Who Is The Best Self-Directed IRA Custodian?
The best self-directed IRA custodian is *somewhat* subjective - I think there are 3 or 4 custodians (and administrators) who deserve the crown - but who is NOT the best is very clear...
Picking the right custodian for your self-directed IRA is a vitally important decision. It's particularly critical if you plan to invest in real estate or any other asset that requires formal title work for conveyance, because those assets are much harder to transfer to a different custodian if you don't like the service you're receiving.
As you make this decision, keep this fact in mind: There's no obligation on you to use one and only one self directed IRA custodian. In fact, there are some circumstances when it actually makes a lot of sense to have multiple distinct IRA's. I'll get into that a bit later.
Here are 7 key considerations for selecting a self-directed IRA custodian:
1. Quality of Service: It would shock you to know how many times I've encountered custodians who have made major mistakes in their client accounts. The worst one I've seen (and I've seen it repeatedly) was a major custodian who totally failed to record a real estate deed for a property purchased in an IRA. This can be a real disaster.
2. Speed of Service: This matters more for some people than others. If you're buying real estate at a foreclosure auction, you need a way to get access to cash quickly, so you'll need to find a custodian who can commit to that.
3. Experience with Your Asset Class: If you're going to invest in real estate, choose a custodian that has a lot of experience with real estate investments. Seems obvious... but many people don't even ask.
4. Experience with Your Specific Strategy: Let's return to the example of investing in real estate. What does it mean - in your specific case - that you want to "invest in real estate"? If it means buying a plot of land and holding it, then nearly any self directed custodian can handle that for you. But if "real estate investing" to you means that you buy a house, renovate it, resell it via owner financing, and then resell the note in stages via separate partial transactions... well, clearly that strategy is very, very different from merely buying and holding real estate. Work with a custodian who understands precisely what you're doing so that you're not impeded when opportunities arise.
5. Asset Titling Options: How legal title to your assets is held by your IRA is a question that almost nobody considers until it's far too late. I have another article here that goes much deeper into this topic, but the basic summary is this: The way that most custodians hold title to assets builds a substantial dependency on that custodian for you. In other words, if your assets are titled incorrectly, it could be very difficult and expensive to change custodians if it was ever necessary. Read the article about IRA Asset Titling and be sure to select a custodian who will give you the flexibility you need
6. Personal Representative: When possible, use a custodian who assigns a personal representative to your account. It can be very helpful to have a personal relationship with a specific person.
7. Fees: Most self directed IRA custodians charge some combination of a flat annual fee along with a per-transaction fee. A few of them charge a flat percentage based on the size of the account... and usually, those are more expensive. It hasn't been my observation that there's an real correlation between the size of fees paid to a custodian versus the quality of their service, so aim to minimize fees.
I don't believe there is a single self directed ira custodian that is fundamentally the right choice for everyone. The best way to find the right custodian is to seek out the opinion of trusted colleagues. If you know me personally and want my opinion, give me a call