# AMERIPRISE FINANCIAL SERVICES, LLC X-17A-5 (2022-02-25) — Broker-dealer annual report - Company: AMERIPRISE FINANCIAL SERVICES, LLC - Form: X-17A-5 - Filed: 2022-02-25 - Period: 2021-12-31 - Accession: 0000862988-22-000003 - CIK: 49709 - File #: 8-16791 - Type: Broker-dealer - Material weakness: No - Auditor: Pricewaterhouse Coopers LLP - Auditor location: Chicago, IL - Contact: Michael S. Mattox - Phone: 612-678-0262 - Email: michael.s.mattox@ampf.con - Website: ampf.con - Signed by: Michael S. Mattox (Chief Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/49709/000086298822000003/afssrt.pdf --- {0}------------------------------------------------ ### S TATEMENT OF F INANCIAL C ONDITION Ameriprise Financial Services, LLC SEC File Number: 8-16791 December 31, 2021 With Report of Independent Registered Public Accounting Firm {1}------------------------------------------------ | OMB APPROVAL | | |---------------------------|--| | OMB Number: 3235-0123 | | | Expires: Oct. 31, 2023 | | | Estimated average burden | | | hours per response:
12 | | | | | | | | | | been from War in College State | | |---------|--------------------------------|--| | | | | | 3-16791 | | | | FILING FOR THE PERIOD BEGINNING 01/01/2021 | | | AND ENDING 12/31/2021 | | |-----------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|---------|-----------------------|--------------------------------------------| | | MM/DD/YY | | | MM/DD/YY | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF FIRM: Ameriprise Financial Services, LLC | | | | | | TYPE OF REGISTRANT (check all applicable boxes):
& Broker-dealer
Check here if respondent is also an OTC derivatives dealer | Security-based swap dealer | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | 802 Ameriprise Financial Center, 707 2nd Avenue South | | | | | | | (No. and Street) | | | | | Minneapolis | | MN | | 55474 | | (City) | | (State) | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | Michael S Mattox | 612-678-0262 | | | michael.s.mattox@ampf.con | | (Name) | (Area Code - Telephone Number) | | (Email Address) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | | Pricewaterhouse Coopers LLP | (Name - if individual, state last, first, and middle name) | | | | | | | | 11 | 60606 | | One North Wacker Dr. | Chicago
(City) | | (State) | (Zip Code) | | (Address) | | 238 | | | | 10/20/2003 | | | | (PCAOB Registration Number, if applicable) | | (Date of Registration with PCAOB)(if applicable) | FOR OFFICIAL USE ONLY | | | | | | | | | of an indonomandont niin is | {2}------------------------------------------------ | Michael S Mattox | | . swear (or affirm) that, to the best of my knowledge and belief, the | | |-------------------------------------------------------------------------------|------|-----------------------------------------------------------------------------------|-------| | financial report pertaining to the firm of Ameriprise Financial Services, LLC | | | as of | | December 31 | 2021 | is true and correct. I further swear (or affirm) that neither the company nor any | | ![](_page_2_Picture_3.jpeg) - - - - - - - - - - - - - - - - - - - - - - - - - - - {3}------------------------------------------------ Ameriprise Financial Services,LLC Statement of Financial Condition December 31, 2021 # **Contents** | Report of Independent Registered Public Accounting Firm 1 | | |-----------------------------------------------------------|--| | Statement of Financial Condition2 | | | Notes to
Statement of Financial Condition3 | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ### **Report of Independent Registered Public Accounting Firm** To the Board of Directors and Shareholder of Ameriprise Financial Services, LLC #### *Opinion on the Financial Statement – Statement of Financial Condition* We have audited the accompanying Statement of Financial Condition of Ameriprise Financial Services, LLC (the "Company") as of December 31, 2021, including the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. #### *Basis for Opinion* The financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of this financial statement in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. February 25, 2022 We have served as the Company's auditor since 2010. {5}------------------------------------------------ # Ameriprise Financial Services,LLC Statement of Financial Condition December 31, 2021 (In thousands) | Assets | | |---------------------------------------------------------------|---------------| | Cash and cash equivalents | \$
