I need someone to do my management cases-problems assignment. Please read the pdf file and do the requirements. I need it 3 pages double spaced. Here are the requirements:
Please find attached a copy of the TIAA CREF case
Your goal look at what they have done, changes made, tell me if it is working. Why or why not
Provide with evidence a solution set that can provide the best way forward for TAII-CREF based on the body of information found....Note there are several KSF'sTIAA is trying to address
FORMAT:Executive Summary! Current situation, market analysis, recommendation
Rubrics
25 Points: Comprehension of the issues and gaps
25 Points: Ability to arrive at possible options to resolve issues and gaps
25 Points: Ability to recommend the "Best Possible" solutions
25 Points: Professionalism -Business writing, articulation, and ability to effectively draw your conclusions to evidence
Microsoft Word - tiaa-cref-text-abridged-0ct8.doc yale case 06-015 october 23, 2006, revised september 8, 2008 TIAA-CREF (A) A Pension Giant Takes a Hard Look at Serving the Customer Jean W. Rosenthal1 Jaan Elias2 K. Sudhir3 Joel Podolny4 When Herb Allison took the helm at TIAA-CREF (Teachers Insurance and Annuity Association of America - College Retirement Equities Fund) in November 2002, the former President and COO of Merrill Lynch encountered an organization focused on its primary product, the largest private pension fund in the United States. Founded as TIAA in 1918 to help academics avoid poverty after retirement, TIAA-CREF had grown to a Fortune 100 company, managing over $260 billion in assets for 3.2 million participants. However, for a company with so many assets and so many individual customers, TIAA-CREF was not well known. It had limited direct contact with its customers. Allison observed, “It was like a big factory with a tiny store in front.” TIAA-CREF’s “storefront” had become increasingly important with the sweeping changes in financial services and pension markets in the preceding decades. TIAA-CREF reacted slowly to the trend toward greater customer choice and service. By 2003, customer-oriented financial service firms had made significant inroads into TIAA-CREF’s base. Where once TIAA-CREF had a near monopoly on campuses, now 83 percent of its largest institutional customers also offered competing vendors like Vanguard and Fidelity. TIAA-CREF’s Boards of Trustees had given Allison a charge to transform the organization to make it more customer-focused. Upon taking over, Allison organized six employee teams to take a hard look at every aspect of the company and to make recommendations. In a feverish six months, the teams amassed a mountain of data and presented a series of bold and controversial options. Now Allison and senior management had to make recommendations to present at the July 2003 strategic retreat of the joint boards. He had to decide which options would maximize TIAA-CREF’s competitiveness, as well as evaluate how much change this “sleepy” organization could absorb. The Evolution of TIAA and CREF From its founding in 1901, Teachers Insurance and Annuity Association of America (TIAA) provided pension products for educators. Its low-cost contributory pension products and life insurance were funded by participating universities, often with matching employee contributions, with each institution determined its own level of outlay. TIAA pensions were portable annuity contracts, an innovation at the time, so the pensions could move with professors. Investing conservatively in governmental, railroad and industrial bonds, the fund weathered the 1929 stock market crash and the Great Depression. This document is authorized for use by Alexander Manga (
[email protected]) for six months from 08/20/19. Yale University School of Management, Yale University. Any unauthorized use or reproduction of this document is strictly prohibited. Transaction: 1629-Case Research 2 tiaa-cref (a) abridged Although TIAA’s bond returns were safe, they were ill equipped to deal with high inflation and increasing life expectancy, leading the company to create the College Retirement Equities Fund (CREF) in 1952. CREF was the world’s first equity variable annuity (described by a Fortune editor as “the biggest development in the insurance-investment business since the passage of the Social Security Act.” 5 ) It was expected that as retirement loomed, faculty would transfer money from the CREF annuity into the more stable TIAA annuity to lock in gains (and only one-way transactions allowed). TIAA-CREF attracted some of the world’s greatest economists to advise on general ledger assets and on stock evaluation and selection. As Scott Evans, head of equities investment, observed, We have always had the benefit of Board Investment Committees with tremendous expertise. Members have included well-known academics like Paul Samuelson, Jay Light, and Bob Merton, as well as leading practitioners such as Bob Kirby, Gary Brinson and David Swensen. The Boards have always taken a “hands on” approach in guiding our investment policy and risk controls. TIAA-CREF’s advisers and dedicated employees oversaw a relatively conservative portfolio. Within that framework, the organization diversified and strengthened returns, for example, by being one of the first U.S. funds to invest in foreign equity and debt markets during the 1970s. Customer choice, however, remained limited: until the 1990s, TIAA-CREF was most often the only pension provider at an institution (other than state retirement programs in state schools), and a customer’s only decision was the split – the percentage for TIAA and for CREF. Money on the Move: Retirement, Investment, and Customer Choice Changes in federal law started a revolution