7 Big “No-No’s” When Choosing a Self-Directed IRA Custodian (Part 2)

November 30, 2017  --  Episode #288

Transcript    ∙    Links & Resources    ∙    Discussion



Yesterday I hit you with the first 3 big “no-no’s” when you’re choosing a self-directed IRA custodian.  But that’s not all… today you get 4 more… and they’re BIG… I’m Bryan Ellis.  This is episode #288 of Self-Directed Investor Talk.




Hello, Self-Directed Investor Nation!  Welcome to the broadcast of record for savvy alternative asset investors like you, where in each episode, I help you to find, understand and profit from exceptional alternative investment opportunities.

I’ve just undertaken a dangerous mission en route to providing today’s content to you, my friends!  That mission?  Attempting to use the internet for any type of research without being totally swallowed up by the incredible explosion of “bitcoin experts”… hehehehe.  What do you want to bet that the number of bitcoin experts is always directly proportional to the price of bitcoin?  Hehehehe.  But I digress.

Today, we focus on 4 more big “no-no’s” if you’re looking to select your first, or a subsequent, self-directed IRA custodian.  If you missed yesterday’s show – which prompted quite a bit of email to me – you definitely should check it out.  The link to that show is on today’s show page.

Speaking of which, today is Episode #288, so today’s show page is SDITalk.com/288.  That’s where you’ll find today’s broadcast – in video, no less, hehehe – along with the full transcript, resource links and comments area for today’s show.  And that comments area there on SDITalk.com/288 is the best way to give us your feedback about this show.  Another fine option is to give us a call toll free at 833-SDI-TALK… and of course, there’s good ole email, which is still my favorite.  You can reach me on email at the address [email protected]

Ok, let’s do this.

No-no #4 for selecting a new self-directed IRA custodian:  Beware of “free” accounts.  Look, it doesn’t automatically mean an IRA company is up to no good if they offer you a “free” account… but nothing in this world is really free, so always ask yourself what the end game is.  Let me expose you to a bit of inside baseball, folks:  The self-directed IRA world is growing, and growing very quickly.  I have the opinion, which I believe many custodians share with me, that the next 5 years will see a boom in IRA custodians being acquired by larger financial companies, and these custodians know that one of the ways they’ll be valued is on the basis of the raw number of client accounts they hold.  Look, fair enough… but just be wary of this… and do your best to find out why the custodian is offering free accounts, and what their plans for the company is in the future.  And PLEASE… do yourself the favor of understanding the limits of the “FREE” offer… because I’ve never ever seen a custodian offer a free account with no strings attached.  If I did see such a thing, I’d assume it was a scam.

No-No #5:  Never hesitate to switch IRA custodians if you have a good reason to do so.  If your custodian has done a good job and earned your loyalty, reward them with your continued patronage.  But if they haven’t done well for you, move on… and don’t let them dissuade you.  It’s a buyer’s market right now, and you should take advantage of it.

No-No #6:  Be careful about selecting a custodian who doesn’t even mention to you the possibility of using a solo 401(k) rather than an IRA.  It’s my humble – but entirely accurate – opinion that the solo 401(k) is far superior to any IRA for most types of non-standardized alternative asset investing like real estate or private loans or really anything that doesn’t usually trade on an exchange.  There are a lot of reasons for this, and I’ll point you to some past episodes that compare IRA’s and 401k’s for self-directed investors on today’s show page at SDITalk.com/288… but if the custodian you’re considering doesn’t even bring up the possibility of using this tool, that could be a red flag that they’re acting more out of their own interests than yours.

And the final no-no when selecting a self-directed retirement account custodian:  If you go with a solo 401(k), use one that qualifies as a trustee-managed plan rather than a custodian-managed plan.  This is because there’s strong legal reason to suspect that the biggest benefit of 401k’s versus IRA’s – which is resiliency versus prohibited transactions – is essentially eliminated in custodial 401k plans.  There’s an entire past episode of this show about that very topic, and it’s also linked on today’s show page at SelfDirected.org/288.

And finally, here’s the answer to the most burning question about this series of “no-no’s” when choosing a custodian:  Why am I using the term “no-no” rather than something more professional like “warnings” or “guidelines” or “areas of concern”?

There’s a very technical, substantive reason, actually:  I have 4 children, the oldest of which is a college sophomore, but the two youngest of which are 3 and 4 years old, respectively… so I spend a lot of time saying “no…no… NO!”  Hehehe.

That’s all for today, my friends, other than a quick note:  If you would like some great independent guidance about selecting the RIGHT self-directed retirement account – whether IRA or 401k – for you, check out today’s show page at SDITalk.com/288.  There’s a great video there you can watch which will really open your eyes!

My friends, invest wisely today, and live well forever!


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Bryan Ellis

I am host of Self Directed Investor Talk, which I'm told is America's #1 podcast and for affluent self-directed investors. I'm also something of an expert in self-directed IRA's, solo 401k's and 1031 exchanges. You can find more of my writing in some cool places like TheStreet.com, Entrepreneur.com, ThinkRealty and even Forbes (that was always one of my goals!). I live in metro Atlanta, Georgia with my wife and business partner Carole Ellis(she's a real business partner... not just because she's my wife... I'd want to work with her if I wasn't married to her... and I'd want to marry her, too). I also have 4 children ranging in age from 2 to 20 (yes, you read that correctly). It's my goal to be the name everybody thinks of when they think of Self-Directed IRA's and Solo 401(k)'s.