Ameriprise 2014 Annual Report Download - page 80

affiliated products and services to our retail clients. Intersegment expenses for this segment include expenses for
investment management services provided by the Asset Management segment.
In addition to purchases of affiliated and non-affiliated mutual funds and other securities on a stand-alone basis, clients
may purchase mutual funds, among other securities, in connection with investment advisory fee-based ‘‘wrap account’’
programs or services, and pay fees based on a percentage of their assets.
The following table presents the changes in wrap account assets and average balances for the years ended December 31:
2014 2013
(in billions)
Beginning balance $ 153.5 $ 124.6
Net flows(1) 14.2 13.1
Market appreciation and other(1) 7.0 15.8
Ending balance $ 174.7 $ 153.5
Advisory wrap account assets ending balance(2) $ 173.5 $ 152.6
Average advisory wrap account assets(3) $ 163.9 $ 138.2
(1) Beginning April 1, 2014, net flows reflect all additions and withdrawals to and from the SPS wrap account program. For all periods
presented prior to April 1, 2014, additions and withdrawals to and from certain non-billable investments of this program were
reflected in the Market appreciation and other line and purchases and sales of billable investments were reported in the Net flows
line. Nets flows for the SPS program are now reported on a consistent basis with our other wrap account programs.
(2) Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue
earned on wrap accounts. Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee.
(3) 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 14%, during the year ended December 31, 2014 due to net inflows of
$14.2 billion and market appreciation and other of $7.0 billion. Average advisory wrap account assets increased
$25.7 billion, or 19%, compared to the prior year primarily 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,
2014 2013 Change
(in millions)
Revenues
Management and financial advice fees $ 2,413 $ 2,039 $ 374 18%
Distribution fees 2,213 2,095 118 6
Net investment income 136 127 9 7
Other revenues 72 65 7 11
Total revenues 4,834 4,326 508 12
Banking and deposit interest expense 28 31 (3) (10)
Total net revenues 4,806 4,295 511 12
Expenses
Distribution expenses 2,943 2,641 302 11
Interest and debt expense 6 6 — —
General and administrative expense 1,065 1,056 9 1
Total expenses 4,014 3,703 311 8
Operating earnings $ 792 $ 592 $ 200 34%
Our Advice & Wealth Management segment pretax operating earnings, which exclude net realized gains or losses,
increased $200 million, or 34%, to $792 million for the year ended December 31, 2014 compared to $592 million for
the prior year primarily due to strong growth in wrap account assets and continued expense management. Pretax operating
margin was 16.5% for the year ended December 31, 2014 compared to 13.8% for the prior year.
Net Revenues
Net revenues exclude net realized gains or losses. Net revenues increased $511 million, or 12%, to $4.8 billion for the
year ended December 31, 2014 compared to $4.3 billion for the prior year primarily reflecting wrap account net inflows
and market appreciation. Operating net revenue per branded advisor increased to $496,000 for the year ended
December 31, 2014, up 13% from $440,000 for the prior year driven by asset growth and client activity. Total branded
advisors were 9,672 at December 31, 2014 compared to 9,716 at December 31, 2013.
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