S&P500 Stock - Ameriprise Financial, Inc. (NYSE: AMP)

A pricey stock but a good investment

Ameriprise Financial is in the investment services industry. Revenues in the investment services touched nearly $300 billion in 2006. 54 percent of these revenues come from brokering and dealing equities, derivatives, debt instruments. The rest of the income comes from investment advice to individuals and corporations. Since interest rates are high, citizens will get inspired to save and invest. This will enable these investment services firm to earn more money. The US has the largest number of high net worth individuals and their combined assets equal $10 trillion. Investment service providers advise these high net worth individuals and manage this asset. This how all these firms make money. With the ageing population on the rise retirement products are in great demand. M & A activity was on a record high in 2006 and is expected to remain the same this current year as well. Investment service providers involved in such deals will earn mega commissions. 

47 percent of the revenues earned by these investment services firms are devoted for salaries and other employee compensation. No company cringes as it is important to retain the talented employees who are responsible for generating their revenues. Hence to reduce other costs, activities like equity research and IT are outsourced from subsidiaries or third parties in lower salary regions such as India. Significant trends from which Ameriprise benefits are Bonus Payments, Outsourcing, Retirement Products.

Ameriprise Financial was founded in 1894 under the name Investors Syndicate and changed its name to Investors Diversified Services, Inc. in 1949. And then changed it twice more to American Express Financial Corporation in 1994 and finally to its present name, Ameriprise Financial, Inc. in 2005. Ameriprise Financial is headquartered in Minneapolis, Minnesota.

Ameriprise Financial targets financial planning, asset management and insurance services to individuals, businesses, and institutions and has condensed its operations to Asset Accumulation and Income, and Protection.

The Asset Accumulation and Income business has its own mutual fund and at the same time offers other companies' mutual funds. Financial advisor network takes care of Annuities and other asset accumulation and income management products and services for its retail client. Outside channels,

Such as banks and broker-dealer networks participate in offering annuities. Institutional clients are given a separate account and are offered sub advisory, and 401(k) markets.

The Protection business offers life insurance, disability income, and brokered insurance products again through financial advisor network. Besides, this personal auto and home insurance products are offered to retail clients through strategic marketing alliances.

The company is present in the banking sector through Ameriprise Bank, FSB in Minneapolis and Phoenix, which offers a suite of products to meet clients' borrowing, cash management, and personal trust needs. The bank offers home lending program such as mortgages, home equity loans, and lines of credit through financial advisor network.  

Ameriprise Financial has merged and renamed its five life insurance subsidiaries into two River Source branded entities. American Partners Life Insurance Company and American Enterprise Life Insurance Company have merged into IDS Life Insurance Company, which has been renamed River Source Life Insurance Company.

Cracchiolo, James M. is the Chairman and Chief Executive Officer. He was with American express Bank before assuming charge in his current role.

William F. Truscott is the chief investment officer. He manages retail, institutional and owned asset portfolios. Zurich Scudder Investments, Chemical Bank employed him before he joined Ameriprise Financial.

Walter S. Berman is the Chief Financial Officer. He started his career with American Express Bank with a brief stint with IBM before joining Ameriprise Financial.

Kim M. Sharan is the Chief Marketing Officer. She was with Merrill Lynch and Citibank before joining Ameriprise.

T. Rowe Price Group, Lincoln National, Raymond James Financial, Waddell & Reed Financial. Nationwide Financial Services, Merrill Lynch, MetLife compete with Ameriprise. But Ameriprise has shown consistent performance. There is a continued focus on the mass affluent and affluent market and this group of clients has grown by 11% over the last year. For this quarter revenues grew 11% to $2.2 billion, adjusted earnings per diluted share was up 5%. Beginning with their overall performance, Revenues grew 11%. Adjusted earnings grew 3% to $237 million. Their revenue streams and assets flows are strong. Ameriprise focuses on tightly managing its expenses and expanding their margins. Their client acquisition strategy is showing dividends which is centered on their commitment to serving clients through financial planning relations. 

$171 million of share repurchases was completed by buying 2.9 million shares. Year-to-date, they purchased over 11.1 million shares for $665 million. Their remaining authorization at September 30th was $701 million. The pace of share repurchase continues to remain prudent and Ameriprise continues to maintain excess capital of over $1 billion. Their balance sheet remains strong and their asset quality is high.

Performance has strengthened this year and going by the track record, the company will continue to grow. This stock will always remain a good investment.