
It doesn't feel like, particularly given how much excess capital you're running with, that's a fully loaded, that's not peak earnings.
No.
Okay.
Okay. Let me start over. Our current trajectory is there, okay. What I was basically saying from the standpoint as we look going forward
There are multiple factors that come into it. We're not changing the base element. Again, if I look at my requirement and the company decides to bring down the capital structure because that requirement is shifting, inorganic opportunity. It was not to signal any change from where we are.
Okay. I just wanted to make sure we were all clear on that.
You're very clear.
I'm crystal clear. How about crystal clear?
Crystal clear is even better. The second question, I was hoping we could be maybe just slightly more granular, thinking about expense growth in AWM. I think in 2019, you've talked to us about roughly 8% year-over-year inclusive of two points for the bank.
Yes.
If we think to 2020, obviously there's a lot of investing in 2019. Can you give us some help on how to think about relative to that 8?
What I would say, and Walter can comment, is that the investments that we're making in the AWM will go back to a more normalized number. Let me give you a quote of this. Within our expense base, okay? As we said, if we recruit advisors and we amortize, it's all in the numbers that we have, right? All of that should come down to the low single digits again, where we were running. The bank will still be an incremental. We will identify that for you so that you would understand it, and we really do believe that with the bank expense, we'll get real profit and revenue that we'll give you. I would say AWM will come back to the low mid-single digits, Walter?
Yes.
Okay.
That's very helpful. Thank you. Then last one, just to throw my insurance hat on for a moment.
Sure.
We've gone through the assumption review period. Very clearly, your interest rate assumption sticks out. If we looked at the average of the peer group, your insurance and annuity peer group, it looks like 375, 8-10 years from now on the 10-year. If you made that change and went exactly to that, how big of a charge is that, rough round numbers?
First, let me just say again, actuarially, we have looked at our liability case. We just don't want to be any different than being aligned with the industry, again, because it's fact and circumstance to us. That being said, as we indicated on the call, that if you took the rate down from that standpoint, you would get $122 million, I think we were throwing out. You pretty much as a guidepost, if you wanted to adjust onto the slope of it's probably in the area of $200 million-$250 million net.
Perfect.
That's the range.
Thank you.
Again, we'll continue to evaluate.
GAAP, I assume that's effectively a GAAP-only charge and non-GAAP.
Yes. It is.
Thank you.
I think you just prompted Mr. Gallagher.
Thanks, Tom Gallagher, Evercore. Walter, just a follow-up to that, if you were to make that change, would there be any go forward impact to earnings, or would it mainly just be the balance sheet charge?
If we were to hypothetically do that.
Yes
It would be onto the balance sheet.
Got it.
Obviously, you get some little adjustments when you build some GAAP, not much.
Okay. I just had a question on asset management. The comment about the $11 billion of wins for the solutions-oriented mandates I thought was interesting because when you look at the trajectory, clearly the last quarter or two has gotten a lot better. I just want to know, if we peel back the onion, were there a lot of lumpy inflows that we shouldn't think about as recurring next year necessarily, or do you think we actually might see a permanently better level of total net flows here?
Listen, I don't think we can predict anything. The $11 billion that Bill put up is a pipeline being developed, not a win yet.
Got it.
There are some wins that we're getting. I'll give you a perfect example. The model win that Bill worked on with Scott to get on a large intermediary platform, there's no flows in it yet. By the time they get the model and then the flows come in. What we're saying is there is opportunity for us to build. We didn't garner that yet. We're getting a few, like Asian, et cetera, we're beginning to see that percolate. The only one that was larger that, and I wouldn't call it lumpy because if the U.K. and Brexit repairs, I think we're going to see a lot more flows into our U.K. franchise. It's one of the top performing franchise.
The win we got with St. James's, as an example, a reasonable portion of that we book in institutional, not retail, even though it's an intermediary type thing. No, I actually see with what Scott mentioned, actually a lot of those products were more recently approved based on in the top quintile performance. We're hoping if the environment continues to sort out, that we'll start to garner some of that into the institutional business.
I guess just as a follow-up, and again, I'm just curious directionally, I think you were running around $7 billion-$8 billion of outflows a quarter.
Yes
if I look back over the last several years. Now you've inflected to around two. It's a dramatic change. Do you think we're likely to stay closer to this level?
I would say Ted?
I think you used the words correctly, inflection point. I think we're seeing really good improvement on the intermediary side. We are predicting better flows next year in the U.K. and in continental Europe. We have seen better redemption rates too, there's some of that in here that we need to factor in. Bill's got a nice pipeline going in solutions. That Asian insurer, by the way, is going to keep topping up money, there's some potential there. That's a great thing about the solutions business. I think our trajectory is sustainable going forward, i.e., there is improvement. We're seeing it, we're planning for it next year, and we're going to keep going after it.
