Welcome to the Q4 2025 earnings call. My name is Tina, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you would like to ask a question, please press star 1 on your touchtone phone. As a reminder, the conference is being recorded. I will now turn the call over to Stephanie Raby.

Stephanie, you may begin. Thank you, Operator, and good morning. Welcome to Ameriprise Financial's fourth quarter earnings call. On the call with me today are Jim Cracciolo, Chairman and CEO, and Walter Berman, Chief Financial Officer. Following their remarks, we'd be happy to take your questions. Turning to our earnings presentation materials that are available on our website, on slide two, you will see a discussion of forward-looking statements. Specifically, during the call, you will hear references to various non-GAAP financial measures, which we believe provide insight into the company's operations. Reconciliation of non-GAAP numbers to their respective GAAP numbers can be found in today's materials and on our website at www.ir.ameriprise.com. Some statements that we make on this call may be forward-looking, reflecting management's expectations about future events and overall operating plans and performance. These forward-looking statements speak only as of today's date and involve a number of risks and uncertainties. A sample list of these factors and risks that could cause actual results to be materially different from forward-looking statements can be found in our fourth quarter 2025 earnings release, our 2024 annual report to shareholders, and our 2024 10k report. We make no obligation to publicly update or revise these forward-looking statements. On slide three, you see our GAAP financial results at the top of the page for the fourth quarter. Below that, you see our adjusted operating results, which management believes enhances our understanding of the business by reflecting the underlying performance of our core operations and facilitates a more meaningful trend analysis. Many of the comments that management makes on the call today will focus on adjusted operating results. And with that, I'll turn it over to Jim.

