TIAA Personal Portfolios | Great for Ethically Responsible Investors

TIAA Personal Portfolios has a slightly higher minimum required balance than your typical robo-advisor, so it’s best kept for experienced investors looking to switch advisors.

TIAA uses a passive investment strategy, which is great for those investing for the long-term, such as retirement.

This advisor doesn’t have the lowest management costs in the industry, but they aren’t the highest either.

Check out my review on this established robo-advisor to see if it’s right for you.

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What is TIAA Personal Portfolios?

TIAA Personal Portfolio is an online investing platform that helps you achieve long-term financial goals, such as retirement. TIAA offers unique investing opportunities, including the option to invest in socially responsible companies – something not all robo-advisors offer and if they do, it’s an afterthought, not the focus.

They offer human advisor services as needed and you can check your account’s progress easily by logging into your account.

How does it work?

Let’s look at how TIAA works.

Account opening

TIAA’s account minimum of $5,000 is a little steep for a traditional robo-advisor, which is why we say it’s great for established investors. TIAA asks the typical robo-advisor questions when you sign up for an account so they can get a feel for your risk tolerance, timeline, and financial goals.

They create a portfolio based on these answers so you can meet your targeted goals. For the most part, TIAA is a passive investment tool, but it depends on the investments you choose. Since they do rely on mutual funds, you may have more actively managed investments than you would with any other advisor.

Deposit and withdrawal

You can deposit and withdraw funds from your TIAA account by logging into your account. If you want seamless transactions, link your checking account to your account and click ‘transfer funds’ in your dashboard. From there, follow the instructions to deposit or withdraw funds. Just know if you withdraw funds that are tied to an asset, you may have to wait 3 – 5 days for the account to settle and funds to disburse.

Interface

The interface is a little confusing, to be honest. Since TIAA has many other offerings besides the robo-advisor, they send you to their main website for everything. You have to toggle through the menu to get where you want to go. On the desktop, this is fine, but on the mobile app, it’s a little confusing and time confusing to get where you need to go.

Trading options

TIAA has both individual and joint taxable accounts as well as IRA and Roth IRA options to help you save for retirement.

What can you trade?

TIAA offers two types of investments – mutual funds and ETFs. While they are similar, they have a few key differences that could affect your bottom line. The assets you invest in depend on the portfolio chosen for you:

• Basic – This portfolio consists mostly of ETFs that mimic or track the market. This portfolio has the lowest expense ratios.
• Insight – This portfolio is for aggressive investors that want to beat the market. It focuses primarily on mutual funds, which have larger expense ratios.
• Impact – This portfolio focuses on socially responsible investments and tries to track the market, not beat it.

Costs

TIAA charges 0.30% of assets under management (you pay it quarterly). This excludes any cash balances and only pertains to the money currently invested. The fee covers everything required to manage your account within TIAA. It does not include the expense fees involved with the mutual funds or ETFs you invest in.

How does TIAA make money?

TIAA makes money off the annual assets under management fee charged to every investor.

Additional features

Cash Account

TIAA offers an interest-bearing account on any amount in your cash balance that isn’t invested. They call it the TIAA Bank Sweep Account.

Human advisors/customer service

TIAA offers a combination of human advisor and customer service. You can get ‘some’ financial advice, but it’s not from a certified financial planner or investment specialist, so most of your questions should be basic enough for the agent to help.

Research

TIAA advisors research for you, selecting the best mutual funds and ETFs that meet your goals, timeline and align with your personal preferences (aka social responsibility).

Education

TIAA offers a variety of educational opportunities on their website. It’s not all related to investing, since TIAA offers other services, but we could all use help in the personal finance sector once in a while.

TIAA Pros and Cons

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FAQ

Are your investments secure at TIAA?

Yes, TIAA is SIPC insured, which means all invested funds up to $500,000 are covered should TIAA go out of business, as is up to $250,000 in cash. Additionally, any funds in the TIAA Bank Sweep Account have FDIC insurance, which covers each individual up to $250,000.

Can you exclude certain investments?

If you want to exclude a specific ETF or mutual fund, whether due to ethical reasons or otherwise, you can apply for an exception with TIAA by calling customer service. They’ll consider your request and see what they can replace the asset that you want to replace with that’s comparable to what you have.

Can you change your profile?

Yes, life happens and TIAA recognizes that. Some robo-advisors keep you stuck in the same risk tolerance and portfolio for the life of your investment, but TIAA doesn’t. You can log into your dashboard and update your investment profile at any time. If you do, it may change the trajectory of your asset allocation, which TIAA handles for you.

Does TIAA offer tax loss harvesting?

Unfortunately, TIAA doesn’t offer tax loss harvesting, but they have an alternative. They recognize the need to lower the tax liabilities as much as possible, so they use tax efficiency methods by rebalancing your portfolio. This means they may sell assets at a loss before they sell assets at a gain to offset the capital gains and therefore lower your tax liability.

Is investing in TIAA for the socially responsible investments worth it?

If you’re a socially responsible investor, it makes sense to try TIAA. Their low management fee compared to other socially-responsible brokerage firms is low and they have an extensive selection which is surprising for a robo-advisor that doesn’t focus solely on socially responsible investments. Most brokers make ethically responsible investments seem like an afterthought, but TIAA doesn’t.

Does TIAA rebalance portfolios?

Yes, they aren’t transparent on how often they rebalance, but some data leads to the thought that they micro rebalance, checking the portfolio daily, and making minor adjustments. You can always check your portfolio at any time and call with questions if you have concerns.

Is TIAA only for retirement accounts?

You can open a TIAA for a variety of reasons. They offer calculators for retirement, as well as saving for college, and even saving for a house. They have a long-term mindset, but they support investors with a variety of goals.

Alternatives

TIAA vs Vanguard

Vanguard’s robo-advisor has a steep minimum investment of $50,000, reserving this service for wealthy and experienced investors.

Vanguard has an impressive investment list and access to financial advisors. Its fees are the same as TIAA but you get unlimited access to financial advisors, which is important when you have as much as $50,000 invested.

TIAA vs Fidelity

Fidelity Go is Fidelity’s robo-advisor with no account minimum. It sounds great, especially for beginners, but know that Fidelity doesn’t offer tax loss harvesting, which can be a large downside if you have a lot of capital gains.

Fidelity combines the robo-advisor with human advice, giving investors the best of both worlds. Its management fee is along the lines of most robo-advisors at 0.25 percent and is great for beginners, especially those that have a Fidelity account already.

Current Promotions

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Worth It or a Scam?

TIAA is good for those already with an account at TIAA. If you aren’t eligible through your organization, then TIAA won’t be an option. For those that are eligible, it’s a great solution for a robo-advisor as long as you have at least $5,000 to invest.

Summary

TIAA’s robo-advisor is new to the industry, but it’s quickly making a name for itself, especially with its ethically responsible investments. Its goal-based investing and human touch make it a good resource for those that are eligible for the program.

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