The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with the "Forward-Looking Statements" that follow and our Consolidated Financial Statements and Notes presented in Item 1. Our Management's Discussion and Analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission ("SEC") on March 2, 2009 ("2008 10-K"), as well as our current reports on Form 8-K and other publicly available information.

Overview

We are engaged in providing financial planning, products and services that are designed to be utilized as solutions for our clients' cash and liquidity, asset accumulation, income, protection and estate and wealth transfer needs. As of March 31, 2009, we had a network of more than 12,400 financial advisors and registered representatives ("affiliated financial advisors"). In addition to serving clients through our affiliated financial advisors, our asset management, annuity, and auto and home protection products are distributed through third-party advisors and affinity relationships.

We deliver solutions to our clients through an approach focused on building long term personal relationships between our advisors and clients. We offer financial planning and advice that are responsive to our clients' evolving needs and help them achieve their identified financial goals by recommending actions and a range of product "solutions" consisting of investment, annuities, insurance, banking and other financial products that help them attain over time a return or form of protection while accepting what they determine to be an appropriate range and level of risk. The financial product solutions we offer through our affiliated advisors include both our own products and services and products of other companies. Our financial planning and advisory process is designed to provide comprehensive advice, when appropriate, to address our clients' cash and liquidity, asset accumulation, income, protection, and estate and wealth transfer needs. We believe that our focus on personal relationships, together with our strengths in financial planning and product development, allows us to better address our clients' financial needs, including the financial needs of our primary target market segment, the mass affluent and affluent, which we define as households with investable assets of more than $100,000. This focus also puts us in a strong position to capitalize on significant demographic and market trends, which we believe will continue to drive increased demand for our financial planning and other financial services. Deep client-advisor relationships are central to the ability of our business model to succeed through market cycles, including the extreme market conditions that persisted through the first quarter of 2009.

We have four main operating segments: Advice & Wealth Management, Asset Management, Annuities and Protection, as well as our Corporate & Other segment. Our four main operating segments are aligned with the financial solutions we offer to address our clients' needs. The products and services we provide retail clients and, to a lesser extent, institutional clients, are the primary source of our revenues and net income. Revenues and net income are significantly impacted by investment performance and the total value and composition of assets we manage and administer for our retail and institutional clients as well as the distribution fees we receive from other companies. These factors, in turn, are largely determined by overall investment market performance and the depth and breadth of our individual client relationships.

Equity market, credit market and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the "spread" income generated on our annuities, banking and deposit products and universal life ("UL") insurance products, the value of deferred acquisition costs ("DAC") and deferred sales inducement costs ("DSIC") assets associated with variable annuity and variable UL products, the values of liabilities for guaranteed benefits associated with our variable annuities and the values of derivatives held to hedge these benefits. For additional information regarding our sensitivity to equity risk and interest rate risk, see "Quantitative and Qualitative Disclosures About Market Risk."

It is management's priority to increase shareholder value over a multi-year horizon by achieving our on-average, over-time financial targets. Our financial targets are:

† Net revenue growth of 6% to 8%,

† Earnings per diluted share growth of 12% to 15%, and

† Return on equity of 12% to 15%.

Our net revenues for the three months ended March 31, 2009 were $1.7 billion, a decrease of $272 million, or 14%, from the prior year period. This revenue decline primarily reflects the negative impact of weak equity markets on management and financial advice fees and distribution fees.

Net income attributable to Ameriprise Financial for the three months ended March 31, 2009 was $130 million, a decline of $61 million from $191 million for the prior year period. Earnings per diluted share for the three months ended March 31, 2009 were $0.58, compared to $0.82 for the prior year period.

We continue to establish Ameriprise Financial as a financial services leader as we focus on meeting the financial needs of the mass affluent and affluent, as evidenced by our continued leadership in financial planning and our strong corporate foundation. Our franchisee advisor and client retention remain strong at 93% and 94%, respectively, as of March 31, 2009. We completed a strong quarter for experienced advisor recruitment, with approximately 200 experienced advisors joining our branded advisor channels in the first quarter of 2009.

Critical Accounting Policies

Valuation of Investments

Effective January 1, 2009, we early adopted FSP FAS 115-2 and FAS 124-2 "Recognition and Presentation of Other-Than-Temporary Impairments" ("FSP 115-2"). This interpretation significantly changed our accounting policy regarding the timing and amount of other-than temporary impairments for Available-for-Sale securities. For information regarding the changes to our accounting policy, see Note 3 to our Consolidated Financial Statements.