676,652 | | Cash segregated under federal and other regulations | 8,975 | | Receivables: | | | Fees due from affiliates | 131,081 | | Financial advisors and employees (net of allowance for credit | | | losses of \$1,118) | 1,169 | | Distribution fees and other (net of allowance for credit | | | losses of \$2,808) | 83,254 | | Secured demand note receivable from Parent | 200,000 | | Goodwill | 173,918 | | Intangibles (net of accumulated amortization of \$120,501) | 60,406 | | Prepaid commissions | 128,454 | | Other assets | 55,892 | | Total assets | \$ 1,519,801 | | | | | Liabilities and Member's Equity | | | Liabilities: | | | Accounts payable, accrued expenses and unearned revenue: | | | Due to affiliates | \$
147,999 | | Field force compensation | 303,634 | | Salaries and employee benefits | 177,030 | | Unearned revenue | 157,253 | | Other liabilities | 119,041 | | Total accounts payable, accrued expenses and unearned revenue | 904,957 | | Liabilities subordinated to the claims of general creditors | 200,000 | | Commitments and contingencies (see note 8) | | | Total member's equity | 414,844 | | Total liabilities and members's equity | \$ 1,519,801 | *The accompanying notes are an integral part of these financial statements.* {6}------------------------------------------------ ### **December 31, 2021** #### **Organization** Ameriprise Financial Services,LLC (the Company)is a wholly owned subsidiary of AMPFHolding Corp LLC. AMPF Holding LLC is a wholly owned subsidiary of Ameriprise Financial,Inc.(the Parent). The Company was previously known as Ameriprise Financial Services, Inc. but was converted to a limited liability company effective January 2020. The Company is registered with the Securities and Exchange Commission (SEC) and the various states in which the Company conducts business as an introducing broker-dealer and is a member of the Financial Industry Regulatory Authority, I nc. (FINRA) and the Securities Investor Protection Corporation (SIPC). In addition, the Company is a registered investment adviser with the U.S. Securities and Exchange Commission pursuant to the Investment Advisers Act of 1940. The Company is registered as a Commodity Trading Advisor (CTA) with the U.S. Commodity Futures Trading Commission (CFTC) and is a member of, and the corresponding services function is regulated by, the Na tional Futures Association (NFA). The Company is required to comply with all applicable rules and regulations of the SEC, FINRA, CFTC, NFAand SIPC. The Company clears the majority of transactions with anaffiliate,American Enterprise Investment Services, Inc. (AEIS), which under a clearing agreement charges the Company clearing fees on a per trade basis or based on assets under management.AEIS is primarily dependent onthe Companyfor the introduction of clients and gathering of client assets which generates AEIS's revenues. As a result, the Companycharges a distribution access fee basedon a fixed contractual amount for ongoing access to the Company's financial advisors, client servicing and product distribution efforts. The Company offers financial planning and investment advisory services to retail clientsfor which it charges a fee through an advisor-based distribution channel. These services are designed toprovide comprehensive advice, when appropria te, to address clients' cash and liquidity, asset accumulation, income, protection, a nd estate a nd wealth transfer needs. To complete their advice services, the Company's financial advisors provide clients with recommendations f rom m ore than one hundredproducts distributed by subsidiaries and affiliates of the Parent, as well as products of approvedthird parties. The financial advisors are either non-employee independent contractors operating through a nationwide franchise system, or they may choose to be employees of the Company. Due to differing levels of support provided to advisors operating in these various platforms, advisors are compensated at different percentages of the gross dealer concessions allowed for the various product offerings. To complement its advisor-based channel, the Company also offers an integrated direct retail distribution channel. Direct distribution services are provided through the Company's online brokerage offering, which allows clients to purchase and sell securities online, obtain research and information about a wide variety of securities, use asset allocation and financial planning tools, contact advisors, as well as access a wide range of proprietary and non-proprietary mutual funds. #### **Basis of Presentation** The preparation of the financial statements in conformity with accountingprinciples generally accepted in the UnitedStates (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. These accounting estimatesreflect the best judgment ofmanagement andactual amounts could differ signif ica ntly from those estimates. #### **Significant Accounting Policies** *Income taxes:*InJanuary 2020 the Company converted to a limited liability companyand became a disregarded entity f or the 2020 tax year. The Company is included in the consolidated tax returns filed by the Pa rent. However, a s a lim ited liability company that is not subject to