Intro: What is TIAA?
TIAA-CREF, currently TIAA, is a leading provider of a broad range of financial services for people from all walks and stages of life.
This well-known firm specializes in addressing the financial needs of people working in the academic, medical, cultural, and research arenas. In this article, we will address the question, “What is TIAA-CREF?”’ and provide a useful TIAA-CREF review.
What does TIAA stand for?
TIAA stands for Teachers Insurance and Annuity Association of America. True to its name, it was founded by Andrew Carnegie to look after the financial requirements like insurance and retirement income of teachers and those in academia. TIAA came into existence almost a century ago in 1918.
TIAA started out to provide specialized financial advice and services to people who dedicate their lives to the service of others through non-profit organizations in sectors such as:
- Teaching and academics
- Research
- Government
- Culture
- Medicine
Today, this firm has expanded from its roots to cater to the financial requirements of people from all walks of life and at all stages of life. Its financial services are suitable for anything from career planning to retirement planning.
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What Is TIAA-CREF?
Now we know what TIAA means, but what does TIAA-CREF stand for? The CREF part stands for College Retirement Equities Fund.
The creation of this scheme in 1952, was a significant step forward in the business of insurance investment since the Social Securities Act. Over the next few years, TIAA-CREF gained in popularity as it continued its development in leaps and bounds.
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Earlier this year, the TIAA-CREF changed its brand name to the shorter, original TIAA. CEO of TIAA, Roger Ferguson, mentions that the new name symbolizes the fact that the company is ready to touch new heights in development while still following the values that it has been building for the last 100 years.
TIAA has a product suitable for you based on your needs and financial management skills. TIAA’s Website is an ocean of information that can guide you from the very first step in your financial journey.
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TIAA’s Investment Plans
Retirement plans are just one of the investment plans that TIAA provides for its customers. Your retirement plan may be sponsored by your employer, in which case a TIAA consultant offers suggestions and guidance regarding that plan and how to gain a lifetime income from it through annuities and mutual funds.
If you are self-employed or the owner of a small business, you can choose from the following retirement plans tailored for small businesses.
- Simplified Employee Pension Plan (SEP) IRA
- Savings Incentive Match Plan (SIMPLE) IRA
Under the SIMPLE IRA, your employees also have to make an annual contribution toward the plan; the SEP IRA does not need any such mandatory contributions and runs only by your contribution.
If you want to go the mutual fund route, the TIAA website has a lot of information. The website also includes the very basics of investing in mutual funds for the beginner investor.
TIAA mutual funds have a high overall rating on Morningstar, with almost 70 percent of its funds having a 4-star or 5-star rating as can be seen in the table below with values for 2015.
One example can be seen in the graph below, which is an analysis of the TIAA-CREF Lifestyle Retirement Income Fund for the Institutional Class.
Some of the mutual funds are the high-risk variety, while others are low-risk ones. You can choose from the lifecycle or target date funds and invest for retirement or from the lifestyle mutual funds, which are classified based on the risks you are ready to undertake for a certain amount of growth.
And then there are annuities, for which TIAA is famous. When you invest in an annuity, you are preparing a kind of income for life, even after retirement. You can start an annuity with your IRA or retirement plan or start from scratch with a personal annuity. You can contribute to your annuity at regular intervals or all at once, whichever way you prefer. TIAA-CREF reviews show that TIAA is a reliable and experienced player in this matter, and you are sure to get great advice and guidance.
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What is a TIAA-CREF Brokerage Account?
You can create a brokerage account with TIAA, plus create and maintain an investment portfolio. You can have an account even if you do not own a TIAA retirement plan. You can also maintain your stocks, ETFs, CDs, bonds and mutual funds through this account.
You can open an account easily online, by telephone, or at a local TIAA office. To transfer funds to your account, you can use a wire transfer, personal check, or transfer from another company; you can even use pension funds to get your TIAA brokerage account going. Professionals from TIAA can help you to manage your account, or if you are confident, you can maintain it all by yourself at their website.
Other Features
Apart from the above investment options, TIAA also provides some other services:
- Life insurance
- The Giving Fund, which lets you donate tax-free
- TIAA Direct provides banking services like interest checking account, high-yield savings account, money market account, and certificates of deposit account
TIAA Direct banking services have earned mixed reviews from customers. Some are happy with their hassle-free procedure for opening accounts and carrying out transactions, while others have had lackluster experiences with them.
This review at Huffington Post ranks the bank at #8 in the list of the top 10 online banks of 2015. The review mentions the usefulness of TIAA Direct checking account, especially for large deposits as the rates are higher. The review also praises the mobile app and lack of monthly fee.
In the TIAA Direct Reviews outlined by customers here, some express their satisfaction with the options available for automated payments and features for businesses. However, customers seem to be dissatisfied with the low-interest rates and the sometimes poor customer service that this bank offers.
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TIAA-CREF Review – A Critical View
TIAA-CREF has been around for just shy of 100 years. It has proved itself time and again as prestigious titles and awards have been bestowed upon it by trustworthy names in the financial world like Reuters and Fortune.
Right after the firm was recognized as the best overall large fund management company at the Lipper Fund Awards in 2014, an article in Reuters described how TIAA has been consistent with its ever-expanding services overall. The Research head of Lipper, Jeff Tjornehoj, appreciated the retail products offered by TIAA. Their risk control strategies also gained the appreciation of other investment officers.
The Reuters article also touches on a few drawbacks of the firm, like the managers sometimes being too unwilling to take risks and its products not being very tax-efficient.
In contrast, this article at Huffington Post takes a different view while giving a TIAA-CREF review. It says that TIAA has been spared of critical reviews because it is a not-for-profit organization.
The reviewer here goes on to say that the retirement plans offered by the TIAA are just on par with other plans and not as good people conceive them to be. He further says that the promotional and advertisem*nt costs incurred by TIAA do not allow it to give the full benefits to its participants, unlike other solely nonprofit organizations which charge less for their annuities.
The Bottom Line
We hope you leave this review with a better answer to “What is TIAA-CREF?” than you had before. If you are planning to invest, this firm is definitely worth considering. The reputation it has maintained for almost a century makes it trustworthy. Now, it’s just a matter of doing your due diligence and figuring out if it’s the right company for you.
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