Welcome to the third quarter 2012 earnings call. My name is Don and I will be your operator for today’s call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Alicia Charity. You may begin.

Thank you. And welcome to Ameriprise Financial’s Third Quarter Earnings call. On the call with me 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. Reconciliation of the non-GAAP numbers to the respective GAAP numbers can be found in today’s materials on our website. Some statements that we make on this call may be forward-looking, reflecting management’s expectations about future events and the 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 2011 annual report to shareholders or our 2011 10-K report. We undertake no obligation to update publicly or to revise these forward-looking statements. As a reminder, we will be conducting our annual meeting with the financial community on November 14th at 9:00 AM. Meeting details can be found on our websites. Now let me turn it over to Jim.

Good morning, everyone. Thanks for joining us for our third quarter earnings discussion. I’ll begin by giving you a bit of my perspective on our results. Walter will cover more of the numbers and then we’ll take your questions. Overall, we had a pretty good quarter. We delivered strong results in our advisory business including very good retail client net inflows. We’re generating modest revenue growth even after the impact of low interest rates. At the same time we’re managing expenses appropriately and delivering double digit growth in operating EPS. We continue to make good progress executing our strategy and our business metrics are sounds. We’re expanding our advisory client base. Our advisor reports [ph] is strong and growing. Assets are up across the firm and we’re improving asset management flows in maintaining good annuity in insurance books. Even with the benefit of rising equity markets over the past year, we continue to manage expenses appropriately given interest rate pressure. Earlier this year, we stepped up our reengineering efforts; we’re seeing the benefits now and continue to invest for growth. Overall, Ameriprise continues to generate strong returns for our shareholders, an important differentiator in today’s environment. Yesterday we announced a $0.45 per share dividend representing a 29% or $0.10 per share increase, the 5th increase since early 2010, in fact, we raised our dividend a 165% over that period. Today our employed dividend yield is above 3% which puts us at the high end of the category for SMP financials. We also repurchased $340 million worth of our stock this quarter, totaling $1 billion so far this year. And we announced a new $2 billion share repurchased program, as we accelerated our buybacks over the past two years. Through the third quarter, we returned a 138% of our operating earnings…

Thank you, Jim. Our third quarter operating net revenue of 2.5 billion was marginally higher than last year but included several disclosed items. Our underlying revenue growth was strong at 3%. Excluding our non-cash unlocking and the additional investment income we recognized last year. Underlying revenue growth was driven by equity market appreciation and stronger advisor client flows. These were partially offset by asset management outflows and the low interest rate environment. As you can see on page four, both pre-tax operating earnings and operating earnings per diluted share grew nicely in the quarter. Pre-tax operating earnings grew 4% to 397 million. Adjusting for disclosed items, earnings grew over 7% versus last year. Pre-tax operating earnings in the asset management and advice and wealth management segments comprise 60% of total operating earnings ex the corporate segment. Excluding the impact of the unlocking, earnings from asset management and advice and wealth management were 52% of the total. Operating EPS growth outpaced operating earnings up $0.11 year-over-year or 14% after adjusting for disclosed items. This reflects our share repurchase activity of over 1.2 billion over the last year. Our strong balance sheet fundamentals and substantial excess capital generation have enabled us to return such a high level capital to shareholders. Turning to Slide 5, we delivered a solid 15.4% return on equity in the quarter which is within our long term target of 15% to 18%. Return on equity was impacted by unlocking as well as the second quarter on usual tax item. Excluding these 2 items, return on equity would have been 16.5% this quarter. We returned 460 million to shareholders through dividends and share repurchase in third quarter, about a 140% of operating earnings. At the same time, our excess capital position remains at 2 billion plus due to our…

[Operator Instructions]. Our first question comes from Jay Gelb from Barclays.

First on Slide 7, where you talk about the $13 million impact from transitioning out of the bank unit. Do you expect that to be included in operating earnings or is that more of a below the line item?

