Financial Engines Inc. plans to introduce a lifetime retirement income offering to address what CEO Jeffrey Maggioncalda said are “the concerns that have caused large employers to reject the offerings that are currently in the market.”
The program would operate within Financial Engines' managed accounts business for defined contribution plans.
Mr. Maggioncalda described his company's intention during a recent conference call with securities analysts, providing some context for Financial Engines' strategy while avoiding details. He declined to be interviewed, however.
“We expect to begin initial deployment of retirement income services at the end of 2010 or early 2011,” Mr. Maggioncalda told analysts on Aug. 10 as part of a discussion of second-quarter financial results. “It will be a number of quarters and years before we really deploy this across all providers and across our entire base of sponsors.” He said he hopes to be “fully serving” existing clients within three years.
“Our retirement income service is going to be an extension of our managed account program,” he said. “It will typically be available to current and future employees who enroll in managed accounts.”
Mr. Maggioncalda said annuities won't be part of what the firm offers.
“We currently plan to initially offer this retirement income feature as an in-plan solution, meaning that anyone who enrolls can receive monthly payouts from their 401(k) plan,” he told analysts. “Plan sponsors will not need to add an annuity or change their investment lineups to offer our solution.”
He said the retirement income offering won't require sponsors to buy new products. “We believe this design will enable us over time to activate this retirement income feature across our existing (clients),” Mr. Maggioncalda said. “Like our current managed account program, our retirement income solution is being designed to work with virtually any open architecture combination of investment products.”
Mr. Maggioncalda also told analysts that the retirement income offering could be in a 401(k) plan, or “it could be in a different type of account.” He didn't elaborate.