Good morning, everyone, and thanks for joining our call. I'll begin with an overview of the business and our progress, and then Walter will discuss our financials in more detail. Ameriprise delivered a strong fourth quarter to complete a very good year in 2025, reflecting the strength of our business, effective strategy, and excellent client experience. Looking externally, equity markets performed well in the quarter, supported by resilient U.S. economic growth, and the overall environment remains quite positive. With that backdrop, Ameriprise delivered new all-time records across the board in the fourth quarter. On an adjusted operating basis, revenue grew 10% to $4.9 billion, driven by strong organic client flows and markets. We also had double-digit growth in our earnings, up 10% to over $1 billion, as well as in earnings per share, which increased 16% to $10.83. And Ameriprise return on equity was again excellent, increasing over 100 basis points to 53.2%, our highest ever. We completed 2025 with assets under management, administration, and advisement at $1.7 trillion, up 11%, and another new high. Across the firm, we're leveraging the strength of our businesses and capabilities to deliver good results while investing in organic growth opportunities and innovation. Supported by a strong financial foundation, we're making key investments across the company in top-tier technology, digital capabilities, AI, and cloud infrastructure. We're also bringing out new product solutions in each of our businesses to further serve more investor needs and deepen relationships. These investments help further enhance our client and advisor experience and drive organic growth. These investments extend to advice and wealth management, where our leading advisor value proposition and integrated technology continue to drive excellent client satisfaction as well as strong organic flows and advisor productivity. Total client assets reached a new record of $1.2 trillion at year-end, up 13% from our focused action to drive flows as well as from positive markets. Total client inflows were $13.3 billion, up 18%, which is one of our best quarters for flows. These results reflect the strength of our legacy flows from our advisor engagement, client acquisition in the target market, and our recruiting success. Our wrap business also grew strongly. Assets increased 17% to $670 billion with meaningful growth in flows. This included good flow momentum in our new Signature Wealth Unified Management account, which we launched at mid-year in 2025. It's been one of our most successful rollouts, and early advisor feedback has been very positive. We continue to build on these early results as more advisors integrate the new platform into their practices. Advisors are seeing real value in the enhanced personalization, automated portfolio monitoring, rebalancing, reporting, and centralized trading. We're also adding new capabilities and strategies to our Signature Wealth platform as we move forward. In addition, we continue to have good transaction activity, up 5% year-over-year. Our bank products complement the business nicely, with assets up to $25.3 billion. We're rolling out and testing new offerings, including expanding our lending book, where we saw good growth led by pledge and nice initial uptake in mortgage loans. After our initial launch of HELOCs, we're seeing strong early interest. We just launched checking accounts, which rounds out our complete bank offering and will be important to enable greater uptake of savings and lending products in advisor practices going forward. Advisor productivity continues to increase nicely, as I mentioned, up 8% to $1.1 million per advisor in the quarter. Our proven advisor value proposition helps them achieve this level of productivity. This includes our interconnected systems of capabilities, anchored by our strong digital advice, CRM, and extensive practice management resources. As we shared, we're also innovating with AI and automation to help advisors identify meaningful client insights and growth opportunities while reducing time-consuming tasks. Also key, our integrated capabilities drive strong system reliability, efficiency, and resiliency. Our best-in-class service is another competitive advantage. This year, J.D. Power recognized Ameriprise for the seventh consecutive time for delivering an outstanding customer service experience to advisors for our phone support. And for the second straight year, we earned J.D. Power's certification for our client phone support as well, which is