Hi! Ameriprise client needing advice...

[cucumber]

Follow-up:

When I inquired about the fees that we were paying at Ameriprise and that I was considering moving our funds to Vanguard, our FA quickly wanted to schedule a meeting to discuss the fees and obviously convince us from moving our funds to Vanguard. So we met with her today.

After reading constantly for the past month or so and reading all your comments, I was pretty sure I was going into the meeting with one goal in mind which was to move our funds from Ameriprise to Vanguard. That unfortunately didn't happen.

Our FA started out comparing the funds that she has us in versus a similar fund at Vanguard so that she could compare "apples to apples". She had beat each one of the Vanguard funds. I was speechless. She then proceeded to tell us that the higher fees are offset by the higher returns and that each fund serves a purpose. So for example, the BlackRock fund (BRBCX) that she has us invest in is to mitigate the downturn in the market which if we put our money in an index, the downturn would possibly be more severe. I was again speechless because it sounded good and made sense. All my beliefs in high fees being bad were just shut down by what she told me. Although I've been reading constantly every night, I still felt like I didn't know enough to make an argument against her seemingly valid points.

Her one and only advice other than keeping all the same investments with her since they are doing well and I guess better than whatever Vanguard fund she compared it with, was to change one of our IRA investments from American Century Strategic Allocation Aggressive CL B (ALLBX) to Vanguard Star (VGSTX). Is that a good move?

Finally my one and only redeeming point was that our 529 plan was being charged a 5.75% sales charge and therefore was netting only like 2.95%. I questioned her on that and she looked uncomfortable at first and then she agreed that I should move it. So planning on moving to a Vanguard 529 plan. Or is the Schwab 529 plan better? Any advice?

I am still convinced that moving all my funds to Vanguard is the best decision but I don't know how to disqualify her claims and in addition, how to cut ties with our FA since she is so nice (although she seemed to be a little annoyed today...). Can anyone help me disqualify her claims and finally push me over the fence to leave Ameriprise?

Please help!!

[target2019]

Quote:

Originally Posted by cucumber I am still convinced that moving all my funds to Vanguard is the best decision but I don't know how to disqualify her claims and in addition, how to cut ties with our FA since she is so nice (although she seemed to be a little annoyed today...). Can anyone help me disqualify her claims and finally push me over the fence to leave Ameriprise?

Do you have a list of the recommended funds and the comparable VG funds you took to her? If it's posted in this thread, I'll go back and look.

This is how a fee-based advisor works: Nice (at initial meeting) > Really Nice (when you are in office for initial evaluation) > Gushing (when you sign up) > Annoyed at your questions. The investor falls back in line, and the process starts over at Nice.

You don't need to disqualify her statements. Now you want to be nice to her, since you were not nice, and she was annoyed. If you really believe that Vanguard is the place to go, then why not call them, and have them initiate the process?

One caution is that you need to be careful about moving investments that have a tax consequence.

You'll get there.

[clifp]

Nothing like a mention of Vanguard, and fees to scare the crap out of Amerprise.

Since she mentioned BRBCX. I thought it would be fun to do a comparison of it vs a comparable Vanguard fund. One of the challenges in figuring out performance is picking the right comparison. There is no perfect comparison. But a very good starting point is the Morningstar classification and the asset allocation. The blackrock fund has 65% cash and bonds,and 35% stock. It is listed as moderate allocation fund. Long time forum members can probably already guess what fund I'm going to use to compare.

Look at the chart below. As you can see the yellow line after 10 years as grown from 10K to just $20K (19,744 to be exact) while the blue line is a shade under $16k. But just as important look at what happened during 2008 and 2009 the blue fund dropped well below 10K to $8,600 or 35% decline from early 2008 peak. The yellow fund stayed above $10K the wwhole time. Now which fund would you rather own Yellow or Blue?
BRBCX Chart BlackRock Managed Volatility Inv C Fund Chart

It probably won't surprise you to learn that Blue fund is the BRBCX. Nor will it surprise long time forum members to learn the yellow fund is none other than Vanguard Wellesley.

So it is all fine and dandy to say

Quote:

So for example, the BlackRock fund (BRBCX) that she has us invest in is to mitigate the downturn in the market which if we put our money in an index the downturn would possibly be more severe. I was again speechless because it sounded good and made sense.

It all does make sense except for the simple fact that we had an awful downturn in 2008 and 2009, and that fund was suppose make downturn less severe, barely out performed 100% stock fund like Vanguard total market. The Vanguard Wellesley fund which is moderate/conservative allocation fund very similar to BRBCX not only made more money during virtually any period than Blackrock, but I bet most owners of Vanguard slept far more soundly at night than the Blackrock owners during the crisis.

There is a bunch of math to prove the Vanguard fund is less risky than the Blackrock fund eventhough they have a virtually identically percentage of stock and bonds. But since the math recently won a Nobel prize, I only have basic understanding of it..

