Alicia Charity - IR Jim Cracchiolo - Chairman and CEO Walter Berman - CFO.

John Nadel - Piper Jaffray Nigel Dally - Morgan Stanley Erik Bass - Citigroup Yaron Kinar - Deutsche Bank Alex Blostein - Goldman Sachs Ryan Krueger - KBW Eric Berg - RBC Capital Suneet Kamath - UBS.

Welcome to the Ameriprise Financial First Quarter 2016 Earnings Call. My name is Hilda and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Ms. Alicia Charity. Ms.

Charity, you may begin..

Thank you, and good morning. Welcome to Ameriprise Financial’s first quarter earnings call. On the call with me today are Jim Cracchiolo, Chairman and CEO; and Walter Berman, Chief Financial Officer. Following their remarks, we will 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 company’s operations. Reconciliation of the non-GAAP numbers to the respective GAAP numbers can be found in today’s materials available on our website.

Some statements that we make on this call may be forward-looking, 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 2015 annual report to shareholders and our 2015 10-K report. We take no obligation to update publicly or revise these forward-looking statements.

And with that, I will turn it over to Jim..

Good morning, and thank you for joining us for our first quarter earnings call. I’ll provide my perspective on the business, comments on the Department of Labor rule and Walter will discuss our financials. Then we will answer any questions you have. Clearly, it was a difficult market environment for the industry.

Volatility was high with significant declines in the average equity markets during the quarter. Our internal index that aligns to our assets under management characteristics was down 8% on average year-over-year and 6% on average sequentially, which impact decline activity, assets under management and fees given we built through the quarter.

Total assets under management and administration ended the quarter at $773 billion. Across the firm, we focused on executing our consistent strategy and managing expenses as we invest in the business and navigate these conditions.

With regards to our financial results for the quarter on operating basis, revenues reflected the tougher environment and were down 4% to $2.8 billion. Earnings per share were relatively flat at $2.17 and our return on equity ex-AOCI remains very strong at 24.2%, up 110 basis points from a year ago.

Because of our ability consistently generates strong free cash flow we’re able to return to shareholders at a significant level while maintaining our excellent capital position. During the quarter, we nearly doubled the number of shares we repurchased from year ago to 5.1 million shares. In total we returned about 150% of our earnings to shareholders.

And yesterday we added to a regular quarterly dividend announcing a 12% increase the ninth increase over the past seven years. Very few financial services companies are generating our level of return on equity and capital return.

And core to long-term approach, our financial foundation remains in excellent shape enabling us to consistently invest in the business and return capital to shareholders in a meaningful way. Let’s move to an overview of the business in the quarter.

In Advice & Wealth management we have a strong business and a significant and growing opportunity to serve more consumers with advice. The strength of our Advice value proposition is how we help people navigate environments like this and help them to plan for the long-term means and goals.

Ameriprise is well positioned to help our clients and invest this address the full spectrum of their needs across market cycles and their lifetimes. The strength of the Ameriprise brand and our reputation is an important differentiator. We’re back on the year with our successful Be Brilliant advertising.

Consumers, advisors and employee reaction remains very positive. As a result, Ameriprise brand awareness hit an all-time high in the quarter. Delivering strong client service is key to our reputation and how we run the business.

I was pleased to see in our recent industry survey Ameriprise ranked fifth out of 20 full service firms to overall invest the satisfaction. In terms of client assets under management, overall client assets remained strong at $451 billion. The market volatility in the quarter continued to effect investor behavior and clients remain conservative.

Cash balances remain elevated at $23 billion, and we had solid flows into fee based investment advisory where we have one of the largest platforms. I am feeling good about the strength of our field force. The Ameriprise value proposition and culture is attracted to our advisors and in the industry.

We continue to maintain very good advisor satisfaction and retention and another seven-year experience advisors joined Ameriprise in the quarter and our pipeline going forward looks good. Overall, given market pressures, advisors maintained good productivity at $510,000 on a 12-month basis.

And in the current environment, comprehensive advice in our confident retirement approach resonates strongly. Our extensive consumer research confirms that advices with clients in our target market are seeking and they’re not getting it from their current financial services providers, so we’re focused on this opportunity.

This also extends to young generations as many are looking to work with an advisor who will meet with them personally, reinforcing the value of the human perspective and personal interaction when saving and investing.

With the volatility earlier in the quarter, we increased our market commentary and communications to the field to equip the advisors to have meaningful conservations with their clients. Overall, we are delivering good profitability with margins of 17.1% in the quarter, up 50 basis points on a sequential basis.

