Good morning, everyone. Thank you very much for joining us for our 2014 financial community meeting. We have a great agenda for you today. First, you'll hear from Jim Cracchiolo, our Chairman and CEO. He'll be followed by several of our business leaders, giving you some more visibility into our businesses. We'll conclude with Walter Berman, our CFO, covering our financial performance. Following our remarks, we'll open it up for questions. During the meeting, you'll hear reference to various non-GAAP financial measures, which we believe provide insight into the company's operations. Reconciliation of the non-GAAP financial numbers to their respective GAAP numbers can be found in today's materials available on our website. Some statements that we make during this presentation will be forward-looking, reflecting management's expectations about future events and 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 results to be materially different from forward-looking statements can also be found in our 2013 Annual Report to Shareholders and our 2013 10-K. We undertake no obligation to update publicly or revise these forward-looking statements. With that, I'll turn it over to Jim.
Good morning, everyone. If you're joining us here in New York or on the webcast, we're kind of excited about telling our story today. We've come a long way over the last number of years. In fact, eight and a half years since we've become a public company. We've invested heavily in our company today. We think that we have some excellent results, and that we have a great opportunity for growth in the future, and that's what we want to discuss today. Let me start by saying that today, Ameriprise stands as a diversified financial services leader with a consistent record of outperformance, and I think we're very well-positioned for what we think will be a continued opportunity of growth in the profit pools in which we play in.
Now, I would like to bring that to life today, both myself and my colleagues, in explaining what we've done to invest in the company, the results that we've achieved, but more importantly, how that foundation that we set can actually position us well for continued growth in the future. I want to leave you with these messages. First, Ameriprise today is a client-centric, value-based business. We, at the heart of what we do, very much focus on our client value proposition and how we deliver that client value proposition, whether in our wealth management business or in our asset management business. We also operate as an integrated business model, and we think there are benefits of that, and that we'll try to continue to explain to you.
I remember my first conversation when we became a public company of trying to explain the components of our business and how that can really result in good returns over time for the shareholders. I think we've been able to prove that, and we want to continue to show you why. We also know that there's a growing opportunity in the wealth management business, particularly around the retirement population. More people are going to be moving to retirement. I'm going to give you some stats on that, and we are well qualified to take advantage of that opportunity. Also in the asset management business. If you look at the assets under management, we'll continue to grow over the next decade, not just here in the U.S. and Europe, but also in many regions around the world.
That gives us an opportunity as one of the large players to play in that pool. We have achieved a consistent record of performance, and we want to continue that record of performance. We're very much focused on how do we drive growth in our revenue? How do we continue to maintain and improve our margins? At the same time, we deliver good return to our shareholders. We do have a differentiated capital position and return, and that has led to great shareholder returns, and we think we can continue that as well with a very high return on equity in the financial services industry. Let me start with who Ameriprise is. We advise, manage, and protect assets and income for retail, high net worth, and institutional clients.
All the components of our business, our company, whether in wealth management, asset management, or our protection annuities, is actually set up to do that. We have the financial strength and the stability to continue to both invest as well as navigate any potential uncalled-for markets that we may come across in the future. Now, what does the integrated business model provide us? I think we tried to show over the last number of years how the businesses work together in a better way. It gives us a very deep, long-term client relationships in our wealth management business with our advisors, with our clients, and to continue to build that. It gives us very strong client retention and client persistency of assets that gives us a very good return.
It gives us diverse revenue streams across market cycles, both with market appreciation and equity markets or if you, in a different interest rate environment, get the spread business that complements all the premium business that supports our protection business. We're able to leverage the valuable expertise we have. Having our investment professionals as part of our firm gives us a great capability into how we manage the assets of the firm, the owned assets. Also, some of the products and capabilities we offer through our advisor channel and our advice-based solutions. It also gives the asset management business from the wealth management business asset flow and managing those assets. It gives our protection business the ability to manage our clients as part of that relationship. Our protection business develops products particularly suited for our clients for their long-term retirement needs, good benefits at a good price.
That overall leads to higher returns and lower volatility across our company. I think that's one of the particularly important equations we have here. When I talk about the segments, I'm going to talk about why we think the segments on their own stand tall in the industries in which they operate, and some should be at premiums. I would say put it all together with the type of return, with the lower volatility that Ameriprise can generate and continue to generate, I think you find that we should be at a premium, not a discount against the industry. Over the years, as we've come out of the recessionary environment, we have grown, compounded 16% in our assets under management and administration to $771 billion as of the end of the year.
Our revenue growth has compounded by 11%, up to $10.9 billion over the same period. Our operating earnings are up 19% on a compound annual growth rate, with operating earnings per share up 24%. That has led to a 900 basis point increase on our return on equity to 19.7% as of the end of the year. As you know, in the first quarter, we were over 20%. Pretty good results. That resulted in last year, on a one-year basis, we sort of outperformed the indices that we track against. Up 88% against the S&P 500, S&P Financials Index. Over the five-year period, we're up 449%. Again, fifth highest total return in the industry. Let's go back to the point of our spinoff and separation. We're up 273%, the second highest total return within the S&P Financials.
I think, again, we've been able to show you whether it's right after our separation and the investments we had to make to become a good, strong public company, navigating the financial crisis, the reinvestments we've made in the business, the acquisitions we did to actually performing quite well over the entire history of us as a public company. Now, we can talk about financial performance, as I just did, but what makes the company really strong and why I really believe that we have an opportunity for the future is around how we operate as a company, as a value-based company. We have 120-year legacy as Ameriprise and its predecessor companies, starting from the days of our IDS company. We always have focused on the client.
There used to be a saying from John Tappan, our founder, "Never a day late or a penny short." They used to have that saying during the Depression. We carried that through the financial crisis more recently. With that in regard, we have excellent client satisfaction. We focus on that every day. I'll give you how that's being recognized. We have industry-leading engagement, both with our advisors but our employee. We track our employee satisfaction every year and our engagement, and we are way above financial industry norms. We're, in fact, at the levels of the best Fortune 100 companies in the U.S. that focus on employee engagement. We've been rated fifth year in a row best place to work as Ameriprise. We have continuity of executive leadership, over 30 years experience in financial services and over 20 years at Ameriprise.
We have meaningful commitments to our communities and where we live and where we work. We've been rated again this year as one of the top 50 companies in the U.S. as a The Civic 50 company for charitable giving and our campaigns that support our local communities. Charities@Work for 2013 gave us Corporate Excellence Award. Here again, you're investing not just in a business, but in a company that brings that business to life around the people, around the leadership, around our focus on what we do every day to keep a strong company. I want to go into our wealth management business. It's the front end of who we are as Ameriprise, the way we reach our retail consumer as Ameriprise. There is a significant wave, you've heard this numerous times, of the baby boomer population moving to retirement.
You can just see, just over the next 2 years, asset growth of investable assets for people actually beginning to enter retirement. You can look at the wave. Over the next 15 years, the largest wave of people will be moving to retirement, 10,000 people a day. They feel underserved. They control a huge pool of assets. 82% of workers think that it's very important or somewhat important to work with an advisor who specializes in converting assets to retirement income. 82% of workers are not very confident that they will have enough money to live through retirement. We're not just talking about people who have a few hundred thousand dollars. We're talking about people who have a few million dollars. Why? Because they want to maintain their lifestyle through retirement.
What they actually accumulated, what they earned during those years, they want to live in a similar fashion. Ameriprise is well-suited to serve that market opportunity. We're a leader in financial planning in the U.S. We're nationally recognized today as a brand. We have over 9,700 highly qualified advisors. We have very large programs. We're number 5 in retirement and as an advice provider. We're number 2 as a mutual advisory program. We have a long history of serving our clients through generations. What I want to talk to you about today, and that will be complemented with the presentations from both Bill Williams and John Woerner, will be around how do we continue to invest and grow in our wealth management business.
First, I'm going to start with delivering an excellent client experience to continue to grow our client base and continue to move further upmarket into the affluent space. Number 2, deepen our client relationships with comprehensive advice and solutions that are tailored to our clients' needs to serve them throughout their retirement, as well as for younger generations, their accumulation stage. Number 3, to really build on the attractive value proposition that we invested heavily in over the last decade to actually continue to grow the productivity of our advisor force and attract new advisors to our system. That will be all supported by the investments we made in tools and capabilities, in our products and our services. That will help us continue to generate the revenue and growth that we want so that we can generate strong returns for the future.
Let me start with delivering an excellent client experience, including how we continue to grow our client base. First of all, our brand experience, it is really out there. The consumers are actually relating to it. They understand what the thoughts are that they need to have regarding their retirement, but they're still concerned. They want to know who to work with. They want to know how to work on it. We've launched another brand campaign. We're going to talk more about the details of this, through myself and Bill Williams in a few moments, but let me just show you some of the commercials. These commercials are not just ads that we run. They're supported by a 360 brand experience. What we do online, on our websites, through social media, with our advisors in their local communities, in how they position their practices in those communities.
Let's run those ads.
Ameriprise asks people a simple question: Can you keep your lifestyle in retirement?
I don't want to think about the alternative.
I don't even know how to answer that. I mean, no one knows how their money's going to last.
I try not to worry, but you worry. What happens when your paycheck stops?
Because everyone has retirement questions, Ameriprise created the exclusive Confident Retirement approach to get the real answers you need. Start building your Confident Retirement today. Ameriprise asks people a simple question: In retirement, will you outlive your money?
No, that can't happen.
That's the thing. I mean, you don't know how long it has to last.
Everyone has retirement questions. Ameriprise created the exclusive Confident Retirement approach. Now you and your Ameriprise advisor can get the real answers you need.
Well, knowing gives you confidence.
Start building your Confident Retirement today. Ameriprise asks people a simple question: In retirement, will you have enough money to live life on your terms?
I sure hope so.
With healthcare costs? Who knows?
Everyone has retirement questions, Ameriprise created the exclusive Confident Retirement approach. Now you and your Ameriprise advisor can get the real answers you need. Start building your Confident Retirement today.
That's out in the marketplace, starting with the launch that we did for the Olympics, and I think it's really playing well out across the airwaves as well as on the websites. We attached that with also a Three-Minute Checkup . Clients can go from that to our website. They can actually look at how are they feeling against their retirement, and the concerns they have against what we did as surveys against the broader client base, as well as against the industry at large. Again, it helps them understand a little better what they need to think about and how those building blocks work for a Confident Retirement. Over the years, since we've made investments, I know you've been hearing from some of our competitors.
We just launched a mobile website, et cetera, but here, ameriprise.com is ranked number 1 in prospect experience, number 3 in web experience in the investment industry, and number 3 as a full-service investment online brand. We've made these investments over many years. Today, we're being recognized for it. These are with what are best online companies. It's not just people who do business like we do face-to-face. What has that led to? Client assets have grown 11% compound annual growth organically over the period from 2009 to 2013. Mass affluent and affluent clients are up 29%, and during this period, their assets are up 69%. It also leads to very strong client satisfaction and client retention, and a very strong referral rate. We gain a lot of our clients through referrals.
The experience that we provide our clients, how they feel about their financial future, they help recommend other prospects to Ameriprise, and we have a referral rate in the upper 70s. Our Net Promoter Score, quite strong in the financial services industry at 66%. We've also been rated number 1 as customer-obsessed firm. In all industries, businesses and companies call for that. We're number 1 in customer experience as an investment firm in that category, and we're highly trusted as a full-service brokerage firm. In fact, we have the number 1 ranking for forgiveness. Again, these are great credentials to have if you want to continue to grow a financial services company in our business today, where financial services companies are not very well trusted. Second, we want to deepen our client relationships with our comprehensive advice and solutions to meet all of our client needs.
This is a very important differentiator between Ameriprise and our competitors. Okay? Because our financial advisory solutions, how we work with clients over their lifetime, builds deep relationships that last a long period of time. Let's look here again, our legacy of leading in financial planning. More financial planning clients than any other firm, more certified planning professionals than any other firm. What does that lead to? It leads to a very high percentage in the way we do business with our clients that have a financial plan. You can see that difference. More important, we execute financial plans. We just don't write a plan, and we call it a financial plan, particularly if it's an asset allocation plan.
We bring that to life with our comprehensive set of solutions, whether it's full brokerage capabilities to the full line of products and services we offer to our protection annuities, our trust and estates, or our tax planning. That leads to a very deep share of wallet. You can see in the dark blue, outside of just one area where we're slightly behind in stock and mutual funds, so stock trading, et cetera, you can see that we lead against the peer average. You put that together, and you have a deep, long-lasting relationship that generates good returns because it has good revenue streams. Now, we don't want to stop there. We know that we pioneered financial planning years ago. How do we bring that to life more formally? You just saw the ads.
We want to actually have a more consumer-friendly experience to explain what financial planning is. Right? Financial planning isn't just an investment plan that you do a portfolio allocation against. It's against your entire life. How do you cover your essentials? How do you ensure your lifestyle? How do you prepare for the unexpected? How do you leave a legacy? That's what our financial planning approach brought to life in what we call our Confident Retirement approach today. Bill Williams will discuss this in a little more detail, but you can see 94% of people who go through this approach feel more confident about retiring. 96% feel the advice that we deliver addresses their needs, and 94% are committed to implement the recommendations.
