Ameriprise 2013 Annual Report Download - page 92

Advice & Wealth Management
The following table presents the changes in wrap account assets and average balances 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 $ 102.7
(1) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period.
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 $12.3 billion, or
12%, 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 $12.3 billion, or 12%, 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.
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.
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