TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
digarei
Posts: 680
Joined: Sat Jul 05, 2014 1:41 am
Location: Sacramento
Contact:

TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by digarei » Sat Oct 21, 2017 7:49 am

This is a link to a New York Times article published 10-21-2017 on accusations of malfeasance from employees and other stakeholders of TIAA (formerly TIAA-CREF).

The Finger-Pointing at the Finance Firm TIAA

https://www.nytimes.com/2017/10/21/busi ... -tiaa.html

Edward Siedle, founder of Benchmark Financial Services wrote:TIAA’s longstanding reputation as a low-cost provider doing well for educators and not driven by profit seems to be challenged by the revelations about how it’s doing business today.
Connect with Bogleheads in Northern California! Click the link under my user info/avatar.

student
Posts: 1378
Joined: Fri Apr 03, 2015 6:58 am

Re: TIAA Trouble

Post by student » Sat Oct 21, 2017 8:09 am

This is alarming. However, Vanguard also has a whistleblower case so I will wait and see.

aristotelian
Posts: 3136
Joined: Wed Jan 11, 2017 8:05 pm

Re: TIAA Trouble

Post by aristotelian » Sat Oct 21, 2017 8:50 am

Ugh. I hate my plan even more.

Teague
Posts: 849
Joined: Wed Nov 04, 2015 6:15 pm

Re: TIAA Trouble

Post by Teague » Sat Oct 21, 2017 9:39 am

Et tu, TIAA?

From the article:
And while TIAA contends that its operations are untainted by conflicts because its 855 financial advisers and consultants do not receive sales commissions, former employees, in interviews and in lawsuits, disagree. They say the company rewards its sales personnel with bonuses when they steer customers into more expensive in-house products and services.
According to interviews with 10 former employees, TIAA management assigned outsize sales quotas to its representatives and directed them to meet the quotas by playing up customers’ fears of not having enough money in retirement and other “pain points.”
Semper Augustus

student
Posts: 1378
Joined: Fri Apr 03, 2015 6:58 am

Re: TIAA Trouble

Post by student » Sat Oct 21, 2017 9:46 am

I just want to mention that I only have one data point but the rep for my university has never called me or emailed me to solicit business. I did email him a few times over the years and he always responded promptly and there were no sales messages in his replies.

Greg in Idaho
Posts: 48
Joined: Tue Dec 27, 2016 12:59 pm

Re: TIAA Trouble

Post by Greg in Idaho » Sat Oct 21, 2017 9:50 am

student wrote:
Sat Oct 21, 2017 9:46 am
I just want to mention that I only have one data point but the rep for my university has never called me or emailed me to solicit business. I did email him a few times over the years and he always responded promptly and there were no sales messages in his replies.
same here

User avatar
oldzey
Posts: 736
Joined: Sun Apr 13, 2014 8:38 pm
Location: Land of Lincoln

Re: TIAA Trouble

Post by oldzey » Sat Oct 21, 2017 9:54 am

I like my TIAA 403b.

1. TIAA Traditional - aka the fixed income / stable value portion of my portfolio.
2. TIEIX - total market U.S. index fund at 0.05% ER.
3. I have no need for a 403b loan: I have an emergency fund. But, our university HR reps always mention those loans whenever I contact them.

I do receive plenty of e-mail and snail mail from TIAA trying to sell me life insurance, but no telemarketing calls.
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

metacritic
Posts: 267
Joined: Fri Oct 05, 2007 12:58 pm

Re: TIAA Trouble

Post by metacritic » Sat Oct 21, 2017 10:57 am

Vocal TIAA critic here. The article is eye opening in that it both confirms and deepens observations I've made about directions TIAA has been heading that cause harm to many of their 403b investors.

That said, I actually like their life insurance products and hold term life insurance with them. Rates are competitive, and I can't imagine they won't honor the contract if/when it becomes an issue.

The Wizard
Posts: 11093
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: TIAA Trouble

Post by The Wizard » Sat Oct 21, 2017 11:04 am

Greg in Idaho wrote:
Sat Oct 21, 2017 9:50 am
student wrote:
Sat Oct 21, 2017 9:46 am
I just want to mention that I only have one data point but the rep for my university has never called me or emailed me to solicit business. I did email him a few times over the years and he always responded promptly and there were no sales messages in his replies.
same here
Same here. :)
My WMA mentioned their personal account management option back at my last pre-retirement f2f meeting with him in 2012.
I said I wasn't interested and that was the end of that.

And I have a number of low ER funds in my plan, including TISPX, VIMAX, and VSMAX...
Attempted new signature...

columbia
Posts: 524
Joined: Tue Aug 27, 2013 5:30 am

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by columbia » Sat Oct 21, 2017 2:18 pm

Their 500 fund goes for .32% (at least the one I had access to), before my plan replaced it with VFIAX.

Somebody is making a profit on their in house funds....

finite_difference
Posts: 725
Joined: Thu Jul 09, 2015 7:00 pm

Re: TIAA Trouble

Post by finite_difference » Sat Oct 21, 2017 2:32 pm

student wrote:
Sat Oct 21, 2017 9:46 am
I just want to mention that I only have one data point but the rep for my university has never called me or emailed me to solicit business. I did email him a few times over the years and he always responded promptly and there were no sales messages in his replies.
I met with a TIAA FA before to get an idea of how we were doing for retirement. He was slick. He steered us from our 50:50 TIAA Trad/CREF Stock portfolio to a complex portfolio with like 10 funds some of which had high ERs. I knew nothing of investing at the time. I remember asking about the expense ratios — so higher expense ratios mean better funds? The FA nodded and smiled.

He also proudly told us that they did not get any compensation for selling products and that he was purely acting in our own best interest. So if it’s true that they award bonuses then that was a lie.