tax andconsidered a disregarded entity for tax purposes, the Company a nd the Parent have elected to not allocate the consolidated amount of current and deferred tax expenses to the Company(see Note 2). Prior to 2020, the Company's provision for income taxes representedthe net amount of income taxes that the Company expected to pay or to receive from varioustaxing jurisdictionsin which it had operations. The Company provided for {7}------------------------------------------------ income taxes based on amounts thatthe Company believedit would ultimately owe taking into account the recognition and measurement for uncertain tax positions. Inherent in the provision forincome taxes were estimates and judgmentsregarding the tax treatment of certain items. The Company's taxable income wasincluded in the consolidated federal a nd state income taxreturns of the Parent. The Company providedfor income taxes on a separate return basis, except that, under a n agreementbetween the Parent and the Company, tax benefits were recognized forlosses to theextent they couldbe used in the consolidated return. It wasthe policy of the Parent to reimburse its subsidiaries for any tax benefits recorded. In connection with the provision for income taxes, the financial statements reflectedcertain amounts related to deferred tax assets and liabilities, which resulted from temporary differences betweenthe assets and liabilities measured f or financial statement purposes versusthe assets and liabilities measured for tax returnpurposes. *Cash and cash equivalents*: The Company has defined cash and cash equivalents to include money market funds, commercial paper,time deposits and other highly liquid investments with originalor remainingmaturities a t the tim e of purchase of 90 days orless. The Company has evaluated the cash equivalentsfor credit risk a nd has determined it is negligible due to the short-termnature of the investment. *Cash segregated under federal and otherregulations*: Pursuant to Rule 15c3-3 Section(k)(2)(i), a ll cash received from customers is held in segregated accounts established solely for the benefit of customers until it is forwarded to affiliates. *Allowance for credit losses:*Financialadvisors are required to pay for certain supportservices provided by the Company. The Companyreserves for any outstanding receivables from the financial advisors that it does not believe are recoverable. The Companyreserves for fees receivable related to marketing support arrangements for sales of m utual funds of other companies basedupon management's judgment as to ultimate collectability. The Company also reserves for its unsecured client activity funded by its affiliate, AEIS.The Company has agreed to indemnify AEIS for any losses that it may sustain from the customer accounts introduced by the Company. The Company reserves for these potential losses. When determining the allowance for credit losses for advisor loans, the Company considers its actual historical collection experience and advisortermination experienceas well as other factors including amounts due at termination, the reasons for the terminated relationship, length of time since termination, and the former financial advisor's overall financial position. Management uses its best estimate of future termination and collection rates to estimate expected credit losses over the expected life of the loans. The allowance for credit losses on advisor loans is recorded in distribution expenses. *Goodwill and intangibleassets:* Goodwill represents the amount of an acquired company's acquisition cost in excess of the fair value of assets acquired and liabilities assumed.TheCompany evaluates goodwill f or im pairment annually on the measurement date of July 1 and whenever events and circumstances indicate that animpairment may have occurred, such as a significant adverse changein the business climate or a decision to sell.In determining whether impairment has occurred, the Company uses the discounted cash flow method.Intangible assets generally represent customer andindependent contractor relationships and non-compete agreements. Intangible assets are amortized over their estimated useful lives, unless they are deemed to have indefinite useful lives.The Company evaluates the finite lived intangible assets' remaining useful lives annually on the measurement date of July 1 andtests for impairment whenever events and circumstances indicate that a n impairment may have occurred, such as a significant adverse change in the business climate. For f inite lived intangible assets subject to amortization, impairment to fair value is recognized if the carrying amount is not recoverable. *Prepaidcommissions*: Commissions paid by the Companyto advisorsin connection with the sales of financial pla ns a re deferred until the plan is delivered and the corresponding revenue is recognized. #### **2. Recent Accounting Pronouncements** #### **Adoption of New Accounting Standards** #### *Income Taxes-Simplifying the accounting forincome taxes.