Ameriprise 2009 Annual Report Download - page 53

Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with
the ‘‘Forward-Looking Statements,’’ our Consolidated Financial Statements and Notes that follow and the ‘‘Consolidated Five-Year
Summary of Selected Financial Data’’ and the ‘‘Risk Factors’’ included in our Annual Report on Form 10-K. Certain reclassifications of
prior year amounts have been made to conform to the current presentation.
Overview
We provide financial planning, products and services that are designed to be utilized as solutions for our clients’ cash and liquidity, asset
accumulation, income, protection and estate and wealth transfer needs. Our model for delivering these solutions is centered on building
long-term personal relationships between our affiliated advisors and clients, and in the case of our products distributed through
unaffiliated advisors, by supporting those advisors in building strong client relationships. We believe that our focus on personal
relationships, together with our strengths in financial planning and product development, allow us to better address the evolving financial
needs of our clients and our primary target market segment, the mass affluent and affluent, which we define as households with
investable assets of more than $100,000.
Our branded affiliated advisors’ financial planning and advisory process is designed to provide comprehensive advice, when appropriate,
to address our clients’ cash and liquidity, asset accumulation, income, protection, and estate and wealth transfer needs. This approach
allows us to recommend actions and a range of product solutions consisting of investment, annuity, insurance, banking and other
financial products that help clients attain over time a return or form of protection while accepting what they determine to be an
appropriate range and level of risk. Our focus puts us in a strong position to capitalize on significant demographic and market trends,
which we believe will continue to drive increased demand for our financial planning and other financial services. Our focus on deep client-
advisor relationships has been central to the ability of our business model to succeed through the extreme market conditions of 2008 and
2009, and we believe it will help us to respond to future market cycles.
Our multi-platform network of affiliated financial advisors is the primary means by which we develop personal relationships with retail
clients. As of December 31, 2009, we had a network of more than 12,000 financial advisors and registered representatives (‘‘affiliated
financial advisors’’). We refer to the affiliated financial advisors who use our brand name as our branded advisors, and those who do not
use our brand name but who are affiliated as registered representatives of ours, as our unbranded advisors. The financial product
solutions we offer through our affiliated advisors include both our own products and services and the products of other companies. Our
branded advisor network is the primary distribution channel through which we offer our investment and annuity products and services,
as well as a range of banking and protection products. Our asset management, annuity and auto and home protection products are also
distributed through unaffiliated advisors and affinity relationships. We offer our branded advisors training, tools, leadership, marketing
programs and other field and centralized support to assist them in delivering advice and product solutions to clients. We support
unaffiliated advisors with strong sales and service support and our solutions which they provide to clients. We believe our approach not
only improves the products and services we provide to their clients, but allows us to reinvest in enhanced services for clients and increase
support for financial advisors. Our integrated model of financial planning, diversified product manufacturing and affiliated and
non-affiliated product distribution affords us a better understanding of our clients, which allows us to better manage the risk profile of our
businesses. We believe our focus on meeting clients’ needs through personal financial planning results in more satisfied clients with
deeper, longer lasting relationships with our company and a higher retention of experienced financial advisors.
We have four main operating segments: Advice & Wealth Management, Asset Management, Annuities and Protection, as well as our
Corporate & Other segment. Our four main operating segments are aligned with the financial solutions we offer to address our clients’
needs. The products and services we provide retail clients and, to a lesser extent, institutional clients, are the primary source of our
revenues and net income. Revenues and net income are significantly affected by investment performance and the total value and
composition of assets we manage and administer for our retail and institutional clients as well as the distribution fees we receive from
other companies. These factors, in turn, are largely determined by overall investment market performance and the depth and breadth of
our individual client relationships.
Equity price, credit market and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the
effects they have on the asset management and other asset-based fees we earn, the ‘‘spread’’ income generated on our annuities, banking
and deposit products and universal life (‘‘UL’’) insurance products, the value of deferred acquisition costs (‘‘DAC’’) and deferred sales
38 ANNUAL REPORT 2009