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Ameriprise Financial, Inc. (AMP)

Q4 2011 Results Earnings Call

February 2, 2012, 9:00 a.m. ET


Alicia Charity - SVP, Investor Relations

Jim Cracchiolo - Chairman and CEO

Walter Berman - EVP and CFO


John Nadel - Sterne, Agee

Suneet Kamath - Sanford Bernstein

Andrew Kligerman - UBS

Alex Blostein - Goldman Sachs

Jeffrey Schuman - KBW

Tom Gallagher - Credit Suisse

Eric Berg - RBC Capital Markets



Welcome to the Fourth Quarter and Year-end Earnings Call. My name is John and I will be your operator for today’s call. (Operator Instructions). I will now turn the call over to Ms. Alicia Charity. Ms. Charity, you may begin.

Alicia Charity

Welcome to the Ameriprise Financial’s Fourth Quarter Earnings Call. With me on the call today are Jim Cracchiolo, Chairman and CEO, and Walter Berman, Chief Financial Officer. Following their remarks, we’ll be happy to take your questions.

During the call, you will hear references to various non-GAAP financial measures, which we believe, provide insight into the underlying performance of the company’s operations. Reconciliations of the non-GAAP numbers to the respective GAAP numbers can be found in today’s materials available on our website.

Some of the statements that we make on this call may be forward-looking statements, reflecting management’s expectations about future events and operating plans and performance. These forward-looking statements speak only as of today’s date and involve a number of risks and uncertainties.

A sample list of factors and risks that could cause actual results to be materially different from forward-looking statements can be found in today’s earnings release, our 2010 annual report to shareholders or our 2010 10-K report. We undertake no obligation to update publicly or revise these forward-looking statements.

And with that, I’d like to turn the call over to Jim.

Jim Cracchiolo

Thanks for joining us for our fourth quarter and full year 2011 earnings discussion. I’ll begin with an overview of our business performance and some thoughts about our positioning for future growth, and then Walter will discuss our financial results in more detail. After that, we’ll take your questions.

We finished the year with substantial progress with a solid fourth quarter, despite continuing challenges from the environment. Markets recovered a bit in the quarter, but remained highly volatile, which caused clients to become more cautious and move to larger cash positions, and interests rates remained near zero which resulted in further spread compression.

My key message for you today is this, as always, we have ability to navigate through the short-term challenges, and we are focused on the medium to long term, which holds great potential for us. Our financial foundation remains one of the best in the industry, and it continues to give us important stability and strategic flexibility.

We believe our financial strength enables us to weather the current storms and maintain our strong position in the future. We continue to generate significant capital and we are still holding more than $2 billion of excess capital and that after returning $1.7 billion or 135% of our operating earnings to share holders through dividends and buybacks during the year.

In addition, in December we announced a 22% increase in the dividend which will be paid in February, and we now have increased our dividend five times in our six years as a public company.

Even with the significant capital we’ve returned, I believe we are in a stronger capital position now, than we were a year ago. As our business has become less capital intensive, we’ve been able to free up capital to return to shareholders and invest for growth, while maintaining our ratings.

Our many strengthens many our highly diversified and proven business model, to our client focus to our financial position allowed us to generated record operating earnings of $1.23 billion and a record operating revenues of $10.1 billion for the year.

Now I will provide you some commentary on our business segments, and then I will give you my thoughts on the year ahead. First, in our Advice & Wealth Management segment, we’ve delivered another strong quarter and our most profitable year ever.

The market volatility and low rates seem to be affecting firms across the industry, with clients once again seeking safety and moving to cash and other low risk options. Still, our advisors generated good quarterly production and a record 384,000 of annual operating net revenue per advisor. We’ve generated strong client asset flows highlighted by 1.4 billion in wrap net flows for the quarter, and 7.3 billion for the year.

We also recorded our third consecutive quarter growth in the number of advisors. Our long term work to reengineer our advisor platform is largely complete, and has given us the lift in advisor productivity that we anticipated.

At the same time, we stepped up experience advisor recruiting efforts and generated good momentum, with a 105 advisors joining us during the quarter, and a total of 337 for the year. The momentum is continuing in to this year. In fact, January was one of our best recruiting months ever with [new] recruits joining the firm.

In the quarter, our margins in the Advice & Wealth Management segment decreased slightly as a result of our increased investments for growth and slowing client transaction activity due to market volatility. Even in the difficult operating environment, we are investing in the business

Beginning in September, we increased our national television advertising presence, and we are finding that the ads are resonating well consumers. We are continuing to roll-out our new brokerage platform, which is a major multi-year investment. The conversion has gone smoothly for our employee advisors, and now we are in the process of converting franchise advisor systems, which is the larger part of our overall network.

The brokerage platform investment will continue at a fairly high level this year, but we expect the process and related expenses to wrap up in 2012. We’ll also invest in new avenues for long term growth, including the launch of a financial planning business in India. That power with India advisors bringing our holistic approach to the Indian consumer is off to a promising start.

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