TIAA launches robo built on MyVest platform

(Bloomberg) -- TIAA, the nearly 100-year-old retirement and insurance company, is launching a robo adviser it built internally, the latest entry into the digital advice field.

The new offering will offer passive index and ETFs and active funds, the firm stated on Tuesday. It will also include a strategy that invests with socially responsible criteria.

TIAA’s robo adviser requires a minimum account balance of $5,000 and charges an annual advisory fee of 0.3%, according to the statement.

In an ongoing attempt to expand TIAA’s customer base, CEO Roger Ferguson recently acquired EverBank Financial and purchased technology firm MyVest.
Roger Ferguson, chief executive officer and president of Teachers Insurance & Annuity Association of America (TIAA), speaks during Bloomberg's fourth-annual Year Ahead Summit in New York, U.S., on Tuesday, Oct. 25, 2016. The summit addresses the most urgent topics for 2017 and beyond–how power shifts in global politics will affect free trade and financial markets; industry-moving innovations in AI, robotics, and life sciences; the biggest investment opportunities for 2017; and how organizations are working to increase diversity, solve the skills gap, and decrease the wage gap. Photographer: Michael Nagle/Bloomberg
Michael Nagle/Bloomberg

“It’s a natural next step in our journey to support the financial well-being of many more people,” said Kathie Andrade, head of TIAA’s retail financial services business.

CEO Roger Ferguson, a former Federal Reserve vice chairman, has been trying to expand the customer base of TIAA, which is known for offering retirement products to teachers, and making acquisitions to reach more retail investors.

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Last year, he agreed to a $2.5 billion deal to acquire EverBank Financial, primarily an online bank. And he bought MyVest, a San Francisco-based technology firm that specializes in wealth management and assisting broker-dealers and banks, which the firm said helped accelerate the launch of the new robo-adviser.

A TIAA spokeswoman noted the platform was built by TIAA's in-house digital team and "it leverages underlying managed account and rebalancing technology from MyVest."

The new offering will include funds from TIAA as well as other firms, such as BlackRock’s iShares and USAA Investment Management.

Much of the growth in the industry is now grabbed by traditional giants in money management including mutual fund firms Vanguard and Charles Schwab. Robo-advisers in U.S. ended last year with $83 billion in assets, according to an estimate from Cerulli Associates, a Boston-based consulting firm.

“When you think about the divergence that’s occurring between digital delivery and people delivery, I don’t think we know exactly what that convergence is going to be. What we do know is that there is a huge need for in-person or people to deliver advice for those that have more complex needs,” Andrade concluded.

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