Thinking about leaving Ameriprise

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Roman07
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Thinking about leaving Ameriprise

Post by Roman07 » Fri Jan 13, 2017 10:46 am

I am new to this forum, and I am looking for some help. I've looked all over the internet, but I haven't had much luck finding information on my dilemma. I am 28 y/o, and I have done a pretty decent job of saving for retirement. I initially set up a traditional IRA through Ameriprise, but I stopped funding that in favor of my 457 plan at work. I then set up a VUL and a Roth IRA through Ameriprise. I am pretty disappointed in the progress of my Ameriprise accounts because they made only 2.7% last year. By contrast, my 457 made 8.6%. I was looking into various robo-advisors (leaning towards Betterment or Intelligent Schwab), but I am expecting a mild confrontation from my financial advisor with Ameriprise because he is a friend. I'm assuming he will tell me that it's not a good idea. I am looking for anyone that has made a similar move and had either good or bad results. Just for more information, he does not charge me an annual flat fee, but there is a 1% fee through Ameriprise, and I'm sure there are fees on many of the funds. Any help would really be appreciated.

NoD
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Re: Thinking about leaving Ameriprise

Post by NoD » Fri Jan 13, 2017 11:00 am

Set up an account at Vanguard (or Fidelity...or) and start the transfer process with them. They will do the lifting and there will be no confrontation. Your advisor is a 'friend', cool, but it's just business. 2.7% is pretty terrible for last year. You can read the wiki and do much better on your own for cheaper methinks. :sharebeer
Some day we'll look back on all this and plow into a parked car.

Topic Author
Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Fri Jan 13, 2017 11:07 am

NoD wrote:Set up an account at Vanguard (or Fidelity...or) and start the transfer process with them. They will do the lifting and there will be no confrontation. Your advisor is a 'friend', cool, but it's just business. 2.7% is pretty terrible for last year. You can read the wiki and do much better on your own for cheaper methinks. :sharebeer
I look at the account as business, but I know that it probably won't go over well on his end. I guess he'll get over it. It seems like Vanguard would be a good option. I trust myself to mess around with stocks, but handling my entire financial future is a little intimidating. That's why I was leaning towards a robo-advisor, but I will look into Vanguard a little bit more. Thanks.

Dottie57
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Re: Thinking about leaving Ameriprise

Post by Dottie57 » Fri Jan 13, 2017 11:09 am

FYI

I am sure you realize that doing business with friends is not a good idea. You may lose the friendship.

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Pete12
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Re: Thinking about leaving Ameriprise

Post by Pete12 » Fri Jan 13, 2017 11:15 am

My old FA at HSBC told me he considered me a "friend" a while ago. Since moving over to index funds at Fidelity I haven't heard from him since. Some "friend"!

Topic Author
Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Fri Jan 13, 2017 11:21 am

Dottie57 wrote:FYI

I am sure you realize that doing business with friends is not a good idea. You may lose the friendship.
Unfortunately at 28 I'm finally learning this valuable life lesson. It seemed like a good idea when I was 21 and starting my account.

Topic Author
Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Fri Jan 13, 2017 11:22 am

Pete12 wrote:My old FA at HSBC told me he considered me a "friend" a while ago. Since moving over to index funds at Fidelity I haven't heard from him since. Some "friend"!
I'm assuming that I will experience a similar outcome.

NoD
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Re: Thinking about leaving Ameriprise

Post by NoD » Fri Jan 13, 2017 11:29 am

Check out the Bogleheads wiki and read up on the 3 Fund portfolio. 18 months ago I was in your shoes. I had talked to an Ameriprise rep, was worried about the complexity of it all and how I could manage it. The wiki + asking questions here saved me, and now my 3 fund at Vanguard is SIMPLE to oversee and my fees average .07 across all investment accounts. You can do it!
Some day we'll look back on all this and plow into a parked car.

Topic Author
Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Fri Jan 13, 2017 11:42 am

NoD wrote:Check out the Bogleheads wiki and read up on the 3 Fund portfolio. 18 months ago I was in your shoes. I had talked to an Ameriprise rep, was worried about the complexity of it all and how I could manage it. The wiki + asking questions here saved me, and now my 3 fund at Vanguard is SIMPLE to oversee and my fees average .07 across all investment accounts. You can do it!
Glad to hear that it can be done. There is just so much information out there that it's hard to decide what I'm supposed to do, but losing out on hundreds of thousands of dollars because of poor returns and fees will motivate me to learn. Thanks for your input.

NotWhoYouThink
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Re: Thinking about leaving Ameriprise

Post by NotWhoYouThink » Fri Jan 13, 2017 12:11 pm

I suggest you spend a couple of weeks, or even a couple of months, figuring out what you want to move to, not just what you want to move from. You have many years of investing in front of you, and waiting a couple of months won't matter much in the long run. What will matter is that you understand costs and diversification and risk, so that you can have a plan and follow it instead of just turning blindly from one expert to another.

Once you decide where to keep your money and how to invest it, the new custodian can pull the funds over, and you can send your "friend" a polite and dispassionate email thanking him for his help and telling him you have moved on. Better email than phone or face to face so you don't have an awkward moment where he tries to talk you out of it. And better just after you have initiated the move than just before, so that he can see it's a lost cause. Then you can see if you remain friends.

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Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Fri Jan 13, 2017 12:27 pm

NotWhoYouThink wrote:I suggest you spend a couple of weeks, or even a couple of months, figuring out what you want to move to, not just what you want to move from. You have many years of investing in front of you, and waiting a couple of months won't matter much in the long run. What will matter is that you understand costs and diversification and risk, so that you can have a plan and follow it instead of just turning blindly from one expert to another.

