Ameriprise?

[samclem]

I'm not a fan of ever having a financial relationship with any planner or fund manager where their compensation wasn't directly related to the performance of my portfolio.

I think this sounds better than it works in practice.
1) If the broker gets compensated based only gains, then he would definitely have an incentive to take very aggressive bets. Hey, the worst that can happen (on that particular account) is that he makes nothing (while the customer loses a big %age of his money), and if he "wins", he gets a big payoff. Not well aligned with the customer's interests, IMO. I think it may also be improper/illegal.
2) If he gets paid a % of assets under management, we have a situation where the guy gets paid more for managing a big account than a small one, when they are the same amount of work. And there's the difficulty of knowing if the broker/advisor is compensated by the underlying funds/insurance agencies, etc, which introduces a big conflict of interest.

It just seems a lot more honest and above board to pay an advisor for his time or a fixed fee for the service, just like I'd pay a plummer or a lawyer. Get the recommendations, then have the client move the money himself. Yes, there's no direct "link" between investment results and the compensation earned by the advisor, but that doesn't bother me because I don't think they can add risk-adjusted value over a prudent low-cost buy-and-rebalance passive approach. T

 

[youbet]

That said, sometimes people can get lucky. In the late 1980s and very early 1990s I worked with a guy who had a fair bit of money with a broker who encouraged him to invest in a (then) little-known company called Amgen. Needless to say, if he stayed the course he's a millionaire many times over by now.

I had a satisfactory experience with the Payne Webber guy I used for a number of years. I belonged to an investment club and he was our broker. He came to some meetings and provided some training and information. Several members picked him up for their individual accounts. I can't remember him ever giving me bad advise or causing excessive churning. Most of the activity was pretty vanilla. He did get me into some municipal bonds which turned out to be fabulous winners at a time when I had not yet learned to research those for myself. The bad news was that commissions were staggeringly high compared to today's commissions at discount brokers.

Information is much, much easier to come by with all of the big name brokerage houses such as Ameritrade, Schwab, etc., having great web sites and search tools. DIY seems to be the way to go and brokers and advisors seem to be drifting more into the sales arena.

OP's experience with Ameriprise seems to be with some sort of brokerage arm of the company as opposed to the bag draggers selling load funds and annuities. I've never seen that aspect of Ameriprise commented here on the FIRE board before.

 

[BellBarbara]

We had Ameriprise to start when we knew zero. She did not sell us anything wacky, only one Riversource fund, no annuities or anything like that. The funds were actually all good. She was very good in creating an asset allocation for my hub who was a contractor at Fidelity (Fidelity was horrible on their recommendations). She recommended all low cost index funds and he did super well. She made no commissions on this or my 401k at my company.

So although we did pay fees for those years (maybe 3?) she did get us started off in a good direction. When my hub took a perm job at Fidelity we had to move all funds inside Fidelity (except my 401K) so we ended the relationship. Fidelitity's proposal to us were just so bad it's embarassing.

We are now in Vanguard. But I do think that some Ameriprise FA are better than others in terms of how they operate. Not that I am recommending them....our FP was free as my company paid for it.

 

[ziggy29]

It just seems a lot more honest and above board to pay an advisor for his time or a fixed fee for the service, just like I'd pay a plummer or a lawyer. Get the recommendations, then have the client move the money himself. Yes, there's no direct "link" between investment results and the compensation earned by the advisor, but that doesn't bother me because I don't think they can add risk-adjusted value over a prudent low-cost buy-and-rebalance passive approach. T

Sure, when you find ones which will work well on that model. I don't know many who would charge the same for a $200K portfolio as a $2M portfolio. The bottom line, and the most important point, IMO (the rest is sweating the small stuff), is that you don't use anyone who increases profit simply by churning stocks or steering you into loaded mutual funds.

Also, I'd expect a flat-fee-only from an advisor who did a *one time* portfolio consultation, but probably not one who is retained in an ongoing advisory/consulting basis. So if you are talking about paying for only one-time consultations once in a while at your request and not an ongoing monitoring and evaluation of your portfolio, yeah, I'd tend to agree with you.

 

[mickeyd]

our FP was free as my company paid for it.

I bet that you paid for it as folks don't work for free and companies don't give freebees to employees.

 

[BellBarbara]

I did not write a check for it (it was before we had them manage money) and neither my company nor Ameriprise took any money from me for it when we decided to sign up about 6 months later. I suspect Ameriprise was happy to offer free plans to my employer or some huge discount.

Vanguard did something similar at the last company I worked for.

