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Old 11-08-2010, 03:14 PM   #61
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So, what's the answer? I'm curious about from the FA's POV.
There's three views here:

1)The insurer's promoting VAs view
2)The firm the FA works for view
3)The FA's view

Where shall I begin?
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Old 11-08-2010, 05:49 PM   #62
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There's three views here:

1)The insurer's promoting VAs view
2)The firm the FA works for view
3)The FA's view

Where shall I begin?
With #1 and work your way to #3 or work backwards it is a sort of free country.
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Old 11-08-2010, 09:24 PM   #63
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With #1 and work your way to #3 or work backwards it is a sort of free country.
The large insurance companies are NOT dummies. They know quite well that VAs represent "sticky money", meaning that due to surrender charges, benefit bases, death benefit riders, etc, folks are not going to disturb that money for a good long time, maybe never in some cases.

I think Pacific Life is a good example, they sponsor seemingly every sports event in the country, their advertising budget has to be in the $10's of millions of dollars. Of course, M&E charges and other expenses pay for that in the end. They know that DB plans (pensions) have gone for most folks the way of the dodo. They also know their distribution channel is everyone in American that holds a Series 6 and insurance license, which is roughly 600,000 advisors, give or take, from you local bank, credit union, P&C insurance agent, and so on, to the FAs, CFPs, etc. In their minds, they offer the "perfect solution" by making "your IRA or portion thereof your own pension plan". The VA market is booming, mainly because of the boomers and the insurers feeding off the fear in investors. Main pitch? "Let's take a portion of your money, and GUARANTEE a stream of INCOME you CAN NOT OUTLIVE,that you can turn on ANYTIME YOU WANT. And, if the market goes up, you can get a PAY RAISE in retirement, who else is offering you that"? Most are written in IRAs because a) it is allowed, and b) that's where most folks have their largest sum of money.

Many layers of wholesalers, support staff, marketing budgets, etc, means there have to be high expenses for everyone to get paid. The insurer typically pay the advisor, insurance agent, bank, etc about 7% of the lump sum put in the product as a commission. This is assuming a 7 year surrender which well over 50% of all VAs are written as. The firm supporting the FA takes their cut, and the FA gets the remainder, and "everyone wins"................
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Old 11-08-2010, 09:30 PM   #64
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Well, not everyone wins!
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Old 11-08-2010, 09:42 PM   #65
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Well, not everyone wins!
Hence the "wink-wink, nod-nod" emoticon.........
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Old 11-09-2010, 09:47 AM   #66
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Is there a 1,2,3 recepie to create your own portfolio that mimicks a VA? Example Term Life Policy, Some Zero Coupon Bonds, Some Bond Funds for cash flow, Some Stocks for growth, and or Dividend Stock fund?
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Old 11-09-2010, 10:07 AM   #67
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Is there a 1,2,3 recepie to create your own portfolio that mimicks a VA? Example Term Life Policy, Some Zero Coupon Bonds, Some Bond Funds for cash flow, Some Stocks for growth, and or Dividend Stock fund?
I think brewer did one on here awhile back...........
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Old 11-09-2010, 05:17 PM   #68
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Quiz time: Why are so many annuities sold in IRAs? The answer is NOT to make the advisor rich!

So, why do people do it?
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Most are written in IRAs because a) it is allowed, and b) that's where most folks have their largest sum of money.
I guess you could argue that the latter statement is an answer to your question, but I didn't read anything in the full response that shows that the answer is not "to make the advisor rich". Still sounds like a massive scam to me. I'm not saying that there isn't a place in the world for annuities, but they could xertainly be sold, with reasonable profit, in a much less predatory and amoral manner.
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Old 11-09-2010, 05:58 PM   #69
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Hi all. I'm with ameriprise and was shocked to see all the bad press you are giving them. I use them for my Roth IRA. I'm not a skilled person in the stock market, but i know the basics. I'm investing my money in an american fund with a front load of 5.75%, and an expense ratio of .83. Is that terrible? What is different about the funds you are in? My advisor pointed me in this direction because once the 5.75 is paid, the expenses are low..If i wanted to be in a different fund, i'd just tell them so. Why are they the culprits?
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Old 11-09-2010, 05:59 PM   #70
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Oops, i didn't mean to indicate i'm ''with'' ameriprise.. I use them for my fund management is what i meant.
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Old 11-09-2010, 06:07 PM   #71
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Hi all. I'm with ameriprise and was shocked to see all the bad press you are giving them. I use them for my Roth IRA. I'm not a skilled person in the stock market, but i know the basics. I'm investing my money in an american fund with a front load of 5.75%, and an expense ratio of .83. Is that terrible? What is different about the funds you are in? My advisor pointed me in this direction because once the 5.75 is paid, the expenses are low..If i wanted to be in a different fund, i'd just tell them so. Why are they the culprits?
I wouldn't call an expense ratio of 0.83 low. It's not as high as some of the advisor selected type funds but's it's certainly not low. And does your fund have 12-b1 (advertisng) expenses that you pay ? I would guess yes. And are there hidden trading fees that are kind of outrageous ? I suspect what the answer is for that. But no, You haven't given enough information to say one way or the other if your fund is really costing you or not.

Per the load. We'll the advisor gets paid somehow. Evidently yours gets paid via the load. At least it's disclosed up-front.
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Old 11-09-2010, 06:12 PM   #72
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I guess i'm not sure if you have been dealing with advisors who push you in a bad direction, or if they are not allowing you to invest the money in the way you prefer? I feel as though if i want to put all my roth money in McDonalds stock that they would allow it. Is the company corrupt, or are the advisors just not always advising what we want?

