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Ameriprise Financial, Inc. (NYSE: AMP) is the new name of American Express Financial Advisors (AEFA). American Express spun off its AEFA unit into an independent company. The new name came into effect August 1 2005, and the spin-off transaction closed in September 30 2005. James Cracchiolo is the chairman and chief executive officer of Ameriprise. The company's headquarters are in Minneapolis, Minnesota.
History
Ameriprise Financial was founded in 1894 as Investors' Syndicate by John Tappan. In 1949, it changed its name to Investors Diversified Services, Inc. in 1949. In the early 1970s, it began construction on what for Minneapolis was a supertall (nearly 800 feet, the highest building height the city is zoned for) headquarters tower, a futuristic design by Philip Johnson, distinguished instantly by its unique stepback pattern. In 1974 the new building, the IDS Center, opened for business. Its distinctive design and modernistic glass facing made it a landmark, stark and modern next to the city's other, much smaller and generally stone-faced skyscrapers. American Express bought the company in 1984, and in 1994 IDS began using the American Express Financial Advisors brand exclusively. On October 3, 2005, AEFA was spun off from American Express as Ameriprise Financial, a publicly traded company. Ameriprise Financial became the 6th largest spinoff in history.
Ameriprise Financial is the 4th largest financial advisory firm in the US. The company has 12,000 advisors and 2.8 million clients. The company has more CERTIFIED FINANCIAL PLANNERS than any other company, according to the CFP Board of Standards.
SEC settlement
On Dec 2, 2005, Ameriprise Financial made a $15 million settlement with the SEC for charges of market timing. The alleged incidents took part from January 2002 to August 2003, while Ameriprise was still a part of American Express. The SEC accused Ameriprise of failing to prevent market-timing even after amending its prospectus to include explicit prohibitions against the practice. Market-timing is arguably detrimental to long-term shareholders because of the trading costs the fund incurs if it has to redeem holdings, the extra cash it may need to hold for redemptions, and other factors. The SEC alleges that after January 2002, when American Express Financial Corporation banned market-timing, the funds still allowed 20 shareholders to rapidly trade the funds, and that some employees rapidly traded through their 401(k) plans. As part of the settlement, Ameriprise is to make annual presentations to the board of directors about its policies and procedures to prevent market timing.
Ameriprise did not disclose this incident to the shareholders of its funds, now marketed under the name Riversource. American Express made a disclosure in its regulatory filings, but these are seen only by American Express stockholders. Ameriprise, now a separate company, has also not revealed which funds were timed, or the names of the people involved and the exact nature of the disciplinary action taken. Morningstar, Inc., a printing and publishing company that offers financial advice to individual and professional investors, has expressed dismay at the company's lack of transparency. It publishes stewardship grades for the mutual funds and companies whose stocks it rates, indicating the quality of their corporate governance, and it has temporarily reduced the grade for Ameriprise's funds.
A financial advisor with Ameriprise typically charges a flat fee for personal financial planning. The fee is determined based upon the complexity of the client's case. Like most advisory firms, Ameriprise advisors can also receive commissions when their clients invest in mutual funds, annuities, insurance, and various other investments.
See also
External links
- Ameriprise Financial Web Site
- Ameriprise Financial fact sheet and history
- Press Release: "American Express to Spin Off Financial Advisors Business to Shareholders" (February 1 2005)
- Press Release: "Ameriprise Financial Chosen as New Name for American Express Financial Advisors" (May 25 2005)
- Morningstar, Inc. report on regulatory lapses at Ameriprise funds
- Complaint website and message boards pertaining to Ameriprise and alleged breaches of fiduciary responsibility to clients