Getting out of Ameriprise – help me move past the face-punch stage into action

[greydog]

I’m trying to get myself out of some terrible Ameriprise accounts I set up – and I need some advice.

A few years ago, I stupidly rolled over my 401(k) account to Ameriprise when I changed jobs. My spouse had a few accounts there (several stocks purchased years ago, as well as Roth IRA contributions for several years), and I liked the idea of consolidating our money into one place. Once there, I was really underwhelmed by the service and knowledge of the people I spoke with. It all seemed rather … scammy to me. But I didn’t listen to that little voice in my head, and I not only rolled over my 401(k) … I also purchased life insurance and disability insurance through RiverSource, which is their proprietary insurance company. (I know, I know.)

When I started educating myself here and elsewhere about the exorbitant fees, I was, frankly, embarrassed that I’d let myself get suckered into this. (Believe me, you can’t facepunch me harder than I’ve facepunched myself.) For a few months, my shame has caused me to look the other way on this whole mess. But now, I’m determined to tackle this problem head-on and unwind my investments in Ameriprise. I’ve read the boards here, I have a copy of JL Collins’s book, and now I’m ready to take the leap. I have a plan, but now I’m getting nervous about making another costly mistake. Has anyone else out there been through this? Does my plan of action seem right?

1) I have a Vanguard account in place – currently a Roth IRA (mine) and a brokerage account (ours jointly -- invested in VTHRX).

2) I will open a traditional IRA via Vanguard to accept the rollover.

3) I will then call Ameriprise and ask them to issue a check for the amount in my 401(k) rollover IRA, payable to “VFTC fbo My Name” – which I will then send to Vanguard. I spoke with a Vanguard rep on the phone, and they said that this will ensure that it’s a true rollover (not a payout, so no unexpected tax implications).

4) Once I get my traditional IRA out of Ameriprise, I’ll work on extricating my spouse’s accounts: A) a Roth IRA, B) a traditional IRA, C) some stocks he’s had forever (bought with his dad, which is why we had this account in the first place). All these accounts are quite a bit smaller than that first account, so they are no less important, but feel less urgent.

5) I also plan to discontinue my disability insurance – the premium is due in October, so I’ll cancel that then. I will also discontinue my life insurance, since I have sufficient coverage (for free!) via my job. I may keep my spouse’s life insurance policy, since he does not have similar coverage via his job, and the policy seems to be pretty cheap (less than $300 annually for a $250K death benefit). 

Has anyone else been through this – are there any red flags you’re seeing here?

[AccidentalMiser]

I read your plan and didn’t see any glaring issues.  Others with more experience will have better feedback. 

I mainly wanted to congratulate you on taking positive action to regain control of your financial life.  Good for you!!  Keep up the great work!

[onlykelsey]

Not really a red flag, but have you looked in to what happens with your life insurance at work if you leave/get fired/they go under, etc?  I recently looked in to this... mine will terminate when I leave the company, although I may be able to continue the policy at market rates.  I'm young and have a pretty high NW so I was okay with that possibility but it might make sense to lock in a modest life insurance policy now, depending on your circumstances.

[AM43]

My friend who used to work for Ameriprise set us up(Me and spouse) with all kinds of accounts with them including life insurance and disability insurance through RiverSource. Since we were young and ignorant and did not care to look deeper what we were paying for, we kept our accounts with them for approx 10 years. To make this short, once I wised up and realized we were being robbed, I closed all of our accounts and transferred everything to Vanguard. We've ended up paying approx 5K combined in surrender charges on all of their products we have been signed onto. It was still well worth it as we made twice that much by investing in way better funds and most importantly  much lower ER with Vanguard. Take a look at your statements and see what surrender charges are to get out of Ameriprise. They could be high depending on value of your account. Get out as soon as you can and dont look back. Good luck.

[greydog]

Thanks so much to all of you -- I really appreciate the advice and encouragement. It has been humbling to go through this process, but I feel good about finally getting a handle on where my money is going and how to fix this problem.