We remain well positioned in the marketplace to take advantage of the opportunity for further growth as conditions settle. Let`s move to annuities and protection. In terms of annuities, we have a consistent story.

We continue to see good solid sales at our variable annuity products which are appropriate solutions for clients to meet their long term goals. While we are experiencing outflows that primarily reflects our closed third party book and in fixed annuities the level of outflows have slowed in recent quarters.

Overall though, the book is performing as expected in this low rate environment. Annuities and their unique benefits are integrated within our confident retirement framework. I feel good about how we are managing the business, developing and enhancing our competitive products and features while managing rest.

Within protection in life and health, our UL products have been our sales leaders off late becoming a larger portion of our balance book with the UL. Claims experienced in the quarter was also within our expectations. Overall we have a good book and we are working with our advisors to serve clients' protection needs.

And in Auto and Home, we are making good progress as we enhance our pricing, underwriting and claims management. Our improved results were masked a bit in the quarter due to higher cat losses which we preannounced. In asset management, we are executing our strategy and focused on gaining market share and generating profitable net flows.

Similar to our wealth management business and asset management, the market declines during the quarter challenged flows in assets under management. We ended the quarter with assets under management at $464. Investment performance remains quite strong.

We have a broad portfolio of strong performing equity and fixed income products and I was pleased to see [five of our] Columbia recognized for [liquid fund awards] in 2016. Overall, outflows were $7.5 billion in the quarter, with $5.8 billion of the outflows were in lower fee portfolios for areas we've highlighted.

Fixed income IMAs at US Trust which is a continuation of our fourth quarter outflows as US Trust has taken a portion of this business back in house. [indiscernible] and other insurance portfolios in the UK and [sub] advice funds where we had ended the relationship and are merging assets into existing Columbia funds.

Importantly, there is very little revenue impacted this move. Outflows also include a single large institutional client who has again redeemed for liquidity purposes. Overall though, there are positive themes across the business. Let me start with third institutional.

We continue to see good interest in a number of our strategies including high yield, we are winning mandates across our key regions of the U.S., Europe and Asia that includes in Korea where we openedan office last year. Our new business pipeline remains healthy and we expect to see the one not funded mandates come through later in the year.

In terms of retail, in the U.S. it was particularly challenging January but net sales improved in February and again in March. We made meaningful market share gains over the past year at nearly all the major place in the broker deal and the independent channels and at a time when gross sales for the industry are down.

With regards to the Acorn Fund, out flows have slowed and if industry flows pick up in the U.S., we expect to build on these positive trends. With regard to retail closing Europe we continuing to reinforce our strong presence in the UK and serve more clients in key markets on the continent including in Germany, Italy and Spain.

European retail net flows in the quarter were similar to the U.S., But they picked up nicely to end the quarter almost slightly negative. As we said before, UK and European retails sentiment can turn quickly with the markets and there has been true in recent weeks has markets have rallied.

So overall we are comfortable with performance of the business, in a challenging market remained focus on providing important perspective to investors and delivering competitive performance. There are positive themes within our flow trends that are consistent with the strategy we are executing.

As I look at the company overall, we have a good combination of businesses and people to continue to execute the strategy we have in place. Our diversified business generates good earnings and strong free cash flow that we reinvest in the business and return to shareholders.

Our return on equity remains strong and it's one of the strongest across financial services, and I feel good about our ability to continue to navigate the market and consistently generate shareholder value. Now let me turn to the Department of Labor's fiduciary rule that came out a few weeks ago.

As America's leader in financial planning, we take our fiduciary responsibility very seriously and put our client's interest first. As you know, while the government removed some of the more onerous elements of the initial rule, but remains as a rule that is comprehensive and complex.

It's hundreds of pages long and is a principal based regulation that requires very detailed analysis. Clearly, it will require a changed agenda for firms across the industry to execute it and be compliant within the timeframe provided. We will take the time necessary to understand it and get it right.

It wouldn’t be prudent to try to oversimplify the rule for you today. But I know you have questions and based on what we understand today, we believe that the impacts will be manageable. We are operating from a position of strength, we have the experience and the capabilities that will allow us to adopt and comply with the new rule.

Consistent with our financial planning leadership, we are one of the largest providers of fee based investment advice and as I mentioned we already operate as a fiduciary under the very high standard of care.

