Ameriprise Financial

From Wikipedia, the free encyclopedia

Ameriprise Financial, Inc.

Type	Public (NYSE: AMP)
Founded	1894
Founder	John Tappan
Headquarters	Minneapolis, Minnesota, USA
Key people	James Cracchiolo, Chairman & CEO
Industry	Financial services
Products	Investments
Website	www.ameriprise.com

Ameriprise Financial, Inc. (NYSE: AMP) is a company offering financial advice and products. It is the successor to American Express Financial Advisors (AEFA), which was a subsidiary of the American Express Company. In 2005, American Express launched the spin-off of AEFA as an independent company. The new name came into effect August 1, 2005, and the transaction closed on September 30, 2005. James Cracchiolo is the chairman and chief executive officer of Ameriprise. The company's headquarters are in Minneapolis, Minnesota.

1 History
2 Ameriprise Advisors
3 Fee structure
4 Criticism & controversy
5 Class Action Settlement
6 See also
7 External links
8 References

[edit] History

Ameriprise Financial began life as Investor's 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 enters the Mutual Fund market in partnership with Investors Mutual
1949 - Investors' Syndicate changes its name to Investors Diversified Services, Inc. (IDS)
1958 - IDS Life Insurance is created
1984 - American Express completes acquisition of IDS Financial Services
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
2005 - American Express announces plans to spin off American Express Financial Corporation into an independent company
2005 - American Express Financial Advisors is renamed to Ameriprise Financial, Inc.
2006 - Ameriprise launches Ameriprise Bank, FSB

Ameriprise Financial is the 4th largest financial advisory firm in the US. The company has over 12,000 financial advisors and 2.8 million clients.^{[citation needed]} The company specializes in meeting the retirement-related financial needs of the mass affluent. Ameriprise Financial ranked only 10th out of 13 in overall client satisfaction in a 2006 J.D. Power & Associates survey of full service financial advisory firms.^[1] In a 2006 survey of over 37,000 US companies, BusinessWeek ranked Ameriprise Financial as the 19th best place to launch a career.^[2] As of 1/26/2007, Morningstar has given a Stewardship Grade of 'C' to Ameriprise and has given a star rating of 2 stars out of a possible 5.^{[citation needed]}

[edit] Ameriprise Advisors

Many Ameriprise advisors are Certified Financial Planners. Ameriprise Financial Services, Inc. has the largest number of these professionals among any retail advisory force.

An Ameriprise financial advisor earns a living by charging clients for financial advice and selling products. Below is an overview of three ways Ameriprise financial advisors can affiliate with Ameriprise Financial:

Approximately 60% of Ameriprise financial advisors are independent contractor franchisees — they are not employed by Ameriprise Financial. They are licensed registered representatives of Ameriprise Financial and do not receive a salary from the company.

About one-quarter of financial advisors are employed by Ameriprise Financial ("employee financial advisors").

The company also has associate financial advisors. These financial advisors are employed by the independent contractor franchisees.

Ameriprise financial advisors are broker/dealers.

[edit] Fee structure

Ameriprise Financial charges clients a flat fee for a personal financial plan, which typically ranges from $500 - $2,000.^[3] Within 90 Days of receiving the plan, you may request a refund, for any reason, by completing and returning, by fax or mail, the Financial Planning Fee Refund request form.

Ameriprise Financial and its advisors also receive commissions when they sell their clients mutual funds, annuities, insurance, and various other investment products.

[edit] Criticism & controversy

In 2005 Ameriprise received the single largest fine that the NASD levied that year.^[4] The State of New Hampshire also levied the largest fine in its history against the company, $7.4 million, in early 2005, based on the charge that the company utilized its financial plan fraudulently— as a vehicle to sell its propriety products in breach of its fiduciary duties to clients.^[5]

Also in 2005, Ameriprise Financial entered into a $15 million settlement with the SEC for charges of market timing. The settlement addressed practices between January 2002 and August 2003. The SEC accused the company of failing to prevent market-timing— even after amending its prospectus to include explicit prohibitions against the practice. The SEC alleged that after January 2002, when American Express Financial Corporation banned market-timing, the funds still allowed shareholders to rapidly trade the funds, and that some employees rapidly traded through their 401(k) plans. As part of the settlement, Ameriprise is required to make annual presentations to its board of directors about its policies and procedures to prevent market timing.^{[citation needed]} The National Association of Securities Dealers fined Ameriprise an additional $12.3 million and the Minnesota Department of Commerce levied an additional $2 million in fines for similar violations.^[6]

Ameriprise did not disclose this incident to the shareholders of its funds, marketed under the name RiverSource since being spun off from American Express. American Express made a disclosure in its regulatory filings, but these were seen only by American Express stockholders. Ameriprise, having become a separate company, had also 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.^[7]

In 2006, in addition to being threatened with NASD suspension for failing to pay an arbitration award to a former broker^[8], Ameriprise lost two arbitration cases. The NASD awarded $22 million to a group of Exxon Mobil Corp. retirees who accused brokerage firm Securities America Inc. of improperly steering them into high-risk investments between 1996 and mid-2003.^[9] Another NASD arbitration panel imposed a $9.3 million penalty against Securities America, the brokerage unit of Ameriprise, on behalf of three retired American Airlines pilots who alleged their broker steered their money into more aggressive funds and trading them on an almost daily basis. Other airline pilots have arbitration claims pending.^[10]

The total number of regulatory actions that have been imposed on Ameriprise by the NASD can be found by using NASD's brokercheck system, available on their homepage.

[edit] Class Action Settlement

The settlement resolves class action litigation arising out of alleged business practices of American Express Company, American Express Financial Corporation (now known as RiverSource Investments LLC), American Express Financial Advisors Inc. (now known as Ameriprise Financial Services, Inc.), and James M. Cracchiolo (“Defendants”). Plaintiffs are individuals who purchased mutual funds, financial plans or fee-for-advice services from Defendants.

Under the terms of the proposed settlement, Defendants have established a cash settlement fund of $100 million, which is accruing interest. Reasonable costs associated with giving notice to the class and administering the settlement will not be deducted from the settlement fund, but will instead be paid separately by Defendants. After deduction of any attorneys’ fees and costs awarded by the Court, the parties will distribute the entire settlement fund, together with interest, to class members in accordance with the Plan of Allocation. The parties estimate that approximately 2,450,000 persons are eligible to claim a share of the settlement fund. If you purchased an AXP Fund from March 10, 1999 through and including April 1, 2006 (the "Class Period") your minimum recovery will be $20. If you purchased a Preferred Fund during the Class Period your minimum recovery will be $50, subject to certain contingencies described in the Plan of Allocation attached to the Notice. If you purchased an American Express financial plan or other financial advice during the Class Period, you may be entitled to additional settlement compensation. Your recovery will depend on the total number of claims actually submitted by class members, the value of those claims under the Plan of Allocation, and other considerations.

This information taken from the website set-up to address class members' claims: http://www.financialfeesettlement.com/