Alicia Charity – Investor Relations Jim Cracchiolo – Chairman and Chief Executive Officer Walter Berman – Chief Financial Officer

Suneet Kamath – Citi Nigel Dally – Morgan Stanley Nancy Rosenberg – SunTrust Ryan Krueger – KBW Thomas Gallagher – Evercore ISI Erik Bass – Autonomous Humphrey Lee – Dowling & Partners Yaron Kinar – Deutsche Bank John Nadel – Credit Suisse

Thank you and good morning. Welcome to Ameriprise Financial’s fourth quarter earnings call.

On the call with me today are Jim Cracchiolo, Chairman and CEO; and Walter Berman, our Chief Financial Officer. Following their remarks, we’ll be happy to take your questions.

On Slide 2 of the earnings presentation materials that are available on our website, you will see discussion of forward-looking statements. Specifically, that during the call, you will hear reference to various non-GAAP financial measures, which we believe provide insight into the company’s operations.

Reconciliation of non-GAAP numbers to their respective GAAP numbers can be found in today’s materials. Some statements that we make on this call may be forward-looking, reflecting Management’s expectations about future events and overall 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 2015 annual report to shareholders, our 2015 10-K report, and the first and second quarter of 2016 10-Q reports.

We make no obligation to update publicly or revise these forward-looking statements. Turning to Slide 3 and 4, you see our GAAP financial results at the top of the page for the fourth quarter and the full year respectively.

Below that, you see our operating results, which Management believes enhances the understanding of our business by reflecting the underlying performance of our core operations and facilitates a more meaningful trend analysis. The comments that Management makes on our call today will focus on operating financial results.

And with that, I’ll turn it over to Jim.

Good morning and thank you for joining today’s earnings call. I’ll provide my perspective on the business, and Walter will focus on the numbers, and we will be happy to take your questions.

Let’s get started. I feel good about Ameriprise and our position.

We had a strong quarter capping off a solid year. Across the firm we remain as focused as ever on serving our clients and advisors while we execute our strategy for growth and long-term value creation.

We’re gaining good traction in Advice & Wealth Management and sustaining competitive results across the firm. Meanwhile, the operating environment has been challenging with continued low interest rates and lingering geopolitical unease, although equity markets have rallied post-election and we had a small lift in interest rates at year end.

Ameriprise navigated the environment well and we make good progress across the business which I’ll review. Our focus was on executing our strategy while continuing to prepare the business and our advisors to comply with the Department of Labor rule.

At the same time Ameriprise delivered solid earnings and very good overall return. We managed the expenses well as we continue to invest in the business to deliver an even more compelling experience for our clients and advisors.

As we begin 2017, equity markets are off to a good start and we may also see further improvements in interest rates. In terms of our financial results for the quarter operating net revenues were solid, given headwinds from low rates and foreign exchange.

We saw particularly strong revenue growth in AWM. Clearly this is a growth engine for the company and now represents close to 45% of Ameriprise’s total revenue.

Operating earnings per diluted share was strong up 11%. We have significant scale, assets under management and administration grew to $787 billion despite an $18 billion negative foreign exchange compare in asset management, which muted strong growth in AWM where we had very good client flows, and our retail client assets ended the year at a record high.

In 2016 we continued our track record for delivering a differentiated level of capital return and excellent expense management while handling regulatory change, maintaining our growth investments and a healthy excess capital position. In fact, we returned over 150% of operating earnings to shareholders through dividends and share purchases for the year.

That included another increase to Ameriprise’s quarterly dividend early in 2016 and our 11th increase over the past 10 years, and the repurchase of a total of $1.7 billion of shares. With good business results and significant capital return, operating return on equity was very strong at 24.6% at the end of the year excluding the non-cash impact of unlocking or 22.2% including unlocking.

Very few financial services companies are generating this level of ROE in capital return. We’ve consistently grown these measures at a meaningful rate.

Let’s move to the businesses. Advice & Wealth Management is strong and growing.

Ameriprise is one of the largest providers in the industry and we’re well situated with our leadership and financial advice. We’ve navigated a tougher environment well and ended the year with good client flows and nice increase in margins.

During the quarter we continue to grow fee-based assets as well as expand pre-tax operating margins in AWM, which were up considerably to 19.3% for the quarter. And if you look at the trend throughout the year, margins grew 100 basis points to 18.1% for the full year.

Total client assets increased to a record $479 billion, reflecting continued strength in our investment advisory business, which remains one of the largest in the industry. With regard to our advisors the Ameriprise value proposition and culture is attractive.