We also benefit from investments we have made to establish a strong compliance foundation, including our infrastructure, policies, supervision and disclosers. Underpinning all of this, our clients and advisors are highly satisfied with the experience we provide.

We have a proven track record of navigating to change and we will build on that experience enhancing our processes and capabilities where necessary to effectively comply with the new DOL rule.

With regard to some products you had questions about, we are confident that our advisors will still be able to recommend the products that they do today in qualifiedaccounts including the annuities and affiliated products which are expressly committed under the rule. In short, we will continue to offer a full solutions set.

Today we apply a rigorous degree of review and due diligent to the products we offer and we have extensive disclosers in place. And while there will likely be additional disclosers and documentation required going forward, based on what we know at this time, we believe that these requirements will be manageable.

And while we cannot predict client advisor behavior in response to the rule, our business model has proven to be adaptable. We can make adjustments prudently to respond to the evolving market environment.

Yes, there will be added cost that we will address through expense reengineering and other means to position the firm for continued growth and margin expansion over the long term. I should also note that during this period of disruption, we see potential opportunities.

For example, the regulatory environment will likely lead to consolidation within the industry which we have already seen. Independent advisors or independent broker dealers may lack the resources or the scale to navigate the changes required and seek a strong partner like Ameriprise.

The financial foundation we built allow us to remain opportunistic while also making the necessary investments to comply with the rule. So in closing, this is a large change agenda for the industry.

And at a high level given what we know, we feel very comfortable that we can effectively navigate through it and we’ll keep you apprised as we move forward. And with that, I’ll turn it over to Walter to take you through the numbers for the quarter. .

Thank you, Jim. Ameriprise delivered solid results in the quarter despite market disruptions. However, we successfully navigated these conditions and results in the quarter were overall quite good, as well as within each of the business segments.

We continue to believe our stock is undervalued, which you can see by the elevated level of repurchase in the quarter. Our capacity buyback stock remains strong, given our balance sheet fundamentals and our business mix generate strong free cash flow. We are committed to maintaining a differentiated level of capital return. Let’s turn to Slide 4.

Macro conditions impacted revenue in a few ways. Our weighted equity index, the proxies put equity market movements on AUM declined 8% on average year-over-year, and 6% on average sequentially. This affected average AUM and thereby fees which we collected based upon average daily assets.

Continued dislocation also muted client activity and contributed to asset management outflows. Sequential results demonstrated a similar dynamic from a market inflows perspective. The last quarter had strong asset management performance fees and CDO liquidation.

Low interest rates remained a headwind for our insurance and annuity businesses and foreign exchange translations impacted asset levels and earnings. This is an industry wide trend held across financial services companies. Let's turn to Slide 5.

Ameriprise delivered stable earnings per share and continued return on equity expansion in a challenging revenue environment. This [clearly] demonstrated our ability to navigate accruesbusiness cycles using the multiple strong levers in our business model.

Our business model generates significant free cash flow and our valuation allowed us to optimistically repurchase stock at this depressed level. Additionally, we are tightly managing expenses while making the right investments to address regulatory changes and grow.

We initiated an additional expense reengineering assessment in the quarter and identified good opportunities for the balance of the year. This way, if market disruptions persist, we’ll able to effectively manage our margins. Let’s turn to segment performance, starting with AWM on Slide 6.

The Advice & Wealth Management business continues to perform well, delivering solid results. Leading indicators for the business were good. We brought in 70 experienced advisors in the quarter and the advisors we’ve on boarded over the past 12 to 24 months are ramping up nicely. Our advisor retention was also strong at over 90% in both channels.

Product growth was solid for this environment with 1.8 billion of wrap net inflows. Operating net revenues was 1.2 billion in the quarter, down almost 3% from last year, driven by market dislocation even after the benefit of the increase in the fed funds rate in December. The market dislocation impacted PTI in a similar manner.

Operating margin in the quarter was strong at 17.1%, up 50 basis points sequentially. Outside of significant market disruption, we expect future margin expansion to continue over time. Asset management continues to provide a solid contribution to our revenue and earnings as you will see on Slide 7.

Clearly, we face two external headwinds in the quarter [technical difficulty]. The average WEI down 8% year-over-year and 6% sequentially and second foreign exchange cancellation was unfavorable. These impacted both revenue and pretax operating earnings. Operating net revenue was down 10% to 724 million.