* In December 2019, the Financial Accounting Standards Board (FASB) updated the accounting standards to simplify the accounting for income taxes. The update amends existing guidance related to the allocation of income tax expense when members of a consolidated tax filing group issue separate financial statements. The updated guidance is a pplied on a retrospective basis for allperiods presented. The standard is effective for interim a nd annual periods beginning a fter December 15, 2020, with early adoption permitted. {8}------------------------------------------------ The Company early adopted theupdated guidance effective Ja nuary 1, 2020. The Company wa s impacted by the conversion to a limited liability company in 2020, the adoption of theupdated guidanceandits election to not be allocated income tax expense as the Company is a member of a consolidated tax filing group. Under the updated guidance, income tax expense, income tax receivables and payables, and deferred tax assets and liabilities are no longer recognized in the financial statements of the Company. As a result, the Company recorded a \$132 million reduction in deferred income tax assets, a \$9 million reduction in uncertain tax positions which were recorded in other liabilities and a \$123 million reductionin retained earnings as of January 1, 2020. The standard also updated the guidance for intra period tax allocation, deferred tax lia bilities rela ted to outside basis differences, step-up in the tax basis of goodwill, interim recognition of enactment of tax laws or ratechanges and franchise taxes and other taxes. None of these updates had an impact onthe Company's statement financial condition. #### *Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments* In June 2016, the FASB updated the accounting standards related to accounting for credit losses on certain types of financial instruments. The update replaces the current incurred loss model for estimating credit losses with a new model thatrequires an entity to estimate the credit losses expected over the life of the asset. Generally, the initial estimate of the expected credit losses and subsequent changes in the estimate will be reported in current period earnings and recorded through a n allowance for credit losses on the balance sheet. The standard is effective for interim and annual periods beginning after December 15, 2019. A modified retrospective cumulative adjustment to retained earningsshould be recorded as of the f irst reporting period in which the guidance is effective for loans, receivables, and other financial instruments subject to the new expected credit loss model. The Company adopted thestandard on January 1, 2020. The adoption of this update did not have a material impact on the statement offinancial condition. #### *Intangibles – Goodwill and Other – Simplifying theTest for Goodwill Impairment* In January 2017, the FASB updated the accounting standards to simplifythe accounting for goodwill impairment. The update removes the hypothetical purchase price allocation (Step 2) of the goodwill impairment test. Goodwill impairment will now be the amount bywhich a reporting unit's carrying value exceeds its fair value. The standard is effectivefor interim and a nnual periods beginning after December 15, 2019 andshould be appliedprospectively with early adoption permitted for a ny impairment tests performed after January 1, 2017.The Company adopted the standard on January 1, 2020. The adoptionofthis update did not have a material impacton the Company'sstatement financial condition. ### **3. Goodwill and Other Intangibles** Goodwill is not amortized but isinstead subject to impairment tests. Duringthe year ended December 31, 2021, the tests did not indicate impairment. Finite-lived intangible assets acquired for the year ended December 31, 2021represent the a cquisition of advisor and customer relationships were \$18,893, with a weighted average amortization period of five years. For the year ended December 31, 2021,the impairment tests on finite-lived intangible assets did not indicate impairment. Finite-lived intangible assets consisted of the following: | | Gross Carrying
Amount | | Accumulated
Amortization | | | Net Carrying
