Ameriprise Franchise

Financing Details

Ameriprise Financial Services, LLC offers several financing options to its Independent Advisors. For new Independent Advisors or those contracting experienced Associate Financial Advisors, Ameriprise Financial may provide loans through 4 to 10-year promissory notes. These loans are based on a percentage of verified past compensation, assets under management, or production at Ameriprise Financial. The interest rate for these transition loans is a quarter point more than the semi-annual mid-term Applicable Federal Rate. Repayment is in monthly installments or becomes due immediately if the Franchise Agreement terminates. Ameriprise Financial will hold a security interest in any amounts received from a future employer and can deduct owed amounts from the Independent Advisor's compensation or accounts. Ameriprise Financial also offers installment loans for business development purposes, such as building, hiring staff, marketing, provisioning new office locations, or renovating. These loans typically have repayment periods of 36 to 72 months, with an interest rate equal to the current prime rate plus 300 basis points (3%). For these loans, Independent Advisors must grant Ameriprise Financial a security interest in the Independent Financial Advisor Business and provide a personal guaranty. For Independent Advisors looking to purchase a practice from another Independent Advisor or a nonaffiliated third party, Ameriprise Financial's Parent company may offer installment loans. These loans are usually repaid over a 120-month period with a competitive interest rate. A security interest in the Independent Financial Advisor Business and a non-compete agreement are required. If the Franchise Agreement terminates and the Independent Advisor affiliates with a competing broker-dealer during the loan term, additional compound interest and liquidated damages may be assessed. Ameriprise Financial does not guarantee leases, notes, or obligations for franchisees and does not receive direct or indirect payments for placing financing with third parties, though it may assign financing to an affiliated company at a discount.

Litigation Summary

Ameriprise Financial Services, LLC has a history of both client-related and internal field sales force litigation, along with some regulatory actions. In terms of client-related litigation, Ameriprise Financial Services, LLC faces approximately 40-60 claims annually from over 2 million clients, primarily alleging advisor error, negligence, misrepresentation, unsuitability, or fraud related to market losses. The company states that none of these claims have resulted in material amounts against it. Currently, there are three pending putative class action lawsuits (Mehlman, Lourenco, and Tripson, all filed in 2024) alleging that Ameriprise's cash sweep services offer interest rates not compliant with its legal duties. For field sales force litigation, Ameriprise Financial Services, LLC typically sees 5 to 12 civil lawsuits or FINRA arbitrations each year from current or former employees, mostly concerning discrimination and employment-related claims. Two specific pending cases are noted: Robert Peter Petrocine (filed 2020) alleges a hostile work environment and wrongful termination for reporting alleged misconduct, seeking over $6 million including punitive damages, with an arbitration hearing scheduled for January 2025. James Theodore Mattson and James Earl Mattson (filed 2023) allege former advisors poached clients and violated rules, seeking over $5 million, with an arbitration hearing scheduled for February 2025. Ameriprise Financial Services, LLC also initiates 5-10 cases annually to enforce contractual rights against former representatives and competitors, and 0-5 collection cases against terminated Independent Advisors for unpaid debt balances. One such pending collection case is against Robert William Urban (filed 2022) for breach of transition and working capital notes, seeking $684,955.62. Regarding regulatory actions, Ameriprise Financial Services, LLC settled with the SEC in August 2018 for $4.5 million due to allegations of failing to safeguard retail investor assets. In December 2017, it settled with the SEC for $1.75 million (plus disgorgement and interest) for negligently relying on misrepresentations about ETF portfolios. In September 2016, the company settled with FINRA for $850,000 (plus restitution) for failing to detect and prevent wire transfers from customer accounts to registered representatives. No pending recruiting-related or state securities actions are required to be disclosed.

Renewal Conditions

Ameriprise Financial Independent Advisor Business franchisees must ensure their office location meets reasonable professional standards and the requirements outlined in the Manuals, including those for signage and the use of Proprietary Marks. They must also be in substantial compliance with all terms and conditions of their Franchise Agreement and any other agreements with Ameriprise Financial and its affiliates. All monetary obligations owed to Ameriprise Financial and its affiliates must be satisfied. Additionally, franchisees will be required to execute Ameriprise Financial's then-current Franchise Agreement, which may include terms and conditions that differ materially from their original contract.

Staffing Notes

Ameriprise Financial Independent Advisors must personally devote best efforts to the management and operation of the Independent Financial Advisor Business and not engage in competitive or other business activities outside the franchise without written approval. Ameriprise Financial Independent Advisors are responsible for the direct, on-premises operation and supervision of their business. Any contractor(s) and/or employee(s) hired by an Ameriprise Financial Independent Advisor must be competent, conscientious, properly trained, approved, and, if required, appointed and licensed through Ameriprise Financial. They must also be fingerprinted and sign Ameriprise Financial's confidentiality and other required agreements no later than the start of their engagement or employment. Independent Advisors have the option to hire support staff, such as one full-time assistant, but may hire more or fewer depending on business needs. Associate Financial Advisors are also an option for Independent Advisors, operating as employees or independent contractors of the Independent Advisor, and require prior approval from Ameriprise Financial. Independent Advisors who qualify can also act as Franchise Consultants, contracting with other Independent Advisors for leadership services like business planning, coaching, marketing, recruiting, and succession planning.