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Q&A with Nuveen CEO Jose Minaya

Jose Minaya Q&A

next issue no. 11: On the horizon

Q: Why is it important to you and to Nuveen that we work toward closing the racial retirement gap?

First, the racial gap on the retirement side is deeply personal to me. I grew up as a first-generation Dominican Republican American in New York City in a home where two hardworking, loving parents weren’t investing in a 401(k). There were very few resources and little to no education available to us about the importance of retirement savings. This is true for far too many Americans.

When I entered the financial services industry nearly 30 years ago, I started to learn about these topics. It granted me the ability to see the importance of retirement savings in accumulating wealth and securing a happy retirement.

This is something that people just don’t talk about a lot within the Hispanic American community. Many engage outside methods, almost gray markets, when they think about saving. Your proverbial “money under the mattress” approach. That to me is a massive failure of our country and our industry. Here at Nuveen, we have the ability to address that need in partnership with members of that community.

Second, over the years I’ve come to realize that these issues represent a massive business opportunity for the entire financial services industry. If we think about the Hispanic American community on its own, the buying power is a massive basket of capital. That community represents nearly $3 trillion of GDP in its own right.1 It is also a young population in the U.S., with a median age of 30, versus a median age of 41 for non-Hispanic Americans.2

If we can get our penetration rates for Hispanic Americans into financial services or retirement products to a comparable level to other communities, that is a massive opportunity from a business perspective. What if we lifted those engagement percentages to 30, 40, 50%? That would be a huge influx of capital into the markets, into our industry and the wider economy. This benefits all of us in the long run.

This is a critical moment for Nuveen and the broader financial services industry. It goes back to our underlying mission that we’re long-term asset managers. I look at this and it seems so obvious to me because there’s going to be a first mover advantage to tapping into these communities.

Q: What idiosyncratic factors affect retirement planning for the Hispanic American community?

There are several significant barriers affecting Hispanic Americans’ ability to effectively save for retirement. As a firm, we have to understand the different cultural nuances in order to adequately serve these clients. For example, the impact of remittances. I grew up in an environment where, especially for a lot of first-generation people, they’re regularly sending money back home. It’s part of the whole agreement of even coming to this country and trying to build a life here; you’re trying to lift your entire family. There are strong cultural expectations around that.

The TIAA Institute releases an annual Personal Finance (P-Fin) Index. It is a barometer of financial literacy based on a 28-question survey.3 Throughout the survey we saw that:

There’s also a culture around trust. When you look at how the entire financial services industry is educating clients and prospects, we are often guilty of presenting a “one size fits all” approach. This simply won’t work. Here at Nuveen, we have a Spanish-speaking sales desk dedicated to serving our Spanish-speaking clients. We are translating materials and creating materials in Spanish, but there is still a long way to go. So, we have to get better at examining the different demographics and asking ourselves, “Are we putting enough effort into truly understanding the communities we’re trying to serve?” We have to engage with a community in order to really penetrate it.

Q: What role does financial literacy play in finding a solution?

Financial literacy is an extremely important component of all of this and the different businesses across the financial services industry all have a part to play. The TIAA Institute P-Fin Index also found that Hispanic Americans answered only 38% of the questions correctly. Whereas the number for white Americans was 53% and for Asian-Americans it was 55%.

Education is key and to be effective, it must be tailored to specific audiences. Just as we cannot address individuals just entering the workforce the same way we address people who are near retirement, we cannot address Hispanic Americans the same way we address Black Americans. We need to be able to find creative ways to share what we do.

I often describe our business as a factory floor. The main job we have is to manufacture something that is going to hold its integrity. So, we have a bias toward educating because it helps drive the capacity of our factory floor. It’s why we exist. It is our central mission, and we want to be able to continue to cast that message in the broadest form possible.

There are overlapping layers of responsibility between us, plan sponsors and financial advisors in doing this. Helping our key stakeholders, namely institutions, participants and plan sponsors, ultimately helps us. It’s a symbiotic relationship. Additionally, we need to talk to leading financial advisors about why we believe in closing the retirement gap and the promise of guaranteed lifetime income. Those financial advisors can then share the message with their clients.

