Ameriprise 2015 Annual Report Download - page 34

distributing the Columbia Management funds through sales charges (front-end or back-end loads) on certain classes of
shares and distribution (12b-1) and servicing-related 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, including U.S. Trust and Bank of America from whom we acquired Columbia
Management in 2010. 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 primarily through financial intermediaries and institutions, including banks, life insurance
companies, independent financial advisers, wealth managers and platforms offering a variety of investment products.
Threadneedle also distributes to direct clients. 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. Our solutions in this
segment and our Protection segment help us deliver on our Confident Retirement approach as well as provide certain
products to unaffiliated advisors and financial institutions.
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 expenses for investment management services provided by our Asset Management
segment. All intersegment activity is eliminated in our consolidated results.
Our annuity products include deferred variable and fixed annuities as well as immediate annuities. The relative proportion
between fixed and variable annuity sales is generally driven by the relative performance of the equity and fixed income
markets. Fixed sales are generally stronger when yields available in the fixed income markets are relatively high than when
yields are relatively low. Variable sales are generally stronger in times of superior performance in equity markets than in
times of weak performance in equity markets. The relative proportion between fixed and variable annuity sales is also
influenced by product design and other factors. In addition to the revenues we generate on these products, we also receive
fees charged on assets allocated to our separate accounts to cover administrative costs and a portion of the management
fees from the underlying investment accounts in which assets are invested, as discussed below under ‘‘Variable Annuities.’’
Investment management performance is critical to the profitability of our RiverSource annuity business.
Variable Annuities
A variable annuity provides a contractholder with investment returns linked to underlying investment accounts of the
contractholder’s choice. These underlying investment options may include the VIT Funds previously discussed (see
‘‘Business — Our Segments — Asset Management — Product and Service Offerings — U.S. Registered Funds,’’ above) as
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