Okay. Yes.
Thank you. Andrew Molloy, Bank of America. Just triangulating some comments and questions from Jay and Tom from earlier today, and from your comments, Walter, and from the agencies. Is there a benefit from higher credit ratings, whether from de-leveraging or a reinsurance transaction from where you currently are today? Then specifically speaking on the capital structure, is there any value in issuing longer-dated paper?
Listen. Ratings are obviously important as we look at our positioning with insurance. As it relates to the long-term implications, no, I would not say they're significant. Obviously, I look at ratings as a reflection of the company, but if you're talking about dollars and cents on long-term debt, again, considering the frequency and everything we do, no. The answer is not. The second part of the question was? I'm sorry.
Just any benefit or interest in issuing longer-dated debt.
Again, we're looking at our capital structure. Everybody is trying to take advantage of. There is a difference with it, and the answer is, to us, it's minimal as we look at the adjustment. What we would have to look at then our requirement and the need for it. It depends on what happens with rates, right? The answer is no, it's not a material factor.
Yeah, I think we also mentioned the rating agencies simply because, as you know, the way you start, we started really with the dominance of the profitability and earnings coming from the insurer. You get rated that way because of the debt, et cetera. We're considered a diversified financial out there in the marketplace from how we're positioned and where we are in SEC, et cetera. When you look at now the rating agencies, they're saying, "You're no longer an insurer per se." We're changing how we think about that. That's, we're factoring into reviews. We don't see any implications regarding the credit or even what we can get in ratings because we're probably on the higher end of the ratings for an insurer anyway.
Okay. Was there something here before I go?
John Nadel from UBS again. Just to follow up on the idea of leverage. If the insurance business is generally directionally shrinking, and particularly would be the case if you accelerated it with a reinsurance deal or another sort of transaction. I guess I'm trying to square that with the idea that you want to bring leverage down to 30%. Wouldn't leverage be less critical a issue if your insurance business is declining and ratings are less critical to you going forward?
Okay. Well, not shrinking. All right. I said we're growing around it. That was an important part. It's an important part of our value proposition. That was not implied. When you look at capital structures, capital structures deal to requirements and type of businesses you're in. This is a reevaluation. If Advice & Wealth Management does not need a very large capital structure from that standpoint because of what it generates and its exposure product. Same thing with asset management. The insurance company, therefore, is carrying the bulk of that aspect. Therefore, as I start assessing different elements, the leverage of the company, looking at the total, it should then be ripped out. We just exited auto and home. Those are natural elements that would be, like you said, if we continue to reinsure in the fixed annuity space, that would also.
That's why I'm saying these are variables that are coming in. I was trying to signal there are variables, not a change in velocity, not a change. It is basically the business as dynamics as they're changing.
Got it.
Make a realistic assessment.
Some of the debt had higher rates that are coming due that we've paid down and determine what we want to do.
Understood. Okay. That's helpful.
Make sense?
Thank you. Yeah. Thank you.
Okay. Yes.
Thanks. Just one last one. On asset management in the fourth quarter a year ago, if my numbers are right, excluding reinvested dividends, it was a little over $12 billion of net outflows in asset management. That was obviously a big number, and I'm sure there's some seasonality tied to that. Any indications in the fourth quarter where that number could come in?
Listen, we don't have crystal balls, but right now things are looking pretty good. Again, I can't tell you if there's some kind of fallout in the market and people want to increase redemptions, but other than something like that, we don't.
Okay.
November. Lots of tax selling. I mean, a real lot of tax selling, like I've never seen related tax selling. Also just there were some really interesting annualized redemption rates for most people in a one-month basis. What portion of that was tax-related selling and what portion of that was out and out panic, I'm not quite sure. Right now, as we sit here through November, things are looking pretty good. Not sure we'll see a lot of tax selling in December, given the way the market's gone. Right now, you never know, but right now the trajectory looks pretty good, and I don't think we're going to be looking at numbers like we saw last year.
Probably seasonally, though, still probably higher outflows.
Seasonally, you might see slightly higher outflows just because of some tax selling, some rebalancing, all that kind of stuff. Again, looking at the numbers through November, we're feeling pretty good about where we are.
Great. Thanks.
Okay, we're out of time, but if there's anything else, you can reach out to Alicia. Hopefully, what we just tried to do today is give you a little better understanding of what we've been doing, the underlying color, how we're really focused. I just want to leave you with one other thought. We talked about financials at the last point, but what I'm really proud of with this firm is the people, the leadership, the type of advisors, and what we deliver. That's what we want to keep going, and I think this company is unbelievably valued for what we do have here. Thank you.
Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating, and you may now disconnect.