wantsto be a buyer in the wake of the Department of Labor's Conflict of InterestRule, saying April 28 that it should see new acquisition opportunities as smallinvestment advisers buckle under the weight of the new compliance requirements.
Thecompany during its first-quarter earningscall struck an upbeat tone on the rule,which is commonly known as the fiduciary rule, predicting that any on its operations wouldbe more manageable than expected. Ameriprise's annuity products and otherofferings should qualify for various exemptions included in the regulations,while the rule's longer implementation timeline should ease pressure on itsexpenses.
"We'reoperating from a position of strength," Chairman and CEO James Cracchiolosaid. "We are confident that our advisers will still be able to recommendthe products that they do today in qualified accounts, including annuities andaffiliated products which are expressly permitted under the rule. In short, wewill continue to offer a full solution set."
TheMinnesota-based insurer has roughly 400 people devoted to analyzing andadapting to the fiduciary rule and spent between $4 million and $5 million onrelated activities. While Ameriprise can absorb that burden, Cracchiolopredicted that smaller companies will have more trouble meeting the newstandards. That could spur a round of consolidation within the life insuranceand retirement sectors.
"Idoubt very much that a small broker/dealer or even the independents in generalor advisers on their own will have the means by which they can navigate this,"he said. "It will squeeze others in the industry unless they have thosecapabilities and means."
Ameripriseexecutives also dismissed what UBS analyst Suneet Kamath described as a "market"belief that the company would be among those hardest-hit by the fiduciary rule.They pointed to the $451 million of first-quarter share repurchases as a signof their confidence in the value of Ameriprise's stock.
"We'renot falling off a cliff," Cracchiolo said. "We're in good shape. Wehave the means; we have the ability."