 

[Rustward]

I bet that you paid for it as folks don't work for free and companies don't give freebees to employees.

It may not have been free, but if it was included in the price of admission (i.e. available to plan participants for no additional fee), why not give it a try.

No, I am not promoting Ameriprise.

 

[Lisa99]

If you want a simple read on all the ways Ameriprise (and other FAs) is sticking it to you, read "Millionaire Teacher."

I'm one of the ones that got away from Ameriprise. It will be 4 years in August since I moved all of our money to Vanguard. BEST financial decision we've ever made even though we had to pay almost $5k to get out of the VUL they had us in.

 

[ExFlyBoy5]

Not so much about Ameriprise, but a friend of mine who retired from the AF a couple years ago became a FA with Edward Jones and for months he harassed me about managing my money. He was offended that I was a Vanguard guy and even said 'oh, your one of those Bogleheads they told us about in class'.

I don't like the idea of Edward Jones looking for new clients by hunting through neighborhoods that have 'big trees, fat squirrels and long cars'.

On the other hand, I was proud to be called a Boglehead. Also, when I told him I was retiring from the Air Force he asked what I was going to do for work...I told him that I wasn't going to. The look on his face was absolutely priceless.

Sent from my mobile device so please excuse grammatical errors.

 

[samclem]

Also, when I told him I was retiring from the Air Force he asked what I was going to do for work...I told him that I wasn't going to. The look on his face was absolutely priceless.

You were too kind. I would have said "One thing I won't be doing is badgering my old friends to buy expensive products."

At least he didn't go to USPA/IRA, First Command, or whatever they are calling themselves now.

 

[ExFlyBoy5]

You were too kind. I would have said "One thing I won't be doing is badgering my old friends to buy expensive products."

At least he didn't go to USPA/IRA, First Command, or whatever they are calling themselves now.

Well, he is still a friend so I didn't want to be too rude!


Sent from my mobile device so please excuse grammatical errors.

 

[Tom52]

I have been an Ameriprise client for about 30 years via the purchase of a universal life insurance policy. Other than that I have used Vanguard for TIRA and Roth IRAs and non-qualified mf investments. A recent inheritance that is invested at Ameriprise must be rolled into Ameriprise accounts in my name before I can access this money. These accounts will consist of a brokerage account of primarily bluechip stocks, a bond mutual fund, a money market account, an inherited IRA that must be cashed out or rolled into an annuity, and several other annuities that must either be cashed out with significant tax consequence or annuitized. The total of this inherited money is approx. 23.5% of my total investments.

For the time being I will probably leave the money with Ameriprise as I didn't really plan on making too many changes to the investments and I have no options for the annuities other than to cash them out and pay big taxes. I did just pay a fee to my advisor to help with a financial plan since I am recently retired. We are trying to control income starting in 2015 to maximize ACA subsidies and minimize tax. So far I am satisfied with the work he has done for me.

So, for my situation, I will continue working with Ameriprise, and will be listening to their recommendations, but if I get a bad feeling I will pull the plug on them. My advisor already knows I have little use for their services and have no love lost for his profession.

 

[cooch96]

So I had an hour long talk with my Ameriprise Broker. He became insulting. Apparently I've only been super lucky the past five years and I don't understand inflation and anyone could beat the market in the past five years cause everything has gone up and he still did well in 2011 when the market was going all over the place and would I feel comfortable performing surgery without an expert present...you get the idea. It got a little ridiculous, which is funny in retrospect, and I saw his true defensive colors.

I'm definitely taking my IRA out and putting it into vanguard. But I'm still tempted to leave a few thousand in a taxable account to see how he performs over the long term with his buyout scheme. I don't want to let his jerkiness cloud my judgement.

Basically, he just does a ton of research and buys a company right before they get bought out when the buyout price is a bit higher than the market price. A few successful buys a year and you're in the double digits on returns (only one sale has gone south out of dozens over the past few years). His claims this is safer than index funds, which I find laughable, but the real selling point is he's confident he can continue to make 7-15% even if/when the market plummets again because companies are still getting bought and traded. I'm curious to see if this is true. I figure either I will make decent returns through the next downturn or I won't. Either way, 97% of my investable money will not be in his hands.


Why be normal when you could just be yourself.

 

[target2019]

So I had an hour long talk with my Ameriprise Broker. He became insulting. Apparently I've only been super lucky the past five years and I don't understand inflation and anyone could beat the market in the past five years cause everything has gone up and he still did well in 2011 when the market was going all over the place and would I feel comfortable performing surgery without an expert present...you get the idea. It got a little ridiculous, which is funny in retrospect, and I saw his true defensive colors.

