Intro and questions about Ameriprise accounts

[ziggy29]

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]

By definition an index fund can't beat the market, or under perform it. hence the 3 stars.

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?

 

[willongo]

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!

 

[willongo]

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]

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]

Of course, there's always the option of just moving on forgetting the whole thing.

This gets my vote.

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]

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]

(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.

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]

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]

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

 

[FinanceDude]

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]

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? 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..........

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]

... 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]

. . .

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]

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]

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]

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]

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]

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]

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?

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]

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]

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]

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]

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]

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.