Self-Directed IRA Administration Fees: Big-Name Custodian vs. Broad Financial

You never want to describe your Self-Directed IRA administration fees with a word that starts with the letter “E,” like "exorbitant," "egregious," or "escalating." These are all words that appear in reviews on the Better Business Bureau website for a Big-Name Custodian while discussing their Self-Directed IRA fees.

For example, here's a review from Person A:

"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.”

And here's one from Person B:

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 the extraction of money from their unsuspecting clients."

The Self-Directed IRA fees Person B mentions can be found below, taken straight from Big-Name Custodian's website. They are paired side-by-side with Broad Financial's Self-Directed IRA custodian fees, which show a stark contrast in how much a custodian can charge annually.

As a result of the Big-Name Custodian's 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, when we talk about our Self-Directed IRA LLC fees, we emphasize words that start with "F," such as "fair," "flat-rate," and "forthright." As shown in a helpful chart on our website, establishing a Self-Directed IRA with checkbook control has fees that include a one-time $1,295 setup fee, a one-time $100 setup fee for the custodian, Madison Trust (our sister company), and an ongoing $100 quarterly fee.

This means that your first year with Broad Financial will result in $1,695 in fees, and with that, you are paying for the freedom that the Self-Directed IRA checkbook model offers. Better yet, each year after that, Broad Financial's quarterly Self-Directed IRA fee schedule will only cost you $400. 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:

"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 Person C:

"****** ***** 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 during 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/asset for a partial termination and $225 for a full termination. Whether or not you find these fees acceptable is up to you. However, what Person C 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.

Person C’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 out its account termination process in order to keep the fee collection train rolling. The precision with which these reviews hit the same notes is staggering.

The following is from Person D, 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 me. 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 process will often take just four business days as long as everything is in order. There is no reluctance to follow through on your request to scrounge up some last-minute fees. There's 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

about all of these terms and IRA custodian fees for a Self-Directed IRA 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 per hour (!) and the "Special Handling Fee" for $25 upon closing your account.

The Miscellaneous fee is not only vague but also allows Big-Name Custodian to take some liberties in deciding how many hours they spent on your request. If Person D 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 for a Self-Directed IRA are not only excessive by most accounts, but they are seemingly the only thing the company cares about.

Consider the following from Person E, a thesis statement:

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

According to Person E, fees are this company's primary, secondary, and tertiary concern.

As shown by our glowing reviews on BBB, Broad Financial's only concern is providing you with the opportunity to invest in exactly what you want and exactly what you believe will deliver your dream retirement. Our Self-Directed IRA services' fees are straightforward, transparent, and congruent with the services we are providing.

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