TIAA, Morningstar Accused of Funneling Assets to Proprietary Products

A federal lawsuit filed in New York accuses TIAA and Morningstar of developing an investment advice tool that has improperly steered clients toward profitable proprietary investment vehicles, including the TIAA Traditional Annuity and the TIAA Real Estate Account.

Known as the Retirement Advisor Field View, the tool was allegedly developed in response to a drop in market share for TIAA’s retirement plan services business.

“A critical component of the scheme was for TIAA to leverage its position as a recordkeeper to employer-sponsored plans, in order to gain access to participants and make investment recommendations that favored its own products,” the complaint states.

A spokesperson for Morningstar declined to comment, citing the firm’s policy of not commenting on pending litigation. TIAA has not responded to a separate request for comment.

The firms developed separate services that use the Retirement Advisor Field View tool for participants in TIAA’s record-kept plans, the complaint alleges.

The first was an investment advice service known as TIAA Retirement Advisor, which allowed participants to access the RAFV tool online, over the phone or in person through on-site TIAA financial consultants, the complaint states. The second was a managed account service known as TIAA Retirement Plan Portfolio Manager, which allegedly followed the recommendations of the RAFV tool in managing participants’ accounts.