Eggs in one meta-basket? Ameriprise all bad?

I have heard mostly bad things about Ameriprise.

Of probably more interest, my wife worked for a sizeable Amerprise branch for about 3 years. She would never put a dime with them after her experience there, and quite a few people left while she was there because they couldn't stomach the tactics. Agents/brokers were constantly chastised/coerced to make things happen to drum up commissions. They referred to clients, behind their backs, in all sorts of degrading ways. Her boss, the branch President, was an insufferable, prima donna of the highest order - and he treated people who worked there terribly while he made a fortune. At least from the inside at one branch, it was unbelievably bad. FWIW...
 
Before you make any decisions, you might consider educating yourself on the subject. That will help you to make an informed decision.

I think VG is a good choice as mutual fund company. They seem to have a solid track record and rock bottom fees.
 
mickeymao said:
Awesome. Thanks for the replies. As I mentioned I am trying to pin down the exact fee structure -- I have an appt. for a phone meeting in a few days. Trying to do my homework first, so I have maximum ammo for that conversation.
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Careful. You sound smart, and you are asking a lot of good questions. But.... this guy is a PRO! They often have a smooth answer for everything. And they can wrap you up in info to spin your head if they think they need to. What was the top 4% rating for?

Also be careful about reccs from friends. IME, many (certainly not all) people who seek out an FA are not financially savvy, and they don't have any way to measure whether he is good or not. Maybe they measure if they 'like him' or not. I doubt they could answer a basic question like - 'how did your portfolio perform versus an equivalent risk-adjusted portfolio made up of no-load index funds?

Your bigger issue is dealing with your wife. Her feelings are pretty common, it certainly seems reasonable that a PRO should be better at it than an individual investor, but as it turns out that isn't the case if you are willing to learn just the basics, and don't have any special situations (and then you need special assistance, probably not a general FA from Ameriprise). Here's how I think about it though - once you have learned the basics in order to evaluate whether the PRO can do the job for you, you have learned enough to go it alone, and then you are ahead by all those fees.


Oh yes, a friend of mine said the biggest investment loss he ever took was the money he handed over to an Ameriprise adviser. He specifically told him he was concerned with capital preservation, and he got most his money put in a single company bond that.... defaulted. He lost 80% of his money.


-ERD50
 
clifp said:
...legal actions a dozen or so state have taken against the company for deceptive practices.
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Do you really need to know anything more?

Once Ameriprise gets their hooks into your money, you'll be a long time getting them out again. It'll be 2016 before I can get all of my money back, and even then I'll have to pay $100 for the privilege of closing my account.

My advice is: run, don't walk, to the nearest exit.
 
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FIREdreamer said:
So add it up: 1% for the financial plan + 1% for the privilege of not paying front loads + 1.5% ER = 3.5% of your portfolio goes to Ameriprise each year... (that's on top of custodial fees, closing fees and whatever...)
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$35000 on every million. There are quite a few here with multiples of millions invested, on their own, in low-cost funds. Just think, with Ameriprise's service (and costs), you could have $2m invested, paying at least $70k a year for the privelege, and have to keep working. Or, you could invest on your own, with fees in line with lots of VG, Fido or Schwab funds (0.1%-0.4% ERs) and have most of that $70k as retirement income instead of investment fees.

My advice is to educate yourself (here, books, class, whatever it takes. You don't have to be a pro, just have a good understanding). Then manage your own, whether Fido or Vanguard or Schwab.

All of that said, you CAN end up with high ERs when using any of those companies if you have not done your homework and chosen low ER mutual funds or ETFs. If you have to ask how I know this, the only answer I can give is that I am still learning myself and still unwinding some investments in funds with ERs that are ridiculous. I started investing without educating myself first on the basics...wrong move. But at least I didn't do it at Ameriprise.

Good luck to you.

R
 
Mickey,

I think you have some good advice on this thread and I'm not going to add to it except to stress that you have plenty of time which you should use to educate yourself and your wife, if she is interested. At least you need to have your wife on board with the making of the decisions. I'm sure your Ameripise guy is going to be pressing you for an answer and that will be a dangerous time, financially speaking, because it will be hard for you to reverse your decision if you go with him and later regret it.

Since you have a Fidelity office nearby it could well be worth making an appointment and hearing what they have to say and to offer.

My 401(k) is managed by Schwab, and we have accounts with both Fidelity and Vanguard and I've been very pleased with all three, and that includes ease of use and advice as well as fees. The advice comes in the form of telephone and e-mail discussions with advisors plus on-line tools.

