TIAA Turns 100 Amid Retirement Market Evolution

As TIAA’s CEO for Institutional Financial Services reflects on the firm’s upcoming centennial anniversary, he’s confident Andrew Carnegie would be proud of where the company and its industry have come. 

By John Manganaro | July 11, 2017
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Ron Pressman is TIAA CEO for Institutional Financial Services, and he’s also a bit of an amateur historian.

During a recent conversation with PLANADVISER, Pressman reflected on his organization's upcoming 100th anniversary. As he noted, the company was originally founded in early 1918 by the well-known steel magnate Andrew Carnegie, who died just a year or so later, to address a very specific social problem. At the time, increasing numbers of university professors and higher education faculty were either retiring in poverty or left unable to retire at all. Carnegie viewed the situation as intolerable and put his considerable wealth to work establishing a non-profit organization that would focus on boosting the financial and retirement wellbeing of America’s teachers. Eventually the focus widened to include non-profits generally, among other client groups.

Pressman mentions all of this to highlight “both the obligation and the opportunity” that historic firms like TIAA face in today’s challenging retirement planning environment.

“We have to take a very long-term perspective because many of our clients will be investing and then drawing down their retirement dollars with us for many decades,” he explains. “Today over 31,000 of our annuitants are over 90 years old, and many of them have saved with us for 40, 50, or 60 years. We even have some clients with a 70-year history with the firm.”

Pressman says the real lesson in this history is to observe how TIAA’s founders had the vision to create a mass-scale private market annuity system prior to the creation of Social Security or even the creation of the concept of the defined contribution (DC) plan. In other words, they had the vision to get ahead of market forces and to turn a big challenge into an even bigger opportunity. 

“We can think of ourselves as being in a similar position today to our early founders, who were facing a real retirement crisis with no easy answers,” Pressman continues. “Today, just as in 1918, we have to be thinking deeply about the role of the private market and private providers for supporting the financial wellbeing of all workers.” 

Undoubtedly, non-profits like TIAA, as well as many of the for-profit institutions in this space, are going to be stewarding the retirement planning of the majority of Americans in the decades ahead. They will be tasked with with picking up a lot of slack that is left in the retirement system by the decline of traditional pensions. Pressman is optimistic about this fact, and providers’ chances to keep doing good work well into the next 100 years. Not really surprising, he is particularly emphatic about the role his own firm hopes to play in solving the next phase of America’s retirement planning challenge.

“There are a lot of companies out there helping people accumulate assets, but there are far fewer companies that have the history of being able to talk to clients about what to do with their assets beyond the retirement date,” Pressman states. “At TIAA, we know how important it is to focus attention on the strategy for the rest of the financial lifetime beyond the working career—being able to layer the equities exposure you need with fixed annuities, variable annuities and other solutions an individual may need. We pay out close to $5 billion a year to our clients, which puts us up there with the Social Security System as one of the largest annual retirement benefits payers in the country.”

NEXT:  Priorities for the future of retirement planning