When it comes to choosing a custodian for your self-directed IRA, it's important to make sure that you select one that is reputable and trustworthy. Requesting references and performing a background check on the advisors you select is a great way to ensure that you are making the right choice. You can use FINRA's free BrokerCheck service to do this. The lack of industry knowledge is the main complaint of customers when it comes to custodians.
This can have a real cost, and may even be considered fraud. Customers have reported issues with former custodians whose staff simply didn't know what they were doing, resulting in fees being charged to the IRS due to custodian errors. When selecting a custodian, it's important to make sure that they have a long history of providing custodial services without any major complaints or problems. It's also important to make sure that they are able to provide the services you need, such as helping an advisor operate between accounts, creating scalable model portfolios, effectively rebalancing, invoicing, and preparing basic performance reports.
You should also make sure that your customers feel comfortable with the custodian, as they will be in frequent contact with them. The responsibilities of a custodian are multifaceted and affect nearly every aspect of an advisor's business. When deciding if you're big enough for a custodian, it's important to consider the size of your business and the number of accounts you manage. It's also important to make sure that the custodian is able to provide sufficient support for both you and your clients.
Having an expert and reliable custodian is essential for any investor who has accounts or IRAs. In recent years, custodians have begun to incorporate brokerage services and additional software tools in order to provide a better experience for advisors and their clients. Ultimately, it's important to choose a custodian who knows where they went wrong in order to correct their mistakes. The best guide for customers who have questions about what a custodian does is to say that their sole purpose is to keep customer assets securely and ensure that they can always access their money if needed.
