• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Wealth Pilgrim

No Money Worries. No Matter What.

Neal Frankle featured in
  • Home
  • Life Insurance
  • Investing
    • Build Strong Investment Building Blocks To Avoid Going Broke In Retirement
    • Systematic Mutual Fund and ETF Investing
    • Stock Market Investing Guide
    • Choosing the Right Investment Brokerage Guide
    • How Bonds Work Guide
    • How Banks Really Work Guide
    • Annuities – What You Need To Know Before You Invest
    • A Beginners Guide To Buying Individual Stocks
    • Create A Pool Of Great Mutual Funds and ETFs To Pick From To Secure Your Retirement
    • ETF and Index Fund Investment Guide
  • Earn More
  • Banking
  • Retirement Planning
    • Retirement Guide
  • Ask Neal a Question
  • Reviews
    • Upgrade Personal Loans Review
    • Lending Club Review
    • Prosper Review
    • Ally Invest TradeKing Review
    • CIT Bank Review
    • LegalZoom Review
    • Lexington Law Review
    • Airbnb Host Review
    • Should You Drive For Uber?
  • Tax
  • Courses
    • Raise Your Credit Score So You Can Buy a House – Free Video Course

How to Pick IRA Custodians

by Neal Frankle, CFP ®, The article represents the author's opinion. This post may contain affiliate links. Please read our disclosure for more info.

Believe it or not, your IRA custodians have a huge impact on your ultimate investment results. I received an email recently from “K” with a frequently asked question about IRAs. My answer will illustrate exactly what I mean.

Here’s K:

”We have a few IRAs that I would like to roll over into one IRA for simplicity’s sake. Can you suggest how to even begin researching which one to choose? I start reading this and that and front-loading, rear-loading, and my eyes glaze over. We don’t really have the money for an advisor and such – so how can “regular” people make a selection?”

Nice question, K. It shows old Pilgrim Boy you’re really using your noodle. You’re definitely on the right track. There is almost no reason to have lots of different IRA accounts all over town. Combine and simplify. That’s my motto. But remember, do not use an IRA custodian if they restrict your investment strategy. You don’t have to conform to them. There is a huge difference between IRA restrictions and IRA custodian restrictions.

As you’ll see, if you have investments directly held at mutual funds, banks, insurance companies or brokerage firms, they often restrict you big time. They want you to buy their “schlock” and nothing else. So if you have your IRA at Vanguard (for example) you’ll pretty much have to have Vanguard funds. If you have an IRA with a brokerage firm, you can only own what the broker wants you to own. Stinky-poo.

Consolidate your IRA investments with a custodian who won’t restrict you. This is one of the best ways to save money because it reduces IRA fees.

This will make your life simpler and make it easier to track your money. Also, you’ll be able to reduce costs and actually make better investments. My advice is to roll all the accounts over to one custodian like Fidelity or TD Ameritrade. They’ll hold (almost) all your funds and investments, and they have a large menu of other investments you can make — many of which are no-load.

Now, let’s address how to invest your IRA money.

I advise you NOT to invest in any loaded funds like I said. That means no A, B or C shares. You can find great alternatives that won’t charge these commissions. (If you go into a bank, they’ll try like crazy to shove these loaded alternatives down your throat, but don’t fall for it. Tell them to shove it instead.)

In order to even have no-load funds as choices, you have to open an account at a place like TD Ameritrade or Fidelity. If you open your IRA at a bank or with a brokerage (like Ameriprise) you’ll have to deal with a broker and then you might be sold loaded funds.

Also, the bank or brokerage company probably won’t hold on to your old IRA investments. They’ll force you to sell them all. But if you go to TD Ameritrade or Fidelity, you can hold your old investments and buy just about anything you want without paying loads when you make new IRA contributions.

Advisors who are Registered Investment Advisors use Fidelity and TD Ameritrade too. This way they can offer clients like you no-load funds. However, if you decide to use an advisor, she’ll charge you an annual fee of 1 or 2% – depending on the size of your account. If you don’t want to manage the account yourself, getting an advisor might be a worthwhile alternative. I like that alternative better than using a broker who will sell you funds that have commissions (loaded funds).

In my experience, it’s really hard to find an impartial broker who knows what he or she is doing. You might get lucky but I’d prefer that you open an IRA with TD Ameritrade or Fidelity and then roll all your IRAs to that custodian. At that point, use an advisor, or if you want to manage the money yourself, you’ll have all the choices in the world.

Once you do that, you’ll have a world of funds available – and most will be no-load. Now you must decide how to invest that money.

If you are young and you have many years before you plan on using that money, you really ought to consider growth. You’ll face ups and downs of course, but over the long-run you’ll be better off.

 

 

Tweet
Pin
Share

Reader Interactions

User Generated Content (UGC) Disclosure: Please note that the opinions of the commenters are not necessarily the opinions of this site.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Are You Human? * Time limit is exhausted. Please reload CAPTCHA.

Primary Sidebar

Who is Neal Frankle

Neal Frankle

I'm a Certified Financial Planner™ with more than 25 years of experience. I feel very blessed and hope to share my personal financial experience and professional wisdom with readers of WealthPilgrim.
Read More »

Stay Connected

Facebook Twitter YouTube RSS

More Categories

Career Development
College Funding
Credit Cards
Credit Score Fixes
Money and Marriage
Debt Relief
Estate Protection
Property Investment Loans
Small Business Strategies
Spend Less Money

Disclaimer

Wealth Pilgrim is not responsible for and does not endorse any advertising, products or resource available from advertisements on this website. Wealth Pilgrim receives compensation from Google for advertising space on this website, but does not control the advertising selection or content. Please do the appropriate research before participating in any third party offers. The information contained in WealthPilgrim.com is for general information or entertainment purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation. Wealth Pilgrim does not provide investment advisory services and is not a registered investment adviser. Neal may provide advisory services through Wealth Resources Group, a registered investment adviser. Wealth Pilgrim and Wealth Resources Group are affiliated companies. In accordance with FTC guidelines, we state that we have a financial relationship with some of the companies mentioned in this website. This may include receiving payments,access to free products and services for product and service reviews and giveaways. Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.


About · Contact · Disclaimer & Privacy policy

Copyright © Wealth Pilgrim 2021 All Rights Reserved