Financial Engines

FINANCIAL ENGINES' ADVICE IMPACT DATA SHOW IMPROVEMENT IN EMPLOYEES' RETIREMENT PLANNING

Investment Advice Helps Employees Save More, Diversify and Build Wealth

PALO ALTO, Calif., May 14, 2003 – Financial Engines, Inc. today announced that results from its Q1 2003 advice impact data show that access to employer sponsored investment advice is helping employees nationwide prepare for a more secure retirement. Financial Engines advice has been shown to impact employee behavior by leading employees to increase savings, reduce company stock concentrations, adjust portfolio risk and build wealth.

"Our data show that Financial Engines is reaching and impacting employees' retirement decisions," said Jeff Maggioncalda, president and CEO of Financial Engines. "Financial Engines has built a complete advice platform that drives real results for employees and positively impacts their chances of achieving a secure retirement."

EMPLOYEES NEED HELP

Financial Engines was an underwriter of the 13th annual Retirement Confidence Survey released by the Employee Benefit Research Institute (EBRI), American Savings Education Council, and Mathew Greenwald & Associates. The survey, released April 11, 2003, noted that widespread lack of knowledge and apathy about key money management issues could prevent millions of Americans from properly preparing for their financial future. Key retirement planning issues include savings, investment allocation and understanding how much money investments will yield in retirement, which can be dramatically affected by the level of investment risk. Through quantitative and qualitative research, Financial Engines has seen that employees who have help with their retirement investing tend to save more, invest more wisely and improve their opportunity to have more retirement income.

"Findings from the 2003 Retirement Confidence Survey show that workers do not know how much they need in retirement, are underestimating how much they can live on and are therefore falsely confident about their retirement security," said Dallas Salisbury, CEO and president of EBRI. "Investment advisory services address workers primary concerns by showing them how much retirement income their investments may yield and helping them save more and diversify to improve their financial futures."

FINANCIAL ENGINES' ADVICE IMPACT DATA

With a customer base of over 900 plan sponsors representing 3.2 million plan participants, Financial Engines has the ability to glean insights from one of the largest advisory client bases in the investment advice industry. To better serve plan sponsors and their plan participants, Financial Engines built a data warehouse in 2001 using state of the art technology and quantitative data analysis techniques. Financial Engines' advice impact data tracks companies with more than 1,000 employees that provide online advice as a pre-paid benefit.*

Impact - Helping Employees Increase Savings, Diversify and Build Wealth

Employees Gain Confidence

Employees that use the Financial Engines online service have a more realistic view of how much money they can expect in retirement, make changes to build their retirement wealth and are therefore more confident about their retirement security.

• Over 90 percent of adopters see a personalized Forecast of how much their retirement savings could yield them in retirement
• The forecasted average retirement portfolio for users increases by $130,000 and the forecasted annual retirement income increases by $13,000
• Financial Engines' June 2002 Participant Survey showed that 80 percent of users report that they are confident about retirement security vs. 58 percent of non-users**

Employees Save More

Adequate savings is critical to achieving retirement security. Of the participants who used the Financial Engines service:

• 80 percent of users were advised to save more
• 20 percent of users implemented advised savings increases
• Users increased savings an average of 40 percent

Employees Create More Diversified Accounts

The Financial Engines service helps employees weigh the risks and rewards of company stock in their retirement plans by showing them the impact different levels of stock could have on their future retirement income.

• Financial Engines advises 58 percent of users to reduce company stock holdings and 85 percent accept this recommendation

Additionally, showing employees the impact of different levels of risk on their potential future retirement income is an effective way to illustrate the impact of risk on a portfolio.

• 55 percent of users were shown that they have an inappropriate risk level for their time horizon to retirement, with 93 percent taking too much risk and 7 percent not taking enough risk
• 35 percent accept the recommendation to adjust their level of risk

Employee Satisfaction is High

The Financial Engines 2003 Participant Survey revealed that the majority of users are satisfied with the Financial Engines service, find it easy-to-use and are taking action on the advice they receive.***

• 81 percent of users reported that they were satisfied with the Financial Engines service
• 79 percent of users reported that the service was easy to use
• 59 percent of users reported that they were taking action as a result of the advice

Reach - Delivering Services to More Employees

Adoption Rises Over Time

Overall average adoption rates are 14 percent after one year, 26 percent after two years and 48 percent after three years. At these same companies, average adoption rates for employees with Internet access are 24 percent after one year, 43 percent after two years and greater than 50 percent after three years. Active electronic communications programs and promotions have been shown to positively impact adoption by increasing awareness.

Printed Personal Statements Work for U.S. Army

In order to leverage the capabilities of Financial Engines' advice technology platform and deliver additional value to customers, Financial Engines recently began offering printed Personal Statements. In January 2003 the United States Army began a pilot of Financial Engines' Personal Statements to supplement its online offering and extend the value of the Financial Engines service. Personal Statements were mailed to 100 percent of Army's U.S-based Non-Appropriated Fund Civilian Employee plan participants. After surveying Army participants, results show that:

• 48 percent agreed that the Forecast shown on the Personal Statements changed their expectations about achieving a secure retirement
• 87 percent of participants found the statements useful
• 68 percent plan to take action with their investments based on their statement findings

About Financial Engines

Financial Engines provides advice technology and services to help financial institutions and employers address real-world investor needs 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. Fifteen financial institutions and 900 plan sponsors have hired Financial Engines to make advice available to over 3.2 million individuals. Nobel Prize-winning economist William F. Sharpe founded the company with a revolutionary vision: to help financial institutions and employers make institutional-quality advice available to individual investors. For more information on Financial Engines, visit www.financialengines.com.

Financial Engines is a registered trademark of Financial Engines, Inc.

* Data regarding investor behavior is derived from the Financial Engines Marketing Database (12/02)

** The survey was sent to 40,000+ participants. A total of 4,255 people responded, of which 2,468 were adopters and 1,787 were non-adopters. Fielding of the survey took place in June 2002.

*** The survey was sent to 20,000+ participants. A total of 1,269 responded. Fielding of the survey took place in February 2003.