Questions to Ask a Self-Directed IRA Custodian

3. Do you provide any educational materials to assist with the process?

Some of the basic functions of a custodian are to prepare account statements, report to the IRS and carry out directions regarding your IRA, but it does not mean that a custodian cannot provide you with additional educational materials regarding account types and the investing process. Some of these materials could include whitepapers, webinars, in-person events and other opportunities for building your knowledge.

Does the custodian implement new technology and practices to make the process easier for you? Do they try to simplify some of the complexities of self-directed IRA investing? Find out how your potential custodian might go above and beyond what is required for you.

Keep in mind, it is recommended that you have any investment decision reviewed by your financial planner, accountant or lawyer before you decide to make an investment. Directed custodians do not provide any research or due diligence of your investment choices.

4. What are your company’s core values?

This question addresses a custodian’s transparency and professionalism. Do they display their values and mission clearly? Do they confidently convey what they do for you and what they care about?

These values will set the foundation for your experience and will address how the custodian’s employees and staff will handle you as a client.

5. How long have you been conducting business as a custodian?

You want your custodian to be competent, stable, and reliable. In order to have those qualities, it helps if a custodian has been in business for more than a year or two.

Experience can be a factor that separates the custodians who are simply trying to get a piece of the ever-growing self-directed IRA industry from the custodians who have the ability to custody your IRA investments confidently and correctly.

6. What fees are involved?

All custodians will charge fees, but how transparent are they about those fees? You probably want to work with a custodian who will tell you exactly what you will be charged for and when that charge will take place. If the custodian seems to avoid the topic of fees, it might be a red flag.

[View Equity Trust’s Fee Scheule]

Since each custodian is different, you’ll want to ask if you’re charged based on each transaction or based on the value of your account. Be sure to ask a potential custodian how you’re billed as well.

7. How are accounts managed?

What type of experience do you expect? Do you want an option to use an online platform or portal to submit paperwork and access your account? What are your preferences and options in terms of service?

You want to be treated as an individual. Each investment is different and a custodian’s answers to these questions should be customized and tailored to your specific circumstances. Before choosing a custodian, asking service-oriented questions about your account specifically will help you to confidently decide.

8. Do you have any references, referrals, or testimonials?

How satisfied are the custodian’s current clients with the process and experience? Inquiring about how many clients the custodian has could also help you gauge their level of expertise and service. While the potential custodian should provide some client testimonials and references, you should conduct your own research as well.

While references and testimonials might help you decide on a self-directed IRA custodian, consider asking for case studies to discover specific circumstances where individual clients have had positive investment experiences, while learning from their process and results.

Understand the Difference Between a Custodian, Administrator, and Promoter

In the space of self-directed IRAs, custodians, administrators and promoters have separate roles. When choosing a self-directed IRA custodian, it’s important to know the differences to avoid confusing the custodial role with the other two roles.

A custodian or trust can hold title to assets, investments and property, and issue funds, while an administrator and promoter cannot. Administrators and promoters are responsible for marketing, basic reporting, data entry, and other aspects of self-directed IRA investing, but cannot complete transactions without a custodian.

[Business owners: Here are additional factors to consider when choosing a custodian for a small business account.]

If you’re interested in learning more about self-directed accounts at Equity Trust, schedule a consultation or call 855-673-4721.