Financial Engines

FINANCIAL ENGINES® INTRODUCES PERSONAL ASSET MANAGER FOR 401(K) INVESTORS

Ground-breaking Managed Account Program is First to Be Accessible to All Investors and Unique to Each Investor

PALO ALTO, Calif., October 13, 2003 – Financial Engines, Inc. today introduced its Personal Asset Manager program, a personal portfolio management program designed for employees who would rather have an independent expert manage their 401(k) savings for them. The program will be made available to plan sponsors and plan providers, including over 900 employers who have hired Financial Engines to provide advice to more than 3 million employees.

Personal Asset Manager powered by Financial Engines gives investors who lack time or expertise a convenient way to get professional investment management and access by phone to a personal advisor. The program is accessible to all plan participants and has no minimum account balance requirement. Without professional help many employees fail to invest wisely for retirement, creating fiduciary risk for employers.

"Typical 401(k) plans are tailored to do-it-yourself investors, with a staggering array of information and choices but almost no expert help," said Dallas Salisbury, president of the Employee Benefit Research Institute. "Employers increasingly want to shift their focus from adding more choice to adding more help."

Personal Asset Manager lets employees delegate the responsibility for investment and savings decisions to an expert and receive a level of personalized investment management for their 401(k) accounts never before available to them. What makes this level of quality and personalization possible is the same underlying advice technology that powers Financial Engines' online advice and printed statements. Together with online and print, Personal Asset Manager gives employers a comprehensive, consistent suite of advisory services designed to meet the needs of every employee, regardless of the time and interest they have in investing.

"Online advice is only one way to deliver the power of our engines," said Jeff Maggioncalda, president and CEO of Financial Engines. "With Personal Asset Manager, we can deliver the same personalized, expert advice to employees who want to delegate to an advisor they can talk to by phone. Now, even employees who do nothing with their 401(k) accounts can succeed."

How it Works

Personal Asset Manager, like the company's other advice offerings, is completely personalized. Rather than slotting employees into model portfolios, Financial Engines creates a portfolio unique to each investor based on their specific 401(k) investments, non-401(k) investments, spouse's investments, savings rate, time horizon, risk level, and goals. Additionally, employees have the added assurance of being able to access a live advisor who can explain how their recommended portfolios will help them reach their goals.

After enrolling in the program, members receive a Personal Plan Preview that details the exact portfolio plan that will be implemented and offers the option of supplying additional information through the mail, online, or to an advisor over the phone. The account will then be continuously monitored and periodically rebalanced taking into consideration all of the personalized data that is available.

Personal Asset Manager offers investors:

• Ongoing professional portfolio management
• Access to savings management to maximize pre-tax savings over time
• Access to a live advisor
• Personalization based on outside holdings and company stock
• Convenient enrollment via print, online, or over the phone
• Utilization of the existing investment options in their retirement plan
• No minimum account balance requirement

In developing Personal Asset Manager, Financial Engines spent a year with over 50 sponsors and 2,000 participants listening to what they want from this kind of a program. A sponsor forum in May 2003 revealed that the most important elements in a managed account solution include*:

• Simple enrollment via paper, phone, online (80%)
• Personalized to include outside assets and company stock (73%)
• Phone access to an advisor (68%)
• Uses sponsor's existing investment options (89%)
• Independent fiduciary (84%)

"Sponsors require a solution that reaches the unreachable employee, is easy to add to their plan and can be trusted to provide high-quality, personalized portfolio management," said Ken Fine, vice president of product marketing for Financial Engines, who led the development of the program.

Over the past ten years employers have focused on adding additional investment options to their 401(k) plans as a means of fiduciary management. These employers are now concerned about providing employees with the help they need to avoid making investing mistakes that could cost them their retirement. Adding a managed account advice option is comparable to hiring an investment manager to a plan under the Employee Retirement Income Security Act of 1974 (ERISA). Therefore, employers can offer managed accounts as a means of fiduciary risk management to help ensure that employees are properly saving and diversifying their accounts.

Financial Engines in Practice

In addition to providing plan sponsors with a broad suite of services to help them manage their fiduciary risk, Financial Engines has also created a fund performance track record that demonstrates the efficacy of its financial methodology. Financial Engines recently took the 8,443 mutual funds it analyzed in 1997 and looked at how well the top-ranked funds performed over the six-year period from 1997 to 2002. Top-ranked funds were identified as funds that earned a 1997 Financial Engines Fund Score ("FE Fund Score") of 9-10. Financial Engines assigns an "FE Fund Score" based on how well it expects a fund to perform in the future using a proprietary forward looking fund-ranking analysis by Financial Engines. An FE Fund Score of 9-10 represents the top 15 percent of the mutual funds analyzed by the Financial Engines model. Results showed**:

• 73 percent of Financial Engines' top-ranked funds outperformed the median fund in their category over the past 6 years
• 62 percent of Financial Engines' top-ranked equity funds outperformed the median fund in their category over the past 6 years
• 70 percent of Financial Engines' top-ranked bond funds outperformed the median fund in their category over the past 6 years
• 66 percent of Financial Engines' top-ranked international equity funds outperformed the median fund in their category over the past 6 years
• 95 percent of Financial Engines' top-ranked money market funds outperformed the median fund in their category over the past 6 years

 "Clients consider our methodology to be a critical reason for selecting us for both advice and managed accounts," says Maggioncalda. "We now have evidence that our institutional-quality methodology delivers superior results for participants."

About Financial Engines

Financial Engines provides investors with honest, personalized advice and portfolio management online, on paper, by phone, and in person. Financial Engines advice technology makes expert advice accessible to all investors and unique to each investor. The company was founded by Nobel Prize-winning economist William F. Sharpe and currently serves millions of individuals, over 900 plan sponsors and many leading financial institutions. Financial Engines has incorporated proven financial methodology into proprietary advice technology to offer a complete advice platform to meet the needs of all investors. For more information visit www.financialengines.com.

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

* Source: Financial Engines sponsor forum, "Reaching the Reluctant Investor", May 2003. Percentage represents sponsors selecting features as "important" or "very important" on a scale from 1 to 4.

** Represents funds that earned a 1997 Financial Engines Fund Score ("FE Fund Score") of 9-10. An "FE Fund Score" is a ranking assigned by Financial Engines based on the application of a proprietary model created by Financial Engines in 2000. These rankings represent the retroactive application of the model from 1997 to 1999. An FE Fund Score of 9-10 represents the top 15% of the mutual funds analyzed by the Financial Engines model. "Equity funds" refers to funds in the S&P "Equity" and "Balanced" categories. "Bond funds" refers to funds in the S&P "Domestic and International Bonds" and "Muni Bonds" categories. "International equity funds" refers to funds in the S&P "Global and International" category. "Money market funds" refers to funds in the S&P "Taxable and Tax-free Money Market" category. These are model results only and do not reflect actual advice given by Financial Engines, or the actual performance of accounts advised by Financial Engines. Certain of Financial Engines' clients may have had investment results materially different from those shown. These results do not reflect the deduction of any fees that may be charged by Financial Engines to utilize this proprietary model. Such fees may be paid by a plan participant or a plan sponsor. Financial Engines has applied its model to the funds in all 7 of the S&P mutual fund categories, and has averaged the category specific results which is reflected in the overall performance information. Source: Financial Engines.