Deferred Acquisition Costs and Deferred Sales Inducement Costs

For our annuity and life, disability income and long term care insurance products, our DAC and DSIC balances at any reporting date are supported by projections that show management expects there to be adequate premiums or estimated gross profits after that date to amortize the remaining DAC and DSIC balances. These projections are inherently uncertain because they require management to make assumptions about financial markets, anticipated mortality and morbidity levels and policyholder behavior over periods extending well into the future. Projection periods used for our annuity products are typically 10 to 25 years, while projection periods for our life, disability income and long term care insurance products are often 50 years or longer. Management regularly monitors financial market conditions and actual policyholder behavior experience and compares them to its assumptions.

For annuity and universal life insurance products, the assumptions made in projecting future results and calculating the DAC balance and DAC amortization expense are management's best estimates. Management is required to update these assumptions whenever it appears that, based on actual experience or other evidence, earlier estimates should be revised. When assumptions are changed, the percentage of estimated gross profits used to amortize DAC might also change. A change in the required amortization percentage is applied retrospectively; an increase in amortization percentage will result in a decrease in the DAC balance and an increase in DAC amortization expense, while a decrease in amortization percentage will result in an increase in the DAC balance and a decrease in DAC amortization expense. The impact on results of operations of changing assumptions can be either positive or negative in any particular period and is reflected in the period in which such changes are made. For products with associated DSIC, the same policy applies in calculating the DSIC balance and periodic DSIC amortization.

For other life, disability income and long term care insurance products, the assumptions made in calculating our DAC balance and DAC amortization expense are consistent with those used in determining the liabilities and, therefore, are intended to provide for adverse deviations in experience and are revised only if management concludes experience will be so adverse that DAC are not recoverable. If management concludes that DAC are not recoverable, DAC are reduced to the amount that is recoverable based on best estimate assumptions and there is a corresponding expense recorded in our consolidated results of operations.

For annuity and life, disability income and long term care insurance products, key assumptions underlying these long-term projections include interest rates (both earning rates on invested assets and rates credited to contractholder and policyholder accounts), equity market performance, mortality and morbidity rates and the rates at which policyholders are expected to surrender their contracts, make withdrawals from their contracts and make additional deposits to their contracts. Assumptions about earned and credited interest rates are the primary factors used to project interest margins, while assumptions about equity and bond market performance are the primary factors used to project client asset value growth rates, and assumptions about surrenders, withdrawals and deposits comprise projected persistency rates. Management must also make assumptions to project maintenance expenses associated with servicing our annuity and insurance businesses during the DAC amortization period.

The client asset value growth rates are the rates at which variable annuity and variable universal life insurance contract values invested in separate accounts are assumed to appreciate in the future. The rates used vary by equity and fixed income investments. Management reviews and, where appropriate, adjusts its assumptions with respect to client asset value growth rates on a regular basis. We typically use a five-year mean reversion process as a guideline in setting near-term equity asset growth rates based on a long-term view of financial market performance as well as recent actual performance. The suggested near-term growth rate is reviewed to ensure consistency with management's assessment of anticipated equity market performance. In the first quarter of 2009, management elected to follow the mean reversion guideline, increasing near-term equity asset growth rates and projecting that first quarter approximate 12% decrease in equity values will be recovered within the five-year mean reversion period. At recent equity market levels, increasing the annualized equity market return projected during the five-year mean reversion period by 100 basis points reduces DAC amortization and other impacted expenses by $20-$25 million after tax.

We monitor other principal DAC and DSIC amortization assumptions, such as persistency, mortality, morbidity, interest margin and maintenance expense levels each quarter and, when assessed independently, each could impact our DAC and DSIC balances.

The analysis of DAC and DSIC balances and the corresponding amortization is a dynamic process that considers all relevant factors and assumptions described previously. Unless management identifies a significant deviation over the course of the quarterly monitoring, management reviews and updates these DAC and DSIC amortization assumptions annually in the third quarter of each year. An assessment of sensitivity associated with changes in any single assumption would not necessarily be an indicator of future results.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements and their expected impact on our future consolidated results of operations or financial condition, see Note 2 to our Consolidated Financial Statements.

Owned, Managed and Administered Assets

Owned assets include certain assets on our Consolidated Balance Sheets for which we do not provide investment management services and do not recognize management fees, such as investments in non-proprietary funds held in the separate accounts of our life insurance subsidiaries, as well as restricted and segregated cash and receivables.

Managed assets include managed external client assets and managed owned assets. Managed external client assets include client assets for which we provide investment management services, such as the assets of the RiverSource family of mutual funds and Seligman family of mutual funds, assets of institutional clients and client assets held in wrap accounts. Managed external client assets also include assets managed by sub-advisors selected by us. Managed external client assets are not reported on our Consolidated Balance Sheets. Managed owned assets include certain assets on our Consolidated Balance Sheets for which we provide investment management services and recognize management fees in our Asset Management segment, such as the assets of the general account and RiverSource Variable Product funds held in the separate accounts of our life insurance subsidiaries.

