Products October 10, 2013

TIAA-CREF to Expand Advisory Force by 45%

A planned expansion of approximately 200 advisers will give TIAA-CREF a total of more than 650 advisers in its individual advisory services group by the end of 2014.
Reported by

The number of local offices with advisory services will also rise, to more than 120 by the end of next year. At the beginning of 2012, TIAA-CREF had 72 offices and 250 advisers.

The demand for additional advisers stems from increasing demand for individual advice, according to Kathie Andrade, executive vice president, head of individual advisory services at TIAA-CREF. “Our consultative, needs-based approach to financial planning and advice is helping establish a new standard in the market and creating significant client interest that we need more advisers to meet,” she said.

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To manage this growth, Andrade’s division said it is committed to training, including offering a mentorship program, peer coaching support and ongoing training on investments, wealth management, new financial tools and the company products.

“Our experience shows personalized advice makes a big difference in clients’ retirement preparedness,” Andrade said. “In fact, those who receive advice from TIAA-CREF are five times more confident about their retirement than the average American worker. And participants who received TIAA-CREF’s advice, on average, contribute additional funds to their retirement plan and may potentially have $200,000 more in savings at retirement over the course of a 30-year career.”

Data & Research October 10, 2013

Debt Debate Could Trigger Big Losses for Retirees

U.S. workers could see their retirement savings tumble 20% if Congress and the President fail to craft a deal to raise the federal government’s $16.7 trillion debt ceiling, a new report shows.
Reported by

Such is the conclusion of the American Society of Pension Professionals and Actuaries (ASPPA) “Retirement Savings Will Suffer if Congress Does Not End the Budget and Debt Ceiling Stalemate” report.

The predicted 20% drop would translate to a $2 trillion loss for private pension plans, 401(k) plans and IRAs, researchers said. The tumble would come because most retirement assets are held in investments that will likely respond negatively to ongoing uncertainty around the economic and financial consequences of protracted debt ceiling negotiations.

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ASPPA commissioned the study to analyze the effects of both the current debt ceiling fight and the previous 2011 debt limit debate, which study researchers said disrupted economic growth by negatively impacting three main pillars of the economy: consumer confidence, job creation and the equity markets.

Combined uncertainty in these three areas caused private pension assets to decline 26% in 2011 relative to where they would have been, researchers said, suggesting that a similar drop should be expected this fall if a compromise is not struck before the October 17 deadline.  

Looking at the numbers

Some of the findings researchers used to draw their conclusions include:

  • Before the debt ceiling debate during the spring and summer of 2011, economic confidence had been relatively stable. But during the gridlock, the economic confidence index fell from -20 to -54, a decline of more than 170%.
  • Net job creation had begun to increase in the first quarter of 2011, but during the debt ceiling debate job growth fell from 254,000 jobs created in April to 54,000 created the following month. Job creation numbers did not climb past 100,000 until September.
  • The stock market also reacted in a strongly negative fashion, specifically in the S&P 500, which responded to the debate with a 23% decline.  

The somewhat dire conclusions drawn in the ASPPA’s report are not believed universally. In fact, in wealth and asset management firm Northern Trust’s “Investment Manager Survey Report Third Quarter 2013,” researchers found that close to nine in 10 investment managers interviewed in September expected the political standoff over the federal government shutdown and the U.S. debt ceiling to have “at most a modest impact on U.S. equity markets.”

More on the ASPPA report can be read here. Readers looking for an alternative opinion on the debt ceiling debate can read more on Northern Trust’s investment manager outlook survey here.

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