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Business Description

This Disclosure Document describes the franchises offered by Ameriprise Financial Services, Inc., a Delaware corporation formed on June 14, 1971 (“Ameriprise Financial”, “Ameriprise”, “we” or “us”). We conduct our business under our corporate name, the “Ameriprise” trademark, “Ameriprise Financial®” registration mark and the “Ameriprise Financial” logo. Our principal business address is 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474. We and our affiliates offer personalized financial products and services to help clients achieve their financial goals through personal financial planning and advice. Over the years, we and our financial advisors have helped millions of people invest and save billions of dollars for what’s important to them. In today’s complex financial world, we help our financial advisors help clients by providing a steady voice, a listening ear and a clear vision of financial opportunities and pitfalls. Through our ongoing relationship with clients, we and our financial advisors identify and tailor solutions for clients’ specific needs. Our overall vision is to be the most sought-after financial planning and services firm.

Prior Experience

Prior to October 1, 2005, we were affiliated with American Express Company (“AEC”). On September 30, 2005, AEC spun-off our direct parent, Ameriprise Financial, Inc., to the shareholders of AEC, and it became an independent public company with separate management. As an independent company, Ameriprise Financial, Inc. and its wholly-owned subsidiary, Ameriprise Financial Services, Inc., are not affiliated with AEC or any affiliate of AEC. In 1999, we began offering franchises for Ameriprise Financial, formerly American Express Financial Advisors Inc., independent financial advisor businesses. Other than the franchises described in this Disclosure Document, we do not grant, and have not granted, franchises in any other line of business, although we previously contracted with nonfranchised independent contractors (“Independent Contractors”) who sold our financial products and services. We began contracting with Independent Contractors over 40 years ago. We also utilize non-franchised personal financial advisors that operate as employees (“Employees”). We also began hiring Employees over 45 years ago. Prior to 1999, financial advisors were our Employees during their first year and became Independent Contractors thereafter. Beginning in 1999, financial advisors had the choice either to remain an Employee or become a franchisee (“Independent Advisors”). Employees are paid a draw amount, are eligible for commissions and receive training on offering products and services to clients. Employees operate under the terms of agreements with us (“Advisor Agreement”) on terms different from those described in this Disclosure Document. At the end of 2018, we had approximately 4,411 Independent Advisors and approximately 1,846 Employees nationwide. We also offer Independent Advisors the opportunity to use non-franchised personnel financial advisors that operate as employees or contractors of our Independent Advisors (in this document they are referred to as “Associate Financial Advisors”). We began offering Independent Advisors the opportunity to use Associate Financial Advisors in 2002, and at the end of 2018 had approximately 3,294 such Associate Financial Advisors. Independent Advisors wishing to utilize an Associate Financial Advisor must sign Addendum 4 to the Franchise Agreement. We are also utilizing corporate office staff (“Corporate Staff”) to service clients online or over the telephone. In 2017, our affiliate acquired Investment Professionals, Inc., a broker-dealer, which provides investment services through relationships with banks, credit unions and other financial institutions. Referred to as Ameriprise Financial Institutions Group (“AFIG”), this group operates separately from our Independent Advisors, Employees, and Corporate Staff. At the end of 2018, there were approximately 124 AFIG advisors. Employees, Associate Financial Advisors, Corporate Staff and AFIG advisors have and will offer financial products and services that are similar to or the same as the products and services that will be offered by the independent financial advisor businesses offered in this Disclosure Document. Independent Advisors will pay an Initial Fee and a monthly Association Fee, unlike Employees, Corporate Staff and AFIG advisors who pay no such fees.

