A recent syndicated column by Malcolm Berko "Teachers' Fund Far From the Head of the Class" (Taking Stock, June 6) mischaracterizes our company, our company's performance, advice for clients, value and service.
TIAA-CREF is a top performer in its business areas and compares extremely well to its competitors.
Unlike some of the other companies Mr. Berko mentions, TIAA-CREF consultants receive no sales commission as part of their compensation, so they have no reason to push products as Mr. Berko suggests.iv TIAA-CREF's financial advice, which Forbes magazine called "the most extensive workplace retirement advice," recommends funds and accounts to help clients meet their goals regardless of whether that fund or account is from TIAA-CREF or another company. Over three-quarters of clients who have received TIAA-CREF's retirement planning and advice consider it to be superior to what is offered by other financial services companies.vi
Had Mr. Berko checked with TIAA-CREF, he would have learned about TIAA's non-profit heritage, and that CREF is a not-for-profit corporation. TIAA-CREF's structure enables us to provide exceptional value through quality products and services with fees on our mutual funds and variable annuity accounts that are typically among the lowest, measured by Morningstar Direct.vii
Overall, TIAA-CREF is the largest private pension system in the US, serving 3.4 million individuals and 15,000 institutions. Over 500,000 participants currently receive a combined $10 billion annually from our company. TIAA also is one of just three U.S. insurance companies to receive the highest rating from all major rating agencies, meaning we have the financial strength and claims-paying ability our investors count on for lifetime income.viii
In recent years, we have transformed most aspects of our business to meet the current and future needs of our clients in direct response to their expressed desires. We have installed a new service infrastructure, modernized our telephone counseling centers and websites, and tripled the number of TIAA-CREF local offices. The number of proprietary funds and accounts offered by TIAA-CREF has expanded from 19 in 2003 to 73 today, in addition to almost 300 funds from other companies.
Throughout this complex transition, some individuals have experienced delayed transactions and other service shortfalls. Today, thanks to our extensive work to improve customer service, we are consistently completing most client transactions on the day they are received.
Mr. Berko's lack of information and objectivity in dispensing commentary disserves readers. It would be too bad if anyone were to rely on his unsubstantiated claims and reckless assertions as a basis for following his advice.
iThe Lipper/Barron's Fund Family Survey ranks each fund's total return (adding back 12b-1 fees) and weighs the rankings by its proportion of the fund family's offerings and finally by a Lipper category ratio (e.g., general equity). Each fund's score is added up to get the fund family score. TIAA-CREF was ranked 7th (of 67) for the one-year period ending December 31, 2006, 38th (of 62) for the five-year period ending December 31, 2006, and 9th (of 67) for the one-year period ending December 31, 2007. Please note that due to our recent fund merger in the spring of 2007 and the subsequent change in inception dates for a number of our funds, the TIAA-CREF fund family was not eligible for inclusion in the 5 and 10 year rankings.
ii"SmartMoney Fund Screen," The Wall Street Journal, June 3, 2008. The Journal screened 1319 mid-cap funds, based on 3- and 5-year returns and low fees, based on data as of May 29, 2008. The Mid-Cap Value Fund (retail class) has negative returns for the 1-year period. iiiMorningstar Direct, March 31, 2008. Past performance cannot guarantee future results. The Morningstar median represents the midpoint of an index of comparable funds/accounts grouped on factors such as investment objective and asset class exposure. Relative performance over other periods may vary. For more complete information about TIAA-CREF performance and rankings, visit our website at www.tiaa-cref.org/performance.
ivTIAA-CREF consultants are compensated through a salary plus incentive program that emphasizes client service excellence.
v"Got to Have a Plan," Forbes, December 10, 2007.
viTIAA-CREF Internal Customer Survey Data, 2007
viiMorningstar Direct (February 2008) based on Morningstar expense comparisons by category.
viiiA++, A.M. Best Company (as of 6/07); AAA, Fitch Ratings (as of 5/07); Aaa, Moody's Investors Service (as of 5/07); AAA, Standard & Poor's (as of 7/07) - the highest possible ratings from these independent analysts. These ratings do not apply to variable annuities, mutual funds, or any other product or service not fully backed by TIAA's/TIAA-CREF Life's claims-paying ability.
Past performance is no guarantee of future results. Please keep in mind that there are risks associated with investing in securities including loss of principal.
You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877-518-9161, or go to www.tiaa-cref.org for a current prospectus that contains this and other information. Please read the prospectus carefully before investing. All TIAA-CREF investment vehicles are subject to market and other risk factors, which could result in loss of principal.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA/SIPC, distribute securities products. Insurance and annuity products issued by TIAA (Teachers Insurance and Annuity Association), New York, NY and TIAA-CREF Life Insurance Co., New York, NY. Advice and Planning Services is a division of TIAA-CREF Individual & Institutional Services, LLC, a registered investment advisor.
© 2009 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017