Our advisors force is strong and they continue to grow productivity with operating total net revenue for financial advisor are $518,000 on a trailing 12-month basis, and it was another good quarter for recruiting with 77 high quality advisors joining the firm. We also had a record year for bringing in larger size practices.

We’re starting 2017 with a solid pipeline and expect the recruiting landscape to continue to be fruitful for Ameriprise. The strength of the Ameriprise brand and our reputation is another important differentiator.

We had excellent results in 2016. I would Be Brilliant campaign drove the highest brand awareness we’ve ever experienced and it continues to resonate very well with mass affluent and affluent investors, and we’re back on the air with new ads for our Be Brilliant advertising.

We also continue to invest in our digital experience on ameriprise.com and the Ameriprise app to provide clients with increase capabilities and security and an even better experience. And building on our strong reputation, Ameriprise continued to earn important industry recognition in the fourth quarter.

We’re ranked number one in the investment industry in Temkin Group’s 2016 Net Promoter Score Benchmark Study. In addition, in the Hearts and Wallets 2016 Wants and Pricing survey, Ameriprise is a top performer in customer ratings based on unbiased and puts my interests first in the investment firm category.

We’re proud to earn this type of recognition. It confirms even more that the core elements of our advice value proposition and the way we do business, positively influences client satisfaction and loyalty which is important to a long-term growth.

As it relates to the DOL rule, clearly the situation is evolving with the new administration. We along with the industry are closely monitoring developments.

We’re remaining flexible. If the rule is delayed, we will adjust accordingly.

However, there are a few changes that we’re making that are aligned with where the industry is going in our advisory platform when moving from 12b-1 fees to advisory shares for example. As we’ve communicated, any new rule of this significance and complexity needs to be carefully considered, and most importantly, preserve choice for the millions of retirement savers impacted.

Our focus remains on ensuring our clients and advisors have access to a broader suite of solutions to help meet client needs, grow and protect their assets and achieve their goals. As we move forward Advice & Wealth Management is situated well.

We’re focusing on serving clients needs, growing the business and handling any regulatory adjustments as necessary. Let’s move to Annuities and Protection.

We continue to serve our clients longer-term financial security needs through Annuities and Protection offerings. These are solid books that we are managing well.

The theme for these businesses is manage growth over time and the performing as expected given persistently low rates in industry trends. In Annuities, VA account balances were up slightly year-over-year from market appreciation.

Like others in the industry, our VA sales were down in the quarter and the year, but from what was seen on numbers fared better than the industry given our financial planning focus. The fixed annuity business is performing as we expected in this rate environment.

We continue to see good results from the advisor workshops we’ve held throughout the year and high use of the capabilities we have in place. In life insurance, our overall sales were down consistent with the industry.

VUL and UL account balances were up 3% given markets, and our life insurance in force remained stable at $196 billion. Overall, claims experience remained within expected ranges.

At Ameriprise we continue to focus on being a strong, stable provider that stands behind our clients as we help our advisors improve their productivity and grow. Overall, we’re focused on building on our progress in 2017.

We’ve built these books over many decades and feel good about the returns we can generate. And with signs of the 10-year interest rate coming back that would situate us even better as we proceed in 2017.

In Auto & Home, our changes are taking hold and we’re seeing improved results. As we’ve discussed we’ve put a good team in place in a number of the product pricing, underwriting and other changes that we’ve implemented are beginning to show up in the numbers.

Improvements we’ve made include increased rates and pricing sophistication, more data driven and disciplined underwriting, enhanced segmentation, product changes to mitigate property cat risk and an improved claims management. And we’re seeing improvement in the last development trends and starting to reflect that in our financial results and reserving levels as favorable frequency and severity trends work through the book.

Let’s move to Asset Management. As I look back at the quarter, we’ve experienced headwinds similar to other active global players.

As always we’re working to deliver the outcomes of our clients expect while generating solid earnings. We’ve been in front of clients during this volatile period and providing our global perspective.

Regarding assets under management, we were impacted by an $18 billion unfavorable foreign currency translation on non-U.S. dollar assets.

Excluding the currency move, assets under management were essentially flat year-over-year as outflows were offset by equity market appreciation. We’ve focused on further developing our product lines, providing value added services to our distribution partners and earning greater share.

We’re managing expenses well and delivered a competitive adjusted net operating margin of 36.5%. In addition, we’re investing in our middle and back office operations and executing a multi-year plan to establish an efficient and effective global platform.

