By Ori @FeeX
One type of retirement investment that we at FeeX love to tackle is the “repackaged” fund. A repackaged fund is a classic example of the ways that hidden (and excessive) fees can sneak into your retirement savings — even though repackaged funds essentially look just like the standard funds you can look up on Morningstar or Google Finance, they can have a host of fees tacked onto it by the 401(k) provider that aren’t really apparent unless you take a good hard look at your 401(k) fee disclosure form.
What’s a repackaged fund?
Simply put, a fund with extra fees added on by a 401(k) administrator. What kind of fees? Recordkeeping fees (the cost of administering a retirement plan, as set by the 401(k) provider) could be thrown in there, as well as fees based on the total amount of money in your company’s 401(k) plan (the lower the total balance, the more fees you pay); it also might not be clear where exactly those fees are coming from.
Related Post: Which 401k Funds Should I Pick?
So that means that FeeX has an important job to do in trying to identify repackaged funds, clarify what their fees are, and show it to you in dollars and cents. But this is tricky! Depending on the fund and the 401(k) provider, the fees can vary a lot. So repackaged funds are kind of like snowflakes – no two are exactly alike.
How can FeeX help with repackaged funds?
FeeX’s solution is to use a tactic beloved by our co-founder—crowd-sourcing! It’s as simple as uploading your fee disclosure form—which you probably received when you first signed up for your 401(k) plan—then letting us analyze it for fees, after which point we then add those fees to our database so everyone can have them recognized when they scan their own account for fees.
So you, the FeeX user, have the power in your hands to help us find those pesky repackaged fund fees, not to mention helping anyone else in the future who has the same type of funds as you. Which basically makes you a fee superhero.
And you can see the fee disclosure upload in action below — this user uploaded his fee disclosure form and we discovered that there were extra fees in his repackaged Vanguard fund.
When he went to find other lower-fee options, he actually saw his same fund, without those extra repackaged fees — if he were able to invest in the fund without the repackaged fees, he’d reduce the fees by 50%. Not too shabby!
Ways to take action
1) If you have a 401(k), upload your fee disclosure form when you sign up for FeeX! Look for the upload button at the bottom of the screen. If you don’t have your fee disclosure form handy, you might need to do a little hunting around on your financial institution’s site, or just contact your HR manager and ask them to resend it.
Your upload helps you and a whole bunch of other FeeXers!
2) If you find yourself like the above user paying twice as much in fees on a repackaged fund, contact your 401(k) provider or HR manager and show them your FeeX results (which you can handily print or download as a PDF). They might be able to take action to negotiate a better plan — or if they can’t, you can start thinking about evaluating your 401(k) and seeing if it makes sense to roll it over to an IRA instead.
By the way, we come up with our new product features based on what you all want to see! So send us your ideas, wish lists and suggestions to email@example.com.