Once you decide where to keep your money and how to invest it, the new custodian can pull the funds over, and you can send your "friend" a polite and dispassionate email thanking him for his help and telling him you have moved on. Better email than phone or face to face so you don't have an awkward moment where he tries to talk you out of it. And better just after you have initiated the move than just before, so that he can see it's a lost cause. Then you can see if you remain friends.
My worry is wasting any more time/money with Ameriprise, but I don't want to rush into another mistake. I am trying to look at all of my options and make the right decision from there. I definitely like your idea of how to end the business relationship because I know that he will do everything that he can to talk me out of switching. Thanks for your advice.

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nedsaid
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Re: Thinking about leaving Ameriprise

Post by nedsaid » Fri Jan 13, 2017 1:47 pm

Roman07 wrote:I am new to this forum, and I am looking for some help. I've looked all over the internet, but I haven't had much luck finding information on my dilemma. I am 28 y/o, and I have done a pretty decent job of saving for retirement. I initially set up a traditional IRA through Ameriprise, but I stopped funding that in favor of my 457 plan at work. I then set up a VUL and a Roth IRA through Ameriprise. I am pretty disappointed in the progress of my Ameriprise accounts because they made only 2.7% last year. By contrast, my 457 made 8.6%. I was looking into various robo-advisors (leaning towards Betterment or Intelligent Schwab), but I am expecting a mild confrontation from my financial advisor with Ameriprise because he is a friend. I'm assuming he will tell me that it's not a good idea. I am looking for anyone that has made a similar move and had either good or bad results. Just for more information, he does not charge me an annual flat fee, but there is a 1% fee through Ameriprise, and I'm sure there are fees on many of the funds. Any help would really be appreciated.
Ameriprise is expensive. I worked with one of their financial advisors for several years, had them do retirement projections and a financial plan for me but never invested with them. It cost $500 a year for three sessions with an advisor.

I have no idea why you need Variable Universal Life. It is an expensive product and I don't think it makes sense for a 28 year old. You should be maxing out your retirement plan contributions first. It is pitched because you can borrow tax free against your investment in the policy. But borrowing from anyone is always tax free. You can also get tax deferral on whatever funds you put into it for investment.

One percent a year Assets Under Management is a standard fee for asset management but it is too high in my opinion. If the funds they invest in have 1% expense ratios too, your fee drag is probably 2.5% a year if you add the trading costs within the funds.

Another problem with Ameriprise is that they have a favored list of funds which clients are directed to invest in. These are funds that pay for "shelf space" at Ameriprise, in other words the company gets a fee from the fund companies so that Ameriprise advisors will recommend those funds. They disclose this but it is a conflict of interest.

They are certainly better than nothing. At least they get you to diversify and they will build a portfolio for you. They will do retirement projections for you and perform Monte Carlo simulations to determine your odds for success in retirement. Success means that you have money left over upon death.
A fool and his money are good for business.

parkcitygolfer
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Re: Thinking about leaving Ameriprise

Post by parkcitygolfer » Fri Jan 13, 2017 2:04 pm

I feel like its too expensive also. I show that I made 6.2% last year at ameriprise but I cannot for the life of me figure out the fees on this account. They did just raise the fees as well. I have a feeling that this 6.2% is not a straightforward number. They take 1.1 % for active funds and then the other fees with the funds. Its too confusing and not upfront at all. I am with Schwab and thinking I will be moving all my stuff to them soon.

Topic Author
Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Fri Jan 13, 2017 2:04 pm

nedsaid wrote:
Roman07 wrote:I am new to this forum, and I am looking for some help. I've looked all over the internet, but I haven't had much luck finding information on my dilemma. I am 28 y/o, and I have done a pretty decent job of saving for retirement. I initially set up a traditional IRA through Ameriprise, but I stopped funding that in favor of my 457 plan at work. I then set up a VUL and a Roth IRA through Ameriprise. I am pretty disappointed in the progress of my Ameriprise accounts because they made only 2.7% last year. By contrast, my 457 made 8.6%. I was looking into various robo-advisors (leaning towards Betterment or Intelligent Schwab), but I am expecting a mild confrontation from my financial advisor with Ameriprise because he is a friend. I'm assuming he will tell me that it's not a good idea. I am looking for anyone that has made a similar move and had either good or bad results. Just for more information, he does not charge me an annual flat fee, but there is a 1% fee through Ameriprise, and I'm sure there are fees on many of the funds. Any help would really be appreciated.
Ameriprise is expensive. I worked with one of their financial advisors for several years, had them do retirement projections and a financial plan for me but never invested with them. It cost $500 a year for three sessions with an advisor.

I have no idea why you need Variable Universal Life. It is an expensive product and I don't think it makes sense for a 28 year old. You should be maxing out your retirement plan contributions first. It is pitched because you can borrow tax free against your investment in the policy. But borrowing from anyone is always tax free. You can also get tax deferral on whatever funds you put into it for investment.

One percent a year Assets Under Management is a standard fee for asset management but it is too high in my opinion. If the funds they invest in have 1% expense ratios too, your fee drag is probably 2.5% a year if you add the trading costs within the funds.

Another problem with Ameriprise is that they have a favored list of funds which clients are directed to invest in. These are funds that pay for "shelf space" at Ameriprise, in other words the company gets a fee from the fund companies so that Ameriprise advisors will recommend those funds. They disclose this but it is a conflict of interest.

