Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
TheDDC
Posts: 132
Joined: Mon Jan 08, 2018 11:11 am

Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by TheDDC » Mon Jan 08, 2018 11:23 am

Good day! I have been lurking for a week or so and enjoy reading the posts here. I have a 403(b) rollover question. I currently have an 11-year-old 403(b) TSA - "Riversource RVS RAVA 4 Advantage Qualified" - with Ameriprise. This is entirely a VA with four subaccounts. I definitely DO NOT need to be convinced of the high fee structure of Ameriprise. I have lived with this since for long enough and am ready to adopt the three fund strategy and "roll my own".

I am right now at a 4% surrender on the VA, which for me means taking around a $1,000 hit if I roll over to another qualified account. I am 35, so this is not a big deal to me. I want to do this right early enough in my career so maximize returns on funds with lower fees.

I will be starting a new job next week and the TPA offers me the option of starting a Vanguard 403(b)! My questions:

1) Considering the thread on here regarding Vanguard 403(b) and the new $60/yr. fees imposed in 2017, also factoring into account the obnoxious ER on the Ameriprise VA, would I STILL be better off rolling over to a 403(b) with Vanguard? I am not interested in rolling over to an IRA. I have a pension already, and we also started an IRA for my wife already.

2) Would a Vanguard agent be able to do the rollover, or would I need to do the rollover through my TPA (Omni)? I see there are forms on the TPA website to me to do this, but I am not sure that would be the right strategy.

Thanks for all your help in advance! I look forward to seeing what the group has to say.

-TheDDC

WhyAmeriprise
Posts: 48
Joined: Fri Jan 05, 2018 2:52 pm

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by WhyAmeriprise » Mon Jan 08, 2018 1:43 pm

$60/yr is infinitely cheaper than any fee I've seen from Ameriprise!

My advisor is fee-based, with a minimum annual fee of $750, depending on complexity. The more I read, the quicker I need to pay the last bit of the surrender fee on the RAVA 4 I have, and move it elsewhere. Customer service at Ameriprise HQ doesn't seem to understand my requests either, sending me a generic form, and I've already had Ameriprise HQ drop the ball when the form isn't filled out quite right, and since I haven't paid $750 to the advisor, there's nothing anyone can do other than have me come in for an office visit to pay my $750 annual fee. (even then I probably won't get the forms I need)

If you have an option to deal with Vanguard, even if they charge $60/yr, it's better than anything you would get at Amerirprise.

krow36
Posts: 1771
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by krow36 » Mon Jan 08, 2018 3:38 pm

TheDDC wrote:
Mon Jan 08, 2018 11:23 am
1) Considering the thread on here regarding Vanguard 403(b) and the new $60/yr. fees imposed in 2017, also factoring into account the obnoxious ER on the Ameriprise VA, would I STILL be better off rolling over to a 403(b) with Vanguard? I am not interested in rolling over to an IRA. I have a pension already, and we also started an IRA for my wife already.

2) Would a Vanguard agent be able to do the rollover, or would I need to do the rollover through my TPA (Omni)? I see there are forms on the TPA website to me to do this, but I am not sure that would be the right strategy.
1) You should definitely move your Ameriprise 403b to a Vanguard 403b! If your new district has Fidelity on its 403b vendor list, that would be an excellent, even lower-cost, option.

Did Ameriprise calculate your surrender fee as 4% of your balance, or did you look at the schedule and come up with 4% because you’ve contributed for 6 years? If the latter, I don’t think that’s how it works. Ameriprise uses a “rolling” surrender fee.
From Ameriprise’s information on your annuity on 403bcompare:
Surrender Penalty Charge assessed on a "rolling" basis: A new surrender charge schedule starts with each new premium payment. The charge is based on the year and actual date of the payment. The surrender charge percentage is updated on the payment anniversary.

Advisor 4 Advantage
Surrender Period* Surrender Percentage
1 ----------------------------7.00%
2 ----------------------------7.00%
3 ----------------------------7.00%
4 ----------------------------6.00%
5 ----------------------------5.00%
6 ----------------------------4.00%
7 ----------------------------2.00%
8 ----------------------------0.00%
Assuming you are still making contributions, the surrender fee on 2017, 2016 and 2015 contributions is 7%, it’s 6% on 2014 contributions, etc. Only if you haven’t made any contributions in 2017 through 2012, then your surrender fee would be 4%. You need to ask the rep to calculate your actual surrender fee percentage. I suspect it’s probably around 6% which would be about $1500?

