Ameriprise Financial

Ameriprise Financial, Inc. (NYSE: AMP) is one of the leading diversified financial services companies in the U.S.^[3] Ameriprise Financial engages in business through its subsidiaries who provide a wide range of financial planning, products and services designed to be utilized as solutions for its clients’ cash and liquidity, asset accumulation, income, protection, and estate and wealth transfer needs, including wealth management, asset management, insurance, annuities and estate planning.

Ameriprise Financial, Inc., the holding company is incorporated in Delaware. The company's headquarters are in Minneapolis, Minnesota. James Cracchiolo is the chairman and chief executive officer. The company's primary subsidiaries include Ameriprise Financial Services, Inc., Columbia Management Investment Advisers, LLC, and RiverSource Life Insurance Company. Threadneedle Asset Management is Ameriprise's international asset manager and an award-winning provider of investment solutions to institutional and retail clients across the globe.

History

Spin-off from American Express

Ameriprise Financial is the successor to American Express Financial Advisors (AEFA), a former subsidiary of the American Express Company. In 2005, American Express spun off AEFA as an independent company. Its new name came into effect August 1, 2005, and the transaction closed on September 30, 2005.

Timeline

Ameriprise Financial began life as Investors Syndicate in 1894. Here are a few of the company's key milestones:

• 1894 - John Tappan founds Investors Syndicate
• 1937 - Company assets reach $100 million
• 1940 - Investors Syndicate introduces one of the first mutual funds, the Investors Mutual Fund, giving clients new investing options and two advantages: diversification and professional management. By the 1960s, Investors Mutual Fund is the largest balanced mutual fund in the world.
• 1949 - Investors Syndicate changes its name to Investors Diversified Services, Inc. (IDS)
• 1958 - IDS founds the Investors Syndicate Life Insurance and Annuity Company (now known as RiverSource Life Insurance Company)
• 1974 - the IDS Centre (now IDS Center) is opened in downtown Minneapolis, Minnesota as the company's headquarters
• 1979 - IDS became a wholly owned subsidiary of Alleghany Corporation pursuant to a merger
• 1984 - American Express completes acquisition of IDS Financial Services from Alleghany Corporation; company renamed as American Express Financial Corporation (AEFC)
• 1986 - IDS acquires Wisconsin Employers Casualty Company of Green Bay and renames it IDS Property Casualty Insurance Company
• 1994 - IDS reaches $100 billion in assets and conducts business under the American Express brand
• 2003 - American Express Financial Corporation acquires London-based Threadneedle Asset Management Holdings
• 2005 - American Express Financial Advisors spins off and becomes an independent company named Ameriprise Financial, Inc.; begins trading on the NYSE under the ticker symbol AMP
• 2006 - Ameriprise launches Ameriprise Bank, FSB
• 2007 - Ameriprise debutes at 297 on the FORTUNE 500 list
• 2008 - Ameriprise acquires H&R Block Financial Advisors for $315 million, and the asset management firm J. & W. Seligman & Co. for $400 Million; declines U.S. Government financial assistance
• 2009 - Ameriprise acquires long-term asset management business of Columbia Management for $1.2 billion from Bank of America
• 2010 - Ameriprise Financial completes 116 years of existence and its fifth anniversary as an independent public company

Business

Ameriprise Financial is the largest financial planning company in the United States ^[4] and is among the 25 largest asset managers in the world.^[5] It is ranked 246 in the 2011 Fortune 500.^[6] Ameriprise Financial specializes in meeting the retirement-related financial needs of the mass affluent. It has a three-million-strong client base with more financial planning clients than any other firm, and $672.7 billion in owned, managed and administered assets worldwide.^[5] It also operates Ameriprise Bank, FSB which offers a variety of consumer banking and lending products and personal trust and related services.

Principal Brands

The company uses three principal brands for its businesses in the United States: Ameriprise Financial, Columbia Management and RiverSource. The Threadneedle brand is used for its international asset manager’s products.

Ameriprise Financial Services, Inc., a financial planning and retail distribution subsidiary which operates under the Ameriprise Financial brand name, is a registered broker-dealer and registered investment adviser. It offers comprehensive and personalized financial planning as well as the opportunity to build a long-term relationship with a knowledgeable financial advisor. It has an integrated model of financial planning, diversified product manufacturing and affiliated and unaffiliated distribution through its over 11,400 financial advisors and registered representatives.^[5] This is one of the largest advisor forces in the U.S. The company has 10,472 employees, including 2,168 employee branded advisors.

