Financial Engines CEO to step down in 2015

Lawrence Raffone will replace CEO and co-founder Jeffrey Maggioncalda, who will leave Jan. 1.
AUG 11, 2014
Just as the investment adviser he helped found hits $100 billion in assets under management, the chief executive of Financial Engines Inc., Jeffrey Maggioncalda, said last week he is stepping down after 18 years. Lawrence Raffone, who is currently president of Financial Engines and has been with the firm for nearly 14 years, will take over as chief executive on Jan. 1. Financial Engines, which provides digital retirement plan advice to 401(k) plan participants, reported it had $101.9 billion in assets under management at the end of the third quarter and is the largest fee-only registered investment adviser, according to InvestmentNews' RIA data center. The succession plan has been in the works for more than two years since Mr. Maggioncalda promoted Mr. Raffone to president in 2012. “That was the beginning of a long process,” Mr. Maggioncalda explained, according to transcripts of last week's earnings call. “I continued to give more and more responsibility and reporting to Larry so that today, he's running over half the company.” Mr. Maggioncalda indicated that he felt that the timing was right for him to move on. “I've known since day one with the company that, in my life, I was going to do something different,” he said on the call. “In terms of the timing, I was really looking for two things: What's a good time for me, [and] what's a good time for the company? Mr. Raffone has been with Financial Engines since 2001. He was previously executive vice president of Fidelity Investments' institutional brokerage division. “When I look at the fundamental trends driving our growth, the breadth and strength of our relationships and the quality, scalability and uniqueness of our services, I believe that Financial Engines is in an excellent position to take advantage of a growing opportunity to provide everyone with the independent, personalized retirement help that they deserve,” Mr. Raffone said on the call. Bill Doyle, an analyst who specializes in online investing and brokerages at Forrester Research Inc., said that Mr. Maggioncalda was leaving the company in a good position. The combination of a growing need for retirement advice and increasing demand for digital investment platforms would continue to boost assets, he said. “[Mr. Maggioncalda] took the company from birth to public at a time when a lot of other online businesses sputtered and faded,” Mr. Doyle said. “These guys are beautifully positioned for future growth if you believe that robo-advisers are going to make a difference, and we do.” Mr. Maggioncalda did not specify what his next step could be. He said only that he will take a “gap year” before getting back into anything new and will serve as a consultant to Mr. Raffone and Financial Engines in the meantime. “I will get back into something later,” he said.

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