If your Ameriprise 403b annuity has fees of about 2%, you are paying about 1.8% more than you would pay at Vanguard. 1.8% of $25,000 is $450 per year. I think you would be ahead at Vanguard after about 3 years. Plus I think Vanguard’s broad-based index funds will outperform Ameriprise’s actively managed subaccounts.

2) In any case, I would stop contributing to the Ameriprise 403b and start contributing to a Vanguard 403b! The first step is to set up the Vanguard account. You will have to work with Vanguard and also through your TPA. Transferring the Ameriprise 403b will take time and I expect you'll have to fill out forms for all 3 parties. It will probably take weeks and maybe even months, unfortunately.

TheDDC
Posts: 132
Joined: Mon Jan 08, 2018 11:11 am

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by TheDDC » Mon Jan 08, 2018 5:46 pm

krow36 wrote:
Mon Jan 08, 2018 3:38 pm
[quote=TheDDC post_id=3708326 time=<a href="tel:1515428585">1515428585</a> user_id=129099]
1) Considering the thread on here regarding Vanguard 403(b) and the new $60/yr. fees imposed in 2017, also factoring into account the obnoxious ER on the Ameriprise VA, would I STILL be better off rolling over to a 403(b) with Vanguard? I am not interested in rolling over to an IRA. I have a pension already, and we also started an IRA for my wife already.

2) Would a Vanguard agent be able to do the rollover, or would I need to do the rollover through my TPA (Omni)? I see there are forms on the TPA website to me to do this, but I am not sure that would be the right strategy.
1) You should definitely move your Ameriprise 403b to a Vanguard 403b! If your new district has Fidelity on its 403b vendor list, that would be an excellent, even lower-cost, option.

Did Ameriprise calculate your surrender fee as 4% of your balance, or did you look at the schedule and come up with 4% because you’ve contributed for 6 years? If the latter, I don’t think that’s how it works. Ameriprise uses a “rolling” surrender fee.
From Ameriprise’s information on your annuity on 403bcompare:
Surrender Penalty Charge assessed on a "rolling" basis: A new surrender charge schedule starts with each new premium payment. The charge is based on the year and actual date of the payment. The surrender charge percentage is updated on the payment anniversary.

Advisor 4 Advantage
Surrender Period* Surrender Percentage
1 ----------------------------7.00%
2 ----------------------------7.00%
3 ----------------------------7.00%
4 ----------------------------6.00%
5 ----------------------------5.00%
6 ----------------------------4.00%
7 ----------------------------2.00%
8 ----------------------------0.00%
Assuming you are still making contributions, the surrender fee on 2017, 2016 and 2015 contributions is 7%, it’s 6% on 2014 contributions, etc. Only if you haven’t made any contributions in 2017 through 2012, then your surrender fee would be 4%. You need to ask the rep to calculate your actual surrender fee percentage. I suspect it’s probably around 6% which would be about $1500?

If your Ameriprise 403b annuity has fees of about 2%, you are paying about 1.8% more than you would pay at Vanguard. 1.8% of $25,000 is $450 per year. I think you would be ahead at Vanguard after about 3 years. Plus I think Vanguard’s broad-based index funds will outperform Ameriprise’s actively managed subaccounts.

2) In any case, I would stop contributing to the Ameriprise 403b and start contributing to a Vanguard 403b! The first step is to set up the Vanguard account. You will have to work with Vanguard and also through your TPA. Transferring the Ameriprise 403b will take time and I expect you'll have to fill out forms for all 3 parties. It will probably take weeks and maybe even months, unfortunately.
[/quote]

Thanks for the reply! :sharebeer

I guess I'm wondering why the recommendation to move to fidelity just for the 403(b)? My wife's Ameriprise IRA is entirely a Fidelity four fund portfolio with industry specific index funds, and the ERs are just barely better than the ones on the VA sub funds. Vanguard easily beats Fidelity with fees and diversification options. My hope would be to look at how the Vanguard 403(b) performs with lower cost funds before moving my wife's IRA over to Vanguard. The sales charges at Ameriprise for MFs are ridiculous - 5.75% front loads all over the place.

