Our strength comes from our people — individuals who care deeply about our clients and the company
I frequently hear from employees and advisors about their proudest moments from the past decade.
Their comments are consistent: We serve clients the right way and for the long-term, earn trust and confidence,
and make our communities better places. The moment raised most often is how we handled the 2008 financial crisis
and stood by clients when other firms couldn’t — because we had our own financial plan, made good decisions,
managed risk well and invested for the future. This is good perspective when considering how far Ameriprise has
come in the last ten years, and as we reflect on our 2015 results.
In this, my annual letter to shareholders, I will update you on our progress and reinforce
why I believe we are well-situated to navigate a more challenging operating environment and help
our clients realize their financial goals today and in the future.
Delivering solid results
Ameriprise delivered solid business results in 2015, a period characterized by difficult market conditions.
Revenue growth was tempered as assets under management and administration declined due to higher equity market volatility,
and client activity naturally slowed. Given that we operate in markets around the world, the strong U.S. dollar also
impacted the value of non-dollar assets for U.S. reporting purposes. And we continued to manage the persistent pressure
of extremely low interest rates. However, we offset these market headwinds because of our consistent and prudent expense
management and strong financial foundation, which enable us to continue to invest for growth and return capital to
shareholders at a differentiated level.
For the year, operating earnings grew 3% to $1.7 billion and operating earnings per share increased 9% to
a record $9.32. In fact, with the strength of our business model and capital management, we're generating one of the highest
returns in the industry — operating return on equity, excluding accumulated other comprehensive income grew to a record 24.3%,
up 130 basis points from a year ago.
Few financial services companies have the ability to invest strongly in the business while delivering this level of return
and maintaining significant capital flexibility. For the fifth consecutive year, we returned more than 100% of our
operating earnings to shareholders through increased dividends and ongoing share repurchases.
In 2015, we committed $2.1 billion to dividends and share repurchases, including raising our
quarterly dividend 16%. In fact, we’ve increased our dividend ten times since becoming a public
company in 2005, all while maintaining a strong and prudent excess capital position.
Though the total shareholder return of Ameriprise Financial common stock declined during the year, over the past decade
long-term shareholders have been rewarded with one of the best returns in financial services.
Key to our ability to grow and preserve shareholder value across market cycles is our steadfast focus on our clients — both retail and institutional.
They are at the heart of our diversified business model. Our Advice & Wealth Management business, which is complemented by our Protection and Annuity
businesses, serves client needs for a lifetime — from cash and liquidity to growing and preserving wealth and ultimately leaving a legacy. At the same
time, our Asset Management business is large and diversified with a broad and high-performing product line to serve individual and institutional
Advice & Wealth Management — satisfying clients’ needs, providing strong service and attracting high-quality advisors
Our Advice & Wealth Management business is one of the largest in the United States. The opportunity for Ameriprise is significant
given the continued transition of baby boomers to retirement, younger generations accumulating wealth, and the acute need for personal
financial advice. Ameriprise is strongly situated to provide more Americans with the financial advice and
solutions they need to achieve their financial goals.
We’ve long held the position as the leading financial planning company in the United States.
We have more certified financial planners than any other firm and are a leader in retirement planning.
Our actions define our reputation, and I’m pleased that Ameriprise is recognized as a trusted financial services firm.
We earned the highest forgiveness rating for investment firms in an industry survey — the third consecutive year that we have earned the top spot.
We know our personal and comprehensive approach to serving clients is ideal for helping people confidently navigate not only a
volatile market environment but also each life stage. Our client satisfaction remains very strong, and as we seek to serve more clients,
we have an excellent story to tell.
Last fall, we launched our new Be Brilliant.SM brand platform. Our advertising speaks directly to our target market — mass
affluent and affluent consumers who value advice and the benefits of a personal relationship with a trusted advisor. It illustrates the
everyday moments of brilliance clients can realize by working with the right advisor and the right firm. Ameriprise Financial brand awareness
is near an all-time high, and advisors and clients are inspired by our message. We are complementing our broadcast presence with a strong digital
presence, and advisors are building on our Be Brilliant. brand platform in their local communities and online to engage prospects and clients
at the grass-roots level.
The long-term, personal relationships our advisors establish with clients are an important differentiator for us.
This is reinforced by our Confident Retirement® approach. It simplifies investing for retirement and helps clients
understand actions they can implement, which leads to higher client satisfaction, more referrals and increased advisor productivity.
In 2015, we began to extend our Confident Retirement approach beyond those investing for and living in retirement to
younger generations who are focused on building their wealth. These individuals — Generations X and Y — represent more
than half of our target market and many are looking to work with an advisor who will meet with them personally.
