Couple Looking to take hold of investments

[Whexican]

Howdy all,

My wife and I recently came across this site after researching ways to leave Ameriprise. A little back ground about us:

We are in our late 20s and started investing on our own once we got out of college in 2005. 3 years ago we joined Ameriprise and its been a mixed bag. The first year was horrible where we went through 6 agents in the span of 6 months due to Ameriprises high turn over (though they did find time to sign us into VUL policies :P ). We were ready to call it quits, but decided to at least wait the year since we had already paid. Things worked out with agent 7 who we get along with quite well and we've stayed with her for 2.5 years.

However, we are moving to another state and can no longer work with her. Rather then deal with trying to find a new agent, my wife and I figured we should just try handling our investments ourselves. While reasching what to do, we came across this site and learned of the many horrors of the VUL, front loaded Mutual funds, and hidden Ameriprise fees.

Needles to say, we were a but shaken and feel duped and angry. We plan to speak to our adviser (who, for the most part, we still trust) but we are more adamant about breaking away from Ameriprise, and need advice.

Some questions I have:

-With regards to our VUL policies, is it possible to reduce the benefit to a lower amount, and thus reduce the surrender charge and premium? Our current surrender charge is about $7k for each policy. Each policy also holds about $20k.

-What closing charges can we expect for transferring our Roth IRA, One Account amounts, and mutual funds?

-In addition to Vanguard, what our firms do people suggest looking into?

Thanks in advance for the help!

[chinaco]

How many VUL contracts do you own?


I keep my insurance and investments separate. I use insurance to mitigate the risk of a financial loss. I invest to make money.

Look on the bright side.... you figured it out early.

IMO - the words investment and insurance company more times than not results in a bad experience... including the Mutual Funds run by insurance companies (because they tend to have loads and high fees)

[Whexican]

Quote:

Originally Posted by chinaco How many VUL contracts do you own? I keep my insurance and investments separate. I use insurance to mitigate the risk of a financial loss. I invest to make money. Look on the bright side.... you figured it out early. IMO - the words investment and insurance company more times than not results in a bad experience... including the Mutual Funds run by insurance companies (because they tend to have loads and high fees)

My wife and I each have our own VUL.

[FIREd]

Hello Whexican,

1) Lowering the face amount of the VUL will reduce your premiums, but I don't think it will affect the surrender charges.

2) Closing charges for brokerage accounts: somewhere around $100 per account if I remember correctly. Closing a mutual fund: you may face back-end loads depending on the share class you own. Wiring the money out: $30.

3) I think that Vanguard, Fidelity, Schwab, Wells Fargo could all be good choices depending upon the type of investments you are interested in.

[Whexican]

Quote:

Originally Posted by FIREdreamer Hello Whexican, 1) Lowering the face amount of the VUL will reduce your premiums, but I don't think it will affect the surrender charges. 2) Closing charges for brokerage accounts: somewhere around $100 per account if I remember correctly. Closing a mutual fund: you may face back-end loads depending on the share class you own. Wiring the money out: $30. 3) I think that Vanguard, Fidelity, Schwab, Wells Fargo could all be good choices depending upon the type of investments you are interested in.

Thank you for the feed back.

My wife and I ran the numbers and we look to lose the surrender charge plus the cost of insurance we have already paid into (another 2k per policy). To minimize the loss, I'm wondering if I can reduce my benefit amount from 1 million to 200k, and then reduce the monthly premium to as low as possible (I believe its 25$ according to the policy). The additional cost of insurance can just be pulled out of the account and I can let it run till my 10 year limit is up. I'll still lose the 6k to 7K, but I at least spread that loss over the next 6 years or so, and I have some (overpriced) insurance coverage. Once the limit is up, I just close the policy and pull out whats ever left.

Otherwise I take a bigger hit (charge + lost cost of insurance premiums) and I have no coverage.

What do you all think?

[Milton]

Quote:

Originally Posted by Whexican Needless to say, we were a but shaken and feel duped and angry. We plan to speak to our adviser (who, for the most part, we still trust) but we are more adamant about breaking away from Ameriprise, and need advice.

Since you have already made your decision (not that I disagree with it), I wouldn't bother speaking to your "adviser": there is no real point. She is unlikely to provide any mea maxima culpa acknowledgment, and the discussion will only lead to hurt feelings. Or, worse, maybe she will persuade you to change your mind!