It’s operating earnings.

The other question I have was on asset management. When you updated guidance for this year on the second quarter call, you were looking at the 18-19% pretax margin level where 19.3% year to date, so I just want to confirm that there is nothing we’d expect to see in fourth quarter that might pull that down but in fact that you’d probably be [indiscernible] your guidance.

Pretty much on the trend line.

Okay and then finally the risk base. I’m sorry, go ahead Walter.

When anticipating its price.

And then finally on river source the 514% risk based capital ratio, where do you feel the normalized RBC ratio should be taking in to account your excess capital plans?

Yes as we indicated. We would try to get that under 500 and it should stay in this range, a tad under again depending on there’s a lot of moving parts to that. So if you can’t necessarily control and again this is an estimate. We do the final at the end of the year, but I would say in this range which you should anticipate.

To the substantial amount of excess capital, where else is that being driven from?

The majority of excess capital is actually in corporate at this stage and there is obviously this excess capital in the life company, but it’s throughout all the other subs, but the majority of that is now resident and corporate.

Our next question comes from Eric Berg from RBC Capital Markets.

I am finally getting the handle for a sort of what the exposure is at this point in Connecticut with the manager, and the situation with the manager who retired, at the Marsico funds and in California whether there is going to be sort of ongoing fallout from the decision to let go that PM out there. Could you address each of these 3 issues, the Connecticut situation, the Denver situation and the California situation quantifying as precisely as you can and feel comfortable with the ongoing exposure there?

Okay, let me start with the value and restructuring. Gentleman retired early in the year, in the second quarter and we have continued to experience some of the outflows because a number of those funds as you would imagine are on platforms and models. And so, as they come up for review etcetera sometimes, they reevaluate because the manager has changed, and so, we think that is starting to come down. We would expect that it gets less and less as we go forward in that regard. Regarding Marsico, the PM changed and again, what our experience is, is model changes now on some of the platforms as they reevaluate those funds. We think that Marisco has stabilized their position in regard to their funds and activities. Having said that, they’re still up for a review when you have a change like that. And in regard to the hedge funds, we feel pretty much we have experienced the outflows that will occur there with the manager change and we feel if anything, as we settle that down hopefully we’ll start to get some inflows back in next year in that regard. But, it’s unfortunate as you go through some of the manager changes etcetera, you have model changes that are occur in review, and those things sometimes last a bit longer, then you would think the change has occurred, why isn’t it over. And that’s what we’re experiencing and hopefully we could continue to deal with that effectively as we get fund flows into other of our retail funds and get more of our funds on these model portfolio platforms and that’s what we've working hard to do because we do have good funds with good performance. We just got to get that more known out there in relationship to the ones that were on the platforms.

Could I ask a second and final question of sort of a related nature. In the past you have discussed a hold in your product line of areas where you need to develop. It’s surprising because Columbia is a big and complex organization. I would have thought every box would have been checked. But where do you stand right now in terms of your product bracket? It’s broad but is it complete?

Yes, I think Eric as we have evaluated and we’ll discuss this a bit more at our financial community meeting. We do have a broad product set with good product with good performance and it’s unfortunate that a lot of the areas that we have been really strong in are not necessarily in, in the flow category right now particularly in equities. We have been garnering a very large share in our dividend and opportunity funds things such as that are more equity income related. In regard to the places where we haven't played as well are things like and that's what we've been working on to ensure, because we’re putting our talent together in the product areas is things like global bonds, emerging market debt, things such as that, that have garnered some logic flows, strategic allocation on a multi-asset basis. Now we think we actually have some good product that we've been gearing and building the track records for and positioning and repositioning and we'll discuss that a bit more in 2 weeks but if you look at where large inflows have come from, those were some of the categories. Even in the fixed income, we actually have gotten good flows in places like high yield etcetera. We do have good intermediate funds but some of the things that have been selling have been positioned a bit differently and we're working on that. So, again we can't dictate that that's where the flows will stay but we do have to ensure that we have a good product in those categories as we maintain the categories that we are strong with and hopefully as things rotate back in will be situated well.

