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willongo 10-26-2010 04:18 PM

Intro and questions about Ameriprise accounts
 
Hi all!

I am an "old" student who has had an account with Ameriprise for three years. Needless to say, I have joined the club of the ignorant who are slowly educating themselves and realizing what a scam Ameriprise is and switching over to Vanguard.

Reading the posts on people's experience with Ameriprise was like reading my autobiography!! Since I first opened my account with Ameriprise I always had a hunch that my adviser was taking me for a ride but not knowing anything about anything I chalked it up to paranoia. That is, until she did a few things that left such a bad taste in my mouth that I decided to just get rid of her and take over my finances. I'm learning very slowly, but what I am learning is so much fun and interesting! I get an adrenaline rush everytime I learn something about investing for my retirement!

Anyway, a few snapshots of what is going on in my accounts: I have three accounts, a rollover IRA, an SPS account and the dreaded Variable Annuity. I called Vanguard to switch over my IRA and I called Ameriprise to liquidate my SPS which I will drop into Vanguard as well.

Question 1: Do I have reason to be livid?? Looking over my IRA and SPS accounts I see that there is a total of approximately $60,000 dollars invested in seven funds. The average Front Load fee is 5.0%, average expense ratio is 1.3%, average 12b-1 fee is 0.3% and average Morningstar rating is 3 (five of the funds are 2 but there is a 4 and a 5 star that bring up the average to 3).

Question 2: Is there a compelling reason why anyone invest in funds with low Morningstar ratings? I'd like to think that my adviser had a good reason.

Question 3: In my variable annuity, can I regularly take out the amount available without surrender charge and reinvest that in my Vanguard account? I see in my account that this amount is about $1600 and I figure this is a nice sum to reinvest away from Ameriprise (!).

I'm so glad I found this forum. You guys rock!! I also ordered a whole bunch of books from Amazon to educate myself, books that were recommended in the mymoneyblog site.

Soon I'll be advising my friends!!

MasterBlaster 10-26-2010 04:23 PM

Quote:

Question 1: Do I have reason to be livid??
yes, you should be livid. better yet be livid and move your accounts to a better and less expensive family such as Vanguard.

Quote:

Is there a compelling reason why anyone invest in funds with low Morningstar ratings?
I suspect that first on his list were his fees. Second on his list was a balanced portfolio for you.

Quote:

Question 3: In my variable annuity, can I regularly take out the amount available without surrender charge and reinvest that in my Vanguard account?
You will probably have to pay surrender charges to make up for payments to your "advisor". yes you can transfer what's left to vanguard.

You just had one of those "Life lessons" or "Teachable Moments". Learn from it and move on.

FIREd 10-26-2010 04:38 PM

Quote:

Originally Posted by willongo (Post 993142)

Question 1: Do I have reason to be livid?? Looking over my IRA and SPS accounts I see that there is a total of approximately $60,000 dollars invested in seven funds. The average Front Load fee is 5.0%, average expense ratio is 1.3%, average 12b-1 fee is 0.3% and average Morningstar rating is 3 (five of the funds are 2 but there is a 4 and a 5 star that bring up the average to 3).

Question 2: Is there a compelling reason why anyone invest in funds with low Morningstar ratings? I'd like to think that my adviser had a good reason.

Question 3: In my variable annuity, can I regularly take out the amount available without surrender charge and reinvest that in my Vanguard account? I see in my account that this amount is about $1600 and I figure this is a nice sum to reinvest away from Ameriprise (!).

Q1: I don't know if you should be livid. You have learned a very valuable lesson after only 3 years! It took some of us much longer... Now apply what you've learned.

Q2: Morningstar ratings are quite useless IMO because they are backward looking. In other words, yesteryear's 5-star fund could be next year's 1-star flop. I suspect many of your funds were Riversource funds and they are generally expensive and under-performing. When picking a fund, you have to look past the Morningstar rating. You have to drill down to the nitty-gritty like risk, diversification, cost, tax efficiency, etc... It's really not that difficult with a little bit of education.

Q3: I don't see why not.

Welcome!

willongo 10-26-2010 06:38 PM

thanks for the quick replies
 
So, I'm a little confused about MasterBlaster's response to my variable annuity question. You said that I would have to pay a surrender charge. I know that there is a surrender charge for liquidating or transferring my variable annuity but in my account overview there is a value of $1600 under the heading "Amount available without surrender charge". I interpreted this to mean that I could take this $1600 out of my account without a surrender charge but that the rest of my variable annuity (about $17,000) would be subject to a surrender charge. So, I thought that I could take out the $1600, reinvest it in Vanguard, and leave the remaining $17,000 in the Ameriprise VA. I figured that I would be able to slowly chip away at my VA everytime there was a non-surrender charge amount available and reinvesting it rather than waiting ten years for the surrender charge to come down to zero.

As far as being livid, I'm not too livid. But very annoyed. My original investment was a little over 80,000 and tanked to about 30,000 and now has gone back up to about 70,000. It's really the combination of high front loads, high expense ratios, and low Morningstar ratings that makes me wonder if my adviser truly wasn't caring about my funds' performances and was more concerned about her take while dismissing my attempts at getting help in understanding investment strategies. I was operating under the naive assumption that we had a working relationship in which I would allow her to make money off of me in return for her taking care of my finances in a way that would truly benefit the both of us.

You're right, guys, lesson learned and move on!

FinanceDude 10-26-2010 06:42 PM

Quote:

Originally Posted by willongo (Post 993185)
So, I'm a little confused about MasterBlaster's response to my variable annuity question. You said that I would have to pay a surrender charge. I know that there is a surrender charge for liquidating or transferring my variable annuity but in my account overview there is a value of $1600 under the heading "Amount available without surrender charge". I interpreted this to mean that I could take this $1600 out of my account without a surrender charge but that the rest of my variable annuity (about $17,000) would be subject to a surrender charge. So, I thought that I could take out the $1600, reinvest it in Vanguard, and leave the remaining $17,000 in the Ameriprise VA. I figured that I would be able to slowly chip away at my VA everytime there was a non-surrender charge amount available and reinvesting it rather than waiting ten years for the surrender charge to come down to zero.

Is the VA account in an IRA or is it non-IRA?


Quote:

As far as being livid, I'm not too livid. But very annoyed. My original investment was a little over 80,000 and tanked to about 30,000 and now has gone back up to about 70,000. It's really the combination of high front loads, high expense ratios, and low Morningstar ratings that makes me wonder if my adviser truly wasn't caring about my funds' performances and was more concerned about her take while dismissing my attempts at getting help in understanding investment strategies. I was operating under the naive assumption that we had a working relationship in which I would allow her to make money off of me in return for her taking care of my finances in a way that would truly benefit the both of us.

You're right, guys, lesson learned and move on!
Most Amerprise reps have to sell Riversource VAs, not sure if Riversource has MF but that is possible........

FIREd 10-26-2010 06:56 PM

Most VAs will allow you to withdraw a portion of your account each year, free of surrender charges. In some cases, you may still have to pay taxes and penalties on the withdrawals though.

ziggy29 10-26-2010 07:01 PM

Quote:

Originally Posted by willongo (Post 993142)
I am an "old" student who has had an account with Ameriprise for three years. Needless to say, I have joined the club of the ignorant who are slowly educating themselves and realizing what a scam Ameriprise is and switching over to Vanguard.

Welcome to the club. We've had some pretty sharp and motivated people graduate through those ranks here...

Quote:

Originally Posted by willongo (Post 993142)
Question 1: Do I have reason to be livid?? Looking over my IRA and SPS accounts I see that there is a total of approximately $60,000 dollars invested in seven funds. The average Front Load fee is 5.0%, average expense ratio is 1.3%, average 12b-1 fee is 0.3% and average Morningstar rating is 3 (five of the funds are 2 but there is a 4 and a 5 star that bring up the average to 3).

Front load of 5% is enough to be livid, yes. But don't base future decisions on past mistakes; these are "sunk costs" that can't be recovered either way. You'd need to look at what you think of these funds moving forward after the loads have been paid (and obviously not buying any additional crap with a 5% load). I'm willing to bet these aren't any better, long term, then you can get elsewhere with no load and lower fees.

