Schwab Drops Hedge Fund Platform

Self Directed IRA Investments in Funds Likely to Become Harder to Accomplish

In an earlier article about hedge fund IRA investments I discussed the general process which an investor will need to go through in order to invest their IRA assets in a hedge fund.  As a gross generalization the investor’s custodian will need to make the actual investment into the hedge fund.  In the past I have helped many clients navigate the hurdles which are sometimes involved in this process.  While the process is not exactly easy, it may become more difficult in the future based on anticipated regulatory changes.  These developments may make it harder for investors to invest in a hedge fund with their IRA assets.

In addition, Schwab has recently announced that they will no longer allow self-directed IRA investors to invest in alternative investments such as hedge funds.  This news comes as a big surprise to both advisors and investors.  Schwab was known for having a very good platform for self-directed IRAs.  In fact, out of all of the custodians that my clients have used for these transactions, Schwab was by far the best.  Their representatives were well versed in the mechanics of these investments where many other firms seemed to be learning on the job.  There was more than one time when a client’s investor had to switch IRA custodians in order to find a group which allowed a self-directed IRA investment into a hedge fund.

With Schwab exiting this space it may be more difficult for some investors to try to find good custodians who are able to process these transactions.  I have known at least a couple of well name groups who difficult to work with and lost business because of that.  The article I linked to above noted the backlash by RIAs and hopefully Schwab will reconsider based on the community support for their platform – I do believe that the reason for the backlash is because of good support which was provided to both the managers and customers.  So many times we face horrible customers service and it is always refreshing to find groups who do value the customer.

Hopefully we will be able to continue to rely on Schwab for these services in the future.

Other related hedge fund law articles include:

4 thoughts on “Schwab Drops Hedge Fund Platform

  1. Jaime Raskulinecz

    We an indpendently owned and operated office that is part of The Entrust Group. The Entrust Group is the oldest and largest administrator of self-directed retirement plans in the county.

    My office is located in northern NJ. We specialize in these transactions and are well known for our customer service, ease of getting transactions done and free education to consumers and professionals.
    We are actively seeking clients who are forced to move from the Schwab platform.

    Please contact me at 973-857-8058 or [email protected] if I can be of any help. Or, you’d like to discuss our services for yourself or your clients.

  2. ryan

    Entrust allows for managed futures allocations, which is arguably a preferred way of doing things because of their transparency and liquidity and because of their long volatility benefits.

    I have started working with Entrust in San Diego to offer these products to IRA investors.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.