This gives us a great opportunity to bring in more clients, to deepen our relationships with our current clients, and to continue to move further upmarket. One of the aspects of the business and solutions we do is our wrap business. It has grown. It's quite significant. Over $154 billion of assets under management as of the end of the year. Wrap flows last year is over $13 billion. We're bringing in roughly over $4 billion a quarter in wrap. This is real assets under management that we earn asset management fees on. If we just look at our fee-based revenue across our system, it's over 75% of operating revenues. Another area Walter will get into a little more detail is you've asked, what does this mean on a cash business? We continue to grow our cash business. This does not include our certificates.
In that regard, we know that we're at all-time lows in interest rate and spread. There's a huge opportunity for that, and there's a huge opportunity for more of this money to continue to go to work, as we just said. Let's move to the third area of growth and opportunity for us. Build on our attractive advisor value proposition, and build and continue to build a highly productive advisor force and attract in new people. We do that by really focusing on the culture and the commitment that we have, the dedication and support throughout our system to bring that to life, and the opportunity and reward that we provide our advisors. That is all supported by Ameriprise Financial, and the integrity and the trust of our company. The first, unique culture and deep commitment. When we advertise, the only thing we advertise is our advisor value proposition.
The name of the company is the name of the advisor on the door. It's not of our products and solutions. Why? This is our front end to where we develop a direct consumer relationship. We work with our advisors to deliver the client experience I've just mentioned to you. We care every day about that client experience. We look to invest our dollars against that client experience. We support that with the reputation and the culture that we created. We want to maintain the culture that we have. It's a very important part of who we are and a very important part of what we deliver to the client. With that, we, from myself on down, are committed to our advisors and the clients at that level. We engage the advisors. We understand their needs. We understand their issues.
We understand when we didn't do something right, and when we do something right. They're very vocal. That has turned quite positive over the years. Second, we need and have made significant investment to really develop what we think are leading capabilities in the industry, whether it be our practice tech platform, and I'll come back to that in a few minutes, of what gives us the advisors an integrated solution. Right. We just don't want them operating on the network. We want them operating so that they can truly engage the client well. Our marketing solutions, not just the brand, but all the things that we do to help the advisor support their growth, engagement of their clients, bringing in prospects. The advice and solutions that I just mentioned to you. The training and development. We're one of the leaders in that over many years.
Our practice management. We are very much focused about not just associating an advisor on our network. We want the advisor who's associated with us to grow their productivity, and that's where we focus our attention. Last but not least, the compelling opportunity for the advisor. It's not just about payout. It's about how they can actually become more productive, how they can earn a better margin, how they can develop even greater equities in their practice. We know that when an advisor wants to move or retire, and they're looking for a succession, if they sell their practice, if they're a franchisee in our system, it's worth a lot more than any independent practice being sold on the street. We help them develop those teams, those succession plans to build their practice out.
We help them figure out how they can improve the way they operate. Bill will talk about how we help them with their practice management and their training and incentive programs and their recognition programs. We have our national conference this year. I will be recognizing a few hundred people that go through our Diamond Ring Award ceremony as well as our Hall of Fame ceremony. People work many years to be recognized with those achievements. Let me give you one example of the investments we made, but more important, how those investments can actually work for the advisor and the company over time. We've invested over $600 million in our technology capabilities. We have now full online capabilities. We have integrated tools and data capabilities, paperless office environment, as well as mobile and digital.
As advisors uptake these tools and capabilities, use our new brokerage system, move their activities online rather than paper-based, engage their clients through our document vaults, et cetera, they can save a significant amount of time every week, increasing their productivity. At the same time, the company can save money improving our margins because we don't have to handle those things manually anymore, and the errors that can occur when you're handling them manually. We have been recognized number 2 in social media presence, number 2 as full-service brokerage website overall, number 3 as a full-service investment online brand. Again, we've made a lot of those investments. We're going to continue to make investments. At the same time, we are starting to get some of the dividends of that, and we're starting to be recognized. Our clients are more engaged. Our advisors are more productive.
That has led to a 14% annual growth in productivity to 440,000 per advisor. As we created this value proposition, we want to continue to ensure that our advisors are taking advantage of it. Our advisors today, if you look at our franchisees in the independent channel, they are the most productive out there in that space, and they have grown their productivity as one of the highest. We have excellent client, I mean, advisor retention rates, over 95% in the franchisee channel, including with a number of the members of their team. The employee channel has risen to over 92% and is highly productive today. We have succession planning and team building for the practices. We give the advisors the opportunity to continue to grow and be successful, and that's what's critical. In that regard, our employee productivity has grown nicely.
It's up to, I think, roughly about 380,000 average per advisor, we're adding more productive advisors into our channel. Over the last number of years, we recruited over 2,000 advisors, 25 billion of assets being transferred. We're being recognized from nowhere. We never recruited previously. We always built organically. Today, top five in breakaway advisors joining Ameriprise is how we're positioned out there. We're recruiting now across our channel, both in our employee channel and our franchise in many parts of the country. The average productivity per advisor recruited is three times of what has attrited. We have an opportunity continue about bringing Ameriprise to life, telling our story, not just with clients and prospects, but also with the advisor community, and we're trying to do that even better and more formally today. What has that led to? Our revenue and our operating earnings have grown tremendously.
Our operating pre-tax earnings is up to $592 million as of the end of 2013. Our operating margin, 13.8%, and was over 15% in the first quarter. I spoke to you about Ameriprise, the wealth management being the front end of the company. I talked to you about the integrated business model. Based on that front end and how we do business with our clients, you can see I just spoke about the 100% that's AWM. 35% of the revenue in our asset management comes from the AWM segment in that fashion, in a sense of that they are able to garner flows from our client relationship. Annuities, 84%. The difference was at the outside business we did that we currently have that channel closed. Protection, 63%. In the life business, it's all our clients. The 37% is our auto and home business.
Overall, the advice and wealth management the front end of our business. Our client relationships with over two million clients represent 70% of the revenue of the company. We want to grow that 30%, I want to be clear that that 7% is quite strong and one that adds value across our franchise. Let me just touch upon protection annuities, and John Woerner, our president of the insurance annuity business, will talk to this in a little more detail. We want a differentiated business designed to meet clients' long-term needs and deliver strong returns for our company. Today, we have built that type of business.
We're number 10 in life insurance and as annuity carrier in the industry, $100 billion plus of client assets under management, 100% affiliated distribution for our life, health, and variable annuities, and core solutions essential to the Confident Retirement approach that John Woerner will talk to you about. We have an affinity-based auto and home business that we think also it's a direct player out there, is a very good business and one that can generate good value over time. Life insurance in force, $194 billion. Annuity policyholder account balances, $76 billion in variable, $13 billion in fixed. Very strong businesses, a very strong book built over many years that has a very good risk profile. On those operating earnings of $4.7 billion, we earn roughly $1 billion. On an allocated capital basis, including with contingent capital in case there's some kind of major stress test, 18.3%.
Adjusted for the long-term care, 16.2% with the long-term care, that's a closed block. I've given you a bit of an overview of both Ameriprise, but also now the advice and wealth management business and a little of the protection of annuities. I will come back after the break and introduce the asset management business. Right now, what I'd like to do is introduce Bill Williams to give you a little more color and flavor for our advice in wealth management and how we bring that proposition to life with our advisors.
What I get the privilege of doing is telling the story from an advisor point of view. I spent most of my career helping advisors see the value at our firm and to implement what we've built as Jim outlined. I've been here for 25 years. Of the executives sitting here today, I probably have the most tenure at the firm of anybody. I started out as an advisor in the 1980s. I was a leader in almost every position in the firm, including helping to grow our novice business, where we were hiring advisors from scratch. I have helped to bring advisors from other firms to our company, and I've helped to lead our experienced advisor platform over the years, and now I get the privilege of running the independent channel.
There are roughly 10,000 advisors that Jim mentioned at our company, the key is helping them to help their clients more effectively. We do that by really sticking to three core tenets for our growth strategy, and Jim outlined these. One is focusing on our culture and our commitment to them. The next is our dedication and support, where we're making our investments to make them more productive. The last is helping them realize the opportunity and rewards that come with being part of Ameriprise and the system that we've built, and the leadership we put against that to build the model overall. The formula is pretty simple, folks. If you can help to recruit quality advisors, we're not trying to be the biggest force out there.
We're trying to be the best and find high-quality people that believe in real financial planning and serving the client in a very deep, comprehensive way. When we do our interviews, we go through a lot of interviews with people from other firms. We want to make sure we're bringing the right ones here. Once they're here, we want to help them grow faster than anywhere else. That means helping them to attract the right kind of clients to their book, as well as retaining assets and bringing new assets in and helping them be productive with the books once they're here. That's our specialty. Let me walk you through how that works at our company and how the advisor is adopting that over time. First thing, let me talk briefly about the culture.
Our tenure of leadership, I talked about my leadership here at the company, is close to 25 years. Most of our team that's on the field that knows advisors, they have very strong tenure at the firm. They know the advisors by name. That's one of the things we choose to invest in to keep them close and connected to us. As an executive team, we wake up every day saying to ourselves, "How do we help the client and the advisor relationship deeper?
How can we bring better value through financial planning, through the comprehensive approach to the client, but also to the advisor who's got to deliver on that?" I sent a note to an advisor that I helped recruit not long ago, I got a note back a couple of days ago that I thought I would just throw on the slide. He sent me a long note about why he was glad he was at Ameriprise. He'd been at another company for a long time, he came to us based on some of the things I'm sharing with you today. I pulled one piece of this out because it resonated for me. He said, "Ameriprise feels like a family. The leaders really care about helping me grow.
The other advisors share their best practices all the time with me." He said, "At my other company, I couldn't get good ideas from other advisors because they thought I was competing for the same assets and the same clients." He said, "At this company, everybody's willing to share and to try to help." The word that I want to pull out here is family. When we talk as an executive team and with my leaders in the field and with the overall system, we talk about building a family because we care. It shows up in our retention rates, best-in-class retention rates as Jim went through. The next thing we've invested in is a set of actions that can help the advisor, tools, systems, actions, can help the advisor deepen with their clients.
When you think about what you really want an advisor doing every day, and what an advisor wants to do when they wake up every day is basically three things. They want to meet with their existing clients to help them reach their dreams and goals. They want to attract new clients and assets to their business, and they want to work with their teams to process that business efficiently. If they're doing anything other than those three things, we're losing productivity over time. We sat back and we said as a team, "What could we do to build a system around that advisor that would help them do more of those three things effectively?
Can we build turnkey technology so they don't have to think about it?" There was a time in our past where they had to go to Best Buy and figure out which kind of computer was best for them. They had to look at the different software packages that were out there to serve their needs. Today we packaged it, and it's much more integrated, and it's easier for them to choose. They also had to figure out their own marketing at one point, and they would think through how would they create an ad and get it approved. How would they set up their client contact system? How would they brand their office? Today we've created marketing turnkey systems that I'll walk you through, so they don't have to think about it. They just have to focus on execution. Those are just a few examples.
The other thing is, we train them over time in how to have conversations with various types of clients. We wanted to streamline what that conversation would look like, test it in the marketplace, and ensure that it worked, and then bring it to them, i.e., Confident Retirement conversation, and make sure that if they used it in front of their best clients, in front of prospects that were coming in, it would work to solidify the relationship and pick up more assets, and it has. I'm going to walk you through what that looks like. On the marketing side of things, we've invested heavily at building our brand. We only became public, and the name Ameriprise emerged only about seven years ago. We continue to build reputation around that. The advisors are extremely proud of the Ameriprise brand.
When they see the ad, it makes them feel proud about the ad. We tell the story from an advisor and a client point of view. The next piece is the eight key marketing activities. I talked briefly about this, about having the tools and the systems to help advisors to grow. Now, we help them turnkey how to brand their office, how to set up referral systems, how to work with CPAs and attorneys, the online experience, the message they send through their website. All of those pieces come together, including seminars and events. Through the Internet, they click on it. Everything's pre-approved. It's ready to go. They can implement it, or they can use one of our coaches through an 800 number or face to face, we can set up their business plan.
We also have a system where if they load up their prospects and their clients and tell us a little bit of data about them, demographics, we can send pre-approved information that looks like it's coming from the advisor and the advisor wrote it, specifically for the needs of that client. If they tell us the client has kids that are planning for education, we'll find articles that are written by experts that will be sent via either email or first-class mail to those clients that say, "Here's some information from the advisor that we thought you'd be interested in." We've turnkeyed that. It's extremely simple and easy. Before, it would take their staff and them hours to get it done.
As Jim mentioned, we've built an online experience, which I'll cover in just a little bit, then I'm going to go deeper right now into the Confident Retirement discussion. For years, we were known and had been known as the place to come for comprehensive advice. We do more financial planning than anywhere else. The advisors, in some cases, struggled to tell the value of what doing financial planning really was. What's the outcome of great financial planning? Well, the outcome should be that the client walks out of an appointment and says, "I feel more confident. I want to refer more people in. I'm excited about my future. I'm not nervous about the future." We created this conversation tool that's backed up by marketing, by financial planning tools, by an online experience that's all aligned to four things.