At age 38 I went through the same process as you are going through now, and it took 2 years before I had settled on a way forward, with fund choices to match a chosen Asset Allocation. I'm 55 now and have made a number of changes since then but I'm so pleased I took the time back then to educate myself enough to manage my own investments.
 
I chatted with my Ameriprise guy for a while. He verified I'd be paying him 1% annually on top of the ERs of the funds, and that Ameriprise would be absorbing the front-end loads of those funds. He verified that I can set up exactly the same thing myself and save that 1% (and get funds with lower ERs). He claims confidence that he can outperform index funds even under those conditions. He stressed retail fees I'd be paying for funds purchased through someone like Fidelity or TD Ameritrade, so I need to research that, but I'm highly dubious those would come anywhere remotely near 1% of our portfolio.

He also asserted that if I went with Vanguard I would be invested 100% in one fund family, and that would be risky. As there are so many Vanguard champions here, I encourage you to tell me if that is BS, and why.

Thanks again for sharing your experience.
 
Very few retail fees at Fidelity. They have some transaction fee funds, but a huge number of funds that can be bought without transaction fees.

And you can always buy directly from the mutual fund company to avoid the transaction fees.

And the "invested in just one fund company" line is BS. Each mutual fund is diversified, and if you hold several mutual funds you are even more diversified. You do not put yourself at risk by holding the funds through Vanguard or because all the funds might be managed by Vanguard. Each mutual fund is its own entity and operates independently of the others.

Audrey
 
audreyh1 said:
Very few retail fees at Fidelity. They have some transaction fee funds, but a huge number of funds that can be bought without transaction fees.

And you can always buy directly from the mutual fund company to avoid the transaction fees.

And the "invested in just one fund company" line is BS. Each mutual fund is diversified, and if you hold several mutual funds you are even more diversified. You do not put yourself at risk by holding the funds through Vanguard or because all the funds might be managed by Vanguard. Each mutual fund is it's own entity and operates independently of the others.

Audrey
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I agree - the question of the risks of a single company has been raised and discussed here before, and you can rest assured that if a company like Fidelity or Vanguard went bust, the funds would not be affected.
 
And am I correct that each fund's performance is a function purely of its holdings and fees, and has nothing to do with the company who owns it, so performance could not be affected either?
 
mickeymao said:
I chatted with my Ameriprise guy for a while. He verified I'd be paying him 1% annually on top of the ERs of the funds, and that Ameriprise would be absorbing the front-end loads of those funds. He verified that I can set up exactly the same thing myself and save that 1% (and get funds with lower ERs). He claims confidence that he can outperform index funds even under those conditions. He stressed retail fees I'd be paying for funds purchased through someone like Fidelity or TD Ameritrade, so I need to research that, but I'm highly dubious those would come anywhere remotely near 1% of our portfolio.

He also asserted that if I went with Vanguard I would be invested 100% in one fund family, and that would be risky. As there are so many Vanguard champions here, I encourage you to tell me if that is BS, and why.

Thanks again for sharing your experience.
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Well, my Ameriprise guy once confessed that the only way for him to outperform index funds is to take a lot of risks with my money so that the (hopefully) higher returns minus the higher fees can (hopefully) come above market returns. It didn't work for me and I doubt it will work for you. So you would need something like a 80% stock portfolio at Ameriprise to (hopefully) achieve the same results as a 60% stock portfolio at Vanguard. You are basically taking extra, uncompensated risk so that the advisor can make a living.

As Audrey explained, Vanguard funds are separate entities. They are not owned by Vanguard. In fact Vanguard is owned by the funds. If one fund or even Vanguard goes bust, the other funds will keep on rolling just fine. If you invest all your money with an advisor, he could easily cash in your accounts and disappear with your money. It has happened before. It will happen again.
 
FIREdreamer said:
As Audrey explained, Vanguard funds are separate entities. They are not owned by Vanguard. In fact Vanguard is owned by the funds. If one fund or even Vanguard goes bust, the other funds will keep on rolling just fine.
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That is true of a lot of fund companies, including Fidelity and American Funds, among others.
 
I think the simplest way someone on this board explained this was this: If they are taking 1% out of your portfolio, remember in retirement, you will be living off of about 4% of your portfolio - so they are taking a sizeable chunk of your future available funds...

If you actually do the math and see how much compounded over time the fees rob you of, you will run - not walk away...
 
There's no one who will look after your money as well as yourself. When there's a bull market, everything is ok, but when the bear comes will the pro be there to look out for you or will he/she say, well, that's just the risk of investing?
 