terrific. We're known for our commitment to client and advisor success. Experienced advisors continue to choose Ameriprise. We've added 91 quality advisors, building on a strong momentum from the third quarter. And the pipeline for experienced recruits across channels remains attractive. And by the way, our total advisor count is up 1% year over year. Ameriprise advisors continue to stand out industry-wide for exceptional service, growth, and high-quality practices. We had a record 478 teams named to the Forbes Best in State Wealth Management Team's 2025 ranking. Earlier this month, I attended the AWM Field Leader Kickoff for the year. Our AWM team is made up of strong cadre of field leaders who help advisors leverage our value proposition and client experience to build even more successful practices. Our retirement and protection solutions are also contributing nicely to transactional activity, organic growth, and deeper share of wallet. Structured annuity sales were up 7% in the quarter, and life and health sales grew 14%, with most of the focus on accumulation-focused variable universal life. Our overall portfolio continues to perform very well. Here again, we're investing in product enhancements and leveraging AI and digital to increase efficiencies in underwriting and overall service. In asset management, we're delivering meaningful financial results as we leverage our global capabilities for greater efficiency and future growth. Assets under management and advisement reached $721 billion for the quarter, up 6%. that. We had continued strong investment performance with 103 4- and 5-star Morningstar rated funds at year-end. Nearly 70% of our funds globally were above the medium for the one-year timeframe on an asset-weighted basis and stronger for long-term timeframes, with 80% of our funds above the medium for 3- and 10-year performance periods. Regarding flows, we generated $1.9 billion in net inflows in the quarter, which included higher reinvested dividends. Overall, we had net inflows in model delivery strategies and improvement in institutional growth sales. We continue to invest to further broaden out our investment capabilities to meet evolving market demand. That includes expanding our active ETF lineup and further building out our SMA model delivery and alternatives offerings. During the quarter, we launched six new active, managed, and research-enhanced ETFs in the U.S., along with our initial launch of ETFs in EMEA. Across asset management, we're leveraging our global footprint to generate additional operational efficiencies. Our back-office transformation and data foundation work will continue to increase the cost-effectiveness of data delivery and help ensure our solutions are scalable. Reflecting on Ameriprise overall, our business and financial results remain strong with record revenue, earnings, EPS, and return on equity, as well as a differentiated level of capital return. As you saw, we increased our capital return to more than 100% in the quarter. We were opportunistic with a discount in the share price. And the size of the buyback brought our total capital return for the year to nearly 90%, one of our highest levels in recent years. We've also consistently maintained a healthy and resilient balance sheet. 2025 was another terrific year for us, our 20th as a public company. In just two decades, we've established Ameriprise as a premier brand built on helping millions of clients achieve their most important financial goals. And we're continually innovating and transformed how we go to market, earning best-in-class recognition and results across a wide range of environments. Equally important, we earned a highly respected reputation over the years for who we are and how we operate the firm. In fact, Ameriprise was just named one of America's most iconic companies by time. We rank among the top 50 across industries, and we're also the leading diversified financial services firm on the list. And this award adds to many others. We were again included on the Wall Street Journal's list of best managed companies for 2025. And America's Most Responsible Company's 2026 list from Newsweek, as well as Ameriprise is one of America's best companies, 2026, according to Forbes. In closing, we feel very good about the business and how we're positioned as we look to 2026. We're executing our clear, consistent strategy and driving innovation and using operating leverage where we see opportunity. With that, Walter will discuss the numbers in more detail, and then we'll take your questions.