Over 50% of the decline was related to markets and foreign exchange with the balance largely related to the cumulative impact of net outflows. Pretax operating earnings were down 22% to 149 million with over 60% of the decline related to markets and FX. We are prudently managing expenses with overall expenses down 7% and G&A down 3%.

The results in the quarter were in line with our expectations in this environment. However, we began additional expense management actions in the quarter and have the capacity to further reduce expenses to support margin improvement. Turning to annuities on Slide 8. The segment is performing in line with our expectations.

Variable annuity pretax operating earnings were 100 million down from 144 million a year ago. This business was also impacted by market dislocation in the quarter both in terms of the direct impact on account values and lower asset earning rate as well as the impact on DAC and DSIC and SOP reserves.

This non-cash impact was about 60% of the decline in the quarter. The underlying business is solid and the risks are well managed. Fixed annuity pretax operating earnings declined to 24 million due to the elevated lapses as the block [run off]. The earnings in the quarter also benefited from a couple of million dollar of onetime items.

Given the current interest rate environment, there are limited new sales and as a result, this book is expected to gradually run off and earnings will trend down during the year. Turning to the protection segment on the next slide. Pretax operating earnings were $69 million in the quarter.

Let’s focus on Life & Health first, which in line with expectation. Pretax operating earnings benefited from stable claims experience and the recapture of the reinsurance [treaty], but continues to be pressured by low interest rates.

While Auto and Home was certainly impacted by elevated capital losses in the quarter, we were pleased to see early indications of improvement in the underlying loss trends and the operating results. The changes we had been making to enhance pricing, underwriting claims and operations are taking hold.

New business, as moderated in targeted areas as a result of prudent rate taking and additional underwriting discipline. Let's turn to the balance sheet on Slide 10. As we have told you before, Ameriprise maintains a strong balance sheet that we will use optimistically.

In the quarter, we returned 150% of operating earnings to shareholders through dividends and share repurchase. We repurchased 5.1 million shares in the quarter, almost double the number of shares repurchased a year ago. Additionally, we announced a 12% increase in our quarterly dividend $0.75 per share. Our balance sheet fundamentalsremain strong.

We have more than 2 billion of excess capital and an RBS ratio of approximately 550%. Our hedging program is working well and the investment portfolios diversified. We feel good about our energy exposure and it's wasn’t a net unrealized gain position at the end of the quarter.

Our strategy is consistent and we are well positioned to navigate challenging environments using the various levers to continue to deliver excellent results. With that we will take your questions..

Thank you. We will now begin the question-and-answer session. [Operator Instructions] We have a question from John Nadel from Piper Jaffray..

Jim, I think all of us on the call are probably really interested in your commentary around that department of Labor's fiduciary standard and in particular I recognize that it's very early and probably too soon to talk about quantifying cost and those sorts of things but you I think I understood your comments to say that you are confident that your advisors will be able to continue to recommend annuity as another affiliated product in the qualified accounts.

Can you just go through that, is that a matter of the big exemption language being changed enough in the final version versus the original proposed language that you guys feel comfortable that that’s the way you can go?.

Yes, I mean we are reviewing almost a 1,000 pages of what the rules says but from our review and interpretation variable annuities will continue to be sold as would other investment products that are proprietary or affiliated. Of course consistent with that like we do today, everything would have to be appropriately disclosed.

There would be no difference in the sense of let's say if we are offering one mutual fund versus the other compensation differences or anything like that which we do today. And the big exemption does allow for it in that regard.

And even if you look at annuities today, we do a very detailed review before every -- any annuity is sold whether in the qualified or the non-qualified to ensure that it meets the standard as appropriate in regard to that there are real appropriate benefits that are the right solutions for the client versus alternatives.

And we will carry that in to what we do here moving forward, and maybe some other disclosers that the rule would want but having said that we feel very good about the business we are currently doing and it is permissible as we read it under the rule going forward..

I totally agree with that take. And what I am also interested in is you talk about the disruption that you could see throughout the industry which could result in some consolidation and I think your words were we are already think some of this.

Can you expand on that a bit or we already starting to have some real dialogue whether it be with small financial advisor groups or some others around potentially joining Ameriprise as a result of this and other factors?.

The short answer to that is, yes. As an example I know one of the questions you have is around the cost of implementing and making these changes. And as I said and I can elaborate is that we have a tremendous level of resources and foundation built but as an example a company like ours we have about 400 people devoted to this right now.

