As Roger W. Ferguson Jr. takes the helm of TIAA-CREF today, he assumes control of a company that often frustrates financial advisers.
His predecessor, Herbert M. Allison Jr., 64, brought a corporate sensibility to the New York-based company, but its efforts to cater to advisers still falls behind that of its competitors, according to some advisers.
“Their systems still have a lot to be desired,” said John LeBlanc, a principal with Back Bay Financial Group Inc., a Boston-based firm with $390 million under management. “Their technology is in the stone age.”
What should be simple tasks are sometimes difficult at TIAA-CREF, said Bob Frey, founder of Professional Financial Management Inc., a Bozeman, Mont.-based firm with $70 million under management.
For example, it can be tough to roll over assets from a TIAA-CREF account to an individual retirement account, he said.
“It almost seems like they are trying to hold on to the assets,” Mr. Frey said.
The appointment of Mr. Ferguson, 57, the former chairman of Swiss Re America Holding Corp. of Armonk, N.Y., as TIAA-CREF’s president and chief executive is worrisome, said Burton Greenwald, a Philadelphia-based mutual fund industry consultant.
Mr. Ferguson appears to be more “ivory tower” than his predecessor, and that isn’t something TIAA-CREF needs, Mr. Greenwald said.
TIAA-CREF declined to make Mr. Ferguson available for comment.
“Mr. Ferguson will continue to build on TIAA-CREF’s progress by completing our foundation of offerings and operating capabilities to help meet clients’ evolving financial needs,” company spokesman Chad Peterson wrote in an e-mail.
Mr. Ferguson was tapped as chairman of Swiss Re in June 2006 and the following October became head of financial services and a member of the company’s executive committee.
Before that, he served as vice chairman of the board of governors of the
Federal Reserve System. Mr. Ferguson joined the
Federal Reserve in 1997 and became vice chairman in 1999.
Mr. Allison, meanwhile, joined TIAA-CREF in 2002 after a 28-year career at Merrill Lynch & Co. Inc. of New York, where he last served as president and chief operating officer until 1999. He is credited with bringing a more corporate culture to the company.
Some advisers complained at first, especially when changes at the company resulted in the departure of many long-standing TIAA-CREF employees, but most have warmed to the view that such changes were necessary.
TIAA-CREF has increased the number of mutual funds it offers, making it much easier to build diversified portfolios for clients, said Scott Dauenhauer, owner and president of Meridian Wealth Management Inc., a Laguna Hills, Calif., firm with $30 million in assets.
But TIAA-CREF still has problems that date back to the days when it was a non-profit, he said.
Its tax-exempt status was revoked by legislation passed in 1997.
“It was a big bureaucracy then and to some extent still is,” Mr. Dauenhauer said.
TIAA-CREF, however, is committed to improving the services it provides advisers, said Rob Rickey, director of client distribution services at the firm.
Advisers may have had a tough time executing account transfers in the past, but “we have gotten past most of that,” he said.
In addition to improving its services, the firm is rolling out new ones, Mr. Rickey said. TIAA-CREF hopes to allow advisers to make “bulk trades” by the end of the year, he said.
It is also rolling out products it hopes will be attractive to advisers.
For example, it launched the TIAA-CREF U.S. Real Estate Fund I LP on March 14.
That fund makes TIAA-CREF’s real estate expertise available to investors outside the “general ac¬count” it manages for the academic, medical, cultural and research or¬ganizations it serves.
The closed-end fund invests directly in real estate and is available only to qualified high-net-worth investors.
More such products may follow.
“We have many strengths inside of the general account that advisers are interested in,” said Shawn Paulk, managing director and head of adviser distribution at TIAA-CREF.
Advisers said they appreciate TIAA-CREF’s leveraging its expertise in real estate.
“I think everyone does love these real estate funds,” Mr. LeBlanc said.
But more needs to be done if TIAA-CREF hopes to count on the support of advisers to help it retain assets as baby boomers retire.
“I still have a love-hate relationship with [the company],” Mr. LeBlanc said.
That is a problem for TIAA-CREF because to remain relevant, it has no choice but to court advisers, said Geoff Bobroff, an industry consultant in East Greenwich, R.I.
But so far, it lags other industry players in meeting those needs, he said.
It is unfair, however, to compare TIAA-CREF’s efforts to serve advisers with the likes of The
Charles Schwab Corp. of San Francisco or
Fidelity Investments of Boston, Mr. Rickey said.
“It is a matter of scale. While we are a large asset manager and have been serving clients through retirement plans for 90 years, we’re comparatively new to the adviser world,” Mr. Rickey said.
“We’ve gotten good feedback from advisers that we have worked with. Our commitment to them is strong, and our improvements will continue,” Mr. Rickey added.
E-mail David Hoffman at
[email protected].