How do we really understand the dreams and goals of each of our clients? We create a financial plan that's built around covering their essential expenses. We figure out what's going to put a roof over their head, the electricity on, medical bills paid, food on the table when they retire. How much money do you need to set aside to generate guaranteed income? That's not at risk to cover the basics, so you never have to worry. The next thing is, most people when they retire, they want to have some fun. They'd like to go on vacation. They'd like to play golf. They'd like to spend time with their grandkids. That requires money.
How do we make sure there's pots of money available, short-term, long-term, medium-term, that outpaces inflation, is invested appropriately, so that they can do the things that they've been looking forward to during retirement? We want to make sure that if unexpected things happen, one of them becomes disabled, somebody requires long-term care, a spouse passes away, the market drops suddenly. We've protected those nest eggs that are going to supply them with their happiness in life, in terms of the roof over their head and the fun, by protecting them. The last is, we're all going to die at some point, how are we leaving a legacy? Where's the money going to go? It's only going to go three places, either to your family, to your favorite charity, or to the government. You get to decide now.
Can we help you build an estate plan you're proud about? What we found out is that clients who go through this process want to invest more money with their advisor, and you can see it there, 45% higher revenue per client who goes through this conversation, 48% higher net flows and two times more opening up accounts brand new. I've been doing this 25 years. I've never seen a conversation tool backed up with the systems that is as powerful as this. I've sat with real clients to go through this. It works. Our advisors are learning it. We just rolled this out last year and put the advertising behind it, and we're really seeing the results come about. This is a note that I got last week from one of our best advisors in California.
He's been here 21 years, so he's got a lot of experience. He's one of my top people. I won't read you every single word of this. You can read it on your own. Basically, he's saying in here that he was referred to somebody that had a relationship at another firm, a competitor firm. They were not very happy because it was all about transaction and product, and they were looking for somebody to really understand their needs. He used this brand-new process he just learned, Confident Retirement, to walk them through after he understood their goals and dreams. Spent an hour and a half with them. Now, one of the things they said as they walked in the door, they said, "Listen, we're meeting you for the first time.
We're not going to set up a relationship today." By the end of the conversation, they'd signed an agreement to do deep financial planning for a fee, and they transferred their entire $4 million to the advisor. The advisor wrote me right after and said, "Bill, this is the best conversation tool that I've ever had in my 21 years. I wouldn't have the money today without it." That's what that story tells us. We've invested $600 million to help the advisor to be more efficient and more productive at this company. The first thing we focused on was how could they process business more effectively? How can we keep them from calling in to check on whether or not the business has been processed or account address has changed or things along that line? How can we do it all online for them?
When they're away from the office, how could they access their information from anywhere in a secure way to make sure the client data is protected? We spent a lot of time building out a process to do that. We've also taken all the forms that used to be in a back office for them that was all manual and all hand done, to online. Every form we have is basically online now, and the client can sign it online by logging into their secure account. They can also, when they get a check, a rollover check or any check, they can scan it, send it in, and have that money in the account within hours. It used to be, when I was an advisor, everything was handwritten. I had to send the forms in by FedEx.
I had to sit in front of a client and fill everything out by hand. They had to sign it. I had to wait for it to hit, then I could trade the account. Now it's a matter of minutes. We also focused on creating this online integrated experience. Literally, I can pull up an app on my phone. I can look at every account I have at Ameriprise, and I can see every account that we have in other places, whether it's my 401 or my deferred comp, my wife's accounts at her company. I can see it all in one place from an app, and I can go online and I can see it as well. The advisor has access to see it in one place, preparing for service meetings is really easy.
For you as a client coming in, you don't have to pull any additional documents. It's all right there. That's all integrated to make sure the workflow is easier. As an example, just in the first quarter of this year, advisors have had to call in 211,000 times less in the first quarter of this year because of the tools we rolled out last year. Six minutes a call, that's 21,000 hours. That's 2,600 days of additional productivity we put in the system just this year from these things we've rolled out. I got a couple of quotes from advisors. First one says, "I can't imagine doing business without these new tools. This is like moving from using a bicycle to driving a Ferrari. I'm saving hundreds of hours a year right now." "You saved me and my staff so much time with these new innovations.
We're already seeing more clients and bringing in new ones and picking up far more business as a result. Thank you, thank you, thank you." This is what our advisors are telling us because we've invested in them and the systems to create a better experience. When it comes to helping them realize the opportunity that exists in their book and the ultimate rewards that come from running a great practice, we invest heavily in a business planning process. We have better data at the advisor level for their flows, of how they run their business, where the revenue's coming from, what decisions they can make than almost any other business out there. We sit with them side by side and write a business plan to help them grow the business with the leadership that's on the ground. We help segment them into different buckets.
Do they need to acquire new clients, deepen, become more efficient, really go after buying businesses outside, and how can we help them do that? By taking the advisor business plan and coupling it with segmentation, you can see the circle has different positions. All of those positions are ones that touch advisors to help them grow, and they're all positioned against either deepening Through things like Confident Retirement or client acquisition with the key marketing activities or the brand, or becoming more efficient, like using the tools. As a company, if we put all of these tools up and we say, "Hey, advisors, go find them. Good luck." That's like saying to somebody who wants to lose weight, "Here's a diet plan online, and here's an exercise plan online.
Good luck." We've got to get the leaders to go have a conversation with them and make it real. We've got to build it into a plan that's step by step and help them grow. When I tell this story to people outside our firm, they can't believe it. We're selective. We want to make sure we bring on the right advisors to us. How have we done? Jim mentioned this earlier, 2,000 people with books of business from other firms have joined us. We're not a one-trick pony on this. We've been able to bring them in from wirehouses, from insurance companies, from independents and RIAs choosing not to be fully independent anymore, but to join our model, from regionals. You can see it's well spread out between each of those different firms, and we're only just getting started with that.
This is a couple of quotes from people who have joined us in the last couple of years. "I love the transition to Ameriprise. It has reinvigorated my mind. I can't believe the number of people who want to help me become a better advisor." "I believe that the business model implemented here is far superior to those at the major wirehouses." "The financial planning culture and complete suite of tools is what attracted me to the firm. I love it here. I'm growing faster than ever." "Ameriprise is extremely advisor-focused. My relationship with my local management is very strong, and I feel exceptionally supported. Business development here is the best that I've ever experienced in 25 years." We're starting to get the feeling out there that we're investing and we care about the client, and it's all coming together in the right way.
What we've seen is continued growth of revenue at the advisor level in both channels, as you can see. That's both the employee and the independent channel. This was recently published last year in InvestmentNews comparing the growth of our independent channel advisors over a four-year period from 2009 to 2012. Our average advisor grew 47%. Notice it's not even close to the others on the list. The closest one is at 28%. If I can sit with an advisor, whether they're with us today or outside, and I can say, "Listen, we've got great culture. We care about you, and we care about the client. I've got great tools where you don't have to think about how to run your business. I've got systems to do that. You just have to worry about delivering great advice to your clients, running a great business, and growing it.
I'll help you with leadership, figure that out." They will come here, and they will grow. If they don't believe in those elements, there's other places for them. My final thought is this. We just rolled out Confident Retirement last year. Advisors are still figuring out how to integrate it fully into their practice. We have room to run on that. The tools I mentioned earlier that drive the efficiency, it's only a fraction of what it could be in terms of the call reduction, the ease of doing business, the workflows, because we just rolled out a number of those things. The tool where you can pull up the app and see all of the accounts that you have at Ameriprise and the ones outside, we just launched that.
We've driven a lot of the growth numbers off of our brand and our training from the past and the marketing, the key marketing activities. Now, when we add the other components, I'm very excited about where this can go. I've never been more excited in 25 years at this firm than I am right now. To continue to tell this story about how we can leverage the fully integrated model at Ameriprise, I'd like to invite John Woerner up. He's going to talk about the insurance and annuity business, how it really fits with our Confident Retirement approach. Thank you.
Thanks, Bill. Jim asked me to spend a few minutes explaining how RiverSource Insurance and Annuities fits with the Ameriprise model and how we deliver the consistent returns and risk profile that Jim talked about. It's really centered on three capabilities: our client-centric approach, our long-term asset accumulation focus that RiverSource has, and our differentiated model that Bill just began to bring to life of our nearly 10,000 advisors. Those three things taken together qualitatively differentiate RiverSource and quantitatively differentiate us. I'll take you through some of our proof points that we look at in each of those areas to say, how are we different? How are we differentiated from other insurance and annuity providers? We think we deliver that for clients, advisors, and shareholders in a distinctive way. First, the client-centric approach. Bill brought to life the Confident Retirement approach.
This is the Ameriprise advisor's comprehensive advice conversation with clients as they move into retirement. There are thousands of solutions that they utilize to fulfill those clients' goals and dreams. Some of those are RiverSource solutions, whether it's our use of annuities to provide that essential and guaranteed source of income, whether it's some of our life insurance products to provide for that legacy the client's looking for, or whether it's helping them deal with the unexpected and dealing with chronic care or long-term care situations. The important part is that our solutions are placed in the context of a comprehensive advice relationship. That makes a difference in terms of the client's understanding of what these solutions do for them and their persistence and their commitment. Jim showed you the different results we get across the firm in terms of our penetration, given our financial planning approach.
Here's some more detail with that same survey, looking at some of our wire house competitors. As you see, in area after area, from life insurance to long-term care to variable annuities to fixed annuities, the level of penetration we achieve with our clients in understanding their needs and then actually implementing and meeting their needs is substantially differentiated from many of our advice competitors. I've looked in this country and in other countries. This financial planning and comprehensive approach leads to more comprehensive meeting of client needs than I've seen in my 20-year career. It works in accumulation, it works as people move into retirement as well. What does it do for the advisor-client relationship? On the left there, we looked at Ameriprise client persistency.
We looked at clients that had no RiverSource relationship, and we looked at clients that might hold a RiverSource annuity, a RiverSource protection product, or both. In cases where they use both to provide their income needs and their protection needs, we have a 5 times improvement in client persistency. A substantial advantage to the advisors, you think about it, as Bill talked about having a long-term client relationship where they're serving that client over decades. And for affiliated asset management company, that's also managing some of those assets over decades for these clients. That persistency is real and makes a difference for our clients and our advisors. Our clients are satisfied with the service and the approach they get from RiverSource as part of their Ameriprise relationship. These assets are substantial.
As Jim highlighted, some of the assets in our fixed and variable products from the annuities as well as protection, these are all part of the long-term asset accumulation that our advisors are working with our clients to do. A portion of these assets are managed under the advice of Columbia. So these provide good long-term stable assets with the expertise of Columbia and Threadneedle to provide for those clients' goals. This focus on long-term accumulation shows up in our business profile. This is looking at limited results in terms of where we are focused versus where the industry is focused. As you'll see, nearly 80% of our business mix is in our cash value products, our variable universal life, and our index universal life on the insurance side. That compares with about 34% for the industry. We have the breadth of products others have as well.
We have our death benefit universal life. We have our term to meet client needs. But where our advisors' focus is and where our focus is really helping them build those assets for the long term and provide for the legacy that they're looking for as well. That is why we focus on our cash value solutions. We also design our products in a prudent way. We design them prudently to be there for the long run for the client and for their accumulation goals. So these are just a few examples of how we've, over the years, designed our variable annuity products. We were one of the first to require diversified asset allocation models within the variable annuity with living benefits. This helps ensure the client's balances grow in a steady and stable way and are there for the long run. We've done that since inception.
We have had incentives to discourage early withdrawals so that we're sure that the client we're bringing in is using that really for a long-term goal. We're the first to introduce managed volatility funds. Another great example of the partnership of the integrated model with Columbia Management, designing those managed volatility funds, these Portfolio Stabilizer funds, which our advisors have been a resounding success with clients and advisors to help them manage the downside volatility in their accounts while also growing for the long term. The disciplined hedging strategy, which Walter will also talk about, has been a hallmark of our approach. On our insurance side, that cash value focus, that long-term asset accumulation focus, is critical to our business profile and what we're doing for clients. Lastly, our advisor channel that Bill brought to life more broadly really differentiates our business.
This, I think, is an underappreciated aspect across the industry in how various competitors are positioned. What you have here is our business mix, as Jim talked about on the annuity and insurance side is through our Ameriprise advisors. Our various insurance competitors there give their business mix in terms of where they focus. Your channel choice matters in terms of can you efficiently and effectively support advisors? Can you get to high levels of advisor productivity? Can you meet client needs effectively? Let me share with you some data that says our channel choice and how we support advisors and that close partnership we have really leads to those differential economics and results for clients and advisors. This chart was done by an external consulting firm that looked at long-term performance measure. In this case, they looked at the long-term growth and book value of insurance companies.
What difference does channel choice make in terms of the return for those firms? They broke them into three broad groups, primarily third party, mixed, or primarily affiliated. What you see is that the ones that work primarily through affiliated advisors have nearly a three times improvement in their long run performance on this measure than those that work primarily through third party. Channel choice makes a difference. This is the industry at large. I'll share with you some data on what difference it makes for RiverSource and the results we can deliver. First, the economics of that distribution system. Can you efficiently and effectively support advisors as they're seeking to meet client needs? Here's our wholesaler productivity information in terms of the results they can deliver in variable annuities or in the life insurance versus peer sets.
