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 September 30, 2009, we had a network of more than 12,300 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.

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 September 30, 2009 were $2.0 billion, an increase of $321 million, or 20%, from the prior year period. Revenue growth reflects the year-over-year improvement in net investment income, primarily driven by net investment losses in the prior-year period. Net revenues for the nine months ended September 30, 2009 were $5.5 billion, a decrease of $42 million, or 1%, from the prior year period.

Net income attributable to Ameriprise Financial for the three months ended September 30, 2009 was $260 million compared to a net loss attributable to Ameriprise Financial of $70 million for the three months ended September 30, 2008. Net income attributable to Ameriprise Financial for the nine months ended September 30, 2009 was $485 million, an increase of $154 million from $331 million for the nine months ended September 30, 2008. Earnings per diluted share for the three months ended September 30, 2009 were $1.00, compared to loss per share of $0.32 for the three months ended September 30, 2008. Earnings per diluted share for the nine months ended September 30, 2009 were $2.04, compared to $1.46 for the nine months ended September 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. Total advisors increased 8% compared to the third quarter of 2008, reflecting acquisitions, experienced advisor recruiting and continued strong advisor retention rates. Our franchisee advisor and client retention rates were 91% and 93%, respectively, as of September 30, 2009.

On September 30, 2009, we announced a definitive agreement to acquire the long-term asset management business of Columbia Management from an affiliate of Bank of America Corporation. The total consideration to be paid will be between $900 million and $1.2 billion based on net asset flows at Columbia Management before closing and is expected to be funded through the use of cash on hand. The transaction is expected to close in the spring of 2010, subject to regulatory review and approval. Related to the transaction, we incurred $4 million of pretax non-recurring acquisition and integration costs during the three months ended September 30, 2009, and expect to incur between $130 million and $160 million through 2011. These costs include system integration costs, proxy and other regulatory filing costs, employee reduction and retention costs, and investment banking, legal and other acquisition costs.

Critical Accounting Policies

Valuation of Investments

Effective January 1, 2009, we early adopted an accounting standard that 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. For the nine months ended September 30, 2009, management elected to follow the mean reversion guideline, 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 $15-$20 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 increased to $439.9 billion at September 30, 2009, a net increase of 12% from September 30, 2008, primarily due to strong product flows, bond market appreciation and our 2008 acquisitions, partially offset by the 9% decline in the S&P 500 Index compared to the prior year period.

Total annuity net inflows in the third quarter of 2009 were $527 million, comprised almost entirely of variable annuity net inflows, compared to $384 million in the prior year period consisting of $568 million in variable annuity net inflows partially

offset by $184 million in fixed annuity net outflows. Wrap account net inflows of $2.7 billion and market appreciation in the third quarter of 2009 increased total wrap account assets to $90 billion, a 7% increase compared to the prior year period.

Fixed annuities had total net inflows of $2.0 billion for the nine months ended September 30, 2009 compared to net outflows of $1.1 billion in the prior year period. Variable annuities had net inflows of $1.4 billion for the nine months ended September 30, 2009 compared to $2.2 billion in the prior year period. Wrap account assets had net inflows of $6.8 billion for the nine months ended September 30, 2009 compared to $4.9 billion in the prior year period.

Total Asset Management net inflows were $2.3 billion in the third quarter of 2009, reflecting improved Domestic and International flows, compared to net outflows of $9.6 billion in the prior year period. Domestic managed assets net outflows were $152 million in the third quarter of 2009 compared to $5.5 billion in the prior year period, an improvement of $5.3 billion. The 13% increase in Domestic managed assets compared to the prior year period also reflects market appreciation. International managed assets net inflows were $2.5 billion in the third quarter of 2009 compared to net outflows of $4.2 billion in the prior year period. Market appreciation of international managed assets was $10.8 billion in the third quarter of 2009 compared to market depreciation of $7.2 billion in the prior year period. The negative impact on International managed assets due to changes in foreign currency exchange rates was $2.7 billion in the third quarter of 2009 compared to $12.5 billion in the prior year period.

Total Asset Management net inflows were $2.2 billion for the nine months ended September 30, 2009 compared to net outflows of $19.3 billion for the prior year period. Domestic managed assets net outflows were $402 million for the 2009 period compared to $10.2 billion in the prior year period. Market appreciation also contributed to the 13% increase in Domestic managed assets compared to the prior year period. International managed assets net inflows were $2.6 billion for the nine months ended September 30, 2009 compared to net outflows of $9.2 billion in the prior year period. Market appreciation of International managed assets was $6.8 billion for the 2009 period compared to market depreciation of $17.8 billion in the prior year period. The positive impact on International managed assets due to changes in foreign currency exchange rates was $6.2 billion for the nine months ended September 30, 2009 compared to a negative impact of $12.1 billion in the prior year period.

