Leaving Ameriprise - One Year Later

[jerome len]

Any way you cut it, Ameriprise is expensive compared to Vanguard. Years, ago, I was with a bank and asked that they choose from and build my investment account with "no load"funds. We'll, I didn't get any front loaded funds but no one told me the expense ratio nor about the 5% back end fee when I sold some of the funds.

After a couple years of losing money, compared to a total market index fund, and getting monthly advice on what to sell and buy, churning my investment way too often, I started looking at fund choices other than my trusted banker. I found Vanguard. Now I too pay no more than .20% fees and have made money most years. I'm getting older so I've put more money in bonds, they are doing well and I am so far ahead of where I would have been without Vanguard. I also have some money in Fidelity, they are "reasonable" as well and I still haven't forgiven my trusted banker but I do need them for various other accounts.

So, everyone can argue about who's right or wrong on the fees mentioned above, but no one can argue that Vanguard fees are less than most of the high priced guys.

Fun listening to all of you, however. I do wonder, if it is an Ameriprise rep defending them in some of the postings, above? Hmmmmm.

 

[REWahoo]

DFA's premise is their unwillingness to sell direct to avoid retail investors greed and panic hurting their performance.

Vanguard and DFA aren't competitors. It's a completely different level. DFA wouldnt' want 95% of Vanguard's clientelle.

[-]We[/-] They don't seem to be all that bad...

...during the turbulent first eight trading days of August, barely 2% of the more than 3 million participants in 401(k) plans administered by Vanguard executed any sort of equity trade.

History also suggests that most participants who do trade aren't "cashing out" of the market.

Vanguard research from the 2008-09 financial crisis shows that in volatile markets, most traders tend to make a modest shift away from stocks, while some actually increase their stock exposure. The impulse to panic and sell everything is muted. In fact, throughout the 2007-2010 period, just 3% of Vanguard 401(k) participants sold out of the equity market entirely.

https://personal.vanguard.com/us/insights/article/401k-activity-08122011?SYND=RSS&Channel=AN

 

[52andout]

Very cool! I met a guy this weekend who retired, starting riding a bike again and lost 60 or 70 pounds in 1.5 years.

If you guys really like cycling, check into some of the week long organized rides. BRAG (Georgia) is my favorite. Florida has one. Virginia, NC and Tennessee each have one. The granddaddy is RAGBRAI (Iowa). It is really fun to spend a week doing nothing but riding, eating and sleeping with a thousand or more like minded souls, moving from one small town to the next. My goal when I hit ER, or relatively so since I'm older than you, is to ride a couple of those a year. Unfortunately, my wife isn't into cycling, so I probably won't be doing a century in every state!

Good inspiration!

I did the Buffalo to Albany ride a few weeks ago, 400 miles. Before this year I never rode more than 10 miles at once and I did every single mile. Many were moving on to Bon Ton (finger lakes in NY), a few to Ragbrai and other rides. Some of the riders had gone across the country (3 month trip) more than once. on our trip the youngest rider was 6 (on he back of her dads bicycle) and the oldest rider was 89. What surprised me was how many people did it alone. They weren't alone for long. We had 550 riders and 100 staff and volunteers on our jaunt. Just don't be a cheapskate on the bike, a good bike with a good seat makes a difference.

back on the topic, I never trust anyone that has to make a living selling me stuff. I can never be sure it is in my best interest. Doing research is so important to understand the fine print. We have a friend who was sold a very expensive annuity as well as some risky gas lease stuff and deeply regrets it, especially when he goes to work every day when he could be retired.

 

[nvestysly]

Lisa99,

It's certainly encouraging to see you making progress on the financial and health fronts. DW and I think we have the financial under control (as much as that's possible) and health is okay now but we need to stay in shape. Your progress encourages us to continue doing the right things.

As for Ameriprise... I don't know much about them except that we have an acquantance who works as an assistant in a local office. With that relationship, DW took a part time job as an assistant - the extra money looked good and it was three days a week which worked well in our schedule.

I should make another thread for this discussion but the short story is Ameriprise was less than a stellar employer. DW's situation is likely more of a reflection on the broker/dealer/manager she worked for but if he/she acts this way it's difficult to believe much of Ameriprise does not act this way. In addition, a significant portion of the investor pamphlet given to prospective clients is devoted to the fees/commissions/payments - very little was dedicated to the services they perform.