Quote:

Originally Posted by willongo (Post 993142)
Question 2: Is there a compelling reason why anyone invest in funds with low Morningstar ratings? I'd like to think that my adviser had a good reason.

The short answer, IMO, is "rarely." There are times when I think M* overly punishes mostly good funds with the same management in place that had a relatively short bad run. So I wouldn't say I'd *never* invest in a fund with less than (say) 3 stars, but there's no way I ever would unless I had enough additional information that led me to strongly believe the rating was unjustifiably harsh. And in most cases there are enough clearly high-rated funds that it would be unnecessary to "reach" to a 2-star fund.

Look at the performance over 3-year, 5-year and 10-year periods after expenses. If you don't want to search for reasonable expense, high performing managed funds, once you get out of the clutches of the jackals you may want to simply index instead.

Having said that, I have once knowingly invested in a fund that M* gave only two stars. Based on my own supplemental due diligence I was convinced the fund was considerably better than their rating. (And it did slightly better than its benchmark after fees while I held it.)

Quote:

Originally Posted by willongo (Post 993142)
Question 3: In my variable annuity, can I regularly take out the amount available without surrender charge and reinvest that in my Vanguard account? I see in my account that this amount is about $1600 and I figure this is a nice sum to reinvest away from Ameriprise (!).

Some annuities allow you to withdraw a certain percentage of an account per year without surrender charges. You'd need to check whether that's the case where you are. Some of them may allow up to (say) 10% a year without surrender charges; some will ding you for every dime until that 8th year (or whatever it is) goes past. There's no reason why you couldn't take out as much as they allow per year without surrender charges.

And if you are going to get slammed with a huge surrender penalty, as we've said in other "Ameriprise Escape" threads in the past you may have to suck it up and wait until the surrender charges expire, then do a 1035 exchange to something like a Vanguard variable annuity to avoid taxes and penalties. Right now you are still "underwater" from your cost basis so a 1035 wouldn't be needed if your contributions were all after-tax. But if this account goes "into the black" and you want to avoid taxes and penalties on the gains, a tax-free 1035 into a low-cost VA provider with a decent array of low-cost funds would be ideal.

yakers 10-27-2010 12:08 PM

I think what MB meant was forget the $1,600 clear, take all the $ out, even with penalty, ASAP to a better company. Generally good advice. I did not do that with DW's 403b as she was near to turning 55 and getting it all out free. Maybe there is a 'special circumstance' that allows for complete fee free transfer.

frayne 10-27-2010 12:25 PM

My two cents, avoid Amerprise, like it was the plaque.

Sarah in SC 10-27-2010 12:30 PM

Quote:

Originally Posted by frayne (Post 993438)
was the plaque.

Teeth? :whistling:

I'd set up new accounts at a brokerage and transfer your accounts fairly soon. You will be hit with transfer fees, fees to sell, fees to wash your undershorts (you get the idea). Although it is hard to, just try to move on without getting totally embroiled in the anger.

Keep reading here and at your library, and try to spend your time thinking about your risk tolerance and time horizon. Those will point you toward the right asset allocation and if you select funds with those in mind, you will be better able to hold on in times of panic because you know why you own a given fund.

Good luck to you!

Lisa99 10-27-2010 01:45 PM

Hi Willongo, welcome to the "we hate Ameriprise club" and CONGRATS on working to get out of their clutches.

I stumbled on the early-retirement.com website in mid-August and quickly found out that Ameriprise was sucking us dry. Using the reading recommendations we were able to better educate ourselves on investing and get all of our money moved in about a month even though we have a high six figure portfolio. We went from having expense ratios that mirror yours to an average expense ratio today of about .15.

The thought process we went through on deciding whether or not to pay the VUL surrender charge came down to the fact that there were no good funds available in the VUL to invest in. They were all very high expense ratio and I felt that by sucking it up and paying the surrender charge ($5500) I could quickly recoup the charge.

We've now been with Vanguard for 10 weeks and have a total return that is beating the pants off what our advisor was doing AND WE'RE IN INDEX FUNDS!! ;D Doesn't take an advisor to advise on index funds!

As you're taking this great step, one of the most important things to remember is to consider each account (company 401k, IRAs, current Ameriprise accts) as individual components of your entire investment picture. This will make more sense as you learn about asset allocation...I promise :)

ziggy29 10-27-2010 01:50 PM

Quote:

Originally Posted by Lisa99 (Post 993499)
Hi Willongo, welcome to the "we hate Ameriprise club" and CONGRATS on working to get out of their clutches.

I was hoping our latest "Dump Ameriprise" graduate would chime in... :)

Sarah in SC 10-27-2010 01:53 PM

Quote:

Originally Posted by ziggy29 (Post 993500)
I was hoping our latest "Dump Ameriprise" graduate would chime in... :)

Me, too! Thanks, Lisa for your helpful advice to the newest member of the club! ;D

Lisa99 10-27-2010 02:00 PM

Ya know Ziggy, this dump Amerprise move has literally changed out lives.

It sounds overly dramatic but it's true. Now that we have control, we've been able to confidently estimate our FIRE date and make informed decisions about where to invest that next dollar.

With Ameriprise we were in a fog because the advisor made it just seem so darn hard and to OP, it isn't hard at all as long as you keep the strategy simple...and in investing, simple is good!

willongo 10-27-2010 04:44 PM

Wow!
 
So many replies!

So far, I haven't been socked with so many fees for removing my money. I can't remember offhand, but I doubt I haven't had to pay more than about $150 for transferring my IRA to Vanguard and liquidating my SPS account.

I have been musing about also taking out my variable annuity. The total fees I would have to pay would amount to about $1800, something that I think I would be willing to give up just to be completely rid of Ameriprise.

However, I'll do a little more research before making that decision. I'm trying to figure out if there is anything I can do in terms of moving money around with regards to the VA while leaving it at Ameriprise, or if the best bet is too just pay surrender charges and be rid of them.

It's really the math that is daunting!

By the way, what is the purpose of a VA anyway. At first, I thought that it was just basically life insurance and basically useful only for those with dependents or beneficiaries. But, after reading what I could from the Ameriprise website (not very user friendly, by the way!) and from what I think I recall my adviser telling me, I get the impression that the VA would give me a guaranteed income after retirement. However, I don't see how exactly this would be any different from an IRA.

Sarah in SC 10-27-2010 04:48 PM

IRAs don't have guaranteed income (but then again, hard to say if the VA really guarantees much). IRAs hold securities, pretty much anything you want to buy security-wise can be bought in there and you make the investment decisions. And, of course, if the said security tanks, with it does your IRA balance.
The VA promises otherwise. Does it deliver? Who knows?

MasterBlaster 10-27-2010 04:51 PM

Quote:

Originally Posted by willongo (Post 993596)
So many replies!
By the way, what is the purpose of a VA anyway. At first, I thought that it was just basically life insurance and basically useful only for those with dependents or beneficiaries. But, after reading what I could from the Ameriprise website (not very user friendly, by the way!) and from what I think I recall my adviser telling me, I get the impression that the VA would give me a guaranteed income after retirement. However, I don't see how exactly this would be any different from an IRA.

The concept is that your VA grows tax deferred in the variable annuity accounts. Then when you retire you "annuitize" it into a stream of income payments over your remaining lifetime.

Were it not for all the fees and the crappy rates, it almost would be worth considering. Ameriprize will be the big gainer should you stay on this course though.

If you want to do the variable annuity path then consider a low cost provider like vanguard. Keep in mind though that annuities are insurance. thereffore they will always have some extra fees to provide for the "can't lose" death benefit and will usually trail a similar IRA/401k account.

Lisa99 10-27-2010 04:58 PM

I decided not to go down the 'math' path to determine whether or not to leave the VUL at Ameriprise.

Mentally I wanted to be done with them, so paid the $5500 surrender charge and considered it the cost of education.

And one of the reasons you're getting so many replies is because we're passionate about helping people get away from Ameriprise!

mickeyd 10-27-2010 05:29 PM

Hey willongo,

Welcome here.