Amount | | |------------------------------------|--------------------------|---------|-----------------------------|---------|--|------------------------|--------| | Customer and advisor relationships | \$ | 143,516 | \$ | 102,669 | | \$ | 40,846 | | Tax referral agreement | | 10,200 | | 9,386 | | | 814 | | Non-compete agreements | | 27,191 | | 8,446 | | | 18,745 | | December 31, 2021 balance | \$ | 180,907 | \$ | 120,501 | | \$ | 60,405 | {9}------------------------------------------------ #### **4. Business Owned Life Insurance** The Companyholds cash value life insurance policies as a means of offsetting market fluctuations in certain deferred compensation liabilities. As of December 31, 2021, the cash surrender value, which approximates fair value, of this lif e insurance was \$32,300and is included in the other assetsline in the statements of financial condition. #### **5. Secured Demand Note Receivable and Subordinated Liabilities** In December 2014, a subordinated loan agreement in the form of a secured demandnote was entered into with the Parent. The borrowing available underthe subordination agreement on December 31, 2021, is as follows: Secured demand note collateral agreement, 0.10 percent, due December 15, 2022 \$200,000 The subordinated borrowingwith the Parentis available in computing net capital under the SEC's uniform net capital rule. Under the terms of the subordinated loanagreement, to the extent that such borrowings are required f or the Company's continued compliance with minimum net capital requirements,the Company is prohibited from making pa yments on the subordinated note agreement. The Company has the optionto renewthe current agreement in one-year increments in perpetuity.Pursuant to the agreement, the Parent must notify the Company on or before the day thirteenmonths preceding the maturity date if they do not intend to extend the maturity date of the agreement. The Company a nd the Parent have elected to notterminate theagreementforfiscal year 2022. On December 31, 2021,the secured demand note was collateralized by securities with anaggregate fair value of \$218,920. Based on the character and fair value of the securities collateralizing the secured demand note receivable, the entire \$200,000 is available in computing net capital in accordance with the SEC's uniform net capital rule. The securities collateral has been deposited by the Parent in a separate custodialaccount for the exclusive benefit of theCompany. I n the event the Company draws on the secured demand note receivable, the maximum payment to the Company in a ccordance with the terms of the collateral agreement is \$200,000 and the stated interest rate adjusts from a standing ten basis points to LIBOR plus 90 basis points. The subordinated loan agreement and the associated secured demand note agreement entered into with the Parentwas approved by FINRA prior to the respective effective dates. ## **6. Fair Values of Assets and Liabilities** U.S. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants atthe measurement date; that is, an exit price. The exit price assumes the asset or liability is not exchanged subject to a forced liquidation or distressedsale. ### **Valuation Hierarchy** The Company categorizes its fair value measurements accordingto a three-level hierarchy. Thehierarchy prioritizes the inputs used by the Company's valuation techniques. A levelis assigned to each fair value measurementbasedon the lowest level input thatissignificantto the fair value measurement in its entirety.The three levels of the fair value hierarchy a re defined as follows: - Level 1 Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date. - Level 2 Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities. - Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. #### **Determination ofFair Value** The Companyuses valuation techniques consistentwith the market and income approaches to measure the fair value of its assets and liabilities. The Company's market approach uses prices and other relevant information generated by market transactions involvingidentical or comparable assets or liabilities. The Company's income approach uses valuation {10}------------------------------------------------ techniques to convert future projected cashflows to a single discounted present value amount. When applying either approach, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. The following is a description of the valuation techniques used to measurefair value andthe general cla ssification of these instruments pursuant to the fair value hierarchy. #### *Cash Equivalents,Other Assets and Liabilities* When available, the fair value of securities is based on quoted prices in active markets. If quotedprices are not availa ble, fair values are obtainedfrom third party pricing services, non-binding broker quotes, or other m odel-based valuation techniques.The Company's cash equivalents, consistingof commercial paper and time deposits, are classified a s Level 2 and are measured at amortized cost, which approximatesfair value because of the short time between the purchase of the instrument and its expected realization. Level 1 other assets consist of common stockand governmenttreasury bills a nd notes. Level2 other assets consist of unitary investment trusts (UIT's), municipal bonds and limited