Independently Operating Subsidiaries

Securities America

Securities America Financial Corporation’s roots go back to Financial Dynamics, an insurance marketing organization founded in 1984 by Steve Wild that had between 10,000 and 12,000 independent insurance agents affiliated with the firm. Financial Dynamics created Securities America, an independent securities broker/dealer, to use its insurance sales force to offer investments. In 1998, Securities America was acquired by American Express. In October 2005, after American Express spun off its financial services unit as Ameriprise, Securities America became a wholly owned subsidiary of Ameriprise. Under Ameriprise, Securities America continued to operate independently as a Nebraska-based broker/dealer, which serves independent financial advisers across the country. Securities America acquired Brecek & Young Advisors, a California-based broker/dealer, and its subsidiary, Iron Point Capital Management, from Security Benefit Corp. of Topeka, Kansas.

On April 25, 2011, Ameriprise announced that it is trying to find an "appropriate buyer" for the Securities America. Ameriprise said that this move will “allow SA to focus on growth opportunities in the independent channel and would allow Ameriprise to devote its resources to the Ameriprise-branded advisor business.”^[7]

Threadneedle Asset Management Holdings

Threadneedle Asset Management Holdings SARL is a Luxembourg-based holding company for the Threadneedle group of companies and a wholly owned independent subsidiary of Ameriprise Financial which provides investment management products and services to clients in the United Kingdom, Europe, the Middle East and the Asia-Pacific region. Though acquired by Ameriprise Financial in 2003, Threadneedle operates as an independent international asset manager, under its own brand name, management organization and operating, compliance and technology infrastructure. Threadneedle primarily provides international investment products and services, and Ameriprise Financial, through an arrangement with Threadneedle, offers certain international and U.S. equity strategies to its U.S. clients.

In 2008, Threadneedle acquired Invesco Perpetual's full service defined contribution pension business with total assets of £470m,^[8] followed by acquisition of Standard Chartered Bank’s World Express Funds investment funds business in 2009, the latter providing Threadneedle with an established Luxembourg-based SICAV platform with over US$2.38 billion worth assets under management as at April 30, 2009.^[9] In August 2011 it was announced that Threadneedle would acquire the investment assets of LV= amounting to some £8 billion.^[10] At December 31, 2010, Threadneedle had $105.6 billion in managed assets worldwide, and was expanding distribution of its institutional products in Europe, Asia, U.S., Middle East and Australia.

Locations

• Ameriprise Financial's headquarters is located at 55 Ameriprise Financial Center, Minneapolis, Minnesota 55474.
• It maintains executive offices at 7 World Trade Center, New York, New York 10007.
• Its employee and franchised financial advisor branch offices are located throughout the United States.
• Ameriprise Financial also has employees in Bangalore and Gurgaon (Ameriprise India), India, and London (Threadneedle).

Ameriprise advisors

Ameriprise has more than 9,600 branded advisors who recommend actions and a broad range of product solutions consisting of investment, annuity, insurance, banking and other financial products to clients based on an appropriate range and level of risk. The financial advisors charge clients for financial advice and selling products. There are four ways Ameriprise financial advisors can affiliate with Ameriprise Financial, Inc.

• Approximately 60% of Ameriprise's financial advisors are independent contractor franchisees — they are not employed by Ameriprise, but are licensed registered representatives of Ameriprise and do not receive a salary from the parent company.
• About one quarter of financial advisors are employed by Ameriprise ("employee financial advisors"). Ameriprise Financial Services, Inc. has the largest number of these professionals among any retail advisory force. The majority of the employee advisors work in local offices like their franchisee counterparts.
• Over 120 of the employee advisors work within the corporate office in Minneapolis as part of the Ameriprise Advisor Center (AAC). These Advisors are fully licensed Securities and Insurance professionals that have received additional training which allows them to assist clients exclusively by telephone. They are required to hold the Series 7 and Series 63 Financial Industry Regulatory Authority (FINRA) licenses, along with insurance licenses in all states they serve, and are encouraged to acquire their Chartered Retirement Planning Counselor (CRPC) professional designation from the College of Financial Planning, and are reimbursed for the cost.
• The company also has associate Financial Advisors, employed by the independent contractor franchisees.^[11]

Many Ameriprise advisors are Certified Financial Planners, and the company actively encourages attaining this designation. Many advisors also hold similar designations such as the CLU or ChFC.

Fee structure

Ameriprise Financial and its advisors receive commissions when they sell their clients mutual funds, annuities, insurance, and various other investment products. Financial planning services and investment products purchased through 'managed accounts' are not assessed a commission but rather are fee-based.

Advisors and clients may enter into an agreement whereby the client pays a flat annual fee (a negotiated precentage of the overall value of the account) for an on-going planning relationship (Wrap Account).^[12] This fee varies based on advisor experience, certifications, and the complexity of the given client's service needs. By doing so, all normal brokerage fees and commissions are waived.

