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chadposner

Tiaa-cref Proposes Fee Hikes

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FYI,

 

According to Morningstar "TIAA-CREF plans to dramatically hike its management fees, subject to shareholder approval. If the proposed plans are accepted, the firm's management fees will rise to 45 to 50 basis points for actively managed funds"

 

"Further, TIAA-CREF wants to slap 12b-1 fees on the retail share class of its institutional funds as well".

 

All this from a firm that prides itself on being low cost. They'll probably say they are still "cheaper" than other providers (they'll probably obmit how it will reduce the returns of their funds).

 

Chad

 

 

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Hi Chad,

There are two conversations going on at M* on the TIAA-CREF Forum about this issue. Mr. Allen has brought a Wall Street mentality to T-C, and it doesn't seems to be sitting well with some long time clients of T-C. You can read the conversations HERE. Best Wishes.

 

Joe

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It depends what the stated purpose of the fee increase is, I think...if they are simply doing it to buy themselves a nicer office building and raise the salaries of TIAA-CREF officers, then that's problematic. If they are raising funds in order to finance the hiring of a long-needed bunch of financial planners who might increase the level of personalized service available to TIAA-CREF clients, then I'd be all for it.

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I haven't read the reasoning for the increase yet, but I believe it is too improve services. They are spending a lot of money upgrading old technology and trying to bring more services to participants as well as more of an open architecture platform. It seems that they are only increasing the costs on the active managemed funds (or portion of the funds, correct me if I am wrong) perhaps it is so they can recruit more talent. I haven't bothered to read the reasoning yet mainly because I have never seen a company actually give the real reasons for raising fees, of course TIAA has always been different and I am sure the reasonings are truthful.

 

Perhaps they are adding more distribution fees so that they can get on more platforms and distribute their funds to a wider audience - however I don't anyone that is really clamoring for TIAA actively managed funds, so i don't know if this strategy will really work.

 

If they do their job correctly they will end up with more assets because of the fee hike and will be able to begin lowering the fees again at some point........only time will tell.

 

ScottyD

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