Review of Northwestern Mutual Wealth Management

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Updated on Wednesday, December 18, 2019

Northwestern Mutual Wealth Management is a subsidiary of Northwestern Mutual, a Fortune 500 life insurer and financial services company. While Northwestern Mutual has its headquarters in Milwaukee, it is a national organization with branches around the country.

Under the Northwestern Mutual Wealth Management division, the company provides financial advice, investment recommendations and trust services. The firm creates customized investment plans for each client.

All information included in this profile is accurate as of December 13th, 2019. For more information, please consult Northwestern Mutual Wealth Management’s website.

Assets under management: $128 billion
Minimum investment: Depends on the fund, not publicly available
Fee structure: Fixed advisory fee, negotiated on a case-by-case basis depending on the services provided
Headquarters:611 East Wisconsin Avenue
Milwaukee, WI 53202
(866) 664-7737

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Overview of Northwestern Mutual Wealth Management

Northwestern Mutual opened the Northwestern Mutual Wealth Management subsidiary in 1968 to oversee its broker-dealer and investment advisor services. Northwestern Mutual itself launched in 1859 out of Wisconsin. It is a mutual life insurance company, which means the company is owned by the insurance policyholders. The company doesn’t sell ownership to investors on the stock market.

Northwestern Mutual Wealth Management has roughly 1,597 employees, of which nearly all (1,466) perform investment advisory services. Financial advisors receive the support of Northwestern’s Wealth Management Investment Team, which includes CFA charterholders. At the end of 2018, Northwestern Mutual Wealth Management estimated it had over $128 billion in assets under management (AUM).

What types of clients does Northwestern Mutual Wealth Management serve?

Northwestern Mutual Wealth Management typically serves individuals, but its brochure notes that its also provides services for pension and profit-sharing plans, trusts, estates, charitable organizations, corporations and other business entities. It also works with financial professionals who aren’t part of Northwestern Mutual Wealth Management and offers them a fixed income advisory service.

The exact investment minimum needed to open an account will depend on the investments the client picks, but Northwestern financial advisors work with all types of clients, not just high net worth individuals. Northwestern Mutual Wealth Management does offer a high-end advisory service for clients investing at least $1 million in assets with the company through its Private Client Services program.

Services offered by Northwestern Mutual Wealth Management

Northwestern Mutual Wealth Management does not run investment funds itself or provide active portfolio management. The firm offers investment advisory services on a non-discretionary basis, meaning advisors do not have trading authority for client funds. Instead, the firm advises clients about potential investments, and then if the client decides to go through with a portfolio recommendation, Northwestern Mutual Investment Services can process their trades as a broker-dealer to set things up.

If Northwestern Mutual Wealth Management cannot serve a client’s needs, it also provides referrals to other outside firms in exchange for a fee paid for by the other advisor. In addition, the firm offers a fixed income advisory service specifically for other financial advisors.

Clients of Northwestern Mutual Wealth Management could also access the broad services of Northwestern Mutual as a whole, which sells insurance, works as a broker-dealer for investments, offers financial planning services and provides support for business owners.

Here is a full list of services offered by the firm:

  • Investment advisory services (non-discretionary)
  • Financial planning
    • Retirement planning
    • Trust and estate planning
    • Charitable planning
    • Education planning
    • Business planning
    • Tax planning and management
    • Cash flow forecasting
    • Spending analysis and budgeting
    • Long-term care planning
    • Debt management
    • IRA and 401(k) rollovers
  • Insurance/risk management
  • Employee benefit plan fiduciary services; 401(k) consulting; pension consulting
  • Workshops and seminars; newsletters and publications
  • Collaboration with clients’ lawyers, accountants, etc.
  • Brokerage services

How Northwestern Mutual Wealth Management invests your money

When you contact Northwestern Mutual Wealth Management, it will partner you with a local financial advisor. The advisor will go over your portfolio size, risk tolerance, financial goals and time horizon.

With that information, the advisor will suggest a customized portfolio for your needs. If you’re interested, you then make the investments through Northwestern Mutual Investment Services, the firm’s broker-dealer service that offers stocks, bonds, mutual funds, ETFs, annuities, CDs and other assets.

On its Investment Services page, Northwestern Mutual states it is focused on long-term investment results and diversified portfolios. The firm does not offer its own actively managed portfolios and is not focused on trying to create above-average market returns, especially in the short term. The firm does not offer the more complicated investment strategies seen at other registered investment advisors (RIAs), like trying to time the market to earn a higher return.

Fees Northwestern Mutual Wealth Management charges for its services

Northwestern Mutual Wealth Management advisors do not earn performance-based fees or charge commissions for making trades. The firm believes this helps it focus on long-term performance. Instead, what you owe will be a percentage of your assets under management, which you pay quarterly.

According to its Form ADV, Northwestern Mutual Wealth Management can also make money through referral fees, when it sends your account to another advisor who is a better fit, and through fixed fees.

Once again, the exact amount you will owe depends on what investments and services you sign up for, so you’d need to consult with an advisor to find out. There aren’t standard fee charts because Northwestern Mutual Wealth Management customizes each client’s investment portfolio.

