TIAA, a general financial services provider, has a robo-advisor service with its TIAA Personal Portfolio. The product has the mission is to offer personalized digital financial services that appeal to all generations. With its socially responsible investing option, TIAA Personal Portfolio brings something novel to the robo-advisor world.
Though there's no minimum investment amount to talk to one of TIAA's licensed financial consultants, TIAA Personal Portfolio has a $5,000 account minimum and a management fee of 0.30%, a relatively competitive rate in the robo-advisor sphere. It’s slightly more expensive than the 0.25% management fee available at robo-advisor juggernaut Wealthfront and comparable to the fees charged by Betterment and SoFi. But for ethically minded investors who also want an easy sign-up process and friendly user interface, this may be a great fit.
There's also a retirement "freemium" model for customers to assess whether their savings are on track for retirement. It also provides an action plan if there's a gap.
As of May 15, 2020, the program is no longer accepting new accounts.
Socially conscious investors; Investors who value personalized and diverse investment portfolios; Goal-motivated customers
TIAA Personal Portfolios gives you a chance to invest in socially conscious funds but at a higher price; the ETF and mutual fund fees average 0.30%.
Pricing: How Much Does TIAA Personal Portfolio Cost?
|Option Name||Management Fee||Minimum Balance||Features|
|TIAA Personal Portfolio||0.30%||$5,000||Comes with automatic portfolio rebalancing, goal trackers, personalized investment portfolios|
TIAA Personal Portfolio
The minimum balance to open a TIAA Personal Portfolio account is $5,000, so it’s not easily accessible for everyone. The management fee is 0.30% but is not charged on any uninvested cash. This fee is competitive with other robo-advisors out there – it’s not the highest, but it’s not the lowest either.
You are also charged fees on the investments. Your investment portfolio is comprised of mutual funds and exchange-traded funds (ETFs) managed by TIAA and its Nuveen unit. The mutual funds used in your portfolio will generally have the lowest fees (expense ratios) if you choose a passive investing strategy. (You can read more about investing strategies in the next section.) Funds used in an actively managed portfolio and for socially responsible investing usually carry higher fees.
TIAA Personal Portfolio’s Investing Strategy
TIAA primarily invests in mutual funds and exchange-traded funds (ETFs).
Your personal investment portfolio is created based on your response to questions about your risk tolerance, financial goals and investment style. There are three different investment styles: Basic, Insight and Impact.
The Basic investment style is a passive investing approach. The portfolio is made up of low-fee index-tracking funds. The Insight style uses primarily actively managed mutual funds. The Impact style is made up of socially responsible funds that include companies with sound environmental policies, for instance. An Impact portfolio is actively managed.
After entering all the relevant information and choosing your investment style, you’ll receive your personalized portfolio, which lists the specific funds you’re invested in. If you’re unsatisfied with the portfolio, you have the ability to change one of the investments. By calling TIAA and requesting a “personalization,” TIAA Personal Portfolio can select an alternative fund in place of the one you want to exclude.
If your portfolio veers off course, TIAA Personal Portfolio provides automatic rebalancing to help your portfolio balance stay in line with your original asset allocation and stay on track of your financial goals.
Available account types with TIAA Personal Portfolio include traditional IRAs, Roth IRAs and non-retirement brokerage accounts.
TIAA Personal Portfolio’s impact investing style sets it apart, as it’s one of the only robo-advisors that offers a socially responsible investing option. In addition, though most of the portfolio is still curated for you, TIAA allows you to switch out investments if you’re investing in something you don’t want to. The freedom for you to choose what you want in your portfolio gives you more control. It’s still mostly hands-off, but you have some say.
Who TIAA Personal Portfolio Is For
Though TIAA Personal Portfolio is not exclusively a retirement planning service, TIAA itself is one of the leading retirement planning providers. If you’re ready to start saving and investing long term for retirement or another investment goal like buying a home, TIAA Personal Portfolio could be a good fit. It offers dynamic tools to help calculate retirement spending and saving. There's also a retirement "freemium" model that allows investors to track their progress toward their retirement goals and provides a solution if they're coming up short.
TIAA Personal Portfolio is useful for anyone planning for the long term. The service does value your personal timeline, with your portfolio based off the projected time horizon of your investments and your risk level. For any savings goals you want to reach eventually, TIAA Personal Portfolio can develop a plan that helps you reach that goal effectively and in a timely fashion.
And though TIAA Personal Portfolio appeals to all people, its goal-based and personal approach is helpful for anyone who wants to begin investing. It also offers professional customer service to answer any questions you may have. It’s mostly a hands-off investing tool, but you have a chance to learn more and gain more experience by reaching out to the service.
