Ameriprise Is Paying Brokers to Dump You Into a “Virtual Advice Unit” and Calling It a Benefit

Same Old Scam, Brand New Name

Merrill Lynch had call centers in Hopewell, New Jersey and Jacksonville, Florida. FINRA investigated them. It was a disaster. I reported on it in 2000 and wrote a full column on it in 2005. Now it is 2024 and Ameriprise has decided to rebrand the same con as a Virtual Advice Unit.

Virtual Advice Unit. Somebody in a corporate conference room got paid a lot of money to come up with that. It sounds sleek. It sounds modern. What it actually is, is a holding pen for clients the firm has decided are not worth a real advisor’s time.

And they are paying brokers $1,000 to make the handoff happen. One thousand dollars to transfer your financial future to a call center staffed by people who just passed their licensing exam. The client has to stay in the unit for at least a year for the broker to collect. That is the transaction. That is what your trust is worth.

The Compensation Structure Is the Confession

You do not need to take my word for it. Look at how these firms pay their advisors:

• Merrill Lynch cut advisor compensation to 20% on accounts under $500,000
• Merrill Lynch pays zero on households below $250,000
• Ameriprise is now using a one-time $1,000 payment to offload smaller clients entirely
• Advisors who keep smaller accounts are financially penalized by their own firms

When the compensation structure punishes advisors for serving you, do not be surprised when they stop serving you. This is not a scandal. It is the business model.

The Pitch They Give You Is Insulting

Ameriprise says eligible clients will receive “personal advice backed by the firm’s innovative capabilities, deep resources, and high standards of service.”

Let me translate that. You are being moved to a cheaper service tier, staffed by entry-level workers the firm hired off LinkedIn for a modest salary and a shot at building their book of business on your account. You are not a valued client in this arrangement. You are a training exercise.

The most honest thing I ever heard at an industry conference was a practice management consultant telling a room full of advisors to fire all their small clients because they are a pain. At least that was honest. Ameriprise is doing the same thing while telling you it is for your benefit.

This Is Why Independent Advice Matters

I decided when I started this firm that we would never do this. No call centers. No virtual advice units. No paying off advisors to dump clients into a phone queue. The reason I keep reporting on this, decade after decade, is because the firms never stop doing it.

If you are sitting in a smaller account at a major wirehouse, you need to ask yourself a direct question. Does your advisor have any financial incentive left to actually help you? Because their employer has gone out of their way to make sure the answer is no.