Our next question comes from Suneet Kamath, please go ahead from UBS.

I had 2 questions, I wanted to start with advise and wealth. Looking at the experienced advisor recruits, it seems like that number keeps ticking up. I think you're annualizing it to over 400 this year versus something like 337 last year. So I guess the question is, can you talk a little bit about the compensation packages associated with these recruits. Just looking at the headlines we're seeing a lot of teams kind of move firms. So I imagine that things are pretty competitive, but can you just talk about how these compensation programs compare to say what we have seen in the past, sort of directionally and I have a follow up.

Sumeet, in regards to what we’re doing, yes, we have a good and consistent pipeline. We have ramped up our efforts a little more fully around the country and we’re recruiting now, not just into the employee section but also into the franchisee area as well. In regard to the packages, the reason for us to increase mainly is because we’re recruiting more, I would call a higher level advisors in, but on a relative sense we’re not necessarily playing in some of the categories and the ratios that you’ve been seeing out in the marketplace. Our packages we think are competitive but at the same time it’s also the type of advisor we’re trying attract that would help them build and grow. And in addition to that, we’ve set it up in a way that as they produce they can actually achieve the higher, what I would call transition comp on the bank end. So we feel very comfortable about that. Our returns are still very good and appropriate. I would say the rates have gone up mainly because we’ve been recruiting more higher level productivity where you would always see the skill up in that regard. But I would still say it’s not to the points that I’ve been seeing in the industry as well.

Got it, and are we seeing the sort of the pickup in productivity from the folks that you started recruiting, I guess back in 2010. I know in the past you’ve talked about, I don’t know if it was a 12 month or 24 month time period before, these guys are really on-boarded. Can you give a sense of where we are based on the folks that you’ve already brought in?

Yes, we track that very closely and we do it on a vantage basis. So as we add more people of course the newer people have less over and produce less, but as you go through the vantages of one, 2 and 3 years. On average we are very successful in bringing over a majority of their assets and books of what they’ve identified and what we have chatted with them and agreed to on the type of the arrangement. The second thing that occurs is that they then transfer over and then it takes them anywhere from one to three years to fully ramp up depending on the type of book, the type of activity, product set and where they are located in regard to an employee versus a franchisee. But we have seen consistent ramp-ups, consistent with our models and our payback schemes. Within a 24-month period as an example, we get about 98% of their assets under management from the beginning. Now, they might not be at 98% in productivity because as you know, based on certain clients and certain activities and certain types of transactions that they might have sold in the past, you don’t necessarily replicate that immediately with market conditions. But we are seeing a consistent nice ramp up with our models. We feel very good about it, that’s why we’re consistently deploying resources to bring in people.

Got it and my second question is for Walter. Just on the excess capital. If I go back over the past couple of quarters, it seems like the excess capital number is consistently been 2 billion plus despite the fact that your payout ratios has been well over 100%. So it seems like the reason is that required capital is going down. So I was just wondering if you could really help us understand what is going on underneath the surface that keeps that excess capital position static despite the fact that your payout ratio has been so high, thanks.

Sure. First what has happened there, we have the market, has certain impacted this quarter and looking at CTU98 [ph] that has lowered our requirement. We’ve also so re-bounced some of our investments as certainly as we exit the bank which is also result in a lower requirement and over the last year we’ve been working on our hedges to make them more effective from standpoint from a capital standpoint and that work will continue and that is primarily the focus also as we get the mixed shift in the business coming in more onto the asset management and advice wealth management, that certainly requires less capital. So we’re seeing a track on our new activity in the amount of capital required on that and we’re working on getting our basic requirement down primarily in the hedging area and use of our hedges in the state capital area.

