Calling themselves the “Robin Hood” of fees, FeeX, a start-up from Israel, is using technology to not only help investors determine the fees they are paying but also to recommend similar but less costly alternatives. Starting with 401(k) and other corporate retirement plans, participants allow FeeX to link to their account using Yodlee to uncover the fees that they are paying, demonstrating how much they will save with other, less costly funds in a condensed and easy-to-read format. Of the eight types of fees they uncover, FeeX suggests that asset-based fees are worst, as they increase as the account grows. Free today, FeeX says they will start charging in the future adding a ninth type of fee they will need to cover.
As 401(k) and other types of retirement accounts become an essential part of tens of millions of people’s portfolios and, in some cases, one of their largest assets, consumers are and will be paying more attention. By focusing on fees, FeeX has picked an easy-to-understand target, just as Frontline did with their report last year on the 401(k) industry.
Fees in the absence of value are always high; however, the lowest-cost funds, advisors or record keepers may not be the best. Since plan participants cannot change record keepers or even advisors on the plan, FeeX focuses on investment fees — which might be easier to discover with the advent of 408(b)(2) and 404(a)(5) disclosures. Not an investment or robo-advisor, FeeX suggests only similar funds based on their category and asset allocation mix.
And before you dismiss FeeX as another interloper into the clubby 401(k) world, you should know that one of the founders started Waze which was sold to Google last year for $1.1 billion.