This reinforces the power of the human perspective and interaction when making saving, investing and retirement planning decisions.
We believe this is a large opportunity for us, and we are introducing this expanded approach to our entire advisor force in 2016.
Our advisor force is experienced and motivated — a powerful distribution platform in the U.S. More than 9,700 dedicated financial
advisors serve clients across the country. We have long maintained excellent advisor satisfaction and retention rates that reflect
the leadership, capabilities and support we provide to help them serve clients well and grow their practices.
$ in billions—
— Assets under management & administration (2005 and 2006 represent assets owned,
managed and administered)
Through our investments in technology, advisors can share information with clients more easily and securely,
and process business even faster. We continue to see good advisor uptake of the tools we’ve put in place,
including eFile delivery, money movement systems and our paperless office.
We also enhanced our digital presence, including incorporating responsive design within ameriprise.com making it easy
for clients to access their information from multiple types of devices. And we further strengthened our wealth management
platform, including enhancing our research function and adding to our growing managed account product line.
Advisors recognize the strength of the Ameriprise value proposition. In 2015, 347 experienced, highly productive advisors
joined the firm — bringing our three-year total to nearly 1,000 advisors — which has added thousands of new client
relationships and significant assets to the firm.
The combination of personal client relationships, broad capabilities and strong reputation translated into
strong metrics and financial results in our Advice & Wealth Management business. In 2015, client net inflows in
fee-based investment advisory accounts were more than $11 billion and overall advisor productivity reached an all-time high of
$514,000 in operating net revenue per advisor. Operating revenues and earnings were up nicely, even in a more challenging environment.
And as we grow the business and navigate the environment, we continue to manage expenses prudently — operating margin in Advice &
Wealth Management increased 60 basis points last year to a competitive 17.1%.
Annuities and Protection — providing important solutions within our Confident Retirement® approach
and strengthening asset persistency
From helping clients maintain their lifestyles in retirement to preparing for the unexpected and leaving
a legacy — we help protect assets and retirement income. For shareholders, our Annuity and Protection businesses are
solid and stable with strong risk characteristics that generate attractive returns across market cycles and contribute
to our ability to retain client assets over time.
In Annuities, we offer our products to Ameriprise clients — people we know well. As more clients move to retirement,
the unique benefits annuities can provide — access to lifetime guaranteed income — are central to meeting client needs.
Variable annuity sales have been steady with good receptivity to the launch of our SecureSource 4® and SecureSource 4 Plus® riders,
as well as ongoing sales of variable annuities without living benefits. This has helped offset some of the pressure from lower equity
markets on annuity account balances and the outflows from a closed book of variable annuities sold through third parties. In fixed annuities,
the business is performing as expected, but new sales are low given persistently low interest rates.
Protecting our clients’ wealth is an important part of an advice relationship and the value our advisors provide.
We’ve built a strong life and health insurance business and are generating steady sales of indexed universal life
insurance — a solution that offers clients market upside for their cash value coupled with downside protection, which our clients
are finding increasingly attractive given market volatility. We did experience higher life insurance claims in 2015 that increased
expenses, but the business remains sound.
In Auto and Home, we continue to earn high policyholder satisfaction and have strong relationships with our affinity partners.
We've built a direct business and are focused on providing an excellent experience for policyholders while strengthening the financial
performance of the business. Like others in the industry, we experienced higher auto liability expenses during the year. In addition,
we also had increased expenses related to claims for prior periods and added to reserves. To address this underperformance, we added
resources and are enhancing pricing, underwriting and claims management. While we are seeing some initial improvement, we recognize that
it will take time for the benefits to be fully realized. We believe the actions we’re taking are the right ones to get the
Auto and Home business back on track.
Asset Management — generating competitive financial results and executing our strategy to gain market
share and profitable flows
With $472 billion in client assets under management, we have an at-scale business with a diversified base of assets and earnings.
We've grown through steady investments in the business and strategic acquisitions to establish Ameriprise as a top 30 global asset manager.
As a result of our strategic, former-parent relationships formed as part of our acquisitions,
we manage large pools of assets that form a stable base, understanding that over time we will experience a level of outflows consistent
with the structure of the books. At the same time, we're growing our higher-fee, third-party businesses as we focus on serving more individual
and institutional clients in key markets globally.
In 2015, we formally brought together the capabilities, resources and reach of Columbia Management and Threadneedle Investments
and introduced a new brand for the business: Columbia Threadneedle Investments®. This was a logical and important next step in
bringing our full capabilities to bear in the marketplace.