But should we expect that 2 plus billion now to start to grade down assuming that you’re paying 90 to 100% of earnings in terms of payout and then in the bank capital should we start to see that number coming down?

No again, plus is not define from that standpoint but the candidates [ph] know because I think we are with the amount of activity and the amount of capital required as we’re adding it in the mix, as I look in the near term I think we should be able to preserve that, again depending on how the level of buyback that we executed upon.

Our next question comes from Thomas Gallagher from Credit Suisse.

Walter, first one for you on advice and wealth, have you all already received the benefit of the fall-off in IT spend in that area. I know there 1Q, the expense level was elevated. If I look back to the run rate this quarter versus back to 1Q, we've had a $60 million reduction. Is it safe to assume we've gotten that full benefit of the fall off already or is there still more to come?

As we indicated, I think Jim indicated that we implemented the system in the third quarter. There is still expense that will be with us for a quarter or 2 as it trails off, but it will trial off and as it relates to training and certainly giving up in our service delivery capability. So on that basis, we will still incur expenses in the fourth quarter. And in the first quarter, the expense will start decreasing. You should not see a dramatic change, but it will start coming off.

But Walter, if we look at apples-to-apples versus the expense run rate from 3Q sale if there is going to be a trail off of expenses through the end of 1Q, order of magnitude, are we talking about something that will be material offset to the, -- we’ll call it $50 million or so of lost earnings as a result of the bank sale. Is it material relative to that $50 million when you think about by 2Q of next year or is it not that material?

If you are talking about from the standpoint as it relates to the $50 million we talked about as related to the lower expense once the system was fully integrated.

Yes, what we have is if you saw in the first quarter of this year, we’ve had a lot of expenses, we had to complete a lot of the development for the conversion in the second and third quarter. In the second and third quarter to Walter’s point, we had a lot of expense for the training and the service deliver to actually migrate over the accounts and support that activity including through clearing. And so what we are now doing is winding down the systems caused carrying the two systems because the development was done, that was heavy in the first part of the year. And we’re winding down to Walter’s point more of the service delivery and the training support cost and that will gradually come off over time as people get ramped up more fully on the systems. What I would say to your point is, we’re not going to fully offset the bank margin because that’s roughly about 15 million a quarter, but we should as you as saw in the third quarter coming from the second quarter, that sort of run rate of reduction in G&A we think will continue probably through the next 2 quarter or so in that regard. So we’re going to bring down on average the expenses for the whole migration over the course of the next year particularly in the first 2 quarters of next year. On an apples-to-apples basis it is less than 15 million per quarter for the bank because we started to achieve some of that savings already in the third quarter if you look at the third quarter below the second quarter, second quarter below first some. So some of that was in there but there's still a remaining piece of that per quarter.

Okay, okay, Jim, that’s clear. So if I look at the delta from the 2Q to Q3 was $7 million is that, so you're saying directionally it could be about that amount?

I think that's what we should see for another quarter and then maybe it will be a bit less than that instead of first and second. So there will be a bit more. I'm just saying it would have offset fully if we didn’t take some of our expenses down in the third quarter of this year which we did.

Okay, so if I understand you numerically, by the time we get into 2Q of next year you might have 1/2 to 2/3 of the lost earnings offset by lower expenses?

Yes, I would say if you can count yet the fourth quarter including in that, yes, probably along those lines but I think Walter can probably do some calibrations and let you know a little clearer when we do the FCM.

The next question I had is just on long term care. I know it’s a small revenue line for you all but you lost a little bit of money in the quarter on it and I guess my question is, should we be worried at all or if you guys have done a reserve adequacy analysis and/or a DAC review related to that business. Only because my understanding is that with the FAS60 accounting and the way it works, when you move into loss recognition territory, that typically precipitates a reserve review type of test and a DAC test, so if you could just comment on that, that will be helpful.