Who should we switch to?
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Old 11-09-2010, 06:16 PM   #73
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Somebody correct me if I am wrong, but 12b-1 fees are included in the overall expense ratio, so when you see a 12b-1 fee in a prospectus, that is telling you how much of the total ER is 12b-1.

Still it is best to avoid 12b-1 fees.
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Old 11-09-2010, 06:19 PM   #74
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Hi John,

You might want to start your own thread regarding your Ameriprise questions.

Each person is different and if we start answering your questions in this thread it might get confusing.

I, for one, left Ameriprise less than six weeks ago. There were myriad reasons including being sold a VUL that was totally unnecessary. Another reason is that our advisor was not looking at our total portfolio as a whole. He was advising us within the Ameriprise acct as if it were the only money we had invested even though he knew it wasn't...and the list goes on.

There are a number of us on this forum who have left Ameriprise in order to self-manage our portfolios.
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Old 11-09-2010, 06:20 PM   #75
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John Galt:

The Company isn't corrupt, They, just like many in the Finacial Services Industry, charge through the nose high prices for their services and hide the fees in tricky spots. Buyer Beware.

As always the interest of the client (you) and the interest of the financial advisor and financial firm may be contary to each other.

Where to invest ? That's for you to decide.

Have you checked out Vanguard ? I like them because they are owned by the underlying funds. So you as an investor in their funds, in a way own the company. They tend to have very low fees and no loads on the funds.
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Old 11-09-2010, 06:26 PM   #76
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Somebody correct me if I am wrong, but 12b-1 fees are included in the overall expense ratio, so when you see a 12b-1 fee in a prospectus, that is telling you how much of the total ER is 12b-1.

Still it is best to avoid 12b-1 fees.
Sometimes yes, sometimes no

check out this link:

Mutual Fund Fees and Expenses


Distribution [and/or Service] (12b-1) Fees

This category identifies so-called "12b-1 fees," which are fees paid by the fund out of fund assets to cover distribution expenses and sometimes shareholder service expenses."12b-1 fees" get their name from the SEC rule that authorizes a fund to pay them. The rule permits a fund to pay distribution fees out of fund assets only if the fund has adopted a plan (12b-1 plan) authorizing their payment. "Distribution fees" include fees paid for marketing and selling fund shares, such as compensating brokers and others who sell fund shares, and paying for advertising, the printing and mailing of prospectuses to new investors, and the printing and mailing of sales literature.The SEC does not limit the size of 12b-1 fees that funds may pay. But under FINRA rules, 12b-1 fees that are used to pay marketing and distribution expenses (as opposed to shareholder service expenses) cannot exceed 0.75 percent of a fundís average net assets per year.
Some 12b-1 plans also authorize and include "shareholder service fees," which are fees paid to persons to respond to investor inquiries and provide investors with information about their investments. A fund may pay shareholder service fees without adopting a 12b-1 plan. If shareholder service fees are part of a fundís 12b-1 plan, these fees will be included in this category of the fee table. If shareholder service fees are paid outside a 12b-1 plan, then they will be included in the "Other expenses" category, discussed below. FINRA imposes an annual .25% cap on shareholder service fees (regardless of whether these fees are authorized as part of a 12b-1 plan).
Other Expenses

Included in this category are expenses not included in the categories "Management Fees" or "Distribution [and/or Service] (12b-1) Fees." Examples include: shareholder service expenses that are not included in the "Distribution [and/or Service] (12b-1) Fees" category; custodial expenses; legal expenses; accounting expenses; transfer agent expenses; and other administrative expenses.
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Old 11-09-2010, 08:29 PM   #77
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Somebody correct me if I am wrong, but 12b-1 fees are included in the overall expense ratio, so when you see a 12b-1 fee in a prospectus, that is telling you how much of the total ER is 12b-1.

Still it is best to avoid 12b-1 fees.
You are correct............
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Old 11-09-2010, 08:30 PM   #78
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The Company isn't corrupt, They, just like many in the Finacial Services Industry, charge through the nose high prices for their services and hide the fees in tricky spots. Buyer Beware.
How do mutual funds hide their fees? Even VG has transaction costs.........
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Old 11-09-2010, 08:31 PM   #79
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I guess you could argue that the latter statement is an answer to your question, but I didn't read anything in the full response that shows that the answer is not "to make the advisor rich". Still sounds like a massive scam to me. I'm not saying that there isn't a place in the world for annuities, but they could xertainly be sold, with reasonable profit, in a much less predatory and amoral manner.
Get the insurers to play ball..they are the ones who set the high fees inside the annuity.........why blame the advisor?
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Old 11-10-2010, 12:26 AM   #80
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The Company isn't corrupt (snip
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On a wholly separate issue, she could NOT find lower cost products for you without getting fired.........how sweet is that? I do love the ongoing assumption that the ADVISOR makes all the money for themselves.......cracks me up everytime.......most reps like her are lucky to see 50% of the total commissions net, often less.........the client is the big loser and the FIRM, not the rep in most cases, makes out like a bandit..........

Places like Amerprise and NML sell a LOT of VAs inside IRA accounts, and it mainly stems from one reason........production requirements. Amerprise reps are required to "sell" X number of "lives" a year, and a VA counts as a "life", so they get closer to their goal. Is that a conflict of interest to the client? Definitely! Is that going to change anytime soon? No............
It sure sounds like a corrupt company to me. They set up a system so the advisors have to choose between selling a probably unsuitable product to their clients, or getting fired.

Like Lisa, I'm pleased to be a former Ameriprise client. I suggest if you are going to use a financial advisor, go with a fee-only one.
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