One of the most difficult but important tasks an investor must face when participating in the self-directed industry of investing is finding the right IRA custodian. It is important that the person who is going to be dealing with your investments be honest and have the know-how to handle your investments the way you want them to be handled. Below is a checklist for finding the right IRA custodian for you.

First and foremost, you are going to want to look at the custodian's background in investing. You are going to want to ask yourself if the custodian has handled the particular kind of IRA before which you are considering. You want to avoid somebody who has any kinds of negative marks on their background, and you also want to be sure you check up on their credentials. You also want to be certain they have experience with the IRA investments you want to make. With experience comes fewer mishaps which may cost you money.

You also want your IRA custodian to have the same similar vision for your IRA as you do. For instance, if you have a strong belief in real estate as a good investment, you want your IRA custodian to have the same beliefs. If you prefer leaving a minimum of half your portfolio in safe investments, you would also like your IRA custodian to be thinking along the same line. If you have an IRA custodian who is not equally as aggressive as you, they will not handle your requests with the same enthusiasm as you would like them to.

It is also important to trust your instincts. Sometimes you may find you just don't like somebody for a reason you just can't put your finger on. Ideally, you may have to work with that person until retirement. That could be an extremely long time to work with a person whom you dislike. If you don't like somebody, it is a valid reason to move on to another IRA custodian. And if your instincts are saying that somebody may be dishonest with your investments, trust them, and find somebody else.

Are y ou really directing your own investments? Sometimes IRA custodians will advertise themselves as self-directed to obtain business, but they are really giving your investments a direction. If you aren't given the opportunity to do whatever you like within IRS regulations, then you really aren't working with a custodian who is self-directed. If this is the case, you should move on immediately. You should not put your trust into anybody who lies to get their hands on your money.

You also need to determine what kind of financial entity your IRA custodian is, and who regulates that entity. Banks and securities brokers dealers are regulated by different agencies and operate differently. Become familiar with the pros and cons of each, and then make a final selection that best suits your needs.

Next you should find out how the custodian registers investments, and if they have Errors and Omissions coverage. This should protect you against loss in case something goes wrong with your custodian. Even though it is a bit more expensive and difficult for the custodian to set up, it is easier to identify which investments are yours if they are registered individually. This makes it easier to move to another custodian should you have any problems. Special Errors and Omissions, or E and O coverage also covers you from losses should your IRA custodian make any mistakes when processing your investments.

The last thing to consider is cost. A good custodian may cost more money, but one who is doing his job right will make much more money than they cost; even if they are helping you self-direct your own investments. Focus more on feedback from other customers than on cost. A lot of positive feedback and little or no negative feedback should be a good indication to you that you've picked a good custodian, at any cost!