Ameriprise 2010 Annual Report Download - page 56

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 and distribution, allow us to fully 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 that
focuses on all aspects of our clients’ finances. This approach allows us to recommend actions and a broad range of
product solutions consisting of investment, annuity, insurance, banking and other financial products that can 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 approach 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 emphasis on
deep client-advisor relationships has been central to the success of our business model through the extreme market
conditions of the past few years, and we believe it will help us to navigate future market and economic 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, 2010, we had a network of more than 11,400 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 life insurance and annuity products and services, as well as a range of banking and
protection products. 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 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 also 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 deep 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 higher retention of
our 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.
We continue to establish Ameriprise Financial as a financial services leader as we focus on meeting the financial needs of
the mass affluent and affluent, as evidenced by our continued leadership in financial planning, a client retention
percentage rate of 93% and our status as a top ten ranked firm within core portions of our four main operating segments,
including the size of our U.S. advisor force, long-term U.S. mutual funds, variable annuities and variable universal life
(‘‘VUL’’) insurance.
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 inducement costs (‘‘DSIC’’) assets associated with variable
annuity and VUL products, the values of liabilities for guaranteed benefits associated with our variable annuities and the
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