While financial advisors clearly have high regard for mutual fund pioneers TIAA-CREF and Nuveen Investments, they are also raising questions concerning culture, strategy and personnel in the wake of the blockbuster $6.25 billion deal to merge the two firms.
Both TIAA-CREF, best known for its non-profit roots and work with teachers' retirement plans and hospitals, and Nuveen, with its municipal bond and government expertise, enjoy "great reputations" in the advisor community, as FPA president Janet Stanzak, principal of Bloomington, Minn.,-based Financial Empowerment points out.
But the deal combining TIAA-CREF's $569 billion in assets and Nuveen's $221 billion in assets is also bound to raise some concern among advisors, says former NAPFA chair Tom Orecchio, principal at Modera Wealth Management in Westwood, N.J.
CULTURE & PERSONNEL
"Advisors will want to know what will happen to the firms' cultures," Orecchio says. "Will Nuveen be able to keep its culture? Which firms' culture will prevail? I think advisors will also want to know how TIAA-CREF will be handling branding. Will they keep it as Nuveen? Will it be re-branded? Is Nuveen's municipal expertise complimentary to TIAA-CREF's existing line of products?"
Financial and personnel issues are also likely to surface, says Neal Simon, founder and CEO of Highline Wealth Management in Rockville, Md.
"Nuveen has been a source of investment products for us and I'd want to know if the same people will be in place making investment decisions and if they will have the same incentive structures," Simon says. "I'd also want to know what TIAA-CREF's motives were for the deal. Is it a new strategic direction for them, or was it purely a financial transaction? And I wonder what direction they will go in together that neither would have gone separately."
Questions about investment strategy and allocation of resources will be in the mix as well, according to asset manager Don Hagan, who just joined Ron Carson's investment arm, Carson Institutional Alliance, as a consultant to the investment committee.
"An important question will be whether the deal cannibalizes or compliments existing business?" says Hagan, co-founder of Day Hagan Asset Management. "Advisors are also going to need to watch and see what happens with Nuveen's research group. Is TIAA-CREF going to keep funding it at previous levels or not? And what will happen to Nuveen's smaller close-end funds? Is new ownership going to pull in its horns? You don't want to see these investment options go away -- advisors want to have a wide universe of availability."
NUVEEN: NO NEED TO WORRY
Advisors shouldn't worry says John Nersesian, Nuveen managing director who is also the chairman of IMCA's board of directors.
"Our customers won't see a significant difference in the way we do business with them," Nersesian maintains. "Nuveen will remain a fully independent holding company within TIAA-CREF. We will continue to operate under the multi-boutique business model that we have used very successfully over the past few years, and we think clients will benefit from an interesting combination of talent and resources from two-well respected firms."
In fact, TIAA-CREF ownership will bring Nuveen "a stronger balance sheet, clear leadership direction and committed ownership," he adds.
The two firms also share significant common cultural traits, according to Nersesian.
"Nuveen was started in 1898 and has extensive experience with investments in public infrastructure and working with schools and hospitals and TIAA-CREF began in 1918 and has been the country's second-largest retirement plan provider," Nersesian says. "Nuveen won the Lipper Award for best overall large fund company in 2012, and TIAA-CREF won in 2013. I think there's great commonality of culture, mission and orientation between the two companies."
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