Thank you, Jim. Ameriprise delivered excellent financial and metric performance in the quarter, with adjusted operating earnings per share up 16% to $10.83 and a strong operating margin of 27%. We had record assets of $1.7 trillion of 11%, which coupled with strong client engagement, drove record revenues of $4.9 billion. We continued to make good investments for growth, particularly within wealth management. We were optimistic with share repurchase in 2025, given share price, and accelerated our capital return. In the quarter, we returned over 100% of operating earnings to shareholders. Our balance sheet remained exceptionally strong, with excess capital of approximately $2.1 billion and holding company available liquidity of $2.2 billion. Let's turn to slide six. Performance metrics and wealth management were strong across all measures, notably with client and RAT flow rates in our historic ranges. Total client assets grew 13% to a record high of $1.2 trillion, with strong client flows of $13.3 billion, representing a 4.7% annualized flow rate. RAP assets increased 17% to a record high of $670 billion, with $12.1 billion of net inflows in the quarter, representing 7.4% annualized flow rate. These are near-record levels of flows, and we saw both our client and RAF flow rates build each month of the quarter. The improvement in both client and RAF flows was a result of continued strong core flows, higher advisor recruiting in the back half of the year, and very strong retention levels. In addition, transactional activity remained strong, increasing 5% compared to the prior year, primarily from growth in annuity products and brokerage. Cash sweep balances increased to $29.9 billion compared to $27.1 billion in the third quarter, which is consistent with the normal seasonal trend we typically see near the end of the fourth quarter. Our advisor trends remained solid as well. Retention was good across all channels, and we saw a strong momentum in our experienced advisor recruiting with 91 advisors joining us in the quarter. Our value proposition resonates with advisors, and we remain focused on ensuring our transition packages are attractive to experienced advisors that share our values and commitment to the client experience. In total, our advisor productivity continues to grow, reaching a new high of $1.1 million. Let's turn to wealth management financial results on slide 7. Adjusted operating net revenues increased 12% to $3.2 billion. The core business is performing very well given the value of our planning model and the multiple touch points we have with the client to meet their needs holistically. Our fee-based and transaction revenues were quite strong, increasing in the low team percentage range, benefiting from higher client assets and activity levels. Our cash revenues, which include net investment income, distribution fees related to off-balance sheet cash, and banking and deposit interest expense increased modestly despite the impact from the Fed Fund's rate reduction since September of 2024. Adjusted operating expenses in the quarter increased 11%, with distribution expenses up 12%. I would note that advisor compensation within distribution expense increased in line with the revenues advisors generate. Distribution expenses in the quarter were 65.8% of total management and financial advice fees and total distribution fees excluding off-balance sheet sweep cash, which is consistent with the 66% level we have guided to. Full-year G&A expenses were up 4.5%, primarily driven by volume and growth-related expenses, including investments in Signature 12 and banking products. This level was consistent with the guidance we provided. Pre-tax adjusted operating earnings increased 13% to $926 million with continued strong contribution from both core and cash earnings. Our core earnings grew in the mid-20% range, benefiting from higher client assets and advisory fees, as well as strong activity levels. The strong level of core earnings that we generated is unique and demonstrates our focus on profitable growth. Cash earnings increased modestly despite the impact from the Fed Fund's rate reduction since September of 2024. Our strategy of leveraging Ameriprise Bank has been important in minimizing the impact from Fed Fund's effective rate reductions on our AWM business. In fact, net investment income in the bank was flat for the year. We continue to take actions to build the bank investment portfolio in a way that supports stable earnings contributions going forward. The overall bank portfolio has a yield of 4.6%, with a 3.8-year duration, with now less than 9% of the portfolio in floating rate securities. In the quarter, new purchases at the bank were $2.7 billion at a yield of 5% with a 4.3-year duration. Last, our margins remained excellent at 29.3%. Turning to asset management on slide 8, financial results were strong in the quarter. Operating earnings increased 17% to $293 million. Results reflected asset growth, higher performance fees, and the positive impact from transformation initiatives. Total assets under management and advisement increased to $721 billion, up both year-over-year and sequentially from higher-ending market levels. Revenues increased 12% to $1 billion, benefiting from higher performance fee revenue than a year ago. Performance fees are an important revenue stream for the asset management business, and this quarter were recognized due to very strong performance in our hedge fund. Expenses increased 10% in total, with distribution expenses up 5%. In the quarter, general and administrative expenses were up 13% as a result of higher performance fee compensation and foreign exchange translation. Margins reached 40% in the quarter, which is above our target range. Let's turn to slide 9. Retirement and protection solutions continue to deliver strong earnings and free cash flow generation, reflecting the high quality of the business that was built over a long period of time. Pre-tax adjusted operating earnings were $200 million in line with our target range. This business has excellent risk-adjusted returns and continues to be an important part of the AWM client value proposition. Turning to the balance sheet on slide 10, balance sheet fundamentals and free cash flow generation remain strong, which is a core to our ability to invest for growth on a sustainable basis while also continuing to return capital to shareholders. We have an excellent excess capital position of $2.1 billion. We have $2.2 billion of available liquidity. Our assets and liabilities are well-matched, and our investment portfolio is diversified and high-quality. Ameriprise's consistent capital return strategy is a key element of our ability to consistently generate strong, long-term shareholder value. As I mentioned, we were opportunistic in the second half of 2025 and accelerated our share of buyback. In fact, we increased our capital return 37% year-over-year to $1.1 billion in the fourth quarter, which is 101% of operating earnings. For the full year, we returned $3.4 billion of capital, which was 88% of operating earnings. As we enter 2026, our strong foundation, coupled with our ERM capabilities and decisioning framework, positioned us well to continue investing for growth in a targeted way and return capital to shareholders at a differentiated pace. In summary, on slide 11, Ameriprise delivered solid results in the fourth quarter to conclude a strong 2025. In 2025, revenues grew 6%, adjusted EPS increased 12%, return on equity grew 60 basis points, and we returned $3.4 billion of capital to shareholders. We have an excellent foundation and capacity moving forward that enables consistent and sustainable profitable growth. With that, we will take your questions.

