Financial Engines
FINANCIAL ENGINES' MANAGED ACCOUNTS BUSINESS MORE THAN DOUBLES IN 2006
100,000+ Employees Enrolled in Managed Accounts Powered by Financial Engines
PALO ALTO, Calif., January 23, 2007 – Financial Engines, a leading provider of personalized 401(k) portfolio management and investment advisory services, today announced that the company's managed accounts business grew more than 100 percent in 2006. Seventy-five new large plan sponsors signed on for managed accounts in 2006, and more than 90 employers are scheduled to roll out in 2007. In addition, in the last two months of the year, five new plan sponsors contracted to automatically enroll all existing participants and new employees into 401(k) plans, with managed accounts as the default investment.* At year end, Financial Engines counted more than 100,000 plan participants enrolled in managed accounts powered by Financial Engines, and had more than $8 billion in assets under management, adding more than $2 billion in AUM in the last 60 days of the year.
Companies that selected Financial Engines to offer a full suite of advisory services to participants in 2006 include CenterPoint Energy, Hallmark, National Grid, and Texas Instruments. In addition, Financial Engines now has relationships with eight of the leading 401(k) providers, including ACS, Hewitt, JPMorgan, T. Rowe Price and Vanguard.
The continued growth of advisory services in the last year was driven by the Pension Protection Act of 2006 and the related proposed DOL regulations on appropriate default investments for automatic 401(k) plans. The Pension Protection Act encourages plan sponsors to implement automatic 401(k) plans, and the Department of Labor (DOL) proposed regulation designates managed accounts as a "Qualified Default" investment for those plans. Employers enrolling participants in Qualified Defaults, such as managed accounts, in accordance with the regulation, receive a fiduciary safe harbor freeing them from liability on investment performance. Both regulatory changes continue to drive strong employer demand for independent investment advice and managed accounts, as companies redesign their 401(k) plans to make participant success more automatic.
"While the demand for our services remains strong, it's especially satisfying that we are able to help those employees who need it the most," explained Jeff Maggioncalda, president and chief executive officer of Financial Engines. "Across our client base, employees in managed accounts have lower balances, have lower incomes and are saving less than the typical employee."
About Financial Engines
Financial Engines is a new breed of investment advisor providing personalized investment advice and portfolio management to 401(k) participants. Founded by Nobel Prize-winning economist, William F. Sharpe, Financial Engines serves millions of employees at many of America's largest corporations. Patented advice technology and institutional-quality investment methodology allow Financial Engines to offer an array of advisory services to meet the needs of a wide range of investors. For more information, please visit www.financialengines.com.
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*Signed clients include both those that are Financial Engines advisory and sub-advisory clients.