There’s more than meets the eye when it comes to picking a self-directed IRA provider. You might make a good choice when picking at random— but the luck of the draw is not always in your favor. You may end up at a custodian who caters to gold investments when you want to flip real estate, or with a provider who charges you out the nose for subpar service— not what you were hoping for. Rotten luck? As luck would have it? Better luck next time? No!
Some providers aren’t up to snuff, but that doesn’t mean you should write off all self-directed IRA providers. Working in the industry, I hear complaints and horror stories from clients transferring their accounts from other custodians regularly. As someone who works tirelessly to ensure clients have the best experience possible, I don’t like hearing this from anyone. When doing your research, remember that their website may sound truthful and promise a lot— but do they walk the walk, or is it just talk? Where’s the follow through?
If you keep your eyes out for the following, you can make sure to end up with one of the good guys.
You’d think the fees would be one of the first things investors would look at when picking a provider, but that’s not always the case. If you don’t make the right choice when opening the account, you can end up paying a huge chunk of your nest egg just on maintenance fees— not the savings boon you were hoping for.
Providers typically charge on a per-value (the overall value of your IRA) or a per-asset (the total number of assets in your IRA) basis. Depending on what you hold in your IRA and your investment strategy, these methods can change the price of your IRA drastically.
For example, if you have an IRA worth $300,000, holding 1 real estate asset, and are paying based on the value of your account, you’d end up paying a competitor around $660 per year. At IRA Resources, we charge based on the number of assets in your account. If your account holds just that one asset and you don’t do any additional purchases, you’d be paying $199 per-year.
Some providers also charge for transfers, rollovers, check deposits, and more— you should clarify what won’t be included before opening your new account. If you’d like more information on how we charge, you can check our fees page.
Low fees are important to consider when saving for retirement, but don’t let that blind you to the other important qualities in a self-directed IRA provider. Make sure your potential provider allows your investment of choice and are familiar with the process— opening an account and being unable to invest as you wanted is not how to build your retirement wealth. If your provider does not allow single-member LLCs and that’s the cornerstone of your investment strategy, you should find a custodian that can allow you to truly invest your way. Not only is it important to make sure you can invest as you chose, but that your new provider has experience with your chosen investment type. Be sure you ask detailed questions of whoever you speak to— and if they don’t know the answers, that they can get the answers for you in a timely manner.
It’s also important that you can get ahold of your provider when you have a question, concern, or just a tight deadline— something IRA Resources prides itself on being able to offer. We don’t believe in the never-ending phone trees you find at some custodians— and if you’re not a fan, you should keep that in mind when researching. Do they answer your emails? Can you get someone on the phone, other than a sales representative? And if you do speak to someone, are they helpful and knowledgeable, or just trying to close the deal? This is the first step in your self-directed experience and a bad interaction is a good sign of how this provider treats their clients. It’s worth taking note of before you’ve opened your account and started investing. At IRA Resources, the representatives you’ll speak to are CISPs (Certified IRA Services Professionals), so you know you’re getting the most accurate and up-to-date information available.
Your potential provider may have their ducks in a row the moment you call, but maybe you spoke to a particularly knowledgeable representative. Is their leadership team experienced and involved in the overall business strategy? What about the company’s history? There are a lot of businesses out there offering self-directed IRAs, but not all of them treat their clients the way they should. It’s important to investigate the practices of the business, like if they’re audited regularly— this can help ensure you’re getting involved with a company you can trust. How often have they been sued, and for what? Lawsuits are something that happens occasionally if you run a business, but a large number or pattern can tell you a lot about how business is run. Looking at the BBB rating and other review sites, such as Yelp and Glassdoor, gives you some insight as well— what’s going on behind the scenes that could impact your investment? What do the client testimonials say? You’ll want to know before you sign on the dotted line.
With the growing popularity of self-directed IRAs, providers are popping up left and right. You’d think, since the account is “self-directed”, the differences wouldn’t matter— an IRA is an IRA is an IRA, right? Wrong. The company you use to open your self-directed IRA can make a major difference in your retirement experience. If you end up with the wrong one, you can miss out on opportunities to invest or get yourself into a tax bind if they don’t follow the rules and regulations. In the end, once you find a trustworthy provider, they can be the best partner for your financial future. IRA Resources would love to help you build wealth in your retirement.