Welcome to the Fourth Quarter and Year-end Earnings Call. My name is John and I will be your operator for today’s call. (Operator Instructions). I will now turn the call over to Ms. Alicia Charity. Ms. Charity, you may begin.

Welcome to the Ameriprise Financial’s Fourth Quarter Earnings Call. With me on the call today are Jim Cracchiolo, Chairman and CEO, and Walter Berman, Chief Financial Officer. Following their remarks, we’ll be happy to take your questions. During the call, you will hear references to various non-GAAP financial measures, which we believe, provide insight into the underlying performance of the company’s operations. Reconciliations of the non-GAAP numbers to the respective GAAP numbers can be found in today’s materials available on our website. Some of the statements that we make on this call may be forward-looking statements, reflecting management’s expectations about future events and operating plans and performance. These forward-looking statements speak only as of today’s date and involve a number of risks and uncertainties. A sample list of factors and risks that could cause actual results to be materially different from forward-looking statements can be found in today’s earnings release, our 2010 annual report to shareholders or our 2010 10-K report. We undertake no obligation to update publicly or revise these forward-looking statements. And with that, I’d like to turn the call over to Jim.

Thanks for joining us for our fourth quarter and full year 2011 earnings discussion. I’ll begin with an overview of our business performance and some thoughts about our positioning for future growth, and then Walter will discuss our financial results in more detail. After that, we’ll take your questions. We finished the year with substantial progress with a solid fourth quarter, despite continuing challenges from the environment. Markets recovered a bit in the quarter, but remained highly volatile, which caused clients to become more cautious and move to larger cash positions, and interests rates remained near zero which resulted in further spread compression. My key message for you today is this, as always, we have ability to navigate through the short-term challenges, and we are focused on the medium to long term, which holds great potential for us. Our financial foundation remains one of the best in the industry, and it continues to give us important stability and strategic flexibility. We believe our financial strength enables us to weather the current storms and maintain our strong position in the future. We continue to generate significant capital and we are still holding more than $2 billion of excess capital and that after returning $1.7 billion or 135% of our operating earnings to share holders through dividends and buybacks during the year. In addition, in December we announced a 22% increase in the dividend which will be paid in February, and we now have increased our dividend five times in our six years as a public company. Even with the significant capital we’ve returned, I believe we are in a stronger capital position now, than we were a year ago. As our business has become less capital intensive, we’ve been able to free up capital to return to shareholders and invest for…

Operating earnings in the fourth quarter clearly reflected the challenging environment. While equity markets have rallied about 5% in January, market volatility remains with us in 2012, and it is clear that interest rates are unlikely to increase until 2014. Looking at revenues in more detail; you can see that excluding the hedge fund fees, revenues would have been about flat to last year. The underlying slowdown in revenue growth reflects low client activity from weak market sentiment. Clients are increasingly focused on capital preservation and generating income. This impacted revenues in two ways; lower transactional volumes and an increase in cash balances. How long the shift in behavior continues is difficult to predict. Revenues were also impacted by low rates, with net investment income down 4% from last year. However, the underlying fundamentals of the business remained strong, with a growing advisor base and good asset growth. From an earnings perspective, operating earnings per share grew 2% despite lower revenues, as we managed expense levels and continued to make substantial investments in brand and technology. We also realized synergies from Columbia integration and saw a good improvement in auto and home results. Turning to slide 4; operating return on equity in the quarter increased 13.1% compared with 12.9% a year ago. As a reminder, we calculate return on equity on a trailing four quarter basis. We saw a big swing in DAC unlocking and model changes year-over-year. Excluding these impacts, underlying return on equity group from 12.5% to 13.4%. As we look ahead to next year, we are on track to hit the 15% to 18% range we provided in November. Underlying our return on equity is our strong balance sheet fundamentals. Our hedge program is effective; our capital ratios are strong with debt-to-cap of 18.5%; the investment portfolio…

(Operator Instruction). Our first question comes from John Nadel from Sterne, Agee. Please go ahead.

