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 June 30, 2009, we had a network of more than 12,500 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 second 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%.

Net revenues for the three months ended June 30, 2009 were $1.9 billion, a decrease of $91 million, or 5%, from the prior year period. Net revenues for the six months ended June 30, 2009 were $3.6 billion, a decrease of $363 million, or 9%, from the prior year period. The decline in net revenues for both periods primarily reflects the negative impact of weak equity markets on asset-based fees, partially offset by growth in fixed annuities.

Net income attributable to Ameriprise Financial for the three months ended June 30, 2009 was $95 million, a decline of $115 million from $210 million for the three months ended June 30, 2008. Net income attributable to Ameriprise Financial

for the six months ended June 30, 2009 was $225 million, a decline of $176 million from $401 million for the six months ended June 30, 2008. Earnings per diluted share for the three months ended June 30, 2009 were $0.41, compared to $0.93 for the three months ended June 30, 2008. Earnings per diluted share for the six months ended June 30, 2009 were $0.99, compared to $1.75 for the six months ended June 30, 2008.

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 91% and 94%, respectively, as of June 30, 2009. We continued to attract experienced advisors, with more than 400 experienced advisors joining our branded advisor channels in the first half 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 half of 2009, management elected to follow the mean reversion guideline, slightly decreasing near-term equity asset growth rates to reflect the positive market on a year-to-date basis. 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, 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 $397 billion at June 30, 2009, a net decrease of 10% from June 30, 2008, primarily due to the 28% decline in the S&P 500 Index.

Clients' lower risk tolerances and preference for guaranteed returns reduced variable annuity net inflows and increased fixed annuity net inflows for both the three and six months ended June 30, 2009 compared to the prior year periods. Fixed annuities had total net inflows of $562 million in the second quarter of 2009 compared to net outflows of $383 million in the prior year period and variable annuities had net inflows of $567 million compared to $811 million in the prior year period. Wrap account assets had net inflows of $2.8 billion in both the second quarter of 2009 and 2008.

Fixed annuities had total net inflows of $2.0 billion for the six months ended June 30, 2009 compared to net outflows of $930 million in the prior year period and variable annuities had net inflows of $895 million compared to $1.7 billion in the prior year period. Wrap account assets had net inflows of $4.1 billion for the six months ended June 30, 2009 compared to $4.2 billion in the prior year period.

Our managed assets excluding wrap account assets increased during the second quarter of 2009 primarily reflecting equity market appreciation and retail net inflows. Total asset management net inflows were $45 million for the three months ended June 30, 2009, compared to net outflows of $4.8 billion for the prior year period. In the second quarter of 2009, Domestic managed assets had $425 million in net outflows compared to $2.3 billion in the prior year period and market appreciation of $8.7 billion in the second quarter of 2009 compared to market depreciation of $1.3 billion in the prior year period. In addition to net flows and market appreciation, Domestic managed assets were impacted by the issuance of debt and equity in the second quarter of 2009 resulting in an increase of $1.4 billion. International managed assets had $470 million in net inflows in the second quarter of 2009 compared to net outflows of $2.5 billion in the prior year period and market appreciation of $481 million in the second quarter of 2009 compared to market depreciation of $2.3 billion in the prior year period. An increase in International retail net inflows in the second quarter of 2009 was partially offset by net outflows in lower margin Zurich-related assets. The positive impact on International managed assets due to changes in foreign currency exchange rates was $10.4 billion in the second quarter of 2009 compared to $446 million in the prior year period.

Our managed assets excluding wrap account assets increased during the first half of 2009 primarily reflecting equity market appreciation and retail net inflows. Total asset management net outflows declined to $102 million for the six months ended June 30, 2009, compared to net outflows of $9.7 billion for the prior year period. In the first half of 2009, Domestic managed assets had $250 million in net outflows compared to $4.7 billion in the prior year period and market appreciation of $5.9 billion compared to market depreciation of $8.3 billion in the prior year period. In addition to net flows and market appreciation, Domestic managed assets were impacted by the issuance of debt and equity in the second quarter of 2009 resulting in an increase of $1.4 billion.
International managed assets had $148 million in net inflows for the six months ended June 30, 2009 compared to net outflows of $5.0 billion in the prior year period and market depreciation of $4.0 billion compared to $10.6 billion in the prior year period. An increase in International retail net inflows in the first half of 2009 was partially offset by net outflows in lower margin Zurich-related assets. The positive impact on International managed assets due to changes in foreign currency exchange rates was $8.9 billion for the six months ended June 30, 2009 compared to $374 million in the prior year period.