Administered assets include assets for which we provide administrative services such as client assets invested in other companies' products that we offer outside of our wrap accounts. These assets include those held in clients' brokerage accounts. We do not exercise management discretion over these assets and do not earn a management fee. These assets are not reported on our Consolidated Balance Sheets.

We earn management fees on our owned separate account assets based on the market value of assets held in the separate accounts. We record the income associated with our owned investments, including net realized gains and losses associated with these investments and other-than-temporary impairments related to credit losses on these investments, as net investment income. For managed assets, we receive management fees based on the value of these assets. We generally report these fees as management and financial advice fees. We may also receive distribution fees based on the value of these assets. We generally record fees received from administered assets as distribution fees.

Fluctuations in our owned, managed and administered assets impact our revenues. Our owned, managed and administered assets are impacted by net flows of client assets, market movements and foreign exchange rates. Owned assets are also affected by changes in our capital structure.

Our owned, managed and administered assets declined to $354.0 billion at March 31, 2009, a net decrease of 21% from March 31, 2008, primarily due to the 40% decline in the S&P 500 Index.

We generated retail net inflows for the three months ended March 31, 2009. Fixed annuities had total net inflows of $1.5 billion in the first quarter of 2009 compared to net outflows of $547 million in the prior year period. Wrap account assets had net inflows of $1.3 billion in the first quarter of 2009 compared to $1.4 billion in the prior year period and variable annuities had net inflows of $328 million compared to $851 million in the prior year period.

Total asset management net outflows declined to $0.3 billion for the three months ended March 31, 2009, compared to net outflows of $5.2 billion for the prior year period. In the first quarter of 2009, Domestic managed assets had $54 million in net inflows compared to net outflows of $2.6 billion in the prior year period and market depreciation of $2.8 billion in the first quarter of 2009 compared to $7.0 billion in the prior year period. International managed assets had $322 million in net outflows in the first quarter of 2009 compared to $2.6 billion in the prior year period and market depreciation of $4.5 billion in the first quarter of 2009 compared to $8.3 billion in the prior year period. The negative impact on International managed assets due to changes in foreign currency exchange rates was $1.5 billion in the first quarter of 2009 compared to $72 million in the prior year period.

The following table presents detail regarding our owned, managed and administered assets:

                                                       Three Months Ended March 31,
                                                         2009                2008           Change
                                                           (in billions, except percentages)
Owned Assets                                        $          29.6     $          36.8         (20 )%
Managed Assets(1):
RiverSource                                                   125.2               147.0         (15 )
Threadneedle                                                   68.3               124.3         (45 )
Wrap account assets                                            68.2                89.6         (24 )
Eliminations(2)                                                (8.4 )             (14.4 )       (42 )
Total Managed Assets                                          253.3               346.5         (27 )
Administered Assets                                            71.1                65.8           8
Total Owned, Managed and Administered Assets        $         354.0     $         449.1         (21 )%

Consolidated Results of Operations for the Three Months Ended March 31, 2009 and 2008

The following table presents our consolidated results of operations for the three months ended March 31, 2009 and 2008:

                                                 Three Months Ended March 31,
                                                  2009                 2008                Change
                                                          (in millions, except percentages)
Revenues
Management and financial advice fees         $           554      $           791    $   (237 )      (30 )%
Distribution fees                                        311                  433        (122 )      (28 )
Net investment income                                    421                  401          20          5
Premiums                                                 266                  256          10          4
Other revenues                                           209                  157          52         33
Total revenues                                         1,761                2,038        (277 )      (14 )
Banking and deposit interest expense                      42                   47          (5 )      (11 )
Total net revenues                                     1,719                1,991        (272 )      (14 )

Expenses
Distribution expenses                                    383                  532        (149 )      (28 )
Interest credited to fixed accounts                      205                  195          10          5
Benefits, claims, losses and settlement
expenses                                                 100                  304        (204 )      (67 )
Amortization of deferred acquisition
costs                                                    286                  154         132         86
Interest and debt expense                                 26                   26           -          -
General and administrative expense                       585                  590          (5 )       (1 )
Total expenses                                         1,585                1,801        (216 )      (12 )
Pretax income                                            134                  190         (56 )      (29 )
Income tax provision                                      18                    4          14         NM
Net income                                               116                  186         (70 )      (38 )
Less: Net loss attributable to
noncontrolling interests                                 (14 )                 (5 )        (9 )       NM
Net income attributable to Ameriprise
Financial                                    $           130      $           191    $    (61 )      (32 )%

Supplemental Disclosures:

Net investment income:
Net investment income before impairment
losses on securities                         $           456
Total other-than-temporary impairment
losses on securities                                     (38 )
Portion of loss recognized in other
comprehensive income                                       3
Net impairment losses recognized in net
investment income                                        (35 )
Net investment income                        $           421

NM Not Meaningful.