If you care about what you’re specifically investing in, TIAA Personal Portfolio’s socially responsible investing portfolio takes this into account. These portfolios are comprised of companies that pay attention to issues like workplace inequality and environmental conservation. They take steps or implement policies to solve particular problems in those spheres and beyond. You also have the ability to switch out an investment with something else if you’re not completely satisfied with your portfolio. This flexible approach can make investing less overwhelming.
How TIAA Personal Portfolio Works
To begin investing with TIAA Personal Portfolio, you’ll need $5,000. The sign-up process is speedy, with the website saying you can get set up in 10 minutes or faster. All you have to do is answer a few questions about your goals and preferences and the robo-advisor will do the rest.
You start by identifying your financial goals - the wealth amount you want to reach and the time-frame by which you’d like to achieve it. Then you choose your investment risk level and style. The risk levels range from conservative to aggressive, and, as we mentioned previously, there are three investment styles: Basic, Insight or Impact. Basic invests in passive investments, Insight investments are ones that are projected to outperform the market in the long term and Impact prioritizes socially responsible funds.
Before you fund your account, TIAA shows you your personalized investment portfolio. This allows you to decide whether you’d like to commit to it. It lists the specific stocks, bonds and other funds that you’re investing in. If you’re unsatisfied with any particular investment, you’re able to call and request that the fund be replaced with another. Though a majority of the portfolio is dictated by TIAA based on your financial profile, you’re given some freedom to decide what goes into the portfolio.
When you’re satisfied with the portfolio, you can fund the account and start investing. The investment portfolio is monitored daily and is automatically rebalanced if needed. With account oversight and progress reports, you’re able to track your journey as you get closer to reaching your long-term goals.
If you need any more help or support, you can speak to personal portfolio consultants. They answer your questions and give you advice, at no extra cost to the user.
Overall, TIAA Personal Portfolio has a quick set-up time to prepare you for long-term investing. You’re able to save and invest toward your long-term goals, like retirement or buying a home, and track your progress along the way. TIAA creates a personalized and convenient investing experience.
What's the Catch?
Currently, TIAA doesn’t offer tax-loss harvesting. Tax-loss harvesting is a strategy used by investing companies to sell underperforming securities at a loss. Those totals are then used to lower the taxes on any gains made in the year. Though some robo-advisors have this feature, TIAA Personal Portfolio is not one of them. However, TIAA Personal Portfolio does offer tax efficiency through rebalancing, in which losses are sold prior to selling tax lots with gains.
In addition, the underlying fees for some funds can run high. This is particularly true if you invest using the actively managed Insight and Impact portfolios. The fees for a socially responsible portfolio range from 0.26% - 0.34%. While it is normal for actively managed funds to have higher fees than passively managed funds, this is something to keep in mind if you plan to invest through TIAA Personal Portfolio
Competition: How TIAA Personal Portfolio Stacks Up
At an annual fee of 0.30%, TIAA Personal Portfolio offers good service at a competitive price. Big names like Betterment and Wealthfront offer their services at similar fees. However, given the newness of TIAA Personal Portfolio, there are more features that come with the other two.
Wealthfront offers a management fee of just 0.25%. The account minimum is also more accessible at $500. In addition, Wealthfront provides tax-loss harvesting on all taxable accounts and has a diverse account range compatibility, which includes trusts and 529 college savings plans. Many services are rolled into an affordable price.
With Betterment, depending on the account, its fees range from 0.25% to 0.50% with no minimum balance for accounts at the basic level. It offers access to live advisors for premium accounts. There’s also tax-loss harvesting on all taxable accounts. Betterment’s ETF fees run lower as well, ranging from 0.09% to 0.17%. These benefits make it one of the big names in the robo-advisor field.
|Robo-Advisor||Fees||Min. Balance||Human Advisor|
|0.25% - 0.50%||$0||Yes|
Some of TIAA's portfolio options have slightly higher underlying fund fees. But TIAA Personal Portfolio provides something the other two don’t: an emphasis on personalized portfolios. Though other robo-advisors also curate portfolios based on answers to personal questions, TIAA Personal Portfolio’s different investing styles give you a chance to narrow down the investments you want to make. You also have the choice to make socially responsible investments. Not all robo-advisors give you that choice. Along with your chosen risk level, the personalization ensures that your portfolio fits not only your investing needs but also your personal values.
Bottom Line: Should You Use TIAA Personal Portfolio?
TIAA Personal Portfolio is one of the newer names in the robo-advisor business, but it already offers attractive services that other advisors don’t. You’re able to work with an established company who values personalization and the investor’s input. The goal-based approach and saving trackers also help you work toward your long-term targets. Though some other features are missing, like tax-loss harvesting, TIAA Personal Portfolio has room to grow into itself as a premier robo-advisor.