Ameriprise 2010 Annual Report Download - page 24

To manage our exposure to residential real estate, we sell the majority of our originated first mortgage products to third
parties shortly after origination. All other lending products are originated and held on the balance sheet of Ameriprise Bank,
with the exception of investment secured loans, which are held on the balance sheet of Ameriprise Financial. As of
December 31, 2010, there were $825 million in home loans/equity line of credit balances, $14 million in investment
secured loan balances and $217 million in unsecured balances, net of premiums and discounts, and capitalized lender
paid origination fees.
Ameriprise Bank’s strategy and operations are focused on serving branded advisor clients. We distribute our banking
products primarily through branded advisors. We believe that the availability of these products is a competitive advantage
and supports our financial advisors in their ability to meet the cash and liquidity needs of our clients. We also serve advisor
clients through the Personal Trust Services division of Ameriprise Bank. Personal Trust Services provides personal trust,
custodial, agency and investment management services to help them meet the estate and wealth transfer needs of
individual and corporate clients of our branded advisors. Personal Trust Services also uses some of our investment
products in connection with its services.
Face-Amount Certificates
We currently issue four types of face-amount certificates through Ameriprise Certificate Company, a wholly owned
subsidiary of Ameriprise Financial that is registered as an investment company under the Investment Company Act of 1940
(‘‘Investment Company Act’’). Owners of our certificates invest funds and are entitled to receive at maturity or at the end
of a stated term, a determinable amount of money equal to their aggregate investments in the certificate plus interest at
rates we declare, less any withdrawals and early withdrawal penalties. For two types of certificate products, the rate of
interest is calculated in whole or in part based on any upward movement in a broad-based stock market index up to a
maximum return, where the maximum is a fixed rate for a given term, but can be changed at our discretion for prospective
terms.
At December 31, 2010, we had $3.2 billion in total certificate reserves underlying our certificate products. Our earnings
are based upon the difference, or ‘‘spread,’’ between the interest rates credited to certificate holders and the interest
earned on the certificate assets invested. A portion of these earnings is used to compensate the various affiliated entities
that provide management, administrative and other services to our company for these products. The certificates compete
with investments offered by banks (including Ameriprise Bank), savings and loan associations, credit unions, mutual funds,
insurance companies and similar financial institutions, which may be viewed by potential customers as offering a
comparable or superior combination of safety and return on investment. In times of weak performance in the equity
markets, certificate sales are generally stronger. In 2010, branded financial advisors’ cash sales were $850 million.
Business Alliances
We provide workplace financial planning and educational programs to employees of major corporations and small
businesses through our Business Alliances group. Our Business Alliances group helps the individual employees of client
companies plan for and achieve their long-term financial objectives. It offers financial planning as an employee benefit
supported by educational materials, tools and programs. In addition, we provide training and support to financial advisors
working on-site at company locations to present educational seminars, conduct one-on-one meetings and participate in
client educational events. We also provide financial advice service offerings, such as Financial Planning and Executive
Financial Services, tailored to discrete employee segments.
Strategic Alliances and Other Marketing Arrangements
We use strategic marketing alliances, local marketing programs for our branded advisors, and on-site workshops through
our Business Alliances group to generate new clients for our financial planning and other financial services. An important
aspect of our strategy is to leverage the client relationships of our other businesses by working with major companies to
create alliances that help us generate new financial services clients. For example, AFSI currently has a strategic alliance
with H&R Block, Inc. designed to build relationships between our branded financial advisors and the tax professionals of
H&R Block, Inc. and to leverage those relationships to better serve both AFSI and H&R Block, Inc. clients through referrals.
Our alliance arrangements are generally for a limited duration of one to five years with an option to renew. Additionally,
these types of marketing arrangements typically provide that either party may terminate the agreements on short notice,
usually within sixty days. We compensate our alliance partners for providing opportunities to market to their clients.
In addition to our alliance arrangements, we have developed a number of local marketing programs for our branded
advisors to use in building their client bases. These include pre-approved seminars, seminar- and event-training and referral
tools and training, which are designed to encourage both prospective and existing clients to refer or bring their friends to
an event.
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