Business Offered

We have developed and own a distinctive system that offers, through financial advisors, financial planning, investment advice and consulting services, securities products, insurance products, brokerage services, tax planning services, lending services, and other related products and services provided or procured through us and/or our affiliates or third parties (collectively, “Products & Services”) to individuals and/or business owners (the “System”). The distinguishing characteristics of the System include over 120 years of history in financial services; distinctive products and services; a high level of securities and regulatory compliance, the highest standards of customer service and quality advice, including financial planning; administration procedures providing for superior customer service and management control including consolidated statements; orientation programs; advertising and promotional programs; and direct marketing services, telemarketing and online services directed to clients; all of which may be changed, improved, and further developed by us from time-to-time. The System is identified by trade names, service marks, trademarks, logos, emblems, and indicia of origin for use in connection with the System, as further described in Item 13 (“Proprietary Marks”). If we offer a franchise to you (we will refer to the franchisee as “you”), you will sign the Independent Financial Advisor Business Franchise Agreement (the “Franchise Agreement” attached to this Disclosure Document as Exhibit A) which will grant you the right to establish and operate an independent financial advisor business using our System and the Proprietary Marks (the “Independent Financial Advisor Business”). To promote the highest standards of operation under the System, we have prepared Confidential Operations and Compliance Manuals (the “Manuals”), to which you will be granted access by a method selected by us, and which include, but are not limited to, manuals, bulletins and other written policies and procedures setting forth the minimum standards for the Independent Financial Advisor Business, including Client Satisfaction, Compliance and the Code of Conduct. In addition, the Manuals set forth standards regarding the use of Proprietary Marks, signage, communications, privacy principles, processing procedures and the Compensation Reference Guide. As our franchisee you would be an Independent Advisor and you would offer the Products & Services to clients. The Products & Services that Independent Financial Advisor Businesses offer include (i) investment certificates, stock, other securities, financial products, investments, life insurance and annuity policies, contracts and other insurance products, and other products, and (ii) financial planning, advisory, securities brokerage or other financial services.

Initial Fees

Initial Fee When you sign the Franchise Agreement, you must pay us an Initial Fee as a lump sum payment. The Initial Fee is $1,500. This fee is fully earned and non-refundable as consideration of administrative and other expenses incurred by us in entering into the Franchise Agreement. We will also provide an initial orientation program to you as part of the Initial Fee. The Initial Fee is not increased for individuals that are offered the opportunity to sign the Registered Principal Addendum. For employees of Ameriprise Financial who seek to become an Independent Advisor after a job elimination, we may waive the initial franchise fee as provided in Addendum 7 to the Franchise Agreement. Optional Training Programs We offer various optional training programs. You may wish to attend some of our optional training programs prior to opening the Independent Financial Advisor Business. We estimate that the cost of attending an additional training program will range from $0 to $5,000 (for multiple day workshops) per training program. The payments for optional training programs are non-refundable. See Items 6 and 11 for further details regarding our optional training programs. Some training programs may only be available to Independent Advisors who are enrolled in a program or meet specific program requirements. Employees who become Independent Advisors may attend optional training programs. The cost to these advisors will range from $0 to $5,000. Except as otherwise described above, all fees are payable in lump sum.

