Sunday, November 04, 2007

An organization with a heart?

TIAA/CREF is a “not for profit” corporation used by many university professors, including me, to manage their retirement savings. For many years its reputation for integrity was impeccable. Its advertising emphasized two themes “a name you can trust” and we do the thinking about financial investments “for those that have other things to think about.” I took it for granted that these slogans were true. I believe many others did the same.

In 2002, TIAA/CREF appointed a new Chief Executive, a former President and Chief Operating Officer of Merrill Lynch. Things changed. I remember a conversation with a colleague, then an now a senior AU administrator, who first called my attention to the new leadership. He noted that the compensation of the new CEO had increased significantly, while the performance of CREF stock investments had fallen, albeit only slightly, below its historically top rated level.

Soon afterwards, I was personally impacted by the new administration’s policies. I received notice that the extended care plan to which I had subscribed with TIAA/CREF was being sold off to Metropolitan Life. Later, I learned from a TIAA/CREF counselor that TIAA/CREF employees had been selling policies to clients virtually up to the day the sell-off was announced. They were the last to know.

TIAA/CREF clients do have other things to think about. I was completing a book. But I felt sufficiently betrayed and outraged that I probed into the matter aggressively. Finally, I reached a public relations staff member attached to the office of the new CEO. Begrudgingly, he admitted that my recounting of events was essentially correct. Policies had been sold up to the day of the announcement and neither staff nor clients had been informed. When I criticized this policy, noting that TIAA/CREF’s mantra was “a name you can trust,” he responded “what would you have had us do?” “Inform clients and your own staff members as soon as the matter was under discussion and seek their feedback,” was my reply. His response - “we did what the law required” - is permanently etched my memory. It resurfaces whenever I hear a TIAA/CREF commercial, or have an interaction with its staff members.

This morning’s blog was motivated by a recent interaction with TIAA/CREF’s wealth management division. Instructions that I thought had been given, were not implemented. A ‘customer relations specialist’ sought to correct the problem retroactively. She reported back to me, “I tried to make the change, but ‘they’ would not approve it.” My frustration was not with her, but with myself. Hadn’t I learned by now that TIAA/CREF is not in any fundamental sense “a name you can trust?”

Despite disillusionment and a memory of betrayal I have not been able to shake, my investments are still with TIAA/CREF. I assume it is no worse than its competitors and perhaps better than most. And I do have “other things to thing about.” Hopefully I have learned my lesson. I will check my accounts meticulously each month and follow up communications to and from TIAA/CREF aggressively. I recommend that others, whatever firm manages your investments, do the same.

TIAA/CREF no longer uses the slogan “a name you can trust.” It has two new ones: “an organization with a heart” and “for the greater good.” However, I have an alternative proposal for the TIAA/CREF public relations department:

“TIAA/CREF: We do what the law requires.”

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