Why I Left Fidelity for a Self-Directed IRA

For years, Fidelity was my go-to institution for retirement investing. Like millions of Americans, I trusted the brand, the polish, and the reputation. I believed, as many investors still do, that if my IRA was sitting at a well-known Wall Street firm offering low-cost index funds, research tools, and a clean user interface, then I was doing everything right when it came to preparing for my financial future.

Over time, however, markets changed. Private capital exploded. Technology reshaped how value is created. Some of the most compelling investment opportunities of our generation began taking place outside the public markets. Slowly, I came to a realization that fundamentally changed how I thought about retirement investing: not all IRAs are the same. More importantly, not all IRA providers are aligned with an investor’s best interests when it comes to freedom, diversification, and control.

That realization ultimately led me to leave Fidelity and move my retirement assets into a Self-Directed IRA (SDIRA). It was a decision that completely transformed how I invest for retirement and how I think about long-term wealth creation.

What Is a Self-Directed IRA (SDIRA)?

A Self-Directed IRA, often referred to as an SDIRA, is not a different type of IRA under the Internal Revenue Code. Instead, it is a different administrative and custodial structure. This structure allows an IRA owner to invest in a far broader range of assets than what is typically permitted, or more accurately, supported, by large brokerage firms like Fidelity, Schwab, or Vanguard.

From a tax standpoint, a Self-Directed IRA follows the same rules as any other IRA under IRC Section 408. You still receive the same powerful tax advantages, tax-deferred growth in a Traditional IRA or tax-free growth in a Roth IRA. The difference is on the investment side. An SDIRA opens the door to assets that most investors never realize their IRA is legally allowed to own.

With a true SDIRA, you can invest in real estate, private equity, venture capital, private credit, hedge funds, private placements, tax liens, precious metals, cryptocurrencies, and many other alternative assets. These assets are simply unavailable on traditional brokerage platforms, even though the IRS has never prohibited IRAs from owning them.

The key distinction is this: the IRS defines what an IRA cannot invest in, not what it can. Once you understand that principle, the limitations imposed by large brokerage firms begin to look far less like regulatory requirements and far more like business decisions.

Why Not All IRAs Are the Same

One of the biggest myths in retirement investing is the assumption that an IRA is an IRA is an IRA, and that the only real differences between providers are pricing, customer service, or the selection of stocks, ETFs, and mutual funds on a predefined menu.

In reality, the most important difference between IRAs is who controls the investment menu, the investor or the financial institution.

At Fidelity, as with most large brokerage firms, your IRA exists within a closed ecosystem. Investments are limited to assets that clear through the platform, fit neatly into internal systems, and support a broader business model built around asset gathering, product distribution, and advisory services tied to publicly traded securities.

A true Self-Directed IRA flips that model by giving control back to the investor. It allows you to invest in anything permitted by law rather than anything permitted by a platform. That distinction becomes increasingly important as more wealth is created in private markets and alternative assets, not traditional Wall Street products.

What Is an Alternative Asset?

An alternative asset is generally defined as any investment outside traditional publicly traded stocks, bonds, mutual funds, and ETFs. That definition, however, barely scratches the surface of why alternative assets have become so important to sophisticated investors, institutions, family offices, and increasingly, individual retirement savers.

Alternative assets include real estate (residential and commercial), private equity, venture capital, private credit, hedge funds, private REITs, oil and gas interests, infrastructure, farmland, timber, tax liens, precious metals, and digital assets like Bitcoin and Ethereum. Many of these assets have return drivers that are fundamentally different from public markets and often exhibit lower correlation to stocks and bonds.

What makes alternative assets particularly compelling inside an IRA is the ability to shelter income, gains, and compounding returns from current taxation. This allows long-term investments to grow more efficiently over time, especially when assets generate regular cash flow or experience significant appreciation over extended holding periods.

What Alternative Assets Cannot Be Held in an IRA

While the IRS allows IRAs to invest in a remarkably wide range of assets, there are important limitations every Self-Directed IRA investor must understand. These rules are primarily found under IRC Section 408 and IRC Section 4975, which govern prohibited investments and prohibited transactions.

First, IRAs are prohibited from investing in collectibles. This includes artwork, rugs, antiques, metals that do not meet specific fineness requirements, gems, stamps, coins (with limited exceptions such as certain U.S. gold and silver coins), alcoholic beverages, and other tangible personal property deemed collectible.

Second, IRAs cannot invest in life insurance contracts. Congress determined that life insurance already carries its own tax advantages and should not be combined with the tax-preferred status of retirement accounts.

Third, and most critically, IRAs are subject to the prohibited transaction rules under IRC Section 4975. These rules are designed to prevent self-dealing and improper personal benefit from IRA assets. They prohibit transactions between an IRA and “disqualified persons,” which include the IRA owner, their spouse, ancestors, lineal descendants, and entities they control.

For example, you cannot use your IRA to buy a vacation home that you or your family uses. You cannot lend IRA money to your own business. You cannot personally guarantee a loan made by your IRA. None of these rules prohibit investing in real estate, private companies, or alternative assets themselves. They simply require that investments be structured properly and administered correctly.