One funny thing is that the new portfolio, based on their in-house Monte Carlo simulations, didn’t even outperform the old one — it just had slightly lower standard deviations. I don’t think it included fees though.

Some of the things he said were true, that you couldn’t time the market. Anyway that meeting piqued my curiosity enough to eventually lead me to here. And the rest is history as they say.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

User avatar
greenspam
Posts: 574
Joined: Mon Feb 26, 2007 12:36 pm
Location: east coast

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by greenspam » Sat Oct 21, 2017 2:37 pm

Meta critic said: "...That said, I actually like their life insurance products and hold term life insurance with them. Rates are competitive, and I can't imagine they won't honor the contract if/when it becomes an issue".

What do you/other BH's consider 'competitive' life insurance rates ? I too have term life insurance thru TIAA, have had it for some time, with premiums going up each year (as has my age, of course; now 58)... but this yr's premium was about $3500 and it seems very expensive to me. I have no data with which to compare this, so i would appreciate any input here on what is considered a competitive rate for term life insurance. Policy amount is $1M. Thanx in advance for any and all replies.
as always, | peace, | greenie.

User avatar
CyclingDuo
Posts: 906
Joined: Fri Jan 06, 2017 9:07 am

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by CyclingDuo » Sat Oct 21, 2017 3:16 pm

digarei wrote:
Sat Oct 21, 2017 7:49 am
This is a link to a New York Times article published 10-21-2017 on accusations of malfeasance from employees and other stakeholders of TIAA (formerly TIAA-CREF).

The Finger-Pointing at the Finance Firm TIAA

https://www.nytimes.com/2017/10/21/busi ... -tiaa.html

Edward Siedle, founder of Benchmark Financial Services wrote:TIAA’s longstanding reputation as a low-cost provider doing well for educators and not driven by profit seems to be challenged by the revelations about how it’s doing business today.
Very, very interesting.

The Vanguard fund options were added under my employer's plan just a couple of years ago (about the same timing as a couple of the lawsuits noted in the article above).

We did meet with one of TIAA's Wealth Management Advisors that we were assigned to, but that meeting was opon our own request. This was part of a process we went through with a few other firms as well when we were deciding to use the DIY or AUM approach for our overall portfolio. The TIAA Advisor had us go through the usual first meeting where you discuss risk tolerance, investing history, financial goals, provide statements of everything, and the typical routine. The Wealth Management Advisor from TIAA then met with us a few weeks later with a printed packet for us with TIAA's recommendations. During the initial meeting, I had quickly pointed out how thrilled I was to have all of my 403b money at TIAA in the Vanguard Admiral Funds (Total Bond, Total International, Extended Market, and the S&P 500) as the ER's were lower and much better than the prior TIAA LifeCycle Fund I was using before Vanguard became an option. The Advisor knew of our preference for low cost funds - especially Vanguard's.

Fast forward a few weeks to the meeting after TIAA had run all of the Monte Carlo simulations and printed off a slick packaging product for us. The TIAA suggestion was to move all of our money from our outside TIAA investments into a TIAA brokerage account, and put it all into about 10-12 various funds they suggested under their management - all with expense ratios well over 1.0, plus the AUM fee would have varied depending on how much money they would manage. My first look at the Advisor was one of those "ya gotta be kiddin' me looks", and then the sales pitch began. In the end, we chose the DIY approach leaving our money where it was after all of the meetings with various firms, but certainly could see the TIAA sales approach which struck me odd after the initial meeting began with what the article noted - "TIAA tells clients that it puts them first".

After the meeting, my wife said - "I see how easy it would be to get sucked in. I probably would have fallen for it myself..." - or so she claimed. There have been many threads about 403b's and teachers/professors that either are or are not aware of Bogleheads.org and the thinking here who, in terms of financial matters, get in high sales load products.

It's interesting to read how the history of TIAA encountered changes along the way that accusations and law suits now of them being like any other Wall Street Firm "Pushing customers into investment products to generate higher pay is a tactic as old as investing itself." I hope TIAA hasn't become just another Wall Street firm, but the linked article doesn't paint a rosy picture.

I did submit a question to Jack Bogle for the upcoming conference with regard to 403b plans and America's teachers. In a nutshell, I asked him when was Vanguard going to step in to offer a 403b program at our schools and academic institutions for our country's teachers and blow all of the other fish (insurance companies) out of the water that are overcharging, and taking advantage of our educators.
Last edited by CyclingDuo on Sun Oct 22, 2017 6:26 am, edited 1 time in total.

LonnieG
Posts: 17
Joined: Fri Oct 20, 2017 8:36 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by LonnieG » Sat Oct 21, 2017 4:03 pm

Sobering article.

Admiral
Posts: 898
Joined: Mon Oct 27, 2014 12:35 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by Admiral » Sat Oct 21, 2017 4:32 pm

greenspam wrote:
Sat Oct 21, 2017 2:37 pm
Meta critic said: "...That said, I actually like their life insurance products and hold term life insurance with them. Rates are competitive, and I can't imagine they won't honor the contract if/when it becomes an issue".

What do you/other BH's consider 'competitive' life insurance rates ? I too have term life insurance thru TIAA, have had it for some time, with premiums going up each year (as has my age, of course; now 58)... but this yr's premium was about $3500 and it seems very expensive to me. I have no data with which to compare this, so i would appreciate any input here on what is considered a competitive rate for term life insurance. Policy amount is $1M. Thanx in advance for any and all replies.
:confused
Why would you not have term life insurance for a fixed annual premium? That is entirely standard in the life insurance industry in my experience. Of course once your term (20, 30, whatever) runs out, then you must pay more. But I have never heard of what you describe.