Q: What role does guaranteeing lifetime income play in solving this issue?

I describe guaranteeing lifetime income as the original promise of the retirement industry. We began with the concept of Social Security, then the concept of defined benefit plans and then, as the world opened up, plan participants were given a lot more choices. They began asking themselves a series of questions. What funds should they buy within their 401(k)? Should they sit inside the default option? How are those ideas and choices being compared? To me, the most consistent thing to keep asking is, what is the desired outcome of retirement?

Starting on the day they retire, participants need enough money in the bank to receive a stream of income that they can live on. That is a participant’s most basic need. All we’re doing is going back to the beginning and asking, how do we get people a level of certainty that they are guaranteed an income stream that they can count on to be there year after year? How can we ensure that people have enough in that income stream to be able to retire with dignity? This is what retirement plans were always meant to be and as a nation, that is the purpose that we have to rediscover together.

Q: What additional work is Nuveen doing with Hispanic American plan participants specifically? What impact does this have?

As I mentioned earlier, we have a Spanish-speaking sales desk available to our Spanish-speaking clients. We are also translating our written material into many different languages, including Spanish. Now we have to go beyond that.

We, as senior leaders, have to go on road shows and get out into Hispanic American communities. Many of our clients currently are Hispanic Americans so we have to make sure we are adequately supporting them and their savings goals. We can’t just translate materials from English to Spanish. We need specific people on our team that specialize in communicating with these participants. We’re asking ourselves, are we leaning into that culture and understanding that community? If we’re talking about the benefits of guaranteed lifetime income, we need to talk about it in a way that really resonates with that community.

When we go to open an office in Tokyo or Germany, we have to think about the community we’re entering. We can’t just send Americans there. We hire locals and lean on their expertise. We tailor product offerings and educational programs to those specific needs. It’s an obvious best practice. So why would we not do that with our Spanish-speaking clients within the U.S. as well?

Nationwide, more than 80% of Certified Financial Planners® identify as white. Less than 3% identify as Hispanic Americans.4 We need more diversity across the financial services industry in order to meet the needs of these clients.

Building on that, the most important thing for us relates to how we get our products out to the marketplace. So, we’re asking ourselves, what can we be doing to create a better message? We need to get to know our clients and customers really well and tailor the message to them individually rather than having one monolithic message. Our factory floor is extremely good at manufacturing a widget, and that widget is guaranteed lifetime income. Yet that is not enough. We need to position ourselves so people see that it’s special and is key to securing a dignified retirement. We’re still learning how to do that, but we are extremely proud to be on this journey.

A recent TIAA survey conducted research into the Hispanic American population, with findings that highlight the need to better serve this community.*

The Institute found that:

In this issue
Retirement What plan sponsors need to know about lifetime income
The conversation around guaranteed lifetime income has been steadily growing since the SECURE Act of 2019 changed safe harbor provisions to protect in-plan annuities.
Retirement Having the lifetime income conversation with participants
Integrating the needs of plan participants into any major change to a retirement plan is paramount to ensuring consistent and lasting engagement.
Retirement How we got here: A history of retirement in the United States
We look back through the history of the retirement industry in the U.S., looking at how we got to where we are today, and why we think Nuveen and TIAA are well placed to lead the industry into the future.
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Any guarantees are backed by the claims-paying ability of the issuing company.

Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association of America (TIAA).

The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example. Past performance is no guarantee of future results. Investing involves risk; principal loss is possible.

This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy, sell or hold a security or an investment strategy, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her financial professionals.

This information does not constitute investment research as defined under MiFID.

Please note that this information should not replace a client’s consultation with a tax professional regarding their tax situation. Nuveen is not a tax advisor. Clients should consult their professional advisors before making any tax or investment decisions. Nuveen, LLC provides investment advisory solutions through its investment specialists.

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