Northwestern Mutual Wealth Management’s highlights

  • Awards for its size and reputation: Fortune named Northwestern Mutual one of the World’s Most Admired Companies in 2019. InvestmentNews also ranked Northwestern Mutual Investments Services as the No. 5 largest independent broker-dealer, by revenue, in 2019.
  • Customized investment recommendations: Northwestern Mutual Wealth Management does not offer a one-size-fits-all portfolio for all its customers. Instead, your advisor will customize their investment recommendation based on your personal financial needs and situation.
  • No performance or trading fees: Northwestern Mutual Wealth Management advisors charge an advisory fee based on your needs and investments. The firm doesn’t make commissions on trades or for your portfolio’s performance, which can drive up costs.
  • Broad service offerings besides investment management: As a large Fortune 500 company with multiple divisions, Northwestern Mutual offers a wide range of financial services besides investment advice, including insurance and business services. Additionally, you can find a Northwestern Mutual branch and advisor nearly anywhere in the country.

Northwestern Mutual Wealth Management’s downsides

  • Not a pure investment specialist: Northwestern Mutual Wealth Management has not won any awards for its overall investment performance. The firm does not try to beat the market to earn above-average returns and does not actively trade in your portfolio, as many other investment advisory firms do.
  • Other financial activities outside of advisory services: Northwestern Mutual originally started as a life insurance company and that’s still one of its main services. Additionally, the firm also acts as a broker-dealer. While the firm’s brochure states it does not believe these other activities interfere with its objectivity in providing advisory services, it still could mean that your advisor has other incentives and focuses beyond just managing your investments. For example, the firm could also make money selling insurance.
  • Difficult to predict investment cost without a meeting: Northwestern Mutual Wealth Management does not publicly list its fees and investment minimums. It depends on each custom portfolio. This means you can’t easily compare their costs without contacting the firm first.
  • May require you to navigate multiple divisions and referral partners: Northwestern Mutual Wealth Management is just one of several subsidiaries at Northwestern Mutual. The company also offers funds from hundreds of partners as a broker-dealer and makes referrals to other advisors. Sorting out all these different groups may get complicated.

Northwestern Mutual Wealth Management disciplinary disclosures

The SEC supervises RIAs like Northwestern Mutual Wealth Management to make sure they comply with rules and regulations. If an RIA has any criminal charges, regulatory actions or legal actions on its record, the firm is required to disclose the event in its Form ADV and official brochure filed with the SEC.

Northwestern Mutual Wealth Management currently lists five disciplinary disclosures in its Form ADV. None are recent, as the most recent case was settled back in 2009. The firm’s disclosures include:

  • Improper marketing and sales activities: Between 2006 to 2008, Northwestern Mutual did not have the right supervisory procedures in place for a type of investment (Auction-Rate Securities). Northwestern paid a fine and offered to buy back these assets from investors. Through 1998 to 2001, some of the firm’s representatives also didn’t use the right terms to market variable life insurance. Northwestern Mutual paid a fine and for a year filed their variable life insurance marketing materials with the government to make sure they were compliant.
  • Mishandled mutual fund sales: Through 2002 to 2004, FINRA found that Northwestern Mutual did not have the right systems in place to find opportunities for mutual fund investors to buy funds at the proper net asset value (NAV), which means investors did not receive the best purchase price. Northwestern paid a fine, compensated clients who were harmed and agreed to tighten up its procedures.
  • Failures to report complaints in a timely manner: In 2005 and 2006, FINRA fined Northwestern Mutual and some of its employees because they didn’t file the proper documents for complaints and failed to update their disclosures with the proper information.

Northwestern Mutual Wealth Management onboarding process

If you are interested in learning more about Northwestern Mutual Wealth Management, you first need to set up an appointment with one of the firm’s financial advisors. Through its website, you can fill out a short questionnaire listing your contact information, top financial goals and income. The firm will then pair you with a local advisor who is a match for your needs. You can also look up specific advisors or try contacting a local Northwestern Mutual branch to schedule a meeting.

During the first appointment, the advisor will get to know your financial situation, risk tolerance, investment needs and timeline. They will use this information to put together a customized investment plan, using the Northwestern Mutual resources and assets. If you’re happy with the plan, you can transfer over your money to launch the portfolio using the firm’s broker-dealer, Northwestern Mutual Investment Services.

From there, Northwestern Mutual notes that your advisor will regularly update your plan and meet with you to make sure your portfolio continues to stay on track. However, the advisor themselves will not have discretionary trading authority for your portfolio so you’ll need to approve any changes yourself.

The bottom line: Is Northwestern Mutual Wealth Management right for you?

While the firm’s investment products and philosophy aren’t flashy, Northwestern Mutual Wealth Management has an excellent overall reputation. It’s also nice that the firm doesn’t limit itself to working with high net worth individuals. You could set up a meeting and learn about possibilities regardless of your income.

If your goal is to create a long-term, uncomplicated investment plan that’s customized to your needs, the firm could be a good fit. Northwestern Mutual could also be worth checking out if you’re looking for services on top of investment management, like insurance and general financial planning.

On the other hand, if you’re bringing in a large portfolio and want a more sophisticated trading approach, you may want to consider a more investment-specialized RIA. This type of firm may be more focused on generating above-market returns and could have advisors actively trade your portfolio, rather than just giving you general advice like Northwestern Mutual Wealth Management does.