Ameriprise financial advisors are fiduciaries only some of the time. Whether an Ameriprise advisor owes you a fiduciary duty depends on the type of account you hold with them, not on their title. When they manage your money through an investment advisory account, they must act as a fiduciary. When they place trades for a commission through a brokerage account, they operate under a lower legal standard called Regulation Best Interest.
Why the Same Advisor Can Wear Two Hats
Ameriprise Financial Services, LLC holds two separate registrations. FINRA regulates it as a brokerage firm, and the SEC regulates it as an investment adviser.1FINRA. Ameriprise Financial Services, LLC – BrokerCheck2Investment Adviser Public Disclosure. Ameriprise Financial Services, LLC – Brokerage/Investment Adviser Firm The dual registration lets one firm offer ongoing portfolio management under adviser rules and execute individual securities trades under broker rules.
In practice, your advisor could owe you a fiduciary duty during a morning meeting about your managed portfolio, then operate under a different standard that afternoon when recommending a mutual fund through your brokerage account. The legal obligation attaches to the service and the account, not to the person. Many large financial firms are structured this way, and investors who assume they always receive fiduciary-level care often do not.
When an Ameriprise Advisor Is Your Fiduciary
When an Ameriprise advisor manages assets through an advisory account, typically a wrap-fee or managed account program, they act as an investment adviser and owe you a fiduciary duty under the Investment Advisers Act of 1940. Section 206 of that law prohibits advisers from defrauding a client, engaging in any practice that operates as fraud or deceit, or trading from their own account with a client without written disclosure and consent.3GovInfo. Investment Advisers Act of 1940
Courts and the SEC read those provisions as imposing two core duties. The duty of care requires the advisor to give advice that is in your best interest based on your individual financial situation. The duty of loyalty requires the advisor to put your interests ahead of their own and to disclose all conflicts that could influence a recommendation, including how they are paid and whether they receive incentives for choosing certain investments.4Interactive Brokers. Investment Advisers Act of 1940 – Fiduciary Duty – Spotlight On
The duty is also continuous. The Advisers Act uses the term “investment supervisory services” to describe the giving of continuous advice based on your individual needs.5Office of the Law Revision Counsel. 15 US Code 80b-2 – Definitions Your advisor has an ongoing obligation to monitor your portfolio and adjust as your circumstances change, not just at the moment a trade is placed. When advisers fall short, the SEC can bring enforcement actions carrying significant penalties, censures, or suspensions.6U.S. Securities and Exchange Commission. SEC Charges Investment Adviser and Two Officers for Misuse of Fund and Portfolio Company Assets
When the Best Interest Standard Applies Instead
When an Ameriprise advisor facilitates a stock purchase, mutual fund sale, or other securities transaction for a commission, they are acting as a broker. In that role, they do not owe you a fiduciary duty. They must follow Regulation Best Interest, a SEC rule codified at 17 CFR 240.15l-1.7eCFR. 17 CFR 240.15l-1 – Regulation Best Interest
Regulation Best Interest requires the broker to exercise reasonable diligence, care, and skill when making a recommendation. They must have a reasonable basis to believe the recommendation is in your best interest based on your investment profile, and they cannot place their own financial interests ahead of yours at the time of the recommendation. If a broker recommends a series of transactions, they must also have a reasonable basis to believe the series is not excessive taken together.7eCFR. 17 CFR 240.15l-1 – Regulation Best Interest
The critical difference is timing. Regulation Best Interest applies at the point of recommendation. Once a brokerage transaction is complete, the broker generally has no continuing legal duty to monitor the investment or to alert you if conditions change. In a fiduciary advisory relationship, that monitoring duty lasts as long as the relationship does. If you hold investments in a brokerage account and the market shifts, deciding when to act is largely on you.