As you can see in the blue, it's substantially above many of our peers. That advantage there in terms of the economics of a distribution we can return to clients in more competitive products, we can return to shareholders in more distinctive returns, as you saw. Also, that leads to higher advisor satisfaction. There's their satisfaction with our annuity wholesaling support and our life wholesaling support versus peer averages. Again, substantially above average in terms of satisfaction that we're able to deliver to help advisors figure out which solutions best meet their client needs and help them match those solutions to the needs. Finally, what does it mean in terms of productivity? Bill shared with you our advisor productivity versus independents. The gray line there is the average productivity overall, and then in insurance and annuities for the top 10 independents in the U.S.
Bill talked about our overall productivity is leading, but also if you peel that back and you look at the annuity productivity and you look at the insurance productivity of those advisors, we lead. In some cases, in insurance, by a substantial margin. That comprehensive advice approach, coupled with that tight integrated support, helps clients and advisors understand their income and protection needs and helps us meet it in a way that we think is head and shoulders above many of our competitors. All three of those pieces come together to deliver the return that Jim talked about in our protection annuity business. That client-centric approach, whether through comprehensive financial planning as clients accumulate, or the Confident Retirement approach as they move into retirement, really helps us understand and meet client needs better.
Our focus on cash value and long-term asset accumulation helps our clients build the money they need for their retirement and long-term goals, protecting against their risks, and delivers a profile of the business of our insurance and annuity business, which are really long-term asset management vehicles that help cement our advisors' practices as they manage the assets for the clients. Also have a synergy with our Columbia Threadneedle business to help manage those assets for the long term at differentiated levels of persistency than you can see in other areas. Finally, our differentiated distribution model. That tight partnership that we have with Don and Bill and our advisor force to help design the right solutions, to help the advisor understand the needs and meet them in a way that is quite differentiated versus other wirehouses or independent advisors you saw.
It's those three things taken together that deliver that high ROE, that consistent risk profile, and that we believe one of the most differentiated players in insurance and annuities out there. Thank you for the time this morning. I think I have the good fortune of sending you to break for about 10 minutes. We'll come back together. Thank you.
Change I don't want to meet nobody new. All I want to do is be with you. Life sounds like I'm alive, I'm alive, I'm alive, I'm alive, I'm alive, I'm alive. It sounds like Oh, I'm alive. How come every day something jumps in the way? Gets complicated, I feel devastated. When I'm feeling down, I only want to be with you. I can't afford the rent, can't remember checks I sent. To pay off all my taxes and feed the president. There's one thing I remember, I only want to be with you. Life sounds like I'm alive, I'm alive, I'm alive, I'm alive, I'm alive, I'm alive. It sounds like Oh, I'm alive. Life sounds like I'm alive, I'm alive, I'm alive, I'm alive, I'm alive, I'm alive. It sounds like Oh, I'm alive. Break it down right here now.
You be Bonnie, I'll be your Clyde. Hop into my car and drive like fireworks. We will ignite through the San Francisco night. Like John and Yoko, like iced tea and cocoa. Like Jay-Z, Beyoncé, come be my fiancée. Hey, soul sister, I'll be your mister. Don't want to be no one else, honey. How many ways can I say to help you understand? That I only want to be your man. It sounds like Oh. It sounds like Oh. It sounds like I'm alive, I'm alive, I'm alive, I'm alive, I'm alive, I'm alive. It sounds like Oh, I'm alive. Bring it back just one more time. Everybody wants me to be who they want me to be except you. All I want to do is be with you. Life sounds like Oh. It sounds like Oh.
Life sounds like, like, like, like, like, like, like, like, like, like, like, like, like, like, like, like, like, like I'm alive, I'm alive, I'm alive, I'm alive, I'm alive, I'm alive. And it sounds like Oh, I'm alive. Life sounds like I'm alive, I'm alive, I'm alive, I'm alive, I'm alive, I'm alive. And it sounds like Oh, I'm alive.
If I had eyes in the back of my head, I would've told you that you look good as I walked away. If you could've tried to trust the hand that fed, you would've never been hungry, but you never will be. More of this or less of this, or is there any difference, or are we just holding on to things that we don't have anymore? Sometimes time doesn't heal, no, not at all. It just stands still while we fall. In or out of love again, I doubt I'm gonna win you back. When you've got eyes like that, they won't let me in. Always looking out. Ooh. Ooh. A lot of people spend their time just floating. We were victims, together but lonely. You've got hungry eyes, they just can't look forward. Can't give them enough, but we just can't start over.
Building within them, we're falling but holding. I don't want to take up any more of your time. Time, time. Sometimes time doesn't heal, no, not at all. It just stands still while we fall. In or out of love again, I doubt I'm gonna win you back. When you've got eyes like that, they won't let me in. Always looking out. Ooh. Always looking. Ooh. Always looking. Ooh. Always looking. Ooh. Always looking. Ooh.
The snow glows white on the mountain tonight, not a footprint to be seen. A kingdom of isolation, it looks like I'm the queen. The wind is howling like this swirling storm inside. Couldn't keep it in, heaven knows I tried. Don't let them in, don't let them see. Be the good girl you always have to be. Conceal, don't feel, don't let them know. Well, now they know. Let it go, let it go. Can't hold it back anymore. Let it go, let it go. Turn away and slam the door. I don't care what they're going to say. Let the storm rage on. The cold never bothered me anyway. It's funny how some distance makes everything seem small. The fears that once controlled me can't get to me at all. It's time to see what I can do, to test the limits and break through.
No right, no wrong, no rules for me. I'm free. Let it go, let it go. I am one with the wind and sky. Let it go, let it go. You'll never see me cry. Here I stand, and here I stay. Let the storm rage on. Spiraling in frozen fractals all around. One thought crystallizes like an icy blast. I'm never going back, the past is in the past. Let it go, let it go. I'll rise like the break of dawn. Let it go, let it go. That perfect girl is gone. Here I stand in the light of day. Let the storm rage on. The cold never bothered me anyway.
Well, you win. It's your show now, what's it gonna be? Because people will tune in. How many train wrecks do we need to see? Before we lose touch. We thought this was low. Well, it's bad, getting worse. Where'd all the good people go? I've been changing channels, I don't see them on the TV shows. Where'd all the good people go? We got heaps and heaps of what we sow. They got this and that. With a rattle attack. Testing one, two. Man, what you gonna do? Bad news, missed you. Got too much to lose. Give me some truth. Whose side are we on? Whatever you say. Turn on the blue
Welcome back. We're going to begin the second part of our presentations, we'll start with our asset management business. I'll give an introduction, Ted Truscott will give you a bit more of an overview, Campbell Fleming will come up and talk about Threadneedle. After that, Jeff Peters will discuss our institutional and solutions business. Walter Berman will follow with our financial overview, we'll take your questions. Let me begin with the asset management business. Very clearly, we today do feel we have a very competitive asset manager. We're delivering strong results, we have established a global platform from which we want to continue to build so that we can actually be a very strong player for the future.
I know the conversation has been recently, when will we get into inflows and what will it mean and what will it look like? What we want to try to do is to show you the journey that we've been on, because I think what we've created today is something that will get into strong inflows in the future. That we have built a very strong, very profitable foundation by which we can actually grow both domestically and internationally, on a global basis. Today, we have an increasing global footprint. We're a top 10 long-term mutual fund provider in the U.S., top five retail ranking in the U.K. Over a half a trillion dollars of assets under management. We have 113 four and five-star Morningstar rated funds.
We have an established institutional presence that we're continuing to grow and expand for the future. That gives us an expanding global footprint. Ted will talk more about how we're expanding globally here. Overall, the asset management opportunity is quite large, and it continues to grow. You can see over the next number of years, 2016, an estimate of $93 trillion of assets will be under management versus in 2010 it was 61. The growth, even though it will sustain here in the U.S., will actually expand further in other regions around the world beyond Europe. Let's look at the journey that Ameriprise was on in our asset management business. We started with our legacy RiverSource business. It was a proprietary shop back in the 80s and 90s. It was one of the best shops in the 80s, the IDS Mutual Fund family.
Having said that, the world had changed. We opened our architecture. In that regard, we can go on our only a certain level of flows as every competitive firm was selling in our own system. We wanted to try to start to grow. We wanted to start also growing internationally. We purchased Threadneedle back in 2003. J. & W. Seligman acquisition to bring us a bit more in the third-party space. We were able to do Columbia Management in 2010. We continued to diversify that business as we integrated it over the last three to four years. Today, I think we have excellent talent. We have a broad product mix, diversified distribution that we're continuing to build upon and expand, particularly through third-party channels. We have good operating efficiencies and good margins, we have strong financials.
During this period, even though we've gone through a major change, including through acquisitions, we have actually grown compared to the competitors on a profitability basis, as strong, if not stronger than the average of our competitors. Today, let's look at the half of $500 billion of assets under management. A little over two-thirds is Columbia, $354 billion as of the end of the year, $147 billion at Threadneedle. mix between retail and institutional. Strong retail mix, over 58%. We also have a good mix between equity and fixed income, some hybrids, some alternatives, et cetera, but equity represents 55% of the total pool. We've gone through a major change as you go through an acquisition. When we purchased Threadneedle, it was the asset management arm of Zurich.
In that regard, 76% of those assets were Zurich-related at the time of the acquisition, 25% was third party. 2013, that mix has changed. 63% is now third party, 37%. We've kept, over a long period, a decade, the Zurich assets, and they continue to appreciate, et cetera, even though we've experienced outflows every year since that acquisition. With that, Zurich represents less than 15% of our revenue. We brought in more third-party business, more retail business, more diversified business, and you can see how that mix has changed. Threadneedle, at the same time, has tripled in size. Okay? There's not just a change in the mix, there's a change in the fee revenue that we achieve, and there's a change in where we're actually distributing. Campbell will talk more about that. Columbia, similar thing. We acquired Columbia. We merged it with our RiverSource business.
As you can see, when we started, 26% of those assets were affiliated, related or ex-parent from Columbia, et cetera. In that regard, today it's less than 15%, and even less than that on a revenue basis. We continue to maintain that pie, so to speak, grow it a little. At the same time, we were able to change the mix a bit. Assets under management has grown compounded 20%. Yes, through this case, through acquisitions, but through appreciation of markets as well as diversified in some of our revenue streams, particularly Threadneedle. Let's look at our PTI and our operating margin. Part of what we did was to put together asset management companies, leverage off of their strength, their capability, put together a more diversified player today that can compete with strong products, strong performance.
Our pre-tax operating earnings have gone from less than $100 million to almost $700 million during this timeframe. You can compare that against industry. Same thing with our operating margin, very competitive at a 37% with the type of mix of business that we have. We still need to move from outflow to inflow as we continue to digest ex-parent activities, but we have good, strong relationships there, good assets that we manage, that we generate good revenue from. At the same time, we've been growing through the diversified channel with new products and other product offerings that we have. Ted is going to discuss this in more detail. We want to gain share in the traditional market areas of the products that we have, gain share globally, grow our outcome-oriented solutions.
We have a good, strong business there that we can leverage, gather assets beyond the U.S. and the U.K., Europe. I think we're set, you as a shareholder have not waited for that performance. We've generated good, strong financial performance during this timeframe. We've extracted value from the acquisitions we've done. We built a good foundation by which now we can continue to grow. I hope my colleagues will give you some of that impression as they come up on stage. Ted?
Great. Thank you, Jim. Hi, everybody. Let's get right into it. Jim talked about us being a very established and competitive asset manager. We're beginning to look at our business, not just as Columbia and Threadneedle, but also just globally. How do we want to run the business globally? If you look in the U.S., we've got $355 billion of assets under management across nine locations. We're a top 10 player in the management of long-term mutual funds. We are making some progress in the third-party retail and intermediary distribution, we'll talk to you a bit more about that. A unifying theme that goes across the U.S., EMEA, and in Asia Pac is our institutional business, which Jeff is going to discuss a little later on.
Campbell is going to take you through the EMEA business, $142 billion across 12 locations, top five retail ranking in the U.K. Very good momentum on the third party wholesale and retail businesses there. It's actually quite a transformation. Campbell will give you some more detail about that. In Asia Pac, building a local presence, all organic at the moment. We'll talk a bit more about the investment management capabilities we have, and a nascent growth that we have in retail, and again, success on the institutional side as well. As Jim mentioned, and you've heard it's a big theme throughout the presentation here is the theme of One Ameriprise. We are part of the Ameriprise organization. The asset management business derives, as you saw, a significant amount of revenue and profit from its association with Ameriprise.
Our job there is, there's no free lunch, I might add. We have to earn our keep all the time within Ameriprise. We are fiduciaries at the end of the day. We are the number 1 seller in the business, and we will fight like crazy to retain that title, and continue to offer products and services that complement our financial planning advice and insurance and annuities business. As you heard from John's presentation, we collaborate closely with the insurance company as well as the broker-dealer, to put together those products and services that matter to our clients. It's a key advantage that we have. We don't take it for granted. We have to earn it, but we're very excited about the continued collaboration within the Ameriprise family. Again, I emphasize, this is fiduciary responsibility, so there's no free lunch here at the end of the day.