The answer is yes. In the third quarter we did do reserve review and we felt that the reserve was adequate from that standpoint. And nothing was necessary to take down and so we’re certainly monitoring the situation. As we indicated claims were up. We made an adjustment on an IBN hour, but we are putting in our rate increases and we feel that at this time certainly based upon review it was not necessary to make a change.

Okay, and my last question is just on the hedge fund outflows, Jim can you provide a little more color on what happened there? Were those client redemptions as a result of an employee departure? Was that the seller [ph] men decided to give money back as a result of it, and also what are the assets remaining with that hedge fund team? Only asking because typically in situations that I've seen in the past like this, once you have substantial outflows with a particular team, those can last a bit longer. But anyway if you could provide a little more color on that?

Okay, when we terminated the manager, as you know, as people are invested in various hedge funds and particularly as you go into a period where we fought with the various market situations, people evaluate that and sometimes they do remove that money if you allow them to do so which we do. We have the funds open. We want them to make informed decisions there. And so as they had notified us, they did pull the assets there. They will evaluate that over the next number of periods to see. But that’s exactly what had occurred. It’s not that we gave the money back. They wanted to take it out at this point in time. We have a good team still there led by Paul Wick and we have added back some additional talent to Paul’s team. We feel that Paul has had an excellent track record over the years and that he is very much focused on continuing to maintain his performance and I think as we do that, we should hopefully garner some flows in the future. And so that’s really the situation. It was unfortunate, but at the same time we think appropriate.

Our next question comes from Alex Blostein, Goldman Sachs.

I wanted to go back to AW on for one second. Jim can you talk about I guess competitive dynamics in the marketplace today. Clearly your head count growth has been very good. Where are you seeing incremental phase coming in from? Is it predominantly wire houses or are you seeing it from other kind of more regional players? And then more importantly, the way you guys thinking about structure in the compensation arrangement for the new financial advisors. How does that differ from I guess your current pool of FAs.

So overall we’re seeing increased activity and consistent activity from a number of different places. We’re seeing people continue to join us from the wire houses in a very focused way. We’re also seeing now people joining us from some of the regionals and even if you are the independence as we look at in particularly into our franchise or channel and so we feel like our story is getting out there in the marketplace. We’re actually having good conversations and people are becoming more familiar with us. We used to be known as the quiet company that didn’t necessary understand who we work fully, and I think we’re starting to make the right noise out in the marketplace and positioning so that we are getting on more radar screens. From that perspective, as people are becoming more familiar and as we’ve attracted more people over so they understand what we’re able to do and who we are. We are seeing bigger and bigger producers as well becoming interested in us. So I think that we’ll continue at this point in time and I feel good about it. As far as the packages are concerned, I know there is a lot of headlines out there and those headlines are particularly focused in the industry on the million dollar plus producers and I think there is a bit more competition out there particularly in the wires for those people. that’s not necessarily the territory we’re playing in and very clearly I think if people are choosing to come here, they’re choosing to come for more of the value proposition, the culture, the type of positioning we have in the marketplace versus moving to another wire. And so again, we feel good about our ability to do this and more of an appropriate economic fashion. We’re not going to appeal to all people and we’re not going to appeal to those they just want a big check and that’s good. We actually prefer not to. So we feel good about where we are and what we are attracting and helping those people come over and helping them to actually take up a stronger advice value proposition.

Great, and then 2 on asset management. Jim, first one for you on the institutional business, I know there is I guess little bit of noise whether these one off kind of outflows, but when you look at the pipeline and we talked about it last couple of quarters performance is really good, your year numbers are solid across a margin product, can you give us a sense of how big of the pipeline is for you guys of potential wins and when and what’s the pace of I guess those assets coming into the run rate?

