Is any particular type of financial institution "safer" to open a Roth IRA with?

Local financial institutions have deposit insurance, so until you get into 6-figures there is nothing to worry about either way. I guess my concern is more with the offerings available from a credit union versus a national company like a Schwab, Vanguard, Fidelity or American Century Investors. My advice is to deal with one of those where you can choose from a variety of no-load funds and investments.

I have my IRA money at Schwab and feel completely safe from custodial risk. That is the risk that Schwab will go under. However, I am invested in investments that carry risk and i could lose money because of the way my money is invested. That says nothing bad about the custodian, that is related to the investments I have selected.

Certain kinds of investments do have investment risk that is associated with the custodian. If a bank goes bust then CD money is at risk. As long as it is below FDIC limits you should be okay in the long run, but you may have some red tape to go though. So far, most bank failures have been handled by getting another bank to take over so there has been minimal inconvenience to the account holder.

As long as you stick with a reputable custodian like Schwab, you custodial risk is negligible. You should focus more on your investment strategy.

Your risk of loss is zero if you open an IRA at a local bank or credit union with federal insurance and invest only in money market accounts or CD's.

Not that I would recommend that, esp. at a large bank. (The fees are too high) Look for a credit union or INGDirect.com that offers free Roth IRA's

Your risk of loss is near zero if you open an IRA with a large mutual fund company like Vanguard, Fidelity, T Rowe Price, etc and only invest in money market funds. If you invest in mutual funds that invest in bonds or stocks, you will have much better returns in the long run, but you run the risk of ups and downs in the value of the account over the next 10-20 years. You also want to be careful of costs. There are ways to get free or near free accounts with these companies, but you must read the details. In general, almost all brokerages and mutual fund companies will give you a free account if you invest at least $10,000 with them...but there are other, cheaper was to get them too.

Your risk of fraud is zero but your risk of loss in a bit great at brokerage houses like Schwab (td ameritrade, etrade, etc) if only because they are basically set up for you to use the accounts to buy and sell stocks....which is not a good idea for most people.

First, you would be able to desire to return to a determination what you desire to invest in in the IRA. An IRA is purely a style of retirement account - no longer a particular investment. that's a "basket" interior of which you would be able to hold bonds, shares, mutual funds, financial corporation CDs, etc. A financial corporation isn't the only place to decide for installation an IRA.