The surrender charges I got from my logging into my Ameriprise Account. I am showing roughly a 4% difference between surrender value and cash value, so that would be an average of all the contribution years I assume. That is insane with the rolling charges. The last deposit made was back in March 2017.

It will suck being out of the market while this rollover happens I must be honest. It's not as large as portfolio as most since I have the pension, but still challenging not seeong my assets work and I have enough to take advantage of Admiral shares. I assume I would still be earning returns on the Ameriprise side during the multi-month process?

EDIT: I noticed that Vanguard charges $15 per fund for a 403(b)? Really?

Again thanks for the help so far guys! I'll be anxiously awaiting your responses.

-TheDDC

krow36
Posts: 1771
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by krow36 » Mon Jan 08, 2018 9:18 pm

TheDDC wrote:
Mon Jan 08, 2018 5:46 pm
I guess I'm wondering why the recommendation to move to fidelity just for the 403(b)? My wife's Ameriprise IRA is entirely a Fidelity four fund portfolio with industry specific index funds, and the ERs are just barely better than the ones on the VA sub funds. Vanguard easily beats Fidelity with fees and diversification options. My hope would be to look at how the Vanguard 403(b) performs with lower cost funds before moving my wife's IRA over to Vanguard. The sales charges at Ameriprise for MFs are ridiculous - 5.75% front loads all over the place.
The Fidelity generic K-12 403b plan charges $24 per year. Their broad-based index funds are as low-cost as Vanguard’s index funds: Total Mkt Index Premium, FSTVX, ER 0.04%, US Bond Index, FSITX, ER 0.04% and Int’l Index Premium, FSIVX, ER 0.06%. Fidelity offers lots of very high cost funds but you should stick with the above 3 index funds. Fidelity also offers their Freedom Index 20XX Investor funds, ER 0.15%. https://www.403bcompare.com/products/68 ... entoptions

I was not suggesting you use a Fidelity annuity based 403b plan but a Fidelity mutual fund based 403b plan.
The surrender charges I got from my logging into my Ameriprise Account. I am showing roughly a 4% difference between surrender value and cash value, so that would be an average of all the contribution years I assume. That is insane with the rolling charges. The last deposit made was back in March 2017.

OK, your surrender fee on your account should be accurate. My estimate assumed that your contributions were equal over the years, and I made other assumptions which were no doubt incorrect.
It will suck being out of the market while this rollover happens I must be honest. It's not as large as portfolio as most since I have the pension, but still challenging not seeong my assets work and I have enough to take advantage of Admiral shares. I assume I would still be earning returns on the Ameriprise side during the multi-month process?

EDIT: I noticed that Vanguard charges $15 per fund for a 403(b)? Really?
Last year Vanguard changed their generic 403b plans for K-12 districts. They are now using Newport Group as the record keeper and for compliance. The annual fee is now a flat $60 per year rather than $15 per fund. Unlike before, Admiral class funds are now allowed as well as loans. So the difference in fees between the Vanguard and Fidelity is not really significant. If you have other accounts at Vanguard, you might want to use Vanguard, although your account will be with Newport Group, using Vanguard funds. Being out of the market is not ideal but could work to your advantage, or not--who knows whether the market will go up or down during the time of your transfer. Getting your 403b balance to Vanguard's low-cost index funds will likely soon pay for any missed upside. You are investing for your retirement some 20 to 30 years from now, so little blips, either up or down shouldn't concern you! :)

TheDDC
Posts: 132
Joined: Mon Jan 08, 2018 11:11 am

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by TheDDC » Mon Jan 08, 2018 9:37 pm

