I don't know that specific annuity, but I did recently go on my own journey of trying to untangle the true cost of other TIAA annuities (Traditional & Real Estate) plus CREF funds in an IRA that my dad inherited when my mom passed away last year. I wound up throwing up my hands and giving up. But in my search to uncover the true fees, I came across an
article on Yahoo! news by a CFA who was surprised by how high TIAA's fees are. I shared it with my dad, and I think having a third party (certified professional) confirm what I'd been telling him, convinced him to move that IRA to Vanguard.
He has his own retirement account at TIAA because he's a retired professor and that was the option available to him when he started his job (that one would be much more complicated to untangle, and is not something he asked me for help with). My mom on the other hand purposely moved some of her retirement funds to TIAA because of it's reputation. And that's the thing, for teachers of their generation it did have a good reputation and it may even have been a decent option at that time. However, today there are better and simpler investing options easily available.
Just in trying to find the Yahoo! news article again, I also came across this
NY Times article saying similar things about TIAA having high fees and not living up to its reputation.
My advice would be to say that the fees were too complicated to get a good handle on (which, of course, the financial industry does on purpose), but that TIAA specifically and annuities in general tend to charge high fees that aren't justified and that is why you prefer index investing. You can cite the articles I linked to, in which professionals who have looked at TIAA products much more closely back you up in this assessment.
Money can be hard to talk about with friends. I certainly wouldn't fault you for sending her to talk with a financial advisor. But I'll say, the thing with smart people is, they're curious. So if you pique her interest, she'll do the rest.
If she is interested in index investing, I think a great introduction is
JL Collins' advice for his daughter. It has the added benefit in this situation that since she's doing well financially, she's probably already checking some of those boxes on his list, which gives her a confidence boost. And of course, if she wants more, there's the
stock series.
For me it was that historical chart in
Part II that immediately convinced me that investing in the stock market for the long term was the only way to go. Now this was after a decade of being in the workforce and saving money, most of which was in a savings account losing value to inflation year after year. I consider myself a very intelligent person, but they don't teach personal finance in school. Everyone has their own money hangups. For me, I came from a family that didn't talk about money, and I picked up on my parents' disdain for people who focused on making lots of money. My parents knew nothing about investing, they had pensions. So I didn't know what I didn't know. Many very smart people have little knowledge of personal finance. Your friend has nothing to be ashamed of.
