Ameriprise Financial

[S.B.]

Anyone use Ameriprise Financial as their financial advisor? If so, do you have any feedback on them? I am thinking of using them for comprehensive financial planning.

[Mr. BoH]

Don't do it.

My mother in law paid them a few hundred bucks for this service (back when they were American Express) and they "conveniently" recommended that she invest her full portfolio in American Express load funds. She almost did it, too, until she had me look over the "recommendations".

I called the broker (errrr... "advisor") on this, and he said that American Express just happened to have the absolute best funds in every possible category and he was in no way influenced by the fact that he would make an extra 6% if she invested in them. Yeah, right.

The point of using fee-based financial planning (a good idea) is that that person will then not put you in funds where you have to pay a commission. I guess American Express figures they can have their cake and eat it too (ie. charge you for the advice and charge you a load).

Based on this experience, I would avoid this company like the plague.

[S.B.]

Thanks for the reply.

Yeah, they want to charge me a flat fee of $650 for the year - is this what you mean by fee based? I assumed just about any financial advisor would try to get me into their products, and I would just have to be on my guard to determine if it's best for me. They immediately asked if I had consider rolling over my previous employers 401(k), which I don't think I would do since it is a very good one.

[Mr. BoH]

Yeah, that's the flat fee I'm talking about.

Look, if you're willing to pay sales loads, you can find "free" investment advice at virtually any brokerage firm. Paying a flat fee is usually a much better idea because it's cheaper in the long run and there is no conflict of interest.

But my main point is, there is no reason you should be doing both. And that's what American Express is trying to sell.

I would find a fee-only* advisor. NAPFA is a good place to start, although I'm sure there are many others.

*By law, an advisor must disclose to you who is compensating them: it can be by you, by the fund companies, or both. You want to find one who receives their entire compensation from you.

They immediately asked if I had consider rolling over my previous employers 401(k), which I don't think I would do since it is a very good one.

This is exactly the conflict of interest I'm talking about. If you transfer the 401k to them, they make big bucks. If you leave it at your old employer, they make nothing. I don't know how you could possibly trust them to give you objective advice in this situation. It's like asking a car salesman if you should buy a new car.

[Salzmann]

Front-end load funds aren't always bad- because of the amount I have invested in the American Funds group through Edward Jones I pay only a 2% load on new money for Class A shares- and none when I switch back and forth among funds. The annual fees are also lower on the Class A shares so you do better in the long run.

But Ameriprise is too "cookie-cutter" for me- the joke is they always recommend the "happy meal" of mutual funds, long-term care insurance and universal life insurance for everyone.

I switched my old employer's 401(k) to my Edward Jones account, but that's because they had a crappy plan. If you're happy with your old plan, there's no reason to move it. Find a new advisor, put your new money in, then think about moving over your 401(k) if you like what you see.