They are certainly better than nothing. At least they get you to diversify and they will build a portfolio for you. They will do retirement projections for you and perform Monte Carlo simulations to determine your odds for success in retirement. Success means that you have money left over upon death.
Thanks for your feedback and explanation on some of the points. I'm a little disappointed in myself that I am not familiar enough with the products in which my money is invested, but this is helping a lot.

monsterid
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Re: Thinking about leaving Ameriprise

Post by monsterid » Fri Jan 13, 2017 2:07 pm

Least you learnt early. You'll hopefully never be misinformed again! It's a blessing.

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Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Fri Jan 13, 2017 4:35 pm

parkcitygolfer wrote:I feel like its too expensive also. I show that I made 6.2% last year at ameriprise but I cannot for the life of me figure out the fees on this account. They did just raise the fees as well. I have a feeling that this 6.2% is not a straightforward number. They take 1.1 % for active funds and then the other fees with the funds. Its too confusing and not upfront at all. I am with Schwab and thinking I will be moving all my stuff to them soon.
That's what worries me. I actually asked my advisor what all of the fees are, and he told me only that there is a .95% handling fee. He didn't discuss any expense ratios. I know that I'm not paying only .95%, but Ameriprise makes it impossible to find out what I'm actually paying.

PaunchyPirate
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Re: Thinking about leaving Ameriprise

Post by PaunchyPirate » Fri Jan 13, 2017 5:02 pm

As difficult of an experience it is to face the "friend" with the news, I think you have to do it. I am a former Ameriprise customer. I didn't really start investing until I was in my mid-to-late 30s. I suddenly found a much better paying job and decided I better get serious with investing, but I really didn't know where to start. So I hired an Ameriprise advisor. While I know it cost me quite a bit of money through the 6 or 8 years I was with her, I don't fully despise her or Ameriprise (just partially). Going through the experience with my advisor helped me understand about asset allocation and reallocation, the need for regular payments into my accounts, the need for structure in the investing process, etc. But after a few years, I realized I could do that all on my own for the most part. And by that time, the internet was bursting wth helpful sites (like Bogleheads.org) to help me make financial decisions. Also by that time, my portfolio was significantly larger than it was when I started and I was able to see thousands of dollars being siphoned away in fees alone. Not to mention the loss due to expensive investments and underperforming investments. So I got brave and contacted my advisor and indicated I would be moving away from Ameriprise to my own brokerage accounts with TD Ameritrade. I used the things they had taught me and what I had learned online to pick my new investments and move forward. I didn't get it all right immediately. It took me a while longer to actually find Bogleheads.org and help me even better understands simplification and such. And I've moved much of my holdings to Vanguard index funds. I will further consolidate more money into Vanguard accounts after I get confirmed tax paperwork from TD Ameritrade. I could not be happier with my decision. That 1% you are paying will quickly become thousands of dollars each and every year. Don't pay it. Unfortunately, if you lose a friend over it, that will be sad. But hopefully, he's been thru this before.

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macchiato
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Re: Thinking about leaving Ameriprise

Post by macchiato » Fri Jan 13, 2017 6:08 pm

Roman07 wrote: That's what worries me. I actually asked my advisor what all of the fees are, and he told me only that there is a .95% handling fee. He didn't discuss any expense ratios. I know that I'm not paying only .95%, but Ameriprise makes it impossible to find out what I'm actually paying.
I did an analysis of the additional expense for my parents who was with them until they finally switched. I looked at their statements and got the load info from Morningstar or such, and logged all of those in a spreadsheet. They added over 1% on top of the 1% "wrap fee." Plus half the funds were "Columbia" which Ameriprise owns, adding a splash of extra perversion onto existing incentives for the "advisor."

As part of the Powerpoint I gave them (yes I used Powerpoint, just telling them to switch wasn't working) I demonstrated how much Ameriprise took vs. if they had switched to a low-fee Vanguard scenario a few years prior that matched the same goals.

I showed how Ameriprise took 75% of the gains they would have otherwise had--to the tune of tens of thousands of dollars.

When my dad finally called the "advisor" to inform of the impending switch, he desperately tried to reduce the wrap fee to retain my folks. Dad knew in that moment that he was doing the right thing.

You're young, pull the band-aid and switch as soon as you can.

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Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Fri Jan 13, 2017 6:44 pm

PaunchyPirate wrote:As difficult of an experience it is to face the "friend" with the news, I think you have to do it. I am a former Ameriprise customer. I didn't really start investing until I was in my mid-to-late 30s. I suddenly found a much better paying job and decided I better get serious with investing, but I really didn't know where to start. So I hired an Ameriprise advisor. While I know it cost me quite a bit of money through the 6 or 8 years I was with her, I don't fully despise her or Ameriprise (just partially). Going through the experience with my advisor helped me understand about asset allocation and reallocation, the need for regular payments into my accounts, the need for structure in the investing process, etc. But after a few years, I realized I could do that all on my own for the most part. And by that time, the internet was bursting wth helpful sites (like Bogleheads.org) to help me make financial decisions. Also by that time, my portfolio was significantly larger than it was when I started and I was able to see thousands of dollars being siphoned away in fees alone. Not to mention the loss due to expensive investments and underperforming investments. So I got brave and contacted my advisor and indicated I would be moving away from Ameriprise to my own brokerage accounts with TD Ameritrade. I used the things they had taught me and what I had learned online to pick my new investments and move forward. I didn't get it all right immediately. It took me a while longer to actually find Bogleheads.org and help me even better understands simplification and such. And I've moved much of my holdings to Vanguard index funds. I will further consolidate more money into Vanguard accounts after I get confirmed tax paperwork from TD Ameritrade. I could not be happier with my decision. That 1% you are paying will quickly become thousands of dollars each and every year. Don't pay it. Unfortunately, if you lose a friend over it, that will be sad. But hopefully, he's been thru this before.
I'm pretty much going through what you went through. I go into it in the beginning knowing that I was at least doing the right thing by investing. As I'm becoming more serious and building a larger account, I'm realizing what the fees and poor returns are starting to cost me. I've spent nearly all day researching Vanguard, and I think that is what I'm going to go with. Thanks for sharing your experience.

