TIAA announced Tuesday a major effort to modernize and transform its recordkeeping and participant services offerings as it continues to compete in an industry beset by slim margins and mounting demands.

After a lengthy review of options, TIAA signed a multi-year deal with information and technology services and consultancy Accenture to support parts of TIAA’s recordkeeping operations, according to the announcement and conversations with senior executives. Meanwhile, TIAA will maintain control of the retirement plans and recordkeeping services, plan data and “all aspects of relationships” with plan sponsors, participants and plan advisers.

The deal, scheduled to go into effect in 2025, includes an offer to 1,500 TIAA employees to take roles at Accenture, with about half located in the U.S. and half in India. TIAA declined to provide a geographic breakdown of those roles but said employees will receive offers for jobs in offices near their current locations.

“We feel this is the right time to build a strategic partnership, with the advent of [artificial intelligence], with the advent of digital ecosystems, with the advent of cloud and modern technologies,” says Sastry Durvasula, TIAA’s chief information and client services officer, who has been leading the transformation of TIAA’s technology and operations.

Durvasula says after looking at the various options, the firm felt Accenture would be the right partner due to its scale and investments in artificial intelligence, along with its experience in updating systems for financial services firms.

“There is going to be a focus on modernization of technology, our core processes and digital experiences, particularly targeting our plan sponsors and participants,” he says. “I think [plan and participant services] are rife for disruption as we try to transform recordkeeping in this digital age and revolutionize the industry.”

The relationship with Accenture will include a focus on some of TIAA’s specialty areas, including 403(b) plans and in-plan retirement income annuities.

Ray Bellucci, TIAA’s head of recordkeeping and chief administrative officer for retirement solutions, added that clients have been asking for services on which, despite seeing progress in recent years, the firm needs to move more quickly.

“The pace of change has been accelerating, and our clients have said, ‘We need you to keep up with that,’” Bellucci says. “As the leader in lifetime income, we are not just keeping up with it—our goal is to leapfrog ahead of it.”

The firms did not disclose the terms of the deal but noted that it is a multi-year project and a “major investment” from TIAA.

New Day

The partnership is reminiscent of a 2020 deal that Vanguard penned with Infosys to take over operations of its recordkeeping services; that deal led to the shift of about 1,300 employees over to Infosys.

But TIAA’s move comes as the industry has faced many changes in just the last few years. For one, recordkeepers continue to adapt to implementation of the provisions of the SECURE 2.0 Act of 2022, which are still rolling out and require recordkeeper builds that, in some cases, are complex to implement and still awaiting further clarification from regulators. Meanwhile, a focus on lower plan fees from plan sponsors and advisers has already led to massive recordkeeping consolidation, and further pressure from litigators seems inevitable.

TIAA itself, along with Morningstar Inc., is facing a recent legal complaint led by law firm Schlichter Bogard LLP. In that complaint, participants are alleging the firms pushed them into advice solutions that, in turn, put them in relatively higher-priced investment solutions, including in-plan annuities. TIAA has denied the charges, saying they are without merit and that the firm “does not put its own interest ahead of our clients.”

The partnership with Accenture will seek to create improved services for plan sponsors and better outcomes for participants, according to Tuesday’s announcement.

“The strategic partnership will develop capabilities that will help individual plan participants create a more secure financial future through new digital features—from the moment they enroll, to managing their retirement plans, to when they’re ready to retire, and into retirement,” TIAA wrote in the announcement. “Planned enhancements include access to innovative retirement planning solutions featuring simple ways to track progress toward their retirement readiness.”

The partnership will also bring new digital capabilities and AI-driven tools to TIAA relationship managers working with plan sponsors and consultants, the firm wrote. These clients “will see improvements that include an elevated digital experience and expanded reporting capabilities with access to data and insights that can be used across their practice.”

Recordkeeper Evolution

In recent years, TIAA and its asset management arm, Nuveen, have been advocating for defined contribution plan sponsors to implement a pension-like paycheck for retirees using annuities; it is a method the firm has been using for a century in 403(b) plans, and TIAA already offers a product that can be used as the qualified default investment alternative for plan sponsors.

Those solutions, however, are still in the early innings for many plan advisers and sponsors, with unanswered questions about cost, portability for participants and the ultimate use case when a participant hits retirement age.

Meanwhile, TIAA still dominates the 403(b) plan space that includes plan sponsors in the education and health care sectors. It ranks first in assets for those plans among recordkeepers that took the 2024 PLANSPONSOR Recordkeeping Survey. It also ranked fifth for total employer-sponsored DC programs by assets and sixth by participant count. 

Through the Accenture partnership, plan advisers and sponsors should start seeing new capabilities across enrollment, money management, retirement education and advice planning solutions, according to the firms.

Meanwhile, TIAA is embarking this week on outreach with clients to explain the new partnership and assure them their current relationship managers and setups will not be disrupted, according to executives.

Many of the TIAA employees being offered roles with Accenture primarily support back-end recordkeeping operations and will often perform similar roles, but “with automated tools and enhanced processes.”

Durvasula noted that many of the senior-level employees informed of the move have already accepted the transfer; he is hopeful the majority of other employees will as the plan gets rolled out.

“Our new colleagues will have access to Accenture’s technology, data and AI capabilities and the resources to build skills for the future and deliver even greater business value to clients,” said Manish Sharma, CEO of Accenture North America, in a statement.

In a May 2023 blog post, Accenture Managing Director Tim Hoying wrote about the changing landscape of retirement plan recordkeeping. In it, he argued that for recordkeepers to compete, they needed one of three core attributes: large plan specialization, small plan specialization at volume and services outside the traditional 401(k) plan.

He also argued that, across all three types, “the winners would be those that demonstrate success in activating their participant base to engage with value-added, holistic advice services.”

Durvasula makes the case that the new partnership with Accenture will help tee up TIAA to be serving plans and participants for another century.

“This will reimagine our capabilities for the next 100 years,” he says. “We fundamentally believe that [adding] a partner of Accenture’s caliber is not only going to address the needs of yesterday and today, but position us for tomorrow.”