I am 46 and have a $1m policy. The premium is fixed at about $1,000 per year until my 20 year term expires (which is in maybe 16 or 17 years from now). For those with less good medical history, obviously the premium might be higher. But it should never go up during the the life of the policy.

beardsworth
Posts: 1979
Joined: Fri Jun 15, 2007 4:02 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by beardsworth » Sat Oct 21, 2017 4:58 pm

greenspam wrote:
Sat Oct 21, 2017 2:37 pm
Meta critic said: "...That said, I actually like their life insurance products and hold term life insurance with them. Rates are competitive, and I can't imagine they won't honor the contract if/when it becomes an issue".

What do you/other BH's consider 'competitive' life insurance rates ? I too have term life insurance thru TIAA, have had it for some time, with premiums going up each year (as has my age, of course; now 58)... but this yr's premium was about $3500 and it seems very expensive to me. I have no data with which to compare this, so i would appreciate any input here on what is considered a competitive rate for term life insurance. Policy amount is $1M. Thanx in advance for any and all replies.
I really should be doing something else with my time right now :oops: but your comments made me curious.

I Googled "life insurance quotes" and then went to this page for State Farm:

https://www.statefarm.com/insurance/quotes/life-quote

Your Bogleheads signature/avatar says you're on the "east coast' but doesn't say where. To get an illustration, i told the State Farm site that the applicant lives in Maryland and is male. Because you say you're 58, I entered a birth date of 10-01-1959. Seeking to enter information about a healthy person, I said you were 5'10" tall, weigh 175, and have not used tobacco. Among four possible self-ratings of health, ranging from "Average" to "Excellent," I chose the second best, i.e., "Very Good." For a term policy of $1 million for such a hypothetical insured, beginning at age 58 (which, of course, may isn't quite your own situation, since your policy has already been in effect for a while), State Farm quoted a premium of $462.85 per month = about $5554 per year.

Then I did the same at this site for Geico

https://www.geico.com/life-insurance/

which asked a lot more questions, all of which I answered in the most "healthy" way possible. It also wanted an actual town name rather than just the applicant's state, so I said you lived in Laurel, MD, a suburb between DC and Baltimore. For a term policy issued at age 58 and lasting 20 years, the Geico site quoted $313 per month = $3756 per year. For a term policy issued at age 58 and lasting for the insured's "lifetime" it quoted $1087 per month.
greenspam wrote:I have no data with which to compare this, so i would appreciate any input here on what is considered a competitive rate for term life insurance.
But, as you can see from my own sleuthing above, it is possible to go fishing, rather than asking if anyone else on the forum can give you a fish. :)

Considering your coverage and your age, your TIAA premium of $3500/year seems quite competitive, assuming that State Farm and Geico are valid comparisons, and assuming that the issue age was 58, which isn't your case. When my wife and I had TIAA term life insurance, we also had the inflation rider. (It's not clear if you've done the same.) We found that on a premium-dollar-per-coverage-dollar basis, the portion of the annual premium attributable to the inflation increase rose faster than the premium for the original base coverage itself.

Valuethinker
Posts: 33372
Joined: Fri May 11, 2007 11:07 am

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by Valuethinker » Sat Oct 21, 2017 5:19 pm

greenspam wrote:
Sat Oct 21, 2017 2:37 pm
Meta critic said: "...That said, I actually like their life insurance products and hold term life insurance with them. Rates are competitive, and I can't imagine they won't honor the contract if/when it becomes an issue".

What do you/other BH's consider 'competitive' life insurance rates ? I too have term life insurance thru TIAA, have had it for some time, with premiums going up each year (as has my age, of course; now 58)... but this yr's premium was about $3500 and it seems very expensive to me. I have no data with which to compare this, so i would appreciate any input here on what is considered a competitive rate for term life insurance. Policy amount is $1M. Thanx in advance for any and all replies.
You should never have been sold a policy that increases premium w age. That was irresponsible in the first place.

Also what is your insurable need?

Most of us at 58 don't need 1 million. College fees are provided for. Pension savings plus widows benefits mean our spouses are ok so the gap that has to be bridged is small. Just our after tax spending until projected retirement.

That would leave outstanding mortgage. Do you have that large a debt?

In your shoes I would figure out my insurance need and price that policy, in level term until what age I needed it. As long as your health is good even at 58 term insurance should not be outrageous.

If you have significant health issues then it may be difficult or impossible to get new insurance. Also if you get a new policy it is best not to lapse that policy until the exclusion period has passed (therefore usually a legally defined limit I think it depends on state).

afan
Posts: 3003
Joined: Sun Jul 25, 2010 4:01 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by afan » Sat Oct 21, 2017 7:09 pm

This makes sense considering my interaction with TIAA. I have some money there, so I took the call when someone phoned me to "talk about my retirement". I assumed there was some question about my account. It took a while, and the person calling was first vague, then evasive when I asked what it was about.

He told me he was a retirement expert and kept saying he could "help me with my retirement plans". At first I said "Great!" and asked him a question about timing of Roth conversions. Instead of discussing conversions he asked whether I had an accountant or did my tax returns myself. Unsure what that had to to with optimizing Roth conversions, I told him I did them myself and asked my question again. Again, no answer, but claims that he could help with retirement plans. I told him the way he could help was to answer my question, if he knew.

He kept implying he knew, but after several more rounds he said "you should ask your accountant". I reminded him I had told him I did not have an accountant, and said that it would be fine for him to tell me that he did not know the answer, but it was a waste of time to keep going around the same ground. He then said that anything regarding Roth conversions would be tax advice, and he was not allowed to give tax advice.

