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Old 10-31-2007, 03:59 PM   #61
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Originally Posted by laurencewill View Post
Fee based FAs can be a real boon to a novice. Commission based can be a scourge. Usually the higher expense/poorer investment vehicles give the FA a better commission (he gets his "cut" from those fees) so he has an incentive to hurt you, the client. Most of them don't think of it that way, but that's the deal. If you are uncomfortable with a strictly do it yourself approach (hey, so am I on some things, like changing the oil!), look for a fee only financial advisor. Often these people can do much more than sell you a product. They can help you chart a budget, plan for buying a house, refer you to professionals to help with trusts etc. I had friends, a couple, who went to their local Credit Union and got this type of service from their on staff financial advisor. They went from being slightly in debt on credit cards to well on their way to a happy retirement because of her.
I think you are confusing "fee-based" with "hourly fee" advisors.........
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Old 10-31-2007, 05:51 PM   #62
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Well, I had only differentiated "fee" and "commission" based FA's in my mind. Yes, hourly.

EDIT: Hey, I was giving you props and you gotta correct me Some thanks!
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Old 10-31-2007, 06:17 PM   #63
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We are meeting with him again tonight and if we don't get a better gut feeling, we'll do just that.

I see a lot of anti-Ameriprise sentiments here, but are they that much worse then everybody else, or just because they're the biggest? I mean, all advisers are in it to make money off their clients. They don't work for free.
No they don't work for free and they shouldn't. The problem I have with Ameriprise is that they give you the appearance of them giving you objective advice when in reality it's geared towards over priced prop products. Secondly, I can see making money but the stuff they peddle will send your portfolio to the slaughter house as they're skimming off you all along the way: in the front (planning fee, loads, over priced insurance), in the middle (quarterly AMP management fee, M&E charges, MF management fees), in the end (12b-1 fees). The other downside is the bulk of their advisors work is upfront putting together the plan* and then for doing nothing they skim off you for years.

*Don't really believe the plan is useful as it's a sales pitch to but prop products.
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Old 11-01-2007, 11:28 AM   #64
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Sounds like USPA and IRA.......horror stories from over 20 years ago - still remember the confrontational (salesperson yelling at my husband and I) meeting - still seethe today when I think of it. Then husband realizing how much of the 'insurance and mutual fund money we put in was fees and not insurance or mutual fund.' Hard lesson learned, luckily early on.
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Old 11-01-2007, 04:47 PM   #65
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Sounds like USPA and IRA.......horror stories from over 20 years ago - still remember the confrontational (salesperson yelling at my husband and I) meeting - still seethe today when I think of it. Then husband realizing how much of the 'insurance and mutual fund money we put in was fees and not insurance or mutual fund.' Hard lesson learned, luckily early on.
I believe they are called First Command now, but they are still peddling the same junk.
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Old 11-02-2007, 07:20 AM   #66
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Can anybody tell me what a "wrap fee" is? My mother just found out that Ameriprise is charging her that as well, and neither of us has any idea what it is.

Thanks!
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Old 11-02-2007, 07:33 AM   #67
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Wrap fees, I was wondering when we'd get there...Finance Dude, you tell her! In short, wrap fees are a great way to make it really hard for you to figure out how much they are making off of your account. Blech!

And gawd, do not get me started on First Command, I sat next to a guy at a CFP review course from there last week and could hardly eat my lunch thinking of how they rip off the military guys. Geez, and don't get me started on the "Merrill rule"...
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Old 11-02-2007, 08:37 AM   #68
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Can anybody tell me what a "wrap fee" is? My mother just found out that Ameriprise is charging her that as well, and neither of us has any idea what it is.

Thanks!
A wrap fee is an amount charged to a client of an investment advisor for several services wrapped together, such as portfolio management, asset allocation, custodial services, execution of transactions, and preparation of quarterly performance reports. The wrap fee is calculated as a percentage of net assets in the clients account rather than on transactions. Traditional wrap programs typically charge wrap fees of 1-3%.