We have a very close relationship with Zurich. Campbell will talk to you more about that. Collaborating with Zurich on future products and services is part of our job with them going forward. Again, we have to earn our keep there as well. We have a significant relationship with Liverpool Victoria, big win for Threadneedle going back a couple of years. Again, there's opportunities to grow there, as well through partnering with them about products and services they're going to need in the future. Finally, our relationship with U.S. Trust, very important relationship, a key component of our total asset base. A market share that is normalizing, quite frankly, over time. You've seen some of the outflows there.
Again, there's opportunities to work with them, to improve on services that they can offer to their clients, and it also offers us an incredible knowledge base to build off of in terms of expanding in the private bank area. This is our governance framework. You've seen it before. It's called Five P. I emphasize that this is a governance framework. Okay? We have multiple investment philosophies across Columbia, Threadneedle, and out in Asia. We have to have that. If you look at the broad plethora of product that we have, no one philosophy can govern all of this. We have multiple investment philosophies. We're unified through this governance mechanism called Five P, which we're taking across the firm globally. We are famous for saying, we don't tell you what to do, we just measure to make sure you're doing what you say you do.
That's the way that we manage the business. Again, it gives us the flexibility to manage the large number of product that we have. We look at that plethora of product that we have as actually an advantage, going forward. I'll talk to you a bit more about that within the context of our strategy going forward. The key phrase on this slide is performance expectation. We know, given a product's characteristics and how the team seeks to achieve alpha, what we would expect for performance, bad or good, in certain market conditions. It is essentially taking a close look at what our expectations around performance are, bad or good, what's happening in the markets, how the team is doing, that leads us to be able to govern this. This is Colin's great treasure, and gift to Ameriprise, quite frankly.
He does a fabulous job managing it, he's of course with us here, our Chief Investment Officer, Colin Moore. He is now the Global Chief Investment Officer. As I mentioned, we are running the business on a global basis. Performance. We're competitive from a performance point of view. We have a broad array of products, have 113 four and five-star funds. As you know, in the U.K., you actually have to be selected to be rated by Morningstar, as opposed to in the U.S., where you simply are rated by them. There are a few things that we can improve on in the domestic equity front in the U.S. that we're working on. Acorn is one of those focuses, I'll mention that a little bit later. If you look across this broad measure of performance, consistency is the key here.
We aim to achieve a consistency in performance. We're proud of what we've been able to achieve, we're very proud of what both Columbia and Threadneedle have been able to achieve in terms of long-run investment performance across a wide variety of products. One of the key pieces to what we do is research. You all are securities analysts. I suspect that just about every asset manager you talk to talks about the benefits of research. We're committed to it. We have 150 folks dedicated to this. It's a career path at the firm. If you say, "What are some of the proof points, Ted, around research?" I can simply point to the fact that we have had no significant credit losses in own portfolios, separate accounts, or mutual funds. Our credit research is fabulous. It's a way we seek to distinguish ourselves.
It was a key component to Ameriprise's performance in the financial crisis, we're immensely proud of not only our credit analysts, but also our equity analysts and what they bring to the table, we measure them rigorously. We have all kinds of proof points about how effective research is beyond that broad proof point that I just gave you. It's that independent, forward-looking, and dynamic research that also has led us to avoid, for instance, in the municipal bond space, several municipal bankruptcies, downdrafts in Detroit and Puerto Rico. Simply put, that tax-exempt performance is not only great portfolio management, but importantly, very strong research that underpins all of this. I mentioned to you that we're focusing on global capabilities, running the business from a global basis.
At the end of 2012, we established a global leadership structure, a vision for what we wanted to be going forward. We'll talk to you about that. The big theme in 2013 was, where appropriate, integrating the teams across a wide variety of asset classes, but mostly global, emerging, and global asset allocation. Importantly, you should know that there is a full 85% of the business that was really not affected by deciding to become global, because there are certain strategies that we run, whether they're at Threadneedle or Columbia, that are just unaffected by this choice, to manage in this fashion. Of course, 2013 continued our expansion in Asia. With 2014, we've made some additional global and regional leadership changes. We can talk about that in a little bit if you'd like. We've established a global solutions group.
We are taking a much more global view of product and marketing, and the expansion in Asia continues. What are the industry dynamics in forming our strategy? This chart comes actually from a Casey Quirk study, but quite frankly, we've seen a number of others just like it, and our experience in the marketplace tells us it's true. Some of the big opportunities going forward are in the outcome-oriented investing space. It's referred to as alternatives and solutions in this particular chart. We call it outcome-oriented investing. Big source of future revenue for us in the industry. We also see a lot more in global, whether that's emerging IFA global asset allocation, lots of revenue opportunity there. One does not want to underestimate the existing traditional assets that are out there. This is a huge pile of assets.
It's mostly found in our home markets of the U.S., U.K., and Europe. It is a market share game, but it's a huge pile of assets. Campbell will talk to you about a big win that we had in the U.K. that shows that this opportunity is one that we should not dismiss just because it's more traditional. It actually represents a big deal for us going forward, and we're going to remain focused as well on managing this set of products and services really well and trying to gain share. Jim took you through this slide earlier. Four points to the strategy. Number 1, gain share in the traditional products and markets. 2, gain share in global. That's another big revenue pile that you saw on there.
Grow our outcome-oriented solutions business as well as gathering assets in today marketplaces that are either growing and that represent a smaller pool in that $93 trillion that's coming in the future that Jim talked about. We're talking about the emerging world, Asia, Latin America, et cetera. You've also got up-and-coming markets like the Middle East, Australia, Canada, that we're focused on as well. Key enablers are underneath that, investment performance and efficient business with the right risk management and services, and retaining people and having a more integrated global brand and product capability going forward is another enabler. Let's talk about gaining share in traditional markets. We've transformed our institutional capability. Jeff's going to talk to you about that very strong momentum in the U.K. and Europe. Campbell will talk to you about that.
We're making some progress in intermediary, but we have more to do, quite frankly. We'll talk a bit about that. We have to materially improve intermediary, particularly in the fixed income space, and we want to continue to expand in the private wealth business. Our U.S. Trust experience gives us the ability to deal with other private banks, speak private banking language, and it's going to be a source of growth for us in the future. Let's talk a bit more about intermediary in specific. $21.6 billion of gross sales, and $1 billion in model allocations. We're making progress there. We have a significant share at Ameriprise, but we want to go for more. We have less dependency on sub-advised products. You need to understand, I think, that we executed a very complex merger between two retail intermediary organizations.
The RiverSource business was almost entirely focused on selling within Ameriprise, the Columbia business was more of a traditional third-party business. We've had to do a lot of things to improve that. We have an 11-point plan that goes after everything from executing better with focus firms, that's wirehouses, independent broker-dealers, growing in the RIA channel, which as you know, is one of the fastest-growing channels out there. We need to improve wholesaler productivity beyond where we are today. We not only get data from third parties, but we measure that ourselves. We have to roll out some new products, that's mostly in the outcome-oriented space to help us grow as well. Simply put, folks, when you boil this down, it's just one big theme. It's called let's outsell our redemption rate, just as we've done at Threadneedle. That's the key.
We've done it at Threadneedle. We can do it at Columbia as well. From the global product perspective, we've got $52 billion in assets under management. We've aligned our research and investment capabilities across Columbia and Threadneedle. There are some things we need to improve on. We need to better commercialize our emerging debt and emerging equity track records, which are quite strong. We need to improve our IFA performance, and we need to launch our global opportunity bond fund, as well as have a higher alpha global equity product that can be sold in the U.S. and, quite frankly, be a bit more competitive with the folks who are doing well out there. Outcome-oriented solutions. This is a big deal for us. It's a big source of revenue going forward, and we have some key hires that we've made in this space.
Number one, we hired Toby Nangle, who works in the U.K. He is part of another key hire for us, Jeff Knight, who joined us about a year and a half ago. Jeff is leading our global outcome-oriented business. We have some good performance in these categories. We're launching additional products that we detailed here, including MATA, which is the Multi-Asset Target Alpha Return Fund, and CARA, which is the Columbia Adaptive Risk Allocation Fund. These are being targeted at both institutional clients and retail. They come under different names, but they're after the same thing. We are going to work very hard on this business and expand this business going forward. We can't do it all, folks. We're not going to be everything to everybody, which means we will explore partnerships with other providers where appropriate as part of multi-asset solutions going forward.
Finally, there is the gathering assets beyond the U.S., U.K., and Europe. We have established licensed offices in four locations in Asia. A fifth is on the way. We've expanded our sovereign wealth growth. We've had a number of key wins in 2013 with sovereigns. We've established a local investment presence. We have equity and fixed income capabilities, local asset management for locals, and also feeding into our global operation in Singapore. We're very pleased that that's up and running. We think there's going to be significant growth there. The Sukuk mandates or Sharia-compliant investing is a big wave going forward. It's a very underdeveloped market. We think we can do a lot of this out of our office in Malaysia, but also serve Middle Eastern clients as well. We're working hard on that as that represents an interesting opportunity going forward.
We're also going to continue to gather assets in Canada, Latin America, and Australia, build that out a little bit more, and where appropriate, consider targeted merger and acquisition activity. With that, we'd like to take you a little deeper into some of the things I talked about. I'm going to introduce Campbell Fleming, who's the CEO of Threadneedle, who's going to take you through the Threadneedle story. Campbell, come on up. Thank you.
Thank you very much, Ted, and welcome everyone. I'm going to talk about our international business. It's so international. You've got a fellow that's named after a Scotsman but is actually Australian running a business out of London. It's good to be back in New York, and it's certainly good to be made to feel so welcome here. Jim has spoken about the diversification of Ameriprise's performance and also the contribution and results it has made. Ted has spoken about becoming a competitive asset management company. I will show you how Threadneedle is contributing to these themes as the international arm of our global asset management effort. Threadneedle is now in its 20th year. It's through that difficult teenager phase.
It's in its decade as part of Ameriprise, and that's been a terrific relationship, and it's great to have a parent with such a balance sheet, such insights into clients and the trends that we're seeing here in the United States, which are repeating and rippling out across the world as people struggle with the challenge of how do they fund their retirements or how governments deal with that as well. We've added $100 billion in that time. We've grown from $47 billion to $147, a record amount today. We've successfully expanded from the U.K., Swindon, and London. Never go to Swindon. To 17 countries across Europe, Middle East, and Asia. We've grown from 230 employees to 709 today, of which are 158 investment professionals delivering that outstanding track record of persistent, consistent, good risk-adjusted performance. I like to say that boring is the new thing.
Clients want good 3, 5-year track records. They're not chasing the latest, hottest thing. They want very steady, predictable, good returns from substantial copper-bottom providers. The sole focus, consistent with what Jim has been speaking about in that becoming client-centric and also being client-obsessed, is the delivery of active management to clients. You saw the opportunity in the industry. You saw that 85% of the revenues going forward are predicted to be in solutions, incumbent assets, and global equities. That's why despite the growth of passive, it's about the revenue story that Jim touched on. A firm like Threadneedle working together with Columbia as part of Ameriprise has got excellent opportunities. You've seen the asset under management by class. You'll see that we can do a little bit more to diversify into fixed income.
We have a very strong equities and property business, which is a blessing in terms of excellent fee rates. In addition to that, you've seen the diversification. I'm going to touch on a little bit of that now. But before I do, we are competing on the international stage. The top 5 retail ranking in the U.K. We are the number 16 ranked brand across Europe, including the U.K. And we have very good top 10 market shares in terms of the all-important net sales in places like Benelux, Germany, Switzerland, and for a key asset class like U.K. property. We also enjoy top 20 positions in other markets such as the U.K., Spain, Austria, and Italy. We've got significant traction in the institutional businesses in the U.K., Europe, and Asia Pacific. Jeff Peters will touch upon that in a moment.
We've got more to do. But we're enjoying excellent ratings and excellent new ratings from those all-important global consultants as well as a result of Jeff's efforts and now having a global institutional team. That has meant the client base is expanding in all regions, and we're developing new businesses in Latin America and Asia. As Ted touched upon, we now not only have an excellent distribution effort there that can service our international partners, some of the world's leading private banks, some of the world's leading platform providers, but also the in-region private banks who are garnering significant flows as wealth builds in the Far East, in the Middle East, as middle classes become more affluent. And you can't choose to be a global product provider and partner and not be in these places.
It's very important that we build out quality distribution efforts as well as manufacturing efforts in these regions. And it shows our commitment to the region, not only from a partnership basis, but also the fact that we're starting to manage money there, and that gives you significant credibility in the local and regional players' eyes, which is also very important. We also spoke about the diversification of the business, but also the quality in margins. And I know that Walter is going to touch on that shortly, where he'll go through the contribution, the growth in assets, the growth in earnings, and the like. Ted also was very kind to talk about the fact that it's about outselling a redemption rate. It's about getting into net flows. We are hugely privileged to run money for Zurich and LV. It gives us a solid installed base.
