Ameriprise Retracts Plan to Levy Discretionary Fees on Indie Brokers

13 Dec    Investing News

Reacting swiftly to a backlash from many of its independent brokers, Ameriprise Financial has canceled plans to charge monthly fees of $750 to $2,000 for using its discretionary platform to manage client accounts.

The Minneapolis-based firm had announced internally last Friday that it would impose the new charges in April 2020 to offset technology “enhancement” costs and to reduce the regulatory risks of controlling client accounts.

On Wednesday afternoon, Ameriprise emailed affected advisors that it was abolishing the planned “program” fee.

“One of the things we are most proud of about Ameriprise is our client- and advisor-centric culture, which influenced this decision,” a spokeswoman said in an e-mailed message after the firm told discretionary-account advisors Wednesday afternoon that it would retract the plan. “We care, we listen and, when appropriate, we make adjustments.”

Such policy changes are rare, according to brokers, and reflect the concerns of some of Ameriprise’s most successful independent brokers who use its SPS Advisor program. The spokeswoman said she could not immediately comment on other occasions when planned fees were rescinded.

The fees were to have been tiered to the number of accounts that independent contractors managed on the platform. More than 7,700 of Ameriprise’s brokerage force of 9,930 are so-called franchise, or independent, advisors, although not all of them exercise discretion over client accounts.

Independent brokers at Ameriprise and other firms retain much higher percentages of the fees and commissions paid by their customers than do brokers who are full-time employees, but they also are subject to a broad array of operational, compliance and product-platform fees that are not levied on employee-channel brokers.

The discretionary platform fee was to have been imposed at a time when most brokerage firms have been promoting advisory accounts in which customers pay asset-based fees as opposed to traditional commission-based transactional accounts. But they also have been changing policies to meet new conflict-of-interest concerns from regulators about “reverse churning,” where customers who do little trading pay more in asset-based fees than they would have been charged in commissions.

“We will continue to invest in the SPS Advisor program to best serve our advisors and their clients—and we look forward to continuing to partner with our advisors to appropriately manage the heightened risk presented when clients give full investment management discretion,” the Ameriprise spokeswoman said.

Ameriprise’s major competitors are not known to have imposed discretionary-account fees on advisors.

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