Thank you. We will now begin the question and answer session. If you have a question, please press star 1 on your touchtone phone. If you wish to be removed from the queue, please press star 1. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star 1 on your touchtone phone. Our first question comes from the line of Stephen Chuvek with Wolf Research. Please go ahead.

Hi, good morning, and thanks for taking my questions. So I wanted to start off on organic growth. The 4Q acceleration was quite impressive, especially in light of a tougher recruiting backdrop cited by some of your peers. You also spoke of maintaining competitive TA rates as part of your recruiting packages and was hoping you could help us reconcile the acceleration at new flows that we saw in the quarter with the lower distribution expense ratio. And can you speak to the outlook for both organic flows and distribution expense in the coming year?

I'll start and then I'll ask as we head to us. A little good about the underlying flow picture. That would be something that you would certainly feel good about how we're moving into 2020 in line with the productivity increases that our advisors generated and the volume of what they generated. Walter, I'll ask you to cover the expense side.

We certainly see it's in line where we've seen with the revenue growth. So on that basis, we see that we'll be in the ranges that you've seen. And we feel completely there, as we talked about, we are competing. so you could see some increase in distribution, but it is certainly within the ranges that we feel very comfortable and the revenue generation is associated with it.

It's helpful, Collar. And maybe switching gears to the expense side, given a number of areas on the investment front that were cited in the prepared remarks, I was hoping you could provide preliminary guidance for 26 growth in firm-wide OPEX, as well as G&A growth within AWM, just given a higher percentage of investment likely being allocated on the wealth side.

Okay. Let me acknowledge the capability, product solutions, and services. We've rolled out a good number of them, including some of the stuff we mentioned for the bank, expanding some of our product services, our signature wealth, et cetera. So we feel good, and we've got a good agenda to continue. But having said that, we continue to re-engineer and transform and free up and get some productivity improvements from things like AI and intelligent automation, et cetera, as well as where we locate our resources. So I'll turn it over to Walter.

So as it relates to the key point is what Jim said is while we operate. So the net effect of that should be, as you look at the company, staying within the ranges that you saw, you know, again, based on volume and other things, but certainly seeing AWM with that combination of investing and streamlining and through transformation, probably in the same range of, you know, probably. But, again, there's investments in there being offset.

That's right, Collar. Thanks so much for taking my questions.

Next question comes from the line of Wilma Burgess with Raymond James.

Please go ahead.

Hey, good morning. Great result on flows in 4Q25. Could you give us a little bit more color on what to expect into early 26? Fall 91 advisors recruited in 4Q, which seems to imply a pretty solid result for 1Q. So maybe give us a little more color there.

Yeah, so as we talked about, the drivers of that certainly are organic, and looking at that and looking at the components of organic recruiting and certainly terms, we believe we were seeing good results, but there is seasonality attached to that. But certainly as the fundamentals, we do see good results as it relates to those elements of getting traction. And so we're just feeling organic. We're certainly there. And then we're sure that we retain our advisors.

But there is a seasonality factor.

Thank you. And then how should we think about the buyback going forward, a strong result in the quarter? And could you also remind us what you consider the best use of $2.1 billion of excess capital, particularly in this environment?

So, the key, and again, as you saw, we said we would be optimistic, and we certainly were, as we saw the amount of buyback and dividends in the fourth quarter. And, again, that's with investment in the businesses and looking at all aspects of it. So, we feel comfortable with the generation as we look into 2026 as a certainly important element to return to shareholders. And the range that you saw for the year was 80. We returned 88% with dividends and buyback. That's a pretty good range of 85% to 90% based on what we do today with our capabilities and the ability to return to shareholders as a value point.

Thank you very much. The next question comes from the line of Craig Sikenthaler with Bank of America.

Please go ahead.

Thanks. Good morning, Jim Walter. Hope everyone's doing well. We have a follow-up on the strong net new assets in wealth management in the quarter. So I heard your response just to Wilma's question that there's a seasonal factor that we should account for. But what about a second factor from elevated financial advisor movement in the quarter due to integration at a peer? Should we also be adjusting for this going forward?

We know things are happening. Our recruiting, as we showed you in the fourth quarter, our pipeline in the first quarter is quite strong. So we feel from our perspective that we'll continue to bring on good, experienced people, and we continue with all of the resources that we've been applying and the technology focused very much on our advisors generating continued organic growth, and that's the core of our business. So I don't know if that answers your question. From a recruitment, listen, it's a competitive market out there. We also very much focused on retaining our advisors. Our retention was quite strong in the fourth quarter, but we feel very good about where we are. Through that, and just a follow-up on client cash, also in wealth management.

You know, overall trends are pretty good in the quarter, but we saw some mixing in the underlying balances, especially with off-balance sheet. You know, what's going on with that mix? How should we think about the mix going forward? and seasonality will flip from positive to kind of tougher in one queue. What are your thoughts on cash sweep growth in the first half of 2026?

Yes, you saw the seasonality that you would see in the fourth quarter, and we feel very good about it. But we are seeing, certainly looking at the sweep component, looking at the on-balance sheet and off-balance sheet, comfortable with the generation and the management. But we do see with certainly managing that, as in the first quarter, you will see utilization for tax and other reasons. But we have positive generation. And the other thing, as it relates to our strategy, we have certainly minimized the amount of floating, and certainly within our buffets, but we implement our strategy to basically invest along, so the impact.