It gives us a very, very strong copper bottom, it gives insights into the products, and it gives us insights into the client demands that those excellent firms are seeing. You'll see that since 2009, we've managed to deal with the structural redemptions from that installed base. You'll see most of it's in unit link type wrap products that have a natural maturity and a natural runoff. You'll see we've been able to replace them with non-legacy book assets, whether it be the win from Liverpool Victoria, which we believe that trend will continue as smaller insurers and the like think about capital requirements and seek to outsource to expert asset managers. Whether it be relationships with the likes of STANLIB, or whether it be contributing as a key partner in product provider solutions or in model portfolios of key private banks as they too expand.
You'll see that we have been able to come up with some positive net flow years. The more important thing is the assets that are going out are replaced with new assets at a significant multiple to the fees that we lose. You'll see since 2009, we were just under $100 billion. We had really one large client in Zurich and another small one with 57% of the client base. A few years on, they now account for under 50%. We've diversified with another large client. We believe there's more opportunity in that space. More importantly, you'll see that we've grown our third-party institutional and we've grown our wholesale businesses. Again, they are at much better rates. That means that we are generating traction in those core markets that Ted spoke about.
If you have a look at the markets that Threadneedle cover, you'll see it's just about 40% of where global assets are. Together with Columbia, we cover the globe in the right markets and we're getting traction there. We're seeing traction in global products. You'll see that what we're selling in global fixed income equities, emerging market equities, asset allocation products, and also commodities is very well. We enjoy a terrific franchise with U.K. property and our developed market equities are excellent performers. As clients put risk on and as we can take advantage of winning assets from poor performing incumbents, we can grow the business. We had a loss of an excellent U.S. equity team. Seven of the team left under Cormac Weldon. They went to Artemis. Cormac had been with the business for 17 years. It's a pretty good run. $2.1 billion in outflows in the quarter.
The outflows will continue a little bit more, the reality is we're able to replace Cormac with a 30-year veteran of Wall Street in Diane Sobin, who'd been managing the assets of Zurich. We're also able to draw on the 58 analysts at Columbia to present a much more joined up, more global proposition to our international clients. I'd put it to you that had Threadneedle not been part of Ted's global asset management business, we wouldn't have been able to counter with such an excellent response when inevitably you lose a team. We followed up very quickly with a terrific win, $5.5 billion from St. James's Place. St. James's Place is one of the leading mass affluent product providers in the U.K. It's an excellent story. We won. It's a very interesting portfolio. Global equity income, U.K. equity income, and our global bond.
It was a terrific win. More importantly, it showed that working together with an institutional team led by Jeff, the wholesale team, we were able to pass all the tests of St. James's Place consultant to be selected on that. These consultants are liking what we're seeing, and there's more opportunity of winning more business from incumbents in these products. The focus will continue to be on delivering flows into those key global products and our regional franchises. We will focus more on developing stronger and deeper relationships with those firms, product providers, platforms, private banks, institutions that share our values and want our product. We will enhance the coordination with our sister company, Columbia, and we'll seek to provide a much broader range of solutions to pick up on the changing needs and requirements, and Jeff Peters will take you through that in a moment.
More importantly, we continue to invest for future growth. The priorities you've seen is continue to build out the global product range, develop that institutional solutions capability, which leverages the insights that we have for managing money for our parent company and managing money for Zurich and also Liverpool Victoria. We'll increase and refocus our marketing budget to further strengthen the brand, and we'll continue to focus on quality revenues and net flows. We'll manage the cost base very aggressively as well. We'll continue to diversify revenues by markets, by products, by channels to make sure that we grow assets under management. If I were to sum up here, you see we're focusing on making sure we have the right products, we're in the right regions, and we're working with the right clients.
By doing that, we're meeting the client needs and industry dynamics that you've started to see. Clients are interested in getting protection from inflation, they want good growth products. They're obsessed by getting yield. You spend all your life saving, and now you can only get 50 basis points for your savings on deposit. They're also very interested about how they preserve capital. You've seen the ads. Will my savings outlive my retirement? Wherever you go in the world, people are worried about that. They're worried about volatility of markets. As markets have settled down a bit, you've seen them come on a risk on and start to move back towards some of these equity products and things because of the concern about inflation and the like. More importantly, they're increasingly wanting solutions. How can we bring our asset allocation expertise?
How can we blend these capabilities to provide outcomes for clients that will help address many of these concerns? We've got a very diversified business. It's delivering the right products in the right markets. It's looking at a regional and a global basis, and it's also starting to expand and succeed in new markets as well as traditional. I'd say that we're well-positioned for opportunities and growth for our clients and our shareholders. In summary, we will, like our parent, continue to diversify our business, to improve our revenues, grow our AUM as a key part of asset management. I hope you agree that like that ad, there's more within reach. With that, I'll hand over to my friend and colleague, Jeff Peters.
Thank you, Campbell. Let me add my welcome to everybody. It's great to see everybody here, and thank you for coming. I wanted to spend a couple of minutes talking with you in a bit more detail about the institutional business at Columbia and Threadneedle, both where we've been, the progress we've made, and more importantly, where we're going. Let me start with a little bit of the evolution. If you rewind the tape back to 2010, when Columbia and Ameriprise first came together along with Threadneedle, the institutional business really consisted of three pretty independent groups that had some commonalities to them. The major commonality that they all had was that their assets and flows were heavily weighted toward either affiliated assets or their parent assets.
In addition, Threadneedle's institutional business outside of that, and you've heard a lot about that already today, was primarily focused on the property business. As we came together as a business, we faced the dynamic of both growing overall, but taking a business that was likely to reset in some of the former parent assets as our situation had changed, and replacing it and growing it with true third-party business. If you look at the right-hand side of this page, you can see we've had some success in doing that. While our former parent business in the U.S. has gone from 20 down to eight, we've seen our third-party business, both at Columbia and Threadneedle, grow enough to offset that. We're now at $170 billion all in terms of the institutional business. So we're pretty comfortable with the scale.
If you switch away from AUM and talk about the flows, we've also made pretty significant progress on that. On the left-hand side of the page is the former parent flows in the U.S. You can see in 2010 down to 2011, we had some expected resets in those flows, mostly low-fee business. Those continued at a lesser extent in 2012 and 2013. I'm happy to report that so far this year, we're flat. I think that the message from that is our business is stabilizing there. On the right-hand side, you see a better picture where we crossed into positive third-party flows on the base of stronger growth sales in 2012 and continue it in 2013 and indeed in the first quarter this year.
The flow picture has improved dramatically, and we've basically been able to outsell the redemptions from the former parent, and you see that in this chart, where last year we crossed the Rubicon into positive net flows as a business in the institutional space. That's all been relatively positive, but how do we do it? Well, to do it, we undertook a pretty significant plan of action in five or six areas. The first thing we wanted to do was, as has been talked about before, we really wanted to hold on to the former parent business to the best extent we could. So we went client by client, including the parent itself or clients that they had influence in, on a retention basis, talking with all of them and trying to keep those assets, and I think we've been relatively successful in that.
We did a fundamental soup to nuts look at all the foundational elements of the business and upgraded them. Consultant databases, RFPs, the marketing story, literally starting at square one. It was a very large-scale talent change. About 65% of the people in the business are new since 2010, and we really focused in terms of how we were going to grow and what we were great at. Specific, very high-quality product capabilities. Ted's talked about credit. We're very strong in high alpha U.S. equity. We really leveraged those. Really a shoe leather or foxhole by foxhole, however you want to say it, plan by plan sales effort, both within the pension markets themselves and also with consultants to go and tell our story.
In 2013, we also have taken the Columbia approach and the Threadneedle approach and converged them and have begun doing this globally in basic blocking and tackling to build a great institutional business. What's happened? On the right-hand side of the page, our former parent flows, as I mentioned before, have normalized. The redemption rate there is now at the same level that the redemption rates are across the market for us. We've got a strong third party set of results in the U.S. with sales up significantly, the pipeline up a lot. We've had take-up of our strategies across all the segments in the marketplace, from corporates to publics to sovereigns, et cetera, and our consultant search activity is also well up. All leading indicators of the future that we like to see.
That progress has begun moving from U.S. over into Europe and Asia, as seen at the bottom, where we've created a dedicated channel now for institutional, and we've seen that begin to bear fruit with 18 wins of $75 million or more in the last year, which is a pretty significant start to that. Good progress in our plan to build out the institutional business. That doesn't mean we're done. As a matter of fact, we've got some pretty significant opportunities ahead, and I'd like to take you through those in the next couple of minutes. When we talk about the plan or the journey that we're on in institutional, I reference a bullseye a lot. If you start in the center of the bullseye, there's a limited number, 10 to 15 clients, or rather, competitors, that are in the center here as tier 1 providers.
At scale in traditional products, at scale in alternative products, a thought partner to the largest plans around the world in every conversation, global in nature. You move out more toward the outer rings, you get a tier 2 set of providers who are great in a specific set of products, specific set of capabilities, at scale that way, largely regional, and then you get sort of everybody else in the outer ring. The journey that we've been on since 2010 has been to move from the outer ring into what I would say right now is the tier 2 with our focus on credit, high alpha, et cetera. Now our goal over the coming years is to move into the tier 1 and be one of those competitors that's in every conversation. How are we going to do it? In four thematic ways.
First, we're taking our sales focus away from just select franchise products to even more products than that in traditional. Adding products to the mix, more arrows in the quiver. A great example of that is a product that we have called Contrarian Core Equity, which is a very strong U.S. equity product, which is garnering a lot of flows overseas and here in the States. Establishing products like that to add to what we already have is going to be a way where we continue to grow. Second, we're moving away from a primary focus in terms of the flow dynamics from the U.S. market into a focus on all of the markets that we want to play in, Europe, Asia, Middle East, to make ourselves global and really to converge the institutional approach.
An institution in Asia is very similar to an institution in the U.S. in a lot of ways except language. They tend to want the same things. They tend to have the same buying power. They tend to think about consultants in the same way and often have the exact same firms. A converged approach is the right way to serve them, and that's what we're moving towards. We're focusing away from a traditional product approach to the multi-asset outcome-oriented approach you've heard both Ted and Campbell speak of. That's a very long topic which I won't take a lot of time talking about today, but we're making great strides in that. We've got great talent in terms of Jeff Knight and Toby Nangle to help build the effort. We've already got significant credibility in having done similar things for our former parents and for Zurich.
We're very excited about the platform that we have to compete in that business, and as a matter of fact, we already are. That will be an absolute linchpin for us, and that will include alternative products beyond just the traditional ones that are a large part of the current mix. Finally, we've got to move from a focus on the shoe leather or foxhole by foxhole approaches, territory by territory selling, into one that does that, but also adds brand and marketing credibility so we can increase our overall presence. If we do these things, how will we tell if we're winning? Well, you saw the charts before where institutional was a significant portion of the business, but below 50%. We'd like to get it above 50%, and you'll also be able to tell in terms of the AUM growth from us joining the top tier.
Very difficult to pin down what that actually means. If one were to take sort of an average of top-tier assets, you sort of come with a number north of $300 billion. That's clearly over time and a very significant goal, but that's an aspiration which we'd like to get to over the next many years as we move from tier 2 into tier 1. With that concludes my remarks on the institutional business. Let me now turn it over to Walter Berman, who can walk us through the financial results.
Thank you.
Thanks, Jeff.
At last, the last speaker. Being last actually gives me an interesting perspective. I get a lot of material from my previous colleagues. Most of my slides have been used, so I'll cut through this fairly quickly. I promise I'll let you know when I'm getting my interesting perspective from my colleagues. My role here is to really bring this together to talk about how we create shareholder value by meeting our clients' needs and our advisors' needs. I'm going to basically focus on talking about our performance from a financial standpoint, both on an absolute and on a relative basis. I'm going to demonstrate using our positioning today and the growth trajectories that we have, how we're going to go forward to grow profitably.
Talk about our enterprise risk management, which is core to doing that effectively. Then hopefully convince you that we have the capability of expanding our P/E multiple. With that, let me start. Looking at what we've set up as our basically shareholder drivers, both from the standpoint operating growth and net revenue growing at 6% to 8%. We've clearly exceeded that over the 2009 to 2013 period at 10.3%. The operating earnings per share growing, our target was 12% to 15%, we've hit 24.3% over the 2009 to 2013 period. Our return on equity, which was changed, but the latest target is 15% to 18%, which is now 19.7% at the end of 2013. Here's my first point. In my 49 years of experience, which actually takes into consideration 25 for Bill, 20 for John, and four for Campbell, this is seriously good. All right.
What really accomplished that was what we told you we were going to do, we did do. Back in 2009, looking at our targeted growth areas, we basically said we were going to grow them substantially. We went from 12% of our basic PTI earnings to close to 57%. Significant achievement, no question. Columbia was a key change for us, the market, really a lot of hard and analytical capabilities that we applied to this. We accomplished the objective, we accomplished the objective profitably. The other businesses grew also, it's just that these are the businesses that we told you were going to grow at a more rapid rate. From my standpoint, significant and a core element to our success. Let me take you through one of the core targeted growth areas, which is advice and wealth management.
