TIAA-CREF trying to stay ahead of financial storm

CHARLOTTE — Bertram "Bert" Scott is in an enviable position, helping run a financial-services firm that's thriving when others are stumbling.

His company, pension heavyweight TIAA-CREF, is a quiet giant in Charlotte: Though it operates in the shadow of the big banks uptown, it's a Fortune 100 business with more than 2,800 local employees and plans to hire more next year.

It's enjoying the highest marks from the ratings agencies and introducing new products, including a retiree health care plan it will roll out next month. The investment research firm Morningstar Inc. reports that TIAA-CREF was one of the few big fund companies to add to assets last month.

Scott, once named to Fortune magazine's list of "The 50 Most Powerful Black Executives in America," is in charge of the New York-based company's Charlotte operations, which are housed at a high-tech campus in the University area that covers almost 140 acres.

Scott, whose official title is executive vice president and chief institutional development and sales officer, sat down with the Charlotte Observer this month to talk about how the company is staying ahead of the global economic storm.

Q: Given the current recession, are clients saying that they want to dip into their retirement plans early?

A: There is some speculation that people are considering taking money out of the market. I think that's a bad decision, even in these difficult economic times. ... There are people who are naturally nervous in this time, and what we're trying to do is calm them so they don't do things that are irrational.

We talk to them about what their plans are for retirement, get them focused again, and help them be wise about where they're putting their money in the market.

Q: What's your best advice for them?

A: Keep money in the market. Continue to save. Don't make large, major purchases. Diversify your asset mix. (That means) not having everything in equities ... so when the equity markets are down, other markets are up. Putting money under the mattress is not the right answer."

Q: Is there any legislation that's on your radar?

A: We continue to be supportive of rational things that make people want to save. ... The Pension Protection Act of 2006 allowed for automatic increases in savings rates for individuals, so if you decide you're going to save 5 percent this year, and next year you're going to do 5.5 percent, it happens automatically in your payroll. It's called autosave.

And also auto enrollment, which means you're automatically enrolled (in a retirement plan) unless you opt out. The legislation enables that now, so a lot of employers are beginning to do that.

Q: How do the problems at Wachovia and the rest of the banking industry affect you?

A: Any disruption in the market affects consumer confidence, but it has no direct effect on us beyond that. We empathize with their difficulties, but we are a strong financial institution and we're trying to be a stabilizing influence on the market. Wachovia is not a direct competitor in all aspects of our businesses. In the retirement plans, they are, because Wachovia offers retirement services to employers.

Q: Why is TIAA-CREF doing well when other financial firms are struggling?

A: One area that makes us different is, we have always had a very active risk-management capability in the firm. So when people are out investing money in the markets, there is a partner sitting there and saying, "Is that the right risk for the population we're trying to serve?"

And it's an equal partnership: The investment people don't have more leverage than the risk people. We're investing people's money for retirement.

Q: Also, your financial advisers aren't paid by commission, right?

A: Right. When we sit down with a client and build a plan, we give objective advice, which means we will talk about anyone else's funds and investment options.

Since the people who spend time with our clients are noncommissioned, they really are there to make sure they give the best possible advice, as opposed to advice related to how they may be paid. That's always been the case with the firm, which is unusual in this business. We've never had commissioned salespeople, ever.