Obviously a lot of margin pressure in Advice & Wealth Management and Asset Management this quarter. 9ish in A&WM and maybe just shy of 17x items in Asset Management. I’m just interested in the 12% target and the 23% target for those two segments respectively. I know client activity, etcetera, pressure points; my question is; are those targets achievable and over what timeframe?

John, this is Jim Cracchiolo. I’ll respond first and then Walter can compliment. If I look at the AWM segment, we were hit with a bit of impact due to market volatility. I mean, fees were lower, our Wrap business went down a lot in the third quarter because of market depreciation and our underlying flows are still fine; that started to come back in the fourth quarter. But of course you’re taking the fees for every month during the quarter and they would’ve been impacted. Second, if you look at a number of companies are already reporting, and in the industry a lot of client activity did slow in the fourth quarter, whether you look at the retail firms, the direct firms or wire houses because of the market volatility. It does impact client behavior. So even though we’re sitting here now in January and the markets are back, during that period if we recollect in August, September things were looking pretty ugly again, and it does give people pause and there was a large amount of volatility in October, November, etcetera. So we’re no different. I mean our client activity is looking at CNBC and the news and looking at how many times that stock index moves up and down and the European crisis and the political climate that’s out there. Now, will that come back if things start to again continue to show stabilization etcetera? The answer will be yes. But it does your top line revenue. Now in addition to that, what we thought appropriate so is we are investing in our multiyear platform. We didn’t want to slow that down, and so we started the conversion to our franchisee system, integrating in the full brokerage to all of our other systems and capabilities, and going through that conversion that will continue through this year, as we get to the fourth quarter, it will be pretty much complete. That was a step up a bit in investment. We also were investing in a number of other things to continue to build out our systems, mobile, etcetera, apps and a number of things that funds get committed before and your project work going on before. You can tell with the markets going to do (inaudible).

I understand that. If I could just interject. If I think about that $14 million year-over-year higher expenses on those items that Walter had mentioned; that’s about 150 basis points as I calculated on the margin for the segment. So in other words should we think about the remainder of the difference to your 12%, which is about where you were the last couple of quarters, as being just, we got to watch we got a see consumer sentiment, we got to see transactional volumes, and client activity picked back up and we regained that difference?

We will regain that because remember, our systems development was through the year. We had a little extra in the fourth quarter, but it was through the year. The only thing incremental was the relaunch of our new campaign, which started in September when we had a full year impact. Now, that we are going to continue that campaign through the first quarter, and then we’ll evaluate how much we spend later in the year. But I would say this. We do have the ability to control some of our discretionary expenses that we’re looking at. I do believe, again, I can’t dictate the markets and client activity. But I would say we will be in the 12% margins this year in the AWM business. So I don’t look at that one quarter as an issue. I would actually say there’s strong underlying growth, the indicators are there, advisors are not going to stop their productivity, but clients do have to get a little settled. So I feel good about that segment and I feel good about what we’re doing in it. As I said, the investments we’re making, they’ll start to roll off like that technology this year, and there will be a big upside because we are running two systems, we are converting thousands of advisors and we are doing a lot of systems development. A lot of that was in last year’s P&L and we still got good margins. So once that rolls off, it will help tremendously. In the Asset Management business, to be very clear on that, we have a level of depreciation. We’ve lost a number of assets because equity markets weren’t best to get flows where we thought we would get. The parent stuff, I know people look at the volume of those dollars, but we always sort of thought that we would lose them. They are not a lot of fee basis. So I would say that 23%, no, I would probably put more in the 20%, 21% based on just where markets are, because I think that compressed us where we thought things would improve in the market situation. Again, if markets come back it will be a different sorry, but if we’re thinking about that on a relative sense today, that’s probably more where I would target it. Having said that I do see some underlying things changing around there. Now flows in the industry aren’t great, but Threadneedle is doing good. I think Columbia is starting to gain some traction through its third party institutional, and retailer’s outflows are slowing. So we’ll get over the hump of the parent stuff. I identified it just as I told you in my talking points, so that no one’s surprised at it, but those will be lumpy. But at the end of the day again, I think we are making a good underlying traction.

Just one last quick one, is your buyback currently curtailed or is it operating just at a lower level than we’ve been accustomed to?

