FeeX is a service that deals with an often overlooked aspect of investing, which is the fees you pay on the accounts you invest with. There are all kinds of fees associated with maintaining an investment account, and the job of FeeX is to reveal them to you and then make suggestions as to alternatives. This service has the potential to save you tens of thousands of dollars over a lifetime of investing.
FeeX is an SEC-registered investment advisor. But instead of being just a run-of-the-mill investing service, the company offers something unique. FeeX analyzes your existing investment accounts and determines how much in fees you’re paying to maintain each one.
Think of FeeX as a service you use in conjunction with your existing financial services. In some cases it may motivate you to switch financial providers and choose a lower cost provider.
What Is FeeX?
They describe themselves as “The Robin Hood of Fees” — someone who robs from the rich and gives to the poor. They identify themselves as an investment fee reducer versus simply a robo-advisor. So while they’re in the robo-advisor space, they don’t consider themselves in that particular category alone.
“We like to call ourselves an investment fee reducer,” explains Molly O’Brien, Communications Manager at FeeX.com. “That’s because our service has a specific focus on fees, rather than higher-level holistic portfolio advising like WiseBanyan or FutureAdvisor.”
The founders believe the “financial industry is built on an asymmetry of information that causes investors to pay high fees for average or even poor performance.”
Those fees serve to reduce investment returns and often go unnoticed by individual investors. FeeX believes everyone should have free and clear information in regard to what they’re paying in connection with investing money. The founders are not from the financial industry but are actually from the tech world, which may have something to do with their out-of-the-box perspective on investing.
The company has been funded three rounds of venture capital totaling $12.25 million. Investors include Blumberg Capital, an early-stage venture capital firm, and Horizons Ventures, a Hong Kong–based venture capital firm that focuses on disruptive and technology-focused startups. Horizons Ventures was involved in the startups of such well-known companies as Skype, Facebook and Spotify.
How FeeX Works
FeeX analyzes your account, scanning the account for different types of fees. Once those fees are identified, they will show you how to lower them by investing in funds that charge lower fees but offer similar performance.
The service supports hundreds of investment brokers, including Fidelity Investments, Charles Schwab, TD Ameritrade and Wells Fargo.
FeeX syncs up with your accounts and determines how much you’re actually paying in fees. The typical period of time of the analysis runs anywhere from 90 days to a full year (if you maintain the service with them). FeeX then breaks down into the actual dollars you’re paying. They claim the average user can save an extra $18,794 in a typical retirement account using their service.
Of course it’s important to realize those savings are achieved over a period of years. Even still, it can make a big difference in a retirement plan.
FeeX provides all of these services completely free. For now the service is being funded by the venture capital funds and relationships they have with the various brokers they recommend, though FeeX states they have referral arrangements with some of the financial service providers.
Signing up for the FeeX service is a simple process. To create an account, all that’s necessary is your email address and a password.
Once your account has been created, link any investment accounts you own to your FeeX account. FeeX uses the popular service Yodlee on the back end to link up your account. Though they scan and analyze the fees in your accounts, they do not have the capacity to access your money for any purpose. The service exists strictly to determine the level of fees you’re paying in your investment accounts.
These are the fees they scan for:
- Expense Ratio — Mutual funds, ETFs and even no-load funds carry an expense ratio. This is a small percentage — anywhere from a fraction of a percent to as much as 2 percent or more of your balance — that is skimmed off of your return.
- Plan Fee — If you have a 401(k) account, your plan provider is probably charging you these fees for the privilege of holding your money.
- Advisory Fee — Financial advisors charge percentage fees that appear small but add up fast.
- Transaction Fee — These “pay to play” fees ding your account every time you buy or sell. FeeX helps you see the real cost of each transaction.
- Other Fees — Other investing fees include: wrap fees, upfront sales loads, back-end redemption fees, account maintenance fees and more.
Some of these fees are well hidden, in addition to the fact that unwary investors may not total up all of the various fees to see what an account is really costing them overall.
FeeX refers to these fees as the “tyranny of compounding fees” — which is the exact opposite of the magic of compounding interest. FeeX then recommends alternative investments that will save you money on those fees, and it can add up to serious money over time.
As an example, let’s take an investment of $50,000 over a 20-year timeframe, invested at 10 percent per year. We’ll consider two scenarios, one with 2 percent in average annual investment fees, and the other with 1 percent. You may be surprised by the impact a 1 percent change in investment fees can make on a long-term investment.
Investment Account A (2 percent fees) — The net return on this account is 8 percent (the 10 percent investment return, less 2 percent in transaction fees). After 20 years, the account grows to $233,047.
Investment Account B (1 percent fees) — The net return on this account is 9 percent (the 10 percent investment return, less 1 percent in transaction fees). After 20 years, the account grows to $280,220.
Over 20 years, Account B accumulates $47,173 more than Account A “just” because of a 1 percent difference in investment fees. And naturally, the longer the investment horizon, the greater the advantage will be of Account B.
Reducing those investment fees is what FeeX can do for you.
Some investment platforms also provide similar services, such as Personal Capital’s 401(k) Fee Analyzer. However there are fees to have an account with Personal Capital, and FeeX has the advantage of being a standalone service you can use to screen other investment platforms and accounts.
- Free Service — The service costs nothing to use.
- Easy to Sign Up — You can quickly sign up and find out the fees you are paying within minutes.
- Recommended Alternatives — FeeX will recommend alternative firms and/or replacing existing high-fee ETFs or mutual funds.
- Assumes Retirement for Timeline — All fees are based upon time until your retirement. So if you have funds set up for other goals (i.e., saving for college, new home, etc.) FeeX does not take that into consideration.
FeeX’s free service could potentially save you thousands over time. They have a strong mission that helps users understand where their money is going and offers alternatives to help you minimize fees.
Because the service is free to use, there is no harm in trying it out. We at minimum recommend checking out your accounts and seeing how much you are really paying in fees. The amount might surprise you.