Is TIAA-CREF taking advantage of my elderly (84) parent?

[ScaledWheel]

My father is single and has started to exhibit some memory issues that are impacting his financial health such as missing payments, locking himselves out of accounts, etc.

In the process of trying to help him, I came across some of his disclosures from his accounts at TIAA-CREF (a 403b and a trad IRA). This included the funds:

ACMVX - American Century Mid Cap Value Fund (0.98% ER)
NFRIX - Nuveen Floating Rate Income I (0.72% ER)
NCOIX - Nuveen High Yield Income I (0.77% ER)
IWS - iShares Russell Mid-Cap Value ETF (0.06% ER)
WMFAX = Allspring Municipal Bond Fund - Class A (0.75% ER)
PHYZX - PGIM High Yield Z (0.51% ER)
ESGU/ESGD/ESGE - "ESG Aware" iShares Index funds - these seem the least egregious as they at least broadly track the total market

The one that raised a red flag was the Mid-cap value and municipal bond fund, because why would you need a mid cap value fund, and why would you have a municipal bond fund in a tax-advantaged account, also my father is probably in the 12/15% tax bracket so no real tax advantage there either.

Does anyone know if TIAA-CREF has a history of taking advantage of their clients by putting them in these weird, high-expense ratio funds? Or is it more likely that my father just made bad financial decisions?

[tibbitts]

My father is single and has started to exhibit some memory issues that are impacting his financial health such as missing payments, locking himselves out of accounts, etc.

In the process of trying to help him, I came across some of his disclosures from his accounts at TIAA-CREF (a 403b and a trad IRA). This included the funds:

ACMVX - American Century Mid Cap Value Fund (0.98% ER)
NFRIX - Nuveen Floating Rate Income I (0.72% ER)
NCOIX - Nuveen High Yield Income I (0.77% ER)
IWS - iShares Russell Mid-Cap Value ETF (0.06% ER)
WMFAX = Allspring Municipal Bond Fund - Class A (0.75% ER)
PHYZX - PGIM High Yield Z (0.51% ER)
ESGU/ESGD/ESGE - "ESG Aware" iShares Index funds - these seem the least egregious as they at least broadly track the total market

The one that raised a red flag was the Mid-cap value and municipal bond fund, because why would you need a mid cap value fund, and why would you have a municipal bond fund in a tax-advantaged account, also my father is probably in the 12/15% tax bracket so no real tax advantage there either.

Does anyone know if TIAA-CREF has a history of taking advantage of their clients by putting them in these weird, high-expense ratio funds? Or is it more likely that my father just made bad financial decisions?

My experience with TIAA is that unless perhaps you pay them for advising, they don't "put you" in anything; your investments are entirely selected by you. So whaet kind of relationship does your father have with TIAA?

[windaar]

I've been with T/C for 25 years now and all of my investing decisions have been entirely my own. I suppose if I contacted one of their "wealth advisors," they might steer me toward funds in their interests rather than mine. But that has never happened.

[Katietsu]

When TIAA has offered us portfolio advice, they have used someone like Ibbotsen to create the plan. Too many funds at too high a ER for a typical bogleheads but nothing odd.

I cannot even guess how the municipal bond fund ended up in a retirement account. My spouse had a mid cap value fund in his 403b with Fidelity, probably picked the investment about 25 years ago. I think it might have just been a trendy thing at that time. Maybe Dad invested then? Think we might have a Pioneer high yield fund one of the 403bs at some time too.

TIAA owns Nuveen, so those are not surprising to see.

[ScaledWheel]

Thanks for the responses. It seems likely that Occam's razor applies here: my dad picked some suboptimal funds, potentially with the help of an advisor, but nothing necessarily nefarious is happening. Just makes me wish my dad wasn't so weird about money and this is something we could have talked about a long time ago.

[nisiprius]

As a side note, this seems to confirm my concerns about their acquisition of Nuveen. Just because they have Nuveen, the result is that somehow unsophisticated investors are buying Nuveen funds. The average expense ratio of your dad's portfolio is surely higher than it would have been if he were only in TIAA funds. Expense ratios like 0.72% are abusively high for a bond fund where expected returns are relatively low.

[whomever]

"My experience with TIAA is that unless perhaps you pay them for advising, they don't "put you" in anything; your investments are entirely selected by you. "

When I signed up, the investment choices were entirely my own. Shortly before retirement I went to meet with a rep in order to get estimates for Trad payouts. My (dim by now) recollection is that the rep gave me the estimates I wanted, then launched into the sales spiel for other funds. I confess I'm not sure, because my reaction to those kinds of pitches is to stand up, extend my hand, say thanks, and leave. So it's not like I would have sat there listening long enough for it to have made a big impression.

[crefwatch]

Thanks for the responses. It seems likely that Occam's razor applies here: my dad picked some suboptimal funds, potentially with the help of an advisor, but nothing necessarily nefarious is happening. Just makes me wish my dad wasn't so weird about money and this is something we could have talked about a long time ago.

Very sensible reply.

Just to pick one product, WMFAX, this is Class A of an (as others noted) very expensive mutual fund. But it's also a Front-Load fund! This suggests that he paid 4.50% of his investment to buy it in the first place. That suggests very strongly to me that he, at some time in the past, closed an IRA at a blood-sucking full-service brokerage firm, and moved the fund to TIAA. (I don't KNOW that, I'm making an educated guess.)

It's relevant whether he has a Brokerage Window in either of his two accounts. (Less likely in the 403(b)) That would probably be necessary to get WMFAX into a TIAA IRA, but I don't know for sure.