Awards & recognition

Financial industry and media experts have recognized Ameriprise Financial for its growth, innovative financial solutions and unique approach to financial planning. A few awards and recognition received by Ameriprise Financial are as follows:

• In its 13th annual Top 500 list of American companies that have generated "the most revenue growth and cash returns" released in May 2011, Barron's listed Ameriprise at #29.^[13]
• Seven Columbia Management funds received 2011 Lipper Fund Awards as top-performing mutual funds in their respective Lipper categories.^[14]
• Ameriprise Financial ranked #1 on Financial Advisor Magazine 2009 Broker-Dealer Ranking (by Gross Revenue)^[15]
• Ameriprise Financial ranked fifth in overall client satisfaction in a 2009 J.D. Power & Associates survey of full-service financial advisory firms.^[16]
• In a 2009 national survey, BusinessWeek ranked Ameriprise Financial as the 67th best place to launch a career.^[17]
• 2008 Lavender Pride Award by Lavender Magazine.
• 2008 Jefferson Award for outstanding public and community service

Criticism & controversy

• Securities America, a subsidiary of Ameriprise Financial, was fined $5.4 million in 2003 for letting a broker work under a false name in its Orlando office and allegedly make bogus investments.^[18] In 2005, Ameriprise agreed to pay a $12.3 million to settle NASD charges relating to favorable treatment allegedly given to some mutual funds in exchange for brokerage business.^[19]

• In mid-2005, the State of New Hampshire reached a $7.4 million settlement with American Express Financial Advisors, alleging the company had violated the law by rewarding their financial advisers for recommending underperforming in-house mutual funds to clients.^[20]

• Also in 2005, Ameriprise Financial entered into a $15 million settlement with the SEC for charges of market timing. The Minnesota Department of Commerce levied $2 million in fines for similar market timing violations. The National Association of Securities Dealers fined Ameriprise an additional $12.3 million for unsuitable share sales.^[21][22] Ameriprise, having become a separate company, had not revealed which funds were timed, or the names of the people involved and the exact nature of the disciplinary action taken. Morningstar temporarily reduced the stewardship grade for Ameriprise's funds, although it did not impact the fund's overall star ratings from that firm.^[23]

• In 2006, the NASD threatened to suspend the company for failing to pay an arbitration award to a former broker.^[24]

• In September, 2006, Securities America reached a $16.3 million settlement with a group of Exxon Mobil Corp. retirees for failing to supervise an associated broker.^[25][26]

• On July 11, 2007, the NASD fined Securities America $375,000 for improperly sharing directed brokerage commissions from a mutual fund company with a former Securities America broker.^[27] Another NASD arbitration panel awarded $9.3 million to three retired American Airlines pilots against Securities America and a formerly associated broker for allegedly mishandling their savings. Other airline pilots have arbitration claims pending.^[28]

• On July 10, 2009, the Securities and Exchange Commission (SEC) announced an enforcement action against Ameriprise for receiving millions of dollars in undisclosed revenue sharing as a condition for selling certain real estate investment trusts (REITs) to its brokerage customers. Ameriprise agreed to pay $17.3 million to settle the SEC's charges, however the period in which SEC states the violations took place were prior to the spinoff from American Express.^[29]

• On April 15, 2011, Securities America, Inc. (SAI) and its holding company, Securities America Financial Corporation, entered into settlement agreements related to the sale of private placement securities issued by Medical Capital and Provident Royalties that resulted in a $118 million pre-tax charge in the first quarter of 2011. The charge is in addition to a $40 million pre-tax charge in the fourth quarter of 2010.^[30]

Competitors

• New York Life Insurance Co.
• John Hancock Financial Services
• Edward Jones Investments
• T. Rowe Price
• The Charles Schwab Corporation
• Merrill Lynch
• Morgan Stanley
• Linsco/Private Ledger (LPL)
• The Vanguard Group
• American Century Investments
• E*TRADE
• Scottrade
• Fidelity Investments

See also

• American Express
• Columbia Management
• RiverSource

Notes

External links

• Ameriprise Financial - Official Site
• Ameriprise Investor Relations
• A small group of historical corporate records of IDS are available for research use at the Minnesota Historical Society.
• FINRA Brokercheck Page
• JD Power ranking of online brokers
• "Financial fact sheet and history". Ameriprise. http://www.ameriprise.com/amp/global/about-ameriprise/key-facts.asp. 
• "2006 Ameriprise Financial Completes First Year as an Independent, Public Company" (Press release). Ameriprise Financial. October 3, 2006. http://www.ameriprise.com/amp/global/press-center/press-release-84.asp. 
• "NASD Fines Ameriprise Financial Services, Inc. $500,000 for Supervisory Violations in 529 College Savings Plan Sales" (Press release). NASD. October 26, 2005. http://www.nasd.com/PressRoom/NewsReleases/2005NewsReleases/NASDW_015319. 
• "Ameriprise Financial Chosen as New Name for American Express Financial Advisors" (Press release). Ameriprise Financial. May 25, 2005. http://www.ameriprise.com/amp/global/press-center/press-release-1.asp. 
• "American Express to Spin Off Financial Advisors Business to Shareholders" (Press release). Ameriprise Financial. February 1, 2005. http://www.ameriprise.com/amp/global/press-center/press-release-8.asp.