Expert Interview with Molly O’Brien of Feex About Hidden Fees

molly feex

Hidden fees are like a hairline fracture in your retirement plan – undetectable at first, but able to grow and spread to undermine all of your financial preparations.

FeeX began when co-founder Uri Levine detected $230 in hidden fees on his credit card statement. He went after these fees with a vengeance in the vein of FeeX’s motto, the Robin Hood of Hidden Fees.

FeeX’s Molly O’ Brien took a moment to break down some of these fees, where they can be found, and what can be done about them.

Can you introduce us to FeeX for people who aren’t familiar with your company? Where are you based out of? What prompted you to start the business?

FeeX is an online tool that helps people find the fees that could be damaging their retirement savings. After you link your retirement account (we support 401(k)s, IRAs, brokerage accounts and more), we scan it for fees and find you alternative ways to invest with lower fees that will end up saving you more money over the long run. FeeX got started in Israel in the fall of 2012 and then launched in the U.S. this past spring. The idea for it came when our co-founder Uri Levine found out he had been charged over $230 in hidden fees on a credit card balance of 33 cents; at the same time, our CEO read the fine print of his parents’ retirement savings account and realized they were paying crazy hidden fees too. It was clear there was a problem with transparency in the financial world, and FeeX is now here to help make things a lot more transparent!

Who are your main clientele? What are some ways that both businesses and individuals can use your services?

We’re here for anyone who has a retirement savings account, whether you’re a newbie investor and have no idea what’s going on in your 401(k), or you’re an experienced investor who wants to make sure they picked their best possible portfolio. Individuals can use FeeX to scan their 401(k), IRA or other account for fees; or you can even “test” investments for fees before you opt into them to make sure you’re making the right choice. From a business standpoint, we’ve had people check their 401(k)s for fees, then communicate with their HR contact or 401(k) plan administrator to work on providing lower-fee investment choices for employees.

You show people where to look to find hidden fees in 401(k)s and IRAs. Where are some places that hidden fees can often be found?

The expense ratio of a fund is a big one. Mutual funds have a built-in fee that’s essentially paid to whomever is operating and managing the fund, and sometimes those fees can be pretty crazy. It’s charged as a percentage, so it’s hard to connect a 1% or 1.5% expense ratio to your own savings. But FeeX results include the effects of compounding over time, so that measly 1% fee can end up eating tens or even hundreds of thousands of dollars of your retirement savings over the course of a lifetime.

Another fee we find is the advisory fee, which is oftentimes an AUM (assets under management) fee charged as a percentage of the total amount of money an advisor is managing for a client. That fee isn’t necessarily hidden, but when people see their advisory fee expressed as an actual dollar amount, it can be pretty jarring!

We also find wrap fees, up-front sales loads, back end redemption fees, transaction fees, account maintenance fees, and administrative fees – and we’re working on being able to find even more.

How much can people stand to save, over the course of a lifetime by eliminating fees?

The average savings per FeeX user over a course of a lifetime is almost $19,000, but we’ve been able to find hundreds of thousands of dollars in savings for some of our users.

You often refer people to lower-fee funds. What are a few of the best deals around that you have found?

Index funds are a great alternative to some of the more expensive mutual funds because they’re passively managed, meaning you can save a ton on costs while still seeing similar or even better performance than those mutual funds. For example, there’s an American Funds mutual fund (AMRMX) that invests in mostly American stocks with high-yield dividends, and it has a .61% expense ratio, which is pretty decent. In its place, FeeX would suggest the Vanguard High Dividend Yield Index fund (VHDYX), which tracks an index of the same types of stocks and has better returns than the original fund, but has lower fees (.19%) because it’s passively managed. FeeX does all the work of researching and finding lower-fee funds for you.

As part of your mission statement, to be “The Robin Hood Of Fees”, you claim to “untangle the thicket of financial jargon that separates us from our money,” by “using technology to democratize finance and build better retirement outcomes for everyone.” What are some ways that people can use technology to get a better and clearer understanding of financial information? What technology can they use? Why is this important in the current environment?

The great part about using technology in your finances is that information that was once confusing, opaque, or just plain unavailable can be found, explained, and used all in one place. That’s what we’re trying to do at FeeX with fees: to make it easier to lower your fees, but also to spread awareness that hidden and excessive fees are even a problem to begin with. And you can also see it in other financial tech products like ReadyForZero with debt, Credit Karma with credit cards, and Magnify Money with checking and savings accounts. Tech can bring you digestible information and ways to take action that don’t require a million steps or a ton of time. When people don’t know exactly what’s going on with their money, that’s an opportunity for financial institutions to profit off of ignorance – and we think it’s time to shed a light on hidden fees and let the investors profit from that information instead.

For more information on hidden fees, and to find out how FeeX can help your retirement plan, like them on Facebook, and follow them on Twitter.

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