NEW YORK (MainStreet) — When you stepped foot in your first job out of college, you may have heeded the conventional wisdom and opened a 401(k) account. But you may not have been aware that these retirement accounts don’t come for free.
In fact, about 70% of 401(k) holders in the U.S. falsely assume that their 401(k) plan is free, according to an AARP survey. Recognizing this gap, former president of Waze Uri Levine, Yoav Zurel and David Weisz decided to create FeeX to educate consumers on the hidden fees associated with 401(k) plans, IRAs, and brokerage accounts, and to then help them get rid of these fees. The Israeli startup, which launched in 2012, brands itself as the “Robinhood of Fees.”
“This is probably the biggest secret in the world--$600 billion of fees every year that people [in the U.S.] are paying and aren’t even aware of it,” said Uri Levine, co-founder and chairman of FeeX. “The reality is that about one-third of your retirement will be lost in fees. If you have a 401(k) plan, and you don’t know how much you’re paying, you’re paying too much.”
The average American household will pay $155,000 on 401(k) fees, according to a study from New York think tank Demos. “Most people are so cost-conscious, but they don’t think about the inherent costs that go with a 401(k),” said Jared Snider, a financial advisor at Exencial Wealth Advisors.
That’s where FeeX comes in -- to try to help consumers navigate the often obscure terrain of their 401(k) plans. When a consumer creates a profile on FeeX, and the platform may recommend alternative mutual funds that a consumer can switch to that have lower fees. In the future, Levine says FeeX could expand to other financial products like mortgages and loans to give similar advice.