We did not curtail it. Again, going into the fourth quarter; now looking back you can always say hey, markets why did you do that? But markets were bit more volatile. We are looking at what it looked like. We did a substantial amount over the course of the year and we are also looking at potential opportunities at the same time. But no, buyback is not curtailed. We will continue it this year. We just sort of adjusted it depending at the same time. We don’t have a perfect crystal ball on things.

Let me just add to that, if you looked at the share price, it went from like 37 to 50 in the quarter, and so is completely volatile. We actually purchased on the average. But, as Jim said, it was just looking at a pretty volatile market, and in retrospect you can always say could’ve bought more. The reality is I think we bought (inaudible) but no curtailment.

Our next question comes from Suneet Kamath from Sanford Bernstein. Please, go ahead.

I just wanted to follow-up on John’s questioning on the margin. I am actually surprised to some degree that you feel comfortable with the 12% Advice & Wealth, and you are sort of lowering Asset Management. The reason is you’ve reaffirmed those targets or those objectives in sort of November at your Investor Day. From Investor Day to the end of the year, I think the markets were higher in terms of helping the Asset Management. I get the fact that client activity is weaker, but again you’re affirming the 12% in Advice & Wealth. So I’m just trying to understand like what’s the delta between what you said in November in terms of Asset Management and what you’re saying now?

As you talk about looking at it from that standpoint, certainly the markets have rallied, and as we’ve seen the volatility with it, if you’d just take a straight line projection up certainly, as Jim said, you might get to a higher number. But it is challenging for where these markets are, and the more you get shifts coming in and out of that nature, it does affect us from the equity and fixed income flip. So I think that is really where the leverage is going to go in and out. It’s just this volatility in the market, it’s just at a pretty steep basis, and so, I think that’s where you’re seeing us be a little cautious on that.

Maybe getting back to Advice & Wealth then, 12% is a pretty big lift for the year. I know you touched on it in answering John’s question, but what specifically do you think gets you from where you are today there? Is it really a throttling back of some of the advertising expense beyond the first quarter or what are kind of the big levers that you have to get to the 12%?

So let’s look at it. From a perspective, again, I can’t predict activity during the quarter in fees. So for instance if you say, and that goes for the Asset Management; if you say the markets are going to just continue to go up from here or even manage stability from here and rise, then we’re talking about a different story. Our forecasts, our projection is just based on last year was we didn’t take that right. It was up, it was down, and you don’t get on average the fees all the time. So part of our difference may be from what you’re looking at is that if we’re here and we’re continuing to rise on a nice even slope, that’s one thing. If you got a level of volatility it’s another thing. In regards the margin itself, I do believe we can manage some of the discretionary expenses. I think we’re going to set some internal targets to tighten up on something that’s nice to do and nice to have. But if the revenue is weak, we got to adjust that. At the same time as I said, we want to complete some of these investments like that technology, get it behind us. That will help our margins in the future. Interest rates also affected us a bit more when the [NACE], we were even using the yield curve last year. That’s a little out so we want to make up for some of that by tightening those expenses. Now will revenue rise as much? Maybe not, but I can still tighten the margin even if revenue is a bit lower. So we are guarding against the revenue weakness. If the markets come back here and stay stable then I think we’ll continue to show the rise we did in the first few quarters of last year. If it doesn’t then I need to tighten the ship a little bit.

Understood, and one quick follow-up. When you said earlier that you expect to hit 12% margin in Advice & Wealth in 2012, is that for the full year or you staying sort of by the end of the year?

That is for the full year. That was the expectation.

And that’s still your expectation?

With the caveats that you mentioned, yeah.

We can’t guarantee anything. What we’re saying is we’re still trying to shoot that, and we have a number of things that we are working on to help make that happen.

Our next question comes from Andrew Kligerman from UBS. Please go ahead.

Just following on that last line of questions, it would imply to get that 12% margin, you need to use these discretionary spending initiatives to maybe cut at least $15 million a quarter in expenses. Is that the objective, and maybe Jim or Walter, a little more clarity on those potential initiatives?

