Choosing a financial services relationship that is right for you

Understanding brokerage services, investment advisory services and financial planning.

As you consider your immediate and long-term financial needs, you may ask "What type of financial services relationship is right for me?" There are different types of services: brokerage services, investment advisory services and financial planning. They are different not only in terms of the services provided, but also the different obligations of the firm that provides those services. Ameriprise Financial can help you understand these types of services so you feel comfortable with your approach as you seek to reach your financial goals.

Whatever approach you choose, we believe that your needs can best be served by someone who understands your goals and supports your dreams. This may include helping you plan to achieve your goals and recommending appropriate investments for your situation. Financial recommendations should take into consideration your risk tolerance, time horizon, overall financial objectives, tax situation and any financial constraints.

Ask yourself these important questions:

• What services are you using today?
• What do you want to focus on?
• How do you plan to reach your dreams and goals?
• Do you want assistance with a few targeted areas or are you seeking a more holistic approach?
• How involved do you want to be in investment decision-making?

Brokerage services

Brokerage services include a range of services related to investing in specific securities — such as stocks, bonds and mutual funds — which are held in a brokerage account. These services are provided by a broker-dealer through a registered representative who, acting as your agent, can buy and sell securities on your behalf, and provide periodic reports regarding your transactions and the value of your holdings.

Generally, brokers will not make investment decisions for you but may offer recommendations about which securities to buy, hold or sell. The recommendations are often made on a transactional basis. Brokers must know key facts about your financial situation and then make suitable recommendations based on those facts. "Suitable" means that the broker has asked you about your basic financial and tax status, including current investments, income and net worth; your tolerance for risk; investment experience and the expected amount of time you plan on holding the investments. Using this information, they can recommend a specific product or service.

Brokers can also provide investment guidance beyond the scope of buy/sell/hold recommendations on individual securities, such as providing investor education, investment research, basic financial analyses and advice on an asset allocation¹ strategy based on the suitability information described above. Typically, you are not charged a separate fee or commission for this guidance because it is part of, and incidental to, the brokerage services.

Brokers must also:

• Treat you in a fair manner characterized by high standards of honesty and integrity.
• Conduct due diligence on any security so they have a reasonable belief that any recommendation made is "suitable."
• Seek to execute all orders in the best available market by taking into account all relevant facts and circumstances such as order price, order size and trading characteristics of the security involved.

When working with brokers, you should also know that their obligation to tell you about their business, conflicts of interest and other matters is more limited than if they were to have a fiduciary relationship with you, like an investment adviser.

Investment advisory services

Investment advisers provide analysis and advice by making investment recommendations or providing research and/or opinions to their clients on securities or markets. Investment advisers may also provide you with asset allocation strategies based on your financial and tax status. These services are provided through investment adviser representatives who are responsible for providing investment advice and suitable recommendations to clients on an ongoing basis throughout the term of the adviser-client relationship.

The Investment Advisers Act of 1940 and applicable state laws impose a different, higher set of regulatory standards on investment advisers than broker-dealers. Sometimes, you will hear them referred to as having a "fiduciary" relationship with you — this means an investment adviser has the responsibility to act in your best interests. In addition to having the same obligations as brokers, investment advisers must also:

• Act in your best interests when providing you with investment advisory services.
• Place your interests above their own.
• Avoid or disclose any material conflicts of interest, including disclosure of compensation paid to or received from affiliates as a result of the advisory relationship or any recommendations made in connection with the advisory services.

When you engage the services of an investment adviser, you will enter into a written agreement and receive a brochure that contains important information about the adviser and their business. The agreement acknowledges and governs the advisory relationship and outlines the investment adviser’s obligations to you. The brochure includes information about the adviser's business model, the scope of services provided, fees you will pay and possible conflicts of interests that may affect the advisory relationship.

Ameriprise^® financial planning

For many consumers, reaching long-term financial goals through an investment advisory service is a solid approach to take. Financial planning typically differs from other types of investment advisory services because of the breadth and scope of the advisory services provided.² When you engage in a financial planning relationship, you benefit from a comprehensive, ongoing process that helps you achieve your goals.

Financial planning is the process of meeting your financial goals through the disciplined management of your finances. Financial goals can include buying a home, saving for education costs or planning for retirement.

The financial planning process consists of six steps that help you take a "big picture" look at where you are financially. It is an ongoing process, defined by the Certified Financial Planner Board of Standards, Inc., designed to help you meet your immediate and long-term financial goals. Using these six steps, you can identify your objectives, define your current situation, evaluate how much you need to reach your goals and determine what you need to do to help reach them.

At Ameriprise Financial, we believe financial planning is a long-term, collaborative relationship, delivered through a one-to-one financial planning process. We'll work together to define your dreams, develop a plan to help you get there, then track your progress along the way, recommending changes when needed.

Financial planning provides direction and meaning to your financial decisions. It helps you understand how each financial decision can affect your other goals. For example, using a specific investment strategy might help you buy something in the future, but it may have a negative impact on your current lifestyle, protection needs or other future goals. By viewing each financial decision as part of a whole, you can consider the impact on your entire financial situation.

Taking action on the proposed strategies and recommendations is part of the process and can help you reach your financial goals. Once your Ameriprise financial advisor has analyzed your situation and proposed strategies and recommendations that are aligned with your goals, needs and priorities, you can decide how to take action on your plan.

Typically, you have a choice of financial services providers with whom to implement the recommendations via a transaction-based brokerage account, a fee-based investment advisory account or a combination of both. The protection you receive from a financial planning relationship does not extend to any existing brokerage accounts or the implementation of a financial plan, unless you decide to continue the relationship after you receive your initial recommendations from the same provider.

It is also important to revisit your financial and life goals regularly, monitor your progress toward them and make adjustments to help you stay on track. At Ameriprise Financial, we encourage clients to have an ongoing planning relationship because research shows they are more confident and optimistic that they will achieve their dreams and financial goals than people who don't.