market securities. Level 2 liabilities consist of UIT's, non-convertible debt securities, municipal bonds, governmentsecurities and a gencies and limited marketsecurities.Level 3 contingent consideration liabilities consist of earn outs and/or deferred payments related to the Company's acquisitions. Contingent consideration liabilities are recorded at fair value utilizinga discounted cash flow model using an unobservable input (discount rate). Given theuse of a significant unobservable input, the f air value of contingent consideration liabilitiesis classified as Level 3 within the fair value hierarchy. The following table presents balances of assets and liabilities measured at fair value on a recurring basis: | | December 31, 2021 | | | | | | | |------------------------------------|-------------------|----|---------|----|---------|----|---------| | | Level 1 | | Level 2 | | Level 3 | | Total | | Assets | | | | | | | | | Cash equivalents | | | | | | | | | Commercial paper | \$
— | \$ | 600,854 | \$ | — | \$ | 600,854 | | Time deposits | — | | 25,000 | | — | | 25,000 | | Other assets | 176 | | 2 | | — | | 178 | | Total assets at fair value | \$
176 | \$ | 625,856 | \$ | — | \$ | 626,032 | | Liabilities | | | | | | | | | Contingent consideration liability | \$
— | \$ | — | \$ | 33,605 | \$ | 33,605 | | Other liabilities | \$
6 | | 2 | | — | | 8 | | Total liabilities at fair value | \$
6 | \$ | 2 | \$ | 33,605 | \$ | 33,613 | During the reporting period, there were no material assets or liabilities measured at fair value on a nonrecurring basis. There were no transfers between levels during the periods. The following table provides a summaryof changesin Level 3 liabilitiesmeasured at fair value on a recurring basis: | | Contingent
consideration | | | |------------------------------------------|-----------------------------|-----------|--| | | | | | | | | liability | | | Balance at January 1, 2021 | \$ | 43,463 | | | Accretion included in earnings | | 1,143 | | | Issuances | | 11,160 | | | Settlements | | (8,053) | | | Valuation adjustments including earnings | | (14,108) | | | Balance at December 31, 2021 | \$ | 33,605 | | {11}------------------------------------------------ #### **Fair Value of FinancialInstruments** In general, the Company's financialassets andliabilities are carried at fair value or at amounts which, because of their short-term nature and based on market interest rates available to the Company onDecember 31, 2021 approximate fair value. Included in receivables from financial advisors and employees onthe statements of financialconditionare loansreceivable from financial advisors. As of December 31, 2021,the carryingvalue of the loansis \$2,397, which approximates fair value. These receivables, not included in the table above, are considered a level 3 fair value. As of December 31, 2021,the fair value of the secured demandnotesreceivable and the subordinated liability approximate book value of \$200,000. Thisreceivable and liability, not included in the table above, are both considered level 2 fa ir value. As of December 31, 2021, the secured demand note collateral consisted of corporate bonds and agency mortgagebacked securities and is considered level2 fair value. #### **7. Net Capital Provision and Regulatory Requirements** As a registered broker dealer, the Company is subject to the SEC's uniform net capital rule (SEARule 15c3-1). The Company computes its net capital requirements under the alternative method provided for in SEA Rule 15c3-1, which requires the Company tomaintain net capital equal to 2% of combined aggregate customer-related debit items, a s def ined (or \$250, if greater). On December 31, 2021, the Company hadnet capital of \$102,812 which was \$102,562 in excess of the amount required to be maintained at those dates. Advances to affiliates, dividendpayments and other equity withdrawals are subject to certain notification and other provisions of the net capital rule of the SEC and other regulatory bodies. The Company has claimed exemption from SEA Rule 15c3-3 of the SEC under paragraphs(k)(2)(i) and(k)(2)(ii) of tha t rule. #### **8. Commitments and Contingencies** In the normal courseof business, the Company may indemnify and guarantee certain service providers a gainst potential losses in connection with their acting asservice providers to the Company. The maximum potential a mount of future payments the Company could be required to make under these indemnifications cannot be estimated, however, the Company believes that it is unlikely it will have to make materialpayments under thesearrangements and has not recorded a contingent liability in the financial statements for any indemnifications. The Company has agreed to indemnify an affiliate,AEIS,for any lossesthat it may sustain from the customer a ccounts introduced by the Company. The Company reserves