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

                                                          June 30,
                                                    2009            2008          Change
                                                    (in billions, except percentages)
Owned Assets                                    $       32.5    $       36.9           (12 )%
Managed Assets(1):
Domestic                                               134.8           143.2            (6 )
International                                           82.5           120.9           (32 )
Wrap account assets                                     79.0            91.4           (14 )
Eliminations(2)                                        (11.3 )         (14.3 )         (21 )
Total Managed Assets                                   285.0           341.2           (16 )
Administered Assets                                     79.8            65.6            22
Total Owned, Managed and Administered Assets    $      397.3    $      443.7           (10 )%

(2) Includes eliminations for RiverSource mutual fund assets included in wrap account assets and RiverSource assets sub-advised by Threadneedle.

Consolidated Results of Operations for the Three Months ended June 30, 2009 and 2008

The following table presents our consolidated results of operations for the three months ended June 30, 2009 and 2008:

                                            Three Months Ended June 30,
                                              2009              2008                Change
                                                     (in millions, except percentages)
Revenues
Management and financial advice fees      $         606     $         780    $    (174 )       (22 )%
Distribution fees                                   351               422          (71 )       (17 )
Net investment income                               514               393          121          31
Premiums                                            269               257           12           5
Other revenues                                      175               158           17          11
Total revenues                                    1,915             2,010          (95 )        (5 )
Banking and deposit interest expense                 38                42           (4 )       (10 )
Total net revenues                                1,877             1,968          (91 )        (5 )

Expenses
Distribution expenses                               425               506          (81 )       (16 )
Interest credited to fixed accounts                 237               192           45          23
Benefits, claims, losses and
settlement expenses                                 587               294          293         100
Amortization of deferred acquisition
costs                                              (125 )             144         (269 )        NM
Interest and debt expense                            28                28            -           -
General and administrative expense                  610               572           38           7
Total expenses                                    1,762             1,736           26           1
Pretax income                                       115               232         (117 )       (50 )
Income tax provision                                 28                27            1           4
Net income                                           87               205         (118 )       (58 )
Less: Net loss attributable to
noncontrolling interests                             (8 )              (5 )         (3 )       (60 )
Net income attributable to Ameriprise
Financial                                 $          95     $         210    $    (115 )       (55 )%

Supplemental Disclosures:

Net investment income:
Net investment income before
impairment losses on securities           $         545
Total other-than-temporary impairment
losses on securities                                (27 )
Portion of loss recognized in other
comprehensive income                                 (4 )
Net impairment losses recognized in
net investment income                               (31 )
Net investment income                     $         514

Overall

Net income attributable to Ameriprise Financial for the three months ended June 30, 2009 was $95 million, down $115 million from $210 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 919 at the end of the second quarter of 2009 compared to 1,280 at the end of the second quarter of 2008, a drop of 361 points, or 28%. Short-term interest rates declined period over period as the Fed Funds target rate was 0-25 basis points in the second quarter of 2009 compared to a range of 200-225 basis points in the second 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 June 30, 2008 to June 30, 2009, partially offset by growth in fixed annuities.

Management and financial advice fees decreased $174 million, or 22%, to $606 million for the three months ended June 30, 2009 compared to $780 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 $12.5 billion, or 14%, 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. Total managed assets excluding wrap account assets decreased $45.0 billion, or 17%, in the second quarter of 2009 compared to the prior year period primarily due to market

depreciation, net outflows and 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 $71 million, or 17%, to $351 million for the three months ended June 30, 2009 compared to $422 million in the prior year period primarily due to lower equity markets and growth in cash and deposit products due to clients' preference for short-term and fixed income investment products, which resulted in slower sales and flows for other products that generate higher distribution fees.

Net investment income increased $121 million, or 31%, to $514 million for the three months ended June 30, 2009 compared to $393 million in the prior year period primarily due to an increase of $77 million in investment income on fixed maturity securities and $6 million in net realized investment gains for the second quarter of 2009 compared to $27 million in net realized investment losses for the second quarter of 2008. The increase in investment income earned on fixed maturity securities was driven by higher invested asset levels due to fixed annuity net inflows, partially offset by the combination of low short-term interest rates and high liquidity levels. In the second quarter of 2009, net realized gains from sales of Available-for-Sale securities were $46 million and other-than-temporary impairments on previously impaired non-agency residential mortgage-backed securities were $31 million. In the second quarter of 2008, net realized gains from sales of Available-for-Sale securities were $1 million and . . .