Is Ameriprise Worth It?

[junger]

I did a search to see if there was anything already discussing this and couldn't find anything, so forgive me if I'm duping a previous question.

My wife and I both have Roth IRAs set up through Ameriprise. We're investing in Riversource mutual funds, which are Amerprise's products.

I'm perfectly aware that this is a conflict of interest (not to mention the fact that we are also purchasing IDS life insurance from them), but we're not really capable (yet, at least) of managing our own IRAs.

Part of me has always felt a bit uneasy about investing in Ameriprise's proprietary products, but we don't know how to do it on our own. In addition to investing in their product, we also pay $400 a year for our financial advising.

Is this worth it for us? Should we drop Ameriprise and head somewhere else, or suck it up until a time where we feel comfortable managing our own investments?

Thanks for the help.

[vsjhoc]

Re: Is Ameriprise Worth It?

I sucked it up for far too long. I paid a fortune for a financial plan, which steered me only to products that paid the highest commissions to the AmEx (pre-Ameriprise) advisor. I recently got out of everything but the annuity because the break costs were too high. AmEx was slapped with a multi-million dollar fine by NASD last year for pushing B-class shares (you pay a fee when you sell) instead of A-class shares (which cost you less because you pay a purchase fee but no big deferred sales charge). I narrowly missed being part of the class action settlement. My advisor pretended to know nothing about the settlement -- that smacks of fraud.

I don't mean to be completely discouraging. It's better to have a plan and to be investing than to be doing nothing at all. You can do this stuff yourself if you're willing to do a bit of homework. There are lots of resources out there and guidance on this site. Good luck!

[junger]

Re: Is Ameriprise Worth It?

We've got all A-class shares, but thanks for recounting your experiences.

Was it difficult to move your investments into your own management? I've been reading things about a wrap fee -- something like $250 to move out.

[vsjhoc]

Re: Is Ameriprise Worth It?

I still don't have the time or patience to research and take care of it myself, so I moved everything to Smith Barney over the course of a year. I paid some fees, but some of the AmEx funds had been underperforming for a long time. I like my advisor's approach, I paid no plan fee, and it's all C class shares. They have a zillion funds and my advisor buys a lot of the same ones he recommends to me. His commission is the same no matter which funds I get, and I pay it only indirectly (through the 10b5 fee, I think -- the management fees are slightly higher but there are no upfront or backend fees). He knows what I went through with the last advisor and that one snaky move by him and I'll pull the whole portfolio.

[Mathew Green]

Re: Is Ameriprise Worth It?

Part of me has always felt a bit uneasy about investing in Ameriprise's proprietary products, but we don't know how to do it on our own. In addition to investing in their product, we also pay $400 a year for our financial advising.

If you're paying them for investment advice (not total financial planning) it's almost certainly wasted money. Very few advisors beat the market long term.

You'd be better off having an account with no advice and just putting your money into index funds that track the S&P500, NASDAQ, etc and have a management fee of less than 2%. All you need is to be smart enough to move out of the index and into a money market account when it becomes obvious a major bear market is setting in (ala the bear that started in mid-2000). Otherwise you'll do as well as half the mutual funds by just staying in the index fund and adding a set amount each month (dollar cost averaging).

If you want something more sophisticated, and more profitable, read "Yes, You Can Time the Market!" by Ben Stein & Phil DeMuth. Their method helps you get in and out at the right time without a lot of short-term trading. It may be available at your local library and is $12-$14 at bookstores. Link to reviews of this book at Amazon.com: http://www.amazon.com/Yes-You-Can-Ti...qid=1158089416

Weigh your choices and if you're not totally comfortable spend several months pretending you're investing in several different ways without putting any real money into them. How well you do in those pretend accounts will tell you which method is best for you. This practice is called "paper trading" and it's a great way to learn how to manage your own money with zero risk.

Disclaimer: Nothing above should be considered "professional investment advice", and all the other traditional disclaimers.

[junger]

Re: Is Ameriprise Worth It?

I'm paying them for both financial advice as well as managing my IRAs. But thanks for the great advice -- I'll definitely keep that in mind should we decide to switch over.