For the quarter excluding former parent flows, we have global retail net inflows of about $500 million that included reinvest in dividends. In the U.S.

we’re experiencing a bit of a pickup from redemptions in the fourth quarter, as we saw course the industry. However, over the course of the year we’ve been able to grow share on many of our key intermediary platforms.

We are very focused on working with partners to achieve their key strategic growth themes. In the UK and European wholesale, we like others in the industry were impacted by the risk of trades that occurred due to the Brexit vote in advance of the U.S.

election and the time referendum. The overall political environment had soften wholesale markets, but we are seeing signs that this is settling down.

In terms of institutional, our win rate remains strong and we have a healthy pipeline of opportunities in a number of equity, credit, and solutions multi asset strategies. However, we did experience a delay in mandates fundings that led to about $700 million out in the quarter, excluding low fee form of parent assets.

That’s said, our won-not-funded list of mandates is the largest it’s been with wins in both domestic and international that should fund in the first half of the year. We have a number of initiatives on the way to complement our core business that we expect will gain traction.

These include in solutions, especially our multi asset, tax efficient and adaptive risk products that are already receiving good interest. In addition, we’re looking to build on our capabilities and managed accounts, strategic beta and responsible investing.

Our long-term investment performance remains strong. However, we did see slippage in one-year versus benchmarks in equity funds with a core or growth bias as traditional value sectors outperformed shortly after the U.S.

election. Our average performance with close to medium versus peers, performance should improve as a strong post-election surge.

We saw some of that already in January. With regard to our overall fixed income and risk allocation products, they performed quite well for the year.

Importantly across the house for both equity and fixed income, our three- and five-year numbers are strong. We also maintained our ratings with 112 four- and five-star Morningstar funds.

As we look forward, we have established ourselves as a global player during a period of intense change for the industry. We’re managing the level of change well and preserving profitability.

Overall, we have a competitive business and we continue to position ourselves as a client centric firm. In closing, I feel good about how the company is situated.

We’re executing our strategy and investing for growth as we manage the change facing our industry. We’re focused on delivering our advice value proposition, while handling the regulatory change environment.

We have a solid business and we’re delivering good earnings, cash flow and shareholder return and we continue to manage expenses tightly. As we look forward with our client focused, business strength, our capital profile, and return as well as our operational risk management, Ameriprise is positioned well.

Now, Walter will cover the financials and I’ll be back to take your questions.

Good Morning. Ameriprise delivered a very strong quarter with operating EPS of $2.73, and a return on equity above our targeted range at almost 25% excluding unlocking.

Advice & Wealth Management continues to be our primary growth driver with improved wrap net inflows, strong experience advisor recruiting, and excellent margin expansion. Asset Management provided a strong contribution to profitability and sustained very competitive margins through tight expense management during the period of outflows.

Annuities and life and health insurance underlying earnings remain within expectations in light of the low rate environment. Auto & Home was profitable in the quarter, reflecting the enhancements we’ve made to pricing and operations.

Finally, our balance sheet remains strong, enabling us to return over 150% of operating earnings to shareholders in 2016. Excluding unlocking, we returned over 135%.

Let’s turn to Slide 7. Ameriprise delivered EPS of $2.73, up a 11% from the prior year.

Advice & Wealth Management delivered 21% growth in earnings and Auto & Home had a substantial turnaround in results. G&A expenses remain well managed.

We continue to invest in targeted growth areas and overall remained disciplined. G&A declined 4% even with elevated corporate segment expenses including a $11 million of DOL project costs and $12 million in severance costs.

As Jim said, we are monitoring and evolving situation as it relates to the DOL. A substantial number of projects were well underway in anticipation of the April deadline.

So this level of DOL expense will continue in quarter one. Beyond that, the level of expense will be fluid until there is more clarity.

We returned the substantial amount to shareholders through dividends and share repurchase with $523 million returned in the quarter and $2.2 billion for the full year. And ROE reached 24.6% for the year, excluding AOCI and unlocking.

Let’s turn to segment performance. Starting on Slide 8, the Advice & Wealth Management businesses continues to perform very well, delivering strong business metrics and financial results.

We are seeing strong leading indicators for this business, excellent recruiting, strong advisor retention, and client acquisition, all contributing to record client asset levels and positioning our platform for future growth. Operating net revenue was up 4% from last year to $1.3 billion in the quarter, from solid wrap net inflows, higher earnings on brokerage cash, and asset-based fees.

We saw a portion of the impact from the December rate increase and expect additional lift in 2017. We’re tightly managing G&A expenses, down 5% from last year.

