No one heard much about TIAA-CREF during the financial crisis, which was great news for Roger Ferguson. Just months earlier he had become CEO of the giant financial institution (No. 95 on the Fortune 500) that manages retirement investments for thousands of university professors and other employees of educational, medical, government, and cultural institutions. It came through the crisis fine and has since grown to almost $900 billion of assets under management. Ferguson, 63, was vice chairman of the Federal Reserve from 1999 to 2006. He talked recently with Fortune about crisis leadership, retirement misconceptions, and much else. Edited excerpts:
Where are you finding investment value now?
We still think there are opportunities in alternative investments—timber, agriculture, real estate, etc. In liquid investments, many people think small-cap companies are likely to have a bit of a run. A number of folks think Europe and perhaps even Asia, places that have been heavily beaten down, are subject to a rebound. But we try not to be market timers, so we follow a very disciplined, broadly diversified approach, and we recommend that to everybody.
Activist investors have been in the news. Have the Icahns and Einhorns of the world been good for shareholders?
It’s too early to say. The reason is that in many cases they’re interested in driving up equity valuations in a short period of time. There’s another approach to active investing, which we follow, which is trying to work with management, develop a better strategy, and see that executed over time. That should produce much better returns, perhaps over a longer period and a little more sustainably.
Some researchers say the retirement crisis is overhyped. What’s the truth?
The truth is we have a retirement challenge that could become a crisis if we don’t address it. Social Security is totally capable of paying all its obligations now—but in the next 15 or 20 years, if we do nothing, Social Security will be able to pay only 75% of its obligations. It’s not yet a crisis, but that puts a big premium on Social Security reform sooner rather than later.
What’s the most unrealistic expectation that people have about retirement?
It’s that their retirement is going to be like their grandfather’s retirement. People don’t realize that life expectancies have gone up, that we are healthier and therefore could have more active and longer retirements than they might imagine.
What’s the most valuable thing you learned from leading TIAA-CREF through the financial crisis?
One is foresight. My team and I all had a sense that things were unraveling maybe more quickly than others had seen. The ability to look a little into the future is very important. The second thing is to communicate, communicate, and, did I say, communicate. Make sure people understand how you are seeing the world and why you’re making the decisions you’re making. That allows them to align their decision-making to your decision-making.
This story is from the March 1, 2015 issue of Fortune.