NerdWallet is the latest media company to test the digital financial advice waters.
The San Francisco website known for consumer finance information announced Tuesday the launch of two new tools—a retirement calculator and 401(k) fee analyzer—that the company says will provide personalized recommendations to help people manage money, maximize retirement savings and build a financial plan.
“Today, working Americans are facing the prospect of retiring far later than previous generations,” said Kyle Ramsay, head of investing and retirement at NerdWallet, in a statement. “Our new retirement tools give our users a clear picture of where they stand today and guidance on how to improve, particularly by reducing fees that can drain their hard-earned retirement savings.”
The fee analyzer and a new 401(k) Rollover Center were developed through a partnership with FeeX, a service that algorithmically uncovers advisory, investment and expense ratio fees. After the user answers questions about the former employer, the investment firm that holds the account and the type of investment funds in the account, FeeX automatically generates a cost comparison to show consumers investments with lower fees and how much they could save over time.
They can then roll their 401(k) into an investment alternative of their choice for no charge. If the user chooses to switch to another provider, FeeX gets paid by that company.
David Goldman, FeeX’s director of business development, said the company’s mission is to bring “transparency to the retirement market and empower Americans to make smarter, data-driven investment decisions.” Yoav Zurel, the CEO of FeeX, added that users can see a list of available IRAs and make a decision similar to comparing airline prices on Kayak.
However, it isn’t immediately clear on the 401(k) Rollover Center website how these IRAs are chosen or how it avoids conflicts of interest. The Financial Industry Regulatory Authority recently warned consumers to watch for conflicts in digital advice services.
When asked if trading investment performance for lower fees could actually hurt an investor over time, Zurel said, “No one knows what would the future performance be. FeeX shows you all past performance and captures the impact of fees for the future.”
The retirement calculator, built internally by NerdWallet, is similar to other tools available online but can also suggest next steps for consumers and connect them with advice through NerdWallet’s Ask an Advisor platform.
The move by NerdWallet continues a growing trend of financial media companies moving into the digital advice market. Daily Worth recently partnered with a wealth management firm to design and launch their own robo advisor, WorthFM, and Investopedia announced plans to launch a digital hub to connect consumers with financial advisors.