I haven’t done your exact calculation, but it is a combination of, certainly as Jim said, as you look at the revenue on managing the expense based upon that revenue base. So yeah, I think we have degrees of flexibility on that. I haven’t done the exact calculation the way you have done it. But it is a combination of factors that go through.

Anything specific you could lay out (inaudible), Walter?

Really what it is across the board is this. We do a lot of technology spend for enhancements, new initiatives beyond the brokerage platform conversion. There are numerous program on the marketing and support levels that we have. There’s a number of things that we truly invested in, enhanced training and setting up new initiatives like onboarding our new advisors and even increasing our advertising there. So there are number of different things that we’ve done that we could tighten a bit depending on what the market situation looks like that would be helpful in this environment. Controlling some of our staff expenses that get charged in from the different units into the AWM business that we can tighten. Listen, when we were growing in a number of areas, etcetera. We wanted to continue to invest more heavily. We had a big investment agenda and we might just have to temper that a bit and tighten it, and we’ve been used to doing this. We’ve always reengineered. We have a number of new initiatives that our resources were consumed with the integration of Columbia that we’re freeing backup; that we can work on again reengineering and moving things and enhancing the way we operate and process. And some of the things we’re looking to do will help in that line. So this apart we need to do, this is part of what we’ve always done. Again, I’m not putting the 12% as a firm thing as the most important objective. I’m just saying I think I have opportunities and we are still believing that we are growing the advisor force, we are growing ways that they can deepen their relationships. We are introducing things that hopefully will help them deepen and gain more assets. So some of that will come from revenues, some of it will come from expense tightening.

Okay. And then maybe just shifting gears to the Asset Management area, particularly Columbia, where the one-year number for your above-average (inaudible) numbers. It went from 62% asset weighted in 2Q to 56% 3Q, down to 38% in the fourth quarter and that kind of dragged down the three-year numbers well. Could you give a little color on where you expect that number to go in the near term? What’s causing that struggle in performance, and what you think the implications are for retail net flows going forward?

So there are two things that occurred, and I’ll give you a little more color to it. On the one year performance, what occurred is that we had a number of our domestic equity funds falling a bit low the Lipper medians. Now the differentials between the second and third quartile were very small in 2011, and while we under-performed and since it was so small, we could make up that ground, in most cases, quickly and January is already showing that, that’s come back around. So we think that we’ll start to show improvements. The big change was we had one of our funds move below, and it was a big fund, move below the median and that was because a good quarter rolled off and the bad quarter rolled on in the sense of hurting that. But already January performance is good there as well, and we’re hoping that, that will start to turn its colors as well. But we think it has a lot to do with that movement so to speak, and our investment people are feeling good that there’s an ability to continue to see improvements there.

Got it. And then just lastly M&A; it seemed like you were alluding in an earlier question to the fact that you’re looking at opportunities. Do you think that’s the environment [heated] up a bit in terms of opportunities, and in what areas? Asset Management? Advice & Wealth Management?

Well, I think you’re seeing a bit more level of activity out there in the Asset Management world. We’ll continue to look a potential opportunities. It doesn’t mean there was one for us, but we’ll continue to look and see if there is something that’s good that we could potentially do. We have the flexibility to do that, and incremental to what we’re doing now, we’ll continue to look at the buybacks as I said as part of what we’re going to continue to execute on, and we’re going to continue to review our dividend policy as well. We did another raise at the end of last year. So we’re going to look flexibly of how we can create shareholder value using the strength of our balance sheet and the free cash that we continue to generate. That’s why as I look at the fourth quarter, it wasn’t what we ideally would want. But having said that, I think if you look at the underlying of what we’ve been able to invest in, what we’ve been able to do, and even though one can estimate what that will always be to next quarter, I think if you look at the underlying things we have just accomplished over the last few years, we want to continue to build upon that. And we’re going to continue to work hard to do that.

Our next question comes from Alex Blostein from Goldman Sachs. Please go ahead.

So just to go back to the margin discussion and AWM; I understand it’s hard for you to predict environment in the markets and the level of productivity, etcetera. But it does feel like you guys are bringing in higher-producing advisors in the employee channel where planning capacity and incremental margin on that should in theory be higher. So kind of taking that into consideration, do you think there’s some room for margin improvement from this 9% to 10% level, assuming markets don’t really change from here?

