Financial Engines Opens New Advice "Channels"

November 20, 2002 ( - Evolving to meet the varied information needs of participants, online advice provider Financial Engines is bringing some of its advice expertise "offline", as well as some more streamlined processes.

The Palo Alto-based advice provider has unveiled a new Personal Statements product, pioneered with the 600,000 employees of the state of Florida.   The new offering will give workers a view of how much their 401(k) investments might be worth at retirement, as well as a personalized “call to action” to help improve that forecast.   The statements can be delivered by mail or email, are customized to each participant situation, and tailored to plan rules.

While those statements were designed to help Florida workers choose between their existing pension plan and a new defined contribution offering (see  Public Sector Rediscovers DB ), a Florida Public Employees Tracking Survey of the first 159,000 employees to make their choice found that over two-thirds reporting using the statement to learn more about their options, while 79% said it was useful or very useful in making their choice.

Smart Starts

In addition, Financial Engines has unveiled two new “QuickSolve” advice modules.   The Single Account QuickSolve helps new participants get started, offering a streamlined projection of what their investments could be worth at retirement, then offering advice across key areas, including:

  • Savings
  • Risk
  • Company stock and
  • Investment selection

The screen flow presents information and decisions in order of priority for individual investors, according to Financial Engines.   The approach is designed to facilitate the needs of those investors who are time-sensitive and prefer explicit guidance that requires little data entry and only a few decisions, according to the firm.

Early data from approximately 3,500 new adopters reveals that nearly two-thirds have completed the streamlined version, and nearly a third used the service multiple times over a three-week period.   Nearly all (92%) have received a forecast, and nearly as many (83%) also got specific recommendations on savings, rebalancing risk and investments.

Bigger Picture

Participants interested in a more detailed and holistic approach, can opt for the Retirement QuickSolve solution, which takes outside accounts into consideration.   The tool also offers new features, including the ability to save a strategy prior to implementation, and enhanced monitoring capabilities that proactively remind users who have a saved strategy to act on it.

Of early adopters of the Retirement QuickSolve option, nearly three-fourths (72%) have set retirement income goals (an average annual retirement income goal of $75,000), while 72% have also entered multiple accounts into the platform.

Financial Engines’ notes that these enhancements were influenced by user behavior analysis, focus group studies and behavioral finance theory on how different types of investors make decisions about saving and investing for retirement.