FeeMetri(k)s

My role at our firm changed earlier this year, freeing me up to focus on creative and thought leadership endeavours. I released by second book (The Fiduciary Formula) and launched the Fiduciary U™ Podcast.

Even 3-4 years later, the industry tools/databases have not evolved very much. I decided to refocus on FeeMetri(k)s and make the product a success. The app is inexpensive for companies to licenses (less than $1k per year and solves their fiduciary obligation to monitor fees). But I had an epiphany - a big part of the value of the app for companies s leveraging the insights to negotiate lower fees with their retirement vendors. This is the consulting I've done for our clients for years and the fee savings can be significant, ranging from tens of thousands of dollars to hundreds of thousands of dollars. Per year. And the stakes have never been higher. 401(k) fee litigation is exploding, with cases filed on pace for a five-fold increase in 2020. And these cases are time-consuming and expensive for companies. For example, in 2015, Lockheed Martin entered into a settlement with their employees and agree to pay $62 million for failing to adequately monitor and negotiate fees.

However, most companies are not equipped to negotiate the best deal possible even with the data. I decided to add an optional consulting service, working fully on a contingency-basis. The company would still license the app on a subscription basis, but could retain me as a "hired gun" to do the negotiating. I have a lot more data, the experience and pattern recognition from doing it for 15+ years, etc. I've rarely run into a situation where I couldn't save a company more money than they could save on their own. My plan is to negotiate 3 year contracts and take 50% of the 1st year's fee savings.

More recently, I've had a number of 401(k) advisors (like me) approach me about licensing this tool for themselves and their firms. It would require some additional functionality to be developed so I am exploring whether this would make sense. The benefit could be much more data (making to app more valuable) and much greater distribution than going to companies one by one (e.g. an advisor could enter 50-100 of their plans created much more scale).

Over a number of month we worked together to take FeeMetri(k)s from a concept, to an MVP, to a more advanced version that was publicly available. One of my closest friends who founded a tech company that went public was a great sounding board and got me connected with a former employee who conducted 2 rounds of usability testing and we got great feedback that we incorporated into the product. He also connected me with a designed who created the UX/UI that AirDev was able to incorporate into the product. I got a few companies to license it and made a few thousand dollars. But at the time, our core business (we are an investment advisory firm) was going through significant growth and I had to focus my attention elsewhere so the product basically sat on the shelf - live, available, but unused.

I built a simple prototype in Excel that had the basic functionality I was looking for. Then I started searching for a developer since I am non-technical and can't code. I received some crazy quotes in the 6-figure range and months of development time.

But I read an article about this visual development platform called Bubble and found a small shop (called AirDev) with two guys who met at Harvard Business School and left to build an agency focused on the Bubble platform. They said they could build an MVP in 7 days for $3,500. I hired them.

I originally came up for the idea of FeeMetri(k)s while driving home from vacation with my family. We had been on a lake vacation and driving home on Sunday through the mountains in a brand new SUV when the transmission went out 5 hours from home. Stuck on a mountain pass with 4 kids who were 8 and under in 100 degree heat is a whole separate story in itself. 8 hours later we resumed our trip and while the entire family was asleep during the ride I started brainstorming.

The original idea was to build a tool that I could use for myself and my team to benchmark the fees in the 401(k) plans we managed for our corporate clients (and prospective clients). We and our clients have a fiduciary duty to monitor and ensure fees are "reasonable" and can help held legally liable for failure to do so. There were very few tools/databases at the time with accurate information, making the job difficult, time-consuming, and dangerous. The 401(k) industry has always suffered from a lack of transparency about fees. I wrote extensively about this in my first book Fixing the 401(k) which was published in 2008.