One of the paradox of investing is that you need to be a very sophisticated investor to understand if you FA is doing a good or bad job. And understand concept like investment styles, time weight returns, and Sharp ratios.

But to to invest yourself with index funds is simple read a book, spend a few hours on website like this. Put the money into a index fund and once a year or so rebalance and you are done.


If you have any more comparison of Amerprise vs Vanguard fund to make I am sure we can help provide a different view.

[2B]

Quote:

Originally Posted by clifp Nothing like a mention of Vanguard, and fees to scare the crap out of Amerprise.

+1

The FA is a salesman (women) and has had a lot of training and probably experience in how to convince people to not move their money. I suspect her comparisons did not include any loads or management fees. She also got to pick the time frame and which funds to compare. Some group of funds always beat the index funds over a given time period. The problem is that nobody has consistently done it and nobody has successfully predicted which ones will.

All the research says that in the long run a diversified portfolio of index funds (with low fees) will outperform an equivalent risk adjusted portfolio of managed fund. You can either believe the results of decades of academic research or the person who makes a living off of the fees collected from your money.

[Htown Harry]

Quote:

Originally Posted by clifp One of the challenges in figuring out performance is picking the right comparison.

Quote:

Originally Posted by 2B I suspect her comparisons did not include any loads or management fees. She also got to pick the time frame and which funds to compare.

Can you tell we're suspicious of her comparison method?

There's another trick used to stack the deck for a particular comparison: comparing price appreciation for one fund against the total return of another fund.

An example of how including reinvested dividend and capital gains distributions makes a very significant difference:



As clifp suggests, the "appreciation from $10,000 invested" comparison avoids this.

I'm curious. Did she share copies of her comparison data with you? Or just attempt to dazzle you with a slide show? If the latter, it's very likely an indication of the comparison's validity.

[Sue J]

Quote:

Originally Posted by cucumber I am still convinced that moving all my funds to Vanguard is the best decision but I don't know how to disqualify her claims and in addition, how to cut ties with our FA since she is so nice (although she seemed to be a little annoyed today...). Can anyone help me disqualify her claims and finally push me over the fence to leave Ameriprise? Please help!!

I'm sorry you weren't able to accomplish your goal on the first try.

The fact that she is annoyed that you want to control YOUR OWN MONEY should be a sign that it's your decision to make. Sometimes NO is a complete answer.

[travelover]

Quote:

Originally Posted by cucumber ........ I am still convinced that moving all my funds to Vanguard is the best decision but I don't know how to disqualify her claims and in addition, how to cut ties with our FA since she is so nice (although she seemed to be a little annoyed today...). Can anyone help me disqualify her claims and finally push me over the fence to leave Ameriprise? Please help!!

I'm really sorry to read this. The bottom line is that it is your money and you don't need permission from anyone to invest it as you see fit.

Find out the tax implications of moving this money. You need to understand this in any case. Then, people here can help you reallocate it at Vanguard.

[REWahoo]

Quote:

Originally Posted by cucumber I am still convinced that moving all my funds to Vanguard is the best decision but I don't know how to disqualify her claims and in addition, how to cut ties with our FA since she is so nice...

Sigh...

You don't need to disqualify anything, all you need to do is call Vanguard and get the ball rolling to move your funds. The problem isn't how nice your FA is, it's your lack of resolve to take control of your own financial destiny.

The only thing keeping you handcuffed to Ameriprise is your reluctance to use the key you hold in your hand. Be strong - do it.

[karluk]

Quote:

Originally Posted by travelover I'm really sorry to read this. The bottom line is that it is your money and you don't need permission from anyone to invest it as you see fit. Find out the tax implications of moving this money. You need to understand this in any case. Then, people here can help you reallocate it at Vanguard.

I am absolutely dumbfounded that OP finds it necessary to engage in a debate with the FA about the merits of Vanguard vs. Ameriprise. When I go to the bank to withdraw money, I would be aghast if the teller started arguing with me about whether I should make the withdrawal. It's none of their business, and I would certainly report such behavior from a teller to the bank's management. I don't see why the same shouldn't happen to this FA.

[Ready]

I think I would like to hire this woman to work for me. If she is this good at sales, I bet she could make me a lot of money!

[pb4uski]

To me in comparing two funds, the important thing is to make sure they are really comparable based on style, AA for balanced funds, etc. Then clifp's analysis of total return/value of $10k for 3, 5 and 10 year periods are metrics that I key in on. Then I look at volatility measures like duration for fixed income and beta for equities.

I suspect that your FA cherry-picked Vanguard funds that underperformed her selections and if you dive into the details you will find that they are not really comparable funds.