Overall

Net income attributable to Ameriprise Financial for the three months ended March 31, 2009 was $130 million, down $61 million from $191 million for the prior year period, reflecting the impact of the significant decline in equity markets and the lower short-term interest rate environment. The S&P 500 Index ended at 798 at the end of the first quarter of 2009 compared to 1,323 at the end of the first quarter of 2008, a drop of 525 points, or 40%. Short-term interest rates declined period over period as the Fed Funds target rate was 0-25 basis points in the first quarter of 2009 compared to a range of 225-425 basis points in the first quarter of 2008.

Net Revenues

The decrease in net revenues was driven by lower management and financial advice fees and distribution fees, primarily due to lower asset levels attributable to the decline in equity markets that persisted throughout the period from March 31, 2008 to March 31, 2009 and clients' increased preference for short-term and fixed income investment products, as well as the lower short-term interest rate environment.

Management and financial advice fees decreased $237 million, or 30%, to $554 million for the three months ended March 31, 2009 compared to $791 million for the prior year period primarily due to lower asset levels, as well as the negative impact of foreign currency translation. Wrap account assets decreased $21.4 billion, or 24%, compared to the prior year period, due to market depreciation, partially offset by net inflows and an increase in wrap account assets due to the acquisition of H&R Block Financial Advisors, Inc. in the fourth quarter of 2008. Market depreciation from March 31, 2008 to March 31, 2009 negatively impacted wrap account assets by $27.1 billion, whereas total net inflows during the same period were $3.7 billion. Market depreciation of wrap account assets was $5.9 billion in the first quarter of 2009 compared to $5.6 billion in the first quarter of 2008. Net inflows in wrap account assets decreased slightly to $1.3 billion in the first quarter of 2009 from $1.4 billion in the prior year. Total managed assets excluding wrap account assets decreased $71.8 billion, or 28%, in the first quarter of 2009 compared to the prior year period primarily due to market depreciation, net outflows in Domestic and International funds and a $30.0 billion decrease in International managed assets due to the impact of changes in foreign currency exchange rates, partially offset by an increase in managed assets due to the acquisition of
J. & W. Seligman & Co. ("Seligman") in the fourth quarter of 2008.

Distribution fees decreased $122 million, or 28%, to $311 million for the three months ended March 31, 2009 compared to $433 million in the prior year period primarily due to changes in client behavior and lower asset levels. Clients' continued preference for short-term and fixed income investment products in the first quarter of 2009 resulted in slowing sales and flows for other products that generate higher distribution fees.

Net investment income increased $20 million, or 5%, to $421 million for the three months ended March 31, 2009 compared to $401 million in the prior year period, due to $16 million in net realized investment gains for the first quarter of 2009 compared to $24 million in net realized investment losses for the first quarter of 2008. In the first quarter of 2009, net realized gains from sales of Available-for-Sale securities were $51 million and other-than-temporary impairments recognized in earnings were $35 million. In the first quarter of 2008, net realized gains from sales of securities were $8 million and other-than-temporary impairments recognized in earnings were $32 million. Investment income earned on fixed maturity securities decreased $23 million compared to the prior year period primarily driven by lower short-term interest rates while investment income earned on seed money and other investments increased $4 million from the prior year period.

Premiums increased $10 million, or 4%, to $266 million for the three months ended March 31, 2009 primarily due to growth in Auto and Home premiums compared to the prior year period driven by higher volumes. Auto and Home policy counts increased 6% period-over-period.

Other revenues increased $52 million, or 33%, to $209 million for the three months ended March 31, 2009 compared to $157 million in the prior year period primarily due to a $50 million gain on the repurchase of certain junior subordinated notes ("junior notes") in the first quarter of 2009.

Banking and deposit interest expense decreased $5 million to $42 million for the three months ended March 31, 2009 compared to $47 million in the prior year period primarily due to lower crediting rates on certificates, partially offset by higher certificate balances.

Expenses

Total expenses decreased $216 million, or 12%, to $1.6 billion for the three months ended March 31, 2009 compared to $1.8 billion for the three months ended March 31, 2008, primarily due to lower business volumes, lower expenses from hedged variable annuity living benefits and continued strong expense controls.

Distribution expenses decreased $149 million, or 28%, to $383 million for the three months ended March 31, 2009 compared to $532 million in the prior year period primarily due to decreases in advisor compensation reflecting a shift in client behavior and lower asset levels, which were both impacted by market declines. Net revenues per advisor decreased to $59,000 in the first quarter of 2009 compared to $81,000 in the prior year period and total managed assets decreased $93.2 billion, or 27%, compared to the prior year period.

Interest credited to fixed accounts increased $10 million, or 5%, to $205 million for the three months ended March 31, 2009 compared to $195 million . . .