New member - new job - kids in high school

[Wormrider]

Hello all,

This is my first post as a noob. My wife has convinced me it's time to get some advice about financial planning for our kids college education and retirement in the next 7-10 years.

I just changed jobs and also have a new 401k to think about. A fair amount of people at my work are using FAs affiliated with Ameriprise. I spoke with them once and got the impression they like insurance products. Currently they want $800 to determine my "options". So far it appears that their compensation is tied to management fees. Is it worth it for us to pay for their assessment or look elsewhere?

We live in a rural area so there are not many options for FAs. I've always heard it's better to have a FA that charges by the hour, for example, rather than through management and transaction fees.

I've got 401ks in other other corporations from previous jobs plus an IRA at Fidelity. I try to diversify across investment types as well as managers. I get the feeling that Ameriprise wants total control.

Suggestions


TIA

[FIREd]

My suggestion: Stay away from Ameriprise (I speak from experience here). Before you know it, your money will be locked up for 10 years in expensive annuities and life insurance policies.

Around here, most people believe that nobody takes care of your money better than yourself. It pays to educate yourself. I estimate that I save about $12K a year by taking care of my own money rather than letting an Ameriprise FA do the work.

[Wormrider]

Quote:

Originally Posted by FIREdreamer Around here, most people believe that nobody takes care of your money better than yourself. It pays to educate yourself.

How much time do you estimate you spend each month taking care of your money?

[Bestwifeever]

Welcome to the boards.

Go to the "link" section at the top of the page and you will find a wealth of resources to help you. I can say, "All's I needed to learn about retirement, I learned at this board."

Others will likely echo Firedreamer's response. It sounds like the $800 fee is a drop in the bucket when it comes to Ameriprise.

[FIREd]

Quote:

Originally Posted by Wormrider How much time do you estimate you spend each month taking care of your money?

It takes some time to educate yourself and set up your portfolio properly. After that, it probably takes less than 1 hour per week if you invest in mutual funds.

[kyounge1956]

Quote:

Originally Posted by Wormrider Hello all, This is my first post as a noob. My wife has convinced me it's time to get some advice about financial planning for our kids college education and retirement in the next 7-10 years.

Hi Wormrider!

Quote:

I just changed jobs and also have a new 401k to think about. A fair amount of people at my work are using FAs affiliated with Ameriprise. I spoke with them once and got the impression they like insurance products. Currently they want $800 to determine my "options". So far it appears that their compensation is tied to management fees. Is it worth it for us to pay for their assessment or look elsewhere?

definitely the latter

Quote:

We live in a rural area so there are not many options for FAs. I've always heard it's better to have a FA that charges by the hour, for example, rather than through management and transaction fees.

Right, otherwise a conflict of interest can arise. What's in your best financial interest may quite often result in less income for the advisor, if s/he is paid by commissions or transaction fees.

However, even though this conflict won't come into the picture with a fee-only financial planner, investigate thoroughly to make sure the planner can actually answer your questions. I have a somewhat unusual provision in my pension, and although I have no doubts about the integrity of the planner I hired to give me an idea of how much I need to save and when I'll be able to retire, the software she used for the Monte Carlo simulations was completely unable to reflect the actual benefit I would be receiving. I ended up paying quite a lot of money and not finding out what I wanted to know.

Quote:

I've got 401ks in other other corporations from previous jobs plus an IRA at Fidelity. I try to diversify across investment types as well as managers. I get the feeling that Ameriprise wants total control. Suggestions TIA

Run, don't walk, to the nearest exit! I started an account with Ameriprise (before I joined E-R ) and was sold a variable annuity inside my Roth IRA. I am still waiting for the surrender charge to come down to a reasonable level so I can cash it and get shed of them without losing too much of my savings. Even if I wait until the charge goes to zero—and I probably won't—it will still cost me (IIRC) $75 to close the account. During the several years I've had an account with them, I've gotten a number of disclosure statements to the effect that one regulatory agency or other caught them doing something they weren't supposed to, they've been sued or complained against, and they are now going to stop doing whatever it was. A letter from one's FA saying "we got caught scamming our customers (maybe including you) but we're stopping now" does not inspire confidence!