krow36 wrote:
Mon Jan 08, 2018 9:18 pm
[quote=TheDDC post_id=3709161 time=<a href="tel:1515451565">1515451565</a> user_id=129099]
I guess I'm wondering why the recommendation to move to fidelity just for the 403(b)? My wife's Ameriprise IRA is entirely a Fidelity four fund portfolio with industry specific index funds, and the ERs are just barely better than the ones on the VA sub funds. Vanguard easily beats Fidelity with fees and diversification options. My hope would be to look at how the Vanguard 403(b) performs with lower cost funds before moving my wife's IRA over to Vanguard. The sales charges at Ameriprise for MFs are ridiculous - 5.75% front loads all over the place.
The Fidelity generic K-12 403b plan charges $24 per year. Their broad-based index funds are as low-cost as Vanguard’s index funds: Total Mkt Index Premium, FSTVX, ER 0.04%, US Bond Index, FSITX, ER 0.04% and Int’l Index Premium, FSIVX, ER 0.06%. Fidelity offers lots of very high cost funds but you should stick with the above 3 index funds. Fidelity also offers their Freedom Index 20XX Investor funds, ER 0.15%. https://www.403bcompare.com/products/68 ... entoptions

I was not suggesting you use a Fidelity annuity based 403b plan but a Fidelity mutual fund based 403b plan.
The surrender charges I got from my logging into my Ameriprise Account. I am showing roughly a 4% difference between surrender value and cash value, so that would be an average of all the contribution years I assume. That is insane with the rolling charges. The last deposit made was back in March 2017.

OK, your surrender fee on your account should be accurate. My estimate assumed that your contributions were equal over the years, and I made other assumptions which were no doubt incorrect.
It will suck being out of the market while this rollover happens I must be honest. It's not as large as portfolio as most since I have the pension, but still challenging not seeong my assets work and I have enough to take advantage of Admiral shares. I assume I would still be earning returns on the Ameriprise side during the multi-month process?

EDIT: I noticed that Vanguard charges $15 per fund for a 403(b)? Really?
Last year Vanguard changed their generic 403b plans for K-12 districts. They are now using Newport Group as the record keeper and for compliance. The annual fee is now a flat $60 per year rather than $15 per fund. Unlike before, Admiral class funds are now allowed as well as loans. So the difference in fees between the Vanguard and Fidelity is not really significant. If you have other accounts at Vanguard, you might want to use Vanguard, although your account will be with Newport Group, using Vanguard funds. Being out of the market is not ideal but could work to your advantage, or not--who knows whether the market will go up or down during the time of your transfer. Getting your 403b balance to Vanguard's low-cost index funds will likely soon pay for any missed upside. You are investing for your retirement some 20 to 30 years from now, so little blips, either up or down shouldn't concern you! :)
Thanks for the advice! So you are recommending I open an account with Fidelity directly for the 403(b)? That is an option through my TPA as is Vanguard. I had assumed you meant MFs of course. NO more VAs for me!

Since we're talking "stay or go", What if I were to stay with Ameriprise but just liquidate the existing VA and have them create/transfer funds to a new 403(b) with nothing but Vanguard and Fidelity index funds? That would prevent my having to transfer anything to another brokerage. I have my annual appointment with my Ameriprise guy on Thursday. I'll run this past him to see if he will play ball. If not, I think I'll have my answer. What do you think?

EDIT: I just opened a Vanguard brokerage account for taxable investment. So, no matter what, that will always be a piece of the pie for me.

-TheDDC

krow36
Posts: 1771
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by krow36 » Mon Jan 08, 2018 10:53 pm

TheDDC wrote:
Mon Jan 08, 2018 9:37 pm
Since we're talking "stay or go", What if I were to stay with Ameriprise but just liquidate the existing VA and have them create/transfer funds to a new 403(b) with nothing but Vanguard and Fidelity index funds? That would prevent my having to transfer anything to another brokerage. I have my annual appointment with my Ameriprise guy on Thursday. I'll run this past him to see if he will play ball. If not, I think I'll have my answer. What do you think?
Ameriprise does not offer no-load index mutual funds in their generic 403b plan for K-12 school districts. Check out Ameriprise on 403bcompare.com. https://www.403bcompare.com/products/14 ... entoptions
Their mutual funds are almost all load funds, either class A (front end load and high ER) or class C (back end look and even higher ER). Even if the loads are waived, the ERs of around 1%, compared to Vanguard's or Fidelity's no-load, index funds with ERs of 0.05% to 0.10% make the decision easy! :)

If however your old employer was not a K-12 school district but a non-profit organization that had a tailor-made 403b plan with Ameriprise, then I don't know what your fund choices might be. :( However Ameriprise is known to be a high-fee provider, as you know.