 

[DblDoc]

Vanguard and DFA aren't competitors. It's a completely different level. DFA wouldnt' want 95% of Vanguard's clientelle.

Shall I forward this to DFA and see what their response is. I'm sure many of Vanguards customers dollars look the same as their current clients.

DD

 

[Dogman]

What a woman!

Lisa,
It is refreshing to see the interest that you have developed in your life, retirement, and the investments. You are obviously a woman that any man should be proud, it looks like you have a wonderful life ahead.

Go for it! Just don't wait to long..........

 

[FinanceDude]

Shall I forward this to DFA and see what their response is. I'm sure many of Vanguards customers dollars look the same as their current clients.

DD

DFA recommends their advisors set investment limits, typically $250,000 or higher. While most on here would qualify, in the large expanse of VG clients, the above post is probably accurate......

DFA is not after accounts under $100K, and that's probably on the low end.

 

[Lisa99]

Lisa,
It is refreshing to see the interest that you have developed in your life, retirement, and the investments. You are obviously a woman that any man should be proud, it looks like you have a wonderful life ahead.

Go for it! Just don't wait to long..........

Thanks Dogman! We aren't waiting at all.
Since posting my update we've lost another combined total of 25 pounds and just rode in our first Century bike race weekend before last. We have another one Nov 12 in CA. I've also gotten interested in triathalons and am starting a swimming program so I don't drown during the swim leg!

We also recently bought an RV and have planned several trips in the next few months...all related to cycling or hiking.

Overall we're having the time of our lives. Yes, we still work, but the jobs are enjoyable and we are able to put away my entire paycheck so it's all good there.

 

[Bram]

Nice to read your story, Lisa. I too was helped away from Ameriprise a few years ago by some of the good folks here @ ER.org and am grateful for it.

 

[SJ1_]

Lisa - Thanks for sharing.
Biking is a great way to exercise

 

[Rustward]

It has become clear to me that you assume that the 5% wrap fee is an annual fee. It isn't, it is a one-time fee.

Lisa, I realize this reply is to an old post that has gone kinda cold, but it is important to point out that most wrap accounts charge a percentage of AUM (assets under management) per year (usually paid quarterly). If you paid a one-time fee of 5% that is likely not a wrap fee or a wrap account -- it sounds more like a front-end loaded retail share.

I have seen wrap fees as high as 3% (but not in this century) . . . and most are much much lower these days. 1% seems fairly common, but I don't pay anything remotely close to that.

Would you mind telling us what funds you were in? Then it might be pretty easy to determine if you were in a wrap account or in front-loaded funds (or something else).

Generally, wrap accounts give you access to institutional share classes that have no loads and lower ER's than retail shares of the same funds (retail being A, B, and C shares).

No, I am not telling everybody they should dump their Vanguard funds and open a wrap account. Do whatever you want.

One of the purposes of this forum is education, and there seems to be some misunderstanding, at least with some members, about what a wrap account is and what it isn't.

 

[Rustward]

. . .
Aug 2011 - We’re now in a total of five funds across the entire portfolio (qualified and non-qualified), all of which are Index funds. Average expense ratio is 0.09% which is a fraction of last year! Our AA is 60/40 with equities being 35% large cap, 15% small cap and 10% Intl. The bond portion is in a single Fido Total Bond Market Index which is held in my 401K. We also cashed out all of DH’s options and ESPP from CSCO and put them into Vanguard. We made this move because of the ongoing underperformance of the stock.

I am not picking, honestly, but I have another question.

You state that your average expense ratio is 0.09%, your AA is 60/40, and the bond portion is "Fido Total Bond Market Index".

According to Fidelity's FTBFX prospectus, this fund has an expense ratio of 0.45%.

If 40% of your portfolio has an ER of 0.45%, what is the other 60% invested in that brings the average portfolio ER to 0.09%?

Congratulations on the positive things happening in your life. Keep it up.

 

[Lisa99]

I am not picking, honestly, but I have another question.

You state that your average expense ratio is 0.09%, your AA is 60/40, and the bond portion is "Fido Total Bond Market Index".

According to Fidelity's FTBFX prospectus, this fund has an expense ratio of 0.45%.

