MutualFundWire.com: Fortune 100 Company Signs With Financial Engines
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Tuesday, September 28, 1999

Fortune 100 Company Signs With Financial Engines


For the first time, employees at a Fortune 100 company will be getting investment advice for their 401(k) plan through the Internet. Financial Engines has announced that it will provide advice to the active members of Merck & Co.'s salaried 401(k) plan.

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    • The plan covers 17,000 of Merck's 57,300 employees; workers in the pharmaceutical company's union plan are not covered. Brian Samuels, vice president of field operations and business development, Financial Engines, told InvestmentWires that the advice provider started rolling out the service last week.

    Samuels also hinted that Financial Engines is on the verge of announcing another handful of Fortune 500 relationships in the next few weeks.

    The implementation is integrated into Merck's recordkeeping system to pull plan specific data for the participant, said Samuels. This information includes account balance, deferral amounts, and in some cases, deferred compensation balances. He explained that the data will be used to populate the screens for participants.

    However, data will not be fed back into the recordkeeping system after participants have decided on an allocation mix, he admitted. Participants must enter personal information on their own.

    Fidelity Investments acts as the plan's recordkeeper.

    "Merck's decision to offer its employees access to independent investment advice fits with our commitment to employees. That commitment includes a constructive work environment where employees have access to the tools they need to be successful," said Caroline Dorsa, vice president and treasurer for Merck.

    Engines hopes to hit a 50% utilization rate for the service, said Samuels. He noted that in tests, up to 78% of targeted users had used the service.

    Why haven't more employers offered Engine's service or a competing one? Samuels says that the biggest hindrances to date for sponsors offering advice are fiduciary concerns. "Fiduciary liability is the biggest issue with all sponsors," said Samuels. He added that Merck and the soon to be announced additional adoptions by plan sponsors may start a "domino effect" of more sponsors integrating the new tools into their plans.

    Other recent implementations include Dole offering 401kForum's services and Pan American Life rolling out Rational Investors' services to its bundled plan client base.


    Printed from: MFWire.com/story.asp?s=25052

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