Source: http://www.mccallumgroupinc.com/case_study_tiaa.html
Timestamp: 2013-05-18 13:22:28
Document Index: 370986921

Matched Legal Cases: ['§ 770', '§ 770', '§ 403', '§ 770', '§ 770', '§ 770']

McCallum Group Inc. - What We Do - Results/Case Studies - TIAA-CREF
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TIAA-CREF is a $380 billion financial services group serving people in the academic, medical and research fields for more than 85 years. Situation: TIAA-CREF wanted to improve its ability to offer financial services to educators in the California market. In some districts, only high cost investment alternatives were available because no-load, low-cost vendors like TIAA-CREF did not have large sales forces.
Teachers were frequently overwhelmed by the choices available to them, and did not understand what they were paying for when they chose particular products. Public school teachers whose districts offered 403(b) plans had as many as 150 or 200 vendors offering 403(b) investments to them, and typically got little or no help from their employers in trying to choose investments. The number of vendors offering products increased as a result of Insurance Code § 770.3, whose purpose was to protect an employee from being injuriously impacted by a school district’s dealing with third party vendors.
Insurance Code section § 770.3 prohibited a school district from requiring the placing of an annuity through particular insurance agents, brokers, or companies, and specifically authorized an employee to designate the licensed agent, broker, or company through whom the employer must arrange for the placement or purchase of a Section 403(b) annuity. Challenges & Opportunities: Client’s perceived self-interest precluded it from being a good sponsor for legislation.
The bill faced strong opposition from some 403b vendors.
Solutions/Outcomes:
The Governor signed AB 2506 (Steinberg), which requires 1) vendors seeking to offer § 403(b) retirement investment products to employees of local school districts, community college districts, and county offices of education to register their products with the California State Teachers’ Retirement System (CalSTRS) Board, and 2) the CalSTRS Board to provide the districts and county offices of education access, via an Internet website, to an impartial information bank comparing the registered vendors and the investment options being offered. The new law included language specifying that, for purposes of restricting the use of 403(b) investment products provided to employees of local school districts, community college districts, and county offices of education by those vendors and investment products registered with the board, the provisions of § 770.3 of the Insurance Code do not apply.
The first Web site of its kind in the nation, 403bCompare.com went live on November 30, 2004. The site received the 2005 Leadership Recognition Award from the National Association of Government Defined Contribution Administrators. Among other things, the Web site offers information on 403(b) plans, available investment options, fees involved, and product performance.
McCallum Group, Inc. identified and brought together potential supporters, one of which (United Teachers of Los Angeles) decided to sponsor legislation to address the problem. The California Teachers’ Association ultimately became a co-sponsor.
We also garnered the support of:
AFT College Faculty Guild, California Teachers Association (CTA)
Community College League of California Faculty Association of California Community Colleges (FACCC)
Small School Districts' Association.
McCallum Group found an author for the legislation, the then Chair of the Assembly Appropriations Committee, one of the two fiscal committees that would hear the bill.
In drafting the bill, we started with language that would have made Insurance Code § 770.3 inapplicable; subsequently helped draft bill amendments that allowed each local school district, community college district, and county office of education to select and provide options to its employees from among the registered vendors; and finally removed amendments to Insurance Code § 770.3.
McCallum Group met with bill opponents and the author’s office to obtain consensus on the bill’s provisions, and worked closely with the client in helping to draft bill amendments.
We participated in a workgroup that provided input into the design of the Internet Web site, which is intended to help employees of California's local school districts, community college districts or county offices of education make better-informed investment decisions. More Case Studies: