AllianceBernstein CEO: “We Want to Grow Private Wealth Channel”
(Updates with average advisor productivity in fifth paragraph.)
AllianceBernstein, the $623-billion asset management giant, plans to expand its private wealth advisory business, executives said on Wednesday.
“An important element of our strategy is to grow the high-end portion of our business,” said President and Chief Executive Seth Bernstein on AllianceBernstein’s fourth-quarter earnings call, noting that accounts with greater than $20 million in assets grew by 1.1% in 2019.
The firm, which is controlled by French insurer AXA, does not report its total number of wealth advisors. But headcount across Bernstein’s 19 U.S. wealth offices grew 6% in 2019, and it is targeting another 5% increase this year, the company said Wednesday.
The average Bernstein broker produced $53.1 million in 2019, the company said in a slide presentation, eclipsing the $1-million level boasted by UBS, Merrill Lynch and Morgan Stanley, and well above the half-million-dollar-and-lower averages at most independent and regional firms. Productivity per Bernstein advisor has grown at a compound annual rate of 11% since 2013, when it was $28.6 million.
“We remain very focused on growing the productivity of advisors we have in place,” said Seth Bernstein.
The production number is calculated by dividing annual gross sales in a year by average advisor headcount, a Bernstein spokeswoman said. That is a standard industry methodology, and indicates that Bernstein has 212 advisors given the wealth division’s reported gross sales of $11.3 billion last year.
Illustrating the value of the wealth channel to Bernstein’s core business, private wealth clients added $11.2 billion to alternative funds and strategies in 2019, up 20% from a year-earlier, while ESG (environment, social and governance) strategies soared 80%, attracting $2.7 billion.
“These products are supportive of the continued growth in our targeted affluent and more highly complex client base,” the CEO said.
Alternative investments provide higher returns to asset management companies than plain-vanilla stock and bond funds.
Gross sales of asset management products, however, fell by 16% in 2019 from the previous year. The decline reflected “some softness due to the broader geopolitical environment”—including rate hikes and the U.S. China trade war that curbed expected asset inflows—but the company plans to add advisors to attract more assets.
Bernstein wealth clients in the fourth quarter withdrew a net $100 million from their accounts, down from $800 million in the third quarter. Gross sales in the quarter rose 17% to $2.7 billion from $2.3 billion in the July-September period.
For the company as a whole, assets under management grew 21% in 2019 to $622.9 billion.
Net income rose 37.7% to $256 million from the 2018 fourth quarter, while net revenue jumped 23% to $987 million.
AllianceBernstein attributed the gains to higher distribution revenue along with base advisory and performance-based fees.
AXA plans to withdraw $14 billion of fixed-income investments from Alliance Bernstein in the first half of this year, but the outflow will have “minimal revenue impact” because of the low fees charged to the parent company, the asset manager said in its earnings release.