Yes. Complemented to what I said. But yes, that was another thing you just pointed out very clearly. We are adding a lot of productivity from new people joining us. It takes time to ramp up. The ones that were added two years ago are ramping nicely. The one we added last year will help the ramp up this year, and we are accelerated the number of people we brought in towards the latter part of the year.

On Asset Management, you told us about the same redemptions at the Investor Day a month and a half ago. So net-net you are probably seeing maybe $8 billion to $9 billion of [still] redemptions come in that you know of in 2012. But then you guys also talked about institutional pipeline, that was pretty good and there’s some mended that you won but haven’t funded yet. Can you quantify those, and what you think those actually going to fund?

Well, as I said, we have some fundings already come in like in our Threadneedle area and in the Columbia area. We have some good wins that we won in the fourth quarter and December, etcetera, that we think will be finding in the first quarter. We have others that were in the pipeline that we’re bidding on; the pipeline is quite strong. So here again, I can’t give you numbers per say right now, but I would just say that the improvements are there. We think that we’ll win. Again if you adjust for these parent stuff that I just mentioned, I think that this will be one of the areas that we’ll look for improvement in growth this year based on the traction that we’re gaining.

Shifting gears a little bit on capital management and potential acquisition opportunity for you guys, Jim, on current operating earnings basis you guys spit out, Walter, you pointed at 135% of your total operating earnings between the buybacks and the dividends. Given the slowdown in the fourth quarter, but I mean maybe we should think about more on an annualized full run rate basis, is that kind of the total payout that you guys are thinking about for 2012? That’s question number one and then the follow-up to that on the M&A side, I guess, what areas in Asset Management do you guys still feel you have some product holes that you would need to fill?

Alex, we don’t set a hard fast target, but we have about, as of the end of December, about $1.450 billion left in the authorization, and that spreads over approximately six quarters. So you can get a pretty good idea what the standard of this playing average is, and then as we said, we’ll be opportunistic about it. So really, while we bought back a [250 billion] in the fourth quarter, we didn’t feel that was really retreating from it. As I indicated it was extremely volatile markets so we will just gauge that. But certainly I don’t forecast earnings; as you look at it, we do gear as we understand that as Jim said we’re looking at which way whether its dividends are it’s going to be buybacks. So I think those sort of indications should give you some comfort zone of where the minimum standards are.

Okay. And the product holes potentially?

I think we would like to continue to grow our international businesses. I think if we look at the US, it’s not so much product holes per se. Now that we’ve completed and upgrading our systems etcetera and we have good things in place we could probably take on more assets and expand a bit more there and in some of the areas. So it’s more of what would help us to continue to position ourselves well and gain from the position that we put in place, even gain some more profitability in revenue. So, I think that’s what I would say. If you are looking at areas to expand in, it would mainly be more international than domestic. If we are looking for more of an ability to consolidate onto something we’ve built, it would be more in the US.

Our next question comes from Jeffrey Schuman from KBW. Please go ahead.

I think we hit the Wealth Management margin pretty well. I maybe got a little bit lost on the Asset Management margin comments. In response to John’s question you mentioned 21%. I wasn’t clear if you are suggesting that as possibly a relevant aspiration for 2012 or whether that is the new 23% sort of longer term more basic aspiration?

No. I was just commenting on 2012. Again I am not here to predict or project by actual numbers, because again a lot goes into it. I mean if we had a good read on markets and what goes into happens in equity and whether there’s a shift back around in flows in equity, I’d be able to secure and give you a better calculation. But I think just off the top of our heads here and thinking about the 23 and just based on what we’ve been seeing and have, we sort of adjusted that in our view right now for 2012 not for the longer term.

Well, that’s very helpful, Jim, because we’ve seen a lot of margins over time and I think for a period we operated under some pretty clear goalposts and you are advancing on those goalposts. I think we were also on the same page and over the last couple of quarters we’ve all got a little bit disoriented. So understanding that things are fluid, it’s still very helpful that you’ve given us some sense of where you could go in 2012.