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Oak&Elm
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Re: Thinking about leaving Ameriprise

Post by Oak&Elm » Fri Jan 13, 2017 6:48 pm

Here's a free tip for all financial situations....DON'T DO BUSINESS WITH FRIENDS AND RELATIVES

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Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Fri Jan 13, 2017 6:50 pm

macchiato wrote:
Roman07 wrote: That's what worries me. I actually asked my advisor what all of the fees are, and he told me only that there is a .95% handling fee. He didn't discuss any expense ratios. I know that I'm not paying only .95%, but Ameriprise makes it impossible to find out what I'm actually paying.
I did an analysis of the additional expense for my parents who was with them until they finally switched. I looked at their statements and got the load info from Morningstar or such, and logged all of those in a spreadsheet. They added over 1% on top of the 1% "wrap fee." Plus half the funds were "Columbia" which Ameriprise owns, adding a splash of extra perversion onto existing incentives for the "advisor."

As part of the Powerpoint I gave them (yes I used Powerpoint, just telling them to switch wasn't working) I demonstrated how much Ameriprise took vs. if they had switched to a low-fee Vanguard scenario a few years prior that matched the same goals.

I showed how Ameriprise took 75% of the gains they would have otherwise had--to the tune of tens of thousands of dollars.

When my dad finally called the "advisor" to inform of the impending switch, he desperately tried to reduce the wrap fee to retain my folks. Dad knew in that moment that he was doing the right thing.

You're young, pull the band-aid and switch as soon as you can.
Thanks for the information. I tried to go through my statements to figure out what the funds were costing me, but I had a hard time figuring out all of the funds and their costs. I realize that I will likely lose tens (possibly hundreds) of thousands of dollars by the time I retire if I don't change things up. I'll definitely be making a move within in the next few weeks. I appreciate your advice.

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Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Fri Jan 13, 2017 6:51 pm

Guardyourheart wrote:Here's a free tip for all financial situations....DON'T DO BUSINESS WITH FRIENDS AND RELATIVES
Unfortunately I didn't think about this when I was 21 and started the account. Hindsight is 20/20.

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BL
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Re: Thinking about leaving Ameriprise

Post by BL » Fri Jan 13, 2017 6:57 pm

Did you search here for the company? Others have gone through this. Don't invest with family or friends. They know when folks start asking questions that they won't stay much longer. V has a PAS for 0.3 % if you feel you need them for a year or more to have someone to talk to besides free Bogleheads.

Read Hurdle # 5 in this little pdf:
https://www.etf.com/docs/IfYouCan.pdf

Look up a few funds by ticker at Morningstar.com. Select Expense tab and look for loads, Expense ratios which include 12b-1 kickbacks to the brokerage/broker. For example, VTSAX has no loads, no 12b-1 kickbacks from their 0.05 % ER (expense ratio). Compare total cost projections over the years with VTSAX.

Of course they don't want you to know what they are raking off while you take the risk and they are still making money even in a crash. That is usually when folks tend to awaken.

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Portfolio7
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Re: Thinking about leaving Ameriprise

Post by Portfolio7 » Fri Jan 13, 2017 7:26 pm

I'm genuinely sorry for the situation you are in; like many of us, you've learned the hard way. Ameriprise has a special place on the ninth circle of hell, as far as I'm concerned.... because I did pretty much what you did, except 1) Ameriprise was recomended by my employer and 2) I turned down the VUL. I read the book by the guy who created them, and it scared the bejesus out of me. I don't know a single person who is glad to have invested in a VUL, though I'm sure one must exist somewhere. Totally unnecessary for someone like you. If you are a multi-millionaire & fully taking advantage of tax deferred vehicles, then maybe... but frankly I don't think I would ever own one.

My investments also did virtually nothing for the time I was with Ameriprise. I ended up pulling about 95% of my investment with them and using it for a house downpayment, and just had about $5K left over. I didn't move that, and I should have.... when I finally consolidated about 18 years later, that $5K had become..... wait for it.... $6K. Pitiful. My 401K had quadrupled in that time span on the basis of returns alone, not counting subsequent contributions and returns on those later contributions.

The reason for the low returns, besides the awful funds, is very high fees embedded in the fund structure and the investment process itself by Ameriprise. Vanguard, Fidelity, or any of the Robo-advisors will serve you much better, and you really can't go far wrong with any of them. Search and read about the three fund portfolio, it's a great place to start (and end - some of us slice and dice with 5-10 funds, but some of us are convinced that the 3 fund portfolio itself is actually the single best answer. Either way, both solutions are 'good enough' and far superior to what you are dealing with now.) Post questions if you are unsure, ask all the weird questions that occur to you. The great folks on this forum have been through the misconceptions, the learning, and someone will be able to help. Vanguard is a great choice; I'm with Fidelity because my 401k is there, so I consolidated all my accounts with Fidelity.