In other words, Ameriprise looks at the account value each year and deducts some amount from it for these "wrapped" services. The problem is, the fee is deducted even if you had no transactions during the year -- the wrap fee continues year after year...a steady negative impact on your bottom line. In most cases, IMHO a wrap fee is a bad idea!
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Old 11-02-2007, 11:08 AM   #69
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Can anybody tell me what a "wrap fee" is? My mother just found out that Ameriprise is charging her that as well, and neither of us has any idea what it is.

Thanks!
A wrap fee is what Ameriprise charges you each year to supposedly manage your account. More than likely, you pay them for the plan then you implement the plan and then you never hear much from them yet they still charge you a yearly wrap fee. The wrap fee is a yearly percentage that is charged on a quarterly basis based on the average balance for that quarter so say the wrap fee is 1.5% and the average daily balance is 100k, for that quarter you'll pay approximately 100k x .015/4 or $375. This is in addition to the mutual fund management fees and 12b-1 fees. As you can see, this'll drain your account over time and cost you come retirement. Ameriprise takes their cut whether you make money or lose money. These fees are no good.
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Old 11-05-2007, 11:03 AM   #70
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A wrap fee is what Ameriprise charges you each year to supposedly manage your account. More than likely, you pay them for the plan then you implement the plan and then you never hear much from them yet they still charge you a yearly wrap fee. The wrap fee is a yearly percentage that is charged on a quarterly basis based on the average balance for that quarter so say the wrap fee is 1.5% and the average daily balance is 100k, for that quarter you'll pay approximately 100k x .015/4 or $375. This is in addition to the mutual fund management fees and 12b-1 fees. As you can see, this'll drain your account over time and cost you come retirement. Ameriprise takes their cut whether you make money or lose money. These fees are no good.
Is this something that only Ameriprise does?
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Old 11-05-2007, 01:39 PM   #71
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Other companies charge wrap-fees as well. There's a chart on this early-retirement.org site that shows how these wrap fees can take a big bite out of your retirement.

While I don't have a problem with companies charging for their services, the problem I have with Ameriprise is that they're charging you for non-objective advice. The mutual fund companies that pay Ameriprise the most to be listed will be moved to the top of the "preferred list" so what you have is Ameriprise is charging you for a plan and then the funds they chose for you are based on whoever pays AMP the most and on top of that they charge you a wrap fee each quarter.
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Old 11-06-2007, 09:47 AM   #72
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woohoo!

As of this morning, the funds from Ameriprise have been completely transferred into my new Vanguard account. Good riddance!
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Old 11-06-2007, 10:19 AM   #73
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As of this morning, the funds from Ameriprise have been completely transferred into my new Vanguard account. Good riddance!
Nice job. How are your folks leaning?
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Old 11-06-2007, 03:55 PM   #74
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Nice job. How are your folks leaning?
The verdict is still out. They weren't listening to what I thought, so I sent an article about what fees can do to your portfolio and that got them thinking. The problem is that they really like the guy. They've had him or his mother as an FA for over 15 years and feel loyalty. I will still try and get them to move to a better place, though.
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Old 11-06-2007, 05:24 PM   #75
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The verdict is still out. They weren't listening to what I thought, so I sent an article about what fees can do to your portfolio and that got them thinking. The problem is that they really like the guy. They've had him or his mother as an FA for over 15 years and feel loyalty. I will still try and get them to move to a better place, though.
As long as you are committed to helping them, things should work out. Your parents are more trusting with their personal finances than mine were.................
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Old 01-22-2008, 06:21 PM   #76
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Hi, I'm new here, and not very sharp about investing. I went with Ameriprise a couple of years ago, and after reading this I'm trying to understand where I can see these fees that they may be charging me. If I don't get a good handle on this, I can't make an intelligent decision about moving to something like Vanguard.

So, I'm pouring over my monthly 12 page Ameriprise statements I don't see anything that looks like a charge or a fee.

