Thinking of leaving Ameriprise

[yuag]

Hey everyone this is my first post so I appreciate any help I can get.

I've been with Ameriprise for the past few years investing in mutual funds and a retirement account. I went with them because at the time I wanted to start investing and didn’t know where to look. They called me for a free consultation, and the sucker I was at the time, I agreed. The advisor has been really nice to me and I don’t believe he’s a bad guy.

Since opening an account with them I’ve tried to learn as much as I can on my own, through books, magazines, podcasts, etc. What I’ve taken out of everything I’ve learned, is that you should avoid loaded mutual funds and variable annuities.

I’ve since opened up an account on Vanguard and the first fund I am invested in is the Domestic Total Stock Index. Over time when I accumulate more funds I’d like to get into the Int’l Total Stock Index as well.

What I have in Ameriprise is B-Load mutual fund, an IRA from a 401k rollover, and a Roth Variable Annuity.

The B-Load fund is in a healthcare specific mutual fund banking on the fact that baby boomers will need more healthcare as they age. It did pretty well up until the new year, and at this point it’s down about 8%. I’m a buy and hold type of investor so this doesn’t concern me at this time. I stopped adding to this fund in March. The balance is around $5500.

The IRA from the 401k rollover is split among two funds. One is slightly more conservative than the other. At the time the advisor wanted to go 60/40 with the 60 going in the more conservative fund. I had requested to go 60/40 the other way, putting the 60 in the more aggressive fund. I’m in my twenties, and figured I have plenty of time to invest to stand the volatility of the short-term fluctuations. When the IRA was created they were invested 60/40 with the 60 going towards the conservative fund. That kind of upset me but I didn’t say anything. I am guessing by that time it was too late because the funds were already invested and there might be fees to move the money around. That balance is about $5000.

The Roth IRA Annuity was also returning decently well (despite all the things I read that blast them because of the fees) until the beginning of the year. Also during the first quarter the account was transformed to be controlled by some Morningstar analyzer program which supposedly rebalances your account and buys shares when they’re lower each month. (I invest a set amount each month). Now instead of being invested in 10 funds in the annuity it’s more like 18. It makes me wonder with the additional funds are additional fees being incurred?

I keep track of everything in quicken, and I find it more cumbersome to track these 18 funds separately. With everything I hear about variable annuities, I’m wondering if I made a bad decision. That balance is at $2850, and the surrender value is $2800. However it says amount available without surrender charge is only $250.

My questions are:
1. What is the difference between the surrender value and the amount available without surrender charge?
2. Is it a huge mistake to be in the roth variable annuity, if so what should I do to transfer it to the Vanguard accounts I have now?
3. Is it worth it to transfer the B-load mutual fund now or should I wait til the load disappears after a few years and transfer then?
4. Because I do think the advisor is a nice guy (yes I know there are probably some personal incentives in things he’s offered, what I mean is I don’t think he’s a jerk) what advice do you people have when I make the call to transfer funds?

 

[FinanceDude]

What is the difference between the surrender value and the amount available without surrender charge?

Surrender value is the amount NET of the surrender charge, amount available is the amount you van withdraw WITHOUT incurring a surrender charge ($250)

Is it a huge mistake to be in the roth variable annuity, if so what should I do to transfer it to the Vanguard accounts I have now?

I don't know about a huge mistake, but you will incur a surrender charge to get out so you'll start out with less than you would have. the choice is yours.......

Is it worth it to transfer the B-load mutual fund now or should I wait til the load disappears after a few years and transfer then?

It depends on how big of a hit you will take, and how well what you are going to be investing in will do versus what you have. If the hit is 2-3% or less, it might be worth doing........

Because I do think the advisor is a nice guy (yes I know there are probably some personal incentives in things he’s offered, what I mean is I don’t think he’s a jerk) what advice do you people have when I make the call to transfer funds?

Tell him you've decided to take control of your own money going forward, thank him for his help, and leave it at that.

 

[Texas Proud]

1. What is the difference between the surrender value and the amount available without surrender charge?

This tells me you have a staggered plan where only a certain amount come off the surrender charge per year. The $250 you can move right now at 100%. The other will cost you to move whatever ther surrender charge.
2. Is it a huge mistake to be in the roth variable annuity, if so what should I do to transfer it to the Vanguard accounts I have now?

Simple answer, YES. A ROTH is a tax deffered account... an annuity is a tax deferred account... why double up with more fees and no benefits.

3. Is it worth it to transfer the B-load mutual fund now or should I wait til the load disappears after a few years and transfer then?

Wait.

4. Because I do think the advisor is a nice guy (yes I know there are probably some personal incentives in things he’s offered, what I mean is I don’t think he’s a jerk) what advice do you people have when I make the call to transfer funds?

Just transfer them. Who cares if he is a nice guy or not. If he is nice, give him a call after you transfer and get to know him. He is a PAID person right now. And you are paying him.


As an aside... I don't think you have enough money invested to worry to much about... yes, it is costing you, but it is a better lesson learned right now then when you had $100K to $200K invested... so don't put more money there, use Vanguard or another low cost fund and slowly move away from them.

GOOD NEWS.... you actually started!!!

 

[amerijunk]

1 & 2 The way it works is they take the balance of the annuity on the anniversary date and they say in the upcoming year you're able to take 10% of this balance surrender free thus this is how they came up with 250 dollars. As the previous poster said, the main advantage of the annuity is that it's tax deferred since it's already in the Roth thus you've lost the advantage of the annuity. Someone probably will tell you that your investment is protected in the event you die. The problem with this is that the cost to do this isn't worth what you get in return. The cost to do this is 0.9% a year so for every 100K it'll cost you 900 bucks. You can by a long term term policy for cheaper and get more insurance for the dollar.

The cost to keep the annuity is expensive since you have to pay the Mortality and Expense charges (the 0.9), you have to pay the management fees on the sub account and you have to pay a yearly contract charge. To sum it up, in the long run you'd be better to move it.

3. Tough call. You're probably paying a large sum each year in the management fees and the 12b-1 fees so you'll have to decide if it's cheaper to eat the B surrender and move it to a product with a lesser management fee. I personally feel 12b-1 fees are a waste and avoid them.

4. Who care. Business is business. They're always nice when you give them money. Once you move it, you'll never hear from him again. So be it. You have to look out for yourself.

Ameriprise goes after the novice investor to get them into annuities and other prop-products. Ameriprise doesn't provide advice they sell products [moderator edit] so you'd be smart to move it all or move it gradually as the surrender charges decrease. You're young and have plenty of time so it's good that you learned about Ameriprise now instead of down the road when you had 100K or more.