The Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA-CREF) is the leading provider of retirement services in the academic, research, medical and cultural fields. The non-profit organization, which is number 81 on the Fortune 100, is one of America’s largest institutional real estate investors and an institutional heavyweight in the stock market. It has US$ 381 billion in combined assets under management, serves more than three million customers, and is affiliated with over 15,000 institutions.
And now TIAA-CREF, which is higher on the Fortune 100 list than companies like Coca-Cola and Cisco Systems, is making a splash in the financial-services marketplace with trend-setting ads, a cycling team and good old-fashioned bottom-line performance.
Unless you’ve been in a Soviet-style media blackout the last four years, you’ve probably noticed that a dramatic change is afoot in this “old” company: from television spots made by Academy Award-winning filmmaker Errol Morris, to Philippe Starck-esque environmental branding at its New York headquarters, to targeted sponsorships (including National Public Radio and a cycling team), to enlisting Olympic gold-medal speedskater Joey Cheek as a company ambassador. These trailblazing steps—unseen in TIAA-CREF’s nearly 100-year history—have been part of a concerted effort to increase the awareness of its brand and values, and are at the same time a reflection of the intense competitive landscape the company faces from Fidelity, Vanguard, AIG, Schwab and other well-known firms.
Indeed, the challenges facing TIAA-CREF today are quite different from those during its inception in 1918. At that time, Andrew Carnegie, then a trustee of Cornell University, discovered that many professors could not afford to retire. His brainchild was the Teachers Insurance and Annuity Association of America: the first private pension plan in America designed to provide lifetime income and, perhaps most revolutionarily, a plan that was portable, allowing professors to take their pensions wherever their work and studies carried them. Through strategic and conservative investing, the company survived the 1929 stock market crash and the Great Depression.
Carnegie’s winning formula quickly catapulted the company into a virtual monopoly in the academic retirement-fund space. “A quarter-century ago, TIAA-CREF had nearly 100% marketshare in higher education,” TIAA-CREF CEO Herb Allison explained during a recent interview. “By the time I joined TIAA-CREF in late 2002, that marketshare hovered around 70%.” He continued, “Very, very few companies that once dominated their industry and then slipped have ever recovered to their former leadership position. I’ll bet you can’t name more than one or two.”
Allison, who came to TIAA-CREF after 28 years at Merrill Lynch, described his arrival in sweeping terms: “I was determined to restore TIAA-CREF’s historic leadership in the non-profit market by refocusing the company on our core mission of meeting the financial needs of the individuals and institutions we serve on the best terms possible.”
And these are indeed historic times at TIAA-CREF. “Now we’re transforming nearly all aspects of our operation to fulfill our mission in the 21st Century,” said Allison. TIAA-CREF has taken bold, modernizing steps to increase awareness of its brand and values, which is making a positive impact on the company’s bottom line. Brian Browdie, TIAA-CREF’s vice president of corporate communications, explained in a recent interview, “We’re individualizing advice, revamping our website, getting more consultants onto campuses, and taking steps to deliver better service to people across the savings spectrum. We’re focused on people in the academic sphere, and on constantly delivering products and services to meet their evolving needs.”
More often than not, delivering at TIAA-CREF has meant letting money talk. Today, 58% of TIAA-CREF mutual funds and variable annuity accounts are rated either four or five stars by Morningstar. At the same time, TIAA-CREF has consistently offered some of the most affordable financial products in the industry. Since it inaugurated its wealth management practice in 2005 to provide more personalized advice for high net-worth clients, the market has responded with remarkable enthusiasm. In fact, the majority of institutions offered TIAA-CREF’s new advice platform has signed up. Recently, Defined Contribution & Savings Plan Alert, a publication of Institutional Investor magazine, recognized TIAA-CREF with one of its most prestigious awards, “Advice Provider of the Year,” ahead of runners-up OppenheimerFunds and Fidelity Investments. “For showing that being big and having existed for decades doesn't mean a firm isn't capable of change and growth, TIAA-CREF is being named Advice Provider of the Year,” the publication reported.
In addition to delivering substantively, TIAA-CREF has updated its style as well. “We’ve come a long way,” observes Steve Goldstein, TIAA-CREF’s executive vice president of public affairs and marketing. He continues, “Three years ago, when I started, unaided awareness of our brand was around one percent. Many consumers who were aware of us didn’t even know how to pronounce our name. So we were in a very unique position for an F100 company. We had to explain not only the excellence of what we do, but also start from square-one with an introduction of who we are.”
Goldstein, with the help of an advertising agency, helped conceive its current "For the Greater Good" campaign, featuring advertisements directed by filmmaker Errol Morris. “It was and continues to be a bold campaign that differentiates us from our competition. We’re out for your greater good. We don’t receive sales commissions. We’re interested in you. We serve those who serve others. Those are claims that our competitors simply cannot make,” says Goldstein.
At the same time, “for the greater good” has the collateral benefit of reinforcing TIAA-CREF’s legacy as a leader in corporate responsibility. “Its message contrasts sharply with the tarnished images of Wall Street,” reported Matthew de Paula in the Oct. 1, 2004, issue of US Banker.
In addition to its ongoing television campaign, TIAA-CREF has utilized cost-effective sponsorships in some non-traditional arenas, such as cycling. “We got into the cycling space very much ahead of the curve,” explains Goldstein. “Just as we were the first in our space to sponsor NPR and were subsequently followed by the rest of our competitors, so too were we the first in our space in the cycling arena. It has been a very economical way to get our brand out exactly where we need it, since cycling competitions in this country frequently take place at colleges and universities.”
When asked about the company’s decision to enlist the services of 2006 Olympic speedskating gold-medalist Joey Cheek, Goldstein answers, “When you’re recruiting someone to be an ambassador for your company, it has to be much more than just a face; this is someone who is going to be responsible for delivering the promise of your brand. Here’s a guy who after winning his gold medal immediately donates his bonus to a humanitarian organization that uses sports to help disadvantaged children around the world. This is someone who’s giving for the greater good and who embodies our brand.”
But TIAA-CREF has been forced to deal with bad press too. Late last year, the company publicly responded to complaints that some of its customers were having problems accessing their accounts electronically because of the upgraded computer systems. In his April 24, 2006, front-page article in the Wall Street Journal, Tom Lauricella wrote, “Technology continues to bedevil TIAA-CREF.” Browdie responded to the criticism in an interview following the publication of the story, “We are doing everything we can to address service disruptions as we upgrade our systems to meet our participants’ and clients’ evolving financial needs.”
It appears that on the grassroots, customer level, the evolution is working. Dr. Kenneth Swan, a professor of surgery who invests with TIAA-CREF for his retirement, has become something of a frontline evangelist of the company. He explains, “Folks often come to me and ask for advice, which is a good opportunity for me to advise them about the opportunities that TIAA-CREF provides.”
A passionate, devoted customer base is no small feat from a company that’s emerging from its history as a virtual monopoly.
“We used to be so paternalistic,” Browdie explained. “Today, it’s all about listening closely to our customers and working nonstop to deliver.”