It was also a year when active managers outperformed for investors. Our talented equity and fixed income investment teams in the U.S.,
London and Singapore delivered strong investment performance across style and capitalization. Recently, FE Trustnet, a U.K.
trade publication, named Columbia Threadneedle as the top-performing U.K. fund group over the past decade.
Maintaining a broad and high-performing product line is essential to meeting our clients’ needs and growing assets
under management. In 2015, we took steps to streamline our retail product lines while also launching new products in the
traditional, alternative, global and ESG product categories. This included launching the Columbia Global Unconstrained Fund,
our first Asian equity funds for the local market, the Columbia U.S. Social Bond Fund and the Threadneedle Ethical U.K. Equity Fund.
In U.S. retail, we significantly enhanced product, marketing and sales leadership and the initial results are encouraging — in 2015
we increased gross sales and gained market share in key intermediary channels at a time when industry gross sales were down. However,
this progress was muted from a flows perspective given continued outflows in the Acorn® Fund. The fund’s short-term performance has
improved as a result of the enhancements we’ve made, including adding an experienced lead portfolio manager who came on board at the end of the year.
In European retail, we’re building on our leadership position in the U.K. where we are a top five provider and expanding our
presence in key markets on the continent, including Italy. In addition to new product launches, we added key talent to our European
and U.K. equities teams. And while the market environment dampened retail flows in the region at mid-year, flows rebounded in the
fourth quarter as market conditions improved.
Outside of our core growth markets of the U.S. and U.K./Europe, we’re targeting specific markets where we can serve more individual
and institutional clients and gain share — Asia, the Middle East and other regions are attractive long-term opportunities for us as we
expand our distribution capabilities and investors’ understanding of Columbia Threadneedle.
This includes third party institutional, where it was a challenging year for the industry given geopolitical and
other market-driven pressures. While we were not immune to these pressures, the institutional business remains strong.
We are generating good performance in equity, fixed income and alternative strategies, as well as within our multi-asset solutions business.
Our pipeline of new sales opportunities is strong. I believe that we have the capabilities, consultant relationships and deep understanding
of institutional client needs to move the business to a tier one position.
In terms of financials, the decline in assets under management pressured revenues, but consistent with our expense discipline,
we managed expenses well, delivered good earnings and generated a competitive adjusted net pretax operating margin of more than 38%.
We have built a strong and profitable asset management business — a long-term growth driver for Ameriprise. We are focused on
generating profitable net inflows, and I am confident that we have the right strategy and team in place to execute our
long-term growth agenda.
Evolving our business mix — differentiated by our capital strength, flexibility and return
Consistent with our long-term strategy, we are orchestrating a strategic transformation led by our more fee-based,
less capital-demanding businesses of Advice & Wealth Management and Asset Management, complemented by the strength and
stability of our Protection and Annuity businesses. It's a powerful model anchored by a strong financial foundation.
As we've grown, we have invested strongly in the business, returned significant capital to shareholders through share repurchases
and dividends and maintained more than $2 billion in excess capital, ample liquidity and a high-quality, diversified investment portfolio.
Percent of pretax operating earnings from our fee-based, less capital-demanding businesses
Advice & Wealth Management and Asset Management
Annuities & Protection
(Data excludes Corporate & Other segment results)
$ in millions
As we've grown over the past 10 years, we've orchestrated a strategic transformation of Ameriprise to generate more of our operating
earnings from our fee-based, less capital-demanding businesses — Advice & Wealth Management and Asset Management. In 2015, these two
businesses accounted for 66% of our pretax operating earnings, and we believe as we grow our earnings over time we can increase
their contribution to more than 70%.
Maintaining a strong financial foundation is essential to continue this transition. Our capital strength and quality reflects our
commitment to our management principles of prudent risk management. And as we seek growth opportunities, Ameriprise has the capital flexibility,
as well as management experience, to identify and integrate strategic acquisitions effectively to complement organic growth.
Benefiting from our client-focused culture
At Ameriprise, our values guide our actions. We have leading employee engagement and some of the best employee
satisfaction levels across industries. And our advisor satisfaction and retention rates have consistently remained strong.
Our commitment to strengthening communities is central to our culture. Our employees volunteer thousands of hours of their
time and our charitable giving rates are among the highest in the industry. We strive to make a difference. Hunger relief is a
particular focus, and since 2009 we have provided more than 58 million meals and 196,000 volunteer hours to Feeding America
and other hunger-relief organizations. We also proudly support the men and women in the U.S. military. In 2015, we were recognized as a
Yellow Ribbon Company by the state of Minnesota, and for the second consecutive year, Ameriprise earned the Military Friendly designation
for helping transitioning service members seeking employment.