On top of the mostly accurate advice that you have received already, I recommend that you take action to insure that you make no further contributions to any of the accounts until you decide what to do. If you decide to continue with these plans you can always crank it up again but once you have given them the cash, you are stuck.

Remember, the Ameriprise rep has no fiduciary responsibility to you.

willongo 10-28-2010 02:06 PM

Yeah, mentally, I think I just want to be done with Ameriprise so I might just forgo the research and just pull out.

On a positive note, I checked my accounts online. One of them, the SPS account, has disappeared! That means I should receive a check soon that I will send to Vanguard pronto.

Only two more to go! Vanguard should take care of the second account. I've already received a welcome letter from them so I expect that in a couple of weeks or so the IRA account will disappear as well.

As for the VA, I'll probably wait until next month to surrender it, as that is when the surrender charge steps down from 8 to 7%.

Lisa99 10-28-2010 02:26 PM

Isn't it satisfying to see those accounts disappear from Ameriprise?!

willongo 10-29-2010 07:25 AM

It's almost life changing to see that account disappear! LOL!

Even better, I can't wait to see all my accounts pop up in Vanguard's website and watch them grow beyond anything that would happen in Ameriprise!

target2019 10-29-2010 09:14 AM

When I go to financial dinners and eat heartily at their, I also feel very satisfied. Just feel sorry for those who will get hooked.

aida2003 10-29-2010 11:32 AM

In regards to M* ratings, the same analysts who assign those stars to the funds advise investors not to be too hung up on them. The stars are all about the past. But yes, I agree it's psychological and so comforting to see more stars like a hotel :blush:.
E.g. Total Stock Index fund (VTSMX) is rated 3*. How different will it be if I move my $$ from this fund to a similar fund at a different co.? It's an index fund and its managers are barely involved in it. Well, maybe Fidelity has a lower expense ratio for this kind of index fund, but again I like Vanguard and I don't want to keep moving my money around + tax considerations if I had to sell in one co. in order to move to another co.

MasterBlaster 10-29-2010 11:50 AM

Quote:

Total Stock Index fund (VTSMX) is rated 3*
By definition an index fund can't beat the market, or under perform it. hence the 3 stars.

Trying to beat the market is a fools errand. You either delude yourself or end up with a higher risk portfolio.

Those 5 star funds almost always are a flash in the pan. Almost nobody can consistently beat the market.

Check out this discussion (from the Coffeehouse Investor website) on trying to beat the market to see the futility of trying:

https://www.coffeehouseinvestor.com/i...utfox-the-box/

ziggy29 10-29-2010 11:52 AM

Quote:

Originally Posted by aida2003 (Post 994320)
E.g. Total Stock Index fund (VTSMX) is rated 3*. How different will it be if I move my $$ from this fund to a similar fund at a different co.? It's an index fund and its managers are barely involved in it.

I would expect most index funds to have three stars almost by definition, because they are designed to track the market, not beat it (or trail it).

kumquat 10-29-2010 05:09 PM

Quote:

Originally Posted by MasterBlaster (Post 994335)
By definition an index fund can't beat the market, or under perform it. hence the 3 stars.

Quote:

Originally Posted by ziggy29 (Post 994336)
I would expect most index funds to have three stars almost by definition, because they are designed to track the market, not beat it (or trail it).

I'd suggest that a perfect index fund would under perform the market by it's (low) MER. What's a few basis points among friends?;D

willongo 10-29-2010 05:36 PM

Quote:

Originally Posted by MasterBlaster (Post 994335)
By definition an index fund can't beat the market, or under perform it. hence the 3 stars.

Trying to beat the market is a fools errand. You either delude yourself or end up with a higher risk portfolio.

Those 5 star funds almost always are a flash in the pan. Almost nobody can consistently beat the market.

Check out this discussion (from the Coffeehouse Investor website) on trying to beat the market to see the futility of trying:

The Coffeehouse Investor » Outfox the Box

Yuck, now I'm thoroughly confused. I had dumped my Ameriprise IRA into Vanguard's Wellesly Income Fund and was thinking of also investing in their 2035 Target Retirement Fund. Mind you, this decision was based on not knowing anything yet (I still have to read up on investing wisely). I liked Wellesley because it has a 60/40 stock/bond ratio and that's just my cup of tea for no really good reason. It also had a high M* rating (back then when I thought ratings were very important) and relatively low expense ratio. I also thought that the 2035 Target Retirement Fund would be an aggressive counterbalance to my being timid by going along with Wellesly's ratio. The Target Fund has, I think an 80% stock investment.

But, now I see that the coffeehouse investor is telling me that I'd be a fool to rely so heavily on stocks.

Goodness, I can't wait to get my books in the mail so I can read up on investing and really make an informed decision instead of throwing darts.

Diversify, diversify, I have to chant the diversification mantra and not get too caught up in coming up with the perfect portfolio! :laugh:

willongo 11-04-2010 06:16 PM

update and another question
 
Well, Vanguard has notified me that they have notified Ameriprise about transferring my IRA. I closed my SPS account and got a check in the mail. Dumb*ss that I am, I opened up a Roth IRA out of sheer joy only to realize afterwards that I could just have simply and more cheaply converted part of my IRA. But, whatever.

I also sent in a request to Amerprise to terminate my relationship with my advisor and to give me a refund. I knew I wasn't going to get a refund after three years but I figured that I had nothing to lose and, besides, I got the pleasure of stating in the request form that I was unhappy with my financial advisor.

Today, my advisor called and left a message that she was surprised to find out that I had closed two of my accounts. She was concerned and asked that I call her and also suggested that I, at least, carefully consider my VA because of the surrender charge.

Needless to say, I felt a little smug sense of self satisfaction. But, call me a pushover of a wimpy pussy cat, I then felt bad after thinking about it. I figured that she did, after all, really gave me a pretty diverse portfolio.

My initial big shock was finding out about the high front loads and expense ratios and all I could think was that I needed a voodoo doll of her likeness but that the next best thing was just to close my accounts without her knowledge and give her a bad word in my cancellation/refund request.

If I recall correctly, I think she said that Ameriprise does not pay her a salary and that her money comes from commissions. So, is it so bad that she steered me towards fund that would pay her livelihood? Is the reality of the situation just that I was ignorant and chose to be ignorant by convincing myself that she was looking out for my best interest although I really knew better? What was she supposed to do, tell me not to invest with Ameriprise? Not!

So, I decided to write a letter to Ameriprise telling them to disregard my negative review of her and told them I was simply deciding to take control of my finances and moving them to a company that was not going to charge me all their crazy fees.

My colleague tells me I'm crazy and that I'm being the biggest wimp and that I should call my advisor and give her a piece of my mind. Another colleague says that I should send that letter because if my advisor really wanted to she could have really taken advantage of my ignorance but instead did the best she could do given her commission based salary.

I don't know, I say she could always just work for Vanguard or become a fee-based advisor instead of preying on the ignorant. But, who knows, maybe she's not really that good, and Ameriprise is her only opportunity. Oh, I don't know, I'm just having arguments with myself. I do that a lot.

Of course, there's always the option of just moving on forgetting the whole thing. But what if she gets reprimanded?? There I go arguing with myself again.

So, what thinks you all?? Send the letter or not?

73ss454 11-04-2010 06:20 PM

Let it go because you're Free at last, Free at last!

If she was on salary where did you think that money would come from.

REWahoo 11-04-2010 06:23 PM

Quote:

Originally Posted by willongo (Post 996728)
Of course, there's always the option of just moving on forgetting the whole thing.

This gets my vote.

Quote:

Originally Posted by willongo (Post 996728)
But what if she gets reprimanded??

I'd say the odds of her getting a reprimand as a result of your letter and having Elvis show up at your front door at noon tomorrow were roughly the same...

Lisa99 11-04-2010 08:47 PM

I let it go as well.