I'm suggesting that you are missing a great deal of information, even if some of it is lost in the sands of time, and cannot be retrieved! There are other things you can learn, like whether his 403(b) has lower-cost or higher-cost options. (I worked at a lot of NFPs with less than 100 full time employees, and they are often stuck with higher-cost investment options in a 403(b), TIAA or other providers.) Many 403(b)'s are incredibly expensive, even at large city K-12 boards of education.

You may wish to search this newsboard for (the many) posts on Power of Attorney. If his acuity is declining, you should not wait to start persuading him to appoint someone. And you need (annoyingly) to do the proprietary POA forms for EVERY fin-serv provider, because they will (even illegally) resist obeying a general form fully approved by his home state!
= = =
Edit: One reason I made this suggestion about the A Class / WMFAX is that I personally did have a (1980; "The past is another country, they do things differently there.") IRA Brokerage at Paine Webber, where I did have some load funds, due to (for example) Vanguard and Fidelity not being available there. In 1980, the commission for buying 100 shares of something like IBM was probably around $185! When I consolidated my IRAs at TIAA a few years ago, I kind-of expected the load-funds to be liquidated, but they were in fact, transferred in kind, and they were in my TIAA IRA Brokerage window for a year or two, because they continued to perform.

[beernutz]

I've been a TIAA member since 1999. In 2014 I went to a TIAA seminar at the University I'd worked for for 11 years because a good friend and colleague was retiring soon. I had no plans to retire within 10 years at the time. The presentation was very slick and after it I accepted TIAA's offer to do a free to me portfolio assessment.

At the time I had a simple 4 fund 75/25 asset allocation of TIAA traditional and three equity funds. I have no excuses but I accepted their offer to rebalance my portfolio from a simple 4 fund one to a 15 fund multi headed monstrosity I didn't understand. It was difficult to even know what my asset allocation was.

This lasted a few years until I came to my senses.i don't think TIAA is evil but they are compromised. Don't let them dictate your future.

[crefwatch]

Although it did not happen personally to me, I want to endorse Beernutz’ post about TIAA “slice and dice”. TIAA’s motives include avoiding “bad advice” accusations, as well as supporting Nuveen’s operations as a fully independent (Ironica typeface) subsidiary.

If I may put words in his mouth, I read “more in sorrow than anger” between his lines.

[ResearchMed]

Thanks for the responses. It seems likely that Occam's razor applies here: my dad picked some suboptimal funds, potentially with the help of an advisor, but nothing necessarily nefarious is happening. Just makes me wish my dad wasn't so weird about money and this is something we could have talked about a long time ago.

Very sensible reply.

Just to pick one product, WMFAX, this is Class A of an (as others noted) very expensive mutual fund. But it's also a Front-Load fund! This suggests that he paid 4.50% of his investment to buy it in the first place. That suggests very strongly to me that he, at some time in the past, closed an IRA at a blood-sucking full-service brokerage firm, and moved the fund to TIAA. (I don't KNOW that, I'm making an educated guess.)

It's relevant whether he has a Brokerage Window in either of his two accounts. (Less likely in the 403(b)) That would probably be necessary to get WMFAX into a TIAA IRA, but I don't know for sure.

I'm suggesting that you are missing a great deal of information, even if some of it is lost in the sands of time, and cannot be retrieved! There are other things you can learn, like whether his 403(b) has lower-cost or higher-cost options. (I worked at a lot of NFPs with less than 100 full time employees, and they are often stuck with higher-cost investment options in a 403(b), TIAA or other providers.) Many 403(b)'s are incredibly expensive, even at large city K-12 boards of education.

You may wish to search this newsboard for (the many) posts on Power of Attorney. If his acuity is declining, you should not wait to start persuading him to appoint someone. And you need (annoyingly) to do the proprietary POA forms for EVERY fin-serv provider, because they will (even illegally) resist obeying a general form fully approved by his home state!

About the "IRA at a blood-sucking full-service brokerage firm, and moved the fund to TIAA..."

First, I never heard of this WMFAX fund, and I also never heard of (or don't remember!) "Allspring", either. And I am *definitely* not any sort of apologist for them.
However, in SOME cases, loads are waived. I have no idea if this only happens in tax-deferred accounts (TIRA or 403b type accounts) or not, but that's my only experience with noticing a load waived.

So *IF* that is the case here with WMFAX at TIAA, things may not be as bad as suspected.

Also, it might be worth checking if there is indeed a Brokerage Window at the 403b.
A few years ago, our 403b was moved back to TIAA. There had been no Brokerage Window at TIAA previously, but there was at Vanguard (the intermediate step). When the 403b was moved back to TIAA, there was a new Brokerage Window with access to almost any mutual fund from almost any mutual fund family (of those familiar to us as USA-based residents and investors, anyway).
So 403b accounts at TIAA *can* have Brokerage Windows, if that's how the Employer arranged things.

RM

[tibbitts]

Just to pick one product, WMFAX, this is Class A of an (as others noted) very expensive mutual fund. But it's also a Front-Load fund! This suggests that he paid 4.50% of his investment to buy it in the first place. That suggests very strongly to me that he, at some time in the past, closed an IRA at a blood-sucking full-service brokerage firm, and moved the fund to TIAA. (I don't KNOW that, I'm making an educated guess.)

In fairness we don't know if the retirement program waives any fees. In the past it was common for A shares to have fees waived for retirement programs, but there didn't used to be a share class for every letter of the alphabet like now so... the OP can investigate the fees and let us know.