‘Robin Hood’ of Fees Takes Aim at 401(k)s

Levine got the idea for the company after he was charged interest and fees after paying off a credit card and called the bank to question it. The bank waived the charges, but it got Levine thinking about the effects of “predatory” fees, according to his blog. Other examples surfaced, and the idea for FeeX was born. 

Linked to a participant’s retirement accounts, the company’s algorithm “uncovers advisory, investment and expense ratio fees and suggests alternative ways to save and reduce the cost of retirement.” The company say it can find eight types of fees, including expense ratios on mutual funds and ETFs; advisor fees; asset-based fees, such as wrap fees; up-front sales load fees; back-end redemption fees; account maintenance fees; wire transfer fees; and transaction fees. 

Its algorithms then “condense the information in an easy-to-read format that reveals how much people actually pay for the privilege of investing. FeeX then shows what can be done to reduce, or sometimes eliminate, these fees.” Users are given a look at the compounded cost of fees within their plan over time, and directed toward cheaper alternatives. 

Since not all fees can be eliminated — after all, someone participating in a company retirement plan may not have the option of switching to investments with lower fees or even leaving the plan to pursue lower-cost savings elsewhere — FeeX may not be the panacea it seems. But that doesn’t mean that a determined group of employees couldn’t take it upon themselves to convince an employer that something needs to be done about high fees in a retirement plan. 

The bottom line: with so much focus on the effect of fees on retirement funds, there’s likely to be a lot of interest in seeing how effective this service can be.