Last week I got a survey from Ameriprise asking me to rate my advisor. I don't know if it was because we closed our accounts or if it was coincidence, but I chose to throw away the survey.

kyounge1956 11-05-2010 01:31 AM

Quote:

Originally Posted by willongo (Post 996728)
(snip)
If I recall correctly, I think she said that Ameriprise does not pay her a salary and that her money comes from commissions. So, is it so bad that she steered me towards fund that would pay her livelihood? Is the reality of the situation just that I was ignorant and chose to be ignorant by convincing myself that she was looking out for my best interest although I really knew better? What was she supposed to do, tell me not to invest with Ameriprise? Not!

There you have in a nutshell the conflict of interest inherent in paying people by commission who advise others on their investments. This system rewards your "advisor" (actually a salesperson) for getting you, her client, to invest in the products that will maximize her income, rather than those that will maximize yours. You saw the result. She had you in funds with high expense ratios, variable annuities with their surrender charges, and so on, all of which was eating into your returns in order to line her pockets.

Quote:

So, I decided to write a letter to Ameriprise telling them to disregard my negative review of her and told them I was simply deciding to take control of my finances and moving them to a company that was not going to charge me all their crazy fees.

My colleague tells me I'm crazy and that I'm being the biggest wimp and that I should call my advisor and give her a piece of my mind. Another colleague says that I should send that letter because if my advisor really wanted to she could have really taken advantage of my ignorance but instead did the best she could do given her commission based salary.

I don't know, I say she could always just work for Vanguard or become a fee-based advisor instead of preying on the ignorant. But, who knows, maybe she's not really that good, and Ameriprise is her only opportunity. Oh, I don't know, I'm just having arguments with myself. I do that a lot.

Of course, there's always the option of just moving on forgetting the whole thing. But what if she gets reprimanded?? There I go arguing with myself again.

So, what thinks you all?? Send the letter or not?
I dithered about that one too. When I was a naive new investor, my Ameriprise advisor sold me a variable annuity inside my Roth IRA account, and it later cost me a stiff surrender charge to disentangle myself. When I decided to get all my money out of the hands of Ameriprise, it was suggested to me that I write a letter requesting a refund. I did think, when I had learned more about investments, that I had been sold an unsuitable product, but I was the one who told the advisor I was risk averse, so maybe we were just equally ignorant together. Who knows? In the end, I didn't request a refund. I decided to chalk up the several hundred dollars of surrender charge, account closing fee etc, to experience. I agree with REWahoo. Don't bother sending the second letter, just get on with Life After Ameriprise. As the old proverb goes, it's no use crying over spilt milk.

chinaco 11-05-2010 06:15 AM

IMO - 5% front-load and 1.5% expense is a sin! I would move the mutual funds ASAP.

Ditto about moving on. Chewing out the sales person will not help.

A better approach would be to share your story with everyone you know so friends and family do not fall for it.




travelover 11-05-2010 07:24 AM

Now that you have gotten your money from Ameriprise, it is time to start thinking about a nice vacation timeshare. :whistling:

FinanceDude 11-05-2010 07:24 AM

Quote:

The concept is that your VA grows tax deferred in the variable annuity accounts. Then when you retire you "annuitize" it into a stream of income payments over your remaining lifetime.

If you want to do the variable annuity path then consider a low cost provider like vanguard. Keep in mind though that annuities are insurance. thereffore they will always have some extra fees to provide for the "can't lose" death benefit and will usually trail a similar IRA/401k account.
Vanguard's annuities do not have living beneft riders..........

FinanceDude 11-05-2010 07:29 AM

Quote:

Originally Posted by kyounge1956 (Post 996814)
There you have in a nutshell the conflict of interest inherent in paying people by commission who advise others on their investments. This system rewards your "advisor" (actually a salesperson) for getting you, her client, to invest in the products that will maximize her income, rather than those that will maximize yours. You saw the result. She had you in funds with high expense ratios, variable annuities with their surrender charges, and so on, all of which was eating into your returns in order to line her pockets.

On a wholly separate issue, she could NOT find lower cost products for you without getting fired.........how sweet is that? :nonono: I do love the ongoing assumption that the ADVISOR makes all the money for themselves.......cracks me up everytime.......most reps like her are lucky to see 50% of the total commissions net, often less.........the client is the big loser and the FIRM, not the rep in most cases, makes out like a bandit..........

Quote:

I dithered about that one too. When I was a naive new investor, my Ameriprise advisor sold me a variable annuity inside my Roth IRA account, and it later cost me a stiff surrender charge to disentangle myself. When I decided to get all my money out of the hands of Ameriprise, it was suggested to me that I write a letter requesting a refund. I did think, when I had learned more about investments, that I had been sold an unsuitable product, but I was the one who told the advisor I was risk averse, so maybe we were just equally ignorant together. Who knows? In the end, I didn't request a refund. I decided to chalk up the several hundred dollars of surrender charge, account closing fee etc, to experience. I agree with REWahoo. Don't bother sending the second letter, just get on with Life After Ameriprise. As the old proverb goes, it's no use crying over spilt milk.
Places like Amerprise and NML sell a LOT of VAs inside IRA accounts, and it mainly stems from one reason........production requirements. Amerprise reps are required to "sell" X number of "lives" a year, and a VA counts as a "life", so they get closer to their goal. Is that a conflict of interest to the client? Definitely! Is that going to change anytime soon? No............

Bestwifeever 11-05-2010 09:33 AM

Quote:

Originally Posted by FinanceDude (Post 996849)
... I do love the ongoing assumption that the ADVISOR makes all the money for themselves.......cracks me up everytime.......most reps like her are lucky to see 50% of the total commissions net, often less.........the client is the big loser and the FIRM, not the rep in most cases, makes out like a bandit..........

You have said this before, but I don't ever see anyone assuming the individual advisor is being paid 100 percent of the fee, FD. It's the paying it that bothers us, not how much is ending up in the advisor's pocket.

Rustward 11-05-2010 10:51 AM

Quote:

Originally Posted by willongo (Post 996728)
. . .

I also sent in a request to Amerprise to terminate my relationship with my advisor and to give me a refund. I knew I wasn't going to get a refund after three years but I figured that I had nothing to lose and, besides, I got the pleasure of stating in the request form that I was unhappy with my financial advisor.
. . .
My initial big shock was finding out about the high front loads and expense ratios and all I could think was that I needed a voodoo doll of her likeness but that the next best thing was just to close my accounts without her knowledge and give her a bad word in my cancellation/refund request.
. . .
So, I decided to write a letter to Ameriprise telling them to disregard my negative review of her and told them I was simply deciding to take control of my finances and moving them to a company that was not going to charge me all their crazy fees.

Did they sell you front loaded funds and charge other fees in addition to the loads?

If so and if you don't mind saying, how much in fees?

Agree with the posters saying to just move on quietly.

clifp 11-05-2010 05:17 PM

First to the OP congrats Willongo for escaping the evil clutches of Ameriprise. It was also nice to see a recent board member and victim like Lisa99 help show him the light.

I have been trying unsuccessfully to convince my best friend to leave Ameriprise. Ironically, the only reason he is thinking about is he see from her Facebook that they are political opposites. (So Sarah, FD be careful of friending your clients he he).

One of the things that did get his attention, is when I started reading from the back of the 100+ page compensation disclosure brochure that Ameriprise is required to hand out about their lawsuits. Over the years dozen of states Attorney General have filed suit against Ameriprise and over a wide variety of deceptive practices.

Now I don't think a 5% load is particularly deceptive, although an selling annuity in an IRA is border line financial malpractice IMO. Still Ameriprise can do no longer do lots of things in many states due to settlements, what they did to you may or may not be covered. So since you have the letter written I'd go a head and send a copy to the local better business bureau, along with your state's consumer protection agency. The BBB letter will hurt Ameriprise's future business, and the letter to the state will at least put your name on the list for any current or future lawsuits. It seems worth a couple of stamps to me.

willongo 11-05-2010 06:27 PM

Quote:

Originally Posted by Rustward (Post 996924)
Did they sell you front loaded funds and charge other fees in addition to the loads?

If so and if you don't mind saying, how much in fees?

Agree with the posters saying to just move on quietly.

