Here's how it works: FeeX searches fees by analyzing crowdsourced financial data of its users through Yodlee, a provider of online banking services that track customer transactions while keeping them anonymous.
"When you connect … your investment or IRA or retirement or 401(k) account to the FeeX platform, basically what we're doing is that we're analyzing all the fees that you are paying and we tell you how much fees you're paying in dollars not percentages," Levine said. "And how much it's going to accumulate over the next 30 years or 10 years or whatever" the investor's time horizon is.
FeeX then offers users alternative investment choices that have lower fees. "The basic service to let you know how much fees you're paying and here are the comparable funds is a free service." Levine also said those alternatives funds are "completely objective and we make them based on the fees" and performance.
So how does FeeX make money? He said, "We make money by creating [a] new fee structure that's not available today. For example, grouping people together and getting them a volume discount. That is a subscription service."
Levine said he understands possible privacy concerns because users need to provide their account numbers and passwords. "If we were to ask you to upload it manually that'd be a nightmare, and you'll never do that." He said the user information required is similar to other online money-managing services.
Financial firms don't have to participate for FeeX to work, he said. "I'm not sure they're going to like our service."
In making his case of the platform, the FeeX chairman paraphrased Albert Einstein. "One percent a year sounds small, right? But when you take into consideration the compound effect of that, Einstein used to say that compound interest is the eighth force of the universe."
"Those that are understanding that are earning it, and those that don't are paying it. And we, most of the people, are simply paying it," Levine concluded.
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