The question comes from the line of Brennan Hawken with BMO. Please go ahead.

Good morning. Thanks for taking my questions. I'd love to drill into the bank channel. We see continued consolidation among regional banks. You know, you guys are contending that yourselves with the Comerica deal. So curious about – I believe you guys have spoken, though, despite that consolidation, about a desire to continue to grow. So how do you manage the risk of consolidation if you're going to continue to look to grow in that channel? And how is the engagement going with your partners at CoAmerica as they approach it?

In the financial institutions business, we've been adding a number of institutions through the latter part of the year. We feel the opportunity is really good there for us to continue. We know that consolidation occurs that can both present opportunities or challenges, depending on how that takes place and what the interesting parties may be. In regard to a very good relationship with them, I know they're going through their acquisition. I know that will be assumed exactly where they proceed there. But we have really generated really good value in our partnership with them. Their advisors love our abilities and the support. I know Co-America is very positive on our relationship. But, again, you know, that's a decision now for Fifth Third to make as part of whatever deal and arrangement. I know they already had their own activities in-house, et cetera. So we'll see where that goes. but we still feel very strongly that with what we can provide and what we deliver and the satisfaction that every party who have joined us has with us, both the advisor and the client and the institution, we feel good opportunity for us to continue to move forward.

The only thing I would add to that, as you would imagine, any contractual arrangement that you have contemplates these sort of contingencies and there are protections built in.

Understood. Thanks for that color. Appreciate it. Following up on Stephen's question, you guys spoke to Expense Outlook. Thanks for that color. I believe, Walter, when you spoke to some of the growth that you saw in G&A investments were flagged as a driver, certainly we've seen some of your competitors in wealth leaning in on expense growth and making investments in the platform. You know, can you speak to Comprom investments more competitively?

I think as we continue to proceed, we'll continue to make various capabilities or continuing to one where we really, nation and data and the use of analytics and AI are going to continue. It's not like one, you know, like trance and that's it. But having said that, as you would know, over the years, we continue to transform our business and free up resources from other places. So I would say if we were just doing the investment and not the reengineering, we increase every year. But we are very good at what we do and how we do it so that we offset some of that increase if it's just purely if you're thinking about investment. So the largest part of our expense growth really is from volume increase, as you would imagine. But comfortable, but I will also say we have a leading technology capability platform out there I would put against anyone in the industry. And the way it's all integrated and the way the advisor can be productivity on it, because when we attract advisors in coming from you name the house, they are very positive about our capabilities here.

The other thing I would just add is, yes, and with the scope of Ameriprise, We have the ability to leverage across to support all the businesses. So that gives us an advantage to really provide that capability in a more efficient and effective way because we can leverage it over a broader base.

Thanks for taking my questions.

Your next question comes from the line of Sunit Kama with Jeffrey. Please go ahead.

Great, thanks. I wanted to start with Signature Wealth. Can you give an update in terms of, you know, what percentage of advisors are using it? And when you roll out these platforms, is there a material difference in terms of utilization for the franchisee advisors relative to the employee advisors?

You know, it always takes a little time as you then have to roll out and launch the platform and advise the advisors of how to utilize and train them on it, et cetera, et cetera. So our uptake from the rollouts we've done of previous is actually one of the best so far. And the amount of assets, the number of advisors uptaking it. And having said that, you know, it's more of they start, they sample it, and then they start to continue to go down that journey. And as they get comfortable with it, then they start really picking up their level of activity. So we feel very good about that. But I think this will be something that, as an example, it is a new, more comprehensive platform. Capabilities the advisors are getting used to from how they do the portfolio. They love the idea of how it monitors the portfolio, how it rebalances the portfolio, how it does more centralized trading for the portfolio, et cetera, and the reporting that they're able to provide the client and the intelligence from it. So we think it will be very good. We've recently added managed SMAs to it that will continue to roll out. We're adding other capabilities as we do that. So over the course of this year, we'll have a fuller spectrum of all of the variables in it that they can then utilize more comprehensively. So I think we're in good shape with our initial launch, and it's proceeding very well.