Not counting the VA, my advisor plunked my money into seven funds in an IRA and an SPS account. Here's the list of seven with the front load, expense ratios, 12b-1 fees and "since inception" rates of return following in order:
1. 5.75%, 1.19, 0.25%, 5.99

2. 5.75%, 1.34, O.25%, 1.27

3. 5.75%, 1.60, 0.25%, 2.84

4. 5.0%,, 1.68, 0.3%, 12.19

5. 5.0%, 1.21, 0.3%, 4.83

6. 4.5%, 0.99, 0.3%, 4.05

7. 2.75%, 0.88, .25%, 2.23

there might very well have been other fees, but I couldn't figure out what they might have been because i couldn't make sense of most of my paperwork.

willongo 11-05-2010 06:37 PM

Quote:

Originally Posted by clifp (Post 997057)
One of the things that did get his attention, is when I started reading from the back of the 100+ page compensation disclosure brochure that Ameriprise is required to hand out about their lawsuits. Over the years dozen of states Attorney General have filed suit against Ameriprise and over a wide variety of deceptive practices.

Now I don't think a 5% load is particularly deceptive, although an selling annuity in an IRA is border line financial malpractice IMO. Still Ameriprise can do no longer do lots of things in many states due to settlements, what they did to you may or may not be covered. So since you have the letter written I'd go a head and send a copy to the local better business bureau, along with your state's consumer protection agency. The BBB letter will hurt Ameriprise's future business, and the letter to the state will at least put your name on the list for any current or future lawsuits. It seems worth a couple of stamps to me.

Funny enough, I received a letter giving me the option to join a class action lawsuit against Ameriprise right after I gave them my money. I consulted my friend who had recommended me to the advisor (she was his advisor) and asked him about it. He said to disregard it because it was "obviously" a lawsuit from misguided and disgruntled clients. I just went along with his advice because I used to think he was so much smarter than him. NOT ANYMORE!!

willongo 11-05-2010 06:48 PM

Oh, I forgot to mention that you guys are a pack of wolves!!!! But, I do find wolves beautiful animals and am entranced by their howls.

So, I've decided not to bother calling my FORMER! advisor and no way am I apologizing to her for stating in my refund request form that I was unhappy with her.

As a matter of fact, the more I think about our relationship the more I realize that I owe her no apologies. Twice I asked her to recommend books and websites to educate myself on retirement investing to which she said both times she would send me information but did not, once she met me for an appointment with her hair disheveled and no make up complaining that she was tired and could we just go to her place instead of having lunch. We went to "her place" which was actually her friend's barely furnished apartment that she was apartment sitting. And, anytime we met she was always digging for information on my ex who had recommended me to the financial advisor and why we broke up (hello! none of your business!)

Uggh, >:(

FinanceDude 11-05-2010 06:54 PM

Quote:

although an selling annuity in an IRA is border line financial malpractice IMO.
Quiz time: Why are so many annuities sold in IRAs? The answer is NOT to make the advisor rich!

So, why do people do it?

harley 11-05-2010 09:03 PM

Quote:

Originally Posted by FinanceDude (Post 997089)
Quiz time: Why are so many annuities sold in IRAs? The answer is NOT to make the advisor rich!

So, why do people do it?

Because it allows you to tax defer the same money twice? :angel:

Is the reason based on the death benefit rider in the VA? I'm not sure. I still think the reason is because the advisor makes a lot more commission on a VA then on a regualr MF.

Lisa99 11-05-2010 10:03 PM

For the question regarding fees to close the Ameriprise account.

I was charged a $100 administrative fee to close the SPS account.

I wasn't charge an administrative fee to close the VUL, but the surrender charge was $5500.

It was simple and relatively inexpensive to get away from them considering the complexities of what they had us in and the size of our account.

kyounge1956 11-05-2010 11:24 PM

Quote:

Originally Posted by clifp (Post 997057)
First to the OP congrats Willongo for escaping the evil clutches of Ameriprise. It was also nice to see a recent board member and victim like Lisa99 help show him the light.

I have been trying unsuccessfully to convince my best friend to leave Ameriprise. Ironically, the only reason he is thinking about is he see from her Facebook that they are political opposites. (So Sarah, FD be careful of friending your clients he he).

One of the things that did get his attention, is when I started reading from the back of the 100+ page compensation disclosure brochure that Ameriprise is required to hand out about their lawsuits. Over the years dozen of states Attorney General have filed suit against Ameriprise and over a wide variety of deceptive practices.

Now I don't think a 5% load is particularly deceptive, although an selling annuity in an IRA is border line financial malpractice IMO. Still Ameriprise can do no longer do lots of things in many states due to settlements, what they did to you may or may not be covered. So since you have the letter written I'd go a head and send a copy to the local better business bureau, along with your state's consumer protection agency. The BBB letter will hurt Ameriprise's future business, and the letter to the state will at least put your name on the list for any current or future lawsuits. It seems worth a couple of stamps to me.

It was those notices in the mail that tipped me off. I found it disconcerting to realize that the custodian of my retirement savings was being penalized—repeatedly—for deceptive sales practices or other wrongdoing.

clifp 11-06-2010 01:27 AM

Quote:

Originally Posted by FinanceDude (Post 997089)
Quiz time: Why are so many annuities sold in IRAs? The answer is NOT to make the advisor rich!

So, why do people do it?

Good question. My guess is part of the reason is the reps have have quotas on how many insurance policies the have to sell. Also aren't VAs treated as insurance policies which require a different/lesser test to pass in order to sell? My related guess is that it maybe a way of circumventing the fiduciary responsibility of the IRA custodian.

willongo 11-06-2010 09:33 AM

some more questions
 
I'm such a financial moron so forgive my dumb questions:

1. What exactly is a SPS account at Ameriprise? Is it just a fancy savings/checking account?

2. Have I been paying taxes on anything related to my SPS account? For example, every year my 1099 form would have some values for Total Ordinary Dividends, Qualified Dividends and Nondividend Distributions. Did any of these dividends have anything to do with my SPS and were any of these dividends taxable? All other entries were zero, except for Interest Income, but this was never more than a few cents or dollars.

3. I've already contributed the max into an IRA and a Roth IRA with the SPS check ($5000 into each) that I got from Ameriprise after closing the account. So, I'll have about $25,000 extra in my bank account from the SPS and VA (after I close the VA account soon!). Will I be taxed on this money since I cannot put it into either IRA's?

4. I was thinking of putting this money into tax-exempt bonds. Is this a good idea? Basically, I'm trying to put that money somewhere where I don't have to pay taxes because I'm a student and cannot afford to be paying taxes and also I can't have more than $25,000 in liquid assets as a requirement of some subsidy that I receive. I already have 20,000 in my bank account so the additional SPS and VA monies would put me way over the 25,000 limit.

I really need a Financial Advisor. BUT NOT FROM AMERIPRISE!!!!!!!!

FIREd 11-06-2010 09:44 AM

Uh-oh, you cannot contribute $5,000 to an IRA* and $5,000 to a Roth IRA during a single year. You can contribute a maximum of $5,000 to an IRA or a Roth IRA, not both. The $5,000 limit can be split between the IRA and the Roth (for example $2,000 goes in the IRA and $3,000 goes to the Roth). The interests, dividends and capital gains generated by the money you were not able to put in IRAs will be taxed.

If the SPS account was simply a managed brokerage account outside of an IRA, then yes dividends, interests and capital gains from that account are/were taxable. Since it sounds like you only had an IRA, a variable annuity and SPS account at Ameriprise, the 1099 you received every year was directly a result of dividends, interests and capital gains generated by the SPS account.

Generally speaking, tax-exempt bonds are a better deal if you are in a high tax bracket. So if you are in the 28+% Federal tax bracket and live in a state with high income taxes, tax-exempt bonds could be a good choice. Please do your research about possible pitfalls specific to tax-exempt bonds.