We’re making target investments for growth while controlling the overall expense base. Finally we delivered an excellent operating margin a quarter at 19.3%.

In 2016 our margin was 18.1%, an increase of 100 basis points versus 2015. Asset Management continues to generate good profitability as you can see on Slide 9.

Assets under management were $454 billion and included $18 billion impact from foreign exchange. Adjusting for the impact of foreign exchange, AUM was essentially unchanged from a year ago, as market depreciation largely offset the impact of net outflows on AUM.

Operating net revenues decreased 9% to $761 million, reflecting lower performance fees than the prior year and foreign exchange changes. We continue to live on our goal of maintaining competitive margins in the business by tightly managing expenses.

This is demonstrated by an 11% decrease in G&A expenses, a portion on which related to foreign exchange translation and lower performance fee compensation. Excluding those items G&A was still down 6%.

Pre-tax operating earnings were $169 million, unchanged compared to a year ago if you exclude elevated performance fees in the prior year. We continued to deliver margins in the 35% to 39% target range for both the quarter and the year.

Turning to annuities on Slide 10, the segment is performing in line with our expectations, giving the market environment, with pre-tax operating earnings of $127 million down $25 million from last year. This decline reflects the ongoing impact from unlocking assumption changes and continued low interest rates.

As a reminder, last quarter we updated policyholder behavior assumptions to reflect current experience as part of the annual unlocking process. As we indicated last quarter we expected an ongoing impact of variable annuity earnings relating to those changes of approximately $40 million per year, primarily from an increase in the growth rate of the living benefit reserve.

Results in the quarter included $11 million from this change. Our assumptions will be revisited again in the third quarter as part of the 2017 unlocking Additionally, variable annuity net outflows were elevated in 2016 reflecting the industry decline in VA sales as well as higher lapses, those still within actuary expectations.

In fixed annuities we are continuing to see account values decline, given minimal sales in this rate environment. Turning to the Protection segment on Slide 11, pre-tax operating earnings were $59 million in the quarter.

Auto & Home has had a significant turnaround and delivered an operating profit in the quarter, which included a benefit from lower reserves that was partially offset by a true up of our prior period cat losses. As we previously told you, the actions we have taken to improve our pricing, underwriting and claims practices are taking hold, and positive trends have emerged in the last couple of quarters.

We will continue to monitor performance in the book to determine if further reserve actions are appropriate. We are seeing Auto & Home premium trends in the right direction, reflecting the price increases we are making, which more than offset the decline in policy count related to underwriting change.

The life and health business delivered solid results. There were some large unusual items in both the current and prior year.

Last year we disclosed a favorable $28 million waiver of premium adjustment for life insurance. And the current quarter included two unfavorable items totaling $10 million that are not expected to reoccur.

Overall, claims experience was in line with expectations. Let’s turn to the balance sheet on Slide 12.

Our balance sheet fundamentals remain strong. Our excess capital is approximately $2 billion with an estimated RBC ratio of approximately 500%.

Our hedging program has been quite effective with weighted managed hedged effectiveness at 99% in a quarter. And the investment portfolio remains strong and diversified with net unrealized gain position of $1.2 billion.

We returned $2.2 billion of capital to shareholders through dividends and share repurchase in 2016, which was over a 150% of operating earnings, or over a 135% excluding unlocking. As we enter 2017 we are still targeting to return 90% to 100% of operating earnings to shareholders as a baseline, but we will adjust that as we assess market conditions and our valuation.

And with that, we will take your questions.

Thanks. Good morning.

I wanted to start with advice and wealth, just as we think about trending this over the course of 2017. In that 19% margin in the fourth quarter was there anything sort of that we need to think about as being particularly favorable in the quarter or was that a pretty clean result?

It’s Walter. You should look at it as a pretty clean result.

Okay. And then as we think about that shift that you talked about from 12b-1 to advisory, what sort of impact is that going to have on the margin?

I think the earnings are probably going to be fairly stable and maybe revenue is lower. So I would think that would improve the margin, but just any color on that.

Yes, it will improve the margin. But again there’s fundamentals that are going to substantially increase the margin also.

So, yes, there will be some lift because of the revenue adjustment as it comes through, but again, we don’t know exactly how much is being repriced right now which would offset that – from a margin standpoint. But clearly there we see the margin improving even beside that.

Okay. And then just on Asset Management, I think Jim you had mentioned that I think what you call the funded pipeline and institutional is the largest ever.

