TIAA is committed to taking a leadership role within the industry on the proposed fiduciary rule. We continue to advocate in Washington for changes that will address certain concerns we have with the proposal, while strengthening this new regulation in a way that will protect the best interests of your institution and the financial future of your participants.
Yesterday, Ed Moslander, Senior Managing Director, Institutional Client Services, testified on behalf of TIAA at DOL hearings on the proposed rule. TIAA’s participation was part of a four-day session featuring 75 expert witnesses representing different perspectives in the debate.
The testimony Ed gave for TIAA reinforced our position from our July 20 comment letter (PDF) to the DOL and focused on these key areas:
Holding Rollover Advice to the Same Fiduciary Standard
We underscored TIAA’s support for the DOL proposal to institute a Best Interest Standard for advice to participants about whether or how to take distributions from their retirement plan.
We commend the DOL’s efforts to ensure that rollover advice – including whether to receive a lifetime income distribution from an annuity or roll over from an employer-sponsored plan to an IRA – is subject to the same fiduciary standard as all other investment advice.
Protecting the Ability to Educate Participants
While TIAA supports the Best Interest Standard, we reiterated our concerns about limitations the rule would impose on our ability to continue providing you and your participants with the guidance and services you need. These restrictions would hinder our ability to deliver meaningful education to individuals about rollovers, and we urged the DOL to amend the rule to address this.
We believe that the fiduciary standard should apply only if the financial professional is offering investment advice – or recommendations that are personalized and prescriptive, forming a reasonable basis for an individual to assume that he or she can use the information to make specific investing decisions. Advice should be distinguished from ordinary marketing and educational activities, where financial providers offer educational information on investment products and solutions.
Critical Need to Educate About Lifetime Income
Narrowing the definition of education, while expanding the definition of advice, will significantly affect how we deliver basic information about critical issues, such as lifetime income products, to your plan participants and to IRA investors.
The proposed rule’s narrow approach to education could curtail our ability to help plan participants and IRA owners understand how annuity options work, and the importance of using lifetime income vehicles to ensure retirees do not outlive their savings. With longer life expectancies, the need to make sure that individuals understand lifetime income – and build lifetime income streams into their retirement savings planning – has never been greater.
Providing Industry Leadership
“Put the customer first” has always been a core value that defines the way TIAA serves you and your participants. We applaud the DOL for undertaking this important project to ensure all retirement savers know their financial institutions and advisors are putting the interests of individuals first.
We will continue to keep you apprised of any important developments. In addition, we will be hosting a webinar for plan sponsors on the latest regulatory, judicial and legislative issues, including the DOL-proposed fiduciary rule, on Tuesday, September 8 at 2:00 p.m. (ET). Click here for more information and to register.
In the meantime, if you have questions, please contact your relationship manager or call the Administrator Telephone Center at 1-888 842-7782, Monday through Friday, 8 a.m. to 5 p.m. (ET).
TIAA-CREF Individual & Institutional Services, LLC, Teachers Personal Investors Services, Inc., and Nuveen Securities, LLC, Members FINRA and SIPC, distribute securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association of America (TIAA) and College Retirement Equities Fund (CREF), New York, NY. Each of the foregoing is solely responsible for its own financial condition and contractual obligations.
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