TIAA-CREF gets serious about its financial advisor business.
The reputation a company has earned over the years is usually very difficult to shake, but that isn't stopping TIAA-CREF from tapping its considerable muscle and resources to try and do just that. Most people know the 85-year-old pension giant from its relationship with the teachers, professors, doctors and other individuals who invest through its 403(b) and other retirement plans. More than 12,000 colleges, universities, schools, teaching hospitals and research institutions offer its products, and it has over $250 billion in assets under management.
Despite its long history and impressive size, TIAA-CREF began its efforts to reach financial advisors just five years ago, when the loss of its tax-exempt status spurred its transformation from a pension system for educational institutions to a more traditional group of financial services companies. The challenge, both then and now, is transforming an industry giant with relatively little experience in dealing with advisors into a diversified financial institution that acknowledges their importance to its future and serves them effectively.
Those efforts got off to a slow start. Even as other financial services companies aggressively courted advisors in the late 1990s, TIAA-CREF seemed stuck in first gear. Until 1999, it did not have a dedicated advisor team or a measurable marketing effort to attract advisors.
Michael Lane, director of advisor services since July 2001, admits TIAA-CREF's reputation among advisors at that time was spotty. "For years, financial advisors viewed us as a competitor or adversary," he says. "They had clients in the education or research fields whose assets they wanted to manage, but we just weren't structured to support advisor-run accounts. So a lot of that money left the firm."
Advisors recall a company whose corporate culture needed adjustment. "The message I got from TIAA-CREF was that it wanted to deal directly with the client and would not give advisors the time of day," says Don Kukla, who holds the CPA, CFP and PFS marks and hangs his shingle at the Moneta Group in St. Louis. "Everything from the procedure for submitting forms to getting information on a client account was like pulling teeth."
According to Lane, TIAA-CREF started trying to turn things around in 1999 by putting together a group of five individuals who handled advisor calls, went to professional conferences and tried to get the word out about the new, advisor-friendly environment. "It was a good beginning, but it wasn't enough," he says. "People were using the service desk to pull money out, not put money in."
When Lane took over, he expanded the dedicated advisor staff to 20 professionals, many of whom travel around the country to meet with advisors personally. His group is working on implementing systems that would allow advisors to download information about client TIAA-CREF accounts into their own computer systems. The technology, he believes, will open the door for advisors to manage billions of dollars in TIAA-CREF 403(b) accounts. And the firm now has 17 mutual funds for the public covering a variety of asset classes.
Kukla says these efforts have had a positive effect on his dealings with the company over the last 18 months. "They seem to be embracing advisors," he says. "There is someone I can call who specializes in handling advisor inquiries. And they are very open to working with me." Recently, a TIAA-CREF representative contacted one of his clients about setting up a meeting to discuss his 403(b) plan, which Kukla had been authorized to manage for about five years. "My client said he wanted me at the meeting, and the representative was fine with that. I'm not sure such an open dialogue would have happened a few years ago."
John Stephens, MD, CFA, with TCI in Tucson, Ariz., also has noted a change. "Before, TIAA-CREF wasn't very helpful to financial advisors," he says. "They tended to keep things regarding their client accounts close to the vest. There was an understanding that advisors just weren't a part of their business." More recently, he says, the firm sent a "very helpful" representative to meet with him. "I see TIAA-CREF now as a good, responsive firm with some attractive, low-cost investment options."
TIAA-CREF's efforts on the technology front also are progressing. Currently, systems that will allow advisors to manage 403(b) assets and download the information into their own computers are being tested in practices that use Centerpiece software, and Lane says the program is slated for national rollout in early 2003. Testing for practices that use Advent software will begin later in the year, he says.