Cracking the Defined Contribution Investment Only market is a venture many asset management companies have experienced much consternation over and spent millions of dollars trying to accomplish. Many still find that getting their products on platforms is an uphill battle even with a robust program in place.
Having a factor that separates your company from others is crucial to getting products on retirement platforms. For TIAA-CREF, that factor is leveraging its long retirement saving heritage in its DCIO market efforts.
"It was a natural extension of who we are. You can look at TIAA-CREF's long history within the defined contribution space overall and working with others from an asset management perspective off of our own proprietary platform, said John Panagakis, head of asset management business development at TIAA-CREF. "It is a natural evolution to look for additional ways to diversify our own business and expand our footprint," he said.
The first step to building a DCIO business is getting the appropriate agreements in place with retirement platforms, Panagakis said. "Then we serve them in a variety of ways though the national accounts team working with the home office staff, our wholesaling force working with field reps that are employees of the record-keeper and independent advisors that may use the DCIO platforms to serve the retirement plans they work with. Separate, but still important is tying in the consultant community," he stated.
In addition to building relationships with appropriate parties, Panagakis said funds must screen well to be considered for placement in a plan.
In differentiating itself, TIAA-CREF leverages its retirement heritage in its value proposition to platforms. "I think if you look at our heritage, it's different from a lot of asset management shops," Panagakis said. "We didn't grow up as an asset management firm that is now serving the retirement community. We grew up as a mission-based organization focused on retirement. Our asset management heritage is servicing and focusing on retirement outcomes and investing our money with a focus on retirement. That differentiates us from the community at large.
"Even as an insurance company our general account is pointed at retirement almost exclusively and not at life insurance. It's in our DNA."
Panagakis added that focusing on the company's heritage and stability influences the product line up, "It's rather easy for us [to differentiate ourselves] because our products are built for retirement savings, we're not conflicted in trying to be all things to all people as an asset manager. We focus on retirement and college savings. We are not subject to what the hot new thing of the day is. We don't say, 'this is the next trend happening here, so let's build a dozen or two dozen products based on it,' but stay focused on our true mission-long-term savings, college savings, retirement, outcomes for savers, plan participants and plan sponsors."
Before building new products Panagakis said that TIAA-CREF puts an ear to the ground to find out what clients are looking for.
"We want to make sure we are listening to what clients, advisors and consultants are telling us about the needs in the market. We put the primary focus on our clients and build products that suit those needs as well as taking advantage of our investment management capabilities as a firm. There's a lot of things we do within TIAA-CREF that are not necessarily expressed as a direct fund you could invest in. We look at our capabilities and marry them with the needs of the clients."
Currently, according to Panagakis, clients are looking for products that have a global view and address specific portfolio concerns. "What we are hearing out there is that people are looking for outcome oriented solutions that may address things such as inflation that focus on the global environment rather than just the U.S. Also, we are hearing more interest expressed in products that take into account social and environmental issues, which are also part of our heritage."
There are challenges that TIAA-CREF has encountered in the DCIO market, Panagakis said, mainly countering the perception that the firm was only the recordkeeping platform for higher education or for the non-profit community.
"The challenges for us as an asset management firm are when you say, TIAA-CREF and people think, 'Oh you are the recordkeeping platform for higher education or for the non-profit community.' So the hurdle for us has been building awareness of our brand as an asset manager, making people aware that our investment capabilities are available off of our platform. As people become more aware of that and understand what we have to offer it becomes a natural extension of what we are doing," he said.
To get the word out on TIAA-CREF's investment management capabilities the firm takes a variety of approaches. "We are out there meeting with consultants, advisors and plan sponsors across the broad spectrum for one-off conversations. We are present at the major investment conferences and we sponsor activities.
"One adage I can share is: we were at a major conference five years ago and attendees came up and said to us, 'Oh you are the recordkeeping program of TIAA-CREF' whereas we were there as an asset manager. What we are hearing more and more as the years go by, however, is that people are immediately recognizing us as an asset manager as well as a recordkeeper. Through a variety of direct outreaches, conferences, webinars, whitepapers and educational seminars we are making our presence and our brand known in the marketplace."
Among the future plans for TIAA-CREF is the expansion of the firm's staff states Panagakis.
"We are expanding our client base, delivering and providing an outstanding investment experience and extraordinary client experience. We are looking at growing our client servicing, investor relations and our distribution capabilities to effectively meet a growing interest in TIAA-CREF's asset management."