Ameriprise 2012 Annual Report Download - page 75

Net investment income decreased $28 million, or 11%, to $233 million for the year ended December 31, 2012 compared
to $261 million for the prior year primarily due to a lower asset earnings rate on invested assets and $6 million of
additional bond discount accretion investment income in 2011 related to prior periods resulting from revisions to the
accounting classification of certain structured securities.
Expenses
Total expenses increased $123 million, or 4%, to $3.4 billion for the year ended December 31, 2012 compared to
$3.3 billion for the prior year due to a $121 million increase in distribution expenses driven by higher compensation due to
strong growth in client assets.
Asset Management
Our Asset Management segment provides investment advice and investment products to retail, high net worth and
institutional clients. Such products and services are provided on a global scale through Columbia Management and
Threadneedle. Columbia Management primarily provides U.S. domestic products and services and Threadneedle primarily
provides international investment products and services. We provide clients with U.S. domestic individual products through
unaffiliated third party financial institutions and through our Advice & Wealth Management segment, and we provide
institutional products and services through our institutional sales force. International retail products are primarily distributed
through third-party financial institutions and unaffiliated financial advisors. Individual products include mutual funds,
exchange-traded funds and variable product funds underlying insurance and annuity separate accounts. Institutional asset
management services are designed to meet specific client objectives and may involve a range of products, including those
that focus on traditional asset classes, separately managed accounts, individually managed accounts, collateralized loan
obligations, hedge funds, collective funds and property funds. Collateralized loan obligations and hedge funds are classified
as alternative assets. Revenues in this segment are primarily earned as fees based on managed asset balances, which are
impacted by market movements, net asset flows, asset allocation and product mix. We may also earn performance fees
from certain accounts where investment performance meets or exceeds certain pre-identified targets. In addition to the
products and services provided to third-party clients, management teams serving our Asset Management segment provide
all intercompany asset management services for Ameriprise Financial subsidiaries. The fees for such services are reflected
within the Asset Management segment results through intersegment transfer pricing. Intersegment expenses for this
segment include distribution expenses for services provided by our Advice & Wealth Management, Annuities and Protection
segments.
On April 30, 2010, we completed the acquisition of the long-term asset management business of the Columbia
Management Group from Bank of America. The acquisition significantly enhanced the capabilities of the Asset
Management segment by increasing its scale, broadening its retail and institutional distribution capabilities and
strengthening and diversifying its lineup of retail and institutional products. The integration of the Columbia Management
business, which was completed in the second quarter of 2012, involved organizational changes to our portfolio
management and analytical teams and to our operational, compliance, sales and marketing support staffs. This integration
also involved the streamlining of our U.S. domestic product offerings. As a result of the integration, we combined
RiverSource Investments, our legacy U.S. asset management business, with Columbia Management, under the Columbia
brand. Total U.S. retail assets and number of funds under the Columbia brand as of December 31, 2012 were
$216.3 billion and 205 funds, respectively.
From time to time, fee waivers have been provided to the Columbia Money Market Funds (the ‘‘Funds’’) by Columbia
Management and certain other subsidiaries performing services for the Funds for the purposes of reducing the expenses
charged to a Fund in a given period to maintain or improve a Fund’s net yield in that period. Our subsidiaries may enter
into contractual arrangements with the Funds identifying the specific fees to be waived and/or expenses to be reimbursed,
as well as the time period for which such waivers will apply. In aggregate, we voluntarily waived fees of $11 million and
$14 million for the years ended December 31, 2012 and 2011, respectively.
Threadneedle remains our primary international investment management platform. Threadneedle manages seven OEICs
and one SICAV offering. The seven OEICs are Threadneedle Investment Funds ICVC (‘‘TIF’’), Threadneedle Specialist
Investment Funds ICVC (‘‘TSIF’’), Threadneedle Focus Investment Funds (‘‘TFIF’’), Threadneedle Portfolio Advantage Funds
(‘‘TPAF’’), Threadneedle Investment Funds ICVC II (‘‘TIF II’’), Threadneedle Investment Funds ICVC III (‘‘TIF III’’) and
Threadneedle Investment Funds ICVC IV (‘‘TIF IV’’). TIF, TSIF, TFIF, TPAF, TIF II, TIF III and TIF IV are structured as umbrella
companies with a total of 71 (33, 14, 2, 2, 6, 8 and 6, respectively) sub funds covering the world’s bond and equity
markets. The SICAV is the Threadneedle (Lux) SICAV (‘‘T(Lux)’’). T(Lux) is structured as an umbrella company with a total of
30 sub funds covering the world’s bond, commodities and equity markets. In addition, Threadneedle manages 13 unit
trusts, 10 of which invest into the OEICs, ten property unit trusts and one property fund of funds.
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