Ameriprise 2015 Annual Report Download - page 79

Advice & Wealth Management
The following table presents the changes in wrap account assets and average balances for the years ended December 31:
2015 2014
(in billions)
Beginning balance $ 174.7 $ 153.5
Net flows(1) 11.1 14.2
Market appreciation (depreciation) and other(1) (5.3) 7.0
Ending balance $ 180.5 $ 174.7
Advisory wrap account assets ending balance(2) $ 178.9 $ 173.5
Average advisory wrap account assets(3) $ 178.5 $ 163.9
(1) Beginning April 1, 2014, net flows reflect all additions and withdrawals to and from the SPS wrap account program. 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 $5.8 billion, or 3%, during the year ended December 31, 2015 due to net inflows of
$11.1 billion, partially offset by market depreciation and other of $5.3 billion. Average advisory wrap account assets
increased $14.6 billion, or 9%, 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,
2015 2014 Change
(in millions)
Revenues
Management and financial advice fees $ 2,629 $ 2,413 $ 216 9%
Distribution fees 2,195 2,213 (18) (1)
Net investment income 146 136 10 7
Other revenues 73 72 1 1
Total revenues 5,043 4,834 209 4
Banking and deposit interest expense 30 28 2 7
Total net revenues 5,013 4,806 207 4
Expenses
Distribution expenses 3,081 2,943 138 5
Interest and debt expense 8 6 2 33
General and administrative expense 1,065 1,065 — —
Total expenses 4,154 4,014 140 3
Operating earnings $ 859 $ 792 $ 67 8%
Our Advice & Wealth Management segment pretax operating earnings, which exclude net realized investment gains or
losses, increased $67 million, or 8%, to $859 million for the year ended December 31, 2015 compared to $792 million
for the prior year primarily due to strong growth in wrap account assets and continued expense management. Pretax
operating margin was 17.1% for the year ended December 31, 2015 compared to 16.5% for the prior year.
Net Revenues
Net revenues exclude net realized investment gains or losses. Net revenues increased $207 million, or 4%, to $5.0 billion
for the year ended December 31, 2015 compared to $4.8 billion for the prior year primarily reflecting growth in wrap
account assets. Operating net revenue per branded advisor increased to $514,000 for the year ended December 31,
2015, up 4% from $496,000 for the prior year driven by asset growth. Total branded advisors were 9,789 at
December 31, 2015 compared to 9,672 at December 31, 2014.
Management and financial advice fees increased $216 million, or 9%, to $2.6 billion for the year ended December 31,
2015 compared to $2.4 billion for the prior year driven by growth in wrap account assets. Average advisory wrap account
assets increased $14.6 billion, or 9%, to $178.5 billion at December 31, 2015 compared to the prior year primarily due
to net inflows and market appreciation. See our discussion of the changes in wrap account assets above.
57