I am grateful to work with people who care about the good we can do for others, both at work and in our communities.
Excellence in all we do
Respect for individuals and for the communities in which we live and work
Global equity market declines and heightened volatility at the start of 2016 have renewed investor fears and worries about the state
of the global economy. We live in an increasingly interconnected world, and that is certainly true with markets, economies and central banks.
People around the world are confronting similar questions about risk and reward. They need well-informed advice and solutions when
considering investment strategies to achieve their goals — growing and preserving their hard-earned wealth, educating their children
and preparing for retirement. Receiving high-quality, personalized financial advice is essential for all investors. That’s what we do.
Regulators are also considering how investors receive advice, and in the U.S., the Department of Labor will soon introduce a
third standard of care for retirement accounts. The industry, including Ameriprise, offered extensive perspective and input to inform the rule.
As of this writing, we don’t know the specifics of the final rule, but we do know that it will affect investors and the industry.
We built our business over decades to deliver appropriate advice to clients, and we have long served them under a fiduciary standard while
maintaining a strong compliance culture and infrastructure. We have been preparing to manage the changes just as we have with other new regulations;
we have the resources, infrastructure and capabilities to ensure strong implementation. Importantly, our leadership team is focused on helping guide
advisors and clients through these changes. We believe that our financial advice value proposition — satisfying clients’ needs for the long term — has
been and will continue to be highly relevant and sought after.
Whether it is a difficult and volatile market environment, regulatory changes or other headwinds, I am confident that the strength
of our client relationships and the flexibility of our business model will continue to differentiate Ameriprise.
In closing, I share in my colleagues’ pride of our first decade as Ameriprise Financial and the more than a century of
our legacy that we hold dear. We successfully executed one of the largest spin-offs in U.S. history; navigated the
financial crisis better than most — without government support; stood behind and advocated for our clients; delivered
appropriate products and solutions to help meet their long-term goals; and invested strongly in the business to deliver
long-term value to our shareholders.
We strengthened Ameriprise as a U.S. wealth management leader; established the firm as a global asset manager;
and differentiated our insurance and annuity businesses through their risk management and focused distribution.
Ameriprise is one of the strongest financial services firms in the industry with a legacy of performance across market cycles.
The stage is set for the future, and I’m energized about the opportunity to realize our full potential.
To our more than 20,000 employees and advisors, thank you for your hard work, energy and enthusiasm.
We appreciate all you do to serve our clients every day.
To our clients, thank you for entrusting your assets to Ameriprise. We greatly value your business.
To my fellow members of the Ameriprise Financial board of directors, thank you for your counsel and support.
We benefit from your perspective.
And finally, to you, our shareholders, thank you for your trust and confidence in Ameriprise. We will continue to do all we can to reward it.
James M. Cracchiolo
Chairman and Chief Executive Officer
The graph below compares the cumulative five-year total return for shareholders of Ameriprise Financial,
Inc. common stock with the cumulative total returns of the S&P 500 Index and the S&P 500 Financials Index.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends)
from Dec. 31, 2010 to Dec. 31, 2015.
Comparison of a five-year cumulative total return*
Ameriprise Financial, Inc., the S&P 500 Index and the S&P 500 Financials Index
Ameriprise Financial, Inc.
*$100 invested on Dec. 31, 2010 in stock or index, including reinvestment of dividends.
Fiscal year ending Dec. 31.
The Standard & Poor's 500 Index (S&P 500® Index), an unmanaged index of common stocks, is frequently used as a general
measure of market performance. The Index reflects reinvestment of all distributions and changes in market prices,
but excludes brokerage commissions or other fees. The S&P 500 Financials Index measures the performance of financial
components of the S&P 500 Index.
Past performance does not guarantee future results. It is not possible to invest directly in an index.
Copyright © 2016 S&P, a division of The McGraw-Hill Companies. All rights reserved.
This report is not a solicitation for any of the products or services mentioned. Investment products,
including shares of mutual funds, are not FDIC or otherwise federally insured, are not deposits or obligations,
or guaranteed by any financial institution, and involve investment risks, including possible loss of principal and fluctuation in value.
Past performance does not guarantee future results. Actual results may vary materially from our plans,
estimates and beliefs. Please review carefully the discussion captioned “Forward-Looking Statements” contained in
Part II, Item 7 in our Annual Report on Form 10-K for the year ended Dec. 31, 2015.