However, if a fund was comparable and total return after fees exceeded the low cost fund for 3, 5 and 10 year periods and volatility was comparable then I would consider the higher cost fund. The rub is, few asset managers can beat the index by more than the fee difference for 3, 5 and 10 year periods.

[MRG]

Quote:

Originally Posted by cucumber Follow-up: ....Bunch of good stuff I deleted. ..... Finally my one and only redeeming point was that our 529 plan was being charged a 5.75% sales charge and therefore was netting only like 2.95%. I questioned her on that and she looked uncomfortable at first and then she agreed that I should move it. So planning on moving to a Vanguard 529 plan. Or is the Schwab 529 plan better? Any advice? I am still convinced that moving all my funds to Vanguard is the best decision but I don't know how to disqualify her claims and in addition, how to cut ties with our FA since she is so nice (although she seemed to be a little annoyed today...). Can anyone help me disqualify her claims and finally push me over the fence to leave Ameriprise? Please help!!

I deleted some of your post to get to the point. Other's have given excellent comparisons.

So think about the 529 plan, she set it up or advised, correct?

If so why did she put you in a fund with 5.75% sales fee? You know why. If she gives you one bad piece advice, why believe anything she says?

She's annoyed because she sees you getting smarter, knows you're going to keep getting smarter. She's worried, how do I replace this persons fee's, I got a car to pay for.

You don't see it yet but you did very well. Use the 529 as your motivation.
Best wishes,
MRG

[ERD50]

Quote:

Originally Posted by cucumber Follow-up: .... Our FA started out comparing the funds that she has us in versus a similar fund at Vanguard so that she could compare "apples to apples". She had beat each one of the Vanguard funds. I was speechless.

You should not be surprised. She appears to be good at what she does, which is to make her look good to you. But pick it apart a little, and just like after you learn how a magician does a trick, you might say "Ahhhh - so that was all it was!"

See the trick - she picked the Vanguard funds to use in the comparison. Now do you honestly think she just picked the first fund that seemed like a good benchmark, or did she do her homework, and only select funds that made her look good?

What would you do if your paycheck depended on it?

Quote:

She then proceeded to tell us that the higher fees are offset by the higher returns and that each fund serves a purpose.

Of course she did. See clifp's response.

Quote:

All my beliefs in high fees being bad were just shut down by what she told me. Although I've been reading constantly every night, I still felt like I didn't know enough to make an argument against her seemingly valid points.

Here's the thing. Do you believe it? Have you seen enough evidence, from people who have no financial interest in this to be convinced? Then act accordingly, and move the funds away. If not, then keep studying until you are convinced one way or the other. But clearly, the Ameriprise person is biased - I'd look elsewhere for info.

Quote:

Finally my one and only redeeming point was that our 529 plan was being charged a 5.75% sales charge and therefore was netting only like 2.95%. I questioned her on that and she looked uncomfortable at first and then she agreed that I should move it.

So after being pressed, she admitted they were collecting 5.75% of your money for no benefit to you? But only after you questioned her on it? What does that tell you about her motivations to do what is right for you? What else will she try to get away with, until you catch her? Is that who you want handling your investments?

Quote:

Please help!!

You have everything you need. At this point you must help yourself!

-ERD50

[ziggy29]

I think we are developing a reputation as a place for recovering Ameriprise clients to enter rehab and provide support for one another.

[Animorph]

Quote:

Originally Posted by clifp Nothing like a mention of Vanguard, and fees to scare the crap out of Amerprise. Since she mentioned BRBCX. I thought it would be fun to do a comparison of it vs a comparable Vanguard fund. One of the challenges in figuring out performance is picking the right comparison. There is no perfect comparison. But a very good starting point is the Morningstar classification and the asset allocation. The blackrock fund has 65% cash and bonds,and 35% stock. It is listed as moderate allocation fund. Long time forum members can probably already guess what fund I'm going to use to compare. Look at the chart below. As you can see the yellow line after 10 years as grown from 10K to just $20K (19,744 to be exact) while the blue line is a shade under $16k. But just as important look at what happened during 2008 and 2009 the blue fund dropped well below 10K to $8,600 or 35% decline from early 2008 peak. The yellow fund stayed above $10K the wwhole time. Now which fund would you rather own Yellow or Blue? BRBCX Chart BlackRock Managed Volatility Inv C Fund Chart It probably won't surprise you to learn that Blue fund is the BRBCX. Nor will it surprise long time forum members to learn the yellow fund is none other than Vanguard Wellesley. So it is all fine and dandy to say It all does make sense except for the simple fact that we had an awful downturn in 2008 and 2009, and that fund was suppose make downturn less severe, barely out performed 100% stock fund like Vanguard total market. The Vanguard Wellesley fund which is moderate/conservative allocation fund very similar to BRBCX not only made more money during virtually any period than Blackrock, but I bet most owners of Vanguard slept far more soundly at night than the Blackrock owners during the crisis. There is a bunch of math to prove the Vanguard fund is less risky than the Blackrock fund eventhough they have a virtually identically percentage of stock and bonds. But since the math recently won a Nobel prize, I only have basic understanding of it.. One of the paradox of investing is that you need to be a very sophisticated investor to understand if you FA is doing a good or bad job. And understand concept like investment styles, time weight returns, and Sharp ratios. But to to invest yourself with index funds is simple read a book, spend a few hours on website like this. Put the money into a index fund and once a year or so rebalance and you are done. If you have any more comparison of Amerprise vs Vanguard fund to make I am sure we can help provide a different view.

