Ameriprise 2012 Annual Report Download - page 74

In January 2013, we completed the conversion of our federal savings bank subsidiary, Ameriprise Bank to a limited powers
national trust bank. In 2012, all checking, savings and money market accounts and certificates of deposit were liquidated
and returned to our clients, Ameriprise Bank’s consumer loan portfolio, including first mortgages, home equity loans, home
equity lines of credit and unsecured loans, was sold to affiliates of Ameriprise Bank, and Ameriprise Bank’s credit card
account portfolio was sold to Barclays Bank Delaware (‘‘Barclays’’). See additional discussion on the transition and the
impact to our business in the Overview section above.
The following table presents the changes in wrap account assets for the years ended December 31:
2012 2011
(in billions)
Beginning balance $ 103.4 $ 97.5
Net flows 9.6 7.3
Market appreciation (depreciation) and other 11.6 (1.4)
Ending balance $ 124.6 $ 103.4
Average balance(1) $ 115.0 $ 101.4
(1) Average ending balances are calculated using a five-point average of quarter-end balances.
Wrap account assets increased $21.2 billion, or 21%, during the year ended December 31, 2012 due to net inflows of
$9.6 billion and market appreciation and other of $11.6 billion. Average wrap account assets increased $13.6 billion, or
13%, compared to the prior year due to net inflows and market appreciation.
The following table presents the results of operations of our Advice & Wealth Management segment on an operating basis:
Years Ended
December 31,
2012 2011 Change
(in millions)
Revenues
Management and financial advice fees $ 1,737 $ 1,590 $ 147 9%
Distribution fees 1,879 1,849 30 2
Net investment income 233 261 (28) (11)
Other revenues 64 61 3 5
Total revenues 3,913 3,761 152 4
Banking and deposit interest expense 40 48 (8) (17)
Total net revenues 3,873 3,713 160 4
Expenses
Distribution expenses 2,324 2,203 121 5
General and administrative expense 1,106 1,104 2 —
Total expenses 3,430 3,307 123 4
Operating earnings $ 443 $ 406 $ 37 9%
Our Advice & Wealth Management segment pretax operating earnings, which exclude net realized gains or losses,
increased $37 million, or 9%, to $443 million for the year ended December 31, 2012 compared to $406 million for the
prior year primarily due to strong growth in wrap account assets partially offset by lower net investment income. Pretax
operating margin was 11.4% for the year ended December 31, 2012 compared to 10.9% for the prior year.
Net Revenues
Net revenues exclude net realized gains or losses. Net revenues increased $160 million, or 4%, to $3.9 billion for the year
ended December 31, 2012 compared to $3.7 billion for the prior year reflecting client net inflows and market
appreciation, partially offset by lower net investment income. Operating net revenue per branded advisor was $396,000 for
the year ended December 31, 2012, up 3% from the prior year. Total branded advisors were 9,767 at December 31,
2012 compared to 9,730 at December 31, 2011.
Management and financial advice fees increased $147 million, or 9%, to $1.7 billion for the year ended December 31,
2012 compared to $1.6 billion for the prior year driven by growth in wrap account assets. Average wrap account assets
increased $13.6 billion, or 13%, to $115.0 billion for the year ended December 31, 2012 compared to the prior year due
to net inflows and market appreciation. See our discussion of the changes in wrap account assets above.
Distribution fees increased $30 million, or 2%, to $1.9 billion for the year ended December 31, 2012 compared to
$1.8 billion for the prior year due to higher asset-based fees driven by growth in wrap account assets.
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