I was doing regular deposits with them but I stopped that back in April. On those brokerage trade confirmation statements, I do see a commission charged on each transaction and it's about 2.75%

Am I missing something? If all my fees were up front, maybe there's no harm in leaving these funds at Ameriprise? Any advice would be greatly appreciated.
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Old 01-22-2008, 06:46 PM   #77
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Hi Joe

I assume that your Ameriprise advisor has been purchasing mutual funds for you.

If so the 2.75% commission is for the "wonderful" load mutual fund they will investing your money for you. That is still a significant junk of change on your $1 millions in savings that is 27,500. This wouldn't be so bad if you got anything special for the$27K but you don't. Zillions of studies have shown that No load mutual funds perform as well and generally better than no load mutual funds sold by places like Vanguard.

The second fees are embedded in the mutual funds. A typical load fund that Amerprise sells has an expense ratio of 1.5% on the assets under management, so if they have you in 4 mutual funds @200K each that is $12K in hidden fees you pay EACH YEAR.
In contrast a typical Vanguard fund has an expense ratio of .25% or $2K/year for $800K in stocks and bond funds. It is important to note that Amerprise will not tell you about the expense ratio. The only way to see the fees is to read those love 50+ page prospectus they send you. Although, the SEC does now require a chart showing you the impact of expense ratios in the first few pages. You can look up the fees at Morningstar or simply posted the fund symbols (prefered) or fund names on this thread. The board will be happy to help Amerprise lose another customer.


Finally the 3rd level of fees is the so call wrap fees, or financial consulting fees. Depending on your account size, greed of your financial advisor, and amount time they spend working with your. These fees can be between .5-1% of the total assets under management, or a flat annual fee, or in some case waived entirely, it is possible with a large account like yours that Amperprise may waive the fees. Although, I think this would be pretty rare.

Unfortunately there is little you can do to get the money back. I would make sure that you get your Amerprise advisor to take you to a nice dinner. Perhaps by telling him that you are investigating other financial advisors. Then after he pays the check fire him...
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Old 01-22-2008, 06:49 PM   #78
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Joe, good for you for following up on this.

The 2.75% fees would not have been charged by Vanguard, but this is water under the bridge. Find out what your ongoing expense ratios are for the investments you have. If Ameriprise won't tell you clearly, you can find this out via Morningstar or similar.

Also find out if you will be charged a fee to move your money. I'd go with Vanguard, but know what last fees you might get hit with before you make the switch.
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Old 01-22-2008, 08:07 PM   #79
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First, I can't say how glad I am that I found this forum!

About 1/3 of my savings are at Amerirpise - about $325k. Here are the mutual funds I have there, and I tired to get the expense ratio from Morningstar - let me know if I got that right at least. The bulk of my money is in the first 2:

fund - expense ratio
------------------------
GCTAX - 1.09%
GSHAX - 1.12%
GSMIX - 0.90%
GISAX - 1.65%
GGOAX - 1.47%
GCSAX - 1.26%
GREAX - 1.44%
GEMAX - 1.79%

^^^ that's about $265k
Then I have another $60 k in a Riversource annuity. I don't see any fund symbols for these but the annuity is made up of these allocations:

50.36% = RVS VP Div Eq Inc Fd
7.61% = RVS VP Hight Yld Bond
1.88% = RVS Life Fixed
16.12% = FTVIPT Mutual Shr Cl2
24.04% = Wagner Intl Small Cap

I guess my wrap fee was the annual consulting fee I paid - I'll save some embarrassment and keep that to myself.

So if I understand... much of this money is in ~ 1.1% expense ratio funds. If I move that to a 0.25% fund at Vanguard, I'd save about $2200 annually? I realize that's an improvement, but what I have now isn't awful, or is it?

(And should I still remain a Dennis Hopper fan?)
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Old 01-22-2008, 08:32 PM   #80
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It's awful. Don't just think about the 2200 annual savings....it's 22,000 over 10 yrs PLUS all the lost earnings on each dollar sucked away from you. AND you CAN remain a Dennis Hopper fan! (if you want to)
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