New investment management option helps clients transition to and live in retirement
Complements wide array of lifetime income options for clients
New York, November 19, 2013 – As financial circumstances become more complex, managed account solutions can help individuals manage their investment portfolios and improve their potential to meet their goals. TIAA-CREF’s own service, Portfolio Advisor, provides clients with highly personalized portfolio management overseen by an experienced team of investment professionals. Today, the company announced Portfolio Advisor‘s latest option, Managed Income Strategies, designed to help individuals generate income during retirement.
“People may need to think differently about how their assets are invested once they begin taking income,” said Eric Jones, senior managing director, Advisory Solutions, TIAA-CREF. “The investment approach that worked during their years of saving isn’t necessarily the best way to invest once they are dependent on those same assets for income. People face different risks as they transition into retirement.”
Through a carefully constructed and monitored portfolio, Portfolio Advisor’s Managed Income Strategies are designed to address three risks during the income-taking years:
- Sequence of return risk – If a significant market decline occurs in the early years of taking withdrawals from a portfolio, it is more difficult for the portfolio to recover, and it becomes likely that the portfolio will not be able to support the level of income originally planned.
- Interest rate risk – Rising interest rates can cause the value of bond holdings to decrease, and income portfolios typically have a higher allocation to relatively undiversified bonds. Given today’s current low level of interest rates, many retirees are particularly exposed to this risk.
- Inflation risk – Retirement can last up to 30 years or more, and inflation can cause the cost of living to rise during retirement. Portfolios designed to produce income to live on need to address the fact that individuals will need an increasing amount of income to help keep pace with inflation.
“Our Managed Income Strategies are designed to help address these risks, with the goal of helping individuals sustain their purchasing power in retirement,” Jones said. “We believe Managed Income Strategies can improve the likelihood of a consistent income stream for use in retirement.”
Managed Income Strategies portfolios are constructed and managed differently than typical accumulation portfolios, aiming to generate income over the long run and attempting to manage the unique risks of an income portfolio. The portfolio is divided into shorter-term and lower-volatility assets for near-term income and long-term assets to pursue both income generation and future growth potential. It also seeks to increase diversification and address inflation risk through exposure to a wide array of asset classes and securities.
TIAA-CREF’s Portfolio Advisor service offers several investment strategies in addition to the Managed Income Strategies and is designed for individuals at any life stage and has a $50,000 minimum account threshold. The service is customized to personal needs and goals by allowing individuals to build upon TIAA-CREF’s investment strategies while reflecting their unique investment preferences, such as managing downside risk, social investing, passive investing, portfolio management approach or income focus.
TIAA-CREF’s Portfolio Advisor service is one of the industry’s fast-growing managed account platforms and currently has more than $9.2 billion in assets under management (as of 09.30.13). The service provides clients with personalized portfolio management based on their unique goals and preferences. In partnership with the client’s TIAA-CREF advisor, a dedicated team of TIAA-CREF investment professionals manage taxable and IRA investments based on a deep understanding of the individual’s investment goals, risk tolerance and personal investment preferences.
For accounts enrolled in Portfolio Advisor, TIAA-CREF handles all day-to-day account investment decisions, including monitoring, rebalancing investments and refining the various strategies to help pinpoint what adjustments, if any, are needed to stay true to an individual’s goals. Clients review the progress of the portfolio quarterly with their advisor.
For more information regarding TIAA-CREF Portfolio Advisor, click here.
TIAA-CREF has offered clients lifetime income options for retirement since its founding in 1918. Today, TIAA-CREF offers a wide variety of income-oriented solutions and helps clients seeking to build their financial futures through in-person financial services at more than 90 offices across the country.
In addition to the new Portfolio Advisor Managed Income Strategies, TIAA-CREF has created a variety of brokerage services such as new tools and resources for individual planning and use of lifetime income options, including:
TIAA-CREF “Financial Essentials” Financial Education Program: New seminars in this series include “Paying Yourself: Income Options in Retirement.” This seminar shows the basic rules that govern the most common retirement accounts and provides perspective on when to tap into different assets.
Enhanced Retirement Income Planner: The Retirement Income Planner is an online tool designed to help evaluate individual retirement readiness and maximize income payouts. It creates hypothetical scenarios showing clients how much income they might expect once leaving full-time employment. New elements include expanded budgeting spreadsheets and educational materials.
In-Person Advice Services: TIAA-CREF will add 100 advisors to its team around the country by year-end. Since the beginning of 2012, TIAA-CREF has grown the number of advisors by more than 50 percent, helping individual clients across the country as they seek to build financial well-being.
TIAA-CREF (www.tiaa.org) is a national financial services organization with $542 billion in assets under management (as of 09.30.13) and is the leading provider of retirement services in the academic, research, medical and cultural fields.