I doubt very much that a small broker dealer or even independents in general our advisors on their own are going to have the means by which they can navigate this, both from a legal, a regulatory, a compliance, a technology, a support, a serving, and education, a training, we have mobilized our field resources, the company resources, we’re going to be doing extensive training with technologies underway.

So we have the ability to do this and we will and it's not just incremental cost we’re devoting and rechanneling our resources so that we redeploy to get this done appropriately. And I would just say it will squeeze others in the industry unless they have those capabilities and the means..

Thank you. Our next question comes from Nigel Dally. Please go ahead -- from Morgan Stanley, apologize..

I had a question on the asset management margins. Previously you talked about adjusted margins in the high-30s clearly given the markets that wasn’t attainable in the first quarter.

But given the market recovery and expense initiatives you talked about, how should we be thinking about margins looking forward?.

I believe its again with market saying that we should recover back up to the 38 and up range in that we were in previous quarter, again it's subject to markets and certainly we are being disciplined on our expenses. And so we believe that will definitely occur..

And then second question on the -- if UK were to exit the European Union, any impact that would have on [indiscernible] just wanted to check on that as well..

Well, we’re reviewing, of course we have various funds that we sell across Europe. We have the different units by which we sell them on this so there will be some conversion et cetera and there will be the establishment of course that they do separate. So it will require work on behalf of financial institutions on what that is.

But we think if it did come about there’d be a time frame and we in our initial reviews think that we could very easily or more appropriately accommodate those changes..

And on the financial side, obviously, we have dividend flows and other things which we are looking at putting in hedges and we’re just evaluating that right now..

We have a question from Erik Bass from Citigroup..

First on DOL and I realized on the expenses you won’t be able to provide a specific number.

But just hoping you could maybe give us a little bit sense about the incremental spend you may need and whether this is more of a 2016 or 2017 issue?.

Let me take a shot. In the first quarter we incurred couple of million dollars as relates to. But again that’s in the context of the original publication on the regulation, which was lot more comprehensive in the time frame so a lot more compressed.

When the final rates came out, we are reassessing that and obviously that would we believe result [indiscernible] time frames and less basic change factors that we are assessing at this stage we believe are there that that number will be adjusted. But that is the process that we’re going over.

And I would say at this stage and again, please take this in the light of we are still in the midst of that, the expenses will probably be spread as we look at it and probably a reasonable portion of it and again don’t know the number yet will be in the 2016 time with some spillover into ’17..

I think it will continue, I would probably say that we had about 4 plus million, 4-5 million in first quarter as Walter said.

And we will have incremental expenses but what we are doing is if we didn’t have the type of resources and the capabilities we have then it would be a tremendously greater amount but since we’re redeploying out of our internal resources to deal with this off of other various activities et cetera, we think we could accommodate.

I mean if you look at the project itself and said you took the total it would be probably expensive. But if you look at it where we’ll add some incremental that will need in the time frame. Having said that, the redeployment would actually say the incremental would be much smaller than what would be required if we didn’t have what we have in place..

And are you contemplating any product changes on your advisor platform? We’ve seen other firms announce plans either stop selling, load funds or stop selling funds with 12B-1 fees. These steps you’re considering and how do you think about the implications for both advise and wealth management and the asset management business..

Right, so the way we look at it is that we sell a combination of funds and share classes today with different reasons.

We’re doing two things, one is under the big and appropriately if you’re doing a transaction oriented sale of course again that’s permitted and allowed under the belt and therefore a loaded fund is still appropriate and those funds still which will be ones are appropriate.

And again it's as typical that you have to evaluate because everything will be into investment advisory is not necessarily a right as appropriate even from the SEC's perspective and the bit does allow it.

Second, regarding our various activities and platforms, we are actually and we have been underway for this for last year and a halfbefore this even occurred to actually build our lifetime account infrastructure and what that will allow us to do is across all the various platforms on our investment advisory that we can have one seamless way of operating and therefore we can actually as the various share classes are introduced appropriately move and migrate -- give our advisorsthe ability to use the most appropriate and for the type of investment that'sout in the market place.

And so we are migrating that anyway, we think that’s an appropriate longer term and based on our ability to do that would satisfy the DOL's regulation of what they are looking for from a sea and leveling and transparency.

So that’s underway and that’s a very large investment but we have that underway to begin with and it's good that we have the infrastructure that we will going to be completing in '17..

Our next question comes from Yaron Kinar from Deutsche Bank..

Can you remind us; do you sell any third party a notice through your advisory business?.

Yes, we do..