TheDDC
Posts: 132
Joined: Mon Jan 08, 2018 11:11 am

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by TheDDC » Wed Jan 10, 2018 11:28 pm

Thanks for all the help, krow36!

I also noticed I am able to withdraw roughly $10,000 from this VA without a surrender charge, but I am wondering if even a partial liquidation is possible without it being considered a "loan". I will discuss all of this with my Amerprise FA tomorrow and update you.

Again, thanks!

-TheDDC

WhyAmeriprise
Posts: 48
Joined: Fri Jan 05, 2018 2:52 pm

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by WhyAmeriprise » Sat Jan 13, 2018 10:43 pm

TheDDC wrote:
Mon Jan 08, 2018 9:37 pm
Since we're talking "stay or go", What if I were to stay with Ameriprise but just liquidate the existing VA and have them create/transfer funds to a new 403(b) with nothing but Vanguard and Fidelity index funds? That would prevent my having to transfer anything to another brokerage. I have my annual appointment with my Ameriprise guy on Thursday. I'll run this past him to see if he will play ball. If not, I think I'll have my answer. What do you think?
How did the visit with the Ameriprise FA go?

I can't visit my Ameriprise FA because he wants an annual fee of at least $750, and I see no point to pay him anything any longer. (dismantling the Ameriprise accounts is not fun)

Your 403(b) may have different funds, as each RAVA is different, but I compared a few and saw nothing that would keep me with Ameriprise. Even though the funds have similar names, the performance doesn't keep pace with the fund you see traded elsewhere.

TheDDC
Posts: 132
Joined: Mon Jan 08, 2018 11:11 am

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by TheDDC » Sat Jan 13, 2018 11:13 pm

WhyAmeriprise wrote:
Sat Jan 13, 2018 10:43 pm
TheDDC wrote:
Mon Jan 08, 2018 9:37 pm
Since we're talking "stay or go", What if I were to stay with Ameriprise but just liquidate the existing VA and have them create/transfer funds to a new 403(b) with nothing but Vanguard and Fidelity index funds? That would prevent my having to transfer anything to another brokerage. I have my annual appointment with my Ameriprise guy on Thursday. I'll run this past him to see if he will play ball. If not, I think I'll have my answer. What do you think?
How did the visit with the Ameriprise FA go?

I can't visit my Ameriprise FA because he wants an annual fee of at least $750, and I see no point to pay him anything any longer. (dismantling the Ameriprise accounts is not fun)

Your 403(b) may have different funds, as each RAVA is different, but I compared a few and saw nothing that would keep me with Ameriprise. Even though the funds have similar names, the performance doesn't keep pace with the fund you see traded elsewhere.
:sharebeer

Got so wrapped up in weekend festivities I forgot to post. Thanks for the reminder!

My visit went better than planned. My advisor seemed to already know what I was loaded with ahead of time. Funny how that works. I had no problems getting him on board with my plan, and he had no problem with a fee for service agreement once I move all assets to Vanguard (wife's IRA and our joint brokerage) and Fidelity (my 403(b)) under my management. He has had others jump ship and sees where things are going. He is also 60 and wants to stay in the industry a few more years and has clarity of thought on this. He said 10 years ago he would not have entered into a fee for service arrangement

My next decision: If I move into fee for service, is it worth the $600/year that he wants? That is a flat fee, not based on assets. He has always had a good perspective on sector growth and he has never given us bad advice on the Fidelity funds in my wife's portfolio. The Ameriprise limitation on the funds offered in an IRA is what kills me. The high ERs are all over the place, very much sector-based and nothing low cost. The VA I'm in has actually performed quite well, but two of the funds have ERs of 1.2 and 1.3! One is international.

What I would like to do is liquidate my VA enough to avoid the surrender fees. So for now that would mean liquidating around $10k, enough to get into a lower cost fund, and I would draw down the highest ER funds first. It is going to take a lot of paperwork and patience.

I also need to decide if I want to go with Fidelity for the 403(b) due to the fact that the ERs are low, the fee is low for 403(b) accounts, and I do have access to Fidelity "premium shares" which is their equivalent of Admiral shares. I could go with Fidelity or Vanguard, but I am concerned that Vanguard is not as interested in the 403(b) business after the latest round of changes with Newport Group.