By the way, Term life insurance is a far better deal than a VUL, and you don't need it until you have a wife and/or kids that depend on you and your income.
"An investment in knowledge pays the best interest" - Benjamin Franklin

minesweep
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Re: Thinking about leaving Ameriprise

Post by minesweep » Fri Jan 13, 2017 7:33 pm

Dottie57 wrote:FYI

I am sure you realize that doing business with friends is not a good idea. You may lose the friendship.
To me a true friend is someone who would be happy for me finding better investment options that were available to me. Money shouldn't be a foundation for friendship.

paveldatsyuk44
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Re: Thinking about leaving Ameriprise

Post by paveldatsyuk44 » Fri Jan 13, 2017 7:34 pm

OP. I was in a similar situation. Check out the recent threads i posted on here.

My advice, is the questions should be not "should i" but "how to".

Seriously, I've invested a great deal of time researching this. I'm very data driven, and i became 100% certain that Ameriprise is screwing most people.

I decided to pursue a three fund portfolio between TIAA (my work retirements) and Vanguard.

I recommend setting a timeline for yourself and get the transfers in process a few days before you tell your adviso. It is about business and doing what is in your best interest. One of my best friends was my advisor, and I wish i would have done the transfers before i had lunch with him. Be ready for transfer fees and back end loads....

paveldatsyuk44
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Re: Thinking about leaving Ameriprise

Post by paveldatsyuk44 » Fri Jan 13, 2017 7:39 pm

also too, OP, if you feel you need advice at the outset you can hire a vanguard advisor (0.3% aum) or i recommend portfolio solutions. they could set you at ease the first year, and their fees are very reasonable. then you can go it alone after you feel comfortable. Their fees are over 1% less than my fees at ameriprise...

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roymeo
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Re: Thinking about leaving Ameriprise

Post by roymeo » Fri Jan 13, 2017 7:43 pm

Roman07 wrote:I trust myself to mess around with stocks, but handling my entire financial future is a little intimidating.
I believe you've got that reversed in which is harder to "guess right" on.
The sewer system is a form of welfare state. | -- "Libra", Don DeLillo

minesweep
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Re: Thinking about leaving Ameriprise

Post by minesweep » Fri Jan 13, 2017 7:45 pm

Roman07 wrote:Just for more information, he does not charge me an annual flat fee, but there is a 1% fee through Ameriprise, and I'm sure there are fees on many of the funds. Any help would really be appreciated.
There continues to be a lot of focus on the consequences of today’s low-rate environment. In such an environment, one of the most important things an investor can do is economize on the cost of the financial services they’re buying (translation: find lower expense ratio funds!).

Still, it never ceases to amaze me how much people continue to neglect the “silent killer” of long-term returns—high investment costs. Every now and then, I see articles that talk about the bite that investment costs can take out of a portfolio over time. But many times, these articles talk about how much of your “returns” an investment manager takes via fees. For example, if a fund charges a 1% fee and you anticipate a 5% gross return, it’s often observed that you’re giving up “20% of your return” (1% of the 5%) to costs. Jack Bogle likes to point out that the cost is dramatically higher when thought of as a percentage of after-inflation, after-tax returns: accounting for inflation of 2% and effective taxes of (say) 20% on the total return, your after-tax, “real” return is reduced to 2%, and a 1% fee is 50% of that!
Stopping the silent killer of returns

minesweep
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Re: Thinking about leaving Ameriprise

Post by minesweep » Fri Jan 13, 2017 8:16 pm

NoD wrote:Set up an account at Vanguard (or Fidelity...or) and start the transfer process with them. They will do the lifting and there will be no confrontation. Your advisor is a 'friend', cool, but it's just business. 2.7% is pretty terrible for last year. You can read the wiki and do much better on your own for cheaper methinks. :sharebeer
If I were the OP I would go ahead with the transfer process and give my friend a heads up rather then have him be blind sighted after the fact. I would simply say that I found this website called Bogleheads.org that has been very helpful in the transition process. And if needed I could go to them for further assistance in establishing a simple and cost effective investment plan. In the process you may find out how good a friend he is.

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dwickenh
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Re: Thinking about leaving Ameriprise

Post by dwickenh » Fri Jan 13, 2017 8:36 pm

Roman07,

Here is a fund expense calculator that will open your eyes to how much it costs for expensive management and funds.

http://www.dinkytown.net/java/FundExpense.html

Hope it helps,

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

krow36
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Re: Thinking about leaving Ameriprise

Post by krow36 » Fri Jan 13, 2017 10:03 pm

dwickenh wrote:Roman07,
Here is a fund expense calculator that will open your eyes to how much it costs for expensive management and funds.
http://www.dinkytown.net/java/FundExpense.html
Hope it helps,
Dan
This is a great calculator to show the difference that fees make over time. It’s the same tool that bankrate.com provides and gets the same results that the one that Security and Exchange Commission provides.
http://www.bankrate.com/calculators/ret ... lator.aspx
https://www.sec.gov/investor/tools/mfcc/get-started.htm
It’s important to include the opportunity costs—the loss from the fees paid, that compounds over the years. Plug in the numbers for a load, high ER fund with an advisor’s fee and compare it to a Vanguard low-cost index fund.

AllAboard
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Re: Thinking about leaving Ameriprise

Post by AllAboard » Fri Jan 13, 2017 10:19 pm

OP,

Like others have said, you should leave Ameriprise as soon as you can. I started investing ten years ago with them, but have been doing the indexing thing for the past 5.5 years. They are seriously just taking your money.