And so [indiscernible] notice that comes through, [indiscernible]?.

We don’t break it out, but it's probably in the low double digits and might that -- and it's being more ramping up as we have continued to introduce various ones that to do diligent affords etcetera..

And would that be to both through the [indiscernible] and fix?.

No in the fix carrier, particular with based on the environment we are in, that’s very little in sales anyway so we haven't introduced. And if that changes overtime, we could easily do that..

Okay. And then of course in another category altogether, looking at the RBC ratio, I saw quite a meaningful change were decline quarter-over-quarter.

Can you maybe talk about that a little bit?.

Well that was actually I think more driven by the interest rates situation. And so from our standpoint as we look at in both with the hedging and everything from that standpoint, it was on that basis and we also declared a dividend out of the company in a normal course and on an ordinary dividend..

Okay, but the ordinary dividends are one up to the whole [go back to think on]access capital also came down a bit, about $0.5 billion, right?.

Well, it's in the rounding so I would say it's certainly less than $0.5 billion. Again if you look at the earnings, look at what we did, basically pay out, it's less but it’s the way we express it because we are trying to get to the again 2 billion approximately then 2 billion plus.

So I would say it's in the rounding of it and it's probably in the 0.25 billion range..

And I’ll sneak one last quick one and with regards to expense management, can you maybe elaborate a little bit on what the contingency plan was and whether do you plan on keeping at in place even if the markets do recover this quarter?.

The answer to that is, yes. And we are doing that as well as I said because not just we have the market volatility which we always plan that, you don’t know the perfect signs so whether that’s going to end or not. And second of all we have made a number of things in our reengineering that we think we could continue to move forward it as appropriate.

And that actually helps free us up resources that we can deploy towards the DOL without incrementally increasing our resources where unnecessary..

We have a question from Alex Blostein from Goldman Sachs..

So back to the DOL, I understand that it's hard to size revenue exposures and as you try to think through financial advisory behavior. But just thinking through different buckets and actually I wanted to focus in the asset managing business for a second.

I don’t think you guys are a big participant in class Asia classes with Columbia, but maybe help us size how much of your total [AUM] is in IRA accounts, and I guess most of that will be in Columbia..

So when we look at our sales and across the business and then Walter into qualified, as we said to you before, Columbia is one of our strong providers in our channel, but as I always said to you it's low double digits in total sales across qualified, non-qualified the whole house.

Within that we also [we didn’t]qualify have a very large substantial business and investment advisory and Columbia is part of that as they are in individual sales for a transaction on the brokerage side. But it's no more in qualified than it's across the house per se. And the percentage is small.

So if you look at what may go on within the big side of it or the transaction side of it, you are talking about low mid-single digits. And so it's not that -- and it's no different thanother large providers in our system. And again Columbia has some excellent product with excellent performance and their fees are below average in general.

Then when you take and I'll just because the next question whether from your or somebody else will be annuities and similar so let me answer that one for you. Annuities is roughly in the qualified business of the total sales we do across the Ameriprise family here within the wealth management is only in the mid-single digits.

So, if all annuities went away from -- we’re talking mid-single-digits of sales, but it's not going to occur because based on the reviews we do today and how substantial they are in preclearance we think that will continue.

Now could some of it ship the next question from an upfront load to a level load, yes, and we have the ability to do that those products are there. So if the advisors as you said wanted to shift some behavior and they want to put an upfront load, they have the ability just like on the wrap do the level load.

And so to our perspective we don’t think there is a substantial and even if it changes by a few percent I guess I heard from many of you over the times as why am I in the annuity business. So if it shifted away I’ll just go into investment advisory and I’ll still generate good profitability and good margins. So, we’re not concerned.

We like the solution of the annuities because it fits the solution set for a confident retirement and longevity of income and that need will still be there and our advisors will still determine appropriately whether it's fixed.

So whether it's Columbia product or it's annuities as an example, we think there is a critical need Columbia has excellent product, we don’t sell it differently, we don’t pay differently. So, we actually believe that and the big does allow for.

So if we didn’t have what we had in place the due diligence, the disclosures, the review processes, appropriate compensation, we would probably have a different concern but we don’t in this case.

But again we will adjust and if there is a migration and anything, we have different alternatives and we make those adjustments and I think from a perspective we’ll be in good shape..

And Walter one for you, just bigger picture around expenses. When we look at your guidance of G&A over the last three years, it's been managed extremely well, it's actually flat to down over the last three years.