Well I think we’re also going to try to cover this in a bit more detail in 2 weeks. Ted Truscott will be actually discussing the various flows and our distribution activities and the various products. What I would say here is this, our institutional pipeline is good and strong. It doesn’t mean we’re not going lose some of the stuff that we had in the past as you experienced, but as I said, with the large hump a lot of Bank of America activities, there is still below [ph] but again we mentioned as 1.5 billion, it’s not a lot of money. We’re going to have some lumpiness like as we said from things like the Marsico or the VNR, things that are on various platforms as they continue to migrate out or get settled. But, even retail, we are starting to feel good. I mean our sales are actually a bit up and we look at market share gains in our focused area are positive. But we need to get more of that. We need to get on more platforms, more intermediate recognized full deployments we have versus some of names of firms out there and we are working hard. Threadneedle has actually come back in a good way. Now that Europe has settled down a little, hopefully we’ll continue that way but we see retails flows came back very nicely and institutional flows are very good. I mean it doesn’t look that way once you get to Zurich but we’re always going to have a $1 billion a quarter with Zurich. I mean the pension fund tender was the one that we identified because we had more flow[ph] of the pensions and have it diversify. But if you take that out, Threadneedle was in a nice positive position this quarter, and Columbia who’s unfortunately with the hedge fund. But Columbia I mean, our institutional funds neutralized that including some of the portfolio platform changes and then the retail, more than half of the outflows were in those just 2 fund category, the VNR and sub-advise. So, I think we’re making progress. This is not still a great time where everything is in inflows but listen, we've got a good underlying platforms. People were working hard. We’re continuing to fill out the areas that we are not necessarily well-known for that we think we can be in those areas. We’ll go over that a bit more but I am feeling pretty good about it. I mean we've got work to do. So this is not like declaring victory at any sense, but I think we've got over the hump and at the same time I think we've got a good platform and we are generating pretty good margins and profitability from it. We have an investment performance as maintaining itself.

And then Walter, just one for you on also on asset management. So taking into account what the outflows you had in the alternative business, I guess if you look at the whole complex, how much in a AUM do you guys have right now that’s kind of performance eligible and how are those assets performing this year?

The performance has actually been okay. I mean, in both of the health and in the tax side and I am not sure on the fund side, I am not sure if we’ve bet over a $1 billion is what is in the funds.

Over a $1 billion and the funds are the just all of across everything.

Are you talking about the hedge funds, it’s probably concentrated in the 2 areas that I mentioned.

Our next question comes from Jeff Schuman from KBW.

I guess I want to do a little bit of hair splitting. One page seven, regarding the transition on the bank, it says neutral EPS impact in 2013. I think in Walter's comments, he said neutral by the end of 2013. I guess the difference is not immaterial to estimates. Which is kind of the more accurate expectations?

Obviously we will engage, redeploy the capitals. Obviously the capital is still in bank this quarter, in the fourth quarter. But commencing in the first quarter of next year we will redeploy. We’re not intending to match exactly on the earnings that are coming out of the bank but by the end, our target was to neutralize effectively for the year the impact of that all from an EPS standpoint.

Okay so not matching by quarter but when on a full year basis pretty much neutral that?

That's what you should expect, yes.

And then going back to the loss of the alternative assets, I mean a 1.5 billion of outflows, isn't that a big number relative to the size of the complex but if you've often pointed out historically not all assets are in equally some of the Zurich assets you lose probably you don’t earn much presumably the alternatives earned probably your best earning assets. I mean is the loss of these assets material enough that we should think about it in our numbers or just how well did you earn on those assets?

These were earning assets, obviously higher than Zurich had mentioned, but again, its manageable, it will impact us obviously in fourth quarter a bit but from that standpoint, we believe we will be able to build it back but I would say it certainly has a higher profitability factor than some of the ones we've been talking about we've been losing from the bank but again its manageable.

And lastly you've given us some directional guidance on the ad spend, I think you're up sequentially maybe flat year-over-year but we don’t really have great visibility into what the ad spend is. I mean should we just assume that corporate DNA is kind of flat year over year or how do we account specifically for the ad-spending given the limited visibility?

