Ameriprise 2008 Annual Report Download - page 29

Standards, Inc.’s defined financial planning process of Engage, Gather, Analyze, Recommend, Implement and Monitor. This
process involves gathering relevant financial information, setting life goals, examining clients’ current financial status and
determining a strategy or plan for helping clients meet their goals given their current situation and future plans. Once we have
identified a financial planning client’s objectives, we then recommend a solution set consisting of actions—such as paying
down debt, increasing savings and investment, creating a will, and including tax qualified formats in the client’s allocation of
savings and investment—as well as products to address these objectives with clients accepting what they determine to be an
appropriate range and level of risk. Our financial planning relationships with our clients are characterized by an ability to
thoroughly understand their specific needs, which enables us to better help them meet those needs, achieve higher overall
client satisfaction, have more products held in their accounts and increase the company’s assets under management.
Our financial planning clients pay a fixed fee for the receipt of financial planning services. This fee is based on the complexity of
a client’s financial and life situation and their advisor’s particular practice experience, and is not based on or related to actual
investment performance. If clients elect to implement their financial plan with our company, we and our affiliated financial
advisors generally receive a sales commission and/or sales load and other revenues for the products that we sell to them.
These commissions, sales loads and other revenues are separate from and in addition to the financial planning fees we and
our affiliated financial advisors may receive. We earned branded financial planning net cash sales in 2008 of $211 million, a
4% increase over 2007. In addition, sales of financial plans increased in 2008, and approximately 46% of our retail clients
serviced by branded franchisee advisors and employee advisors of AFSI have received a financial plan or have entered into an
agreement to receive and have paid for a financial plan.
Brokerage and Other Products and Services
We offer our retail and institutional clients a variety of brokerage and other investment products and services.
Our Ameriprise ONE Financial Account is a single integrated financial management account that combines a client’s
investment, banking and lending relationships. The Ameriprise ONE Financial Account enables clients to access a single cash
account to fund a variety of financial transactions, including investments in mutual funds, individual securities, cash products
and margin lending. Additional features of the Ameriprise ONE Financial Account include unlimited check writing with overdraft
protection, a co-branded MasterCard, online bill payments, ATM access and a savings account.
We provide securities execution and clearing services for our retail and institutional clients through our registered broker-
dealer subsidiaries. As of December 31, 2008, we administered $75.5 billion in assets for clients, an increase of $4.5 billion
from December 31, 2007. Clients can use our online brokerage service to purchase and sell securities, obtain independent
research and information about a wide variety of securities, and use self-directed asset allocation and other financial planning
tools. Clients can also contact their financial advisor and access other services. We also offer shares in public non-exchange
traded Real Estate Investment Trusts (‘‘REITs’’), and other alternative investments and structured notes issued by other
companies. We believe we are one of the largest distributors of public non-exchange traded REITs in the U.S.
Through Ameriprise Achiever Circle, we offer special benefits and rewards to recognize clients who have $100,000 invested
with us. Clients who have $500,000 or more invested with us are eligible for Ameriprise Achiever Circle Elite, which includes
additional benefits. To qualify for and maintain Achiever Circle or Achiever Circle Elite status, clients must meet certain
eligibility and maintenance requirements. Special benefits of the program may include fee waivers on Ameriprise IRAs and
the Ameriprise ONE Financial Account, a fee-waived Ameriprise Financial MasterCard or a preferred interest rate on an
Ameriprise Personal Savings Account, as applicable.
Fee-based Investment Advisory Accounts
In addition to purchases of proprietary and non-proprietary mutual funds and other securities on a stand-alone basis, clients
may purchase mutual funds, among other securities, in connection with investment advisory fee-based ‘‘wrap account’’
programs or services, and pay fees based on a percentage of their assets. This fee is for the added services and investment
advice associated with these accounts. We currently offer both discretionary and non-discretionary investment advisory wrap
accounts. In a discretionary wrap account, we (or an unaffiliated investment advisor) choose the underlying investments in the
portfolio on behalf of the client, whereas in a non-discretionary wrap account, clients choose the underlying investments in
the portfolio based, to the extent the client elects, on their financial advisor’s recommendation. Investors in discretionary and
non-discretionary wrap accounts generally pay an asset-based fee (for advice and other services) based on the assets held in
that account as well as any related fees or costs included in the underlying securities held in that account (e.g., underlying
mutual fund operating expenses, investment advisory or related fees, Rule 12b-1 fees, etc.). A significant portion of our
proprietary mutual fund sales are made through wrap accounts. Client assets held in proprietary mutual funds in a wrap
account generally produce higher revenues to us than client assets held in proprietary mutual funds on a stand-alone basis
because, as noted above, we receive an investment advisory fee based on the asset values of the assets held in a wrap
account in addition to revenues we normally receive for investment management of the funds included in the account.
6