*I'll assume your IRA is a deductible IRA.

willongo 11-06-2010 10:36 AM

Quote:

Originally Posted by FD (Post 997232)
Uh-oh, you cannot contribute $5,000 to an IRA* and $5,000 to a Roth IRA during a single year. You can contribute a maximum of $5,000 to an IRA or a Roth IRA, not both. The $5,000 limit can be split between the IRA and the Roth (for example $2,000 goes in the IRA and $3,000 goes to the Roth).

hmmm...i get the feeling i might end up paying some crazy taxes next year. i'll keep researching and figuring it all out.

in any case, if i can only contribute a max of $5000 to both, then what happens if i already have contributed 5000 to each? I did it online in Vanguard and both the IRA and Roth RA have 5,000 in each. As soon as my IRA from Ameriprise rolls over I'll then have 45000 in the IRA.

FIREd 11-06-2010 10:48 AM

Quote:

Originally Posted by willongo (Post 997258)
hmmm...i get the feeling i might end up paying some crazy taxes next year. i'll keep researching and figuring it all out.

in any case, if i can only contribute a max of $5000 to both, then what happens if i already have contributed 5000 to each? I did it online in Vanguard and both the IRA and Roth RA have 5,000 in each. As soon as my IRA from Ameriprise rolls over I'll then have 45000 in the IRA.

You can call Vanguard and tell them you made "excess contributions to an IRA" and they will help you correct the problem. Make sure to take care of it before the end of the year though.

If you pay crazy taxes, you must have made crazy money, so all is not lost I guess...;)

mickeyd 11-06-2010 11:04 AM

Quote:

Originally Posted by target2019 (Post 994263)
When I go to financial dinners and eat heartily at their, I also feel very satisfied. Just feel sorry for those who will get hooked.


I know what you mean, and those who bite buy also end up paying for the free meal that the rest of us who also ate and then disappeared into the night. :greetings10:

Lisa99 11-06-2010 12:17 PM

Your rollover IRA doesn't count against your $5,000 limit in 2010 unless you had already put money into that Ameriprise IRA this year.

And you'll pay taxes on the SPS account proceeds if you had capital gains. Our account was about 4 years old and because of the market drop in 2007/2008 we were still underwater by about $18,000 net on our acct so we didn't have to pay capital gains tax to liquidate.

If your account is still open you can go to the SPS screen online and look at the tab called Gain/Loss (I think that is what it was called). That screen will show you for all the funds you were in whether you were positive or negative in each fund.

harley 11-06-2010 02:36 PM

Quote:

Originally Posted by FinanceDude (Post 997089)
Quiz time: Why are so many annuities sold in IRAs? The answer is NOT to make the advisor rich!

So, why do people do it?

So, what's the answer? I'm curious about from the FA's POV.

willongo 11-06-2010 04:08 PM

Cool. I called up Vanguard for advice and got my questions answered and my sanity restored.

Basically, I flipped out because I thought that I would be paying taxes on the entirety of the SPS and VA accounts when cashing them in, not just the gains.

And, because I cannot have more than $25,000 in my bank account (a requirement of a subsidy that I'm receiving) and I already have $20,000 in there I had no idea where to put the extra money from the SPS and VA (about $30000) if I couldn't put it in an IRA.

Vanguard advised me to open up a non-retirement acccount and to use their online funds advisement tool. So, I'll end up dropping the money in some funds that were recommended in a portfolio that included Total Stock Market Index (48%), Total International Stock Index (12%), and Total Bond Market Index funds 40%).

Vanguard is also issuing me a check for the Roth IRA that I had plunked $5000 into since I already plunked another $5000 into the IRA.

I'm sure I'll run into something else that will send me into orbit, but I'm not as panicked now as I was before.

I've been reading Random Walk Down Wall Street and it has been helpful but I obviously need to do much more reading and research to get a grip on sound investment practices. It's fun, though. :)

Raygun99 11-06-2010 07:06 PM

I haven't looked at EVERYONE of your transactions but you may want to get a summary of what your Basis information was in Ameriprise before they close out your accounts. Your TAX return for 2010 will need some level of scrutiny to ensure all of these changes are properly accounted for in sheltered and general accounts. IRS is getting better at making them provide information but some are not very cooperative after your close the accounts.

Lisa99 11-06-2010 09:08 PM

you may want to rethink the Total Bonds Fund in your Vanguard taxable account. If you have that fund in a taxable account, you'll have to pay taxes on the monthly dividends it pays even if you reinvest the dividends.

Not sure what your your total investment pot is, but you want to try to keep bonds in tax deferred accounts. We have all of our bonds allocation (40% of total) in our 401k accounts and the Total Stock Market Index and Total Intl Index in the Vanguard taxable acct.

You might want to get familiar with the Bogleheads forum. It's a good financial forum that that helps people with the fundamentals of investing. It's one of the sources I used for self-educating when we took over managing our investments. The FAQ on where each asset class should be placed (taxable account vs tax deferred acct and why) is here: Bogleheads :: View topic - Investment Planning

FinanceDude 11-07-2010 11:08 PM

Quote:

Originally Posted by harley (Post 997125)
Because it allows you to tax defer the same money twice? :angel:

Uh. no..........

FinanceDude 11-07-2010 11:09 PM

Quote:

Originally Posted by willongo (Post 997354)
Cool. I called up Vanguard for advice and got my questions answered and my sanity restored.

VG gave you tav advice? Oh-oh.........

FinanceDude 11-08-2010 03:14 PM

Quote:

Originally Posted by harley (Post 997329)
So, what's the answer? I'm curious about from the FA's POV.

There's three views here:

1)The insurer's promoting VAs view
2)The firm the FA works for view
3)The FA's view

Where shall I begin?

clifp 11-08-2010 05:49 PM

Quote:

Originally Posted by FinanceDude (Post 998008)
There's three views here:

1)The insurer's promoting VAs view
2)The firm the FA works for view
3)The FA's view

Where shall I begin?

With #1 and work your way to #3 or work backwards it is a sort of free country.

FinanceDude 11-08-2010 09:24 PM

Quote:

Originally Posted by clifp (Post 998065)
With #1 and work your way to #3 or work backwards it is a sort of free country.

The large insurance companies are NOT dummies. They know quite well that VAs represent "sticky money", meaning that due to surrender charges, benefit bases, death benefit riders, etc, folks are not going to disturb that money for a good long time, maybe never in some cases.

I think Pacific Life is a good example, they sponsor seemingly every sports event in the country, their advertising budget has to be in the $10's of millions of dollars. Of course, M&E charges and other expenses pay for that in the end. They know that DB plans (pensions) have gone for most folks the way of the dodo. They also know their distribution channel is everyone in American that holds a Series 6 and insurance license, which is roughly 600,000 advisors, give or take, from you local bank, credit union, P&C insurance agent, and so on, to the FAs, CFPs, etc. In their minds, they offer the "perfect solution" by making "your IRA or portion thereof your own pension plan". The VA market is booming, mainly because of the boomers and the insurers feeding off the fear in investors. Main pitch? "Let's take a portion of your money, and GUARANTEE a stream of INCOME you CAN NOT OUTLIVE,that you can turn on ANYTIME YOU WANT. And, if the market goes up, you can get a PAY RAISE in retirement, who else is offering you that"? Most are written in IRAs because a) it is allowed, and b) that's where most folks have their largest sum of money.

Many layers of wholesalers, support staff, marketing budgets, etc, means there have to be high expenses for everyone to get paid. The insurer typically pay the advisor, insurance agent, bank, etc about 7% of the lump sum put in the product as a commission. This is assuming a 7 year surrender which well over 50% of all VAs are written as. The firm supporting the FA takes their cut, and the FA gets the remainder, and "everyone wins"................;)

73ss454 11-08-2010 09:30 PM

Well, not everyone wins!

FinanceDude 11-08-2010 09:42 PM

Quote:

Originally Posted by 73ss454 (Post 998137)
Well, not everyone wins!

Hence the "wink-wink, nod-nod" emoticon.........;)

Raygun99 11-09-2010 09:47 AM

Is there a 1,2,3 recepie to create your own portfolio that mimicks a VA? Example Term Life Policy, Some Zero Coupon Bonds, Some Bond Funds for cash flow, Some Stocks for growth, and or Dividend Stock fund?

FinanceDude 11-09-2010 10:07 AM

Quote:

Originally Posted by Raygun99 (Post 998245)
Is there a 1,2,3 recepie to create your own portfolio that mimicks a VA? Example Term Life Policy, Some Zero Coupon Bonds, Some Bond Funds for cash flow, Some Stocks for growth, and or Dividend Stock fund?

