Dear Plan Sponsor,
I wanted to reach out to you regarding two recent New York Times articles you may have seen about our sales practices. We take seriously our responsibilities to discuss lifetime income solutions and help our participants decide what's right for them.
At the same time, we also know that TIAA has to earn your trust and business each and every day. For that reason, we are undertaking a review of our training materials to ensure they are aligned with our mission, values, policies and procedures. To be clear, we are proud of our high-touch programs and approach to educating participants on their financial health and how best to meet their long-term financial challenges and goals. As part of that approach, it is critical that we have honest, forward-looking conversations that help our clients understand their financial needs and make the important, often difficult decisions necessary to achieving better outcomes. Describing these conversations in terms of identifying "pain points" is not reflective of TIAA's culture and values, and that is something that will be addressed in our review.
Consistent with our non-profit heritage, TIAA operates without profit, in accordance with our charter. Any profits that we make – including through affiliates such as Nuveen – are returned to our participants or reinvested in the business. Further, we maintain an open-architecture platform for our recordkeeping services, meaning we make a wide variety of third-party funds available – even if it means they are chosen over our proprietary offerings. In fact, flows into non-proprietary offerings have been increasing every year since we introduced open architecture in 2003.
As you know, TIAA acts in a fiduciary capacity for the investment advice provided to plan participants in accordance with our in-plan advice program for your retirement plan. We use an independent financial expert – Morningstar Investment Management, LLC (Morningstar) – to provide specific investment recommendations. Our advice program complies with the Department of Labor’s advisory opinion (2001-09A), also known as the SunAmerica opinion.
We were an early supporter of the DOL Fiduciary Advice Rule and its goal of ensuring that advice is in the clients’ best interest.
In addition, we disclose how we compensate our Individual Advisory Services (IAS) financial advisors. Information about our compensation plan is disclosed to participants each time a financial plan is delivered, and in the Getting to Know TIAA brochure on TIAA.org. Our IAS financial advisors are paid a salary plus an annual bonus, which is not based on the profit or revenue to TIAA that any investment product may deliver. Instead, the annual bonus takes into account the effort involved by the advisor in connection with the investment solutions we offer, including the time and resources required to create solutions that meet clients' needs.
Financial advisors rely on a Centralized Advice Group to develop tailored client financial plans. Unlike many other firms, our advisors are not responsible for choosing the underlying funds in a managed account or any other investment solution. In addition, all recommendations are reviewed by a separate review team to ensure they are appropriate and in the client’s interest.
I know some of our clients will also have questions regarding media reports that we have received a subpoena from the New York Attorney General's office. I can confirm that we have received regulatory inquiries, which is not surprising given the first news article. As always we will fully cooperate with our regulators. While we do not comment on specific exams or inquiries, I can say that we are proud of our practices and believe they are best in class, and we are committed to keeping them compliant with all laws and our clients' expectations.
We are committed to answering any questions and addressing any concerns that you may have, and I encourage you to reach out to me or your TIAA Relationship Manager if you have any questions or want additional context regarding points made in the article. We stand ready to help you in any way we can.
Our mission is to work as hard as we can to help deliver outstanding financial outcomes for the individuals and institutions we so proudly serve. We deeply appreciate the trust that you have placed in us, and we are dedicated to continuing to earn that trust every day.
President, Institutional Retirement
President, Institutional Retirement