Ameriprise 2008 Annual Report Download - page 87
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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 financial advisors. Our affiliated advisors utilize a diversified selection
of both proprietary and non-proprietary products to help clients meet their financial needs.
The following table presents the results of operations of our Advice & Wealth Management segment for the years ended
December 31, 2007 and 2006:
Years Ended December 31,
2007 2006 Change
(in millions, except percentages)
Revenues
Management and financial advice fees $ 1,350 $ 1,080 $ 270 25 %
Distribution fees 2,218 2,034 184 9
Net investment income 399 377 22 6
Other revenues 76 62 14 23
Total revenues 4,043 3,553 490 14
Banking and deposit interest expense 230 218 12 6
Total net revenues 3,813 3,335 478 14
Expenses
Distribution expenses 2,349 2,068 281 14
General and administrative expense 1,179 1,071 108 10
Total expenses 3,528 3,139 389 12
Pretax income $ 285 $ 196 $ 89 45 %
Our Advice & Wealth Management segment reported pretax income of $285 million in 2007, up from $196 million in 2006.
Net revenues
Net revenues were $3.8 billion, an increase of $478 million, or 14%. Management and financial advice fees increased
$270 million, or 25%, in 2007 as compared to 2006. The increase was led by net increases in wrap account assets of 23%
from December 31, 2006 to December 31, 2007 and an increase in planning fees due to accelerated financial plan delivery
standards. The growth in distribution fees of $184 million, or 9% from 2006, reflected an increase in cash sales and market
appreciation. Net investment income increased $22 million, or 6%, in 2007 compared to 2006 primarily due to an increase
attributable to a full year of activity from Ameriprise Bank partially offset by lower average account balances in certificate
products. Banking and deposit interest expense increased $12 million primarily due to a full year of activity of Ameriprise Bank
and higher rates of interest paid on certificates partially offset by decreases in certificate sales and balances.
Expenses
Total expenses increased $389 million, or 12%. The increase in distribution expenses reflects higher commissions paid driven
by increased sales volumes and higher assets under management. General and administrative expense increased due to
higher staffing and vendor costs related to a full year of activity of Ameriprise Bank and increases in professional, consulting
and technology fees, partially offset by a decline in legal and regulatory costs.
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