Best IRA Brokers
Individual Retirement Accounts are confusing at best — but they don’t have to be. With all of the options and marketing behind financial institutions and advisors, it can be difficult to feel like your choices are clear.
You can choose mutual fund firms, banks, online brokers and even robo-advisors. A robo-advisor is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners. Robots!
So which option is best for you?
Vanguard – The well known king of low cost index mutual funds
Betterment – Easy to use robo-advisor known as the ‘Apple of finance’
Scottrade – Online broker with low costs
Wealthfront – Easy to use robo-advisor which manages your investments for you online
Vanguard is the leader in low cost index mutual funds. Unlike other investment companies, Vanguard strives to build wealth only for their clients, not for outside owners. They keep costs low – a reported less than 20% the industry average.
Some Vanguard highlights
Low costs: the average Vanguard fund expense ratio is 82% less than the industry average
- High-quality funds: a reported 93% of Vanguard mutual funds and ETFs performed better than their peer-group averages over the past 10 years
Broad fund selection: Select from a wide variety of options:
- “All in one” Target Retirement Funds
- Over 200 commission-free mutual funds and ETFs.
- Investment flexibility: competitive trading commissions for:
- Non-Vanguard mutual funds and ETFs
- Stocks, bonds, and other securities
Betterment is slick and easy to use. Great for first timers. The design and flow of the website/app are top quality and intuitive. Investment selection is simple as well. Just choose how much you want invested in stocks and how much in bonds – Betterment does the rest. Simple right?
- IRAs: Roth, Rollover, Traditional, SEP
- Minimums: None
- Fees: None upon opening – fees range from 0.15% to 0.35% depending on balance
Some Betterment highlights
- Achieves the best returns at every level of risk: through diversification, automated rebalancing, better behavior, and lower fees, Betterment customers can expect a reported 4.30% higher returns than a typical self guided investor
- Sync external investment accounts: securely sync your outside investments to see your total net worth in one place. Betterment also advises you on how much you’re losing to fees and stagnant cash
- Rebalancing – Every time you make a deposit or receive dividends, they rebalance your portfolio
Scottrade offers fantastic online tools and the costs for trading are low. One huge benefit of Scottrade is that they have physical brick and mortar offices all over the country. Similar to a bank, you can visit them and discuss your financial goals in person with a professionally trained investment consultant.
Some Scottrade highlights
- Great selection of products, accounts and tools: these help you identify and monitor the right mix of investments to reach your goals
- Large selection: bonds, mutual funds to CDs and treasuries
- Excellent tools: retirement calculator, portfolio review tool, investment screening, expert investment ‘lists’ available
- Physical locations: for in-person services and advice
Wealthfront is another simple to use robo-advisor. It’s similar to Betterment where you choose how much you want invested in stocks and how much in bonds, they do the rest. Wealthfront has no or low fees depending on account balance. Wealthfront invests your IRA in diversified, low cost ETFs. Wealthfront rebalances your portfolio and automatically reinvests your dividends.
- IRAs: Roth, Rollover, Traditional, SEP
- Minimums: $500
- Fees: None upon opening, 0.25% of your account balance after $10,000
Some Wealthfront Highlights
- Broad exposure: REITs, emerging markets, dividend paying stocks, allocation between U.S. companies and international firms
- Automatically maintenance activities: account rebalancing, tax-loss harvesting, and dividend reinvesting
- Earn free management of an additional $5,000 when you refer a friend
- Simple investment setup: using answers from a survey about your stage in life and risk tolerance, Wealthfront creates a portfolio of stock, bond and real estate ETFs that will suit your needs. Adjustments can be made to your taste.