I think brewer did one on here awhile back...........

harley 11-09-2010 05:17 PM

Quote:

Originally Posted by FinanceDude (Post 997089)
Quiz time: Why are so many annuities sold in IRAs? The answer is NOT to make the advisor rich!

So, why do people do it?

Quote:

Originally Posted by FinanceDude (Post 998133)
Most are written in IRAs because a) it is allowed, and b) that's where most folks have their largest sum of money.

I guess you could argue that the latter statement is an answer to your question, but I didn't read anything in the full response that shows that the answer is not "to make the advisor rich". Still sounds like a massive scam to me. I'm not saying that there isn't a place in the world for annuities, but they could xertainly be sold, with reasonable profit, in a much less predatory and amoral manner.

JohnGalt 11-09-2010 05:58 PM

Hi all. I'm with ameriprise and was shocked to see all the bad press you are giving them. I use them for my Roth IRA. I'm not a skilled person in the stock market, but i know the basics. I'm investing my money in an american fund with a front load of 5.75%, and an expense ratio of .83. Is that terrible? What is different about the funds you are in? My advisor pointed me in this direction because once the 5.75 is paid, the expenses are low..If i wanted to be in a different fund, i'd just tell them so. Why are they the culprits?

JohnGalt 11-09-2010 05:59 PM

Oops, i didn't mean to indicate i'm ''with'' ameriprise.. I use them for my fund management is what i meant.

MasterBlaster 11-09-2010 06:07 PM

Quote:

Originally Posted by JohnGalt (Post 998465)
Hi all. I'm with ameriprise and was shocked to see all the bad press you are giving them. I use them for my Roth IRA. I'm not a skilled person in the stock market, but i know the basics. I'm investing my money in an american fund with a front load of 5.75%, and an expense ratio of .83. Is that terrible? What is different about the funds you are in? My advisor pointed me in this direction because once the 5.75 is paid, the expenses are low..If i wanted to be in a different fund, i'd just tell them so. Why are they the culprits?

I wouldn't call an expense ratio of 0.83 low. It's not as high as some of the advisor selected type funds but's it's certainly not low. And does your fund have 12-b1 (advertisng) expenses that you pay ? I would guess yes. And are there hidden trading fees that are kind of outrageous ? I suspect what the answer is for that. But no, You haven't given enough information to say one way or the other if your fund is really costing you or not.

Per the load. We'll the advisor gets paid somehow. Evidently yours gets paid via the load. At least it's disclosed up-front.

JohnGalt 11-09-2010 06:12 PM

I guess i'm not sure if you have been dealing with advisors who push you in a bad direction, or if they are not allowing you to invest the money in the way you prefer? I feel as though if i want to put all my roth money in McDonalds stock that they would allow it. Is the company corrupt, or are the advisors just not always advising what we want?

Who should we switch to?

Rustward 11-09-2010 06:16 PM

Somebody correct me if I am wrong, but 12b-1 fees are included in the overall expense ratio, so when you see a 12b-1 fee in a prospectus, that is telling you how much of the total ER is 12b-1.

Still it is best to avoid 12b-1 fees.

Lisa99 11-09-2010 06:19 PM

Hi John,

You might want to start your own thread regarding your Ameriprise questions.

Each person is different and if we start answering your questions in this thread it might get confusing.

I, for one, left Ameriprise less than six weeks ago. There were myriad reasons including being sold a VUL that was totally unnecessary. Another reason is that our advisor was not looking at our total portfolio as a whole. He was advising us within the Ameriprise acct as if it were the only money we had invested even though he knew it wasn't...and the list goes on.

There are a number of us on this forum who have left Ameriprise in order to self-manage our portfolios.

MasterBlaster 11-09-2010 06:20 PM

John Galt:

The Company isn't corrupt, They, just like many in the Finacial Services Industry, charge through the nose high prices for their services and hide the fees in tricky spots. Buyer Beware.

As always the interest of the client (you) and the interest of the financial advisor and financial firm may be contary to each other.

Where to invest ? That's for you to decide.

Have you checked out Vanguard ? I like them because they are owned by the underlying funds. So you as an investor in their funds, in a way own the company. They tend to have very low fees and no loads on the funds.

MasterBlaster 11-09-2010 06:26 PM

Quote:

Originally Posted by Rustward (Post 998485)
Somebody correct me if I am wrong, but 12b-1 fees are included in the overall expense ratio, so when you see a 12b-1 fee in a prospectus, that is telling you how much of the total ER is 12b-1.

Still it is best to avoid 12b-1 fees.

Sometimes yes, sometimes no

check out this link:

Mutual Fund Fees and Expenses


Distribution [and/or Service] (12b-1) Fees

This category identifies so-called "12b-1 fees," which are fees paid by the fund out of fund assets to cover distribution expenses and sometimes shareholder service expenses."12b-1 fees" get their name from the SEC rule that authorizes a fund to pay them. The rule permits a fund to pay distribution fees out of fund assets only if the fund has adopted a plan (12b-1 plan) authorizing their payment. "Distribution fees" include fees paid for marketing and selling fund shares, such as compensating brokers and others who sell fund shares, and paying for advertising, the printing and mailing of prospectuses to new investors, and the printing and mailing of sales literature.The SEC does not limit the size of 12b-1 fees that funds may pay. But under FINRA rules, 12b-1 fees that are used to pay marketing and distribution expenses (as opposed to shareholder service expenses) cannot exceed 0.75 percent of a fund’s average net assets per year.
Some 12b-1 plans also authorize and include "shareholder service fees," which are fees paid to persons to respond to investor inquiries and provide investors with information about their investments. A fund may pay shareholder service fees without adopting a 12b-1 plan. If shareholder service fees are part of a fund’s 12b-1 plan, these fees will be included in this category of the fee table. If shareholder service fees are paid outside a 12b-1 plan, then they will be included in the "Other expenses" category, discussed below. FINRA imposes an annual .25% cap on shareholder service fees (regardless of whether these fees are authorized as part of a 12b-1 plan).
Other Expenses

Included in this category are expenses not included in the categories "Management Fees" or "Distribution [and/or Service] (12b-1) Fees." Examples include: shareholder service expenses that are not included in the "Distribution [and/or Service] (12b-1) Fees" category; custodial expenses; legal expenses; accounting expenses; transfer agent expenses; and other administrative expenses.

FinanceDude 11-09-2010 08:29 PM

Quote:

Originally Posted by Rustward (Post 998485)
Somebody correct me if I am wrong, but 12b-1 fees are included in the overall expense ratio, so when you see a 12b-1 fee in a prospectus, that is telling you how much of the total ER is 12b-1.

Still it is best to avoid 12b-1 fees.

You are correct............

FinanceDude 11-09-2010 08:30 PM

Quote:

Originally Posted by MasterBlaster (Post 998490)
The Company isn't corrupt, They, just like many in the Finacial Services Industry, charge through the nose high prices for their services and hide the fees in tricky spots. Buyer Beware.

How do mutual funds hide their fees? Even VG has transaction costs.........;)

FinanceDude 11-09-2010 08:31 PM

Quote:

Originally Posted by harley (Post 998444)
I guess you could argue that the latter statement is an answer to your question, but I didn't read anything in the full response that shows that the answer is not "to make the advisor rich". Still sounds like a massive scam to me. I'm not saying that there isn't a place in the world for annuities, but they could xertainly be sold, with reasonable profit, in a much less predatory and amoral manner.

Get the insurers to play ball..they are the ones who set the high fees inside the annuity.........why blame the advisor?

kyounge1956 11-10-2010 12:26 AM

Quote:

Originally Posted by MasterBlaster (Post 998490)
The Company isn't corrupt (snip

Quote:

Originally Posted by FinanceDude (Post 996849)
On a wholly separate issue, she could NOT find lower cost products for you without getting fired.........how sweet is that? :nonono: I do love the ongoing assumption that the ADVISOR makes all the money for themselves.......cracks me up everytime.......most reps like her are lucky to see 50% of the total commissions net, often less.........the client is the big loser and the FIRM, not the rep in most cases, makes out like a bandit..........