At Ameriprise, I was paying 2.6+% in fees annually: I was in 1.2%ER funds with 5% front-end loads. I was in an account with a 0.4% wrap fee. Advisor was charging 1%. On top of that, paid him $700 annually to have 4 meetings.

Now with Vanguard, I am around 0.1% in fees.

And in case you've already paid your advisor fee already, you can request a pro-rated refund:
http://www.ameriprise.com/content/files/AMP_402004.PDF

Take back what you can!

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nedsaid
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Re: Thinking about leaving Ameriprise

Post by nedsaid » Sat Jan 14, 2017 1:23 pm

The sad fact is that if you want personalized attention, you have to pay for it. Financial advisors have to eat too. Keep in mind that when you pay a commission, the advisor has to pay for the ticket charge, or what the company keeps from the commission. All those layers of fees pay for all those layers of employees that Ameriprise hires.

I have found as a rule of thumb that if you are in sales, you have to generate 2.5X to 3X your compensation in fees and commissions to support your host firm and so that they make a profit too.

One poster said he was paying 2.6% a year in fees. One percent of that doesn't count, as it goes to the fund managers. So let's use the 1.6% figure. How much in assets does the advisor have to have under management to make a good living. Let's say he wants to make $120,000 a year. With benefits and payroll taxes, let's say he has to make $180,000. That is what I would want for working hard to attract clients and put up with all the corporate nonsense and a difficult sales manager. He would need to attract $11,250,000 in assets. You take $11,250,000 and multiply it by 1.6% and you get the $180,000. But wait a minute, Ameriprise needs their cut so let's take that number and multiply it by 2.5X. So an advisor probably should have $28,125,000 in assets to really make a go of it.

Now add to that the churn, that is clients will move around. So you also have to replace what you lose and grow your clientele on top of that! And deal with a sales manager, many of whom are maniacs. So pretty much, to make a nice $120,000 in income plus benefits, you probably need a $30,000,000 book of business. So you need to get some folks who are fairly well to do. If you have a nice upper middle class clientele and each client can bring $500,000 to the table, then you need 60 clients. If you are new and the people are more downscale, maybe $250,000 per client, you need 120 clients. If you are bring in recent college graduates, that number grows exponentially. What you find is that some people aren't worth the time you spend with them.

Just doing the math, or reverse engineering the business model, you can see why financial advisors just love near retirees as clients. These are the people with large 401k balances. They just can just about smell the scent of all that money.

From the client's point of view, a more cost efficient way to pay for an advisor's time is by the hour. $150 to $250 an hour is not unreasonable. You will spend a lot less paying by the hour than under an Assets Under Management arrangement or paying commissions. When you think about commissions, it is no small wonder why some advisors churn their clients' portfolios.

I know there are people on the forum who are in the financial business. Are my numbers reasonable?
A fool and his money are good for business.

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Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Sat Jan 14, 2017 1:48 pm

Portfolio7 wrote:I'm genuinely sorry for the situation you are in; like many of us, you've learned the hard way. Ameriprise has a special place on the ninth circle of hell, as far as I'm concerned.... because I did pretty much what you did, except 1) Ameriprise was recomended by my employer and 2) I turned down the VUL. I read the book by the guy who created them, and it scared the bejesus out of me. I don't know a single person who is glad to have invested in a VUL, though I'm sure one must exist somewhere. Totally unnecessary for someone like you. If you are a multi-millionaire & fully taking advantage of tax deferred vehicles, then maybe... but frankly I don't think I would ever own one.

My investments also did virtually nothing for the time I was with Ameriprise. I ended up pulling about 95% of my investment with them and using it for a house downpayment, and just had about $5K left over. I didn't move that, and I should have.... when I finally consolidated about 18 years later, that $5K had become..... wait for it.... $6K. Pitiful. My 401K had quadrupled in that time span on the basis of returns alone, not counting subsequent contributions and returns on those later contributions.

The reason for the low returns, besides the awful funds, is very high fees embedded in the fund structure and the investment process itself by Ameriprise. Vanguard, Fidelity, or any of the Robo-advisors will serve you much better, and you really can't go far wrong with any of them. Search and read about the three fund portfolio, it's a great place to start (and end - some of us slice and dice with 5-10 funds, but some of us are convinced that the 3 fund portfolio itself is actually the single best answer. Either way, both solutions are 'good enough' and far superior to what you are dealing with now.) Post questions if you are unsure, ask all the weird questions that occur to you. The great folks on this forum have been through the misconceptions, the learning, and someone will be able to help. Vanguard is a great choice; I'm with Fidelity because my 401k is there, so I consolidated all my accounts with Fidelity.

By the way, Term life insurance is a far better deal than a VUL, and you don't need it until you have a wife and/or kids that depend on you and your income.
Thanks a lot for your feedback. The more that I have looked into VULs, the more I realize that it is not a good idea for me. I'm happy that I'm learning this lesson now and not in 15 more years.

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Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Sat Jan 14, 2017 1:49 pm

AllAboard wrote:OP,

Like others have said, you should leave Ameriprise as soon as you can. I started investing ten years ago with them, but have been doing the indexing thing for the past 5.5 years. They are seriously just taking your money.

At Ameriprise, I was paying 2.6+% in fees annually: I was in 1.2%ER funds with 5% front-end loads. I was in an account with a 0.4% wrap fee. Advisor was charging 1%. On top of that, paid him $700 annually to have 4 meetings.

