To Cover Losses Elsewhere, TIAA Pushes Costly In-House Products On Retirement Savers, Whistleblower Says
TIAA faces losses on a core business — recordkeeping for retirement plans at colleges and other nonprofits. "Where we make that up is on the product side," an exec told sales staff.
“TIAA stands for Teachers Insurance and Annuity Association of America and it manages $1.2 trillion for 5 million clients, most of them saving for retirement in jobs at universities and other nonprofits. TIAA likes to differentiate itself from other Wall Street firms by highlighting its altruistic, tax-exempt heritage — the company was founded in 1918 when an Andrew Carnegie foundation donated $1 million to provide school teachers with comfortable retirements.
But TIAA has faced daunting financial challenges in recent years as teachers and others saving for retirement have increasingly opted for lower-cost investments than TIAA offers, its own executives have said. TIAA now competes with heavyweights like Fidelity and Vanguard. Younger customers prefer investment products with lower fees, like Vanguard index funds, to vehicles like TIAA’s more costly annuities. Meanwhile, TIAA is generating losses on one of its core, legacy businesses — recordkeeping for the retirement plans at the colleges and other nonprofits it serves.
Ted Siedle is a former SEC enforcement attorney who represents the former TIAA employee filing the recent complaint. He also represented Fitzpatrick and his colleagues whose information led to the 2021 SEC case.
“TIAA changed its practices after the SEC brought the 2021 enforcement action, but the new whistleblower’s information indicates the firm is again putting its interests ahead of clients,” Siedle told NBC News. “Unfortunately, recidivism exists on Wall Street.”
Read the entire article in NBC News today:
https://www.nbcnews.com/investigations/tiaa-pushes-costly-retirement-products-cover-losses-whistleblower-rcna161198