I said that was fine, but I could not imagine how one could do retirement planning without considering taxes. He asked whether we would have enough income when I retired. I said "yes", but what about my question about maximizing retirement money inherited by my heirs?" More laps around the claim he had useful expertise, but no articulation of any information. Eventually got to the same statement that this was tax advice.

He kept asking me when we could meet and I kept asking what the purpose of the meeting would be. He had indicated that he did not know anything about the questions I had. I finally told him there was no point in meeting since it did not seem he had anything to offer. After this bizarre conversation I looked him up. Turns out he had spent his career as a stock broker, having joined TIAA after decades of selling stocks. No financial planning credentials at all. I can only assume he was trying to sign me up as an investment advice client, although he never got around to saying that.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

student
Posts: 1378
Joined: Fri Apr 03, 2015 6:58 am

Re: TIAA Trouble

Post by student » Sat Oct 21, 2017 7:32 pm

finite_difference wrote:
Sat Oct 21, 2017 2:32 pm
student wrote:
Sat Oct 21, 2017 9:46 am
I just want to mention that I only have one data point but the rep for my university has never called me or emailed me to solicit business. I did email him a few times over the years and he always responded promptly and there were no sales messages in his replies.
I met with a TIAA FA before to get an idea of how we were doing for retirement. He was slick. He steered us from our 50:50 TIAA Trad/CREF Stock portfolio to a complex portfolio with like 10 funds some of which had high ERs. I knew nothing of investing at the time. I remember asking about the expense ratios — so higher expense ratios mean better funds? The FA nodded and smiled.

He also proudly told us that they did not get any compensation for selling products and that he was purely acting in our own best interest. So if it’s true that they award bonuses then that was a lie.

One funny thing is that the new portfolio, based on their in-house Monte Carlo simulations, didn’t even outperform the old one — it just had slightly lower standard deviations. I don’t think it included fees though.

Some of the things he said were true, that you couldn’t time the market. Anyway that meeting piqued my curiosity enough to eventually lead me to here. And the rest is history as they say.
Thanks for the info. It is always good to have data point from people with opposite experience.

User avatar
camillus
Posts: 218
Joined: Thu Feb 28, 2013 9:55 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by camillus » Sat Oct 21, 2017 9:46 pm

My main complaint with TIAA is the tiered fee approach to 403b's. Our 403b has funds with fee averages at 0.70% because we are an R1 institution. :annoyed

student
Posts: 1378
Joined: Fri Apr 03, 2015 6:58 am

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by student » Sat Oct 21, 2017 9:58 pm

camillus wrote:
Sat Oct 21, 2017 9:46 pm
My main complaint with TIAA is the tiered fee approach to 403b's. Our 403b has funds with fee averages at 0.70% because we are an R1 institution. :annoyed
I understand that it is annoying for the increase. My understanding is that the change was revenue neutral. R1 ER was increased, R2 ER did not change and R3 ER was decreased. I view this as the same as Vanguard having two classes of shares as R1, R2 and R3 are based on the total value of participants' investments of the client institution. I added some suggestions on how to dampen the effect of R1 ER in your other post on this subject.

TropikThunder
Posts: 641
Joined: Sun Apr 03, 2016 5:41 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by TropikThunder » Sun Oct 22, 2017 12:26 am

student wrote:
Sat Oct 21, 2017 9:58 pm
camillus wrote:
Sat Oct 21, 2017 9:46 pm
My main complaint with TIAA is the tiered fee approach to 403b's. Our 403b has funds with fee averages at 0.70% because we are an R1 institution. :annoyed
I understand that it is annoying for the increase. My understanding is that the change was revenue neutral. R1 ER was increased, R2 ER did not change and R3 ER was decreased. I view this as the same as Vanguard having two classes of shares as R1, R2 and R3 are based on the total value of participants' investments of the client institution. I added some suggestions on how to dampen the effect of R1 ER in your other post on this subject.
Yes and no. I can get to Admiral shares if I have enough money in a particular fund. I can never move from R1 to R2 no matter how much I have in my TIAA account because it's based on the size of my company.

metacritic
Posts: 267
Joined: Fri Oct 05, 2007 12:58 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by metacritic » Sun Oct 22, 2017 6:38 am

Exactly. The two are in no way commensurate and it's not an annoyance, its a structure to deplete R1 holders of their retirement funds. It's usurious.

Think of Vanguard's structure as a nudge to more savings. TIAA's as a penalty regardless of the amount individuals hold.

TIAA has lost its way.

TropikThunder wrote:
Sun Oct 22, 2017 12:26 am
student wrote:
Sat Oct 21, 2017 9:58 pm
camillus wrote:
Sat Oct 21, 2017 9:46 pm
My main complaint with TIAA is the tiered fee approach to 403b's. Our 403b has funds with fee averages at 0.70% because we are an R1 institution. :annoyed
I understand that it is annoying for the increase. My understanding is that the change was revenue neutral. R1 ER was increased, R2 ER did not change and R3 ER was decreased. I view this as the same as Vanguard having two classes of shares as R1, R2 and R3 are based on the total value of participants' investments of the client institution. I added some suggestions on how to dampen the effect of R1 ER in your other post on this subject.
Yes and no. I can get to Admiral shares if I have enough money in a particular fund. I can never move from R1 to R2 no matter how much I have in my TIAA account because it's based on the size of my company.

