TIAA-CREF is creating an RIA-only pre-screened list for referrals
The big 403(b) provider is seeking to help plan sponsors concerned with meeting fiduciary obligations
3 min read- TIAA-CREF creates an RIA referral list for plan sponsors seeking expanded participant counsel.
- RIAs must apply, pay a fee, and pass vetting by Center for Due Diligence to qualify.
- Demand for fiduciary support drives TIAA-CREF to formalize advisor referral process.
TIAA-CREF is creating a pre-screened list of advisors that it will recommend to plan sponsors who are seeking to provide expanded counsel to their participants.
The New York-based giant of the 403(b) market has started accepting applications from registered investment advisors to be approved. Investment advisor representatives who apply must be members of an RIA that have already been approved. Registered reps need not apply.
The screening is being conducted by Center for Due Diligence and Plan Tools. The complete roster is expected to be published in 2012.
TIAA-CREF, which had $466 billion of assets under management as of March 31, currently works with more than 600 financial advisors, including IARs and registered reps.
In red-hot 403(b) market, TIAA-CREF hires hundreds of advisors after RIAs, and Fidelity, pose new threats
The company will still allow plan sponsors to choose registered reps but not at TIAA-CREF’s recommendation.
Fiduciary support
The move makes sense for TIAA-CREF, according to Steve Winks, principal ofSr. Consultant of Richmond, Va.
“TIAA-CREF sees the marketing opportunity for a defined contribution to support clearinghouses built around the Center for Due Dilligence Conference each year – which attracts the industry’s best and brightest DC advisers,” he says. “The combination of CFDD/TIAA-CREF represents the free market from which Merrill et al cannot hide. If it is a question of who best manages conflicts or best thinking, CFDD has no limitations while Merrill does.”
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TIAA-CREF is receiving a rising number of requests from plan sponsors for these kinds of referrals, says Robert Rickey, head of advisor services.
“Increased focus on plan sponsor’s fiduciary responsibilities has led to greater demand for information and support. Our own experience with both individual and institutional clients has confirmed the growing need to support independent advisors.”
In the past, the company would help match advisors to plan sponsors in an ad hoc fashion.
“It was based more on a reactive model,” Rickey added.
Vetting process
For RIAs to apply, they will need to pay a fee and undergo a vetting process that includes a look at the firm’s fee structure, assets under management, errors and omissions insurance and years in business. It will also involve background checks of individuals.
Though Rickey declined to disclose cut-off for assets under management, he said it coincides fairly closely with the threshold advisors need to be overseen by the SEC – $25 million. He acknowledged that the SEC may soon raise this amount to $100 million.
Undergoing this scrutiny has a big potential upside for advisors who are chosen, according to Phil Chiricotti, president of CFDD.
“The retirement plans business is mature at the plan level and headed for consolidation. On the other hand, participant level advisory services are in the embryonic stages of a bull market. That includes individually managed participant accounts and advisor managed portfolios at the plan level…. To grow the participant advisory business, the qualified, competent and qualified advisor must be teamed with low-cost investments and scalable methodology. Teaming with a vendor is the icing on the cake.”
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