Given you are [reengineering]efforts obviously the market backdrop is a little bit toughersince certain things may accelerate, coupled with whatever it is you need to do on a compliance front with DOL, is it still possible for you to keep overall firm wide G&A in this flattish level for the next year or two?.

Well, again in fact we certainly as Jim indicated when we took a -- and we evaluated our expenses base relative to revenue growth and certainly looked at the areas that would again non-inhibit growth and certainly allow us to deal with the DOL announced but we do believe there is still room to manage those expenses very effectively as we go forward..

We have a question from Ryan Krueger from KBW..

Another DOL question, can you talk about your view of the level fee exemption option versus the wrap platform just operated under the standard big?.

We are reviewing the various exemptions and the various options. And so we haven’t made a determination yet on what we will utilize for the advisory and the various programs within it. So that's under review right now but there are the various exemptions and we’ll see what’s most appropriate as we move forward..

I suppose this is probably a related question, but can you give us any extent as to how much revenue sharing and marketing support payments that AWM collects? And I guess if you see any potential pressure there because of the new DOL rule?.

Well, very clearly again under the rule it allows for various levels of cost reimbursement and services for [indiscernible]. And we can well support what those are and the amounts that we collect in it.

And we feel that as we move forward consistent with that based on the services rendered, the price of those, et cetera, et cetera, that that will continue on. There may be some adjustments as we look at it and review it but we don’t think that would be material..

At this point you don’t expect the materials things for the revenue sharing payments that you’re currently collecting?.

The payments we get are all for the cost reimbursements necessary for the services we rendered that are well support and appropriate for what we do..

We have a question from Eric Berg from RBC Capital..

My questions relate to the Department of Labor. Jim a moment ago I just wanted to make sure, I understand, and have just an active understanding of the percentages of business that has gone through the Ameriprise system for Columbia that you referenced a moment ago. I think you were dividing the Columbia sales between brokerage and [indiscernible].

And I think you said what I am looking for ultimately is whether this is right or not that in the brokerage side, the transaction side of the business the percentage of sales that go to Columbia are low double-digits and that is also low double digits on the wrap side of things.

Is that the right takeaway?.

Yes, because remember there is qualified and non-qualified. So qualified let's say half of the total and then within that you get a bit more into the investment advisory than you even get into the brokerage on a transaction side. And that’s continuing to shift as we continue to grow our investment advisory flow program.

So I think that’s a natural shift that’s occurring anyway and we will continue to do so..

I don’t know want to get to the wrong conclusion so I need to test this conclusion with you. If roughly 12% of the brokerage sales are to Columbia fund and 12% of the mutual funds going into your wrap program are Columbia funds, I am using 12% of the single point for low double digit.

Should I be adding those percentages and to say that does this mean in other words that roughly 25% of the mutual funds that the advisory sells are to Columbia?.

No, just the opposite..

Okay well, that’s why I wanted to check.

So why -- when you say just the opposite, the numbers should not be added?.

No because if [identical] you said it was 12% overall sold in my system and let's say you then take 50% of those sales being in qualified and then you take more than 50% of those sales being sold within qualified and investment advisory then you are less than a quarter-of-quarter-of-quarter in brokerage..

Okay, you are going in other words in the opposite direction. I think I get it now and I’ll work with [indiscernible] to the firm things up even more. I guess my other question relates just in general to revenue as well and once again being sensitive to the fact that it is early days and you cannot quantify revenue impacts.

Do you nonetheless see the IRA rollover business, shrinking across this country and becoming just less of a big business than it has been because of the new bar that has been raised here to opening IRA rollovers?.

Well, I’ll put it this way again and we are all doing our view, but the rule does not prohibit IRA rollovers, it requires the higher level of analysis, documentation and disclosers to determine that's in the best interest of the client.

And today we do something very similar, roll over are now considered part of the fiduciary revised, so formerly it's required that you do a number of things necessary to truly show what that is.

And it builds upon for us what we already have in place is very strong comprehensive roll overeducation and discloser materials and we think those whatever we need to enhance to them would meet some of the things, but that review process would be necessary.

We have a program in place called leave it or roll it over already which evaluates the various options for retirement plan assets. And we will then enhance those where appropriate.

But I would say that the rule does not prohibit but it does make sure that your [analyze it] appropriately to make sure that that is appropriate for the client for a number of reasons. And again I think that is some of the things that we do today and will continue to do and if that enhances we will be able to accommodate.