So fair to say we're kind of still in the early innings of this, and there's a lot more?

Early innings, but very good progress.

Okay, that's helpful. And then just on the organic growth, I know you talked about the seasonality, but can you maybe quantify how much of a benefit that was in the quarter in terms of seasonality? And then just longer term, do you still think 4% to 5% organic growth in advice and wealth is a reasonable bogey for you?

As we said, the seasonality is, again, it occurs in the fourth quarter. Actually, there wasn't that much seasonality. more as it relates to the first and other quarter. But it's, yes, the range that we're talking about, and especially driven by the organic aspect, is probably, you then get the changes as it relates to one-off events at that. So, yeah, I think the four to five is a measure, and you would have adjustments as seasonality takes place within it. But that's our annual, as we think about it, on a roll rate basis.

That's helpful. Thanks.

The next question comes from the line of Alex Blostein with Goldman Sachs.

Please go ahead.

Hi, everyone. This is Luke on for Alex. Thanks for taking the questions. Had just a couple of quick clarifications. So obviously expenses have been very well maintained for a few years, and you kind of spoke to a similar outlook in 2026. As you think maybe longer term, sounds like investments remain a big focus. I'm sure you guys will keep finding ways to reengineer the base. But do you think that kind of like low single-digit growth is the right way to think about the expense algorithm beyond 2026 at a high level?

Yep, yep, I think so. I mean, you've still got a level of inflation and other things. And even as you look at other services that you actually buy externally, prices have gone up, you know, particularly from various vendors that provide things. So I think, yes, you've got to consider that. I mean, I don't know about you, but when you look at inflation still at roughly 3%, you've got to deal with that as a factor into. And technology companies and others, even though there are savings or improvements in the lowering of some costs, other technology services have been charged higher and higher as they invest in their capabilities and AI, et cetera.

Is managing the margin to ensure they have that relationship of expense to revenue. But as you said, we continually invest, and we're continuing to re-engineer, and that's been the hallmark of the way we've been.

Yep, loud and clear, and just one more clarification for me. You mentioned positive cash generation during the quarter in the AWM business. I just wanted to make sure, does that mean like ex-seasonality, you're still seeing kind of like cash growth on an organic basis? And then like maybe more high level, how do you think about the pace of cash growth, particularly as we head into potentially an environment where our rates continue to migrate lower.

Yeah, yes. In the fourth quarter, you do see that, but I do see there's an underlying element as it relates to cash generation, as it relates to cash coming in from that standpoint, but also new product capabilities which will generate additional cash for us, if the answer is yes. So, again, it is an area of growth for us because it meets our clients' needs, And there's certainly a key element to building the relationship with our clients and providing that product.

Yeah, I would also say if rates continue to come down on the short end of the curve, people will continue to start to move more from what. So you saw it already move from, you know, to money markets will then start to continue to move into the market in one way or the other. So I think once that does, it will move into sweep a bit more for more transactional and investment purposes.

Your next question comes from the line of John Barnage with Piper Fendler.

Please go ahead.

Good morning. Thank you for the opportunity. What does the consolidation opportunity look like for asset management, in your opinion? Thank you.

i would probably i mean you've seen consolidation over the many years in asset management i think with the markets being so good there's more of a probably a wait and see so to speak in some regards um what we've been doing really is really transforming our platform capability in a sense so that we have the the good really strong technology capability to add more assets to introduce more products and services more effectively, efficiently, and to set up our resourcing in locations that can lower our costs, including where we might outsource. So we feel good about that. We've been introducing a number of new products, whether active ETFs, growing our SMAs and our model capability and getting that launched, as well as expanding some of our alternative acts like our hedge funds and other things like that. So we are in a good organic state of what we're changing around and maintaining the margins and the fee basis, even though we're impacted by some of the flow situation in the active. I actually think over time active will reassert itself, just like it's starting to do in different types of formats, like in the active ETFs. I think the consolidation will continue out in the industry, And I think there's an opportunity in that regard as we think about it. Right now, we're very much focused on getting our, how we're managing, and I feel really good about that. And our investment performance is quite strong over the track record. So we're in a good state, depending on what the environment is for us to capitalize.

