Why Have a Custodian on an IRA Account?

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A person with an IRA account may have a custodian, which refers to the place that holds the money. Find out how custodians can set up rules for what a person can and cannot do with their money with help from a portfolio manager in this free video on money management and personal finances.

Part of the Video Series: Investing & Money Management
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Video Transcript

Do you have an IRA? If you do in the literature that you're getting from the bank or brokerage firm you will receive then referred to as the custodian. What does that really mean? Well it's the technical term meaning that's the place that holds your money. Custodian may set up rules for what you can do and cannot do with your money. Meaning in some banks or brokerage firms the custodian will let you buy stocks or bonds, and others will let you buy stocks, bonds, and international securities. And others will let you buy stocks, bonds, real estate, it just depends upon what you need, and how sophisticated that firm is. And how much that they want to cater to what you want to do. Because after all it's your money. Fees vary a lot among custodians. And it pays to shop. If you're unhappy with the bank or brokerage firm that holds your money and the custodian, in theory you should be able to just change, and move that account to another firm. There may be fees in doing that so read carefully and think carefully before making any move. There maybe penalties in selling securities that you purchased with that custodian, especially if it's a mutual fund. So think carefully about moving before you move. But, you usually will have the right to shift from one custodian from another. Even within the same family, meaning if you were at a large bank or brokerage firm, they might have twenty different custodians under their pervium, in different parts of the world, in different countries. None the less under the same group. So think carefully, that's what custodians do they just hold your money. I'm Roger Groh at Groh Asset Management, thank you very much for spending time with me.


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