What's that does longer term to behavior, I can't sit here as I said, I can't predict what happens longer term and why, but I would say that the client needsthe ability to determine whether they should be managing the assets differently, they should consolidate them, they should develop the various ways to get in streams of income, what does a plan does provide that to them or not, those are all things that will have to be evaluated on an individual basis..

We have a question from Suneet Kamath from UBS..

I just want to go back to some of the expense issues on DOL, Walter did you say in the first quarter you guys incurred -- I think it was 4 million to 5 million of expenses related to DOL and if that's the right number, was that all in AWM?.

That was again as I am looking it of course to enterprise it, that was around $4 million, $5 million, yes..

But it was right across the segment?.

Well, actually again as we look at that expense, it is a onetime expense because it affects most of the segments. So actually we are picking it up in corporate..

Okay, and then was the guidance that that 4 million to 5 million was sort of predicated on the earlier time table and that now the things have got extended that number might come down, is that what you are suggesting?.

What we were doing is very clearly, we weren’t waiting till the rule came out to start the work necessary and thinking about what would be required.

Since the rule came out, what it said is that the period was extended a bit and it was less onerous to some of the requirementsparticularly that you would have to do with calculations and data and all that stuff. So as we now look at it some of the incremental that we thought would even ramp up a lot more is not going to be as necessary.

But the expenses we are talking about are incremental as I said internallyparticularly in AWM but in other places in the company we are the -- redeploying significant resources that is within the AWM's expense base.

So even though we tightened expenses we could have probably tightened them bit more but we are now ensuring that we do that, but I would consider that more of a redeployment rather than incremental. There will be some more incremental Walter is working on what that would look like and we’ll give it to you in the second quarter.

But as we said, a lot of it will be from redeploying what we do..

Maybe just a broader question, because I am trying to figure out what the word manageable means, but when you think about this DOL impact and your view that it's manageable.

Can we assume that the financial targets that you sort of established for the house in terms of EPS growth and ROE as well as for A&WM in terms of margin, that that sort of manageable means that those goals are still achievable?.

Yes, what I would say Suneet is this, and I wish I could give you more perfect signs, I can’t. I would say this, I know people that looked at us and said we are going to be more significantly impacted from the industry et cetera. We don’t believe that. We think that some other people will be impacted a lot or in general across the industry.

So what I would just say is we will be impacted. There is no doubt about it. This will cause a level of disruption change focus on moving and migrating when necessary, changing people’s behavior a bit. But we will get that done.

Now what that will probably mean is there’ll be some adjustment and whether there’ll be cost or revenue in some fashion over a number of periods, but it will work its way through. I would not say that it would be significant that’s why we say manageable, but I can’t say it won’t be anything.

Along the term, we do feel that we have a good value proposition. There is a real need for our services. We will put in place the necessary things appropriately to help our advisors continue to build their businesses. And with that we will get back on track to the margins that we said we were targeting.

But more important than the margins the growth of the business and from the growth of the business the margins will occur.

So I can’t sit here and tell you that no we changed the strategy, we haven’t and I can’t say that we see something that would take us off of our cost longer term but I could probably say that maybe just the seamless idea that you’re going to continue to do everything in the next periods where that’s not going to translate to some change I can’t say that at all.

Longer term we’ll see what happens but this is an environment that does change. But Ameriprise has the capability, we have good value proposition, good foundation and that’s the way we are going to navigate. So I am not here to give you a perfect sign, what I am telling you is we’re not falling off the cliffs. We are in good shape. We have the means.

We have the ability. We have great client satisfaction. We’ve got terrific advisors that know their business well and we are already operate in a very compliant way..

Maybe just the last one just trying to get a little bit more color on maybe why the market is wrong in terms of you guys being more impacted.

Can you just maybe highlight one or two of the areas both on the revenue side and the expense side of where you see the biggest impacts from this?.

Suneet, it's Walter. We’re scratching our heads also I’ll be candid about it maybe because people think we have both sides. But certainly as Jim has said both on the annuity side and on the Columbia side, these are all numbers within ranges that are certainly not concentrated at such levels.

We have demonstrated adjustment and if these products are within acceptable exemptions and things like that and they are solution driven. So we’re scratching our head also, that’s why candidly we are -- so basically purchase what we purchased in this quarter because we do believe we’re undervalued..

Thank you. We have no further questions at this time. We would like to thank you, ladies and gentlemen, for participating in today’s conference. With this, we conclude today’s call. You may now disconnect..