Ameriprise 2009 Annual Report Download - page 83

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 affiliated and
non-affiliated products to help clients meet their financial needs.
The following table presents the results of operations of our Advice & Wealth Management segment:
Years Ended December 31,
2008 2007 Change
(in millions, except percentages)
Revenues
Management and financial advice fees $ 1,339 $ 1,350 $ (11) (1)%
Distribution fees 1,912 2,218 (306) (14)
Net investment income (43) 395 (438) NM
Other revenues 80 76 4 5
Total revenues 3,288 4,039 (751) (19)
Banking and deposit interest expense 178 230 (52) (23)
Total net revenues 3,110 3,809 (699) (18)
Expenses
Distribution expenses 2,121 2,349 (228) (10)
General and administrative expense 1,138 1,175 (37) (3)
Total expenses 3,259 3,524 (265) (8)
Pretax income (loss) $ (149) $ 285 $ (434) NM
NM Not Meaningful.
Our Advice & Wealth Management segment pretax loss was $149 million in 2008 compared to pretax income of $285 million in 2007.
Net revenues
Net revenues were $3.1 billion in 2008 compared to $3.8 billion in 2007, a decrease of $699 million, or 18%, primarily driven by
decreases in net investment income from realized investment losses and lower distribution fees.
Management and financial advice fees decreased $11 million, or 1%, to $1.3 billion in 2008. The decrease was primarily due to a
$21.1 billion decline in total wrap account assets as a result of the deterioration in the equity markets, as well as lower net inflows
compared to the prior year, partially offset by a $2.0 billion increase in wrap account assets related to our acquisition of H&R Block
Financial Advisors, Inc. Net inflows in wrap accounts decreased to $3.7 billion in 2008 from net inflows of $11.7 billion in 2007.
Distribution fees decreased $306 million, or 14%, from $2.2 billion in 2007 to $1.9 billion in 2008 primarily due to market depreciation
and decreased sales volume due to a shift in client behavior away from traditional investment activity.
Net investment income decreased $438 million from $395 million in 2007 to a loss of $43 million in 2008, primarily due to net realized
investment losses of $333 million on Available-for-Sale securities in 2008, primarily from other-than-temporary impairments.
Investment income from fixed maturity securities and other investments decreased $99 million primarily due to lower yields on our
investment portfolio as we increased our liquidity position.
Banking and deposit interest expense decreased $52 million, or 23%, to $178 million in 2008 compared to $230 million in 2007. This
decrease is due to lower crediting rates accrued on certificates.
Expenses
Total expenses decreased $265 million, or 8%, from $3.5 billion in 2007 to $3.3 billion in 2008 primarily due to a $228 million decrease
in distribution expenses resulting from the impact of lower asset levels and cash sales on advisor compensation as reflected by a decrease
68 ANNUAL REPORT 2009