Thank you very much. My follow-up question may be sticking with that. And I totally acknowledge your comments that with markets being favorable, it's kind of a wait-and-see mode. But you've also really transformed the tech capability. And I know that's like a continual investment type of thing. But what inning do you think we are in in that initial transformation of the expense base to better position the organization to add additional AUM? Thank you.

We're probably in the later innings. We're completing, well, we will be, you know, doing the work right now, and we'll complete it sometime later this year on the back office part of that. We are really doing more on the front end. We're using, you know, AI and intelligent automation and other things like that and leveraging the demographics that we have offshore, et cetera. So we're pretty far along in that regard. So I feel pretty good. Walter, you want to comment?

I think you go better. Thank you.

Your next question comes from the line of Tom Gallagher with Evercore ISI.

Please go ahead.

First question, where do you see AWM margins going in 2060? Do you think you can maintain this 29% to 30% range?

Certainly, if you look at core, and as Relay said, again, we're generating system margins of core. The other thing is going to be on interest, and now we've minimized that also because of the way we invest it. So it is in a good range, as we look at what the Fed is saying and other things of that nature, that it will be in this range, and all these third-party elements that we just can't manage, like government or other changes as it relates to interest. But as it relates to the core, we feel we're tracking well.

Thank you. And then I know you mentioned, Jim, you felt good about the pipeline for recruiting FAs. How do you feel about retention of existing advisors? Would you, you know, any color there?

So I think overall we feel very good. It doesn't mean you won't lose some people because it depends on what people, you know, put out there and offer them. But we're also very good in a sense of where we can, when that happens, show why we actually help the advisor more over time generate value than the check. We got hit with it a little last year, as you recognize, and others do, and then recruiting people who want to actually have the capability and have a strong focus on their growth and how we can assist them in their growth. We're not looking to just attract anyone here. We have an excellent platform. We have excellent capabilities. We have excellent leadership that help advise us. I continue to get notes from people who have come to us from the independents, from wirehouses, from RIAs, and they said their only mistake was not coming to us sooner. And their growth since they got here has been tremendous. And I can name any firm that you mention, and I can show you that. So, again, now, it's a very competitive. People say a lot out there. They promise a lot out there. I think that's all I can say is when they're here, we deliver.

Gotcha. Sure, that's a helpful color. And if I could just squeeze one more in, the elevated mortality in RPS this quarter, was that more a large claim volatility or higher frequency?

Claims at this stage, I think it is more frequency. You know what? It's a balance. It's nothing really that it's in both elements. So I think it's both, actually. You contribute on both. Nothing exceptional in either way.

And we don't see it as something that will impact what we've been seeing over the longer term.

We're in the range, so there's nothing there from that standpoint, and it's just, yeah. So I would say it's a balanced situation. There was nothing that elevated us to even think there was any issue.

Okay, thanks.

And our final question comes from the line of Tyler Mueller with William Blair.

Please go ahead.

Good morning. Just one on asset management. And I know you called out the strong hedge fund performance driving higher performance views. Were there any other strategies or regions contributing to that? And then can you give any color on the hedge fund performance and outlook there?

Yeah, no, we've had both in equity and retail. If you look at some of our different areas there, the dividend income, contrarian core, things like that. We've had it in institutional and things like Japan and other strategies. some of the fixed income, but I would just say, and we have been getting very good flows into our hedge funds area, et cetera. We picked up some real estate last year in Europe, et cetera, that was very good. You can see there the rotation in some of the things like LDI and other things that have impacted. We're looking into 226. We're hoping that that will continue to show its improvement, and I think we're doing some of the right things and our performance is quite strong. We just need to pick up a bit more. Our performance is really good and I think that's where we can pick up a bit more share as we get that identified.

Thank you.

We have no further questions at this time. This concludes today's conference.

Thank you for participating. You may now disconnect.