I have been researching firms and I ran across something that confuses me. I thought that Ameriprise FA's were mainly commissioned or charging a wrap fee.
Now an Ameriprise FA is saying that if someone has (his example) 400K invested at Ameriprise (in 50% equities, and 50% in fixed income, the account is made up of stocks, bonds, and ETFs), then there are Ameriprise advisors charging a flat planning fee of $300 to set up and manage this type of portfolio. This would also include quarterly rebalancing.
This seems odd to me. The stocks and bonds have ZERO expense ratios, the ETFs have anywhere from 9bps to 100bps expense ratios. Estimate $400 a year for trades.
Are some Ameriprise advisors starting to work like this? I can't imagine that there are Ameriprise advisors charging a flat $300, no loads, no wrap, nothing but the flat $300.
Thank you for your help.
Ameriprise charges a fee to create financial plan for the client and then they make commisions or wrap fees to implement it.
Thank you very much for your reply.
So would it be reasonable to expect an Ameriprise FA to set up a plan containing stocks, bonds, and ETFs for a flat $300 if there was no implimentation after that (no rebalancing, etc)?
It would be reasonable to get an asset allocation for $300, but I’m always careful not to show any more of the specifics than I have to until the account is landed. I give examples of potential investments, but point out that the investments are only examples, can change from time to time, and do not represent the entire investment plan. Some may insist on seeing the entire plan in advance, and you may still end up giving a lot of cheap advice in those cases, but that should be the exception and not the rule.
That $300 planning fee always includes recommendations for insurance type products that increase the commissions. So while there is a limited amount coming from the portfolio, there are thousands more insurance sales. Then, if you don’t buy any insurance, then they put you in a 1.5% wrap.
I would assume that the $300 (in this example) is simply a fee that they charge for financial planning services only. With the high fees and expenses charged to an advisor at AMP, I don’t know anyone who could realisically generate any significant amount of business with this small of a fee.