Can you give us a sense of how big that pipeline is?

Well, it is the biggest ever that we’ve had. We don’t really put out numbers at this point, but I would probably say it continued to sort of build – we were – the extra delays that we experienced in the fourth quarter we’re hoping it will carry over and we’re still getting some more wins that we expect in the first quarter.

So I would probably just say on a relative basis it’s the highest we’ve ever had.

Okay. And then just a last one from me.

Back in December, Jim, you talked about at a conference the earnings mix of the company over time and I think the slide said 75% plus from the cumulation businesses near-term, which I’m assuming is two or three years. Did that contemplate any acquisitions or divestitures or is that kind of what you think you can do organically?

No, that was organically. That was – it did not contemplate acquisitions or divestitures.

Okay. Great.

Thanks.

Great. Thanks, good morning.

Had a question about the DOL. I know a lot of what you’re doing would remain unchanged, but how would your strategy change at all if it was delayed and would there be any earnings impact from a delay?

So as I mentioned before there are certain things we’re continuing with like the move away from 12b-1s and advisory shares, putting that in place, institutional share classes et cetera that we’re going to continue down that road. But if there was a delay and the administration is reevaluating, we’ll participate in that, but what that would mean is that part of the activities relating to the big exemption and the activity changes there would probably be put on hold across the industry for revision or review further.

So we would probably hold on that activity level and what we would do there until there is some clarity about what would be appropriate or what the industry will move towards with new regulation.

Okay. Then just on recruiting, you also spoke to recruiting strengths in a certain pipeline, but the number of advisors shrunk down a little.

So I guess provide a color as to what was driving that.

Yes. So there are two things.

One is we continued to sort of wean out a lower produces in our employee channel and so in that regard we’re bringing in higher productive advisors. And so as people are hitting thresholds, are not hitting thresholds, they’re starting to reevaluate whether they should be in the channel there.

The second thing is we experienced a little higher turnover in our franchisee with some of their assistance as they continue to make adjustments based upon the environment and the regulation and what they needed to do there for their own areas. So we don’t see anything significant in a sense of a pickup.

We had some additional retirees where they transferred their book internal to our succession planning before the new regulations have come out, but nothing out of normal and it was more in the lower producer end, if anything.

Very helpful. Thanks.

Hi, good morning. This is actually Nancy Rosenberg on for Doug Mewhirter.

Thank you for taking my question. In Asset Management your mutual fund outflow seem to be high aside from FX and conditions in the European market.

Is there anything else driving those outflows and then are you seeing those trends moderate into the first quarter?

Yes. So we did experience two things.

We did experience a bit of a slowdown and some increase redemptions out of our UK activities, Europe in particular due to the Brexit. But after the Brexit, some of the election and some of the unknown, I think you’ve seen across Europe there’s been a bit of a pullback, whereas the U.S.

has actually seen more of an inflow. We’re starting to see that stabilize as we move into the New Year which is good.

In the U.S. we saw some additional pickup in redemptions.

I think that the industry also experienced more in the latter part of November, December. It was actually doing pretty well in October.

So there was some adjustment there. We’re hoping that again that starts to stabilize to come back in the New Year.

So we’re seeing some stabilization there as well. But those are the things that we saw a bit of a pickup that was probably more than we expected.

Okay. And then in Advice & Wealth Management, you touched on this earlier.

But is your lower distribution and G&A expense, is that mainly a function of turnover or are you also seeing like benefits from new policies from the fiduciary rule?

Well, what we’ve been doing is we do modulate the amount of expense that we have within – across the company as you saw our G&A is down. We’ve tightened up on our expenses.

We’re trying to get greater level of productivity from the activities that we have on the way. We have invested well in our technology and enablement.

That is also giving us some good benefits. So that’s what we’ve continued to sort of focus on knowing that the environment was a bit softer last year with both the markets on average were down, as well as just the idea that the increased regulation might have had some effect on activity.

So, but we’re seeing – manage and continue to manage expenses quite well so that we can use that as an offset to any pressure on the revenue side.

Okay, thank you. That’s all I have for now.

Hi, thanks. Good morning.

I want to follow-up on Suneet’s question on the AWM margin. I guess Walter, is the takeaway from your comment that you think the fourth quarter margin is sustainable as we move into 2017 that’s kind of a starting point before any impacts of potential short-term rate increases?

So the issue is our average rate for the year was 18.1% and you get seasonality as it comes through, but we do see that will be depreciating in obviously within that they will get some benefit from the interest rate. But we do see a base level of increase.

