TIAA, one of the nation’s largest investment advisory firms pushed thousands of its customers into higher-fee accounts, benefitting the firm at their investors’ expense. NBC News’ Gretchen Morgenson explains where the settlement money will go.
In January 2023, some 250 financial consultants working for
to offset troubling losses in its core business of handling institutional retirement accounts. Getting thousands of investment products that yield the firm significant profits. 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
’s more costly annuities. Meanwhile, proprietary products.” The former financial consultant who filed the whistleblower complaint spoke extensively with NBC News and provided internal emails and recorded presentations by works very hard to earn and keep our clients’ trust,” a spokesman said in a statement. “
neither admitted nor denied the allegations and paid more than $100 million in penalties and disgorgement. As is its custom, the SEC neither confirmed nor denied the existence of the campaign to shift client assets into actively managed accounts that generated greater profits to the firm and that incentivized sales representatives to do so. Fitzpatrick, a resident of Milwaukee, received a monetary award earlier this year after the SEC used his information to secure a $97 million settlement from
doesn’t view their customers’ money as a sacred thing,” Fitzpatrick said, after reviewing the new allegations. “They are worried about surviving.” The company’s ‘engine’ also offers individual retirement accounts to investors online. Most of the institutional accounts handled by Traditional, its popular annuity, does not have an “identifiable ‘expense ratio’ or ‘fee,’” the company says. Chris Tobe, an expert in pension investments and a former trustee of the $14 billion Kentucky Retirement Systems, said the industry consensus is
products promoted by its sales representatives or its advice tool cost more than its competitors’ or perform poorly by comparison. An example is a ’s in-house products being pushed on its participants to offset losses, the university said in a statement: “Neither Yale nor any of its plan fiduciaries has access to
hasn’t always done this. In the 2021 SEC case, some ’s scripted sales materials characterized the approach. 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.” No disclosure At a meeting last fall,
Traditional, the annuity, would get them on track, he said. Even better, it would generate $10 billion for the firm, Parkin said. Getting clients to use declined to make any executives available for an interview. Like many online advice mechanisms, products, according to the complaint and internal documents. One is the annuity that Parkin said generates significant profits to the firm; the other is the lackluster
declined to say how many plans have the two products in their lineups, saying only that “many” do not. Clients receive no specific disclosure when they use the tool that those two categories contain only has a financial interest in recommending clients purchase its annuities and financial consultants’ bonuses create a conflict of interest when those consultants recommend
describes the tool as providing “unbiased investment recommendations from an independent third-party.” That third party is Morningstar Investment Management LLC, a well-known provider of investment research, data and news. tool from those chosen by a retirement plan fiduciary, it said. “ tool to change their portfolio outside of an institutional plan are also swept into
began a new incentive setup, the complaint contends. While previously consultants had been encouraged to discuss the tool’s recommendations with clients, now the employees are tasked with getting a certain number of clients to implement the tool’s advice. If a consultant persuades at least 170 customers to make changes using the tool, he or she earns credits toward bonuses accounting for one-quarter of their compensation.
Traditional is one of five measures the firm’s human resources committee uses to determine that. Pay at the top of , which operates without profit, paid its CEO more than the CEOs at most of the for-profit companies it says are peers. executives sent a congratulatory email to financial consultants noting that “advice implementations” using the tool were up 34% year over year, a copy shows. More than $400 million in new money flowed to
offering and added $100 each month, she would have generated about $60,000 over the past 15 years. If she invested $15,000 in the Cohen & Steers fund and contributed an additional $100 each month, she would have had $151,000. in 2013 because the firm said it held itself to a higher standard than other Wall Street outfits and always did what was in its clients’ best interests. “That’s all I wanted from an employer,” he said. Early on, he brought in a $5.3 million account and was the top performer among
United Kingdom Latest News, United Kingdom Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Savannah Sellers: I Learned I Have PCOS During a Fertility AssessmentSavannah Sellers is an NBC News correspondent and an anchor for NBC News NOW.
Read more »
Schumer Introduces Bill to Reverse SCOTUS Presidential Immunity RulingSee multiple perspectives from The Hill, NBC News Digital, and NBC News Digital at AllSides.com.
Read more »
FBI investigating after nearly 200 gravestones at 2 Jewish cemeteries are vandalizedMinyvonne Burke is a senior breaking news reporter for NBC News.
Read more »
July 4 travel hitting new record thanks to lower gas prices, humming economyRob Wile is a breaking business news reporter for NBC News Digital.
Read more »
NHL gets its first female coach — an assistant with the Seattle KrakenRebecca Cohen is a breaking news reporter for NBC News.
Read more »
Meet the engineers, doctors and clock punchers competing in the Olympics for Team U.S.A.David K. Li is a senior breaking news reporter for NBC News Digital.
Read more »