I'm proud to come to work every day with 16,000 men and women1 who are dedicated to helping our clients succeed and making a difference in the world. We are passionate about living our values, achieving our mission and doing the right thing for our clients in education, healthcare and other nonprofit professions. Consistent investment performance2, prudent risk management3, low costs4 and lifetime income options are in our opinion exactly what the marketplace needs—and what our clients have historically received.5
Since Andrew Carnegie founded us in 1918, we have put our clients first. As we have expanded the range of services to meet their needs, our purpose and priorities have never changed. We continue to operate without profit in accordance with our charter. We focus solely on delivering excellent service and enhanced returns6 to our clients. 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.
Like any company successful enough to have weathered the financial storms of the last century, we have changed over the last 100 years. For the better. And we have done so to meet the evolving needs of our customers. We are constantly strengthening our core businesses, expanding into new areas, such as retail banking, improving our operations and enhancing our customer experience. Our clients demand nothing less. As we evolved, we've become one of the highest-rated financial institutions7 in the world. And we've paid more than the guaranteed payouts to our fixed annuity holders every year for more than half a century8.
Our structure and heritage makes TIAA unique. We don't pursue growth at the expense of our clients' best interests. We use holistic financial planning to help our clients move to and through retirement and we don't charge a fee for these planning services. Moreover, our clients don't even need to purchase TIAA-specific products to obtain our financial planning services.
Our compensation practices are aligned with meeting their financial needs. Our advisors are paid a salary plus an annual bonus, which is not based on the profit or revenue to TIAA that any product may deliver, but on neutral factors such as the time required to educate our clients on the benefits of more complex products. When an advisor does recommend a TIAA investment solution, the recommendation is reviewed by a central team to ensure that our clients' interests come before any other consideration.
The new fiduciary rule will require retirement advisors to put their clients' interests first, and prohibits using bonuses or other incentives that would cause them to make recommendations that are not in the best interest of the investor. We don't need new regulations requiring us to put our clients' interests first. That's the way we have always operated. We were one of the few financial firms to offer our support and ideas for making the proposed fiduciary rule better. We articulated this support in testimony to the Department of Labor and in seven letters of support to the department. We've proven a firm can be successful while putting clients first.
Our product fees are also some of the lowest in the industry9 and our performance is top-rated10. Any apples-to-apples comparison will conclude that our pricing is well-below industry averages. As the widely-recognized and respected independent source Morningstar Direct reports:
- 81 percent of our mutual funds and variable annuities have expense ratios that are in the bottom quartile of their respective Morningstar categories11.
- 100 percent of our institutional-class lifecycle funds are rated 4 or 5 stars (25% - 4 stars, 75% - 5 stars)12.
Our honesty, transparency and results speak for themselves. But we are proud that our clients—those who know best how we help their lives—speak as well. More than 90% of our clients have stated that they trust us13. We earn their trust from our actions. Whether a client has $500 or $5 million, we provide personalized financial advice at no additional cost. And according to a recent survey of the not-for-profit market, our participants have the highest average retirement account balances in the industry14.
I recall a letter last year from a family thanking us for our tradition of sending a gift to our participants when they turn 100 and every birthday thereafter. The letter is a powerful reminder of what makes TIAA a different kind of financial services organization.
"Thank you for the beautiful plant to congratulate me on my 102nd birthday anniversary. The pension from TIAA-CREF and other investments enable my wife and me to retire in a very comfortable retirement community. None of our investments mean more to us than TIAA-CREF. My wife, Martha, who will be benefiting from TIAA-CREF if she survives me, and I will be celebrating our 82nd wedding anniversary in less than six weeks. According to Wikipedia on my Apple computer, purchased with CREF funds, only four living couples in the U.S. have been living longer."
Our organization celebrates the history our participants share with us—they are a joy to us all. The simple fact is that our clients' success is our success, and our success today can mean millions of secure retirements tomorrow. We are proud that we paid retirement benefits to 31,000 annuitants over the age of 90 last year15. That is why we exist—to help deliver outstanding financial outcomes to the millions of people and thousands of institutions that we serve.