AMP Ameriprise Financial Inc

Ameriprise Financial Inc. (AMP) is hoping history repeats itself in 2010.

The Minneapolis financial planner's Ameriprise Advisor Group, which includes its employee brokers, added 550 financial advisers from competitors in 2009 and is targeting a similar recruiting tally this year.

Ameriprise is also paring down its lower-producing brokers as it focuses more on hiring and retaining brokers who can generate more revenue over time.

"We saw a slowdown [in recruiting] at the end of the third quarter, but in the fourth quarter we saw activity pick up quite a bit," said Dave Geschke, senior vice president of Ameriprise Advisor Group, who oversees the western half of the U.S. for the firm.

"In January we are back to red-hot again," he told Dow Jones Newswires, referring to advisers interested in joining Ameriprise from its rivals.

Ameriprise has benefited from major brokerages, or wirehouses, focusing more on top-tier advisers and cutting back on those in lower production brackets. The average broker at Ameriprise produces between $300,000 and $500,000 in fees and commissions. By contrast, three of the four wirehouses reported an average of $600,000 to $800,000 in production for their respective brokerage forces at the end of the fourth quarter.

However, Ameriprise is taking steps to boost the overall productivity of its roughly 12,000 member advisory force. The firm reduced its broker headcount by 4% year-over-year, cutting back on those who failed to meet certain production benchmarks.

During a conference call with analysts Thursday, Ameriprise Chief Financial Officer Walter Berman said "advisers must meet productivity requirements and the vast majority of the departing advisors had less than $50,000 in annual production."

During the call, Chairman and Chief Executive James Cracchiolo said that because Ameriprise is eliminating these lower-producers, the company will begin to see a "payback" from new recruits in "probably two to three years" rather than five to seven.

In a note to clients Thursday, Sandler O'Neill analyst Edward Shields wrote that while Ameriprise's expenses rose due to adviser recruitment and technology, he expects those costs to drop as the newly hired advisers begin to produce more.

Shields estimated that the wealth segment will boost Ameriprise's pre-tax margin to 7% by year-end 2011 from the 2.3% reported in the fourth quarter.

Ameriprise, which acquired H&R Block Inc.'s (HRB) advisory force in 2008, slowed its recruiting efforts late last year as it completed that integration and rolled out a new brokerage platform.

Following the lead of its larger peers, the firm also paused in its hiring of novice advisers in early 2009. Major brokerages laid off rookie brokers to cut costs during the financial crisis as a plunging stock market made it difficult for these advisers to meet production goals.

Patrick O'Connell, senior vice president of Ameriprise Advisor Group, who manages the Eastern half of the U.S., told Dow Jones the company will "do a little novice hiring again in 2010, but Ameriprise sees a tremendous opportunity to bring experienced advisers to the firm."

While Ameriprise doesn't recruit high producers at the same level as the wirehouses, the productivity of new recruits is 20% higher than two years ago, a company spokesman said.

Geschke said Ameriprise is also seeing interest from top-tier brokers, adding "we have had some $1 million producers come in here too."

-By Brett Philbin, Dow Jones Newswires; 212-416-2173; brett.philbin@dowjones.com

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