Places like Amerprise and NML sell a LOT of VAs inside IRA accounts, and it mainly stems from one reason........production requirements. Amerprise reps are required to "sell" X number of "lives" a year, and a VA counts as a "life", so they get closer to their goal. Is that a conflict of interest to the client? Definitely! Is that going to change anytime soon? No............

It sure sounds like a corrupt company to me. They set up a system so the advisors have to choose between selling a probably unsuitable product to their clients, or getting fired.

Like Lisa, I'm pleased to be a former Ameriprise client. I suggest if you are going to use a financial advisor, go with a fee-only one.

Sarah in SC 11-10-2010 11:19 AM

Just an FYI, you can buy American Funds products at places other than Ameriprise, JohnGalt.

FinanceDude 11-10-2010 12:13 PM

Quote:

Originally Posted by kyounge1956 (Post 998613)
It sure sounds like a corrupt company to me. They set up a system so the advisors have to choose between selling a probably unsuitable product to their clients, or getting fired.

Not really, more of a packaged product that is priced to support their promises and pay everyone along the way. Amerprise owns their own annuity company called Riversource. Unless you have a good reason AND are one of their TOP producers, the wrath of God will descend upon you if you put them in another annuity company.

Quote:

Like Lisa, I'm pleased to be a former Ameriprise client. I suggest if you are going to use a financial advisor, go with a fee-only one.
Did you mean hourly fee, or fee-based?

FinanceDude 11-10-2010 12:26 PM

Continuing on, I offer:

Part 2: The firm the FA works for point of view:

Much of this depends upon what kind of firm the FA works for. If they work for a "wirehouse" (Merrill Lynch, Smith Barney, etc) the firm caps payouts at around 45-50% unless you are one of the largest producers there. Like I said, most VAs are sold with 7 year or longer surrenders, so the brokerage firm gets roughly 7% of the lump sum as commission. So, on a $100,000 annuity sale, the FIRM collects $7,000. They then apply that to a commission "grid" that the rep's cut is taken from, generally 42-48%, but sometimes 50%. At 50%, the wirehouse rep gets $3,500 as W-2 income, and the firm keeps the other $3,500 to pay marketing desk space, phone expense, etc. Not a terrible deal for them. At banks, they really screw the reps, since their mantra is that since the rep gets a ready-made "book" of business to call on, so they are capped at 35% commissions, and the bank keeps 65%.

Brokerage firms like large commission items like VAs. As far as compliance on these products, it is pretty strict as fas as what documentation is needed to process the sale. Most firms have pretty stringent forms that need client signatures and a review from a Compliance officer before the sale is finalized. That being said, most VA sales are approved at most firms, unless there is evidence of churning or other improprities.

Most brokerage firms have selling agreements with the big insurers, i.e. Pacific Life, Prudential, Nationwide, Allianz, ING, Hartford and John Hancock. However, at Amerprise, you have to use Riversource, so there's only one option.

MasterBlaster 11-10-2010 01:06 PM

Quote:

Originally Posted by FinanceDude (Post 998563)
How do mutual funds hide their fees? Even VG has transaction costs.........;)

Oh the game I hear they play, is that they pay (big time) their in-house team for "research" and then tack that onto the transaction costs. You never see it. But it comes out of your pocket.

FinanceDude 11-10-2010 02:24 PM

Quote:

Originally Posted by MasterBlaster (Post 998739)
Oh the game I hear they play, is that they pay (big time) their in-house team for "research" and then tack that onto the transaction costs. You never see it. But it comes out of your pocket.

You "hear" this. but do you know it for a fact? Sounds like "hearsay".....:laugh:

harley 11-10-2010 02:27 PM

Quote:

Originally Posted by FinanceDude (Post 998564)
Get the insurers to play ball..they are the ones who set the high fees inside the annuity.........why blame the advisor?

:whistling:

YouTube - Easy Rider - Steppenwolf - The Pusher

willongo 11-17-2010 09:01 AM

I'm back!
 
Wow! This thread took a life of its own..but now I'm returning it back to me since it was all about me in the beginning anyway. :greetings10:

So, I am finally completely free of Ameriprise's grip, have all my money and am ready to gamble, I mean invest.

I already rolled over 45K into an IRA at Vanguard, some of which I was thinking of converting to a Roth IRA. I also have about 35K that I want to invest which will, of course, have to go into a taxable account.

However, as much reading as I've been doing, I just know that I'm going into this blindly and so I thought that I would hire a Vanguard Financial Advisor. With about 80K that I will have at Vanguard, I'll be a Voyager member. Woohoo!! I wonder what that means in terms of dryer sheets??

Anyway, it would only be $250, I think. Is it worth it?? I ask because someone, FD I think, made a smart quip about Vanguard giving tax advice.

Thanks again!

Lisa99 11-17-2010 09:40 AM

From my observations Vanguard gives the same advice to most people. They recommend keeping investments very simply (index funds) with core choices.

We had a mid six-figure portfolio to invest with them and their recommendations included Vanguard Total Stock Market Index, Vanguard Total International Index, Vanguard Small Cap Index and Vanguard Bond Market Index. (we're 6+ years from retirement)

They also gave advice on which funds should be in tax deferred vs taxable and on the percentage split of each fund based on our asset allocation.

I personally would pay them to build a plan. When meeting with the advisor it is a learning opportunity (he answered endless questions that I had) and $250 is a small price to pay when you're talking about your retirement funds.

travelover 11-17-2010 09:41 AM

Quote:

Originally Posted by willongo (Post 1001737)
..........
Anyway, it would only be $250, I think. Is it worth it??..............

Personally, I would not pay it, at least not until I'd read a few key books off the Boglehead's reading list, starting with the Bogleheads Guide to Investing. I'd also post over at Bogleheads for suggestions for your taxable account. I suspect you'll get a recommendation for the total US market plus international index funds.

Investment Books

Bogleheads Investing Advice and Info

Lisa99 11-17-2010 09:44 AM

Quote:

Originally Posted by travelover (Post 1001768)
Personally, I would not pay it, at least not until I'd read a few key books off the Boglehead's reading list, starting with the Bogleheads Guide to Investing. I'd also post over at Bogleheads for suggestions for your taxable account. I suspect you'll get a recommendation for the total US market plus international index funds.

Investment Books

Bogleheads Investing Advice and Info

Very good point on self-educating first, but I think if you're really new at this having the planner help might make one sleep better at night.

travelover 11-17-2010 10:11 AM

Hint: if you want to reach FIRE, never use the words "only" and "$250" in the same sentence. :laugh:

willongo 11-17-2010 11:05 AM

Quote:

Originally Posted by travelover (Post 1001788)
Hint: if you want to reach FIRE, never use the words "only" and "$250" in the same sentence. :laugh:

The funny thing is that I throw around so much money because I save so much money, if that makes sense. :blush:

But, now, I just want to throw my money in investments since I've caught the FIRE fever!

I've been reading quite a bit and visiting forums and other websites, but too frequently I come across information or a suggestion that throws a curve ball at whatever investment plan I have at that moment.

So, I figured that throwing money at a professional might be a smart thing to do. Though, NOT ONE FROM AMERIPRISE!!!!

Also, the tax events are confusing me more than anything else.

travelover 11-17-2010 11:33 AM

Quote:

Originally Posted by willongo (Post 1001837)
..............
So, I figured that throwing money at a professional might be a smart thing to do. ...........

Hint#2: No one cares as much about your money as you. That is why you need to self educate, even if you end up hiring a "professional". It ain't rocket science.

W2R 11-17-2010 11:38 AM

Quote:

Originally Posted by travelover (Post 1001768)
Personally, I would not pay it, at least not until I'd read a few key books off the Boglehead's reading list, starting with the Bogleheads Guide to Investing. I'd also post over at Bogleheads for suggestions for your taxable account. I suspect you'll get a recommendation for the total US market plus international index funds.

Investment Books

Bogleheads Investing Advice and Info

+1 Good advice.


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