I'm definitely taking my IRA out and putting it into vanguard. But I'm still tempted to leave a few thousand in a taxable account to see how he performs over the long term with his buyout scheme. I don't want to let his jerkiness cloud my judgement.

Basically, he just does a ton of research and buys a company right before they get bought out when the buyout price is a bit higher than the market price. A few successful buys a year and you're in the double digits on returns (only one sale has gone south out of dozens over the past few years). His claims this is safer than index funds, which I find laughable, but the real selling point is he's confident he can continue to make 7-15% even if/when the market plummets again because companies are still getting bought and traded. I'm curious to see if this is true. I figure either I will make decent returns through the next downturn or I won't. Either way, 97% of my investable money will not be in his hands.

Why be normal when you could just be yourself.

I've been eating for free and studying the FA type for about 5 years now. In the past couple of weeks I noticed that these salesmen advisors need an adoring crowd. When you challenge, your adoration is in doubt, isn't it?

You may be in for a surprise if you try to leave a small amount with Ameriprise and it doesn't meet his expectations. Might be funneled into a different arrangement.

It does sound like he is successful at his game. But you probably can't corroborate this entirely by analyzing your own returns. So it is time to walk and get index results.

 

[cooch96]

You may be in for a surprise if you try to leave a small amount with Ameriprise and it doesn't meet his expectations. Might be funneled into a different arrangement.

It does sound like he is successful at his game. But you probably can't corroborate this entirely by analyzing your own returns.

Very, very good point.


Why be normal when you could just be yourself.

 

[clifp]

...I don't understand inflation and anyone could beat the market in the past five years cause everything has gone up and he still did well in 2011 when the market was going all over the place and would I feel comfortable performing surgery without an expert present...you get the idea....

Basically, he just does a ton of research and buys a company right before they get bought out when the buyout price is a bit higher than the market price. A few successful buys a year and you're in the double digits on returns (only one sale has gone south out of dozens over the past few years). His claims this is safer than index funds, which I find laughable, but the real selling point is he's confident he can continue to make 7-15% even if/when the market plummets again because companies are still getting bought and traded. I'm curious to see if this is true. I figure either I will make decent returns through the next downturn or I won't. Either way, 97% of my investable money will not be in his hands.

Honestly 7.5% a year is pretty awful since 2009. Since 2009, I made 17.83%, and while I suspect that is above average for the forum it isn't hugely so. $10,000 at 7.5% grows to $14,880 over the last 5.5 year, at 17.83 it grows to $24,660. That almost an extra $10,000 per 10K. I made 5.11% in 2011 so I am not all that impressed that he also made money.

I wonder how they sleep at night.

 

[2B]

I have been an Ameriprise client for about 30 years via the purchase of a universal life insurance policy. Other than that I have used Vanguard for TIRA and Roth IRAs and non-qualified mf investments. A recent inheritance that is invested at Ameriprise must be rolled into Ameriprise accounts in my name before I can access this money. These accounts will consist of a brokerage account of primarily bluechip stocks, a bond mutual fund, a money market account, an inherited IRA that must be cashed out or rolled into an annuity, and several other annuities that must either be cashed out with significant tax consequence or annuitized. The total of this inherited money is approx. 23.5% of my total investments.

For the time being I will probably leave the money with Ameriprise as I didn't really plan on making too many changes to the investments and I have no options for the annuities other than to cash them out and pay big taxes. I did just pay a fee to my advisor to help with a financial plan since I am recently retired. We are trying to control income starting in 2015 to maximize ACA subsidies and minimize tax. So far I am satisfied with the work he has done for me.

So, for my situation, I will continue working with Ameriprise, and will be listening to their recommendations, but if I get a bad feeling I will pull the plug on them. My advisor already knows I have little use for their services and have no love lost for his profession.

This forum has beaten to death the negatives with Universal Life policies. Unless you have some special legacy deal in your policy, the fees are killing any return you could be getting.

The annuities are also going to be covered up in fees that will drain any return. Don't let your desire to avoid taxes blind you to your own best interests in getting the best returns on your money. Taxes will have to be paid someday. How does paying Ameriprise fees for many years make this any better?

 

[2B]

So I had an hour long talk with my Ameriprise Broker.

That's an hour of your life you'll never get back.

I'm always amazed how FAs try to convince clients that they have some special gift that will allow them to make far more money for them (after their hefty fees and commissions) than they could make indexing. This is despite all the academic evidence to the contrary. Unfortuniately, they frequently convice people of their brilliance. Some never realize they've been had.