Quote:

Originally Posted by Whexican My wife and I ran the numbers and we look to lose the surrender charge plus the cost of insurance we have already paid into (another 2k per policy). To minimize the loss, I'm wondering if I can reduce my benefit amount from 1 million to 200k, and then reduce the monthly premium to as low as possible (I believe its 25$ according to the policy). The additional cost of insurance can just be pulled out of the account and I can let it run till my 10 year limit is up. I'll still lose the 6k to 7K, but I at least spread that loss over the next 6 years or so, and I have some (overpriced) insurance coverage. Once the limit is up, I just close the policy and pull out whats ever left. Otherwise I take a bigger hit (charge + lost cost of insurance premiums) and I have no coverage.

You should investigate the cost of term insurance. At your ages, it might not be too bad.

[FinanceDude]

Quote:

Originally Posted by Milton Since you have already made your decision (not that I disagree with it), I wouldn't bother speaking to your "adviser": there is no real point. She is unlikely to provide any mea maxima culpa acknowledgment, and the discussion will only lead to hurt feelings. Or, worse, maybe she will persuade you to change your mind!

Op said that one of the other 6 advisors sold them on VUL, not agent 7. Shoudl agent 7 have immediately told them to take a large surrender charge when she was assigned the account?

If you like and trust the agent, it would be courtesy to tell her that you have decided to take control of your own finances, thank her for her help, and move on. If you have truly committed to taking control of your money, you won't change your mind, and she knows that.

[Sarah in SC]

Ditto what Finance Dude said. It is simply a courtesy to say that because we are moving, yadda yadda, we've decided to take control of our own investments.
The VUL is tricky. You might find it beneficial to go over the contract with a fee-only financial planner in your new area who can help figure out the best strategy. And of course track down some good term life insurance before you cancel anything.
Congrats on escaping the Ameriprise clutches! My boss worked for them briefly when he first started out in advising. The stories, the stories.

[Milton]

Quote:

Originally Posted by FinanceDude Op said that one of the other 6 advisors sold them on VUL, not agent 7. Shoudl agent 7 have immediately told them to take a large surrender charge when she was assigned the account?

If she was holding herself out as the provider of reliable advice, rather than simply the conduit of statements and invoices, then the answer is "Yes".

Quote:

Originally Posted by FinanceDude If you like and trust the agent, it would be courtesy to tell her that you have decided to take control of your own finances, thank her for her help, and move on.

Since she is merely the agent of a company that the o/p feels has misled him, and will certainly insist upon enforcing the "surrender charge", I don't see the need to extend any particular courtesy, or to thank her for non-existent help. Just send her whatever forms are necessary. She undoubtedly has hundreds if not thousands of clients accounts, and will not be particularly surprised or offended.

[ronocnikral]

welcome from another under 30 member.

while ameriprise has never had me in their grasps, i would personally do as much i could to get out of the VUL. but as it has already been said, it's tricky. i think you are on the right track looking at reducing your coverage amount. neither my wife or I have life insurance outside of what an employer provides as we have no kids. if i kick the bucket, my wife will be SOL, but she has the skills to survive and make a decent living. when we start adding kids, that's a different story and we will insure me with term.

with a move coming up, it may be a good opportunity to assess what is really needed in a home and how you can minimize your life insurance premiums (e.g. "we need a life insurance policy b/c so and so can't afford the house payments on their own") or even the need for life insurance if you have no true dependents.

i also have an IRA at t.rowe price.

[Milton]

Quote:

Originally Posted by ronocnikral neither my wife or I have life insurance outside of what an employer provides as we have no kids. if i kick the bucket, my wife will be SOL, but she has the skills to survive and make a decent living. when we start adding kids, that's a different story and we will insure me with term.

Don't forget term insurance for your wife. Even if she stays at home and does not earn a salary, her unpaid work as a babysitter/homemaker would need to be replaced if she dies.

[Lisa99]

Hi Whexican,

We did exactly what you're about to do less than a month ago. Our VUL with Ameriprise had a $5230 surrender charge, but we chose to bite the bullet and just pay the fee so we could get away quickly and completely. (We went with Vanguard for all of our investments except company 401k and couldn't be happier).

With the VUL you can request that Ameriprise reduce the death benefit and then have the cost of insurance paid out of the cash value of the policy.

Other than the VUL charge, we were charged $100 to close down the account.

Good luck!