Why Fidelity Does Not Allow IRAs to Invest in Alternatives

This is where my journey truly began to change. Once I understood what the law actually allows, the obvious question became clear: if IRAs can legally invest in alternative assets, why doesn’t Fidelity allow it?

The answer has very little to do with IRS rules and everything to do with Fidelity’s business model.

Fidelity, like most large brokerage firms, makes money by selling and managing financial products. These include mutual funds, ETFs, managed portfolios, advisory services, and trading activity that occurs within its platform. Its systems, compliance infrastructure, and revenue streams are built around scale, standardization, and assets that can be easily priced, traded, custodied, and monetized.

When an investor allocates money to alternative assets, especially private investments outside a brokerage platform, Fidelity no longer earns management fees, advisory fees, or product margins. It also loses visibility and control over the client’s capital. That reality conflicts directly with its core economic incentives.

In short, Fidelity does not restrict alternative assets because the IRS prohibits them. Fidelity restricts alternative assets because they do not fit its business model. Large institutions rarely design systems that empower clients to invest in ways that reduce institutional revenue.

How a True SDIRA Complements a Fidelity Account

For many investors, the first step into self-direction does not involve abandoning Fidelity altogether. Instead, it involves complementing a traditional brokerage IRA with a Self-Directed IRA that provides access to alternative assets while maintaining exposure to public markets.

That was my experience as well, and it was a key insight that shaped how IRA Financial was designed. Investors did not want to choose between Wall Street and alternative assets. They wanted a single, compliant retirement platform that could support both.

What I quickly realized was that once investors experienced the flexibility and control of a true Self-Directed IRA, the question changed. It shifted from “How do I complement my brokerage IRA?” to “Why am I maintaining multiple IRAs at all?”

IRA Financial was built to support that natural progression. Investors can start by supplementing existing accounts and ultimately consolidate everything, public markets and private investments alike, into one unified retirement strategy.

In this hybrid approach, an investor might keep index funds, ETFs, and publicly traded securities at Fidelity while allocating a portion of retirement assets to real estate, private equity, or private credit through a Self-Directed IRA. The result is a level of diversification that simply cannot be achieved within a single brokerage platform.

This structure allows investors to benefit from the strengths of both worlds: liquidity and simplicity on the public side, and growth, income, and diversification on the private side, without forcing an all-or-nothing decision.

Why Diversification Is Critical for IRA Investors

Diversification is not a buzzword. It is a foundational principle of prudent investing. Yet most IRA investors are far less diversified than they realize because diversification across funds is not the same as diversification across asset classes.

An IRA invested entirely in public equities, even if spread across dozens of funds and sectors, remains exposed to the same macroeconomic forces, interest rate cycles, valuation risks, and systemic events that affect public markets as a whole.

Alternative assets introduce different risk and return drivers. These include rental income, private business growth, contractual yields from private credit, and scarcity-based appreciation in real assets. When held inside a tax-advantaged retirement account, these assets can reduce overall portfolio volatility while improving long-term outcomes.

Why Many Investors Have Fully Replaced Fidelity with an IRA Financial SDIRA

As the Self-Directed IRA space has evolved, so have the platforms that support it. One of the most important developments has been the emergence of custodians that allow investors to combine alternative investing and traditional investing within a single IRA.

Many investors, myself included, have ultimately chosen to replace their Fidelity IRA entirely with an IRA Financial Self-Directed IRA. It offers the best of both worlds: freedom to invest in alternative assets and the ability to invest in traditional equities commission-free, all within one unified retirement account.

Through the IRA Financial platform, investors can buy real estate, invest in private companies, fund private loans, and allocate to crypto. At the same time, they can trade stocks, ETFs, and other publicly traded assets without maintaining multiple custodians or fragmented strategies.

Once that level of flexibility exists, the question becomes less about whether to keep a Fidelity IRA and more about why it is still necessary at all.

Why IRA Financial?

Ultimately, my decision to move my retirement assets to a Self-Directed IRA was about control, alignment, and opportunity. My decision to choose IRA Financial was about expertise, infrastructure, and trust.

This frustration is exactly what led me to found IRA Financial more than 16 years ago. There was simply no place where I could hold all of my investments, traditional and alternative, in one retirement account without artificial restrictions or institutional conflicts.

I wanted a platform that gave investors the freedom to invest in anything permitted by the IRS while still offering the ability to trade stocks, ETFs, and other traditional assets seamlessly, all under one roof. IRA Financial was built to solve that problem, not just for me, but for investors who believe their retirement capital should work as hard and as creatively as they do.

IRA Financial is not just a custodian. It is a true self-directed retirement platform built by tax attorneys and retirement experts who have spent nearly two decades helping investors navigate complex IRS rules, structure compliant investments, and unlock the full potential of their retirement capital.

With more than 27,000 clients, over $5 billion in assets, flat-fee pricing, no transaction-based conflicts, and the ability to invest in both alternative and traditional assets within a single IRA, IRA Financial represents what a modern retirement platform should look like in a world where opportunity no longer lives exclusively on Wall Street.

Leaving Fidelity was not a rejection of traditional investing. It was an acknowledgment that the future of wealth creation is broader, more dynamic, and more decentralized than any single brokerage platform can accommodate. For investors who want true freedom of choice, a Self-Directed IRA is no longer optional. It is essential.