We’re pretty much on track versus what we spend. It does get split between corporate and AWM. Obviously there’s a lot of institution enterprise advertising, and in the fourth quarter we have heavy ad versus the third quarter. It will increase in the fourth quarter.

The corporate G&A or just the ads been pieced within that?

No, in the corporate G&A, a piece of it goes into corporate G&A and then obviously a portion is in AWM.

Our next question comes from John Hall from Wells Fargo Securities.

Jim, I have a question about M&A, obviously capital is building here, and you have done a couple of successful transactions, Columbia and Threadneedle and characteristics of both of those transactions where that they had large books of legacy asset that created some outflows over time and continued to. I guess given your experiences with each of those properties, what are your thoughts as you look at other properties out there that may have similar legacy asset characteristic?

Well as you know, if you are going to buy an entity that’s attached to any larger entity, particularly that’s in the financial space, you are going to have assets that may have been attached. So if asset managers are owned by banks or insurers etcetera, you’re actually going to have legacy assets. I think as we think about those legacy assets, we always and just like we did with Columbia, we thought about what the net value is of what you will be purchasing, how long those assets would live for and then what’s the sort of the value that you would be left with after enduring. So we do evaluate those things and if it’s still a good opportunity for us based on combination of value and what that would add to us over time, we will definitely still consider it. If you find that there is an independent entity then in most cases, you don’t have those legacy assets, but you still may have larger institutional contracts or other things that would still have to be evaluated if there is a change of ownership. What we do is look at the value of the entity fully with those assets incorporated and what happens if you maintain to more loose them to come up with evaluation and that’s what we would do and even though I’m sitting with the capital as we said, when we don’t see things, we buy more of our stock back and raise our dividend etcetera and that’s what we’ll continue to do. We’re not just looking to spend the capital on assets that are out there. There are assets out there but we have looked at various ones and again, we look at we’re going to be left with in the end to decide whether it would be appropriate for us. So we’re not opposed to that. I think what I would do in the future is if I did an asset like that again I would help to be as clear as I can with you to understand what that outflow may be so that we understood, it. But it would be to really buy what would be underneath it that would maintain and live rather than just what you would buy in a transition basis. I hope that answers your question and that’s what we tried to do with Columbia and we think we are pretty good with that having said that, you still live with the outflows for periods of time.

And just as a follow up on the increase to the dividend, are you managing to some set payout ratio in future that you’re trying to get to?

What we have said right now is in combination, we wanted to return roughly as our starting point about 90% of our earnings to the investor based on where we are at capital position of free cash flow. With that we are trying to rebalance it a bit more to have the mix a bit more in the dividends as investors have expressed that interest and that’s why over the last 2 years, we have raised the dividend 165%. So we’re over a 3% yield, which we like at this point based upon the interest that’s there in the marketplace. We’re not managing to a 3%, we’re managing more to an overall payout ratio that we would give back to the investors between dividend and buyback. We’re not going to chase it up and down but we will look for a steady amount of dividend and a steady amount that we can have of an increase. That’s what we actually tried to do since we’ve been public. There is only one year that we didn’t raise our dividend and I more than made up for it with the 5 increases over the last 2 years. And so we tried to maintain our dividend so that we wouldn’t cut it, and we manage that to be a certain level of cash that we feel very comfortable with and at the same time, we would like to continue to grow the dividends over time consistent with that, but we did increase it a bit more than we would have thought in the past because of what we think the combination interest in our cash flow is today.

Great and just one final thing on the bank and the decision process there to pull capital away from the bank is partly return oriented and partly regulatorily oriented. I was wondering if you could sort of draw a dotted line to what you’re doing in the bank, to your thoughts on whether you are thinking about things around your fixed annuity block of business where that’s a market that there is an awful lot of external interest in.

