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Better option than Ameriprise SEP IRA?
Old 09-21-2008, 04:31 PM   #1
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Better option than Ameriprise SEP IRA?

I am a 1811 CSRS retiree (age 52) who has money in the tsp and is clueless about options for general public. However, my brother, semi-retired at age 54 after years of self employment, has about $275 in an Ameriprise SEP IRA, about 2/3 equities, 1/3 fixed income. It has a management fee of 1.5% up from the original 1%. What would be the best way for him to get out from the loving embrace of AmEx and into a SEP IRA he can basically "self-mange"?
Recommendations? He doesn't need to dip into it for quite a few years probably, with the work he still does, and would like to see it outpace inflation, but also wants it in the "safe slow lane" for a while.
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Old 09-21-2008, 04:43 PM   #2
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typing not so hot tonight

to clarify, brother has about $275K in SEP; and seeks to self-manage, not self mange.
feeling itchy
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Old 09-21-2008, 05:13 PM   #3
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He can roll over his IRA to a host of other financial institutions (Vanguard, Fidelity, Schwab...). A management fee of 1.5% is ridiculously high and I am pretty sure that Ameriprise has his money invested in funds with generally high expense ratios, i.e. 1-1.5%. So he would do well to seek cheaper alternatives. Overall, he could be looking at an instantaneous 2.5%+ increase in annual returns by moving his money elsewhere as I did when I moved my investments from Ameriprise to Vanguard.
47 years old, single, no kids. Exited the job market in 2010 (age 36). Have lived solely off my investments since 2015 (age 41). No pensions.
Current AA: real estate 64% / equities 10% / fixed income 16% / cash 10%
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Old 09-21-2008, 05:34 PM   #4
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Go to the "reading list" and you'll get a good start.

The independent studies all point of low cost, index mutual funds as the best way to go. If you educate yourself, it's unlikely a financial advisor will add any value.
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
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Old 09-21-2008, 05:45 PM   #5
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I'd acquaint him with the Vanguard Target Retirement Funds - they have low expenses and basically auto pilot themselves. He can ignore the year of maturity, instead focusing on the asset allocation that makes him most comfortable.
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Old 09-21-2008, 06:11 PM   #6
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I second all the ideas below--he'd be way ahead if he moved that money to Vanguard or Fidelity. By all means look over the stuff in the reading list. Vanguard is, overall, usually slightly less expensive than Fidelity, but both are good choices.

In addition, you mentioned that he's still working. If he's the only employee, (or it is just him and his wife), he can put away more new money each year using a solo401K than he can in a SEP IRA. Fidelity offers these, Vanguard doesn't. See Fidelity Investments for more info on this option. I've got one, and it there is very little paperwork/hassle.
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Old 09-21-2008, 06:37 PM   #7
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Please encourage him to move from Ameriprise at the earliest. Any one of the other companies mentioned will be a better choice than those folks. I second the target retirement funds at Vanguard or Fidelity for those investors still learning and unsure about the best choices for them.
“One day your life will flash before your eyes. Make sure it's worth watching.”
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