I've already begun the process of transferring my wife's IRA to Vanguard in-kind and mailed off the signed paperwork today. Luckily her funds transfer cleanly, though I do plan on doing a "global rebalancing" of our portfolios with low cost Fidelity and Vanguard MFs and ETFs when my 403(b) starts to move.

What do you think? Worth $600/yr. for the advice? I don't see my guy staying in the business longer than 5-6 years anyway.

-TheDDC

krow36
Posts: 1771
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by krow36 » Sun Jan 14, 2018 12:37 am

TheDDC wrote:
Sat Jan 13, 2018 11:13 pm
My next decision: If I move into fee for service, is it worth the $600/year that he wants? That is a flat fee, not based on assets. He has always had a good perspective on sector growth and he has never given us bad advice on the Fidelity funds in my wife's portfolio. The Ameriprise limitation on the funds offered in an IRA is what kills me. The high ERs are all over the place, very much sector-based and nothing low cost. The VA I'm in has actually performed quite well, but two of the funds have ERs of 1.2 and 1.3! One is international.

What I would like to do is liquidate my VA enough to avoid the surrender fees. So for now that would mean liquidating around $10k, enough to get into a lower cost fund, and I would draw down the highest ER funds first. It is going to take a lot of paperwork and patience.
I'm not sure what you've decided? Is it to use the advisor with that part of your Ameriprise 403b that you don't transfer to Fidelity 403b? If that's not the case, what accounts will the advisor be involved with?
I also need to decide if I want to go with Fidelity for the 403(b) due to the fact that the ERs are low, the fee is low for 403(b) accounts, and I do have access to Fidelity "premium shares" which is their equivalent of Admiral shares. I could go with Fidelity or Vanguard, but I am concerned that Vanguard is not as interested in the 403(b) business after the latest round of changes with Newport Group.

I've already begun the process of transferring my wife's IRA to Vanguard in-kind and mailed off the signed paperwork today. Luckily her funds transfer cleanly, though I do plan on doing a "global rebalancing" of our portfolios with low cost Fidelity and Vanguard MFs and ETFs when my 403(b) starts to move.

What do you think? Worth $600/yr. for the advice? I don't see my guy staying in the business longer than 5-6 years anyway.
I don't think so. You seem to be ready to be a DIYer. :)

anonenigma
Posts: 513
Joined: Thu Apr 21, 2011 11:58 pm

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by anonenigma » Sun Jan 14, 2018 3:42 am

Consult TPA for link to open a new 403(b) account with Vanguard or Fidelity and direct deferrals to that account going forward.

Transfers need to be approved by the TPA (there should not be a problem going from one approved 403b vendor to another). Move the money from Ameriprise either in stages or all at once, depending on the surrender charges.

TheDDC
Posts: 132
Joined: Mon Jan 08, 2018 11:11 am

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by TheDDC » Sun Jan 14, 2018 12:55 pm

krow36 wrote:
Sun Jan 14, 2018 12:37 am
TheDDC wrote:
Sat Jan 13, 2018 11:13 pm
My next decision: If I move into fee for service, is it worth the $600/year that he wants? That is a flat fee, not based on assets. He has always had a good perspective on sector growth and he has never given us bad advice on the Fidelity funds in my wife's portfolio. The Ameriprise limitation on the funds offered in an IRA is what kills me. The high ERs are all over the place, very much sector-based and nothing low cost. The VA I'm in has actually performed quite well, but two of the funds have ERs of 1.2 and 1.3! One is international.

What I would like to do is liquidate my VA enough to avoid the surrender fees. So for now that would mean liquidating around $10k, enough to get into a lower cost fund, and I would draw down the highest ER funds first. It is going to take a lot of paperwork and patience.
I'm not sure what you've decided? Is it to use the advisor with that part of your Ameriprise 403b that you don't transfer to Fidelity 403b? If that's not the case, what accounts will the advisor be involved with?
I also need to decide if I want to go with Fidelity for the 403(b) due to the fact that the ERs are low, the fee is low for 403(b) accounts, and I do have access to Fidelity "premium shares" which is their equivalent of Admiral shares. I could go with Fidelity or Vanguard, but I am concerned that Vanguard is not as interested in the 403(b) business after the latest round of changes with Newport Group.

