Fidelity, Ameriprise or other

Microsoft Bazul
Jun 24, 2018 23 Comments

Retired from Microsoft. I have ~$600K in 401K at Fidelity and ~$600K at Ameriprise in non-401K personal portfolio. Another $500K in paid off real estate. As soon as I left MS both Fidelity and Ameriprise have become very interested in moving the money to other investments...no surprise.

Any opinions on Fidelity vs. Ameriprise?

I'm 50. They both want me to move about 20% to a more conservative investment like an insurance company run holding that is a more guaranteed investment that pays out like a pension at 60. So ~$250K that will pay around $18K annual to death to supplement SS. It would pay out market value to beneficiaries upon death. Sounds like they make money and conver their risk via fees from the original $250K investment over time.

Anyone doing something this?

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TOP 23 Comments
  • Uber Tjeesdh
    Ameriprise has a sketchy background
    Jun 24, 2018 0
  • Amazon / Eng n0v
    Microsoft's 401k gives you access to institutional class investments with extremely low fees. No rollover account will come close to those fees.
    Jun 24, 2018 5
    • Google fried🐙
      Vanguard Admiral shares?
      Jun 24, 2018
    • Amazon / Eng n0v
      The institutional class shares that msft 401k can get are typically lower than retail costs for even really low cost funds
      Jun 24, 2018
    • Google fried🐙
      Admiral shares are for example 0.09%, ie below retail by definition
      Jun 25, 2018
    • Google fried🐙
      Even VOO (non admiral class) is 0.04%... I was looking at a bond fund
      Jun 25, 2018
    • Salesforce 2438ez
      VOO is an ETF which matches the admiral class shares of their mutual fund.
      Jun 26, 2018
  • CareerBuilder JonDoe1
    MSFT 401k is well above average for a 401k, but it's still pretty bad in absolute terms. You'd be far better off just rolling over to Vanguard or Fidelity. Vanguard Admiral shares are very close to the institutional share classes, so close That you can't tell the difference.
    Jun 25, 2018 5
    • Salesforce 2438ez
      Explain further? What absolute terms? Their index funds have expense ratios like 0.01%. So I disagree about pretty bad in absolute terms. It is one of the 401(k) plans that I could actually recommend leaving in the 401(k) when leaving the company, for people who are passive enough.
      Jun 25, 2018
    • CareerBuilder JonDoe1
      They only have a few index funds in one or two asset classes. Impossible to create a truly diversified low cost portfolio inside the 401k. No good international options and mediocre bond options.
      Jun 25, 2018
    • Google fried🐙
      Ah ok that’s pretty friggin low.
      Jun 25, 2018
    • Google fried🐙
      But yeah not so great if you can only buy say large cap/S&P 500.
      Jun 25, 2018
    • Salesforce 2438ez
      @JonDoe1, makes sense, thanks. Yeah that is true. If you’re looking for one spot to manage all your money then it won’t suffice. But if you want to hold your US equities there and manage international and bond elsewhere then it works well. But, as you say, vanguard admiral shares are not too far off so if the 0.02% difference in fee is worth the convenience of managing only one account, a rollover could be worthwhile. Definitely getting to the level of splitting hairs and optimizing personal situations... examples: are you converting nondeductible IRA contributions to Roth and need to keep that IRA balance clean by keeping 401(k) balance as is? Do you want protection assurances from 401(k) or flexibility from IRA? OP would need to do what’s best for them personally, and rollover to Vanguard or Fidelity could certainly be the best option depending what they need.
      Jun 25, 2018
  • Capital One OLB
    Vanguard. Fidelity is significantly better than your other current option. Expense ratios tell the story.
    Jun 24, 2018 2
    • Microsoft Bazul
      OP
      So that's a vote for Vanguard but if not there, then Fidelity is significantly better than Ameriprise?
      Jun 24, 2018
    • Capital One OLB
      Yes.
      Jun 24, 2018
  • CareerBuilder JonDoe1
    Fidelity is light years better than Ameriprise. I wouldn't get into any sort of annuity like they seem to be pushing. Just invest in a standard 3 fund portfolio using index funds
    Jun 24, 2018 0
  • Google fried🐙
    How much does Ameriprise charge you? And then annuities? Is Fidelity asking to have you pay 1+% for their management services? I would assume all of these options are bad by default.
    Jun 24, 2018 3
    • Microsoft Bazul
      OP
      Yeah, it's a variable annuities issued by Minnesota Life Insurance Company and distributed through Securian Financial Services (MyPath Ascend 2.0 optional lifetime income benefit)
      Annual cost (greater of benefit base or contract value) 1.4% (2.25% max). I don't know if Ameriprise has a charge on top of that, something I should ask about I guess.

      From other comments on this thread I guess that's I high cost but could an argument be made for the guaranteed income being worth the cost if the market goes evil during retirement which could happen if I went down the road of the cheaper options listed?
      Jun 25, 2018
    • Google fried🐙
      My understanding is that in retirement you reduce exposure to equities and increase generated income by moving to bonds. I’m not an expert. But I think annuities are broadly regarded as snake oil.
      Jun 25, 2018
    • Google fried🐙
      At the very least I would seek out a fee-based financial planner. Even Fidelity gave me a free consult and did not push any products. (When I asked about money management another time they did push annuities I think. Along with the 1.1% management fee. No thanks.)
      Jun 25, 2018
  • State Street Corporation eagle94
    Stick with passive investing as most of the active mangers can’t beat their benchmarks.
    Jun 20 0
  • Proofpoint / Other gaaandu
    No free lunch. If you are paying 1.4 pct, that is a lot over 20 years. Also, there is both the liquidity issue and what I call the fine print issue, meaning, these are complex products and you are an amateur playing against professionals. Go to someplace with cheap fees, and invest in liquid investments you can understand or in real estate.
    Jun 30, 2018 0

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