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Nov 13, 2009 3:21 pm

I have a client that passed away and i just had a meeting with his son, who is keeping his portion with me but also has $1.4 Million with Ameriprise. He wants me to give him a second opionion on his portfolio. He brought in his contract with Ameriprise. Now me being from Jones, I am not accustomed to having a client sign a contract. He said all he pays is $500 a year, with no transaction fees, or wrap fees (other than the $500). His contract did not say anything about fee's from what I saw, but I would think that there is no way that is all he is paying. Like I said, I know nothing about having clients sign a contract with me, but can any of you give me some tips on nailing this account or pointing out "hidden" fees or statements or whatnot on a client contract, that might make him think twice about the other broker, so that I can bring in this client.

Nov 13, 2009 3:24 pm

His fees are just as hidden as yours.  The expenses on funds, annuities, etc.

Although 3rd and Amp2Indy can likely answer this question better, the $500 is for planning services, I think. 

Please call me out if I am wrong.

Also, your clients sign a contract.  They just don't read it and likely neither do you.  It's called an account agreement form.

Nov 13, 2009 3:27 pm

I understand the client agreement form, but we don't sign our clients up for terms. His contract is for 1 year.  I also understand how we make our money, but for them to make $500 and trails off mutual funds just doesn't seem correct. Is it possible they are throwing him all in C shares and thats why they are able to only charge $500? What about the stock. I'm just trying to understand this contract, so that I can give him a good opinion.

Nov 13, 2009 3:33 pm

shoot me a message with the contract (remove the personal info) and I'll review it for you.

Nov 13, 2009 3:33 pm

The planning is a separate service from what I understand. 

They are likely not charging on the stock, but then again I'm not sure.

His contact likely is like the IRA agreements at Jones.  If you leave before your next IRA billing date, they charge you that, plus a termination fee. 

My guess is they will charge him that $500 if he leaves before the year is up.

Just a way for them to insure they are going to be getting fees.

To be honest, it's like selling someone Franklin Templeton Funds, taking the commission, and getting an immediate trail.  Is it really so different?

Nov 13, 2009 3:35 pm

I do not have it in front of me. He was wanting me to  look at his statement, which he will be mailing to me.  What can you tell me about these contracts.

Nov 13, 2009 3:37 pm

"When participating in ongoing financial planning, you pay a fee annually. If you also own an Ameriprise Financial investment or brokerage account, there may be additional brokerage fees and commissions."

 
This is straight from the Ameriprise website. So does this mean he doesn't realize that he is also paying for the transactions?
Nov 13, 2009 3:39 pm

I've never seen the contract, but I would be surprised if it was a contract that can't be cancelled by either party without penalty (well, it is Ameriprise).

 
I would have to see the contract.  I'm sure it spells out various charges in it.
Nov 13, 2009 3:44 pm

Wet - Did you used to work for Ameriprise? To me it looks like the $500 a year is for the financial planning only and he doesn't realize that he is also paying for the transactions.

Nov 13, 2009 3:47 pm

Tell him he won't pay anything annually with you. Put him in 1 fund family and there is no charge!

Nov 13, 2009 3:48 pm
Ron 14:

Tell him he won't pay anything annually with you. Put him in 1 fund family and there is no charge!



And that would be a lie.

Nov 13, 2009 3:52 pm
Ronnie Dobbs:

Wet - Did you used to work for Ameriprise? To me it looks like the $500 a year is for the financial planning only and he doesn't realize that he is also paying for the transactions.

.

 
Never worked for them.  Sadly I don't have that gem on my resume.
Nov 13, 2009 4:01 pm

Nevermind, I just flopped my balls out and called a local Ameriprise CFP.  The $500 is for the financial planning. He is paying for the transactions as well, or in a wrap account. Nonetheless he is paying more than the $500 and doesn't know he is.

Nov 13, 2009 4:04 pm

He knows.  He's just playin' you.

Nov 13, 2009 4:30 pm

Actually i just spoke with the client again. He didn't know. He's pretty pissed about it though.  YaY for me!...I'm off to see how the world ends.....

Nov 13, 2009 5:03 pm

If this guy has a wrap account the fee he's paying is going to be stamped on his statement.  He's not in a wrap account.

Nov 13, 2009 5:14 pm
Ronnie Dobbs:

Actually i just spoke with the client again. He didn't know. He's pretty pissed about it though. YaY for me!...I'm off to see how the world ends.....





Are you going to explain to him the fees inside mutual funds? And that he will paying you commissions as well?



While I don't know his specific plan, their planning tools are pretty good.



The problem is, you may tell him he's paying those fees, and then he forgets.



Let's say he comes to me for a second opinion. I show him that the mutual funds you put him in are charging him $10k a year. Plus, anytime you make a change, you are charging him (outside of that fund family).



He says, "That blasted Windy didn't tell me about that!".



This is why I love invoicing clients. They know exactly what they are paying for everything.

Nov 13, 2009 5:18 pm

lol @ $500/yr for "financial planning"

Nov 13, 2009 5:52 pm
Moraen:
Ronnie Dobbs:

Actually i just spoke with the client again. He didn't know. He's pretty pissed about it though. YaY for me!...I'm off to see how the world ends.....





Are you going to explain to him the fees inside mutual funds? And that he will paying you commissions as well?



While I don't know his specific plan, their planning tools are pretty good.



The problem is, you may tell him he's paying those fees, and then he forgets.



Let's say he comes to me for a second opinion. I show him that the mutual funds you put him in are charging him $10k a year. Plus, anytime you make a change, you are charging him (outside of that fund family).



He says, "That blasted Windy didn't tell me about that!".



This is why I love invoicing clients. They know exactly what they are paying for everything.





I've already explained all this to him. This advisor is a peice of work. He told the client "You don't pay me a dime! I make my money from the investment company that you put your money with, not you". What a dbag.

Nov 13, 2009 6:00 pm

I surprised FINRA has not put a tent up outside your office with all the shady advisors you uncover.