In Case You Missed It: The Conflict of Interest Rule

The highly anticipated U.S. Department of Labor’s Conflict of Interest Rule was released on April 6th. Under the new rule, investment advisors providing retirement advice are required to serve as fiduciaries and place their clients’ interests ahead of their own. Financial Engines has long supported the rule, and in the weeks following the announcement, Financial Engines and other industry leaders, financial journalists, and industry analysts have delved into the rule.

The Wall Street Journal published an article highlighting reactions from several industry leaders, analysts, and politicians. Christopher Jones, Chief Investment Officer at Financial Engines, shared his point of view, stating:

“From what we have heard and read and the conversations we have had with the secretary and others, I think the [Labor] Department has made sincere efforts to streamline the original rule and make it easier for the industry to accommodate to the rule and minimize the unintended consequences and cost of complying. The core elements remain focused on making sure anybody who is providing advice in a retirement context does so as a fiduciary. We think that’s an unqualified win for the public and will ultimately benefit the industry, as it realigns to be more consumer-friendly.”

USA Today took a look at how consumers perceive the rule in a snapshot of the industry. The snapshot features a stat from our recent survey, which found that 77% of respondents support the idea that all financial advisors should be legally required to put their clients’ best interest first.

Bloomberg’s Katherine Chiglinsky writes that the rule is a vital turning point in protecting consumers in the investing process. She sites our survey finding that only “18 percent of adults were sure they knew what [fiduciary] meant in the context of investment advice.” Chiglinsky explains that the regulation will still allow brokers to collect commission, but the brokers will be required to adhere to the Conflict of Interest Rule, which will “hold more advisers to the tougher clients-come-first standard” and help eliminate some of the confusion around industry jargon.

With the rule now finalized, it is important to be educated on how it affects you. Questions? Check in with a financial professional to learn more.

Financial Engines and The Mutual Fund Store Means Greater Access to Help

Yesterday, we made the exciting announcement that Financial Engines has entered into a definitive agreement to acquire The Mutual Fund Store, an independent Registered Investment Advisor organization that provides personalized financial planning and independent advice from over 125 locations across the U.S.

We are excited to combine our online advisory services with The Mutual Fund Store’s comprehensive in-person advisory service. When the transaction closes, which we expect to occur early next year, our plan is to provide broader investment and retirement planning resources and more choice in the kind of advisor relationship that works best for you: in-person, by phone and/or online. Our plan is to offer you an unprecedented level of service to help you achieve your financial goals – because we know getting help matters when it comes to investing.

How it will work

If you already have an existing relationship with Financial Engines, this acquisition does not change a thing. Your account remains active, your service will continue uninterrupted, and there is no impact on your account fees. You can continue to count on Financial Engines for guidance and advice on your employer retirement plan. Our fiduciary standards, independent investment methodology and dedicated advisor center remain unchanged.

In the meantime, we’ve included some questions and answers below. If you have additional questions, you can reach a Financial Engines Advisor Representative at (800) 601-5957.

We will provide additional updates as we prepare to bring our firms together. Thank you for entrusting Financial Engines with your retirement saving investing as we work to help you retire well.

Questions and Answers:

Will this announcement change my existing relationship with Financial Engines?

This acquisition will not change your existing relationship with Financial Engines. You can continue to count on Financial Engines for guidance, advice and management on your employer retirement plan. Our fiduciary standards aren’t changing. We still have a legal duty to put your best interest first. And we don’t profit from the products we recommend.

What will be the impact on the current services I’m receiving from Financial Engines?

This announcement has no immediate impact on Financial Engines’ product offerings. You still have the same access to Online Advice and Professional Management from Financial Engines. Once the transaction closes, our plan is for access to the broader resources of our combined firms, including holistic financial planning, onsite seminars in the workplace, and the ability to visit a The Mutual Fund Store location for an in-person consultation. We will share more information with you in early 2016 as the transaction closes.

Will my fees change?

This announcement has no impact on your account fees for the services you receive, or your broader relationship with Financial Engines.

Will I still be able to work with my individual advisor at Financial Engines?

Our team of advisor representatives will still be available to you by phone and online.

Are there any changes to my employer retirement plan as a result of the announcement?

This announcement has no impact on your employer’s retirement plan, or Financial Engines’ relationship with your employer. You can continue to count on Financial Engines for guidance, advice, and management on your employer retirement plan. Our fiduciary standards aren’t changing. We still have a legal duty to put your best interest first. We don’t profit from the products we recommend.

