This article was updated on April 12, 2018, and originally published on Nov. 3, 2016.

The financial industry survives on fees -- management fees, advisory fees, and commissions, just to name a few. Brokers pass on the cost of administering millions of traditional and Roth IRAs with opaque fee schedules that can obscure the true cost of your retirement account.

That said, investors who are willing to shop around for an IRA with all the care they would approach buying a home or car can save thousands of dollars in unnecessary charges. Here are some common IRA fees and how to minimize them, one by one.

1. Fund management fees

Management fees aren't limited to IRAs, but they can easily be the most expensive part of investing. If you invest in mutual funds or exchange-traded funds (ETFs), you will pay annual management fees equal to a percentage of the amount invested. These fees are commonly expressed as an expense ratio, or what you pay in fees as a percentage of your investment.

$100 bills in glass jar.

IRA fees work against you while you're saving for retirement. Here's how to minimize them. Image source: Getty Images.

Fees vary by the type of fund and the investments that the fund holds. Stock funds tend to carry higher fees than bond funds. Actively managed funds tend to be more expensive than passive funds that track indexes and do not employ costly analysts and portfolio managers.

Fund Type 

Actively Managed Funds

Index Funds

Stock funds

0.82%

0.09%

Bond funds

0.58%

0.07%

Data source: Investment Company Institute 2017 Fact Book.

Unfortunately, management fees are unavoidable. Asset managers aren't in the business of doing charity work, and it costs money to run and administer a fund. Investors can minimize how much they pay in fund fees by shopping around and using index funds, which, as you can see in the table above, carry expense ratios that are a fraction of the fees charged by active funds.

2. Advisory fees

Investing is generally cheap, but investing advice isn't. A recent survey by one service provider found that the average independent financial advisor charged clients 1.03% of their assets in fees on an annual basis. Wealthier investors have more power to negotiate a lower fee, but the standard fee tends to be about 1% of assets.

Many people choose self-directed IRAs and thus make their own decisions about how to invest their money. By skipping the advisor, you can skip out on advisory fees, which are added on top of any fund fees and commissions.

Investors who are willing to ditch the personalized help of a human advisor -- and some of the related expenses -- might prefer to use a robo-advisory service. Robo advisors use computer models to appropriately allocate their clients' assets as they get closer to retirement age. By eliminating the expensive human element, brokers have driven fees down to less than 0.50% of assets per year. (Of the companies in the list below, only Vanguard is human-assisted.)

Robo Advisor

Advisory Fee

Fund Fees

Total

Betterment

0.25%

0.09% to 0.12%

0.34% to 0.47%

Charles Schwab

None

0.28%

0.28%

Fidelity

0.35% 

Included in estimates

0.35%

Vanguard

0.30%

0.04% to 0.14%

0.34% to 0.44%

Wealthfront

0.25%

0.12%

0.37%

Average target-date fund

N/A

0.51%

0.51%

Data sources: Company websites and disclosures. Wealthfront and Betterment charge fees based on a sliding scale based on the amount invested. Wealthfront does not currently charge advisory fees on the first $10,000 invested. Target-date fund fees are the asset-weighted average reported in the Investment Company Institute's 2017 Fact Book.

Notably, the all-in cost of robo-advisor services is roughly equal to the average fee charged on target-date funds, which are comparable to the services provided by a robo advisor. Target-date funds automatically allocate and rebalance their portfolios based on your expected retirement date, and they are not customized for your individual needs. Instead, they are designed for all investors who share a similar expected retirement date, much like portfolios designed by robo-advisor services.

3. Trading commissions

Every time you buy or sell a stock, fund, or ETF, you'll pay a commission. Commissions vary wildly, but some brokerages offer a select list of commission-free ETFs and mutual funds that can be bought and sold at no cost to you.

Keep in mind that commission-free mutual funds and ETFs frequently come with higher expense ratios that offset the savings on commissions. E*TRADE's list of commission-free ETFs is mostly made up of higher-cost WisdomTree ETFs and sector funds that carry above-average expenses. Similarly, no-transaction-fee (NTF) mutual funds typically carry the highest expense ratios.

Active traders need not apply, as commission-free products are intended for buy-and-hold investors. Most brokers charge inflated commissions to sell commission-free funds within 30 to 90 days of purchase.

The best place to open an IRA is with the brokerage or fund company that you intend to invest with. If you want to invest in Fidelity mutual funds, then open an IRA at Fidelity. If you want to own Vanguard funds, then Vanguard is the place for you. I say this because when you venture outside commission-free ETFs and mutual funds, commissions rise dramatically. 

Broker/Commissions

Stock and ETF Commissions

Mutual Fund Commissions

Charles Schwab

$4.95

$76.00

E*TRADE

$6.95

$19.99

Fidelity

$4.95

$49.95

TD Ameritrade

$6.95

$49.99

Vanguard

$7.00

$20

Data sources: Company websites.

4. Custodial and service fees

These fees are largely avoidable. Custodial fees are the price you pay just to have an account at a brokerage or fund company, and they can sometimes be called "account service fees" or "maintenance fees."

By law, IRA custodians are required to send you documents and statements regarding your investments. If you opt in to receive documents electronically, then most major online brokerages and IRA custodians will waive any and all statement and custodial fees. Help save trees and postage by opting in for digital statements.

5. Transfer fees

The final fee is one I consider particularly egregious -- and best avoided when possible. Transfer fees, also known as ACAT (automated customer account transfer) fees, are the price you pay to move some or all of your IRA to another custodian or brokerage firm.

Moving some or all of your assets isn't cheap, as you can see in the table below.

Broker

Full Transfer Out

Partial Transfer

Fee for Closing IRA

Charles Schwab

$50.00

$25.00

No fee

E*TRADE

$60.00

$25.00

No fee

Fidelity

No fee

No fee

$50.00

TD Ameritrade

$75

No fee

No fee

Vanguard

No fee

No fee

No fee

Data sources: Company websites.

These fees are intended to keep you in place, acting as a barrier to keep you from moving your IRA to another company. Notably, not one company will charge you to move assets to them, but many charge you fees to leave. ACAT fees are truly punitive fees, as unsatisfied customers will have to pay just to move to another broker or fund company.

But there is some good news -- you have negotiating power. Many discount brokers will compensate you with cash or free trades to cover the ACAT fee you pay to move your account to them from your current broker. The larger your account balance, the more likely a broker will offer to compensate you to cover the ACAT fee. Don't be afraid to ask for a perk for moving your account. Your business is valuable, after all.

Minimizing IRA fees

Don't let fees get you down. IRAs are an excellent financial tool, and you can avoid most IRA fees with a few simple steps.

First, always opt in to electronic statements, as many brokers and fund companies will waive statement and custodial fees if you do. This can save you hundreds of dollars, even at typically low-fee companies like Vanguard.

Second, determine what you want to invest in before you open an account. If you want to invest in funds managed by a particular company, it would be wise to go direct to the source to open an IRA with that fund company.

Third, use an IRA intelligently in tandem with other retirement accounts that you may have. Investment accounts such as 401(k)s or 403(b)s frequently offer the ability to buy or sell funds from a number of different companies without paying a commission. The smartest move might be to open an IRA where you can buy funds or individual stocks that you can't buy inexpensively through your employer-sponsored retirement account.

Finally, recognize that fees come with the territory, and they can be minimized but never avoided entirely. Don't let the search for perfection get in the way of using one of the best tools available for saving for retirement.

Jordan Wathen has no position in any of the stocks mentioned. The Motley Fool recommends WisdomTree Investments. The Motley Fool has a disclosure policy.