Financial Engines

FINANCIAL ENGINES' DATA SHOWS ADVICE HELPS 401(K) INVESTORS MAKE INFORMED DECISIONS

Financial Engines' Investment Advice Sees Strong Adoption Over Time And Helps Employees Understand Risk and Return

PALO ALTO, Calif., May 21, 2002 – Financial Engines, Inc. today announced that employers offering Financial Engines' advisory services to employees are seeing positive results with regard to adoption, participant decisions about savings, diversification and risk, and participant retirement security. As advice offered through the workplace gains mainstream acceptance, Financial Engines has broadened its advice delivery capabilities to include online access, call centers, face-to-face advice from professional advisors and printed personal statements. Financial Engines' technology enables sponsors and providers to deliver personalized, cost effective investment advice to employees across all income levels and demographics.

"We've recently witnessed the tragedy that can occur when people make poor decisions with their life savings," said Jeff Maggioncalda, president and CEO of Financial Engines. "Using advice technology, we can make personalized advice available to everyone who needs it, and the results so far show that it's having a real impact."

Participant Adoption
Financial Engines has found that participant adoption rates vary by delivery channel.

• In the case of the State of Florida, 100% of employees receive the benefit of personalized advice through Personal Benefits Statements mailed to their homes. These statements provide a more realistic estimation of what they might expect from their State-sponsored retirement benefit options.
• Participant adoption of the Direct Access online service varies depending on time, Internet access, sponsor promotion of the benefit, and provider site traffic. The average online adoption rates for Financial Engines' plan sponsors with greater than 1,000 employees are as follows:

Empirical data show that adoption naturally trends upward over time as sponsors and providers drive more employees online for their benefits. Plan sponsors who undertake promotional programs to communicate the advice benefit to employees see dramatically higher adoption than those who do not. Companies that promote their advice offering can realize more than 25% adoption in the first year. Furthermore, adoption rates can be many times higher among plan sponsors whose employees heavily use their 401(k) provider website.

"Dow Corning began offering Financial Engines to employees in April 2001, and since that time adoption of the service has grown to about 50%," said Dennis Hurley, manager of pension investments and risk management for Dow Corning. "We feel that offering 401(k) investment advice to employees is the right thing to do to help them prepare for retirement and we expect that adoption will continue to grow as we create new ways to communicate this important benefit to our employees."

Advice Works
Data from the Financial Engines Marketing Database as of April 2002, reveal that investment advice offered through the workplace is having a positive impact on investor behavior and the likelihood that individuals will meet their retirement goals.

Getting started is quick and easy

• 85% of Financial Engines' users who enter data get a personalized forecast of how much income they can realistically expect in retirement.
• Participants receive their forecast within 5-7 minutes of registration.
• Participants average 17 minutes per session, 2-3 sessions in the first month and 5-6 sessions per year.
• Over 40% of users enter information on investments held outside of the 401(k) and over 50% enter individual stocks.
• When individuals use the service, the most common activities are checking balances, checking forecasts and checking for updated advice.

Advice changes employee behavior

• 38% of participants report increasing their savings as a result of using Financial Engines. (Financial Engines 2001 Participant Survey)
• Participants increase savings an average of 67%, from 6% to 10% of income.
• Employees age 44 and younger tend to increase their risk levels, while employees age 55 and older tend to decrease their risk levels.
• Only 12.5% of employees increase their retirement age in order to improve the chance that they will reach their retirement goal.

How employees benefit

• Over 60% of users increase the likelihood of reaching their retirement goals.
• An employee's chance of reaching their retirement goals increases on average from 25% to 50%.
• An employee's median portfolio value estimate increases on average by over $140,000.
• An employee's median annual retirement income estimate increases on average by over $15,000.

"These results clearly demonstrate that participants are realizing positive benefits from personalized investment advice," concluded Jeff Maggioncalda.

About Financial Engines
Financial Engines provides advice technology to help financial institutions and employers solve real-world investor problems for their clients and employees. Financial Engines' services provide specific, actionable investment recommendations based on the outcomes an investor wants to achieve and can be delivered through the web, phone, or face-to-face. More than 20 financial institutions and 750 plan sponsors have hired Financial Engines to make advice available to over 3.0 million individuals. Nobel Prize winning economist William F. Sharpe founded the company with a revolutionary vision: to make institutional-quality advice available to financial institutions and employers that serve individual investors. For more information on Financial Engines, visit www.financialengines.com.

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Financial Engines is a registered trademark 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.