Let's Talk About Self-Directed IRA Fees

"Big Name Custodian" vs. Broad Financial

You never want to describe your Self-Directed IRA fees with a word that starts with the letter “E”: exorbitant…egregious…escalating. These are all words that appear in reviews on the Better Business Bureau website for a big name custodian. I'll refer to them as just that throughout this piece.

For example, from Parker H:

“Their ‘management fees’ are Exorbitant And in my opinion they resist transferring your funds as long as they possibly can So you can't put a stop to those exorbitant fees. Minus 100 stars would be my rating if it were an option.”

From AJ:

“I have been dealing with this sham of a company for 9 yrs. They provide custodian services also known as hold your investment captive with egregious fees to do absolutely nothing. Do your research and find a reputable company as a custodian. If your investment recommends them, question the legitimacy of the investment. Poor CS experience. They excel at extraction of money from their unsuspecting clients.”

The fees AJ mentions can be found below, taken straight from Big Name Custodian's website. They are paired side-by-side with Broad Financial's fees, which provide a stark contrast in how a custodian can charge annually:

As a result of their asset-based model, annual fees escalate according to the total value of your assets. So as you succeed in making money with each investment, they proceed to charge you more and more as a reward for your profit procuring.

With Broad Financial, “E” words are not part of our vocabulary. Instead, we emphasize words that start with “F,” such as fair, flat-rate, and forthright. As demonstrated in a helpful chart on our website, establishing an IRA LLC with Checkbook Control comes with a one-time $1,295 set-up fee, a one-time $100 set-up fee for the custodian Madison Trust (our sister company), and an ongoing $100 quarterly fee.

To recap, your first year with Broad will result in $1,695 in fees, and with that you are paying for the freedom that the Checkbook model offers. Better yet, each year after that will only cost you $400 (4 quarterly fees/year). The quarterly fee does not change based on your assets, and there are no additional or hidden fees that come with maintaining your account.

Meanwhile, over at Big Name Custodian...well, the BBB reviews speak for themselves. The following is from k j:

"This company is dishonest and will find any way they can to defraud people out of their retirement investments. My most recent example is a notification about "potential" fees for expedited service. I marked "Normal Processing Service" on their provided paperwork, and was still ambushed with a fee. After the fact, all they will tell you is, "well you got expedited service, didn't you? The opt out box (on the only paperwork *** provides) doesn't work at certain times of the year." I get that they can charge more for their services when they are turning work around quicker. But if their paperwork offers a regular (no fee) option, and people deliberately choose that option, *** should honor that. It is no wonder this company has been sued in the past and is being sued again."

Here's another review fraught with similar frustration, this time from Nate:

"****** ***** does not let you close your account without exorbitant fees. While trying to close the account they will continue to charge fees, and then late and penalty fees. Fighting the fees takes additional time which they continue to rack up these fees. I transferred the funds out of the account 2 years ago. ****** ***** has continued to charge fees that now add up to $2,300."

Now, Big Name Custodian's termination fee is explicitly stated on their website: $100.00/asset for a partial termination, $225 for a full termination. Whether or not you find these fees acceptable is up to you. However, what Nate describes here implies additional, unreasonable fees that go beyond his understanding of the termination process. The math doesn't quite add up when figuring out how the previously listed termination fees result in a total of $2,300.

Nate's experience with this custodian is nearly identical to many others on BBB, where user reviews reveal that the company has a penchant for dragging on their account termination process in order to keep the fee collection train rolling. The precision in which these reviews hit the same notes is staggering. The following is from David C, who possibly had some fraud sprinkled in with the usual deliberate stalling:

"This company seems to be a scam. I closed accounts with them last year. They refuse to acknowledge it and continue to bill be. They subsequently charged a credit card I had used previously without my consent. This is one of many examples of suspicious behavior this company has engaged in. Avoid them at all costs."

Conversely, Broad Financial, in conjunction with Madison Trust, prides itself on excellent customer service. If you wish to close your account with us, the entire process will often take just 4 business days as long as everything is in order. No reluctance to follow through on your request in order to scrounge up some last-minute fees. Only consistency and clarity between what we tell you and what we charge you.

The same can't quite be said for Big Name Custodian, whose fees page on their website contains misleading language, such as:

"There are no transaction or distribution fees."

...

Distribution of Asset/Re-registration Fee: $100.00 / asset

Those who may be less knowledgeable with all these terms and fees could easily be confused by this seemingly contradictory pair of statements, thus making it more difficult to understand what you're actually paying for in each bill.

That's even before discovering the "Miscellaneous Activity Request Fee" for $75.00/hr (!) and the "Special Handling Fee" for $25.00 upon closing your account.

The Miscellaneous fee is not only vague, but also allows for Equity to take some liberties in deciding how many hours they spent on your request. If David C and countless others are to be believed, this is certainly something that is within the realm of possibility.

As for the Special Handling Fee, it seems as if we have found a contributor to the exorbitant fees that Nate mentioned when closing his account.

Finally, Big Name Custodian's fees are not only excessive by most accounts, but they are seemingly the only thing they care about. Consider the following from James B. a thesis statement:

"The only communication I ever had with them was to collect there [sic] fees."

According to James B., fees are this company's primary, secondary, and tertiary concern. Backed by our 60+ glowing reviews on BBB, Broad Financial's only concern is providing you with the opportunity to invest in exactly what you want. Exactly what you believe will deliver your dream retirement. Our fees are straightforward, transparent, and congruent with the services we are providing.

This is our promise to you. A promise that can not be made and, if it has, can not be upheld by Big Name Custodian. Be sure to consider this when deciding with whom you will set up your Self-Directed IRA.