Conflicts That Persist Even in Advisory Accounts
Fiduciary duty does not eliminate every conflict of interest; it requires disclosure and management of them. Ameriprise participates in mutual fund programs where fund companies pay asset-based fees for inclusion on its platform. The firm discloses that its advisors generally have a greater incentive to offer funds from “full participation” firms, meaning fund companies that pay Ameriprise more in revenue sharing and provide training and support to advisors. When two similar funds are equally recommendable, the firm’s investment research group prefers the fund from a full participation firm.8Ameriprise Financial. Purchasing Mutual Funds and 529 Plans Through Ameriprise Financial
Ameriprise also states that it generally receives more revenue from sales of its affiliated mutual funds than from sales of other funds, and that certain employees may receive higher compensation based in part on assets invested in affiliated products.8Ameriprise Financial. Purchasing Mutual Funds and 529 Plans Through Ameriprise Financial
These conflicts have produced regulatory action. In 2018, the SEC found that from at least 2010 through 2015, Ameriprise sold certain retirement plan customers more expensive mutual fund share classes when they were eligible for cheaper, load-waived versions available on the same platform. The firm earned more revenue from the pricier shares but did not disclose that fact. Affected customers paid approximately $1.78 million in unnecessary charges, which Ameriprise later reimbursed along with roughly $191,000 in interest.9SEC.gov. Order Instituting Administrative and Cease-and-Desist Proceedings – Ameriprise Financial Services
Cash sweeps are another sore point. Ameriprise’s brokerage accounts default uninvested cash into the firm’s affiliated bank, where the firm earns a spread on the interest. A lawsuit has alleged that the rates Ameriprise offered on those cash balances were substantially lower than rates available through competitors.
How to Tell Which Standard Applies to Your Account
Read the Ameriprise Form CRS
The most direct way to see which standard governs your relationship is the firm’s Client Relationship Summary, or Form CRS. Federal rules require every registered investment adviser and broker-dealer to deliver this form to retail investors before or at the time the relationship begins.10eCFR. 17 CFR 275.204-5 – Delivery of Form CRS Form CRS must use language prescribed by the SEC to describe the firm’s legal obligations, so a firm cannot swap in marketing language for the standard-of-conduct disclosure.11U.S. Securities and Exchange Commission. Frequently Asked Questions on Form CRS Ameriprise’s Form CRS is on the firm’s website and confirms that Ameriprise offers both brokerage and advisory services with different applicable standards.12Ameriprise Financial. Ameriprise Client Relationship Summary Form CRS
Check Your Engagement Agreement
Your individual account agreement identifies the fee structure and the exact capacity in which the advisor is serving. If the agreement describes an ongoing asset-based fee and references investment advisory services, you are likely in a fiduciary relationship. If it describes per-transaction commissions and references brokerage services, Regulation Best Interest applies instead.
Ask the Advisor Directly
When in doubt, ask: “Are you acting as my fiduciary for this account?” The answer may differ from one account to another within the same overall relationship, so ask about each account you hold.
Look Up the Advisor on BrokerCheck
FINRA’s BrokerCheck tool at brokercheck.finra.org lets you look up any registered broker or advisory firm, including Ameriprise and its individual advisors. A BrokerCheck report shows customer disputes, disciplinary events, and certain criminal and financial matters on the firm’s or individual’s record.13FINRA.org. About BrokerCheck For individual brokers, the report also covers regulatory complaints, investigations, terminations tied to alleged misconduct, and investment-related civil actions. Reviewing this history before entering a relationship, and periodically after, helps you spot patterns of complaints.
What to Do If Your Advisor Breaches Their Duty
File a FINRA Arbitration Claim
Most disputes with brokerage firms and their advisors are resolved through FINRA arbitration rather than court litigation. To file, you submit a Statement of Claim describing the dispute and damages sought, a signed Submission Agreement acknowledging you will abide by the arbitrator’s decision, and a filing fee tied to the size of the claim. Claims are filed through FINRA’s online DR Portal, though investors representing themselves may file by mail.14FINRA.org. File an Arbitration or Mediation Claim Arbitration tends to be faster and less expensive than court, but the arbitrator’s decision is generally final and binding.
FINRA recommends trying to resolve the issue directly with the firm first. You can also file an Investor Complaint with FINRA.14FINRA.org. File an Arbitration or Mediation Claim
Report Violations to the SEC
If you believe an advisor violated their fiduciary duty under the Advisers Act or Regulation Best Interest, you can submit a tip to the SEC through its online Tips, Complaints and Referrals Portal. To be eligible for a financial award under the SEC’s Whistleblower Program, answer “yes” to the whistleblower program question and complete the whistleblower declaration at the end of the online questionnaire.15U.S. Securities and Exchange Commission. Information About Submitting a Whistleblower Tip