If one of these guys really did have this special gift, why would they be wasting their time making small change from retail clients. If someone could reliably beat the market year in and year out, they would be in so much demand that they would be managing some massive endowment or pension plan somewhere. Therefore, anyone that will deal with people having less than a billion dollars has no special gift for anything except conning retail clients.

 

[Lisa99]

I seriously doubt he'll be your advisor after you move most of your money.

When we escaped we moved 95% and within a week our account was 'transferred' to some guy from a call center that we have no ability to ever meet.

The only reason we have anything with them is our stellar FA sold us 2 private REITs that the buffoon told us we could sell after 5 years. 10 years later and a loss of 50% of our principal and we still can't sell because both companies have limited capital to let people cash out. We've kissed the money goodbye.

And to the person who's going to see how it goes you must not be retired yet? Ameriprise charges a minimum of 1% of your assets per year. Once retired you can withdraw about 4% per year 'safely'. So you're going to let Ameriprise have 25% of your retirement income?

 

[athena53]

Not so much about Ameriprise, but a friend of mine who retired from the AF a couple years ago became a FA with Edward Jones and for months he harassed me about managing my money. He was offended that I was a Vanguard guy and even said 'oh, your one of those Bogleheads they told us about in class'.

I don't like the idea of Edward Jones looking for new clients by hunting through neighborhoods that have 'big trees, fat squirrels and long cars'.

LOL! I've been hit up by EJ brokers both in NJ and here. Guess I ought to choose a more modest neighborhood when we downsize.

 

[rodi]

....
A recent inheritance that is invested at Ameriprise must be rolled into Ameriprise accounts in my name before I can access this money. These accounts will consist of a brokerage account of primarily bluechip stocks, a bond mutual fund, a money market account, an inherited IRA that must be cashed out or rolled into an annuity, and several other annuities that must either be cashed out with significant tax consequence or annuitized. ....

Why do you have to roll the inherited IRA into an annuity? Usually it can be rolled into a beneficiary IRA - and if the person you inherited from was over 70.5 (taking RMDs), you start taking RMDs on your own record.

You can roll the inherited IRA, aka beneficiary IRA to another brokerage. I did this with an IRA I inherited from my father.

There's no law, that I know of, that requires you to convert the inherited IRA to an annuity. I would ask long and hard questions about this.

 

[gayl]

Yeah I thought the statement regarding rolling inherited IRA into annuity / cash option was just the way the adviser would make a quick 10% commission as there isn't a law that you have to pay 10% or incur an immediate tax hit to get at YOUR money

Sent from my SAMSUNG-SGH-I537 using Early Retirement Forum mobile app

 

[2B]

Yeah I thought the statement regarding rolling inherited IRA into annuity / cash option was just the way the adviser would make a quick 10% commission as there isn't a law that you have to pay 10% or incur an immediate tax hit to get at YOUR money

Sent from my SAMSUNG-SGH-I537 using Early Retirement Forum mobile app

+1

There would be a tax hit if the IRA wasn't rolled over to an Inherited IRA at the firm of the OPs choice. I'd call Vanguard and see how it's done.

 

[gayl]

exactly

Converting to cash = taxes
Converting to annuity = 10% commission
Rolling to beneficiary IRA within Ameritrade = no immediate taxes or commission. Suggest then transferring to a discount brokerage such as Schwab or Fidelity where you control it

 

[cooch96]

I seriously doubt he'll be your advisor after you move most of your money.

And to the person who's going to see how it goes you must not be retired yet? Ameriprise charges a minimum of 1% of your assets per year. Once retired you can withdraw about 4% per year 'safely'. So you're going to let Ameriprise have 25% of your retirement income?

The FA is a year younger than me, barely legal to be POTUS. I think I was one of his very first clients where he was allowed to do his own thing and not just try to roll me into the standard Ameriprise's portfolio. So he's only had five years with his scheme and he's been competing with a good bear market. Poor guy (sarcasm).

And in his defense, he's averaged 14%. I had omitted one account and some reserve cash in my previous estimate. Still almost 7% worse than my unmanaged 401k.

I'm still curious to see if he does well, and I hope he does, but I've decided to pull all my money out. I don't need to deal with the condescension. Got medallion signatures for all account transfers today, which is a different, irritating bank story. Stupid Chase.

I bet he'd stick with me (our mothers were braiding each other's pigtails in the sixties) and keep using my money for his pet crusade of something "completely unique" and exactly "what investors like Warren Buffet do. You've heard of him, right?" But double talk is almost as bad as condescension.