Okay. So think about the full year margin as a starting point with upside from there.

Yes. Absolutely.

Okay. And then just on the tax rate.

Can you give us a rough sense of what you’d expect in 2017 at this point?

Yes. Again, looking at in, looking at the mix of business and everything and assuming obviously no benefit being derived, but based on what people are saying from the stack discussion going on in Washington, I would think 24% to 25% is probably a range, but it’s fluid, but it’s based upon the mix we’ve seen in the business, I mean, it’s a good number, good range.

Okay. Thank you.

Good morning. First just a bigger picture question on Advice & Wealth Management.

Jim or Walter, if you just look at some high level statistics your AWM revenue yield or higher than peers, by a considerable margin depending on which peers you’re looking at. So certainly one of the better cases on your company is that your fee levels are quite high, over time they’re going to have to come down meaningfully.

Now I think there are some pretty significant differences in your business versus those peers. But can you address that broad question and is there a movement for you as you’re growing assets now to move that down or are there pretty significant differences?

How would you address that issue?

So I would say is that I think there are differences particularly we have a very strong fee-based business around our financial planning and advice that renders a lot of services to the clients on this full life planning, full retirement, everything from a state to children’s education et cetera, so all of that is part of our fee-based model that is a great value to our clients. In addition to that when you look at, when you say the fees on an average client basis et cetera based on assets et cetera, it’s very much in line based on asset levels et cetera, when you look at a competitive frame.

So of course fee rates for people who have a significant amount of wealth will be always lower than the people who might be in the mass affluent account based on size and effort for their services rendered. So there are differences there as well.

So it’s hard for me to do a compare on a just an absolute basis as you got to look at some. But the financial planning basic foundation and the services rendered there is part of our fee basis.

I would tell you that we generate very strong value in client, I mean, our net grows like I said was right at the top, and all of our ratings for client satisfaction for the services rendered. In fact the more we do the financial planning even though there’s a fee for it the more the clients are satisfied.

So we feel very comfortable with that as we continue to move forward and we’d like more of our advisors to actually embrace that model more fully across their client base.

So, Jim, you don’t see anything structurally that you need to change whether it’s in terms of your typical structure moving far more aggressively into passives or just broader changes to level of fees based on your offerings, you don’t see any real need to change in lieu of where things are going in the environment?

Well, the big change is removing the 12b-1s as there are more institutional share classes and where there aren’t going to start to rebate. But moving that is a reduction in fee to the client for the cause as well as you move into institutional share classes across our range.

The second thing very clearly there is as we look at our business model as anyone else, there is always the move to more fee-based. Our advisors are already factoring in their model portfolios and what they do passive ETFs.

Having said that, it’s not as still active doesn’t make sense as a component of that based on a combination of factors including volatility and risk management and diversity of assets against the market conditions. So we’re helping our advisors to actually build more full fledged portfolios taking into account the combination of factors so that they can manage against the needs and the goals of the client, not just against the benchmark and we think that’s very critical for the long-term achievement of what the client needs to do with less risk

Got you. And then finally, you’ve previously said the change from 12b-1 to advisory shares shouldn’t have any meaningful impact to your bottom line, because most of that was a pass through to the advisor.

Now I assume you’re closer along since it’s now being – it has been implemented. Is that still the case or is that has that changed at all?

No. I mean, we’ve always had when we said we always have a piece of what the 12b-1s that we would get based on the grid, and whereas having said that we also said that we would work to offset that through a combination of expense management and other arrangements and that’s what we’re doing.

So if you just took it as a direct, would there be a piece hit to it? The answer is yes.

But as we said we are working to offset that as you’ve seen that we’ve been continuing to do in combination of expenses as well as ensuring that for services rendered and what our advisers start to actually do in certain cases, different than what they did in the past. So it will have that effect, but we’re looking to offset that, and we think we have things on the way that would help that along.

Just like our advisors we’ll make adjustments in their practices as they look at what they need to do. As I said, they’ve tightened up their expenses as well in some instances.

That’s helpful. So the margin benefit, I assume some of the significant expense improvement you saw in the margin this quarter, some of that’s going to come – be given back in 1Q as you transition or is that –?

Yes. So that’s why we don’t look at the 12b-1 just as a margin adjustment, because we would have gotten a cut at that will probably looking at it as a piece anyway.

But what we’re doing is what we just saw in the fourth quarter based on the expenses that we tightened and now we want that to roll in. So last year we had a full year margin of 18.1%.

