TIAA has long had a stellar reputation in the investment world as a careful steward of money belonging to clients in 403(b) plans — those in the academic, non-profit and medical worlds.
403(b) plans are basically the education and philanthropic world’s version of the 401(k).
For many years, money expert Clark Howard recommended TIAA (formerly TIAA-Cref) as one of a very small number of 403(b) plan providers that wouldn’t rip you off with massive, hidden fees.
But he’s no longer making that recommendation…
Money expert Clark Howard saddened by TIAA allegations
The $1 trillion investment and insurance giant is now accused of creating an internal corporate culture that forced salespeople to use underhanded tactics to sell financial products that were revenue-heavy for the firm, but that didn’t put their clients’ best interest first.
Among the allegations, employees were allegedly under pressure to create fear in new retirees in an effort to con them into buying high-cost investments.
“If they cry, they buy” was a mantra within the company’s sales force, according to whistleblowers.
Here’s another line that was thrown around internally as part of refining the sales process:
“Making the client ‘feel the pain'”
Now, New York’s attorney general is getting involved and has subpoenaed TIAA. It’s possible that this investigation could lead to civil or criminal charges.
No matter how this plays out, the entire matter leaves Clark saddened.
“It pains me,” the consumer champ says. “Regulators will get to the bottom of this, and it will become clear how bad the rot is.”
“But the point here is that when you’re diligent about saving over a working lifetime, you have to be more than careful in choosing who to entrust your financial future to at the time of retirement.”
So if you can’t trust supposedly impartial parties who should have a fiduciary responsibility to you, who can you trust?
Try a fee-only financial advisor. You pay them a flat fee for their investment advice; they don’t earn commissions based on what investments they put you in.
But even then, don’t go in blindly and think any fee-only financial advisor will do. You have to know the right questions to ask of a fee-only financial advisor before you hire them to handle your finances after you’ve built up some wealth.