Which Investment Firm for your Roth IRA and Why?

[myrdale]

Yesterday my sister called asking for some financial advice. She has two separate retirement accounts. One account was from her time as a bank teller, and the second from when she worked a small insurance office. They are relatively low balance, around $3k and $8k. She is concerned because the accounts had went down over the past quarter. Her two initial questions were:

"Should I just take the money out?"
"Should I consolidate them into a single account?"

My answers were "No" and "Maybe".

She isn't the most financially literate, but she is relatively smart, and is interested in learning. Currently she works part time in a day care and her husband works construction in his father's family owned company. Their family business could make them millionaires, or it could make enough to just get by. Either way, she is 36, he doesn't have any retirement plan, and I suspect the reality of their future retirement in 30 years as occurred to her.

She read some of the balance information over the phone to me for the accounts, but she doesn't know what type of accounts they are (401k, IRA, Roth IRA). What she described from the insurance office sounded an awful lot like just a regular IRA and what she described from the bank, I really couldn't tell.

So #1 we have to figure out what she has. She is working on that.

Number #2 she asked where I have my retirement, and I told her for the Roth IRA it is through Vanguard. Then she asked the question that really made me smile: "Why?"

I told her I had heard reviews from Dave Ramsey and others that Vanguard was a top rated company with low fees but there were many other companies as well. Then she asked "What other companies are there" to which I named a few off the top of my head; Edward Johns, Merrel Lync, T Roe Price, etc.

My advice was for her to start a Roth IRA for her future contributions, and depending on the type of accounts the other two were, opening a second regular IRA to roll them into. Also I recommended she talk to the guy who does her taxes to get his advice on if they are regular IRAs if it makes since to transfer them over to a Roth knowing there would be taxes due or not.

So my question for ya'll is: "Who do you use for your Roth IRA and why?" and any other advice you could provide her her situation.

[kork13]

I use Vanguard, and got the rest of my family set up with them as well (DW, both brothers, my father, my kids' 529s & UTMAs, etc.) -- I'm a big fan of their low fees & great mutual fund options across the board....even if their website & customer service sometimes leave something to be desired. My #2 & #3 recommendations (if not Vanguard) would be either Fidelity or Charles Schwab. I've had accounts with Schwab, and they're pretty good, simple, low-ish cost. Fidelity has a variety of very low-cost (I think even some ZERO cost) funds as well. At least a while ago, I have also heard some good things of T. Rowe Price, TD Ameritrade, and E*Trade as well.

Some brokerages to DEFINITELY avoid... Primarily due to high costs, strong emphasis on loaded funds, highly active trading (very costly to churn customer fees), and general misconduct or shady business practices: Merrill Lynch, Edward Jones, American Funds, Oppenheimer Funds, Wells Fargo, Raymond James, Morgan Stanley.... to name a few. Also on that list are ALL insurance companies and MOST small-time independent brokers, such as you find in a strip mall in your local town. While some of those brokers can be great to work with, highly ethical, and truly work with the customer's best interests at heart.... There's too many of them that simply churn high fees. Go with a trusted, reliable, and well-respected low-cost brokerage.

Last note: I would definitely recommend she rolls her old retirement accounts into a traditional IRA with Vanguard, Fidelity, or whoever (of the good ones). Especially for someone not great with financial literacy, consolidation & simplicity should rule the day.

[QuarterMillionMan]

I have 3, Merril Edge, Gold Star which hold precious metals, & Trade Station cryptos. My advice to her should she rollover is a direct rollover and not do an indirect rollover or take a distribution to herself, in which case she would have 60 days window to complete it and deposit it into the new account.

[LivingAlmostLarge]

TD ameritrade because they are way easier to use than vanguard. I find vanguard takes a long time. I don't like chase, bofa, ML, RJ, etc. I do think fidelity is also good but i like TD ameritrade.

Everything to trade at TD ameritrade is pretty much free. Free ETFs, free MF, Free stock trading. I think because it's not like fidelity or vanguard you get both of those for free from a no fee place.

[Petunia 100]

My Roth IRA is at Vanguard. My traditional IRA is at Wells Fargo. I rolled it from Vanguard to Wells Fargo about 15 years ago to get a free all-the-bells-and-whistles checking account. It works fine because I hold ETFs and can trade for free; no commissions or fees of any kind.

However, for someone who wants to be hands off (other than sending more money) a good all-in-one mutual fund is the way to go, IMO. So that's Vanguard, Fidelity, or Schwab. A target retirement fund built from low-cost index funds is a great choice, and all 3 firms offer them. (Fidelity also offers target retirement "freedom funds", which are not built from low-cost index funds and which I personally would avoid).

[myrdale]

Thank you all for the feedback, it pretty much confirms my suspicion that there are a lot of good options out there.

[Like2Plan]

I am most familiar with Vanguard and Fidelity. I probably would not have even looked at Fidelity, but DH's 401ks were being held there and over the years they have made some really beneficial changes. They have some zero expense index funds. They have zero commission trades (for most things) as does Vanguard. One nice thing about Fidelity for someone who is just starting out is they don't have minimum investment amounts.

But, as you noted there are a lot of good options available.