in pension and long-term investing. Money that had been in the hands of professional pension managers increasingly flowed to individual control. Defined benefit pension plans, which promised a set payment at retirement, gave way to defined contribution plans, in which companies invested a specific amount each period, with no guarantee of retirement value. IRAs gave individuals new ways to invest for retirement, and 401(k) plans permitted employers to set up plans for tax-deferred contributions. (See Exhibit 1 for a timeline of investment options and growth in investment assets.) The popularity of defined contribution plans exploded with the great bull market of the 1990s, when the Dow rose from 2,810 to peak at 11,723 on January 14, 2000. More Americans invested in equities, and financial service firms offered an increasing number of alternatives for investors, to balance their portfolios or play their hunches. By 2002, consumers had a choice of 8,000 mutual funds, four times the number of stocks on the New York Stock Exchange. 6 “Superstar” fund managers received market attention. Peter Lynch at Fidelity’s Magellan Fund drew in investors to grow the fund from $147 million in 1977 to $13 billion by his 1990 retirement, beating the market every year and recording a nearly 2,500 percent increase in share value (over six times the increase in the Dow Jones Industrial Average). By 1997, Magellan was managing over $50 billion in assets and had earned $400 million in fees and commissions. 7 In another investment option, Vanguard’s chief John C. Bogle created the first index fund in 1976, mirroring market indices and keeping costs low – no highly compensated investment gurus managed the money and its investor-owned status returned excess profits to investors. In 2000 Vanguard’s 500 Index Fund surpassed Magellan as the market’s largest single fund. 8 When the bull market ended, business page stories focused on scandals, conflicts of interest, and inflated mutual fund fees rather than on instant investor millionaires. Even so, retirement This document is authorized for use by Alexander Manga (
[email protected]) for six months from 08/20/19. Yale University School of Management, Yale University. Any unauthorized use or reproduction of this document is strictly prohibited. Transaction: 1629-Case Research tiaa-cref (a) abridged 3 funds continued to grow. By 2005 U.S. retirement assets reached $14.5 trillion, and private pension and government retirement funds, including retirement holdings in mutual funds, held a quarter of U.S. corporate equities. Much of the accumulation of retirement assets was linked to the impending retirement of baby boomers, those born between 1946 and 1964, who were building up retirement assets in anticipation of the end of their working years. A McKinsey & Co. survey found that more than half of consumers switched their primary financial provider after age 40. 9 Investment firms competed to offer services, advice, and products to capture those customers before they retired. TIAA-CREF Reacts Slowly Despite these market changes, TIAA-CREF remained wedded to its limited offerings, adding only one new option by the mid-1980s: a money market fund. Grumblings increased as customers wanted more options to direct their own investments. In 1986, Stanford University issued a report that was harshly critical of TIAA-CREF and prepared a complaint to the SEC, charging, among other things, that the fund was “anachronistic, paternalistic, and self serving.” 10 The stock market crash of October 19, 1987, underlined TIAA-CREF’s limitations. When the Dow lost 26 percent of its value in one day, customers in CREF saw their retirement assets decline. Those who had anticipated the market drop had moved funds from CREF to TIAA, but they had no way to jump back, since moves from TIAA to CREF were restricted. TIAA-CREF slowly began to change, but it was behind the rest of the industry. In the late 1980s, the company offered its first new retirement accounts since 1952, started to look at its information technology systems, and attempted to change its culture by rewarding some employees with pay for performance. It created a handful of specialized funds: bonds, actively managed equity, and socially responsible stocks. It allowed customers to move assets between funds, and it began to value portfolios on a daily rather than monthly basis. In 1997, Congress revoked TIAA and CREF’s tax-exempt status. Although the change removed a financial advantage, the company could then offer or expand its retirement plan products outside its core customers. It approached other not-for-profits, including hospitals not affiliated with educational institutions, and public K-12 schools. It added trust services and tuition savings programs and opened its mutual funds to the public. However, compared to other private retirement fund vendors, customer options at TIAA-CREF remained limited. For example, the company did not have a fund directed at high-tech stocks in the 1990s, even though a number of customers wanted one. As Ed Van Dolsen, head of support services, noted, Even when we had gone beyond the TIAA and CREF choice, say to a money market fund or global equity, every one of our funds was designed to be (a) simple and (b) safe, diversified, with balanced, measured risk. Our test was if someone put every penny into this fund, would it be all right. We wanted it straightforward and easy. TIAA-CREF’s share of its core market started to decline, even as its total investment dollars continued to grow. Superstar mutual funds began to enter the college retirement market at the largest schools. TIAA-CREF had been the sole provider at 85 percent of its largest institutions (excluding