Financial Engines® is a trademark mark of Financial Engines, Inc.  Advisory services provided through Financial Engines Advisors L.L.C., a federally registered investment adviser and wholly owned subsidiary of Financial Engines, Inc.  Discussion of acquisition for information purposes only.  Does not constitute offer of services or promise of future services; or projections/guidance for Financial Engines, Inc..

It’s National Save for Retirement Week! Here are 10 Saving Tips to Help You Get There

The third week in October is National Save for Retirement Week—a time to reflect on the importance of saving for retirement by encouraging folks to save money and participate in their employer-sponsored retirement plans or to save on their own.

Sometimes the hardest part of saving is knowing what to do. So we asked our experts to share some tips that can help you get ahead.

1. Remember: it’s a marathon, not a sprint. Saving for retirement can feel like an insurmountable goal. But breaking it down into a series of more manageable milestones can help it feel a lot less daunting. Start by working with a financial advisor to put together a savings plan can help kick start this process.

2. Start learning. Retirement planning is your responsibility but it doesn’t have to be hard. Set aside some time to learn some investing basics and understand your options. This knowledge will help you manage your own investments or provide the background to help you to ask the right questions of your financial advisor. You can start with the basics right here.

3. Write down your questions. How much money will I need to retire? What are the fees associated with my 401(k) plan? Does my employer-sponsored 401(k) plan come with access to an advisor? Is my financial advisor a fiduciary? Start asking questions to figure out what options are best for you; and if you don’t know what questions to ask – that’s okay too.

4. Don’t leave money on the table. Earlier this year, we learned that many employees don’t take advantage of their full employer 401(k) match incentive.Our research report estimated that Americans are likely to leave a total of $24 billion in unclaimed 401(k) company matches on the table each year. Make sure you’re contributing enough to your 401(k) to get your full employer match. Our infographic provides the highlights.

5. Pay yourself first. How many times have you heard this? When you get a raise, immediately increase the amount you’re saving in your 401(k). By increasing the contribution quickly, you won’t notice what’s missing from the bump. Our tutorial explains more.

6. Avoid borrowing from your 401(k). It can be tempting, but missing out on the compound growth can mean losing out on a lot of money that you would have earned over the years. More importantly, if you lose your job or change jobs, that loan is due immediately. If you don’t repay it, there are severe penalties. We can help you evaluate the risks.

7. Consider an Individual Retirement Account (IRA). An IRA is typically something you’d do on your own with a bank, brokerage firm or a mutual fund company (this is also available through Financial Engines). You can contribute to an IRA whether or not you are employed. Additionally, depending on which type of IRA you choose (Traditional or ROTH) you can pay the tax now when you first put the money in or pay later when you take it out, depending on what works best for you.

8. Understand Social Security. Among seniors currently receiving Social Security benefits, 22% of married couples and about 47% of unmarried people rely on Social Security for 90% or more of their income. There are many different ways to take Social Security and what you decide can affect your benefit. Use our Social Security Planner to see how you could get more income from Social Security in retirement.

9. Start saving. Take a hard look at your spending habits to see if there’s anywhere you can cut back, like forgoing that pricy coffee in the morning or switching to more affordable car insurance. Time and time again research shows that the longer you delay in starting to save, the harder it is to save enough for retirement.

10. Understand the value of compound growth. More than two-thirds of adults age 55+ admit to procrastinating when it comes to retirement planning, but they’re missing out on missed past contributions, their missed 401(k) match AND any missed investment growth. Our infographic shows how much you could lose if you don’t get started.

If you are eligible for Financial Engines, we’re here to help you retire well. Give us a call and we’ll help you get started. And in the meantime, have a productive National Save for Retirement Week! Happy saving!

What Do 401(k) Investors Want Next? An Advisor on Their Side [infographic]


Technology has helped make investing easier than ever, but it can be frustrating when you just want to talk to someone about your money. Our new research finds that consumers want more than technology: they want a real, human financial advisor in their corner.

We offer that help at Financial Engines.

To learn more about what people had to say, we put together this infographic illustrating some of the findings from our latest research report, “The Human Touch: The Role of financial advisors in a changing advice landscape.”

Financial Engines Expands Access to Our Investment Advisors

Last week, we announced that we are expanding access to our experienced investment advisor representatives. Now, anyone with access to Financial Engines services through their employer can pick up the phone to talk with an advisor at no additional charge.

See if you are eligible for Financial Engines.

You can now talk with one of our advisors whether you have already started using our service or are simply considering it. Previously, access to our advisors was a feature for those enrolled in the Financial Engines managed account program. We will be rolling out this service with different employers into 2016, but don’t let that stop you if you’re ready to call.

