Financial Engines of Palo Alto, Calif. today signed a multi-million dollar agreement with the State of Florida to provide investment education and guidance to the 650,000 participants in that state's pension plan, the company announced today.
The Florida State Board of Administration, the investment manager for the state's $100 billion pension plan, signed a multi-year agreement with Financial Engines, according to a company spokesman who declined to offer further details.
The agreement is part of Florida's plan to begin offering an employee-directed defined contribution plan in addition to its existing defined benefit plan. 'This shift in options offers an innovative benefit to our State's employees who are faced with a complex choice to make,' said Tom Herndon, executive director of the FSBA, in a statement. 'We feel strongly that employees must understand the investment risk of either selection and be able to develop a specific strategy to define and meet their retirement goals.'
The service will be offered in March 2002 and will be designed to allow participants to evaluate the results of switching from the state's defined benefit plan to its new defined contribution plan.
It will also offer a prognostication of the employee's retirement portfolio in the defined contribution plan versus the defined benefit plan, weighing factors like the participant's retirement age and risk tolerance.
The agreement marks the first time a third-party advice provider has won a state contract to provide investment guidance to defined benefit plan participants, a Financial Engines spokesperson said.