Looking at 2009 through 2013, both from an operating revenue standpoint, growing at 12% on a compounded annual growth rate level. Pre-tax operating earnings growing at 113%, finally, operating pre-tax margin at 12.7 basis points. Significant improvement. This is my second point for my colleagues. I designed this schedule. I didn't use outside sources. I basically created this because I really want to talk about the fact that not all margins are created equally. Just like not all returns on equity are created equally, there's risk-adjusted equity. I believe, I've been talking to a lot of you, when are you going to get into the 35% margin category? I felt I should explain and put in context all margins are not created equal. First point on the horizontal before I get to margins, is really comprehensive solutions for retail clients.
Based upon what you've heard from my colleagues, I think it's clear to us and clear to me that we are a premier capability in this area and therefore deserve to be all the way on the right. Looking at margins. There are certainly areas when you look at e-brokers, wire houses have excellent margins. They're in banking businesses, they're in market-making businesses that require capital and have a higher risk profile. This is where I have put them. I think it's directionally correct. As it relates to the regional and traditional IBDs, one has that activity, several of them just have low margins. I wanted to provide you this context when I now start talking about relative performance. Growth. As you see here, AMP's operating net revenues, $4.3 billion.
Certainly looking at our peers here, LPL, Raymond James, Stifel, Charles Schwab, they have substantial net revenue. We basically are greater than both LPL, Raymond James, Stifel. During this period, from 2011 to 2013, information that I've had that was certainly traceable from that standpoint that I felt I could use, our growth was almost $700 million. Generally, that's organic. Our peers, with the exception of Schwab, is basically a combination of organic acquisitions. We basically kept track or exceeded them. If you take a look at Charles Schwab, they grew $744 million on a base that is basically larger than ours, strong growth. Let's talk about profits. Our profits, as you saw in 2013, $592 million. Looking at LPL, Raymond James, Stifel. We're substantially higher than them.
Stifel and Charles Schwab, which is substantially higher than us, are primarily driven or substantially driven by either a combination of banking or market-making activities. Let's take a look at the change. We changed $235 million at AWM over this period. LPL changed $9 million, Raymond James changed $36 million, Stifel changed $66 million, and even though Charles Schwab is 3 times larger than us from the absolute, we basically are pretty close to the actual change. I think strong profitability. Margins. 13.8% at the end of 2013. First quarter over 15.5%. LPL, Raymond James at 7% and 8.3%, respectively. Here you get to, this is non-risk adjusted margins, are very high for Stifel and Charles Schwab. 1 firm estimated Charles Schwab, if you take out and adjust it on a basis of looking at bank peers and everything, it would be below 13%.
I didn't have the position to do it, certainly there's validity in that statement, with Stifel, I certainly couldn't do that. Our change during this timeframe was 3.9% in our margin. LPL and Raymond James went down. Stifel and Charles Schwab, we've exceeded them by 2 to 3 times. I'm trying to demonstrate we have a great foundation. We're growing. We're growing profitably. That's the history of it. Let's build on what we have to see how we're going to go. You all know we've been building the employee channel. As you can see here, it's about 17% of our revenue as of 2013. As a pre-tax margin, it represents 4.4% versus the franchise channel, which is 16.5%. The total, as I indicated for the year, was 13.8%. The employee channel has come from losses, and this year has achieved a 4.4% margin.
There is substantial opportunity, as I've indicated on the call, and I've talked about in the areas of 2 to 3 times, that with the vintaging and maturing and the productivity elements that are built into that channel will continue to grow as it vintages through. Another area of opportunity for us is interest. It'll probably take us 18 months to meet again in this form, I figured I'll just lay out, again, looking at the forward curves. In 2013, as I indicated, our pre-tax income was $592 million. About $71 million of that came from interest-related activity. That's both in the sweep accounts and our certificate activity. If you take a look of where the current forward curve looks in 2016. What I did is overlay that onto our 2013 performance.
If that actually occurred, we would achieve $280 million, which is an additional $209 million, bringing us to over $800 million. That relates to that what we retain, what we give back to our clients, potential drops in the balances of the sweep accounts. If you then translate that onto the margins at the end of 2013, it would go from 13.8% to 17.8%, a 400 basis point pickup. Just again, to demonstrate the fact that it's been an important part in the past of our earning stream. We've been achieving all these margin improvements, basically with marginal contribution coming from this important area.
If you now take that and overlay it into the combination of both the vintaging of our employee channel with the interest, then certainly attracting more experienced advisors into our network, the productivity in our franchise channel along with our employee channel, the way we have demonstrated we have managed margins. One could imagine in the future that we will achieve over a 20% return. I am not guaranteeing this next year. It is something that as it evolves, the potential is there clearly to demonstrate these sort of margins for our business. This is with, in my opinion, a low risk factor attached to it. The second business, this is where actually I will save some time because this has been covered by everybody many times. We have grown. We have grown well. The only thing I will point out is on net flows.
These are adjusted for the disclosures they made about legacy. There really is growth, as you can see, looking at growth sales, $97 billion in 2011, $94 billion in 2013. The differential is, remember, large LV= that we attracted in 2011, that basically is just throwing in the numbers. It was just a very large amount of that business to take in at that time. Profitability, again, discussed many times, very profitable. We have improved the profit. There is no question. Our business has been helped by the markets, but we have also aided with basically re-engineering and other activities that we have conducted. I will cover this quickly. Again, this has been discussed. We basically fare quite well when we compare against peers. Our performance in both the revenue, pre-tax operating income, and certainly adjusted operating margin is quite good.
As you heard, you can anticipate as we improve our basically flow position as we go through the years, that will certainly enhance our revenue and enhance our profitability. So covered the two growth areas. Let me get into the areas that John covered. John's areas, annuities and protections, are important and critical to us for a multitude of reasons. Provides great service capability, great leverage with our clients, but also steady profitability. As you can see here, over $965 million in 2013, generating exceptional returns at 18.3%. I am basically identifying here that basically 2.1% relates to long-term care, which is being well managed, but is basically low return and is no longer issued by us, and basically, we are managing that product.
From my standpoint, the key to this is not just the profitability, but it is the risk approach that we take to managing this business, which is critical. One of the elements that you can see is the way, looking at just the product construct, and John has touched upon this, but I will just quickly go over that. $33 million out of the $76 billion we have has no living benefits, and now $8 billion of it is basically been under our new management construct. We are differentiated. It is not by accident. It is by design. Basically, if you look at, we focus on asset accumulation. John has talked about that. It is a critical element. We meet the needs of our customers. We basically have variable and balanced variable annuity products as it relates to our products have asset allocations in them.
They are designed for solution-based situations, work for our clients and work for us. We've had basically like a steady margin, steady market share. We have not gone up at the wrong time. We've basically stayed meeting the needs of our clients and managing that appropriately. Not making any statements about it's not wrong to have captives. We don't have it. Basically, what you see is what you get. The capital that we have is basically whether it's in a captive or it's in the main company, that is the appropriate level of capital we maintain. We don't use permitted practices. We don't really have extended ourselves on excess guarantees, both in the insurance area and in the annuity area. That is evidenced by basically our net amount at risk, both in living benefits and death benefits.
Finally, as we talked about many times, we follow a disciplined hedge strategy from a capital market standpoint to protect the firm and protect the firm from a volatility standpoint in stress situations. Our enterprise risk, I'm not going to spend time here, but certainly from our standpoint, it is integrated into the way we manage the business. We don't make decisions without understanding the risk profile, the trade-off profile, and that starts with both the design, the distribution, and the continuous monitoring of the product. One example of this is certainly we do all the multiple stress tests that anybody else does, plus more, but we concentrate on making sure we can meet the business needs in a three-year period and certainly understand the stress developments, those stress factors that will evolve to ensure that under those circumstances, we have adequate liquidity and certainly adequate excess capital.
I've chosen here, just trying to replicate using our risk appetite and tolerance reporting, that if what took place in 2008 and 2009 occurred again, starting in 2013, what would happen? If you looked at liquidity tests, we start here right now with $6 billion. We will actually improve that, and that includes that we will continue to make a billion dollars of payments. I'm just using a billion as an example, and continue our current dividend program. The same thing happens with our excess capital position. It's $2 billion. Again, we all know we put a half a billion dollars into our variable universal life. This is now a stress, so technically it's $2.5 now. We will maintain that level with the same situation of paying dividends and also buying back a billion dollars worth of shares. No projections on buybacks.
It's just an example. What this has allowed us to do, and this is the history of it, is to basically return $6 billion to our shareholders over the years. Okay. As you can see clearly here, both from the examples in 2011 right to 2013, continually increasing, but really, maintaining our capital base, both by managing our requirement and building the excess through the shift in the businesses and the way we've performed on evaluating exposure. A comparison to our peers, just taking it from a dividend payout standpoint, share buyback, and total dividend buyback. We are basically, in 2013, had 130% payout, 28% in dividend payout, and then buyback 102%. You can see clearly here we equal or exceed those of our peers, both in broker-dealer, asset management, and insurance. We're currently at 60% in the targeted growth areas.
We've talked about that certainly within our plans and capabilities, we see that going to 70%. That will even provide us greater capability to basically lower our acquired capital and increase our return on equity, and certainly provide us the sort of flexibility that we've talked about. Based upon that, and taking a look again at our target ratios. In this environment, we're going to keep the 6.8%. The market has not changed on interest rates, and we are going to keep certainly our return on 12%-15%, which is really pretty industry highs. We felt that looking at the circumstance with our excess, what we're creating and the mix shift that we've seen, that we can say that we'll go to 19%-23%. You see that we've changed it in 2012, and we will evaluate this continually to see if it's appropriate to move it up.
One of the elements while we are generating, certainly EPS growth, our volatility factor has been extremely good, especially as you compare it to our EPS growth relative to our volatility versus the wealth management peers, asset management peers, and insurance. Actually, this is a pretty interesting chart. I didn't design it, but I'm not going to tell you who did, but it's actually pretty good. If you go back in 2009, if you take a look at our operating return on equity and the differential between that and our cost of equity, -5%. It is currently at 8%. Obviously, we've seen a situation where the free rate and looking where the market is going is certainly now better.
Really, the ability to drive our return up by managing our exposure has really created an excellent spread, which really I think is quite good and certainly will serve us well. Finally, this is my last one, using the bullseye. I actually did this last year, Jeff, I don't want to upset you, but I do believe that there is really margin expansion opportunity for us. If I take a look at certainly moving to median, then certainly using the cash flow generation we have, then the excess capital we have and the cash flow generation, then certainly looking at the outer elements of the high end. When you look at the way we're able to leverage it and the premium factors that would, I believe, and hopefully you will believe, there's margin expansion capability. With that, thank you.
Thank you. I want to take the time to just thank all of our speakers. Hopefully, they gave you a better understanding of Ameriprise. As Walter just closed his presentation, that's why we're quite excited. As I told you in the opening, we feel like we have an excellent value proposition. We feel like we built a tremendous foundation across our company, particularly against investing in our growth areas, and that we can capitalize on some of the opportunity that's out there in the marketplace. Also from the way our business operates, that we can generate good shareholder return and that we can continue to return to shareholders. With that, I'd like to open it to any questions for myself or my colleagues. First one right here.
Great. Thanks. Alex Blostein, Goldman Sachs. Couple of questions, one for Walter and one for Jim, I'll start, Jim, with you, I guess. When we think about the capital return opportunity at Ameriprise, clearly been one of the more unique stories within financial services. You've mentioned a number of times that you obviously continue to think there's opportunities for further multiple expansion and the way you value the company obviously looks slightly different for the market implies right now. When you think about the opportunity to continue your current pace for buybacks, what's kind of the threshold of what you think is the right trade-off until you say, okay, this feels fair, and there might be other opportunities to reinvest in the business versus kind of continuing the pace of the buyback?
First and foremost, what we do do on an annual basis is look at the investment in the business, we try to balance that investment to ensure that we can get the right return. We can always spend more money. The question is, can we spend money and get a good return on that money? That's why every year we also re-engineer, we don't just increase the cost base. Part of the funding of why we're not using more cash or more from a bottom line is because we re-engineer out things that aren't working. If we didn't do that, we would be using more of the cash for organic investment, which would have impacted some of the earnings growth. Part of it is we do look at the organic opportunities first and foremost.
Second, with that, we do evaluate a buyback dividend versus acquisition as an alternative. We've been out there kicking tires to other things that might add some value. I think as you just saw from the team, we're very focused on certain things that can add tremendous value. If those opportunities come along, we'll be very interested in them. Disregarding that, as Walter said, we are generating a lot of earnings and a lot of free cash flow, we continue to feel like with a strong capital base, we're not just looking to increase our ROE by returning all of our capital, with a strong capital base, we can still return nicely to shareholders as part of our equation.
Okay. The second, just a quick follow-up for Walter. Nicely laid out margin expansion story opportunity at Advice and Wealth Management. I think it's obviously been a key focus for investors for some time. If you look at the base that you guys are starting off to get to your 20%+, I guess using last year's 13.8, you were at 15 and change in the first quarter. Some expenses slipped into the second quarter, call it kind of maybe closer to 15% base. Still feels a little conservative, I just want to get your thoughts on that.