Financing

We do not offer direct or indirect financing, except as described below. We will not guarantee a note, lease, or obligation for you. If an Independent Advisor joins Ameriprise Financial or an Independent Advisor desires to hire/contract an experienced Associate Financial Advisor, Ameriprise Financial, in its sole discretion, may offer to Independent Advisor a loan (s) pursuant to a four to ten-year promissory note(s) in order to assist Independent Advisor and/or Associate Financial Advisor in converting to the Ameriprise Financial System. The loan(s) are based on a percentage of verified trailing 12 month compensation earned at the prior firm, the assets under management at Ameriprise Financial on a particular measurement date, and/or the production generated at Ameriprise Financial by a certain measurement date. Independent Advisors are obligated to repay the promissory note(s), including accrued interest, in monthly installments or immediately if their Franchise Agreement is terminated. Prepayments are permitted without penalty. As described in Section 14 of the Franchise Agreement, Independent Advisors will not be permitted to transfer their interest in the Independent Franchise Advisor Business until all accrued monetary obligations, including the promissory note(s), are fully satisfied. Independent Advisors may also not be permitted to become an Employee, Associate Financial Advisor, or staff until all accrued monetary obligations, including the promissory note(s), are fully satisfied. Interest will be charged at a rate equal to one quarter point more than the semi-annual mid-term Applicable Federal Rate compounded annually, as published by the Internal Revenue Service. Independent Advisor must grant us a security interest in all of Independent Advisor’s right, title and interest in any amounts received from any future employer or other party making payments to Independent Advisor. In addition, Independent Advisor authorizes Ameriprise Financial to withhold all money and assets and deduct any missed payments or amounts owed from Compensation owed to Independent Advisor or from accounts held at Ameriprise Financial or its affiliates. Independent Advisor must waive demand, presentment, notice of nonpayment and protest and agree to pay all costs of collection including attorney’s fees. If Independent Advisor defaults on the Promissory Note, Ameriprise Financial may pursue legal action to collect on the remaining balance, as more fully set forth in Exhibit H. Ameriprise Financial may have Installment loans available to qualified Independent Advisors who join Ameriprise Financial for the purpose of marketing, hiring staff, building, renovating, and/or provisioning new office location(s) that meets premise standards (see Item 11). The Installment loans are serviced, in part, by our affiliate, RiverSource Life Insurance Company, which is reimbursed at cost for the services and facilities it provides. To qualify for the Installment loans, an Independent Advisor may need to meet recruiting productivity thresholds, as well as personal financial and credit worthiness parameters. The Independent Advisor must provide a personal guaranty to repay the loan principal and all accrued interest and grant a security interest in the Independent Advisor Business Franchise and execute a non-compete as more fully set forth in Exhibit M. Independent Advisor can borrow up to 100% of the demonstrated need. Repayment is in monthly installments up to a maximum of 72 month period. Prepayments are permitted without penalty. Interest will be charged at a rate equal to the current prime rate plus 300 basis-points at the time the loan is granted, the interest rate is then fixed for the life of the loan. (Prime rate as of 1/22/2019 is 5.50%) Independent Advisor must waive demand, presentment, notice of nonpayment and protest, and must pay for all costs of collection, including attorney’s fees. If Independent advisor defaults on the loan or if Independent Advisor’s Franchise Agreement terminates for any reason, all outstanding principal and accrued interest will be due and payable. Our Parent, Ameriprise Financial, Inc., makes an External Practice Acquisition (“EPA”) loan available to qualified Independent Advisors for the purpose of purchasing a practice from a nonaffiliated third party or from other franchisees who produce a minimum of $1,000,000. The EPA loan is serviced, in part, by our affiliate, RiverSource Life Insurance Company, which is reimbursed at cost for the services and facilities it provides. To qualify for the EPA loan, an Independent Advisor must have a minimum of $250,000 in 26 service period GDC; be in good standing with respect to Compliance and Franchise standards; have a minimum length of service of 12 months with Ameriprise Financial as a financial advisor; have a succession plan on file with the succession planning department; and have approval from an RVP of Ameriprise Financial. Additionally, the GDC in the practice being acquired must be less than or equal to the applicant’s 26 service period GDC. For field leaders moving to an advisor role, the requirement for a minimum of $250,000 in 26 service period GDC will be waived for 2 years following step-down from field leadership. The Independent Advisor must grant a security interest in the Independent Advisor Business Franchise and execute a non-compete as more fully set forth in Exhibit M. Independent Advisor can borrow up to 50% of the total consideration of the purchased practice, if 50% of the purchased price is financed by the seller, up to $500,000 (minimum $25,000). Additional financial criteria and production criteria of the acquired practice must be met. Repayment is in monthly installments which Independent Advisor can opt over a 36 to 72 month period. Prepayments are permitted without penalty. Interest will be charged at a rate equal to the current prime rate plus 300 basis-points at the time the loan is granted, the interest is then fixed for the life of the loan. (Prime rate as of 1/22/2019 is 5.50%.) Independent Advisor must waive demand, presentment, notice of nonpayment and protest, and must pay for all costs of collection, including attorney’s fees. If Independent Advisor defaults on the loan, all outstanding principal and accrued interest will be due and payable upon written notice. There is also a penalty of 10% of the loan amount if the Independent Advisor’s Franchise Agreement terminates and the Independent Advisor affiliates with a competing broker-dealer within one year of termination. We do not have any intent to sell, assign, or discount to a third party all or part of the financing arrangements. We do not receive direct or indirect payments for placing financing with any person third party. We may, however, assign to an affiliated company at a discount.