The following describes the principal subsidiaries that conduct the financial planning, asset accumulation and income,
and protection businesses of Ameriprise Financial, Inc. Columbia Mutual Funds are distributed by Columbia Management Investment
Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC. Threadneedle International Limited
is an FCA- and an SEC-registered investment adviser and an affiliate of Columbia Management Investment Advisers, LLC, based in the
U.K. RiverSource insurance and annuity products are issued by RiverSource Life Insurance Company and, in New York, by RiverSource
Life Insurance Co. of New York, Albany, NY, and distributed by RiverSource Distributors, Inc.
|($ in millions)
|Total net revenues
|Less: Revenues attributable to the CIEs
|Less: Net realized investment gains
|Less: Market impact on indexed universal life benefits
|Less: Market impact of hedges on investments
|Operating total net revenues
|($ in millions)
|Asset Management operating total net revenues
|Less: Distribution pass through revenues
|Less: Subadvisory and other pass through revenues
|Asset Management adjusted operating revenues
|Asset Management pretax operating earnings
|Less: Operating net investment income
|Add: Amortization of intangibles
|Asset Management adjusted operating earnings
|Asset Management adjusted net pretax operating margin
auto and home insurance is underwritten by IDS Property Casualty Insurance Company, or in certain states,
Ameriprise Insurance Company. Personal trust services are offered through Ameriprise National Trust Bank. Ameriprise
Financial Services, Inc. Member FINRA and SIPC. Investment advisory services and products are made available through
Ameriprise Financial Services, Inc., a registered investment adviser.
Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.
Sources: Financial planning leadership: Ameriprise helped pioneer the financial planning process more than 30 years ago.
We have more CERTIFIED FINANCIAL PLANNERTM professionals than any other company in the U.S. based on data provided by the CFP
Board of Standards, as of Dec. 31, 2015. Trust and forgiveness – temkinratings.com. Top 30 global asset manager – P&I/Towers
Watson World 500 – Nov. 2, 2015, data as of year-end 2014. Top 5 provider in U.K. – Investment Association, retail AUM as of Sept. 2015.
|($ in millions)
|Net income attributable to Ameriprise Financial
|Less: Income (loss) from discontinued operations, net of tax
|Net income from continuing operations attributable to Ameriprise Financial
|Ameriprise Financial shareholders’ equity(2)
|Less: Assets and liabilities held for sale(2)
|Less: Accumulated other comprehensive income (loss), net of tax "AOCI"(2)
|Ameriprise Financial shareholders’ equity from continuing operations excluding AOCI(2)
|Less: Equity impacts attributable to the consolidated investment entities(2)
|Return on equity from continuing operations, excluding AOCI
|Operating return on equity, excluding AOCI(3)
(1) Adjustments reflect the trailing twelve months’ sum of after-tax net realized investment gains/losses,
net of deferred sales inducement costs (“DSIC”) and deferred acquisition costs (“DAC’) amortization, unearned revenue
amortization and the reinsurance accrual; the market impact on variable annuity guaranteed benefits, net of hedges and the related
DSIC and DAC amortization; the market impact on indexed universal life benefits, net of hedges and the related DAC amortization,
unearned revenue amortization, and the reinsurance accrual; the market impact of hedges to offset interest rate changes on unrealized
gains or losses for certain investments; and integration/restructuring charges. After-tax is calculated using the statutory tax rate of 35%.
(2) Amounts represent the five-point average of quarter-end balances.
(3) Operating return on equity excluding accumulated other comprehensive income/loss (AOCI)
is calculated using the trailing twelve months of earnings excluding the after-tax net realized investment gains/losses,
net of DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; market impact on variable annuity
guaranteed benefits, net of hedges and related DSIC and DAC amortization; the market impact on indexed universal life benefits,
net of hedges and related DAC amortization, unearned revenue amortization, and the reinsurance accrual; the market impact of hedges
to offset interest rate changes on unrealized gains or losses for certain investments; integration/restructuring charges; and discontinued
operations in the numerator, and Ameriprise Financial shareholders’ equity excluding AOCI; the impact of consolidating investment entities;
and the assets and liabilities held for sale using a five-point average of quarter-end equity in the denominator. After-tax is calculated
using the statutory tax rate of 35%.
||Per Diluted Share
|($ in millions, except per share amounts)
|Net income attributable to Ameriprise Financial
|Less: Income (loss) from discontinued operations, net of tax
|Net income from continuing operations attributable to Ameriprise Financial
|Less: Net realized gains, net of tax(1)
|Add: Integration/restructuring charges, net of tax(1)
|Add: Market impact on variable annuity guaranteed benefits, net of tax(1)
|Add: Market impact on indexed universal life benefits, net of tax(1)
|Add: Market impact of hedges on investments, net of tax(1)
|(1) Calculated using the statutory tax rate of 35%.