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Financial Engines Reports Strong Growth for Income+

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Financial Engines, an independent RIA, announced on Wednesday that it has signed more than 50 contracts for its Income+ solution, which is designed specifically for 401(k) plans. Financial Engines now manages approximately $79 billion for 900,000 employees.

Income+ provides a “way for participants in 401(k) to help manage their money prior to retirement,” Jason Scott, managing director of Financial Engines’ Retiree Research Center, told AdvisorOne on Monday. “In the last four to five years prior to retirement, we adjust the management of the portfolio to protect income. After retirement, the portfolio is ready to generate income.”

One of the benefits of the Income+ solution, Scott said, is that it provides a “balance between portfolio flexibility and an insurance guarantee outside of the plan.”

“Two to three years ago, a lot of solutions, mostly insurance, came from retail weren’t getting a lot of traction because they don’t work in a 401(k),” Scott said. One of the reasons for that is that there are some regulations that make it difficult for sponsors to add annuities to a plan, he said. Another reason is that they create a “lock-in problem” as employees pay for a benefit they would theoretically take later. “A change in service providers costs employees money.”

Income+ is part of the company’s managed account program and provides regular payouts each month from an employee’s 401(k) plan. It uses investments from the 401(k) for the first part of retirement, then offers an optional annuity for later in retirement.

The product also provides employees with access to a non-commissioned advisor representative for advice on their retirement plan.

“Baby Boomers are facing a new kind of retirement, with decisions that are more complex and a world that is more uncertain than their parents experienced a generation ago,” Jeff Maggioncalda, president and CEO of Financial Engines, said in a statement. “They are attracted to Income+ because it can create the kind of safe but flexible spending from their investment accounts that is needed in this new reality.”