No, I agree with you. As I said if we go back a few years on the AWM, we accounted on getting a lot of margin from interest rates rising to get to the 12%. As I said to you, we’re trying to shoot for that 12% even in these volatile markets with heavy investment without that interest margin. So if Bernanke changed their view of the world, you’re talking about a substantial improvement there that we’ve just again put off again for another year and a half because of his latest views. So these things are a bit fluid, the markets are a bit volatile. When they go down in Europe you lose flows, when they come back you start gain them again. It’s not like it’s a consistent feeling that anyone has, but it’s fluid, but the underlying focus has not changed. I want to be very clear to you about the analysts and investors, it has not changed. We’re working hard on it, and as I said, we’ll continue to look at using both the balance sheet flexibly as well as some of our current base spending and investments. There are just some things I won’t entail because we’re halfway through them and I think they’ll pay good dividends after we’re finished.

That’s very helpful. Just one other thing if I might. It’s pretty clear that you’ve probably gotten some good traction building your brand with customers, and certainly for a while the brand was attracting advisors. Can you kind of give us maybe update on how the brand is positioned in the advisor world? Are you still kind of drawing people in the same way you were, post financial crisis or has that moderated or how is the momentum I guess?

No. Actually, the momentum is good and we’ve ramped up our efforts last year, the latter part of last year, pipeline has built. We started to even part of the increase in expenses. We started to actually put our name out there in trades as recruiting. We never did that before because we never recruited before. So we sort of ramped up our advertising there. We have a good pipeline as we said, we’ve added 52 people in January, which is our strongest probably ever productivity. The people we’re adding is higher than it was. Also, just so we know, the brand launch that we did, the advertising and a number of research things that we’ve looked at, it was the number one rated financial services ad in the quarter, and it’s really hitting with the consumer. So that’s why we want to continue it through the first quarter as well, and then we’ll see where we go. But Tommy Lee Jones in those ads are excellent for us; it’s telling our story and the retirement market is going to be here through this volatility, and the need is going to be there. So even though we can debate as you saw the results, in profitability in the quarter, I’m feeling more optimistic about that segment and business. In the Asset Management business, everything we put in place, I feel good about everything that’s underlying that we have in place. But having said that, you saw the industry flows over the last year, and there are only a few places where people are getting inflows that it’s usually a targeted area or a targeted fund or global bond or something like that. It’s not in any large case across equities or large case across all areas. Fixed income is starting to pick up again which is good. We’re starting to push that a bit more as part of our focused sales. So listen, if the environment continues to stabilize and improve, we’re in good shape. Nothing has changed fundamentally from what I told you in November, nor what I told you a year ago and I think we’ll continue to gain traction. The one other thing I will tell you and don’t underestimate is the idea that we are freeing up more capital. Our capital requirements are continuing to go down, we’re continuing to work on those things even more, including in our annuity business. The decisions we made there we think were excellent in that regard and we’re going to continue to put some new products out that will continue to help that in more volatile environments. So listen, I think the markets will be the markets, the environment is such, quarter-to-quarter I can’t do your modeling, but I would say that if you’re looking at this as an underlying strength in core investment, I think we’re in good shape.

Our next question comes from Tom Gallagher from Credit Suisse. Please go ahead.

First question, Walter, just on your ROE guidance on slide 4, 15% to 18% ROE accounting for the DAC change, that implies a range of let’s just call it approximately 570 to 670, pretty broad range. Is it safe to assume, given what you’re telling us about Asset Management margins that you’re going to be at the very low end of that range? Or can you give a little bit of perspective about sort of the puts and takes there?

Can you help me, Tom, a little? When you said the 15 to 18 certainly what we said at the financial committee meeting, but I didn’t catch the point about the 570.

Sure. Walter, I was calculating looking at what you’re adjustment on book value is going to be, assuming some growth in book value throughout the year. I’m just implying 570 would imply a 15 ROE, a little over 670 would imply an 18 ROE. So my question for you is very simply, in lieu of what you’ve told us about Asset Management margins being below previous range, is it fair to say that we should expect the absolute ROE for 2012 to be at the very low end of the range? Or can you just give us a little bit of sensitivity around expectation, because that range is very wide. Just any light you can shed on that just kind of broadly speaking.

