Ameriprise 2005 Annual Report Download - page 103

Glossary of Selected Terminology
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Ameriprise Financial, Inc. |
Administered Assets—Administered assets include assets for
which we provide administrative services such as assets of
our clients invested in other companies’ products that we offer
outside of our wrap accounts. These assets include those held
in customers’ brokerage accounts. We do not exercise man-
agement discretion over these assets and do not earn a
management fee. These assets are not reported on our
Consolidated Balance Sheets.
AMEX Assurance Company—This company is a legal entity
owned by IDS Property Casualty Insurance Company that
offers travel and other card insurance to American Express
customers. This business had historically been reported in the
Travel Related Services segment of American Express. Under
the separation agreement, 100 percent of this business was
ceded to an American Express subsidiary in return for an arm’s
length ceding fee. Ameriprise Financial expects to sell the
legal entity of AMEX Assurance to American Express within two
years after September 30, 2005 for a fixed price equal to the
net book value of AMEX Assurance.
Clients With a Financial Plan Percentage—The month-end
number of our current clients who have received a financial
plan, or have entered into an agreement to receive and have
paid for a financial plan, divided by the number of active retail
client groups serviced by branded employee and franchisee
advisors and our customer service organization.
Deferred Acquisition Costs (DAC)—These represent the costs
of acquiring new insurance, annuity and mutual fund business,
principally direct sales commissions and other distribution and
underwriting costs that have been deferred on the sale of
annuity, life and health insurance and, to a lesser extent, auto
and home insurance and certain mutual fund products. These
costs are deferred to the extent they are recoverable from
future profits.
Gross Dealer Concession—This is an internal measure, com-
monly used in the financial services industry, of the sales pro-
duction of the advisor channel excluding Securities America, Inc.
Managed Assets—Managed assets includes client assets for
which we provide investment management and other servic-
es, such as the assets of the RiverSource family of mutual
funds, assets of institutional clients and assets held in our
wrap accounts (retail accounts for which we receive a fee
based on assets held in the account). Managed assets also
includes assets managed by sub-advisors selected by us.
Managed assets do not include owned assets or adminis-
tered assets. These assets are not reported on our
Consolidated Balance Sheets.
Mass Affluent—These are individuals with $100,000 to
$1 million in investable assets and household income above
$50,000. We track clients with $100,000 or more in assets
with us as a proxy for mass affluent clients.
Owned Assets—Owned assets include certain assets on our
Consolidated Balance Sheets, principally investments in the
general and separate accounts of our life insurance sub-
sidiaries, as well as cash and cash equivalents, restricted and
segregated cash and receivables.
Securities America—Securities America Financial Corporation
(SAFC) is a corporation whose sole function is to hold the
stock of its operating subsidiaries, Securities America, Inc.
(SAI) and Securities America Advisors, Inc. (SAA). SAI is a reg-
istered broker-dealer and an insurance agency. SAA is an SEC
registered investment advisor.
Separate Accounts—Represent assets and liabilities that are
maintained and established primarily for the purpose of fund-
ing variable annuity and insurance products. The assets of the
separate account are only available to fund the liabilities of
the variable annuity contract holders and others with contracts
requiring premiums or other deposits to the separate account.
Clients elect to invest premiums in stock, bond and/or money
market funds depending on their risk tolerance. All investment
performance, net of fees, is passed through to the client.
Total Clients—This is the sum of all individual, business and
institutional clients.
Wrap Accounts—Wrap accounts enable our clients to pur-
chase other securities such as mutual funds in connection
with investment advisory fee-based “wrap account” programs
or services. We offer clients the opportunity to select products
that include proprietary and non-proprietary funds. We current-
ly offer both discretionary and non-discretionary investment
advisory wrap accounts. In a discretionary wrap account, an
unaffiliated investment advisor or our investment management
subsidiary, RiverSource Investments, LLC chooses the underly-
ing investments in the portfolio on behalf of the client. In a
non-discretionary wrap account, the client chooses the underly-
ing investments in the portfolio based, to the extent the client
elects, in part or whole on the recommendations of their finan-
cial advisor. Investors in our wrap accounts generally pay an
asset based fee based on the assets held in their wrap
accounts. These investors also pay any related fees or costs
included in the underlying securities held in that account, such as
underlying mutual fund operating expenses and Rule 12b-1 fees.