Ameriprise 2008 Annual Report Download - page 51

A drop in investment performance as compared to our competitors could negatively impact our ability
to increase profitability.
Sales of our own mutual funds by our affiliated financial advisor network comprise a significant percentage of our total mutual
fund sales. We attribute this success to performance, new products and marketing efforts. A decline in the level of investment
performance as compared to our competitors could cause a decline in market share and a commensurate drop in profits as
sales of other companies’ mutual funds are less profitable than those from our own mutual funds. A decline in investment
performance could also adversely affect the realization of benefits from investments in our strategy to expand alternative
distribution channels for our own products, including third-party distribution of our mutual funds.
We face intense competition in attracting and retaining key talent.
We are dependent on our network of branded advisors for a significant portion of the sales of our mutual funds, annuities,
face-amount certificates, banking and insurance products. In addition, our continued success depends to a substantial
degree on our ability to attract and retain qualified personnel. The market for financial advisors, registered representatives,
management talent, qualified legal and compliance professionals, fund managers, and investment analysts is extremely
competitive. If we are unable to attract and retain qualified individuals or our recruiting and retention costs increase
significantly, our financial condition and results of operations could be materially adversely impacted.
Our businesses are heavily regulated, and changes in legislation or regulation may reduce our
profitability, limit our growth, or impact our ability to pay dividends or achieve targeted return-on-equity
levels.
We operate in highly regulated industries and are required to obtain and maintain licenses for many of the businesses we
operate in addition to being subject to regulatory oversight. Securities regulators have significantly increased the level of
regulation in recent years and have several outstanding proposals for additional regulation. Current market conditions and
recent events could result in increases or changes in current regulations and regulatory structures, including higher licensing
fees and assessments. Significant discussion and activity by regulators concerns the sale and suitability of financial products
and services to persons planning for retirement, as well as to older investors. In addition, we are subject to heightened
requirements and associated costs and risks relating to privacy and the protection of customer data. Our information systems,
moreover, may be subject to increased efforts of ‘‘hackers’’ by reason of the customer data we possess. These requirements,
costs and risks, as well as possible legislative or regulatory changes, may constrain our ability to market our products and
services to our target demographic and potential customers, and could negatively impact our profitability and make it more
difficult for us to pursue our growth strategy.
Our insurance companies are subject to state regulation and must comply with statutory reserve and capital requirements.
State regulators are continually reviewing and updating these requirements and other requirements relating to the business
operations of insurance companies, including their underwriting and sales practices. Moreover, our life insurance companies
are subject to capital requirements for variable annuity contracts with guaranteed death or living benefits. These requirements
may have an impact on statutory reserves and regulatory capital in the event equity market values fall in the future. The NAIC
has adopted a change to require principles-based reserves for variable annuities at the end of 2009, and continues to discuss
moving to a principles-based reserving system for other insurance and annuity products. This could change statutory reserve
requirements significantly, and it is not possible to estimate the potential impact on our insurance businesses at this time.
Further, we cannot predict the effect that proposed federal legislation, such as the option of federally chartered insurers or a
mandated federal systemic risk regulator, may have on our insurance businesses or their competitors.
Compliance with applicable laws and regulations is time consuming and personnel-intensive. Moreover, the evaluation of our
compliance with broker-dealer, investment advisor, insurance company and banking regulation by the SEC, OTS and other
regulatory organizations is an ongoing feature of our business, the outcomes of which may not be foreseeable. Changes in
these laws and regulations may materially increase our direct and indirect compliance and other expenses of doing business.
Our financial advisors may decide that the direct cost of compliance and the indirect cost of time spent on compliance matters
outweigh the benefits of a career as a financial advisor, which could lead to financial advisor attrition. The costs of the
compliance requirements we face, and the constraints they impose on our operations, could have a material adverse effect
on our financial condition and results of operations.
In addition, we may be required to reduce our fee levels, or restructure the fees we charge, as a result of regulatory initiatives
or proceedings that are either industry-wide or specifically targeted at our company. Reductions or other changes in the fees
that we charge for our products and services could reduce our revenues and earnings. Moreover, in the years ended
December 31, 2008, 2007 and 2006, we earned $1.6 billion, $1.8 billion and $1.6 billion, respectively, in distribution fees.
A significant portion of these revenues was paid to us by our own RiverSource family of mutual funds in accordance with plans
and agreements of distribution adopted under Rule 12b-1 promulgated under the Investment Company Act of 1940, as
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