TIAA subpoenaed over sales practices

Whistleblowers cited in Times article say the pension giant pressured reps to push expensive managed accounts

Nov 10, 2017 @ 11:53 am

By InvestmentNews

The New York attorney general has subpoenaed insurance and pension giant TIAA, seeking information on its sales practices in the wake of a recent story in the New York Times.

The TIAA practices drawing scrutiny also are the subject of a whistleblower complaint filed with the Securities and Exchange Commission, according to a new Times story. That complaint was filed by former TIAA employees, who contend they were pressured to sell products that generated more revenue for the firm, but were costlier to clients, while adding little value.

TIAA, which looks after retirement accounts for more than four million people working at 15,000 nonprofit institutions in the U.S., oversees client assets of nearly $1 trillion.

In the Times story, two of the current and former employees the newspaper spoke with said that TIAA had a saying about creating fear among clients to generate sales: "If they cry, they buy."

The SEC whistleblower complaint contends that in 2011 TIAA began trying to convert "unsuspecting retirement plan clients from low-fee, self-managed accounts to TIAA-CREF-managed accounts" that were more expensive, the Times said. According to the complaint, advisers were pushed to sell proprietary mutual funds to clients as well.

"In more than 10 years at TIAA, I have never heard such language, which is certainly not in keeping with our values or approved materials," TIAA spokesman Chad Peterson told InvestmentNews in an emailed response acknowledging receipt of the subpoena.

"We are undertaking an internal review regarding this matter to ensure all of our training materials are aligned with our mission, values, policies and procedures," Peterson wrote. "TIAA focuses exclusively on meeting our clients' long-term financial needs. We always put our clients first and operate in a highly transparent and ethical way."

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

How InvestmentNews picks its Women to Watch winners

The process is laborious and exacting, but well worth it. The end result each year is an impressive group of women in the advice industry from whom others can draw inspiration.

Latest news & opinion

Some good news about female recruitment in financial advice

Each of four core advisory positions tracked in InvestmentNews' benchmarking study has seen an uptick in women entrants.

10 ETFs that are up more than 35% this year

Amid the stock market carnage, there are still some funds posting big gains.

10 biggest HSA providers rated

Morningstar rated the largest plan providers as investment and spending vehicles.

Morningstar: DOL fiduciary rule reduces inflows to mutual funds with high loads

With the measure's demise, will the SEC's advice reform sustain the momentum?

6 tax strategies for year-end planning

How to help clients maximize their wealth using specific tax strategies before the end of the year.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print