I've already begun the process of transferring my wife's IRA to Vanguard in-kind and mailed off the signed paperwork today. Luckily her funds transfer cleanly, though I do plan on doing a "global rebalancing" of our portfolios with low cost Fidelity and Vanguard MFs and ETFs when my 403(b) starts to move.

What do you think? Worth $600/yr. for the advice? I don't see my guy staying in the business longer than 5-6 years anyway.
I don't think so. You seem to be ready to be a DIYer. :)
If I would decide to go to a fee for service arrangement, he would advise me on ALL personal/joint assets including anything outside of Ameriprise management. I would manage the assets and buy/sell as I please. The only thing I would possibly keep under Ameriprise management would be the portion of my TSA that I could not transfer without having to pay the surrender charge. Currently, $10,000 can be transferred out of the TSA without incurring that charge. If I choose to move everything out, the surrender would be $1,000. But for the $600/year fee, he doesn't care if I invest anything with Amerprise.

$600/yr. seems steep. It's an all or nothing proposal, because my advisor would want to keep doing the annual "financial plan". I appreciate his investment advice, but regardless, the man is 60. I am 35 and my wife is 31. In all likelihood he will not be in a position to advise us when we are nearing retirement so keeping him long term may not be a good "investment." And, yes, I am moving toward being a DIYer on top of that.

-TheDDC

WhyAmeriprise
Posts: 48
Joined: Fri Jan 05, 2018 2:52 pm

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by WhyAmeriprise » Sun Jan 14, 2018 1:15 pm

TheDDC wrote:
Sat Jan 13, 2018 11:13 pm
My visit went better than planned. My advisor seemed to already know what I was loaded with ahead of time. Funny how that works. I had no problems getting him on board with my plan, and he had no problem with a fee for service agreement once I move all assets to Vanguard (wife's IRA and our joint brokerage) and Fidelity (my 403(b)) under my management. He has had others jump ship and sees where things are going. He is also 60 and wants to stay in the industry a few more years and has clarity of thought on this. He said 10 years ago he would not have entered into a fee for service arrangement

My next decision: If I move into fee for service, is it worth the $600/year that he wants? That is a flat fee, not based on assets. He has always had a good perspective on sector growth and he has never given us bad advice on the Fidelity funds in my wife's portfolio. The Ameriprise limitation on the funds offered in an IRA is what kills me. The high ERs are all over the place, very much sector-based and nothing low cost. The VA I'm in has actually performed quite well, but two of the funds have ERs of 1.2 and 1.3! One is international.
My case is easier - My Ameriprise advisor wants his annual fee, plus wants to recommend the VUL, VA, and SPS Wrap (1-1.4% annual fee), which all have steep fees to put me into subaccounts with high ERs. My advisor defended a CNL Lifestyle REIT he sold me that I was stuck with, watching it go down the drain, and even when it joined with EPR, he defended EPR. I've lost faith in my advisor. The market was up drastically last year, and even though my RAVA "did well", it lagged behind other Fido and VG investments gained during the same time period. If you trust your advisor, and he's willing to advise on non-Ameriprise assets, it's a toss-up whether the $600 is worth it.
TheDDC wrote:
Sat Jan 13, 2018 11:13 pm
What I would like to do is liquidate my VA enough to avoid the surrender fees. So for now that would mean liquidating around $10k, enough to get into a lower cost fund, and I would draw down the highest ER funds first. It is going to take a lot of paperwork and patience.

I also need to decide if I want to go with Fidelity for the 403(b) due to the fact that the ERs are low, the fee is low for 403(b) accounts, and I do have access to Fidelity "premium shares" which is their equivalent of Admiral shares. I could go with Fidelity or Vanguard, but I am concerned that Vanguard is not as interested in the 403(b) business after the latest round of changes with Newport Group.
Between Fidelity and Vanguard, it looks like Fidelity wins for the 403(b). When the dust settles, I will probably have funds at both because I already have some leftover 401k funds already sitting at Fidelity.

A risk with the Ameriprise advisor is that he may sell his franchise, and thus sell you to another advisor who does not share the same opinion, and also would be looking to earn a new set of commissions from you, as my current FA did when he acquired me as a customer from the previous FA. You acknolwedge "a lot of paperwork and patience", so it seems like you have a good grasp on the investing and finances, and the $600 is a sort of "comfort blanket", but I would not say that you need it anymore, either.

