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Fees. Fees. Fees. Imagine you have $1,000,000 saved up at retirement. Each year, you withdraw $50,000 and your IRA account provider charges an annual 2% fee. That 2% fee doesn’t sound like a lot but it results in $20,000 in year one, representing 40% of what you put in your own pocket. You worked hard to save your nest-egg, so be careful not to let fees eat it up – over time, seemingly small fees can add up to large amounts and be deceptively corrosive to portfolio value.
Beyond fee considerations, customer support is perhaps the next most important consideration when selecting a retirement account provider. Robo-advisors have low fees but not all have the support network of financial advisors that higher fee, traditional brokers provide. Investment selection and account minimums are important factors to weigh too before making a decision on who to choose for your IRA account.
Best Robo-Advisors For IRAs
Which Robo-Advisors are best for IRA account management?
The trend towards lower fee, robo-advisory services is the future with the Millenial generation flocking to them in favor of traditional financial advisors, who will increasingly be replaced by these lower fee alternatives capable of providing comparable, if not superior, money management services.
Betterment, Wealthfront, Future Advisor and Personal Capital stand out as leading robo advisors. Large, established brokers like TD Ameritrade and Fidelity have launched their own robo advisors, TD Ameritrade Essential Portfolios and Fidelity Go respectively.
Personal Capital has an attractive combination of low fees, accessible financial advisors, and supports traditional IRA accounts, Roth IRAs, SEP IRAs, and rollover IRAs.
The management fee charged by Personal Capital ranges from 0.49%-0.89%. Personal Capital also stands out from its peers with an excellent mobile app that allows you easily track your day-to-day spending, cash flow, portfolio holdings, and net worth.
Betterment has no minimum balance requirement and that enticement has attracted over 150,000 customers and $6.1 billion in assets under management. Betterment automatically rebalances portfolios using exchange-traded funds and caters to traditional IRAs, SEP IRAs, Roth IRAs and Rollovers IRAs.
Like many other robo-advisors, Betterment applies modern portfolio theory to assets: cash is automatically invested in a diversified portfolio and portfolios are rebalanced automatically each time an asset class moves more than 3% from its target percentage level.
Best All-Round IRA Providers
Low fees are important but investors with complex financial circumstances may need additional customer support, and broader investment selections. The IRA providers below have the best all-round service.
Retirement planning is personal and having an expert hold your hand through the process can offer a lot of value. Being able to walk into a local office to meet your financial advisor in person is comforting, particularly when markets fall. For this reason, Charles Schwab and Scottrade stand head and shoulders among their peers.
Schwab offers customer service 7 days a week and 24 hours per day. Both have local branch offices where you can meet and visit with your dedicated financial advisor. And both offer extensive retirement planning tools. Plus, both have very broad investment selections, the value of which should not be underestimated.
Best IRA Providers For Traders
Renowned billionaire investor, Warren Buffett, counsels that for most investors a diversified portfolio is the smartest choice. But for the handful of investors who can “buy the fear, and sell the greed” as Buffett says, as part of an active trading strategy, the following brokers offer excellent platforms.
TastyWorks offers one of the most competitive trading platforms when comparing transaction prices. Stock opening trades are just $5.00 irrespective of the number of shares traded. For options and futures traders, pricing is highly competitive when compared to industry peers, just $1.00 per contract for opening options trades, and $2.50 per contract for opening futures trades. TastyWorks supports Traditional IRA accounts and Roth IRA accounts.
TradeKing offers a highly attractive $4.95 stock trade commission charge and an extensive range of tools on its trading platform. A minimum account balance of $2,500 is required at TradeKing and an annual $50 fee is charged for inactive accounts or those falling below the account minimum threshold level.
Best Low Cost IRA Providers
Low expense ratios and a large selection of funds are offered by these IRA providers.
Vanguard established its reputation as the leading low-cost provider when it pioneered index fund investing and its 0.30% flat management fee for Vanguard Personal Advisor Services continues the low cost trend. While Vanguard continues to lead its industry peers on fee comparisons though it does fall short of Fidelity in its selection range of commission-fee ETFs and no-transaction-fee mutual funds.
Fidelity Go is the robo-advisor offering by Fidelity, charging 0.35%, including investment expenses – a pioneering fee schedule among robo advisors – on retirement assets. Fidelity has a broader range of mutual funds than Vanguard but many have a minimum investment criterion of $2,500. Investment minimums are waived with monthly auto-deposits of at least $200.