Now with Vanguard, I am around 0.1% in fees.

And in case you've already paid your advisor fee already, you can request a pro-rated refund:
http://www.ameriprise.com/content/files/AMP_402004.PDF

Take back what you can!
Thanks for the information. Fortunately I am not charged an annual fee due to my family's being involved with the same advisor.

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Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Sat Jan 14, 2017 1:51 pm

minesweep wrote:
NoD wrote:Set up an account at Vanguard (or Fidelity...or) and start the transfer process with them. They will do the lifting and there will be no confrontation. Your advisor is a 'friend', cool, but it's just business. 2.7% is pretty terrible for last year. You can read the wiki and do much better on your own for cheaper methinks. :sharebeer
If I were the OP I would go ahead with the transfer process and give my friend a heads up rather then have him be blind sighted after the fact. I would simply say that I found this website called Bogleheads.org that has been very helpful in the transition process. And if needed I could go to them for further assistance in establishing a simple and cost effective investment plan. In the process you may find out how good a friend he is.

I definitely want to give him the heads up, but I also don't want him to think that there is an opportunity to change my mind. I will most likely begin the transfer process and then let him know what is going on. He is a friend, and while I'm not sure where this conversation will leave our friendship, I don't think that being sneaky will help. Thanks for your advice.

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Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Sat Jan 14, 2017 1:53 pm

roymeo wrote:
Roman07 wrote:I trust myself to mess around with stocks, but handling my entire financial future is a little intimidating.
I believe you've got that reversed in which is harder to "guess right" on.
I definitely understand the risk of stocks, but the money that I have in stocks is just extra money. If I lost it all I wouldn't be happy, but it wouldn't change the course of my retirement/future. Trusting myself to handle my future is what worries me a bit.

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Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Sat Jan 14, 2017 1:53 pm

dwickenh wrote:Roman07,

Here is a fund expense calculator that will open your eyes to how much it costs for expensive management and funds.

http://www.dinkytown.net/java/FundExpense.html

Hope it helps,

Dan
I'll definitely take a look at that. Thanks a lot.

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Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Sat Jan 14, 2017 1:54 pm

paveldatsyuk44 wrote:also too, OP, if you feel you need advice at the outset you can hire a vanguard advisor (0.3% aum) or i recommend portfolio solutions. they could set you at ease the first year, and their fees are very reasonable. then you can go it alone after you feel comfortable. Their fees are over 1% less than my fees at ameriprise...
I think that that might be a good idea for me at least for the first year. Thanks for your advice.

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Roman07
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Re: Thinking about leaving Ameriprise

Post by Roman07 » Sat Jan 14, 2017 1:57 pm

paveldatsyuk44 wrote:OP. I was in a similar situation. Check out the recent threads i posted on here.

My advice, is the questions should be not "should i" but "how to".

Seriously, I've invested a great deal of time researching this. I'm very data driven, and i became 100% certain that Ameriprise is screwing most people.

I decided to pursue a three fund portfolio between TIAA (my work retirements) and Vanguard.

I recommend setting a timeline for yourself and get the transfers in process a few days before you tell your adviso. It is about business and doing what is in your best interest. One of my best friends was my advisor, and I wish i would have done the transfers before i had lunch with him. Be ready for transfer fees and back end loads....
Definitely a good idea on getting the transfer in before breaking the news. I know that it would be unethical, but it worries me what he could do with my account between our conversation and the transfer. I'll have the figure out the exact timeline. Thanks for your input.

WhyAmeriprise
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Re: Thinking about leaving Ameriprise

Post by WhyAmeriprise » Sun Jan 07, 2018 5:21 am

You'll "lose" money, but at least you're only losing seven years of the VUL.

If you think you want term insurance, get the term insurance first, and THEN cancel the VUL.

The funds you purchase for their RAVA and VUL products are not the exact same Morningstar funds. I couldn't easily find it, and tired of the advisors pitch called HQ myself:
VUL: https://www.riversource.com/life-and-di ... cttype=VUL
RAVA 5: https://www.riversource.com/annuities/p ... ucttype=VA

If you want to really pick it apart, these contracts change version numbers, and so the returns vary depending on when you bought your contract.

Supposedly you can rebalance via a form to HQ. I'm looking into this because if your friend is anything like my advisor, the advisor won't help you until you pony up your annual advising fee. Based on what I'm seeing, the returns of the subaccounts don't keep pace with the market, and there seem to be so many fees in the way that any potential tax benefit seems to disappear. I'm waiting for my forms to arrive, and already started some comparison shopping for 20-year term because that should get the kids through college.

If you start a discussion with your friend, expect some fine comments from them: it is evident that you like to take a more forward role in your investment selection and management. I applaud that and wish more people were as engaged in their situation as you are. That said, you’re not a professional and no matter how much you study and read in your spare time, you miss one thing and a plan could fall apart rather quickly.

When I asked my advisor what they would charge just to maintain the Ameriprise products: "Fees for financial planning are based on case complexity and vary from case to case, understanding that financial planning will encompass your entire situation and how everything fits together. My fees start at $750/yr for simple cases and go up from there based on the amount of work that’s needed."

Yep, $750 per year to advise me into accounts with steep management fees, and funds inside those accounts with high expense ratios. $750 minimum just to provide service on the existing products that he earned a commission on. (pay me to recommend them, pay me to say they're ok, pay me to recommend something else I earn a commission on) While I know the advisor doesn't get the full 1%+ in fees for the RAVA, or the ~33% fees that it appears the VUL charges on top of the "cost of insurance" to put us into accounts with 5% loads and/or 12b-1 fees, it's clear that Ameriprise as a whole is doing quite well from a fee perspective.