You can look at the various quarters based on your activity and expenses that pickup in certain times. But we’re looking for that to increase from 18.1% on an annual basis and that would also help to offset anything that would be the reduction in the 12b-1 from a revenue perspective to translate in so that’s why we also said the 2019 is what we’re shooting for as we go forward and continuing to roll on a full year basis.

Got you. Thank you.

Hi. Thank you.

I had a question about the recent FCA review of the Asset Management business in the UK. And what you see as the potential implications for Threadneedle if there’s any impact you would expect on sales or margins?

Yes. As you’re aware the FCA has published an interim Asset Management Market study which they’re inviting comment.

The focus is on regulated funds and delivering value for the investor. We’re currently engaging with the FCA through a series of industry roundtables as well as the industry bodies on how that recommendations and the markets study can best be taken forward.

So I mean it just recently come out. We’re looking at that across and within the industry and we’ll be working to get back with the FCA and give our comments and understand what they might want to move forward with.

So it’s a little early yet to talk about it.

Okay. And then maybe a follow-up to think sort of what Tom was asking.

Can you just discuss the average wrap account fees and if there’s been sort of any changes in those over time and do you anticipate any pressure on wrap fees as the discount brokers continue to both reduce commissions and index fund costs?

Yes. I think there’s been a lot of talk when you look at it against the industry of just a wrap of an ETF or no support from an advisor and you just have a separate portfolio that’s all automated.

And so the real value of what the advisor brings is much more than just putting together a simple allocation of ETFs, and then let the client fend for themselves. So the read real key around the advice value proposition is the advice that’s tangential to that; how to help a client with their behavior, how do you help them make decisions against their various goals and when to adjust, when to add, when to take out, what’s tax beneficial, what’s not and how to manage that volatility through cycle.

So I do believe as with anything it’s always a competitive frame and there will always be adjustments, but at the end of the day as I said I think would Ameriprise and our advisors we continue to actually move more upmarket, we continue to gain greater client flows based on the type of client that we’re continuing to bring in based on advisor value proposition. So we’re looking at is there will always be some adjustments when necessary based on services rendered or price in the market.

But the value added of the advisor, I think is still very important and very critical and our advisors know when they are – with their clients what is the price and the value that they’re offering for the services rendered. But also I would say we’re going to continue to focus on continuing to move a bit more upmarket so that the asset levels go up in which case prices may on a fee basis on a relative go down, but it will be offset by volume.

Got it. Thank you.

Good morning and thank you for taking my question. On the brokerage cash balances in AWM it continues to build, I think the $26 billion plus is probably a record high.

Just thinking about what the high short-term rate and kind of what you are doing in terms of enhancing productivity at the advisors channel. How should we think about the deployment of those cash balances in terms of the engagement between your advisors and clients and how should we think about the client activities going forward?

Yes. So as we looked at last year, we saw in the beginning part of the year a more of a slowdown in activity.

If you remember, the markets were very volatile, they fell a lot, there were a lot of unknowns, then you have Brexit et cetera. And so what we started to see as you saw in the fourth quarter some of our flows in back into wrap business started to pickup again and we continue to see that now as we move into the New Year.

So we’ve brought in assets, the cash balances built, the advisors didn’t put as much to work, they started to do that again in the fourth quarter. And if we continue to see – there’s always events and changes, but as we continue to see move forward particularly if there’s some delay in regulation as well, but the market conditions have improved, interest rates are starting to pick up a little bit, economic activity is more positive.

So I actually believe that some of those assets will go to work as we move in through 2017. And the good thing is that we – they have the cash on hand to do it and we’re bringing in flows.

So that’s the positive. And also as Walter mentioned, there is a pickup of interest rates that have just happened at the end – latter part of December and it looks like a few more rate increases coming that would also get money to work.

Just I guess, more of a generic question regarding to the cash balances. Is there any seasonality based on kind of what you’re suggesting as money putting to work and money into the fourth quarter and maybe a little bit on the sideline and putting more to work in the coming year.

So is there something with seasonality with respect to the cash balances?

Yes. There is a small seasonality as it relates to the December build up.

But it’s again this is record numbers for us and but there is a small seasonality in the fourth quarter.

Okay. Got it.

Thank you.

Good morning everybody. So you touched on the FCA report.

Can you also maybe talk on, about the method too, of regulation in Europe and how you see that impacting your business at Threadneedle? And then what adjustments you may be making?

Well, obviously we are working through it as it relates to it and from that standpoint it is certainly going to have an element of a lot more reporting, a lot more rigor and looking at again to avoid the conflicts similar to the RGR what they did. So we are working through it.

