Our investment methodology
We are objective, we personalize our recommendations for every participant, use realistic forecasting, and create optimized portfolios. And we consider the options in your plan including company stock. Our investment methodology, first envisioned by Bill Sharpe in 1996, has evolved to address the needs of the largest defined contribution plans. Today, that unique methodology is what sets Financial Engines apart.
Our Investment Committee is responsible for the fiduciary oversight and ongoing monitoring of our proprietary methodology and Advice Engines, which power both our Professional Management and Online Advice services.
Our Investment Management team, a group of highly-skilled and experienced professionals with advanced degrees in finance, economics, and mathematics provides expert oversight across the advisory and professional management services delivered by Financial Engines. The group includes financial research & development, portfolio management, investments analysis, and our Retiree Research Center. The team's mission is to provide high-quality, personalized advice and investment management services to millions of individual investors.
The five key principles of Financial Engines’ investment methodology are:
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Based on the work of Nobel Laureate Bill Sharpe, our methodology leverages the techniques used by large pension plans for decades. By providing systematic, objective analysis combined with professional oversight, individual investors can get institutional-quality advice and management, regardless of whether they have $5 or $5 million in their retirement accounts.
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Provide independent, institutional-quality advice and management to individuals.
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At Financial Engines, you won't find any generic model portfolios. We personalize each portfolio to the needs of each individual and to the specific characteristics of each plan. And we look at the total portfolio, considering as appropriate any other information we may have, such as the participant's initial holdings, other sponsored plans, and any outside or restricted assets.
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Personalize portfolios to the participant and the plan.
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Financial Engines models the unique characteristics of tens of thousands of specific securities to project the range of possible portfolio outcomes. By disclosing the potential range of portfolio outcomes and investment risk, your participants will have a more realistic and accurate understanding of their chances of retirement success.
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Employ realistic forecasting using security-level Monte Carlo simulation.
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Expenses and fees matter when it comes to fund performance. That's why our methodology also takes them into account—both in terms of forecasts and in building portfolios. By incorporating proprietary, security-specific modeling of potential returns, risk, and correlations within each plan, we can optimize potential returns for a desired level of risk. In addition, we consider each participant's unique circumstances, preferences, and total portfolio, resulting in an efficiently diversified portfolio for each individual.
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Model fund specifics to create more efficient, diversified portfolios.
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At Financial Engines we analyze each company stock based upon its unique risk and potential return characteristics, not just its asset class category. And in keeping with our goal of providing a more secure financial future for your participants, we also can manage their holdings of company stock and disclose the risk of having too high a concentration within a portfolio.
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Take company stock into consideration—and manage it, too.
Working with us
Whether you're a plan sponsor, consultant, or retirement plan provider, we're ready to help. Learn more ›
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Help in Defined Contribution Plans:
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Bill Sharpe's vision
It all started with a revolutionary idea: to help make financial security a reality for all investors regardless of net worth or investment know-how. Learn more ›