Read The Wall Street Journal: Financial Engines to Offer 401(k) Savers Free Access to Advisers

Our experienced, licensed advisors provide you with personal, unbiased help with retirement plan accounts, income planning and a variety of financial topics. You can talk with an advisor on the phone, via webcam and live chat. Our advisors are non-commissioned and do not sell investment products.

Read Investment News: Financial Engines to Offer More Access to Human Advisers

Not sure where to start? Our advisors can talk with you about your specific situation, including analyzing your retirement plan and outside accounts, savings rate recommendations, and assistance with Social Security claiming strategies. In addition, you can get help with a variety of other topics that can impact your financial wellbeing.

Read BenefitsPro: From Robo-Advisors to Human Advisors

If you’re still unsure about calling an advisor, watch this short video to see how simple it is. We look forward to hearing from you!

Financial Engines Advantage: Your Retirement Checkup is a Great Way to Evaluate How You’re Doing

Did you know, if you have access to Financial Engines, you can request a Retirement Checkup?

Our Retirement Checkup is a simple and effective phone consultation with a Financial Engines Advisor focused on helping you update your Retirement Plan. The service was created in 2008 when the markets were in flux and many investors weren’t sure how to best invest for their future. Since then, the checkup has been an effective tool for realigning individual portfolios – especially important before, during and after significant life events.

Near-retirees need extra help getting ready for retirement.

If you are age 50 and older, our investment advisors will work with you to complete your retirement picture by reviewing all sources of savings, all investment accounts, as well as additional sources of income earmarked for retirement. With this total-portfolio view, the advisor helps you adjust your retirement strategy by explaining different investment and savings strategies in relation to your retirement income goals.

If you use our Professional Management service, our advisors will implement resulting investment changes and send you an updated Financial Engines Retirement Plan reflecting the new strategy. The process is designed to be fast, easy and impactful. We can help you create a plan in one focused phone call that requires little preparation on your part.

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American Employees: Are You Leaving Money On The Table?

If your boss wanted to give you a $1,300 bonus on the spot, you’d take it, right?

A surprising number of Americans actually don’t. Many employees are offered that incentive in the form of a 401(k) match and for whatever reason, end up turning it down. Our new research report estimates that Americans are likely to leave a total of $24 billion in unclaimed 401(k) company matches on the table each year.

We arrived at this startling number by looking at the saving records of 4.4 million retirement plan participants at 553 companies. We found that one in four employees (25%) miss out on receiving their full company 401(k) match by not saving enough on their own. The typical employee who fails to receive the full match leaves $1,336 of potential “money” on the table each year. For the average employee, that’s an extra 2.4% of missed annual income. (See infographic for more.)

With compounding, this could amount to as much as $42,855 over 20 years!

Why do so many employees miss out on potentially receiving thousands of dollars every year?

Employees tend to save more for retirement as they age and earn more money. For example, 42% of plan participants earning less than $40,000 per year do not take full advantage of their employer match. That compares to just 10% of employees who earn more than $100,000 annually. Likewise, employees under age 30 are approximately twice as likely to miss out on their employer match compared to employees over the age of 60 (30% vs. 16%).

For many employees, middle age poses additional savings challenges. We found that the steady decline in employees missing out on their match is interrupted between ages 35 and 45, when the rate of decline flattens out. While we didn’t specifically look at why this savings dip occurs, it may have to do with the growing costs of raising a family, saving to send kids to college or buying a home.

Advisory Services Provide a Helpful Nudge

Our report showed that employees across all ages and income levels who used advisory services were less likely to miss out on any of their employer match compared to those not receiving this help. For example, 25% of employees who earn less than $40,000 and who use professional advisory services missed out on part of their employer match, compared to 44% of people who did not use advisory services.

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What can you do to make sure you’re not missing out?

Know your plan.

Find out how much your employer will match your 401(k) contributions and strive to save at least enough to get the full match.

Get professional help.

If you have access to professional investment help (online advice or managed accounts), take advantage of that benefit.

Ask a financial advisor.

Talk with a financial advisor who has a legal commitment as a fiduciary to put their clients’ interests ahead of their own.

Commit to save more when you can.

If you can’t afford to save enough to get the full match today, increase your savings rate when you get your next raise — and each raise thereafter — until you reach your 401(k) contribution limit.

Greg Stein, Financial Engines director of investment technology, had this to say about the report and the importance of saving enough to get the full employer match:

“The 401(k) match is one of the best deals going for employees, providing an immediate 100% return per dollar invested. Maximizing your available 401(k) match is a key way for millions of American employees to improve their retirement security. While many people might feel like they can’t afford to save more, we hope that these numbers help them realize that they can’t afford not to.”