Walter?
I think we have room to maneuver. Listen. We talk about environments, talk about situations. I believe it's a fair representation. Certainly, if you look at the interest opportunity and the opportunity as we vintage out in the employee channel and certainly in the productivity in the franchise channel, I see big opportunity. I see more upside than certainly. I think we've demonstrated that as we've progressed. You always hold back a little to some degree because environments shifts and things like that. I do think we have the right elements and the right capability to really keep on that margin expansion. I don't know.
Yeah, I think Walter said it. I mean, yes, we're up over 15 now. If you add 5% from the idea of, or 4% from interest rates, we would be at roughly close to the 20 now. The answer is yes, we can go beyond that. I think what we're just saying is who knows what the environment is. If the environment continues along the path of just continued ongoing economic improvement, yes, we'll be in the 20s with interest rates. I don't want to confuse that again. I remember when we put the 12 out there, the interest rates didn't come, and people said, "Well, you're not at the 12 yet," we did get there. Yes.
Thanks, Jim. Suneet Kamath from UBS. I want to go back to slide 32, the bottom slide, where you show us the advisor revenue by channel. Just a couple of questions on that slide. First, if I look at the gap between the employee and the franchisees, it was pretty consistent, 2010, 2011, 2012, and then it narrowed quite a bit in 2013. Just want to get a sense of what's behind that, if it's the vintaging or if there was something else that's going on there.
Walter, was that your
I think it's Bill. Yeah.
Oh, Bill. Okay.
Yep.
Okay. Without my glasses here. Okay. Yeah, I think what occurred is there was a little bit of a slowing, but I think in 2012, it was a little bit slowing also with the market conditions, et cetera. Bill, do you remember?
Yeah, I think it's a combination of things. We had better retention within the employee channel. The ones we were retaining were higher producers, the people we were recruiting were higher, it began to come together with the group.
It was ramping up of the people we recruited in at the same time that we were attriting some of the other people. As you can see, there's a huge jump that occurred as the initial vintages came up.
Okay. As we think about these two channels then, what do you think about, or what do you think the opportunity is in both of them?
I would say that we see first of all, we have a very good tenured franchisee channel that we're helping our advisors continue to grow their productivity, build their teams, build their capabilities for the moving up market. We're going to, as Bill said, we're going to continue to focus on productivity improvements from our core base as we add other people to the base. In the employee channel, where average recruits are over $400,000 that we're bringing in. As all of those people season and ramp up going through the first three years of transition, and we get more utilization and capacity in that system, I would see that actually getting equal to the franchisee channel, in productivity levels. At the same time, I think giving us much greater margins because we're leveraging more of the fix that's there and the capacity we have.
Okay, got it. Just lastly, as we kind of convert revenue per advisor into earnings, what sort of payout ratio should we be applying to these two different channels?
I think again, our franchisee channel on average has about an 85%, 86% payout. The employee channel is in the low 40s.
That's a payout on what? Because it can't be total revenue.
It's on a gross deal of concession.
Right. Okay. All right, great. Thank you.
Over here. I'm sorry, I missed you.
Thank you, Jim. John Nadel from Sterne Agee. Pursuing that in a little bit more depth. You guys have sort of hinted at this over the last couple of years, and you've really laid out some numbers here for us. I think for the first time to really split the employee and the franchisee channel revenues margin. If we think about the employee channel margin potential being roughly equivalent to the franchisee margin potential, I think that's what you've said in the past. What's the combination? You've touched on advisor growth. We're at about 2,100 employee advisors today. Where does that need to get to and over what period of time? Then you've just discussed in response to Suneet, I think, given us a good sense for what the productivity can get to.
I would say it's three things, but again, one of my colleagues can jump in. I think it has first to do with, as I said, ramping up the people we recruit in. Second of all, adding a bit more to that channel because we have more excess capacity to utilize. Third is actually, as Bill said, helping our advisors even become more productive in the channel, using some of the full capabilities, some of the product suite more fully, the financial planning, and advice proposition. If we do those three things, there's no reason why we couldn't get to similar margins as we have in the franchisee channel. The difference between the employee and franchisee is not because the advisor isn't as good or productive today.
It's just that we carry a bit more of the overhead, and because you're not fully utilizing that, you have a dent in your margins.
I guess that's sort of the question I'm trying to get at is how much more capacity, office space, however you want to refer to that. How much more space do you have to?
One of the things we do as we fully load that number. I'll give you an example. I'm paying for brand advertising. I'm paying for my tools and technology. At the end of the day, we still split that based upon the advisors. We don't necessarily say we're going to channel all of that to one channel versus the other.
Yeah.
If we took that out, our margins would be a lot better because that's carrying some of the broader overhead of our system. We also, for instance, have ramped up our recruiting. All that expense goes to where the recruits are, right? Again, you're vintaging them, you're bringing in more people. Over time, that base builds enough to leverage that even more. Part of it is an overhead allocation leveraging, and part of it is a fixed cost. The piece you asked for is a fixed cost.
Got it.
Okay.
That's helpful. I guess if Advice and Wealth Management has 20% plus potential with some things going right. Asset management, I think in 2013, the adjusted margin was 36.5%. If Ted and the rest of the team is successful in some of these endeavors over the next few years, where's the upside potential? Is it a 40% plus type opportunity there?
The way I position that, but Ted can compliment this, is this. We feel we have pretty good margins in the business. We're managing our expenses pretty well. We are investing more. Ted and team are building out more capabilities, as you said, in the solutions area. We're expanding some of our distribution, our product capabilities in international, domestic, global. We're building out Asia. Part of what we're doing is starting to invest a bit more. We want to put more money into branding, et cetera. It's not necessarily a short-term focus to get margin over 40%. Now, having said that, even with that, if we can get the flows in some of the products that have the type of fees that we're looking for, we will get to that 40%, but that isn't our primary driver today.
Our primary driver is to now turn around that flow situation and expand in some key areas that will have future revenue growth.
Perfect. Thank you.
Okay. Do you want to add?
No, we're good.
Other questions, please. One right here. Take him and then-
Thanks. Erik Bass with Citigroup. First question, just as you think about the insurance growth opportunity, you highlighted how, I mean, obviously, you've had strong growth in clients, and insurance seems under-penetrated from your competitors. Is there an opportunity to ramp production up there through the clients that you're bringing in? How do you think about that and balancing sort of the capital usage and the mix shift of the business overall?
Okay. John, you or Bill?
Yeah, I'd say our growth opportunity in insurance and annuities is obviously very tied to our advice and wealth management growth that Bill talked about. As we bring in recruits from other firms, we're finding they're taking to our model very well. We're helping them deepen far beyond what they're able to do at their old firm to fill the full set of needs. Look to the growth of advice and wealth management and our deepening when they bring in additional recruits, that'll really drive the growth of that business.
Yeah, our sales and insurance has been up over the last year or so very nicely.
All right. I guess one other piece on insurance, just the P&C business you didn't touch on as much. Certainly can see the connectiveness with the life and protection businesses, P&C less so because it's a third-party distribution. Just how do you think about that business as part of the whole? Is it just for sort of diversification benefits, I guess, how do you think about it as being core long term?
I'll start, but Walter can complement, and we also have our head of auto and home here. I would say this, we have built a terrific business here. It's a direct affinity-based model. I'll add an example. Ameriprise is one of the affinity relationships, and we have a very good, strong client base that we continue to grow. We have it through other affinity partners like Costco, et cetera. We think the model we created is very good. We also think our cost structure is very good. More recently, we've gotten hit with a combination of weather-related activities and some things that have percolated in the auto environment in a number of states.
We're hard at work to address those things because if we get that back in line based on some of our modeling and other things that we're working on, claims adjustment, et cetera, we think that we can get very good returns there as a diversifier in our business. We've also been able, over the last number of years, to get it up to scale. We've actually just launched some of our travel products now that even have higher margins that we think will be a great complement. That's a business we used to do that we were prevented from doing for a while when we separated from American Express. You put those together, we think we're creating a very good model. It's one of the higher value creation models out in the industry today.
I think getting that to the right size and scale would offer us a lot of good opportunity for the future in deciding how that would fit in longer term.
Take one last one in since Campbell's here. Just curious on your thoughts on the U.K. with the pension scheme changes, if that's an opportunity for Threadneedle and asset managers in general.
Yeah, sure. Thanks very much. For those of you who don't know, the Chancellor George Osborne removed the compulsory requirement for British pensioners to compulsorily annuitize their pension pots at 75. You can build up a lifetime pot of one and a quarter million pounds, which is no chump change. You can draw 25% of that down on retirement, now you can spend it at will as opposed to buying an annuity. The day that was announced, GBP 6 billion got wiped off the balance sheets and the market cap of British Insurers and Hargreaves Lansdown, for those of you who don't know, a GBP 60 billion wealth management platform business. The value of it went up more than it listed for. Obviously the market thinks this is an enormous opportunity. Threadneedle is a provider to the wealth managers, but also to the insurers.
We believe it will have a profound effect in time, we believe that a firm that provides diversified products like us and solutions should do quite well out of it. It's a good opportunity.
Thanks.
Thanks, Jim. Eric Berg from RBC Capital Markets. I just have one question. You've said effectively that in your advice business, you have a factory that's underutilized. My words, too many empty desks. My question is a simple and straightforward one. Despite very aggressive recruiting, I don't think the agent count has been growing, in some quarters, I think it's been declining. Why should we have confidence that it's going to improve in the face of your record of no growth in agent count?
Let me answer that. First of all, I would say we're in a 70-plus % utilization now, that is more highly productive, as you said, over almost 380 as of the first quarter in productivity, which is very different than it was in the past. Remember, we brought this from a big negative to now a positive on a margin to hopefully continue to move it there. Second thing is, the numbers that you're reviewing include what we have as a small channel called our AAC. It's a centralized unit that we use for some of our other client base that we're transferring from our advisor base that aren't where the advisors want to focus. Over that last year, we just made a major transformation, took around about 100 people in that channel, that's in the numbers that you see as employees.
It's sort of buried in the total. The third thing that I would say is, as we continue to put people in the channel, John and his team are recruiting people with even more productivity, right? You take the combination of those factors, we're not looking for a headcount drive per se. We're looking for building the right quality people that can grow. We're looking for those quality people to be of higher productivity. During this period, we still washed out some of our legacy novice people that didn't hit the hurdles that we wanted. We made that as a choice rather than just keep those headcounts within our channel. Okay? All those things have occurred. What I would just say is, how can you see results?
You can see that we went from a $200 million loss in the channel to making money last year, to hopefully making a lot more money over the next few years. That's the difference that you can see. Now remember, I'm spreading all of the overhead of the entire business into their piece of it. If I took that out, you would see greater numbers than the 4%.
Just to understand the cost accounting, 100% of the overhead of the Advice and Wealth Management imposed to it is born by the employees?
No. I'm saying what I do is all the investments we make.
Right.
Technology cost, the brand, et cetera, we do an allocation to the employee channel. We don't just say, well, that's a growing channel. We're not going to allocate costs. We're just going to look at it on a marginal basis. I wouldn't call it all overhead. These are investments, these are people, this is leadership, et cetera.
Another question?
Thank you, Jim. John Nadel again from Sterne Agee. I think the last meeting you held was about 18 months ago when we did this. You sort of have this high-quality problem. I think 18 months ago, you told us to expect over the coming years that your $2 billion of excess capital would slowly work down. It still sits at $2 billion today, despite your cushion for the variable annuity and other enterprise risks. As we fast-forward 18 months from now to the next one, are we going to still hear that it's sitting at $2 billion?
Well, I think one of the things that, again, maybe it didn't come out as clear is during this time frame, we freed up a lot of capital. We returned more than 100% of our earnings, 130%. It wasn't as though if we started from the point we were and we didn't free up more capital or we didn't change the business mix as aggressively as we did, you probably see a rundown in that if we bought the number of shares back. Because of the business mix and the free cash flow, and because of what Walter and his team, risk management, working with the business people have been able to do from a risk management, from a changing of a balance sheet, et cetera, including the closing of a bank, we freed up a lot more capital, okay?
That's the reason we're still with the excess of $2 billion plus, because that $500 million is not necessarily required either. It's just Walter wanted to tell you that I know there's always a concern based on what happened in the industry, and we said, and he just showed you a slide, that even if that happened again, we wouldn't call on the capital we have. We would still be able to do the buyback and maintain a capital position. With that, yeah, we still would say over time, we're going to spend that down. Hopefully, it'll be a combination of what we're doing as well as some acquisitions that would add, and I think we have some credibility that we only acquire where we think we can get juice and get good results and strategically fit in.
I think that we've proved that with the acquisitions we've done.
Like I said, high-quality problem.
Thank you.
Yep.
Any other questions? Okay, we appreciate your time. If there's anything else, please reach out to Alicia, or in some cases, we'll be seeing you again soon. We very much thank your support. We thank if you're investing in the company, your investment in us, and we thank you for following us over the years. We've tried to tell our story a little more to you today to give you a little more color. We think we have something good here that we want to continue to build on. Thank you very much. Have a great day.