We have a teams on it and we will certainly be compliant with the elements within the timeframes that prescribed.

Do you see it as having any impact on flows or profitability?

Not at this stage.

Okay. And then in Advice & Wealth Management, so productivity is up little bit this quarter.

Can you remind us where you think this productivity level could move to assuming a gradual improvement in the rate environment and then kind of normalized market appreciation?

So regarding the productivity as I said, I still think there’s a little bit of an overhang depending on the regulatory frame that people will be working on to get compliant if that was to move forward. I think the other things that we brought about in the switch to advisory shares and the changes we’re making there is working its way through.

It occurred starting last year, but we’re making the changes as we go into the first quarter. And so the real question then is whether the rule moves forward for full implementation starting in April, in which case, we’ll have activity and training in all activities as we continue to move forward.

If that is put on delay then that would actually help with the idea that advisors can be back focused on their book in growing their book. So that’s what we would probably say at this juncture.

Okay. And maybe a little bit differently, in terms of the pivoting from the lower productivity advisors into higher productivity advisors and the hiring of more experienced advisors, where would you say we’re at – what stage in the game are we at today?

Well, we are continuing to bring in now higher producing advisors based on our recruiting. So the GVC is going up where the total of their productivity is going up that we are recruiting in.

Now for the people we’ve recruited in and the new people we’re bringing, that continues to ramp up. And you could probably start to see that even more in our P1 channel or employee channel as that continues to go through fruition.

So we’re continuing to see that as something that will be part of the equation going forward. And again, it’s sort of a gradual quarter-by-quarter with what people we bring in; they ramp up, et cetera, but the pipeline for our recruits still look very good.

We’re even bringing in a lot more million dollar practices that was highest we’ve ever did in 2016 based on our value proposition. So we want to continue along that focus into 2017.

Thank you.

Good morning. Thanks for getting me in.

So I guess I have a couple of quick ones for you. So if we think about the full year 2016 margin for Advice & Wealth Management at 18%.

How big is the differential at this point between the margin produced by your franchisee channel and your employee channel?

Okay. As we’ve indicated, we are – the employee channel is building as you get the advisors and they vintage through, so that is actually improving, but that is lower than the franchise channel.

But that gap has really narrowed from that standpoint as when we started this journey. So I would say they are certainly moved into the mid-teens and the franchise channel is closer to the high-teens.

Got it. Okay, that’s helpful, Walter.

Thank you. And then a couple of years ago at your Investor Day you showed us a hypothetical impact from a 200 basis points rise in the fed funds and that would – all else equal that would drive about a 4 point increase in the pre-tax margin in Advice & Wealth Management.

If I think back on that though I think the level of brokerage cash balances was about half than of what it is today. Does that make a significant difference in how we should think about that?

Well, I don’t – I have to go back and reference, but it clearly I think we were probably in the mid-teens back then depending on what year and certainly it has grown. As we assess it, as we talked about it, there is – looking at the environment, we believe for the first 100 basis points we’re going to – as we talked about, 80% range will fall to us, and then as you progress up you would start to stream that depending on competitive situation.

So I’d have to go back to the – from that standpoint, but environment’s different, certainly we’ve grown, you’re going to get the volume, and then it’s a matter of getting the rate mix shift. And so I think the math that we told you for sure on the first 100 that we should get the 80, and then we have to go from there and look at the competitive elements as we assess it today.

Okay, that’s helpful. And then the last question I have for you is really more of – it’s a bit of a hypothetical as well.

So it’s no secret that you guys were at the late stages of looking at a relatively sizable Asset Management transaction that went in a different direction. But I’m curious, if you did a transaction that was going to cost somewhere between $3 billion and $4 billion, would you need to issue equity as part of that transaction financing?

Hypothetically speaking it was not our intention to issue equity. We really do believe we have the capacity to not do that.

And so maybe another way of thinking about it is how long do you anticipate the buyback would need to be either turned off or curtailed? Would it be a matter of a year or less than a year?

Okay. So that, again, we look at returning to shareholders in a different way, but clearly as we looked at your hypothetical, we certainly feel we’re oppressing, then we have to gauge the circumstances, the buyback, the simulation looking at the agencies and everything, but certainly the capacity is there and we generate a lot of cash.

And so it’s transitioning the upper elements, but again, let me go back to your original premise. It was not intended in something of that nature that equity would be the element that we would use, so it would be more from dead or internal cash.

Terrific. Thank you so much.