Well, the bank decision is really driven based upon, I think the combination of the pressure that would be -- we only had a small banking institution and the bank would subject the entire entity to certain other requirements that we didn’t necessarily see as reasonable and appropriate at this point in time. For the bank itself, we had a no issue or concern about the regulatory requirements for it. It was more of how that would subject the entire institution and limit our abilities to operate in the businesses that we are, because we are heavily regulated in those businesses to begin with. So that was really the decision. It wasn’t just to free up that capital. In the end it does free up that capital and based on again, that it was a smaller institution and the amount of capital we had in it. It sort of offsets the earnings that we had in that at this point in time. The fixed annuity book, we have looked at the various things that are out in the marketplace. We actually generate a nice return on that book. Yes, it is running off a bit. At the end of the day we've evaluated those alternatives and we don’t think that would be favorable for us. But Walter can comment a bit more on that but we constantly look at alternatives but we felt that we’re in a better position than what others may have that are needed to sell that off.

The only thing I have to say is that we certainly do evaluate that from Jim’s standpoint but the returns that have been provided even if the runoff have been, actually within our targeted ranges, and so we don’t need the capital, it certainly generates its earnings and it’s the portfolio that supports it is matched quite well and we feel quite comfortable with the exposure profile.

Our last question comes from John Nadel from Sterne Agee.

Just first a quick comment Jim for you in the board and I don't want to typically say something like this, especially because I am not allowed to invest in your company, but there is not a single company I cover that’s doing a better job of returning capital to shareholder. So, I applaud you for continuing to deliver on that commitment. I do have 2 questions for you on asset management, its starting with the one Jeff Schuman's question, as the makeshift in the overall asset or AUM with fixed income a larger share, the pie equities at least a little bit lower than it has been the norm and more recently with the hedge fund outflow or hedge fund closing the alternatives are lower, how should we think about the impact, how should we size the impact on the overall fee rate for that segment?

I think what I would say here is, we have seen a bit more as you have mentioned of the shift in some of the flows between fixed and equity. Having said that, the markets again, it depends on where the markets are holding, but the market increase says or set that a little bit and you saw a nice rise in the total assets particularly in equities. What I can't predict and I don’t know if you can, maybe our elections and what happens in Washington to get the economy going will be a positive but my belief is that over time there is so much money that have shifted the fixed income at one point, the interest rates start to move, the economy picks up. There has to be a shift back because otherwise you're not going to be balanced correctly either as a retailer or institutional investor but right now it has shifted, Walter I don't know if you can give them a perspective on what that looks like or you will in two weeks?

I think Ted will cover but there has been a shift and the fixed income obviously has a lower earnings profile for us and the shift I guess is, if you look at it, its maybe 20% of the 25% of the market depreciation. Obviously it’s an industry where it is shifting and there are other things that the team is doing to improve them all. Its revenue from reengineering.

Can I ask you so is the margin, I think it's very clear that the margin on alternatives is higher. Is the margin on equities versus fixed income also higher?

Yes.

Okay, and then I guess, Jim, I did notice, its only modest but it was a slight downtick in the quarter, in the number of four and five star rated funds, given that in the overall industry pressure on flows as you just discussed, I'm just wondering and maybe this is more for 2 weeks from now, what outlook you can provide as far as your expectation for flows going forward, particularly Columbia retail.

Right on the number of funds I think we're pretty stable. I don’t know if it moved by one or 2 or something but I think we’re pretty consistent and stable in that regard. I would say we will try to give you a flavor for how we’re thinking about, our distribution and flow activity. What I can't predict, to be very honest is, again will equities come back, when will it come back, what categories are most important right now. We know that in certain of the categories, we've been winning some good business. I think what's offsetting or some of the things that we mentioned to you, and there is some other categories that give big inflows that we haven't played in. But I actually feel like we are in a reasonably good situation but there is a lot more that we can continue to do and we’re working hard to do that. So why don’t we leave it from 2 weeks from now and that will be a better way for us to sort of lay that out and take some of your questions.

Thank you ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.