Call_Me_Op
Posts: 6576
Joined: Mon Sep 07, 2009 2:57 pm
Location: Milky Way

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by Call_Me_Op » Sun Oct 22, 2017 7:15 am

I am not surprised by this, but still disappointed.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

student
Posts: 1378
Joined: Fri Apr 03, 2015 6:58 am

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by student » Sun Oct 22, 2017 7:29 am

TropikThunder wrote:
Sun Oct 22, 2017 12:26 am
student wrote:
Sat Oct 21, 2017 9:58 pm
camillus wrote:
Sat Oct 21, 2017 9:46 pm
My main complaint with TIAA is the tiered fee approach to 403b's. Our 403b has funds with fee averages at 0.70% because we are an R1 institution. :annoyed
I understand that it is annoying for the increase. My understanding is that the change was revenue neutral. R1 ER was increased, R2 ER did not change and R3 ER was decreased. I view this as the same as Vanguard having two classes of shares as R1, R2 and R3 are based on the total value of participants' investments of the client institution. I added some suggestions on how to dampen the effect of R1 ER in your other post on this subject.
Yes and no. I can get to Admiral shares if I have enough money in a particular fund. I can never move from R1 to R2 no matter how much I have in my TIAA account because it's based on the size of my company.
metacritic wrote:
Sun Oct 22, 2017 6:38 am
Exactly. The two are in no way commensurate and it's not an annoyance, its a structure to deplete R1 holders of their retirement funds. It's usurious.

Think of Vanguard's structure as a nudge to more savings. TIAA's as a penalty regardless of the amount individuals hold.

TIAA has lost its way.
Although TIAA has made several moves that I do not like (for example, the ER of the retail class of mutual fund is too high and buying Nuveen), I do not see R1, R2, R3 structure as unfair and usurious. Previously, R3 institutions subsidized R1 institutions. You can get Admiral shares by yourself because you are the client. Here your institution is the client. Perhaps I should have said Vanguard have multiple classes of shares rather than two. For example, it has an institutional class that is for companies with enough assets. Same set up.

Full disclosure, my institution is R2 but I think even its ER is too high and I don't hold them. My TIAA account is almost exclusively TIAA Traditional. To be clear, I am not defending the ER itself within each of R1, R2, R3 classes or any other of its policies, I am merely defending the single act of changing it to 3 classes based on my understanding that the change is revenue neutral.

feehater
Posts: 37
Joined: Fri Jul 14, 2017 10:14 am

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by feehater » Sun Oct 22, 2017 10:48 am

Reminds me of the time a few years ago I left an institution and called TIAA to roll a small 403b into an IRA (also with TIAA at the time, now with vanguard). The guy on the phone doing the rollover tried to convince me to stop investing it in a target date fund, and instead put it in some insurance product or something that had a guaranteed return. I asked if he was acting as a fiduciary. He pretended there was a bad connection and asked me to repeat the question. I asked again. He pretended to not know what I was talking about and changed the subject. I left TIAA pretty soon after that.

The Wizard
Posts: 11093
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by The Wizard » Sun Oct 22, 2017 12:12 pm

columbia wrote:
Sat Oct 21, 2017 2:18 pm
Their 500 fund goes for .32% (at least the one I had access to), before my plan replaced it with VFIAX.

Somebody is making a profit on their in house funds....
I have TISPX in my plan with an ER of 0.05%.
I understand that not all plans have excellent options...
Attempted new signature...

User avatar
nisiprius
Advisory Board
Posts: 34311
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by nisiprius » Sun Oct 22, 2017 12:37 pm

Confirmation of what I'd long suspected but hoped was just paranoia. Fortunately I am retired, converted my TIAA Traditional to "lifetime payout" and liquidated other variable annuity "accounts" and replaced them with Vanguard mutual funds.

TIAA ain't what it used to be. All little incremental things, starting with them losing their tax-exempt status, continuing with their introducing sold-to-the-public mutual funds which contrary to what many hoped and contrary to much speculation at the time turned out not to be particularly low in cost. And then the weird acquisition of Nuveen... which I've thought of as an emphatically-for-profit, high-expense-rate outfit that was involved in shenanigans with auction rate securities...

...so has Nuveen under TIAA changed its spots? Let's see...

Image
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

whomever
Posts: 683
Joined: Sat Apr 21, 2012 5:21 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by whomever » Sun Oct 22, 2017 12:55 pm

Fortunately I am retired, converted my TIAA Traditional to "lifetime payout"
I'm going to be doing that soon. What's worrisome about where TIAA seems to be going for me (and I think maybe for you as well) is that to some degree the attractiveness of TIAA Trad anuuitization relative to 'normal' commercial annuity providers depends on the additional amounts. The historical tacit bargain has been that TIAA shares the good times with annuitants by increasing the additional amounts. If TIAA decides to spend that money elsewhere, that would not make for happy TIAA retirees.

I hope they don't do that. Their other offerings aren't competitive with Vanguard or Fidelity. If they make Trad unattractive, I don't see how they can survive. ISTM they should have adopted the principle of doing one thing (TIAA Trad) well - but they don't seem to be following my preference.

ResearchMed
Posts: 5470
Joined: Fri Dec 26, 2008 11:25 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by ResearchMed » Sun Oct 22, 2017 1:24 pm

whomever wrote:
Sun Oct 22, 2017 12:55 pm
Fortunately I am retired, converted my TIAA Traditional to "lifetime payout"
I'm going to be doing that soon. What's worrisome about where TIAA seems to be going for me (and I think maybe for you as well) is that to some degree the attractiveness of TIAA Trad anuuitization relative to 'normal' commercial annuity providers depends on the additional amounts. The historical tacit bargain has been that TIAA shares the good times with annuitants by increasing the additional amounts. If TIAA decides to spend that money elsewhere, that would not make for happy TIAA retirees.

I hope they don't do that. Their other offerings aren't competitive with Vanguard or Fidelity. If they make Trad unattractive, I don't see how they can survive. ISTM they should have adopted the principle of doing one thing (TIAA Trad) well - but they don't seem to be following my preference.
Hmmmm.... yes, I sure hope that the Trad Ann "extra" continues!
We haven't *yet* annuitized, but we are sort of gearing up for it. We were never going to have all of our annuitized income from TIAA on general principle (also principal, I guess), but we expected most of it to be at TIAA.

