Financial Engines

FINANCIAL ENGINES' INVESTMENT ADVISORSM NOW AVAILABLE FOR 401(k) PLAN PARTICIPANTS

PALO ALTO, Calif., October 26, 1998 – Financial Engines Inc., a pioneering provider of online investment advice, today introduced the Financial Engines Investment Advisor^TM, an Internet-based advisory service that provides personalized, institutional-quality investment advice for 401(k) plan participants. This new service helps 401(k) plan participants understand the relationship between investment risk and return and offers specific fund recommendations to increase the percentage chance that they will reach their retirement goals.

Developed by Economics Nobel Laureate William F. Sharpe and a team of leading software and finance experts, the Advisor service combines advanced financial analytics with Internet technology to create a unique platform for the delivery of impartial, personalized advice to individual investors. The service allows defined contribution plan participants to benefit from the same quality advice that defined benefit managers have used for decades to invest pension fund savings.

"While investment management responsibility has largely shifted from defined benefit plan managers to individual defined contribution plan participants, the expertise needed to wisely invest retirement funds to achieve a specific outcome has not," said William F. Sharpe, founder and chairman of Financial Engines. "Since individuals must now bear the risk that comes with investing, they should also be given the tools and expertise to help them make informed investment decisions that will increase the percentage chance that they will reach their future goals."

ALZA Offers Financial Engines' Service to Employees

After completing a successful pilot of Financial Engines advisory service, ALZA Corporation has elected to roll the Advisor out to its 1,700 employees in three locations. In addition to serving as an incentive for employees to participate in the company's $135 million 401(k) plan, ALZA also hopes to demonstrate its investment in helping its employees plan their financial futures.

"The Advisor allows us to provide a value-added benefit to our employees who will now have access to sophisticated, personalized investment advice," said Harold Fethe, senior vice president of human resources at ALZA. "Financial Engines combines the work of a Nobel Prize-winning economist with the power and reach of the Internet to deliver a level of investment advice previously unavailable to most individuals. Ultimately, we hope this service will help our employees achieve secure financial futures."

The Forecast Engine^TM

At the heart of the Advisor is the Forecast Engine^TM. This system forecasts the range of future retirement income likely to result from owning any combination of specific investments. Rather than forcing users to guess about future inflation rates and stock market performance, the Forecast Engine takes into account thousands of possible scenarios of inflation, interest rates, and investment returns. It models possible combinations of available investments and selects the mix that provides the highest expected return for a level of risk acceptable to the investor.

How it Works

Participants log in to the Financial Engines' Web site and the Advisor is cached on each user's computer to allow for easy navigation and quick computations. The Advisor uses personal information provided by the participant, including age, income, contribution level, total household financial assets and desired retirement age to calculate the percentage chance of reaching a specified retirement goal, with the downside expressed in real dollars. The service then allows users to make changes to their income goal, retirement age, savings rate or level of risk, generating new portfolio recommendations each time changes are made.

The Forecast Engine simulates the performance of investments under each scenario to help users understand the range of possible outcomes at the retirement horizon and the probability that they will reach their goal. With each iteration, the Advisor recommends a combination of mutual funds that best matches the given criteria. As personal circumstances and financial markets change over time, the Advisor notifies participants with each visit of the impact to their holdings and the percentage chance of reaching their goal, and recommends whether they should consider changes to their investment plan.

"Financial Engines Investment Advisor combines the life work of William F. Sharpe with advances in financial analytics and software technology in a way that will fundamentally change the way individuals invest their retirement savings," said Jeff Maggioncalda, president and CEO of Financial Engines. "Using the Advisor, participants can evaluate the different tradeoffs they face in planning for retirement and get a clear picture of what they can expect."

Distribution and Cost

Financial Engines will offer the Advisor directly to plan sponsors at a cost of $30 to $50 per participant per year. Additionally, Financial Engines has formed marketing and distribution relationships with other defined contribution service providers.

In June 1998, Financial Engines and Ernst & Young LLP signed an agreement that adds the Advisor to Ernst & Young's Bright Future Employee Financial Education Program^SM offerings. The Bright Future Employee Financial Education Program combines Ernst & Young's financial educational services with specific, personalized investment advice from Financial Engines.

In September 1998, State Street Global Advisors, the investment management side of State Street Bank, agreed to use Financial Engines' advice technology platform to provide investment advice through SSgA's new Advice Account^SM 401(k) plan offering. State Street's trained, licensed financial advisors will use Financial Engines' simulation engines to forecast retirement outcomes for Advice Account participants.

About Financial Engines
Financial Engines provides online investment advice for individual investors and Fortune 500 companies. Financial Engines combines financial forecasting technology with the power of the Internet to deliver unbiased, personalized advice through a familiar browser interface. Founded by Economics Nobel Laureate William F. Sharpe, Financial Engines is dedicated to helping individuals make better investment decisions to meet the financial needs of their families. Financial Engines was founded in 1996 and is located in Palo Alto, Calif. For more information, visit Financial Engines' web site at www.financialengines.com.

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Financial Engines® is a registered trademark, and Financial Engines Investment Advisor^SM is a service mark of Financial Engines, Inc. All other trademarks and service marks are the property of their respective owners. All advisory services are provided by Financial Engines Advisors LLC, a federally registered investment advisor.