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Ameriprise Financial Services Review

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Ameriprise Financial Services, Inc.

With about $248.3 billion in assets under management, Ameriprise Financial Services, Inc. is not the largest wealth management firm in the U.S. (the two largest have more than $1 trillion in assets under management). But it is certainly one of the most well known. This is, of course, thanks to all of its TV ads over the years. Prior to being spun off as its own publicly owned company (ticker: AMP) in 2005, the company was American Express Financial Advisors.

The firm is both an investment advisor and broker-dealer. It has headquarters in Minneapolis and other corporate offices across the country. Most of its nearly 13,000 advisors are also brokers and insurance agents. So in addition to providing financial advice, they sell investment and insurance products. 

Ameriprise Financial Services Background

Ameriprise’s history goes back to 1894, when it went by Investors Syndicate. It has since changed ownership and names a couple of times - and acquired other companies, including H&R Block Financial Advisors, J. & W. Seligman, Columbia Management, quantitative platform Dynamic Ideas and British investment firm Threadneedle.

According to Investment News, the only broker-dealer to bring in more revenue than Ameriprise is LPL Financial. The latter had almost $5.2 billion in revenue in 2018, while Ameriprise had more than $4.8 billion. Of that $4.8 billion, $1.25 billion was in commissions and $2.6 billon was in fees. 

Ameriprise Financial Services Client Types and Minimum Account Sizes

The firm’s minimum account sizes vary, depending on the investment program. The range runs from $25,000 (for Ameriprise Strategic Portfolio Service Advantage and Active Portfolios) to up to $500,000 (for a select separate account). That said, Ameriprise may waive its minimum at its discretion.

As a result of its relatively low minimum, the vast majority of Ameriprise’s clients do not have a high net worth. The 2018 numbers, to be exact, are 41,220 high-net-worthers to 879,274 individuals who are not as wealthy. Ameriprise also works with trusts, estates, pension and profit-sharing plans, charitable organizations, state and municipal entities, corporations and other business entities.

Services Offered by Ameriprise Financial Services

Ameriprise offers an array of financial services, including asset allocation, ongoing portfolio management services and financial planning. As noted earlier, advisors are also able to sell financial and insurance products, for which they receive a commission from the vendor. Portfolio management can be on a discretionary or non-discretionary basis, depending on the investment program. It can also be through a wrap fee program.

The investment programs, which the company calls “Advisory Solutions” are:

  • Strategic Portfolio Service (SPS) Advantage 
  • SPS Advisor 
  • Active Portfolios® 
  • Select Separate Account 
  • Investor Unified Account (offered through Envestnet Asset Management’s web-based platform)
  • Vista Separate Account (offered through Envestnet)
  • Access Account (offered through Envestnet)

SPS Advantage is the only non-discretionary program. Active Portfolios and Access Accounts solely invest in mutual funds and exchange-traded funds (ETFs). Alternately or additionally, clients can open brokerage accounts.

Ameriprise Financial Services Investing Philosophy

Ameriprise advisors generally use an asset allocation strategy for diversifying assets across various asset classes. The idea is that investing in non-correlating sectors will lower the volatility in your overall portfolio. Your asset allocation will depend on a number of factors, including risk tolerance, time horizon and goals.

With Select Separate Accounts, the strategy depends on the investment managers, of course. Broadly speaking though, they apply fundamental analysis when considering investments. Managers of model portfolios may also utilize computer-based quantitative analysis. Technical analysis may also be applied.

Fees Under Ameriprise Financial Services

For a managed account with Ameriprise, fees include the wrap fee, the investments and infrastructure support fee (for SPA Advisor Accounts), investment costs and any additional transaction-related fees.

The annual wrap fee is generally 2% of managed assets. For Active Portfolios, the percentage goes down for higher amounts of investments. Similarly, Envestnet accounts are on a tiered-fee schedule that depends on the investment strategy (equity and balanced, fixed income or mutual fund/ETF account). These fees range from 2% to 3% at the lowest asset level (less than $100,000) to 0.90% to 1.6% at the highest asset level (more than $50 million or $100 million).

For financial planning services, fees depend on a number of factors, including your advisor’s years of experience, professional credentials, the complexity of your needs and how often you meet. The minimum annual fee is $500, though your advisor may charge more. Also, this fee is negotiable. Additionally, there is a minimum $50/month fee, which may also be higher.

What to Watch Out For

As mentioned earlier, most Ameriprise advisors are also insurance agents and brokers who receive commissions on sales. This presents more conflicts of interest than advisors who don’t wear other hats. That said, as advisors, they are legally bound to work in clients’ best interests. (As brokers, they must only make suitable recommendations.)

Disclosures

In its most recent SEC filings, Ameriprise had a total 132 disclosures. Of them, 95 involved individual affiliates, four involved affiliate firms and 33 involved the company itself. Of the latter 33, the fines or penalities ranged from $100 to $8.65 million dollars and concerned regulatory and civil violations. 

All information was accurate as of the writing of this article. 

Tips for Finding the Right Financial Advisor 

  • Ask how prospective advisors get paid. When they receive only fees from clients, they have less conflicts of interest than advisors who also receive commissions. 
  • Also ask about the advisor’s clientele profile. If you have a high net worth, you don’t want an advisor who has only a handful of clients like you. Same goes if you are on the other end of the scale. You want someone who has the experience and know-how to help people at your level - and considers you important, regardless of your asset level. 
  • Use SmartAsset’s free financial advisor matching tool. Simply answer questions about your financial situation and preferences, and the program will match you with up to three advisors vetted by us.

How Many Years $1 Million Lasts in Retirement

SmartAsset's interactive map highlights places where $1 million will last the longest in retirement. Zoom between states and the national map to see the top spots in each region. Also, scroll over any city to learn about the cost of living in retirement for that location.

Least
Most
Rank City Housing Expenses Food Expenses Healthcare Expenses Utilities Expenses Transportation Expenses

Methodology To determine how long a $1 million nest egg would cover retirement costs in cities across America, we analyzed data on average expenditures for seniors, cost of living and investment returns.

First, we looked at data from the Bureau of Labor Statistics (BLS) on the average annual expenditures of seniors. We then applied cost of living data from the Council for Community and Economic Research to adjust those national average spending levels based on the costs of each expense category (housing, food, healthcare, utilities, transportation and other) in each city. Using this data, SmartAsset calculated the average cost of living for retirees in the largest U.S. cities.

We assumed the $1 million would grow at a real return (interest minus inflation) of 2%. This reflects the typical return on a conservative investment portfolio. Then, we divided $1 million by the sum of each of those annual numbers to determine how long $1 million would cover retirement expenses in each of the cities in our study. Cities where $1 million lasted the longest ranked the highest in the study.

Sources: Bureau of Labor Statistics (BLS), Council for Community and Economic Research