ERD50 said:
Oh yes, a friend of mine said the biggest investment loss he ever took was the money he handed over to an Ameriprise adviser. He specifically told him he was concerned with capital preservation, and he got most his money put in a single company bond that.... defaulted. He lost 80% of his money.
-ERD50
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I didn't think Ameriprise handled trading in individual bonds.......
 
mickeymao said:
He also asserted that if I went with Vanguard I would be invested 100% in one fund family, and that would be risky. As there are so many Vanguard champions here, I encourage you to tell me if that is BS, and why.
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You seem to be confusing "brokerage" with "fund family." Don't combine the two. You want your brokerage to allow you to invest in a broad sprectrum of instruments: funds from any fund family, stocks, corp bonds, gov't bonds at auction and in the after market, options, etc., etc.

For example, I use Schwab as a brokerage but more than half my holdings are Vanguard funds.

Even if you think today that you'll never go beyond investing in MF's, remember you may expand your horizons later as you gain experience. So pick a brokerage, then pick funds from the fund families, such as Vanguard, that you prefer.
 
It is also worth noting that transferring assets from one brokerage to another (or from a mutual fund company to a brokerage) is not that big of a deal. There is a little paperwork up front, but after that the receiving brokerage handles the asset transfer on your behalf.

So, if you started all at Vanguard, and later you decided you wanted a little more flexibility, you could always transfer some or all of your assets to another (discount) brokerage. And importantly assets can be transferred "in kind" - meaning nothing gets sold, just moved.

For example, many years ago I opened an account at Oakmark Funds (a fund company - not a brokerage) to buy into Oakmark Balanced Fund. I did this because at the time it was closed to new investors unless you invested directly with Oakmark. Several years later, I transferred the asset over to Fidelity. I just had to give Fidelity the paperwork with instructions - the account, the fund, and to transfer all shares "in kind". A couple of weeks later, the direct Oakmark account was closed, and the fund showed up in my Fidelity account where I now can access it.

Just to make you aware of the future flexibility you have.

Audrey
 
He was using the term "fund family" to refer to the fact that Vanguard only offers Vanguard funds, so all my investments would be in Vanguard funds, which is one fund family (at least in his parlance). The implication being that something could affect all those funds (which appears to be BS). Hence he was suggesting I get a broker that has more fund options, either full-service like Fidelity or Schwab, or online like E-Trade or TD Ameritrade.

I currently have SEP IRA and brokerage accounts with TD Ameritrade, where I own mostly index ETFs and Vanguard funds, and am pretty happy. I also have an old 401k with Fidelity, which I should roll into a Roth. My wife has a poorly-allocated Roth which needs some work, and needs a money market account or something for short-term savings. The real issue is that investment stuff makes my wife's head hurt, and she wants someone else to deal with it -- and preferably have it all under one roof so that (especially if anything happened to me) she would only have to go one place rather than chasing down and trying to understand all of our now-separate accounts.

Just to make implicit assumptions explicit: everyone who is pointing out the large difference 1% in commissions will make over the long term is assuming that the Ameriprise guy is hopelessly wrong/optimistic/lying about his ability to beat the indexes (or whatever fund choices I would make on my own) by more than 1% plus any ER differential on the funds chosen. I've certainly read and heard plenty to support that assumption, but do you agree with it wholeheartedly?

Thanks!
 
Aha! Thanks. I missed that, though in retrospect it was glaringly obvious.
 
mickeymao said:
Just to make implicit assumptions explicit: everyone who is pointing out the large difference 1% in commissions will make over the long term is assuming that the Ameriprise guy is hopelessly wrong/optimistic/lying about his ability to beat the indexes (or whatever fund choices I would make on my own) by more than 1% plus any ER differential on the funds chosen. I've certainly read and heard plenty to support that assumption, but do you agree with it wholeheartedly?

Thanks!
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Not sure I understand completely what you are saying but when I invest in a Vanguard index fund, I am guaranteed to get market returns minus a small ER. At Ameriprise, the financial advisor would have to consistently beat the index by 2-3% to get the same result (which means taking more risk). I personally prefer to go for the guaranteed market returns and lower risk rather than hope that my financial advisor is good enough to beat the market year in and year out (studies have shown that the odds are stacked against him).

You should read this blog:
Wise Investing - CBS MoneyWatch.com
Very good commentary by an insider on the ability of advisors and fund managers to beat the market (you may have to dig up a bit to find the good stuff).

To make it clear. If this financial advisor promised you he can beat the market year in and year out (or even over the long term), then he is clearly lying to you or he is fooling himself. Nobody can possibly know what their future performance is going to be. Nobody. I hope it is wholehearted enough.
 
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