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

                                                       September 30,
                                                    2009            2008          Change
                                                    (in billions, except percentages)
Owned Assets                                    $       36.0    $       34.4             5 %
Managed Assets(1):
Domestic                                               145.8           128.7            13
International                                           93.7            97.9            (4 )
Wrap account assets                                     89.6            84.1             7
Eliminations(2)                                        (13.7 )         (12.4 )         (10 )
Total Managed Assets                                   315.4           298.3             6
Administered Assets                                     88.5            60.8            46
Total Owned, Managed and Administered Assets    $      439.9    $      393.5            12 %

Consolidated Results of Operations for the Three Months Ended September 30, 2009 and 2008

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

                                      Three Months Ended September 30,
                                         2009                  2008                  Change
                                                   (in millions, except percentages)
Revenues
Management and financial advice
fees                               $            689      $            721    $      (32 )         (4 )%
Distribution fees                               367                   376            (9 )         (2 )
Net investment income                           542                    62           480           NM
Premiums                                        276                   264            12            5
Other revenues                                  109                   249          (140 )        (56 )
Total revenues                                1,983                 1,672           311           19
Banking and deposit interest
expense                                          33                    43           (10 )        (23 )
Total net revenues                            1,950                 1,629           321           20

Expenses
Distribution expenses                           466                   461             5            1
Interest credited to fixed
accounts                                        232                   200            32           16
Benefits, claims, losses and
settlement expenses                             306                   196           110           56
Amortization of deferred
acquisition costs                               (64 )                 240          (304 )         NM
Interest and debt expense                        45                    27            18           67
General and administrative
expense                                         625                   681           (56 )         (8 )
Total expenses                                1,610                 1,805          (195 )        (11 )
Pretax income (loss)                            340                  (176 )         516           NM
Income tax provision (benefit)                   80                   (92 )         172           NM
Net income (loss)                               260                   (84 )         344           NM
Less: Net loss attributable to
noncontrolling interests                          -                   (14 )          14          100
Net income (loss) attributable
to Ameriprise Financial            $            260      $            (70 )  $      330           NM

Supplemental Disclosures:
Net investment income:
Net investment income before
impairment losses on securities    $            561
Total other-than-temporary
impairment losses on securities                 (18 )
Portion of loss recognized in
other comprehensive income                       (1 )
Net impairment losses
recognized in net investment
income                                          (19 )
Net investment income              $            542

NM Not Meaningful.

Overall

Net income attributable to Ameriprise Financial for the three months ended September 30, 2009 was $260 million compared to a net loss attributable to Ameriprise Financial of $70 million for the prior year period, primarily due to unfavorable market impacts in the third quarter of 2008. The impact of lower equity markets and the cost of maintaining high liquidity levels in the third quarter of 2009 was substantially offset by growth in spread products and re-engineering benefits.

Our annual review of valuation assumptions for RiverSource Life Insurance Company ("RiverSource Life") products in the third quarter of 2009 resulted in a net pretax benefit of $134 million, consisting of a decrease in expenses primarily from updating product mortality assumptions for certain life insurance products and from the impact of updating product spreads and expense assumptions, partially offset by a decrease in revenues related to the reinsurance impacts from updating product mortality assumptions. Third quarter 2008 results included a $106 million pretax benefit resulting from our review of valuation assumptions and our conversion to a new industry standard valuation system that provides enhanced modeling capabilities. The review of valuation assumptions in the third quarter of 2008 resulted in a decrease in expenses primarily from updating mortality and expense assumptions for certain life insurance products and from updating fund mix and policyholder behavior assumptions for variable annuities with guaranteed benefits. The valuation system conversion also resulted in an increase in revenue primarily from improved modeling of the expected value of existing reinsurance agreements and a decrease in expense from modeling annuity amortization periods at the individual policy level.

Third quarter 2009 results included a $27 million pretax benefit from the market's impact on DAC and DSIC for RiverSource Life products compared to a pretax expense of $44 million in the third quarter of 2008.

The total pretax impacts on our revenues and expenses for the third quarter of 2009 attributable to the review of valuation assumptions for RiverSource Life products and the impact of markets were as follows:

                                                                      Benefits,
                                                                    Claims, Losses
                                        Other      Distribution     and Settlement    Amortization
Segment Pretax
Benefit (Charge)        Premiums      Revenues       Expenses          Expenses          of DAC         Total
                                                            (in millions)
Review of valuation
assumptions:
Annuities              $         -   $         -   $           -   $             47   $          64   $     111
Protection                       -           (65 )             -                 33              55          23
Total                  $         -   $       (65 ) $           -   $             80   $         119   $     134

Market impacts:
Annuities              $         -   $         -   $           -   $              4   $          22   $      26
. . .