Ameriprise 2013 Annual Report Download - page 29

Sub-advised Accounts
In addition to providing sub-advisory services to each other, Columbia Management and Threadneedle act as sub-adviser
for certain U.S. and non-U.S. funds, private banking individually managed accounts, common trust funds and other
portfolios sponsored or advised by other firms. As with our affiliated funds, we earn management fees for these
sub-advisory services based on the underlying asset value of the funds and accounts we sub-advise. As of December 31,
2013, we managed over $33.5 billion in assets in a sub-advisory capacity.
Distribution
Both Columbia Management and Threadneedle maintain distribution teams and capabilities that support the sales,
marketing and support of their products and services. These distribution activities are generally organized into two major
categories: retail distribution and institutional distribution.
Retail Distribution
Columbia Management Investment Distributors, Inc. acts as the principal underwriter and distributor of our Columbia
Management family of funds. Pursuant to distribution agreements with the funds, we offer and sell fund shares on a
continuous basis and pay certain costs associated with the marketing and selling of shares. We earn commissions for
distributing the Columbia Management funds through sales charges (front-end or back-end loads) on certain classes of
shares and distribution and servicing-related (12b-1) fees based on a percentage of fund assets, and receive intersegment
allocation payments. This revenue is impacted by overall asset levels and mix of the funds.
Columbia Management fund shares are sold through both our Advice & Wealth Management segment and through
unaffiliated third-party financial intermediaries. Among our third-party distribution arrangements is a strategic distribution
agreement entered into in connection with Ameriprise’s acquisition of Columbia Management that provides ongoing access
to clients of Bank of America affiliated distributors, including U.S. Trust. Fees and reimbursements paid to such
intermediaries may vary based on sales, redemptions, asset values, asset allocation, product mix, and marketing and
support activities provided by the intermediary. Intersegment distribution expenses for services provided by our Advice &
Wealth Management Segment are eliminated in our consolidated results.
Threadneedle funds are sold through financial intermediaries and institutions, including banks, life insurance companies,
independent financial advisers, wealth managers and platforms offering a variety of investment products. Various
Threadneedle affiliates serve as the distributors of these fund offerings and are authorized to engage in such activities in
numerous countries across Europe, the Middle East, the Asia-Pacific region and Africa. Certain Threadneedle fund
offerings, such as its UCITS products, may be distributed on a cross-border basis while others are distributed exclusively in
local markets.
Institutional and High Net Worth Distribution
We offer separately managed account services and certain funds to high net worth clients and to a variety of institutional
clients, including pension plans, employee savings plans, foundations, sovereign wealth funds, endowments, corporations,
banks, trusts, governmental entities, high-net-worth individuals and not-for-profit organizations. We provide investment
management services for insurance companies, including our insurance subsidiaries. We also provide, primarily through
ATC and one of our broker-dealer subsidiaries, a variety of services for our institutional clients that sponsor retirement
plans. We have dedicated institutional and sub-advisory sales teams that market directly to such institutional clients.
We concentrate on establishing strong relationships with institutional clients and leading global and national consultancy
firms across North America, Europe, the Middle East, Asia and Australia.
Our Segments — Annuities
Our Annuities segment provides RiverSource variable and fixed annuity products to individual clients. The RiverSource Life
companies provide variable annuity products through our advisors, and our fixed annuity products are distributed through
both affiliated and unaffiliated advisors and financial institutions. These products are designed to help individuals address
their asset accumulation and income goals. Revenues for our variable annuity products are primarily earned as fees based
on underlying account balances, which are impacted by both market movements and net asset flows. Revenues for our
fixed annuity products are primarily earned as net investment income on assets supporting fixed account balances, with
profitability significantly impacted by the spread between net investment income earned and interest credited on the fixed
account balances. We also earn net investment income on owned assets supporting reserves for immediate annuities and
for certain guaranteed benefits offered with variable annuities and on capital supporting the business. Intersegment
revenues for this segment reflect fees paid by our Asset Management segment for marketing support and other services
provided in connection with the availability of VIT Funds under the variable annuity contracts. Intersegment expenses for
this segment include distribution expenses for services provided by our Advice & Wealth Management segment, as well as
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