Wellesley is an actively managed fund, though because of its past performance and Vanguard low expenses everyone likes it. Here we've been saying switch to cheap index funds, the FA says her active funds are better, and now we're saying our active funds are even better, based on past performance?

Anyway, to OP, each mutual fund needs to have gains that are better than the index by the amount of their expenses in order to match the index. Using Ameriprise, each of the funds must cover their expenses plus whatever Ameriprise is charging you, just to match the index. If those expenses add up to something around 2%, it is actually very hard for a manager to cover those expenses and beat the index for the long term. Many will do it for a short period, and maybe your FA got lucky and most of your funds beat their indexes. But will they continue to outperform?

As mentioned, be sure you are looking at total return performance, including dividend and capital gains distributions reinvested. Make sure the Vanguard funds you are comparing to are the best match in terms of portfolio style. For example, many international funds will include or exclude emerging markets stocks. That simple fact will make their returns look different without necessarily saying anything about how good their stock picking is.

Now that you have seen your portfolio under Ameriprise, is that something you might feel comfortable setting up on your own? If so, you are paying Ameriprise a lot of money just to watch your portfolio. Mutual funds are not things that change character on a monthly basis.

If you like your interaction with Ameriprise, then continue asking them to compare your portfolio's funds with similar Vanguard index funds (the same ones each time), don't buy anything with a front-end or back-end load, and don't buy any annuities or insurance products. Your FA already slipped in one front-end load fund, that's pretty much a firing offense right there.

[Texas Proud]

Cucumber.....


Sorry to hear you drank the cool-aid....


Hope you wake up and get your money out of there ASAP.




As a thought to the advice you are getting... if they say to put money in a fund that charges a front end load for ANYTHING.... they cannot be trusted... As one of the TV judges have said 'if you lie to me about one thing, I can't trust anything you say'....

[Coolius]

You were shown a "red flag" when she got annoyed at the 529 investment - she had to do something as she did not prepare for an adequate defense on that portion.

If she had been defensive on that issue, you would likely be less inclined to believe her initial pitch, so she gave in on that point to satisfy you. A minor victory for you perhaps, but she won the war.

By conceding your request she is relieved that the crises ( for her ) is over, and you will continue to fund her car/boat/RV/vacation home expenses for the time being.

Very likely she was putting all her effort on the fund comparison and thought the 529 was a minor point that you would not think about.

Why don't you ask her to do a fund comparison with funds that you select - or those that have been mentioned in this thread? And set the time frame - of your choosing.

She might have a much more difficult time to come up with the same conclusions if she were compelled to use your selections and your time frame.

[2B]

cucumber --

You don't have to "convince" her or anything resembling it. She is a commissioned salesperson with one goal and that is to maximize her fee income. She will never, ever agree that you should move all of your money to Vanguard.

Please get over any feeling that you somehow have to have her "permission." She will always have a counter argument to have you keep your money with Ameriprise.

All you will do is put yourself through meaningless discussions until you actually get up the backbone to move your money.

[karluk]

Quote:

Originally Posted by 2B cucumber -- You don't have to "convince" her or anything resembling it. She is a commissioned salesperson with one goal and that is to maximize her fee income. She will never, ever agree that you should move all of your money to Vanguard. Please get over any feeling that you somehow have to have her "permission." She will always have a counter argument to have you keep your money with Ameriprise. All you will do is put yourself through meaningless discussions until you actually get up the backbone to move your money.

2B's comment sums up your situation perfectly. You are allowing yourself to get lured into a debate with a skilled salesperson who is certain to have a counter-argument to every point you bring up. Why are you allowing yourself to be put into a position of needing the permission of the hired help to take charge of your own money? Everything she says should be met with a polite, "Thank you for your input, but I've decided to go in another direction. When can I expect my account to be closed and receive a check?" Anything less is allowing yourself to be bullied.

[travelover]

This kinda reminds me of an anecdote on another forum. The poster had dropped by a car dealership to look at new cars. They took his car keys to "appraise" his trade in. When he decided he wanted to leave without buying, no one could find the keys to his car. The poor guy was stuck there for hours enduring a hard sell.

My point is that sales people will walk over you just as much as you let them. Sometimes you just have to assert yourself.