[mews]

Welcome to the board.

Once you get set up, managing your money isn't very hard.

Getting set up isn't that bad either, as long as you avoid the urge towards 'fancyfication'.

I'm mostly index funds at Vanguard for IRA & Rollover IRAs from past jobs, and my current IRA is split 50 - 50 between Ing's Large Cap (stock) and Bond fund. They were the cheapest in terms of fees, which count a lot!

Read, use the links, and I will also say (once you have your info organized) if you go to bogleheads dot org, and post your information using their preferred format, you can also get a lot of good, specific freefreefree information from some very smart people.

ta,
mew

[travelover]

Welcome Wormrider. For me the biggest revelation about finances was that once you set up a desired asset allocation, you can pretty much set it and forget it, with only a little yearly rebalancing. There are target funds that you can use that will do this for you automatically, at a very low annual cost.

The biggest fallacy of finance, IMHO, is that people that spend a lot of time at it and make a lot of trades make the most money - in fact the opposite is true. Entire industries are based on keeping this fallacy alive.

Read some of these books here, set an asset allocation, act on it, then relax.

Investment Books

PS. I interviewed Ameriprise re the $800 review and discovered that I knew more about it than he did and and for me it is just a hobby.

[walkinwood]

Just to drive home the point - stay away from Ameriprise.

It doesn't take a long time to learn enough about investing to get started. Start with one of John Bogle's books or Bernstein's Four Pillar's of Investing. They are relatively easy reads, but think of it as education that will pay you back very handsomely.

Also read up on 539 plans, IRAs (traditional & ROTH) & 401ks and how to roll-over your 401-k's from past employers etc., so that you maximize your tax deferred savings.

I found it very easy to get started about 20 years ago, and there are much better resources now. Also, I have never stopped learning. This board is very good for help, but I advise you to do your own reading so that you thoroughly understand what you're doing. That way, you'll stick to your plan when the going is tough and when the going is good.

All the best, and we're all here to help.

[REWahoo]

I realize I'm pounding on a one-note keyboard here, but some have said when American Express spun off their financial advisory company in 2005 and it became Ameriprise, they were very accurate in selecting a new name - they specialize in prying money out of the hands of uninformed American investors.

Note I said "some" have said this. Not me, of course.

[Bestwifeever]

Wormrider, I notice you mention you have an IRA at Fidelity. You could also call them and ask about their different levels of financial planning services.

[Wormrider]

Thanks for all of your comments. You certainly are echoing a lot of my current fears and thoughts.

One question: When one initially meets with a financial advisor is it necessary to give them copies of your tax returns and all of your investment statements? It seems to me if I just summarize these investments (i.e name, amount, # of shares, etc) that this would be enough information for them to give me an assessment.

I will check out your links and books.

Thanks again.

[travelover]

Quote:

Originally Posted by Wormrider Thanks for all of your comments. You certainly are echoing a lot of my current fears and thoughts. One question: When one initially meets with a financial advisor is it necessary to give them copies of your tax returns and all of your investment statements? It seems to me if I just summarize these investments (i.e name, amount, # of shares, etc) that this would be enough information for them to give me an assessment. I will check out your links and books. Thanks again.

You are the boss and don't have to supply any information beyond what you are comfortable with. Don't be intimidated by financial advisers - they should be working for you. And I'd be quick to add that once you read up on the subject and spend some time here and at Bogleheads, you may well find that a FA is a waste of your money.

[Wormrider]

Well I took the bull by the horns and told the guys from Ameriprise that I wasn't interested. I bought Bogle's "Little" book and only have a few pages left to read. Unfortunately, you all will now have to suffer through lots of new questions from me. THANKS!!!!

[Gumby]

Welcome Fremen, and ask away.