Franchisee Revenue and Profit

Some Independent Advisors have earned these amounts. Your individual results may differ. There is no assurance that you’ll earn as much. Written substantiation for this Financial Performance Representation is available to you upon request. The following table presents information about Independent Advisor earnings based on the actual Gross Dealer Concession (“GDC”) levels and GDC Payout Rates for Ameriprise Financial Independent Advisors in the 6 Region sites* in 2018. Please refer to #4 under the Notes To Table 1 section for a description of the columns. PAYOUT METHOD FOR CALCULATING GDC THE METHOD FOR CALCULATING THE GDC PAYOUT RATE IS A PAYOUT GRID. THE PAYOUT GRID MEASURES BOOK OF BUSINESS (“BOB”), TOTAL GDC, AND INCLUDES A POTENTIAL FOR A FINANCIAL PLANNING BONUS PAYOUT RATE. PAYOUT GRID RESULTS DETERMINE WHICH OF THE GDC PAYOUT RATES WILL APPLY TO THE INDEPENDENT ADVISORS’ GDC. Financial Planning Bonus. Independent Advisors who qualify for less than a 91% base payout rate on the payout grid have the opportunity to qualify for a bonus payout rate based on the number of financial plans sold and growth in financial plans. The bonus payout rate will be added to the base payout rate — up to a combined maximum payout rate of 91%. The financial planning bonus payout rate ranges from 1% to 5%. Independent Advisors may qualify for a financial planning bonus payout rate based on their growth and plan count results during 2019, based on Table 5 for the Jan. 29, 2020 through Jan. 26, 2021 Compensation Period. Minimum 2019 Plan Count will be measured as of Jan. 2, 2019 through Dec. 31, 2019. Plan Count Growth will be calculated as 2019 plan count minus 2018 plan count measured as of Dec. 20, 2017 through Dec. 18, 2018. New Independent Advisor Payouts New Independent Advisors may not have sufficient data to determine Payout Grid Results. Therefore, new Independent Advisors’ initial Payout Rate will be determined based on their previous affiliation with another company in the financial services industry. Former Employee advisors will receive an initial payout rate based on their prior production. The initial Payout Rate for new experienced Independent Advisors with a transferable book of business from a financial services company outside of Ameriprise Financial will be a fixed payout rate for a guaranteed term based on several factors, including production at the prior firm (see Table 6a). If the standard grid rate is better, as calculated at year-end grid measurement, the better-of grid rate will be provided for the following compensation year. Once the new Independent Advisor no longer qualifies for a fixed payout rate, the payout rate will change within the next two week service period based on the payout grid in effect at that time and will run through the then-current annual measurement cycle, and thereafter measured every year. Independent Advisors may be eligible for transitional compensation in the form of an initial loan or loans in order to assist Independent Advisor in transferring to the Ameriprise Financial System as further described in Exhibit H. The amount of the loan(s) may be based on the trailing 12-month production generated at the prior firm, the amount of assets under management at Ameriprise Financial on a particular measurement date, and/or the production generated at Ameriprise Financial by a certain measurement date. The Independent Advisor also may be eligible to earn bonuses to help offset loan payments by remaining an Independent Advisor through the date each loan payment is due. Employee advisors transitioning to an Independent Advisor can only do so on one of four designated dates per year, approximately four to five weeks after each quarter end date (see Table 6b). Employee advisors becoming Independent Advisors will have their initial payout rates based on the previous year’s Payout Grid. Regardless of the date of transfer during the year, the Employee advisor’s 26 service period Total GDC, Book of Business (BOB) and 26 service period financial plan count as of December the previous year will be applied to the previous year’s grid to determine the payout rate. For example, Employee advisors who transfer in 2019 will have their sales metrics from December of 2018 applied to the 2018 Payout Grid (see Table 7), and Employee advisors who transfer in 2020 will have their sales metrics from December of 2019 applied to the 2019 Payout Grid (see Table 4). The initial payout rate will be in place until the start of the next compensation period following a year end measurement date when there are 26 service periods of data (including employee advisor sales results). Employee advisors with less than 10 years of service with Ameriprise Financial will have a 15 percentage point payout rate reduction from the rate they would otherwise qualify for as an Independent Advisor. This reduction will last for a minimum of 52 service periods. If after 52 service periods a minimum of 30% of an advisor’s 26 service period total GDC at the time of transition has been recovered, the payout rate reduction will end; otherwise, the reduction will continue until the 30% has been met. In addition, Employee advisors or field leaders who were subject to a payout rate reduction as an Employee advisor will have that payout rate reduction applied to their payout rate as an Independent Advisor until the original term of the payout rate reduction has been met.