Financial Engines, Merrill Lynch in Deal for Online 401(k) Advice

Palo Alto-based Financial Engines has formed a strategic alliance with brokerage giant Merrill Lynch in a move that could bring personalized, concrete investment advice to hundreds of thousands of 401(k) investors via the Internet.

Although the company, founded by Stanford finance professor and Nobel laureate William Sharpe, has entered into similar deals with other 401(k) administrators, this is by far its biggest partnership to date.

Merrill is the nation’s second-largest 401(k) plan administrator based on participants (behind Fidelity Investments) and the third-largest based on assets (behind Fidelity and Vanguard Group).

The announcement represents the latest move in a growing effort to help the nation’s 401(k) plan participants--who are increasingly relying on these accounts to fund their retirements--to invest wisely.

Unlike generic investment advice programs, Financial Engines gives investors recommendations on specific choices in their 401(k) plans.

Through the Web-based program, investors can see if the probability of meeting their specific financial goals will improve or worsen by adding or decreasing allotments to a particular investment option in their plan.

Merrill will make the program available to its 401(k) corporate clients, but it will be up to the companies themselves to decide if they will offer the service to employees, says Patrick Walsh, senior vice president and director for Merrill Lynch Group Employee Services.

Walsh noted that in a recent Merrill Lynch survey, 70% of employees queried said they want someone to advise them on how to invest their 401(k) money.

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The Tarnish Worsens

Gold prices plunged anew Monday, driving the metal’s price to near the 20-year low it reached in August. Monthly closes and latest for near-term futures on the Comex, per ounce:

Monday: $277.60

Source: Bloomberg News