As for whether TIAA will "survive", they've got a head start on that, for at least some of their offerings.

When Employer dropped TIAA "entirely" from the 403b plan several years ago, and added Vanguard and Fidelity, they couldn't really drop TIAA "entirely", not unilaterally, at least.
They forced employees in most of the then TIAA-CREF mutual funds to move the money to preferred funds at Vanguard or Fidelity, OR money in most of the TIAA-CREF funds would automatically be rolled over to a list of "similar" funds, per a list of paired funds.

However, money in Trad Ann, TREA, and apparently any of the "variable annuity" account/funds could not be "forced to move" due to contractual arrangements. And for whatever reason, at least 2 of the "regular" TIAA-CREF (now just "TIAA") were allowed to remain.
Employees were given plenty of notice, and were also able to move money that would "be moved" to CREF holdings that would not/could not be forced to move to Vanguard/Fidelity. (We moved some extra money into CREF holdings, to preserve that choice; we can always roll any of it *to* Vanguard/Fidelity, but not back again.)
We are now able to move money around among those choices as we wish, with the regular constraints of Trad Ann and TREA, even though we cannot add even one cent to TIAA within the 403b.

Assuming that there are these same long-term contractual terms of at least the "CREF" offerings (including Trad Ann, and TREA) exist in other 403b's, TIAA has a somewhat captive audience, at least among their relatively large employer plans.

I wonder what those contractual terms say about any Trad Annuity "extra amounts", and how the magnitude is determined. It's all such a black box, how would any outsider ever know?

RM
This signature is a placebo. You are in the control group.

columbia
Posts: 524
Joined: Tue Aug 27, 2013 5:30 am

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by columbia » Sun Oct 22, 2017 2:14 pm

I'm perfectly happy with my Traditional account and they will do an annual rebalance of your funds, although I don't use it.

Otherwise, I have a pretty low opinion of TIAA.

mecht3ach
Posts: 1
Joined: Sun Oct 22, 2017 2:39 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by mecht3ach » Sun Oct 22, 2017 2:59 pm

afan wrote:
Sat Oct 21, 2017 7:09 pm
This makes sense considering my interaction with TIAA. I have some money there, so I took the call when someone phoned me to "talk about my retirement". I assumed there was some question about my account. It took a while, and the person calling was first vague, then evasive when I asked what it was about.
What you described is very similar to an interaction I had with a TIAA rep about 2+ years ago. My previous institution allowed me to invest my retirement in both TIAA and Vanguard, and then eventually rolled everything over to just TIAA (with my Vanguard funds still intact, but under TIAA 'management' now). I never heard anything from a TIAA rep, other than a postcard that was sent to all employees reminding us that we could visit their booth at the annual benefits fair.

I moved employers nearly 3 years ago, to one that used exclusively TIAA, with some Vanguard funds still in the program, though. Fortunately, the Vanguard funds available are the most typical ones for my balanced portfolio, so I just stuck my contributions into those. A couple of months later, I received the same type of call as you described, but it was prefaced with a voicemail that TIAA needed to talk to me about the named beneficiaries on my retirement account. I checked online, and all looked like it should, but I still called them back. It was possible that I had screwed something up in my onboarding paperwork, and I wanted to make sure it was all okay.

Obviously, that 'beneficiary concern' hook was just a bunch of baloney. I hadn't made any errors, and when I still thought that the call was a legitimate interaction, I also asked some questions about backdoor Roths, and similar general financial planning bits, and received a load of rigamarole in return. The "FP" with whom I was speaking knew less than someone who has spent an hour on these forum pages, and kept pushing me to come in and meet in person, so he could discuss some really fantastic TIAA offerings that weren't currently in my portfolio. Hmph.

I ended the conversation as quickly and as politely as I could. However, I still received a call every couple of weeks for the next few months. The calls were at my work, since they obviously had that number through my employer, but that phone fortunately has caller ID, so I could let them just go to voicemail. Eventually, I became so fed up that I wrote a long email to HR complaining about how the company that was supposed to serve us in our retirement savings was actually using semi-deceitful practices to enhance its own bottom line, and the calls stopped soon after that.

Now, this could have just been a rogue employee. It could have been that the TIAA office in my new city (or assigned to my new employer) was naturally more pushy than at my old job. Or, it could have been that this was one small manifestation of the larger problem described in the NYT article.

LookingtogetFIRE'd
Posts: 15
Joined: Mon Aug 28, 2017 6:58 am

Expose on TIAA

Post by LookingtogetFIRE'd » Mon Oct 23, 2017 9:46 am

[merged this post into the existing thread - moderator prudent]

Anyone with an account (or if you know someone with an account) at TIAA should read this asap:

https://www.nytimes.com/2017/10/21/busi ... ostEmailed

beardsworth
Posts: 1979
Joined: Fri Jun 15, 2007 4:02 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by beardsworth » Mon Oct 23, 2017 3:56 pm

Roger Ferguson, President & CEO of TIAA, has issued an online reply to The New York Times' article about the company.

https://www.tiaa.org/public/about-tiaa/ ... se693.html

Levett
Posts: 4177
Joined: Fri Feb 23, 2007 2:10 pm
Location: upper Midwest

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by Levett » Mon Oct 23, 2017 3:59 pm

Yep. It's there for those who wish to listen.

I've been with TIAA for nearly 50 years, and with Vanguard for 35 years.

They both work fine for me.