for these potential losses. On December 31, 2021, the reserve was \$3,463, respectively, and is reflected in the other liabilities line in the statements of financial condition. On December 31, 2021, there were no amounts indemnified to AEIS for these customer accounts. The Company is involved in the normal course of businessin legal, regulatory andarbitration proceedings, including cla ss actions, concerning matters arising in connection with the conduct of its activities as a diversifiedfinancialservices firm. These include proceedings specific to the Company as well as proceedings generally applicable to business practices in the industries in which it operates. The Company can also be subject to litigation arising out of its general business activities, such asits investments, contracts, leases andemployment relationships.Uncertain economic conditions heightened a nd sustained volatility in the financial markets and significant financial reform legislationmay increase the likelihood that clients and other persons or regulators may present or threaten legal claims or that regulators increase the scope or frequency of examinations of theCompany or the financialservicesindustry generally. As with other financial services firms, thelevel of regulatory activity and inquiry concerning the Company's businesses remains elevated. From time to time,the Company receivesrequests for information f rom, a nd/or has been subject to examination or claims by,the SEC, FINRA, state insurance and securitiesregulators, state attorneys general a nd various other governmental and quasi-governmental authorities on behalf of themselves or clients concerning the Company's {12}------------------------------------------------ business activities andpractices, and the practices of the Company's financial advisors. The Company has numerous pending matters which include information requests, exams orinquiries that the Company has received during recent periods regarding certain matters,including: sales and distribution of mutual funds, exchange traded f unds, a nnuities, equity and fixed income securities, real estate investment trusts, insurance products, and financial advice offerings, including managed accounts; supervision of the Company's financial advisors; security of client information; and transaction monitoringsystems and controls. The Company has cooperated a nd will continue to cooperate with the applicable regulators. These legal and regulatory proceedings and disputes are subject to uncertainties and, as such, it is inherently difficult to determine whether any lossis probable or even reasonably possible, or to reasonably estimate the amount of any loss. The Company cannot predict with certainty if, how or when any such proceedings will be initia ted or resolved or what the eventual settlement, fine, penalty or otherrelief, if any, may be, particularly for proceedings that are in their early stages of development or where plaintiffs seek indeterminate damages. Numerous issuesmay need to be resolved,includingthrough potentially lengthy discovery and determination of important factual matters, and by addressing unsettled lega l questions relevantto the proceedings in question, before a loss or range of loss can be reasonably estimated for any proceeding. An adverse outcome in one or more proceeding could eventually result in adverse judgments, settlements, fines, penalties or other sanctions, in addition tofurther claims, examinations or adverse publicity that could have a material adverse effect on the Company's financial condition. In accordance with applicable accounting standards, the Company establishes anaccrued liability for contingent litiga tion and regulatory matters when those matters present loss contingencies that are both probable a nd ca n be reasonably estimated. In such cases, there still may be an exposure to loss in excess of any amounts reasonably estimated and accrued. When a loss contingency is not both probable and estimable, the Company does not establish a n accrued lia bility, but continues to monitor, in conjunction with anyoutside counsel handling a matter, further developments that would m ake such loss contingency both probable and reasonably estimable. Once the Company establishes an a ccrued lia bility with respect to a loss contingency, the Company continues to monitor the matter for further developments that could a ffect the amount of the accrued liability that has been previously established, and any appropriate adjustments are madeeachquarter. #### **9. Income Taxes** Effective January 1, 2020, the Company adopted guidance simplifying the accounting for income taxes. As a result of the adoption and the Company's conversion to a limited liability company in 2020 which resulted in it becoming a disregarded entity,income taxes expense,income tax receivables and payables, and