Magaziner Defends RI’s TIAA Investments While Controversy Grows

Thursday, November 02, 2017


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A recent New York Times story has raised serious questions about financial giant TIAA — a company that RI has investments nearly $700 million. The Sunday feature by Business writer Gretchen Morgenson of the Times flagged that TIAA positions itself above all others, but those claims are now coming under fire.

“Calling itself a ‘mission-based organization’ with a ‘nonprofit heritage,’ TIAA has enjoyed a reputation as a selfless steward of its clients’ assets for almost a century," wrote Morgenson. 

‘Our values make us a different kind of financial services organization, known for our integrity,’ Roger W. Ferguson Jr., TIAA’s president and chief executive, says on the company’s website,” wrote Morgenson.

But, as the NYT unveils, TIAA’s claims are being called into question as the company fails to disclose its fees and a number of lawsuits and whistleblower actions claim the company is pushing clients into products that generate high fees, but are inappropriate for those they have been targeted to.

Also of note in the NYT piece -- Morgenson said Edward "Ted" Siedle, Forbes columnist, Rhode Island pension critic, and the biggest whistleblower in SEC history, has been briefed on the situation. 

Siedle said he had "no comment" when reached on Wednesday. 

Magaziner on Record

Rhode Island General Treasurer Seth Magaziner defends Rhode Island’s investments with TIAA.

“Treasurer Magaziner is committed to ensuring that members of the retirement system have access to high-quality, low-cost investment options. When the New York Times article came out, the Treasurer directed his staff to reach out to TIAA, who stated that their employees who work on the Rhode Island plans are not compensated based on cross-selling TIAA products, and therefore the situation mentioned in the article does not apply to Rhode Island’s relationship with TIAA,” said Evan England, spokesperson for Magaziner.

The Treasurer has prided himself on shifting the retirement fund assets out of high fee hedge funds to equities. He has shifted more than $500 million out of hedge funds according to a recent appearance on GoLocal LIVE.

“The Treasurer is concerned about the New York Times report, and while it is welcome news that Rhode Island does not appear to be impacted, he will continue to monitor the situation closely and hold TIAA to the highest standard on behalf of the members of the retirement system,” said England.

“TIAA has been the state’s defined contribution provider since 2012 and a 457 provider since July 2017. There are five years remaining on both contracts. At end of fiscal year 2017 there were $692 million in assets,” he added.


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