Ameriprise 2008 Annual Report Download - page 28

•Ameriprise Bank, FSB (‘‘Ameriprise Bank’’) offers a variety of consumer banking and lending products and personal trust
and related services. Its results of operations are included in the Advice & Wealth Management segment.
Our Segments—Advice & Wealth Management
Our Advice & Wealth Management segment provides financial planning and advice, as well as full service brokerage and
banking services, primarily to retail clients through our affiliated financial advisors. Our affiliated financial advisors utilize a
diversified selection of both proprietary and non-proprietary products to help clients meet their financial needs. A significant
portion of revenues in this segment is fee-based, driven by the level of client assets, which is impacted by both market
movements and net asset flows. We also earn net investment income on owned assets primarily from certificate and banking
products. This segment earns revenues (distribution fees) for distributing non-proprietary products and earns intersegment
revenues (distribution fees) for distributing our proprietary products and services to our retail clients. Intersegment expenses
for this segment include expenses for investment management services provided by our Asset Management segment. All
intersegment activity is eliminated in our consolidated results. In 2008, 34% of our revenues from external clients was
attributable to our Advice & Wealth Management business.
Our Financial Advisor Platform
We provide clients financial planning and brokerage services through our nationwide network of more than 12,400 affiliated
financial advisors. Our network currently includes more than 10,500 branded advisors, of which approximately 2,800 are
employees of our company and approximately 7,700 are independent franchisees or employees or contractors of
franchisees. Our network also includes approximately 1,900 non-employee unbranded advisors of SAI. During the fourth
quarter of 2008, we acquired H&R Block Financial Advisors, Inc. (which was renamed as AASI) and Brecek & Young, adding
approximately 950 employee branded advisors and approximately 300 independent advisors, respectively. We believe our
branded advisor network had the fourth largest advisor sales force in the United States in 2008.
Advisors who use our brand name can affiliate with our company in two different ways. Each affiliation offers different levels of
support and compensation, with the rate of commission we pay to each branded advisor determined by a schedule that takes
into account the type of service or product provided, the type of branded advisor affiliation and other criteria. The affiliation
options are:
•Employee Advisors. Under this affiliation, a financial advisor is an employee of our company, and we pay compensation
competitive with other employee advisor models. We provide our employee advisors a high level of support, including local
office space and staff support, in exchange for a commission payout rate lower than that of our branded franchisee
advisors.
•Branded Franchisee Advisors. Under this affiliation, a financial advisor is an independent contractor franchisee who
affiliates with our company and has the right to use our brand name. We pay to our branded franchisee advisors a higher
payout rate than we do to our employee advisors as they are responsible for paying their own overhead, staff compensation
and other business expenses. In addition, our branded franchisee advisors pay a franchise association fee and other fees in
exchange for the support we offer and the right to associate with our brand name. The support that we offer to our branded
franchisee advisors includes generalist and specialist leadership support, technology platforms and tools, training and
marketing programs.
Our strong financial advisor retention rate speaks to the value proposition we offer advisors. As of December 31, 2008, over
45% of our branded advisors had been with us for more than 10 years, with an average tenure of nearly 18 years. Among
branded advisors who have been with us for more than 10 years, we have a retention rate of over 95%. We believe this
success is driven by the choice we offer branded advisors about how to affiliate with our company, together with our
competitive payout arrangements and the distinctive support that helps them build their practices.
Our third platform, the unbranded advisor network served by SAI and its subsidiaries, offers our own and other companies’
mutual funds and variable annuities as well as the investment and protection products of other companies.
Each of our three platforms of affiliated financial advisors provides clients access to our diversified set of cash and liquidity,
asset accumulation, income, protection, and estate and wealth transfer products and services, as well as a selection of
products from other companies, as more fully described below.
Brokerage and Investment Advisory Services
Individual and Family Financial Services
Our branded advisors deliver financial solutions to our advisory clients by building long-term personal relationships through
financial planning that is responsive to clients’ evolving needs. We utilize the Certified Financial Planner Board of
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