Re. life insurance at work: It's a good point, onlykelsey. I work for a big conglomerate, so the risk of this company going belly up is very low. But you're correct that if I were to leave this job, I might have to start from scratch with a new life insurance policy (a few years older, which won't help). We have an elementary-age kid, so being well insured is important to us (and part of why Ameriprise was able to sucker us into these policies in the first place). Perhaps I'll pause on canceling life insurance for myself, or at least price out some similar policies on the open market. I still think my cost from Ameriprise is high.

Re. the surrender costs to get out of Ameriprise: I haven't gotten to that point yet, AM43, but your experience is helpful to hear about. I suspect I'll have some significant costs here, too. One of the things I hate about Ameriprise is those statements, which I find just impossible to read and understand. (I'm sure that's not an accident.) But I'll dredge up the latest this weekend and go over it carefully, to see what I can find out. I'm sure a few calls will be necessary, as well.

Onward...

[ILikeDividends]

I hate this company with a passion. 

I was my late uncle's executor, and he had an annuity with RiverSource, a subsidiary of Ameriprise, which I had to liquidate to pay the beneficiaries.

RiverSource clawed on to their late customer's money like a vampire holds on to a corpse with a few ounces of blood left in it.

Rather than recount details of my experience here, I've done it already on Yelp, for any who are interested:

https://www.yelp.com/biz/riversource-life-insurance-company-minneapolis

My review can be found under user initials "W. H.", with a profile photo of an eagle.

Please do potential future victims a favor and leave your own review of Ameriprise.

WARNING: Their "customer service" department is intentionally misnamed.  They don't have one of those.  That's the label they give to their "corporate service" department.  They just read from a script designed to cost you time.  Better to ask Vanguard to wrestle your money away from them for you.  You are just a voiceless nobody to them; one of many more sheep to be sheared.  Vanguard is neither voiceless nor a nobody.  Take advantage of that, or I predict it will take months to move your accounts if you deal with them yourself.

They are absolutely not incompetent.  Don't make the mistake of assuming they are.  They have a brilliantly designed program to shave pennies, without regard to costing you dollars, and their staff is well trained to do that, all while impersonating a polite and concerned customer service rep.    Time is money.  They will use your time to make money.

Don't wait to move the smaller accounts.  Start moving those accounts right away.  You will pay dearly in time and effort if you let them spread that out over time.

[reeshau]

2) I will open a traditional IRA via Vanguard to accept the rollover.

3) I will then call Ameriprise and ask them to issue a check for the amount in my 401(k) rollover IRA, payable to “VFTC fbo My Name” – which I will then send to Vanguard. I spoke with a Vanguard rep on the phone, and they said that this will ensure that it’s a true rollover (not a payout, so no unexpected tax implications).

I don't know whether your hatred of them drives you to want to savor the revenge of withdrawal, or avoid them.  But you don't have to talk to them at all to rollover--you can have Vanguard do it for you.

[greydog]

UPDATE: Thanks for the tip, reeshau -- I'm not particularly keen to talk with Ameriprise much more. After a few painless calls to Vanguard, I was able to fill out an online transfer form, take it to my local bank for the required Medallion Signature, and the paperwork is in the mail now. Easy peasy.

I agree 100% that I should transfer ALL of my accounts out of there, and soon. But I started with my IRA (which is about 60% of our total assets at Ameriprise). My husband is willing to divest the other accounts (which are in his name) as well, but he didn't want to move as swiftly as I did, and I didn't want to delay. (His accounts were set up for him initially by his dad via Ameriprise, so there's some weird attachment to keeping them there, though he understands that they are not as productive or profitable as they would be elsewhere.) I know he will come around.

I'm going to cancel my Ameriprise / Riversource disability insurance next. I looked at the numbers, and while I'm not completely against this kind of coverage, for our situation it just doesn't make financial sense. If one of us became disabled, we have many other assets (savings, stocks, a house that has appreciated significantly) that we could tap into.

I'm sure many folks on this forum are too smart to get snoockered by Ameriprise or other predatory investment companies, but I wanted to be sure to share how this turned out so that I could show that it's possible (easy, even) to unwind from them. I was embarrassed at first that I'd spent so much time and money getting set up there, especially when I *thought* I was being so smart initially when I threw my lot in with this company. Sunk cost fallacy and all that. But once I mustered up the courage to deal with this head-on, I was able to course-correct and make it right. Thanks in large part to the support and info I found here -- so thanks!