Ameriprise 2011 Annual Report Download - page 43

complexities and increased costs could have an impact on our ability to offer cost-effective and innovative insurance
products to our clients. Similarly, the rules governing the capital requirements of financial institutions, both domestic and
international, could have an adverse impact on our ability to allocate capital for strategic business purposes, while
increasing costs for consumers of financial services.
Any mandated reductions or restructuring of the fees we charge for our products and services resulting from regulatory
initiatives or proceedings could reduce our revenues and earnings. In the years ended December 31, 2011, 2010 and
2009, we earned $1.6 billion, $1.4 billion and $1.2 billion, respectively, in distribution fees. Our own Columbia
Management family of mutual funds paid a significant portion of these revenues to us in accordance with plans and
agreements of distribution adopted under Rule 12b-1 promulgated under the Investment Company Act. We believe that
these fees are a critical element in the distribution of our own mutual funds. In July 2010, the SEC proposed certain
measures that would establish a new framework to repeal Rule 12b-1. The proposed changes have been subject to a
public comment period and, following any enactment, would be phased in over a number of years. Any industry-wide
reduction or restructuring of Rule 12b-1 fees could have a material adverse effect on our ability to distribute our own
mutual funds and the fees we receive for distributing other companies’ mutual funds, which could, in turn, have a material
adverse effect on our revenues and earnings.
We expect that the Department of Labor will reissue proposed regulations in 2012 seeking to change the definition of who
is an investment advice fiduciary under ERISA and how such advice can be provided, which applies to both 401(k) plans
and IRAs. These proposed regulations will again be subject to a public comment period upon their release. We cannot
predict whether or when the regulations may be finalized, or how any final regulations may differ from the previously
proposed regulations. If the regulations were to be issued substantially similar to previous drafts, they could impact how we
receive fees, as well as how we compensate our advisors and design our investments and services for qualified accounts,
which could negatively impact our results of operations.
In October 2011, the FRB, OCC, FDIC and SEC jointly issued a proposed rule that would implement Section 619 of the
Dodd-Frank Act (the ‘‘Volcker Rule’’) which contains certain prohibitions and restrictions on the ability of banking entities
and their affiliates to engage in proprietary trading and to have certain interests in, or relationships with, a wide variety of
investment funds, including but not limited to hedge funds, foreign funds and private equity funds. This proposed rule
would significantly impede our ability to launch investment products, including our ability to provide seed capital to
US-based and foreign investment funds. We and our subsidiaries would also be prohibited from trading for our own
accounts unless such trading qualifies for one of a limited number of exceptions. Additionally, the proposed rule to
implement the Volcker Rule has created considerable debate regarding the potential adverse liquidity impact within the
financial markets, especially with respect to the trading of non-government fixed income securities. To the extent that
liquidity in the financial markets is adversely impacted, we and our clients may experience increased costs and volatility
with respect to our business operations and earnings. Significant time and expense will be required to ensure that
necessary compliance policies and procedures are implemented and to establish appropriate oversight. The proposed rule
could also place U.S. asset managers at a competitive disadvantage in foreign markets. Depending on final parameters of
the Volcker Rule, including the breadth of the permitted activities under the Volcker Rule and the nature of the investment
funds covered by the prohibitions and limitations under the Volcker Rule, the full impact of the rule on our operations,
results and growth strategies cannot be known.
Our insurance companies are subject to state regulation and must comply with statutory reserve and capital requirements.
State regulators continually review and update these requirements and other requirements relating to the business
operations of insurance companies, including their underwriting and sales practices. The NAIC adopted a change to require
principles-based reserves for variable annuities at the end of 2009, and continues to discuss moving to a principles-based
reserving system for other insurance and annuity products. The requirement for principles-based variable annuity reserves,
along with a similar risk-based capital requirement adopted previously, may result in statutory reserves and risk-based
capital for variable annuities being more sensitive to changes in equity prices and other market factors. It is not possible at
this time to estimate the potential impact of future changes in statutory reserve and capital requirements on our insurance
businesses. Further, we cannot predict the effect that proposed federal legislation, such as the option of federally
chartered insurers or a mandated federal systemic risk regulator, may have on our insurance businesses or competitors.
The majority of our affiliated advisors are independent contractors. Legislative or regulatory action that redefines the criteria
for determining whether a person is an employee or an independent contractor could materially impact our relationships
with our advisors and our business, resulting in an adverse effect on our results of operations.
Changes in and the adoption of accounting standards could have a material impact on our financial statements.
We prepare our financial statements in accordance with U.S. generally accepted accounting principles. From time to time,
the Financial Accounting Standards Board (‘‘FASB’’), the SEC and other regulators change the financial accounting and
reporting standards governing the preparation of our financial statements. In some cases, we could be required to apply a
new or revised standard retroactively, resulting in our restating prior period financial statements. These changes are difficult
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