Icon’s Fees: Everything you need to know

Fees are a normal part of a retirement savings plan. Everyone charges fees (even if they say they don’t). But how those fees are calculated and explained often requires an advanced degree. High fees are all too common in retirement savings plans.

 

Overview of Fees

Part of the problem with understanding fees is that there are multiple fees that go to various entities, all of which are play a crucial role in your retirement plan. In the case of Icon, we’ve eliminated unnecessary costs and expenses wherever possible.

Let’s start with quickly reviewing the types of fees commonly found in an IRA.

Fund Management Fees

These fees can often be the most expensive part of an account. This is the fee paid to the company that manages the investment funds. Icon’s average fund management fee is 0.09%, while the average for the industry is 0.79%*. Icon is 6 times less expensive.

Plan Administration and Custodial

These fees cover the cost of managing and maintaining your account and include the cost of things such as recordkeeping, website services, account statements, customer support, etc. All IRAs are required to have a custodian that securely holds your savings.

Advisory Fees

This is the cost for receiving advice on how to invest. Advisors can be real people you work with who will typically charge you a percentage of your total assets annually. If you decide to eliminate the human element, the cost of a robo-advisor can be about half the cost. Icon does not charge advisory fees.

Icon’s Fees: A Fairer Approach

Most retirement plans charge a fee that is based on your total assets. Which means as you make more money, so do they. This is how fees start to eat away at your savings.

We’ve done something completely different. Our fees are based on a low flat monthly fee of $4.00.

The comparison chart below shows what you’ll pay in annual fees, based on how much you have in your account. The amounts below don’t include fund management expenses. (We’ll get to that in a minute.)

 

$50,000 $250,000 $500,000

Icon

$4.00 flat monthly

 

$48 $48 $48

Average IRA

0.87%

$435 $2,175 $4,350

401(k)

1.41%

(Small employer average*)

$705 $3,525 $7,050

 

Now let’s compare fees once you add in fund management expenses. This is commonly referred to as an “all-in” cost.

That chart below shows what you can expect to pay annually on a savings balance of $100,000.

 

Average Fund Expense Plan Administration Fees Annual Fees on $100,000

Icon

0.09% $4.00 per month $138
Typical Robo-Advisor
0.12% 0.40% $520
Manually managed portfolios

(Traditional advisors**)

1.13% 0.99% $2,120
State-run IRA
0.13% 0.87% $1,000
401(k)

(Small employer)

0.79% 1.41% $2,200

 

*Employee Fiduciary Average 401(k) plans of less than $2 million pay all in 2.22%; of that, we assume the average fund fee of 79 basis points and eliminate that from the total.

**2016 Price Metrix Study of Retail Wealth Management: https://www.pricemetrix.com/cms/wp-content/uploads/State-of-Retail-Wealth-2016.pdf?t=1527206648