Financial Engines developed an independent investment management process used by the Vanguard Managed Account Program to give participants individualized access to professional portfolio management services, the release said.
A portfolio is created from low-cost, broadly diversified funds for each participant based on individual risk preferences and factors such as desired retirement age, family information, non-plan assets, and investments in company stock. Portfolios will be reviewed quarterly and adjusted to become more conservative as participants near their desired retirement age, according to the release.
To keep participants knowledgeable of their accounts, quarterly investment reports will be sent out, and participants will be able to have questions answered by Vanguard Managed Account Specialists via telephone.
The Vanguard Managed Account Program will be introduced to participants in the summer of 2004, and will be set on a tiered pricing schedule, ranging from 0.40% to 0.10% of a participant’s plan assets.
Employers will be able to choose to elect the Vanguard Managed Account Program as either a plan option for their retirement plan or as part of Vanguard’s One Step program, which automatically enrolls employees in their company’s 401(k), annually increases plan contributions by a set percentage, provides automatic asset allocation of investments over time, and advises participants on potential asset distribution vehicles upon retirement.
Vanguard has offered Financial Engines’ advisory services to investors since June 2001, with nearly 200 plan sponsors currently offering Financial Engines to some 700,000 participants.