Well actually the range is basically it’s the same as we had before is the 12% to 15% to 15% to 18%. Again not forecasting here; certainly with the understanding as we just said the mix of the businesses and things of that; I believe that we’re certainly in a reasonable about the 15 and it’s again depending on what takes place, we should be able to move into reasonable safe territory. Again, I just don’t want to forecast it, but certainly I feel that making a statement that we’ll be in that range with these challenging events I think is a good statement. So remember we’re still finalizing our EITF and going through there and from that standpoint so factors are coming in. But the business shift is taking place, and I think that we see a good trajectory to get us into those ranges. And that’s why I said it in the comments.

That’s helpful. So you feel like comfortably above 15 at this stage in the game?

We feel that we could go above the 15.

Sure. The next question I had on the Asset Management margins is; is it fair to say that the reason you’re expecting kind of subdued margins at least relative to plan for this year is really just simply because you’re seeing no momentum on active equity management, which is your [High Sea] business. So when you are seeing recovery inflows it’s going into low-fee fixed income? Is it really just that simple at this point?

I think it’s actually (inaudible) what Jim is saying, because as we know with the volatility that takes place in certainly we are driven more towards equity. We are trying to evaluate the implication of that because when you get this much volatility, we get reasonable share in to fixed income; the profitability for us is higher on the equity side. So in these markets, it’s certainly has not been as conducive. So that I think is exactly where we are positioning. And again it’s been extremely volatile. Certainly as we indicated, the rates have gone up 5% and you could start saying the world just takes off from here, that’s great. But that’s not what we’re seeing and it’s difficult to calibrate off that. That’s exactly where it is. As Jim said we are getting close and things of that nature. But the issue is its mix and it’s really the volatility in the market.

Got it. And then Jim, last question, just circling back on Advice & Wealth Management. I hear everything you said about the dampening impact of client funds moving into cash slowdown in client activity weighing on the margins in 4Q. What have you seen? You talked a bit about what you seen thus are within Asset Management. What have you seen in Advice & Wealth Management so far year-to-date? Have you seen any kind of recovery in client activity in [shales], and have you seen any kind of mix shift moving back out of cash or is that still likely the pressure things into 1Q?

Well, I think you got again two things. One is you see an increasing back of fees again because the markets have recovered a bit. And as I said we didn’t see people pull money, we just didn’t see as much money continue to investments into the equity funds, etcetera, in the fourth quarter. So I think if things continue to show what they’re showing, we’ll start to see it move back. I also believe that people today, I mean I don’t think you’re going to see a spurt back in anything. I think you could see some things happening across the industry where things have settled. But I think it might take a little time for it to start to get back to more normalized in a sense. Well, I don’t even know what normalized is anymore; it’s more of how long are you in a more stable, less volatile period for people to feel comfortable. So January it’s early yet. I really don’t even have all the information for January in for me to give you a better read. I would just say on a fee basis, it should be better because the markets have come back. On a transaction basis, I think it hasn’t gotten worse, so I think it’s starting to stabilize, and maybe it’ll start to improve if this continues. But I think it’s still early in the quarter for me to give you a read.

Our last question comes from Eric Berg from RBC Capital Markets. Please go ahead.

Jim, I’d like to return first to Suneet’s question, if the markets have been so volatile, affecting retail activity and affecting willingness in people to invest in mutual funds as well as institutional flows. And that was true all of 2011 and it has continued into 2012, why the change now? In other words, again, my thinking is if that was the case as of Investor Day, so as of your financial community conference, so what has happened between then and now that would lead you to revise downward, admittedly for 2012 only, your margin guidance for the or your thoughts on margin in the Asset Management business? What’s happened in the last few weeks is really what I’m asking?