TheDDC
Posts: 132
Joined: Mon Jan 08, 2018 11:11 am

Re: Rollover Amerirprise 403(b) / Move to Vanguard 403(b)

Post by TheDDC » Tue Jan 16, 2018 10:24 pm

WhyAmeriprise wrote:
Sun Jan 14, 2018 1:15 pm
TheDDC wrote:
Sat Jan 13, 2018 11:13 pm
My visit went better than planned. My advisor seemed to already know what I was loaded with ahead of time. Funny how that works. I had no problems getting him on board with my plan, and he had no problem with a fee for service agreement once I move all assets to Vanguard (wife's IRA and our joint brokerage) and Fidelity (my 403(b)) under my management. He has had others jump ship and sees where things are going. He is also 60 and wants to stay in the industry a few more years and has clarity of thought on this. He said 10 years ago he would not have entered into a fee for service arrangement

My next decision: If I move into fee for service, is it worth the $600/year that he wants? That is a flat fee, not based on assets. He has always had a good perspective on sector growth and he has never given us bad advice on the Fidelity funds in my wife's portfolio. The Ameriprise limitation on the funds offered in an IRA is what kills me. The high ERs are all over the place, very much sector-based and nothing low cost. The VA I'm in has actually performed quite well, but two of the funds have ERs of 1.2 and 1.3! One is international.
My case is easier - My Ameriprise advisor wants his annual fee, plus wants to recommend the VUL, VA, and SPS Wrap (1-1.4% annual fee), which all have steep fees to put me into subaccounts with high ERs. My advisor defended a CNL Lifestyle REIT he sold me that I was stuck with, watching it go down the drain, and even when it joined with EPR, he defended EPR. I've lost faith in my advisor. The market was up drastically last year, and even though my RAVA "did well", it lagged behind other Fido and VG investments gained during the same time period. If you trust your advisor, and he's willing to advise on non-Ameriprise assets, it's a toss-up whether the $600 is worth it.
TheDDC wrote:
Sat Jan 13, 2018 11:13 pm
What I would like to do is liquidate my VA enough to avoid the surrender fees. So for now that would mean liquidating around $10k, enough to get into a lower cost fund, and I would draw down the highest ER funds first. It is going to take a lot of paperwork and patience.

I also need to decide if I want to go with Fidelity for the 403(b) due to the fact that the ERs are low, the fee is low for 403(b) accounts, and I do have access to Fidelity "premium shares" which is their equivalent of Admiral shares. I could go with Fidelity or Vanguard, but I am concerned that Vanguard is not as interested in the 403(b) business after the latest round of changes with Newport Group.
Between Fidelity and Vanguard, it looks like Fidelity wins for the 403(b). When the dust settles, I will probably have funds at both because I already have some leftover 401k funds already sitting at Fidelity.

A risk with the Ameriprise advisor is that he may sell his franchise, and thus sell you to another advisor who does not share the same opinion, and also would be looking to earn a new set of commissions from you, as my current FA did when he acquired me as a customer from the previous FA. You acknolwedge "a lot of paperwork and patience", so it seems like you have a good grasp on the investing and finances, and the $600 is a sort of "comfort blanket", but I would not say that you need it anymore, either.
I took the next step and opened a Fidelity 403(b) account today and filled out a SRA form. The customer service rep couldn't have been more pleasant to deal with, including offering assistance to push things along if Ameriprise drags their feet in the roll process. Our employer plan is awesome. I get access to Fidelity (institutional) premium funds with no minimum buy amount. The first time I called for information and spoke with the first customer service rep on the line I was told something else. You DO need to pretty much get to the point where you have the plan number in order for them to research and see the funds that are available to you. For me, it's pretty much over 200 Fidelity funds including Fidelity Total Market Premium (FSTVX) 0.035 ER and Fidelity Total International Premium (FSIVX) 0.06 ER. I decided to do a 70/30 domestic/intl equity allocation to start.

I was e-mailed a transfer form to get the ball moving on the Fidelity side to start getting funds transferred from Ameriprise. I am moving the account slowly enough so that I will bypass the surrender charges. I am already getting bit with a $125 account closing fee on my wife's IRA with Ameriprise.

-TheDDC

Post Reply