Lev

ResearchMed
Posts: 5470
Joined: Fri Dec 26, 2008 11:25 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by ResearchMed » Mon Oct 23, 2017 4:02 pm

beardsworth wrote:
Mon Oct 23, 2017 3:56 pm
Roger Ferguson, President & CEO of TIAA, has issued an online reply to The New York Times' article about the company.

https://www.tiaa.org/public/about-tiaa/ ... se693.html
Slightly OT, but I was both moved and amused by the couple who thanked TIAA, and noted how they'd been married for 82 years (!).
Better yet, one of them had used the internet to find out that they were among the 4 oldest couples in the USA.

"Way to go!"

:happy

RM
This signature is a placebo. You are in the control group.

Levett
Posts: 4177
Joined: Fri Feb 23, 2007 2:10 pm
Location: upper Midwest

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by Levett » Mon Oct 23, 2017 4:09 pm

As Ferguson points out, TIAA supported the fiduciary rule.

"Contrary to the false assertion in the New York Times article, we were one of the few financial firms to support the fiduciary rule. This support included testimony to the Department of Labor and seven letters of support to the department. We've proven a firm can be successful while putting clients first."

Vanguard opposed it, but John Bogle did not:

http://www.etf.com/sections/features-an ... nopaging=1

http://www.investmentnews.com/article/2 ... ry-rule-is

Oh, dear. ;-)

Lev
Last edited by Levett on Mon Oct 23, 2017 4:18 pm, edited 1 time in total.

grok87
Posts: 7589
Joined: Tue Feb 27, 2007 9:00 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by grok87 » Mon Oct 23, 2017 4:16 pm

This quote is interesting

"We aren't concerned with public shareholders, because we don't have any. Any earnings we make are returned to our participants or reinvested in the business, which helps us remain strong to meet our future promises."

Yes earnings are returned. But as should be obvious earnigns are revenues less expenses. And their expenses seem high compared to vanguard.

It still seems to me that they are not as aligned with their investors as vanguard is. Vanguard is owned by its mutual funds which are owned by its investors. It's not clear to me who owns tiaa. Are they a mutual?

A good analogy to me seems to be with private colleges except that those of course are tax-exempt. And yet their prices (private colleges that is) are mostly obsecenly outrageous and they seem at least partly run for the benefit of their adminstration and tenured staff.
"...people always live for ever when there is any annuity to be paid them"- Jane Austen

User avatar
friar1610
Posts: 1026
Joined: Sat Nov 29, 2008 9:52 pm
Location: MA South Shore

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by friar1610 » Mon Oct 23, 2017 4:30 pm

I had some TIAA-CREF investments years ago but no longer do. I always thought they just made things a whole lot more complex than they needed to. Expenses aside, I just find my simple mind understands VG products much more easily.
Friar1610

student
Posts: 1378
Joined: Fri Apr 03, 2015 6:58 am

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by student » Mon Oct 23, 2017 4:52 pm

Levett wrote:
Mon Oct 23, 2017 4:09 pm
As Ferguson points out, TIAA supported the fiduciary rule.

"Contrary to the false assertion in the New York Times article, we were one of the few financial firms to support the fiduciary rule. This support included testimony to the Department of Labor and seven letters of support to the department. We've proven a firm can be successful while putting clients first."
Interesting, either NYT goofed or Ferguson is misrepresenting facts. NYT states "Along with many on Wall Street, TIAA argued against the fiduciary rule." Here is a press release from TIAA in 2016 regarding this. https://www.tiaa.org/public/about-tiaa/ ... se638.html

grok87
Posts: 7589
Joined: Tue Feb 27, 2007 9:00 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by grok87 » Mon Oct 23, 2017 5:10 pm

student wrote:
Mon Oct 23, 2017 4:52 pm
Levett wrote:
Mon Oct 23, 2017 4:09 pm
As Ferguson points out, TIAA supported the fiduciary rule.

"Contrary to the false assertion in the New York Times article, we were one of the few financial firms to support the fiduciary rule. This support included testimony to the Department of Labor and seven letters of support to the department. We've proven a firm can be successful while putting clients first."
Interesting, either NYT goofed or Ferguson is misrepresenting facts. NYT states "Along with many on Wall Street, TIAA argued against the fiduciary rule." Here is a press release from TIAA in 2016 regarding this. https://www.tiaa.org/public/about-tiaa/ ... se638.html
Tiaa didn't support it, they wrote a 16 page letter trying to change it
"At the same time however we believe modifications to the rule are needed..."

https://benefitslink.com/news/index.cgi ... 418-134491
"...people always live for ever when there is any annuity to be paid them"- Jane Austen

Exterous
Posts: 180
Joined: Mon Feb 20, 2012 1:34 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by Exterous » Mon Oct 23, 2017 5:15 pm

Interesting. This matches my anecdotal experience when I first started at a place a little less than 3 years ago that offered TIAA. During new employee orientation a TIAA rep was there to answer questions. I came up to him and wanted to talk about their index fund options. He couldn't have been more disinterested in me and just gave me a phone number to call. Now the lady who wanted to know about mutual funds and life insurance now for her he had all the time in the world.

I've been a happy Fidelity customer since then

The Wizard
Posts: 11093
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by The Wizard » Mon Oct 23, 2017 5:19 pm

student wrote:
Mon Oct 23, 2017 4:52 pm
Levett wrote:
Mon Oct 23, 2017 4:09 pm
As Ferguson points out, TIAA supported the fiduciary rule.