If 40% of your portfolio has an ER of 0.45%, what is the other 60% invested in that brings the average portfolio ER to 0.09%?

Congratulations on the positive things happening in your life. Keep it up.

The bond fund is in my 401k and is an institutional fund that mirrors Vanguard's Total Bond Market Fund. The expense ratio of the fund is .04%. I also have a US Small/Mid-Cap Index fund in the same 401k with an expense ratio of .03%. So you can see that the ERs are MUCH lower than what one can generally get directly from Vanguard or Fidelity.

Our funds with Vanguard are all in Admiral funds so the ERs are also lower than what can be found in the standard index funds.

 

[Lisa99]

Lisa, I realize this reply is to an old post that has gone kinda cold, but it is important to point out that most wrap accounts charge a percentage of AUM (assets under management) per year (usually paid quarterly). If you paid a one-time fee of 5% that is likely not a wrap fee or a wrap account -- it sounds more like a front-end loaded retail share.

I have seen wrap fees as high as 3% (but not in this century) . . . and most are much much lower these days. 1% seems fairly common, but I don't pay anything remotely close to that.

Would you mind telling us what funds you were in? Then it might be pretty easy to determine if you were in a wrap account or in front-loaded funds (or something else).

Generally, wrap accounts give you access to institutional share classes that have no loads and lower ER's than retail shares of the same funds (retail being A, B, and C shares).

No, I am not telling everybody they should dump their Vanguard funds and open a wrap account. Do whatever you want.

One of the purposes of this forum is education, and there seems to be some misunderstanding, at least with some members, about what a wrap account is and what it isn't.

Thanks for reading Rustward. There was an exhaustive discussion of wrap fees by another poster earlier in this thread. We had >15 funds with Ameriprise and I'd have to dig out long filed documents to figure out which funds they were...so I'll pass.

Bottom line is that even without the wrap fees and the $750/year in advisor fees, we are saving a bundle of money by managing our own investments due to the significant reduction in ERs.

 

[Rustward]

Thanks for reading Rustward. There was an exhaustive discussion of wrap fees by another poster earlier in this thread. We had >15 funds with Ameriprise and I'd have to dig out long filed documents to figure out which funds they were...so I'll pass.

Bottom line is that even without the wrap fees and the $750/year in advisor fees, we are saving a bundle of money by managing our own investments due to the significant reduction in ERs.

OK Fine.

For somebody who uses Quicken for EVERYTHING

... I use Quicken for EVERYTHING ...

it is difficult to understand how you can't tell what you were invested in just a little over a year ago. There might even be tracks in the 1040 you may have filed earlier this year. I respect your right not to answer a question, but next time it might be better to just say that for undisclosed reasons you prefer not to answer.

Anyway, the account you described in the post opening this thread is absolutely not a wrap account. If you were told it is a wrap account you were misinformed. There is no crime in being misinformed, but to knowingly misinform others is, uh, wrong.

Here is investopedia's definition of a wrap account: Wrap Account Definition

"
What Does Wrap Account Mean?
An account in which a brokerage manages an investor's portfolio for a flat quarterly or annual fee. This fee covers all administrative, commission, and management expenses. Sometimes this also includes funds of funds.

Investopedia explains Wrap Account
The advantage of a wrap is that it protects you from overtrading. This is when your broker trades your account excessively to make more commission. Furthermore, because the broker gets a flat annual fee, then he or she only trades when it is advantageous to you. A traditional wrap typically requires an initial investment of at least $50,000 to $100,000.
"

No, you did not have a wrap account.

 

[Lisa99]

I use Quicken for all banking and have for years, but investing while with Ameriprise was hard copy. It has now been changed to Quicken.

Not sure why you're being so antagonistic about this, but this will be my last post/reply to your comments.

 

[FinanceDude]

I use Quicken for all banking and have for years, but investing while with Ameriprise was hard copy. It has now been changed to Quicken.

Not sure why you're being so antagonistic about this, but this will be my last post/reply to your comments.

Maybe married to an Ameriprise advisor?

 

[Lisa99]

Maybe married to an Ameriprise advisor?

that or one of them himself?

 

[Sarah in SC]

Lisa you have done your homework and there is no reason to revisit this except to collect our praise for your efforts to take control of your finances.

 

[Lisa99]

Thanks Sarah!