Introducing Personalized, Integrated Social Security and Income Planning Services

In March, we conducted a study that found Americans are over-confident in their ability to make good Social Security claiming decisions. It turns out that a lot of people need help with this important decision.

Today, we launched new Social Security guidance and income planning services that help people understand how to get the most out of their Social Security benefits and see how the pieces of their retirement income come together after they stop work.

It’s available at no additional charge to employers that offer Financial Engines’ retirement planning services or their employees who use it. And because we feel so strongly that everyone should be able to get the most out of their Social Security benefits, we’re also making the Social Security planner available to all Americans at no charge on www.financialengines.com.

Why is Social Security so important?

Social Security is the foundation of most peoples’ retirement. According to the Social Security Administration, 60 percent of Americans rely on Social Security for more than 75 percent of their income in retirement. It’s also complicated, with thousands of strategies for a married household. In general, it can pay to delay claiming Social Security because your benefits increase 6-8 percent per year you put off claiming. Our study found that the typical American couple leaves more than $100,000 in lifetime benefits on the table because they didn’t understand all of their options.

Here’s what our new Social Security planner offers*:

  • Personalized Social Security plan – Tell us a bit about your situation, and in about five minutes, you’ll get a personalized Social Security plan that can help you make the most of the Social Security benefits you’ve got coming to you.
  • An integrated approach – Unlike most Social Security calculators, which treat claiming Social Security as an isolated, individual decision, our Social Security and income planning services create a personalized strategy that considers other income sources and the full range of life expectancies for individuals or both spouses in a married household.
  • Personalized income plan – Users who have access to Financial Engines’ services through their employers can consider different strategies and receive a clear, personalized income plan, based on their individual situation, which shows how the components of their retirement income come together. The comprehensive plan includes other income sources, including part-time work and pensions, and shows how retirement savings in a 401(k) or IRA can be converted into income to help bridge the gap between retirement and claiming Social Security benefits.**
  • Access to an advisor – All participants with access to the new service through their employer can talk with a Financial Engines advisor at no additional cost. Many of our advisors are certified by the National Social Security Advisor (NSSA) program and can help callers clarify Social Security’s complexities. Advisors can work with callers to create Social Security or income plans and answer questions. Screen sharing is available so that callers can see their plans take shape in real time.

Visit www.financialengines.com to generate your own Social Security plan today!

 

*Financial Engines’ Social Security guidance can provide reasonable estimates for you and your spouse age 18-69; estimates are not guarantees of future benefit payments. Income planning experience available for participants age 55-69 AND 7 years or less from retirement. All estimates are based upon information about you, your stated goals as well as current Social Security laws, rulings and formulas available from the Social Security Administration. Decisions regarding Social Security are highly personal and depend on a number of factors such as your health and family longevity, whether you plan to work in retirement, whether you have other income sources as well as your anticipated future financial needs and obligations. Certain limitations apply.

The Most Important Question to Ask Your Financial Advisor

So you’re thinking about hiring a financial professional for help with your retirement planning.  Congratulations! Recognizing you need retirement help can be the first step toward a brighter retirement future.

Studies have shown that people who get retirement help with their 401(k)s do better than those who go it alone. The thing is, the financial advisory world can be confusing, not to mention treacherous for the inexperienced.

How do you find someone you can trust?

“How do you get paid?”

One of the most important questions to ask a potential advisor is “How do you get paid?”  Don’t worry—you’re not being rude. It’s almost expected. After all, it’s your money and you should be sure that your advisor has your best interests at heart. Follow the money to determine what ultimately motivates their investment advice.

  • Does he or she make a commission for every transaction he makes on your behalf?
  • Does he or she have investment inventory that he is paid to sell?
  • Does he or she get paid more if your account grows larger?

Long-term growth should be your #1 goal when it comes to your 401(k). If your advisor earns a commission when he or she makes a transaction on your behalf, their priorities may be elsewhere (like their paycheck).  And if your advisor also creates the investments they’d like to put you into (mutual funds, ETFs, etc.), their motivation to sell a particular investment could override your desire for long-term growth.

The benefits of an asset-based fee.

It’s for this reason that the asset-based fee continues to gain popularity. This fee structure better aligns the interests of the client (you) and advisor. In this arrangement, the fee is set as a percentage of the amount of money that the advisor manages. Since the advisor is not paid based on what he or she selects for your portfolio, they are free to select the investments that they believe are best for your individual investment goals.

While registered investment advisors are fiduciaries, asking the simple question of “How do you get paid?” can shed light on where your advisor’s loyalties lay. Take the time to understand how they earn money to minimize potential conflicts of interest and set a course for achieving your retirement goals.