Just get your new term insurance (if you want it) and then move your money out. Delay paying any advising fees to your friend, if you can, because he very likely won't be your friend once you stop paying his practice their $750 per year.

mws13
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Re: Thinking about leaving Ameriprise

Post by mws13 » Sun Jan 07, 2018 5:40 am

I had a similar dilemma and my wife moved her 401K account to Vanguard at one point. 3-5 years later, we moved everything as my wife's returns were destroying our friend/advisor.

Trust me, you will lose him as a friend. Just do it, it is the right thing to do.

At some point in time, there may be people who CONSISTENTLY beat the Boglehead model, but they are rare and hard to find/quantify.

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Re: Thinking about leaving Ameriprise

Post by Sandi_k » Sun Jan 07, 2018 2:01 pm

Oak&Elm wrote:
Fri Jan 13, 2017 6:48 pm
Here's a free tip for all financial situations....DON'T DO BUSINESS WITH FRIENDS AND RELATIVES
It's not always that easy. My brother is a broker.

When he first started out (ca. 1995) he worked for a big fee brokerage - and he needed clients if he was going to stay employed. My MOTHER strong-armed most of her friends and relatives to move their portfolios to his "book" at this brokerage.

I was already investing on a small scale, and had set up some accounts for my then-boyfriend, now husband. We agreed to each open a small IRA with my brother, and let it ride for a year - and then re-assess.

We did better with my investments than he did for us - so it got mom off my back, and we rolled over the accounts to our low-fee brokerage.

Now my brother is a high-net-worth CFP/broker, and we're below his asset threshold. He wouldn't manage our investments if I asked. Which I won't.

:D :D :D

DeskPen10
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Re: Thinking about leaving Ameriprise

Post by DeskPen10 » Mon Jan 29, 2018 12:45 pm

Someone in this thread mentioned transfer fees...I'm aware of the potential of no refund of my annual fee, but can't find any info on the Ameriprise site about what other cancellation/close-out fees and charges may/will be assessed by Ameriprise to close my accounts. I would appreciate any information and education you can share about these so I go into the process of closing my qualified and unqualified Ameriprise accounts with eyes wide open. Thanks! :shock:

krow36
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Re: Thinking about leaving Ameriprise

Post by krow36 » Mon Jan 29, 2018 3:41 pm

DeskPen10 wrote:
Mon Jan 29, 2018 12:45 pm
Someone in this thread mentioned transfer fees...I'm aware of the potential of no refund of my annual fee, but can't find any info on the Ameriprise site about what other cancellation/close-out fees and charges may/will be assessed by Ameriprise to close my accounts. I would appreciate any information and education you can share about these so I go into the process of closing my qualified and unqualified Ameriprise accounts with eyes wide open. Thanks! :shock:
It looks like Ameriprise charges an account closeout fee of $125. https://www.brokerage-review.com/wealth ... g-fee.aspx

HJG0989
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Re: Thinking about leaving Ameriprise

Post by HJG0989 » Mon Jan 29, 2018 4:00 pm

$125 to close an account!!! Then again, it may be the best $125 ever spent.

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FrugalInvestor
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Re: Thinking about leaving Ameriprise

Post by FrugalInvestor » Mon Jan 29, 2018 4:05 pm

Roman07 wrote:
Fri Jan 13, 2017 11:07 am
I look at the account as business, but I know that it probably won't go over well on his end. I guess he'll get over it. It seems like Vanguard would be a good option. I trust myself to mess around with stocks, but handling my entire financial future is a little intimidating. That's why I was leaning towards a robo-advisor, but I will look into Vanguard a little bit more. Thanks.
It's interesting that you say this because "messing around with stocks" is probably the worst thing you can do with regard to your financial future.

Read and ask more questions here and the reasons for that will become abundantly clear.

Vanguard is an excellent choice and a very common one here but more importantly you need a good basic understanding of the principles of sound investing as well as a plan.

Best of luck to you and welcome to Bogleheads!
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

mptfan
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Re: Thinking about leaving Ameriprise

Post by mptfan » Mon Jan 29, 2018 4:33 pm

Roman07 wrote:
Fri Jan 13, 2017 10:46 am
I am pretty disappointed in the progress of my Ameriprise accounts because they made only 2.7% last year. By contrast, my 457 made 8.6%.
I don't know your asset allocation (how much of your portfolio is in stocks/bonds) but as a reference, consider the performance of the following Vanguard funds in 2017....

Vanguard Total Stock Market Index Fund (VTSAX, Expense Ratio .04%) returned 21.17%
Vanguard's Lifestrategy Growth Fund (VASGX, Expense Ratio .15%, 80% stocks, 20% bonds) returned 19.21%
Vanguard's Lifestrategy Moderate Grown Fund (VSMGX, Expense Ratio .14%, 60% stocks 40% bonds) returned 15.04%.

AccordingToLuke
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Re: Thinking about leaving Ameriprise

Post by AccordingToLuke » Mon Jan 29, 2018 5:34 pm

I'm not sure I would think of it as a mistake. Maybe he helped you.

Maybe he got you to start investing when you would have put it off cause it was overwhelming. Maybe he indirectly got you on the right track.

Just thank him for getting you started and it has really helped your direction in life, but you are ready to do it on your own.

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