Jun 25, 2019

Financial Engines Launches Fiduciary Distribution Review to Help Employees Retiring or Changing Jobs

SUNNYVALE, Calif. — June 25, 2019 — More than four in 10 individuals (42%) between ages 35 and 65 who left a job where they had money in a 401(k) plan were unaware that it might have been possible to keep their money in the plan, according to a survey released today by Financial Engines, America’s top independent financial planning and investment advisor1.

In addition, more than one in four (28%) didn’t know that some retirement distribution choices trigger tax liabilities and penalties. Additionally, half of respondents (51%) were not aware that they might be able to move money from IRA accounts into their employer-sponsored 401(k) plan.

Financial Engines introduces Fiduciary Distribution Review to help employees navigate choices Financial Engines’ new Fiduciary Distribution Review can help millions of America’s workers avoid financial risks, fees, taxes, penalties and leakage when they change jobs. The service helps employees make informed decisions about their separation benefits, retirement plan distribution choices, and in-plan income options – free from bias or product conflicts of interest. Financial Engines is the workplace division of Edelman Financial Engines, America’s #1 independent financial planning and investment advisor, rated #1 in quality by Barron’s2 and ranked #1 in size by InvestmentNews1.

Fiduciary Distribution Review gives departing employees private, one-on-one meetings with a Financial Engines financial planner. By learning about the employee’s situation and goals, the planners are able to apply their deep knowledge of the employer’s 401(k) plan to give the employee recommendations that are in the employee’s best interests.

Financial Engines is once again leading the way forward for plan sponsors concerned about ensuring the long-term financial health of their workers, as well as protecting themselves as a plan fiduciary. Employees get personal advice that takes into account accurate forecasts of post-retirement income, including Social Security benefits and in-plan income options, to help them achieve their financial goals, while plan fiduciaries achieve closer alignment with their business objectives.

“Employers spend large amounts of time and money providing employees with access to high-quality and low-cost investment options in their plan. They also provide crucial fiduciary oversight to ensure financial providers are protecting employees’ best interests,” said Christopher Jones, chief investment officer at Edelman Financial Engines. “Over 3,200 companies have hired Financial Engines because of our industry-leading financial planning and investment advice, and our new Fiduciary Distribution Review program helps ensure that employees don’t squander their chances of achieving retirement security through poor decisions around plan distributions.”

“There is a lot of confusion and a general lack of awareness among employees about their 401(k) distribution options when they retire or change jobs,” said Ric Edelman, co-founder and Chairman, Financial Education and Client Experience for Edelman Financial Engines. He noted that departing employees can withdraw the funds from their 401(k) account, roll the money to their new employer’s plan, roll the money to an IRA, or leave the funds in the current plan. “There can be huge consequences from making the wrong decision,” Edelman said, “ranging from taxes and penalties to higher fees and risky or poor performing investments.”

He added that the challenges are particularly acute since nearly half of survey respondents (47%) weren’t sure they knew the fees in their current retirement accounts. “Not understanding your distribution options can harm your ability to reach your retirement goals,” Edelman said. “Often, leaving the money with your old employer is the best choice.”

One reason many workers make the wrong choice is because they don’t seek the advice of a trusted financial advisor. Among all respondents, most (69%) have not consulted a financial advisor about their distribution options. Among those who withdrew money from a 401(k) before their retirement, a quarter (26%) got no information or help from any resource. Demonstrating the value of obtaining advice from a financial planner, nearly 80% of those who did consult a financial advisor said they felt more confident about their distribution strategy.

View the infographic and read other insights from our whitepaper Reconsidering the 401(k) Rollover here.

Survey Methodology

Edelman Financial Engines surveyed 1,071 individuals between the age of 35 and 65, located in the US. The survey was fielded in February and March 2019 using the Qualtrics Insight Platform with a panel sourced from the Lucid Marketplace.

About Edelman Financial Engines

Since 1986, Edelman Financial Engines has been committed to always acting in the best interest of our clients. We were founded on the belief that all American investors – not just the wealthy – deserve access to personalized, comprehensive financial planning and investment advice. Today, we are America’s top independent financial planning and investment advisor, recognized by both InvestmentNews1 and Barron’s2, with 180+ planner offices across the country and entrusted by more than 1.1 million clients to manage more than $200 billion in assets. Our unique approach to serving clients combines our advanced methodology and proprietary technology with the attention of a dedicated personal financial planner. Every client’s situation and goals are unique, and the powerful fusion of high-tech and high-touch allows Edelman Financial Engines to deliver the personal plan and financial confidence that everyone deserves.

©2019 Edelman Financial Engines, LLC. All advisory services provided by Financial Engines Advisors L.L.C. Financial Engines does not guarantee future results.

1 Ranking and status for 2018. For independence methodology and ranking, see InvestmentNews Center (http://data.investmentnews.com/ria/).

2 The Top 40 Independent Advisory Firm Ranking issued by Barron’s is qualitative and quantitative, including assets managed, the size and experience of teams, and the regulatory records of the advisers and firms. Firms elect to participate, but do not pay to be included in the ranking. Investor returns/experience are not considered. 2018 ranking refers to Edelman Financial Services (EFS), which combined its advisory business in its entirety with Financial Engines Advisors L.L.C. (FEA) in November 2018. For the same survey, FEA received a precombination ranking of twelfth.


Amy Conley