"Contrary to the false assertion in the New York Times article, we were one of the few financial firms to support the fiduciary rule. This support included testimony to the Department of Labor and seven letters of support to the department. We've proven a firm can be successful while putting clients first."
Interesting, either NYT goofed or Ferguson is misrepresenting facts. NYT states "Along with many on Wall Street, TIAA argued against the fiduciary rule." Here is a press release from TIAA in 2016 regarding this. https://www.tiaa.org/public/about-tiaa/ ... se638.html
You mean TIAA talks out of both sides of its corporate mouth?
Wow.
That takes opacity to a whole nuther level...
Attempted new signature...

student
Posts: 1378
Joined: Fri Apr 03, 2015 6:58 am

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by student » Mon Oct 23, 2017 5:32 pm

grok87 wrote:
Mon Oct 23, 2017 5:10 pm
student wrote:
Mon Oct 23, 2017 4:52 pm
Levett wrote:
Mon Oct 23, 2017 4:09 pm
As Ferguson points out, TIAA supported the fiduciary rule.

"Contrary to the false assertion in the New York Times article, we were one of the few financial firms to support the fiduciary rule. This support included testimony to the Department of Labor and seven letters of support to the department. We've proven a firm can be successful while putting clients first."
Interesting, either NYT goofed or Ferguson is misrepresenting facts. NYT states "Along with many on Wall Street, TIAA argued against the fiduciary rule." Here is a press release from TIAA in 2016 regarding this. https://www.tiaa.org/public/about-tiaa/ ... se638.html
Tiaa didn't support it, they wrote a 16 page letter trying to change it
"At the same time however we believe modifications to the rule are needed..."

https://benefitslink.com/news/index.cgi ... 418-134491
Thanks for the link. A quick glance looks like something along the line we support some items but ...

student
Posts: 1378
Joined: Fri Apr 03, 2015 6:58 am

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by student » Mon Oct 23, 2017 5:38 pm

The Wizard wrote:
Mon Oct 23, 2017 5:19 pm
student wrote:
Mon Oct 23, 2017 4:52 pm
Levett wrote:
Mon Oct 23, 2017 4:09 pm
As Ferguson points out, TIAA supported the fiduciary rule.

"Contrary to the false assertion in the New York Times article, we were one of the few financial firms to support the fiduciary rule. This support included testimony to the Department of Labor and seven letters of support to the department. We've proven a firm can be successful while putting clients first."
Interesting, either NYT goofed or Ferguson is misrepresenting facts. NYT states "Along with many on Wall Street, TIAA argued against the fiduciary rule." Here is a press release from TIAA in 2016 regarding this. https://www.tiaa.org/public/about-tiaa/ ... se638.html
You mean TIAA talks out of both sides of its corporate mouth?
Wow.
That takes opacity to a whole nuther level...
All very interesting. Here is a press release from Elizabeth Warren with "Industry leading firms including Vanguard, TIAA, and Transamerica expressed their support for the rule" regarding her letter to the Department of Labor and the letter itself claims support of the fiduciary rule from many others. https://www.warren.senate.gov/?p=press_release&id=1439

ktip
Posts: 16
Joined: Wed Jun 17, 2015 11:00 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by ktip » Mon Oct 23, 2017 6:37 pm

The Times article was not surprising to me. I had poor experiences with TIAA at two different institutions. And considering the costs of all the funds options -- only thing not so expensive was S&p 500 -- I couldn't understand how they could purport to be acting in the interests of clients. I was confused the first time I had TIAA, because I thought they were supposed to be the equivalent of a non profit, and none of it added up. So to speak. :wink: Very happy to now be at an institution that uses Fidelity.

Levett
Posts: 4177
Joined: Fri Feb 23, 2007 2:10 pm
Location: upper Midwest

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by Levett » Mon Oct 23, 2017 6:48 pm

How shocking that a financial institution might wish to refine a rule it principally supports!

Here's Ferguson in June of 2016:

http://www.thinkadvisor.com/2016/06/23/ ... 1508801703

Let's face it: among some, TIAA is the RCO (Repugnant Cultural Other).

As I previously said, I have used both companies for many years. Neither company is the fount of Virtue.

However, I am amused by how quickly some Bogleheads dismiss the view of their esteemed leader--JB.

Read again: http://www.philly.com/philly/business/r ... dvice.html

Lev

P.S. Fidelity is front page news in today's Wall Street Journal, and it isn't pretty.

student
Posts: 1378
Joined: Fri Apr 03, 2015 6:58 am

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by student » Mon Oct 23, 2017 7:04 pm

Levett wrote:
Mon Oct 23, 2017 6:48 pm
How shocking that a financial institution might wish to refine a rule it principally supports!

Here's Ferguson in June of 2016:

http://www.thinkadvisor.com/2016/06/23/ ... 1508801703

Let's face it: among some, TIAA is the RCO (Repugnant Cultural Other).

As I previously said, I have used both companies for many years. Neither company is the fount of Virtue.

However, I am amused by how quickly some Bogleheads dismiss the view of their esteemed leader--JB.

Read again: http://www.philly.com/philly/business/r ... dvice.html

Lev

P.S. Fidelity is front page news in today's Wall Street Journal, and it isn't pretty.
Learned something today. I do not know the term Repugnant Cultural Other. I think I know now after taking a look at
https://www.nytimes.com/2017/10/10/opin ... -well.html

Levett
Posts: 4177
Joined: Fri Feb 23, 2007 2:10 pm
Location: upper Midwest

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by Levett » Mon Oct 23, 2017 7:12 pm

Student,

You are a good student! :thumbsup

Lev

ktip
Posts: 16
Joined: Wed Jun 17, 2015 11:00 pm

Re: TIAA Trouble [NY Times: TIAA pushes clients to high fee products]

Post by ktip » Mon Oct 23, 2017 7:42 pm

Levett -- I'm not an expert on RCO, but from the Times link/ Brooks definition you are calling people who have bad experiences with TIAA irrational. You are calling me and others irrational for not liking high fees and product pushing from a company that claims to care about public service?

Post Reply