So, Eric, I think you embedded two things. One is some of the Retail things that I said and the Asset Management so let me separate the two. First of all, I do believe there was nice improvement last year in the level of client activity and engagements with the markets. I think where we saw a fall-out earlier in the year in Europe that affected European flows in the Asset Management, but didn’t really affect Retail flows here in the US in the AWM business. That sort of changed when the market really collapsed in the third quarter and was collapsing. So people don’t look at the first time it goes down, they look at the added effect of that, and then, they start to pull back and get concerned but what if it went down another leg and fell from 1100 to 900, etcetera. I think that’s what happened there. I think if you look at all retailers across the industry that have reported, you’ll find 15% down in dots or transactions or fee levels, and I think many of them have commented. So we’re not an outlier there. We probably fall a little less, but it takes us a little more to get back quickly based on just client activity. But I don’t think we’re an outlier there at all. I think you can see that if you just look at other people and what they’ve said in their reporting and what has been published on the industry. In the Asset Management business, as we looked at the numbers, etcetera, what we’re continuing to see is that there isn’t a big move into equity funds. Now, if that changes, maybe based on what’s happening and settling in Europe. But when you don’t get a lot more move into equity funds particularly in the Retail business, that’s your higher-margin business, and when you continue to add that up and also when you assume that, and maybe it’s a wrong assumption on my part, but I’m just assuming continued volatility that we saw last year. So, when you start to think that way, it does impact your fees. You can’t adjust your costs consistent with that up and down; you need to continue to drive forward. So, I think you’ll find that when you do that and you take some revenue out, even though the market may end up higher, you start to compress because you have a fixed expense base.

But given that Columbia with RiverSource now is such a broad and vast complex, I would think you’d have sort of what some people have called an all-weather portfolio and that if customers don’t like equity, well you have a broad portfolio of both municipal and taxable bond funds, and I would think you would be seeing strong flows there and that you’d be okay. That’ll be my last question. Why are we seeing out flows in Retail is my last question. You get my point.

Yeah, Eric, I would say last year, we didn’t actually garner as much in the fixed income, because we got really hit particularly in our tax exempt at the beginning part of the year for places like the US Trust business. I think that’s starting to come back. As I look at new sales coming in right now, tax-exempt has picked up, fixed income has picked up. We’re selling and focused a lot about selling equity. I think the wholesaling and distribution in the pipeline even institutional has shifted that now to balance that with more fixed income focus. So exactly what you said occurred, but we did not have that the way it was for the reasons that I just mentioned to you. So yeah, I think we will continue to gain flows there. But when you gain flows in fixed income or an institutional fixed income, you’ve got different margins than if it’s retail equity.

I’ll now turn it back to Mr. Cracchiolo for closing remarks.

First of all, I appreciate your questions today and also trying to better understand what’s happening underlying the business. I’ll just leave you with this. I think that as you look at our company and you look at the quarter, but put the quarter in light of last year. We had nice improvement in profitability in AWM. We had nice improvement in profitability in Columbia and Asset Management with Threadneedle. We have a continued strong and appropriate base for our annuity business. We have managed risk quite well. Our Protection business has come back where we were having some issues with the catastrophic losses in the auto and home and that has recovered. We’re continuing and have made stronger investments in the business for future growth. We also have put in place a stronger platform as you mentioned in the total of our Asset Management business. So I can’t predict by quarter exactly what you’ll see, but what I could say is that we’re building even a stronger foundation that we have all the capability and flexibility to ride out the markets. I do believe over time our margins will continue. I believe our earnings will continue to shift. I believe our capital requirements will continue to come down. The fourth quarter didn’t change anything along those lines. The only thing I could probably say is that we probably didn’t think that the volatile market would affect things as much as it has, but I think it did across the industry and I think you can compare it across the industry to see how that is consistent. So with that in mind, if you have any other questions or comments please call Alicia and Chad and we’ll try to follow-up with you. But I’m just guarding against a continued environment that I can’t predict, and I’m going to continue to make some changes in the company so that we can handle that quite well in the short term. If the environment improves; and thinking about the equity markets continue to sort of stabilize and go up, then we’re in great shape. So I’m just guarding against this not being okay. Have a great day, and we’ll talk to further as the weeks go on.

Thank you. Ladies and gentlemen, this concludes today’s conference. Thank you for participating. You may now disconnect.