deferred tax assets and lia bilities a re no longer recognized in the financial statements for the Company.See Note 1 and2. #### **10. Related Party Transactions** The Companyhas a short-term intercompany lease agreement with anaffiliate, Ameriprise Holdings, Inc. (AHI). The agreement has a one-year term with no contractual renewalprovisionand is cancelable by either party with 30 days' notice. The Company compensates AHI for the use of property, equipment and similar items that AHI owns or maintains. No lease asset or liability is recorded on the statement of financial condition. Receivables due from affiliates on the statements offinancialcondition primarily consist of distribution f ees of \$76,687, tradingconcessions of \$9,103, marketing support fees of \$8,471, and aninsurancerecoverable of \$22,197, on December 31, 2021. Payables due to affiliates on the statements of financial conditionprimarily consist of administrative expenses of \$91,736, use of property and equipment maintenance for \$17,879, cash for affiliatedproduct purchases of \$8,512 due to various affiliates for investments in products and clearing charges for \$14,592 onDecember 31, 2021. The Company clears the majority of transactions with AEIS. The Company participates in the Parent'sRetirement Plan(the Plan), which covers allpermanent employees a ged 21 a nd over who have met certain employment requirements. The Plan includes a cash balance formula and a lump sum distribution option.Pension benefit contributions to the Plan are basedon participants' age, years of service and total {13}------------------------------------------------ compensation for the year. Funding of retirement costs for the Plan complies with the applicable minimum funding requirements specified by the Employee Retirement Income Security Act (ERISA). The Company also participates in defined contribution pension plans of the Parent that cover all employees who have m et certain employment requirements. The Company's contributions to the plans are a percentage of either each employee's eligible compensation or basic contributions. The Company participates in defined benefit health care plans of theParent that provide health care a nd life insura nce benefitsto retired employees, including retired field employees. Theplans include participant contributions a nd servicerelated eligibility requirements. The Company participatesin the Parent's Ameriprise Financial Incentive Compensation Pla n (incentive plan) a nd the Parent's Franchise Advisor Deferral Plan. Under these plans, employees, directors, and independentcontractors are eligible to receive incentive awards including stock options, restricted stock awards, restricted stock units, performance shares and similar awards designed to comply with the applicable federalregulations and laws of jurisdiction. The Company participates in the Parent's Advisor Group Deferral Plan, which was created in April 2009,which allowsf or employee advisors to receive share-based bonus awards which are subject to future service requirements a nd forfeitures. The Advisor Group DeferralPlan is an unfunded non-qualified deferred compensation plan under section 409A of the Internal Revenue Code. The Advisor Group Deferral Plan also gives qualifying employee advisors the choice to defer a portion of their base salary or commissions beginning in 2010. This deferral can be in the form of share-based a wards or other investment options. Deferrals are not subject to future service requirements or forfeitures. Awards granted under the AdvisorGroup DeferralPlan may be settled in cash and/or shares of the Parent's common stock according to the award's terms. Effective October 2011, the Company entered into two separate revolving credit agreements with the Parent, each with a n interest rate of LIBOR plus 90 basis points, whereby in one the Company can borrow up to \$100,000 from the Parent andin the second the Parent can borrow up to \$100,000 from the Company. As of December 31, 2021, and for the year ended, there were no draws on these lines of credit. Effective December 2014, the Company and the Parent entered into a secured demand notecollateral and subordinated loan agreementfor \$200,000 at a stated interest rate of 0.10% due to mature onDecember 15, 2022,with the option to renew in one-year increments in perpetuity. The Company recordedcapital contributions from the parent of \$0 in 2021and paid dividends to the parent of \$1,050,000 in 2021. #### **11. Subsequent Events** As of February 25, 2022,which is the date the financialstatements were available to be issued, the Company has evaluated events or transactionsthat may have occurred afterthe statement of financial condition date for potential recognition or disclosure. No events or transactionsrequire disclosure. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.