Brightscope: Mike and Ryan Alfred


Brightscope: Mike and Ryan Alfred

More than 72 million Americans save for retirement through 401(k) plans, but most of them don't know how much they are paying in fees, nor how high fees can diminish the value of their nest egg. Now, thanks to brothers Mike and Ryan Alfred, workers can discover the good, the bad and the ugly about their plans.

Three years ago, the tech-savvy duo -- both still in their twenties -- decided to create a Morningstar-like rating system to shed light on the $3 trillion 401(k) industry. The young investment advisers pursued their idea with the same passion and discipline they bring to training for Ironman triathlons and 100-mile runs in the San Diego canyons. They raised nearly $1 million, then hopped on a plane to Washington, D.C., to track down critical data at the Department of Labor. The brothers petitioned the department to release more than 100,000 pages of documents so that they could build their database.

In January 2009 they launched, which now provides free ratings and fee information on more than 55,000 401(k) plans. The site empowers employees to ask about fees and investment options, and gives plan sponsors leverage to negotiate lower prices with service providers. The Alfreds view complaints from industry insiders about the rating system as proof that they have struck a nerve. The company makes money by selling analytical data to plan sponsors, asset managers and plan providers.

What's next? Brightscope recently unveiled a free search tool to let consumers find, compare and, eventually, rate financial advisers. The brothers, who hope to take their company public in a few years, think their latest innovation will top their first one.