Northwestern Mutual is a large financial services business that provides fiduciary and fee-based financial planning, investment management and advisory services. It offers investment products and retirement plans through another two subsidiaries, Northwestern Mutual Investment Services, which is a registered investment advisor (RIA) and broker-dealer, as well as another RIA called Northwestern Mutual Investment Management Company.
Northwestern Mutual Background
Northwestern Mutual was founded as a life insurance company in 1857 in the state of Wisconsin, which at the time had been in existence for just nine years. More than a century later, in 1968, Northwestern Mutual Investment Services and Northwestern Mutual Investment Management Company, the Northwestern Mutual subsidiary that's a registered financial advisor firm and a broker-dealer, was established.
In its current form, Northwestern Mutual offers insurance, investment products and financial planning and investment management services.
Northwestern Mutual Client Types and Minimum Account Sizes
The Milwaukee-based company manages assets for non-high-net-worth and high-net-worth individuals, as well as banks and thrift institutions, trusts, estates, pooled investment vehicles, charitable organizations and insurance companies.
Northwestern Mutual also offers portfolio management services for fund investors. These typically include institutional clients and high-net-worth investors with at least $5 million in assets.
Services Offered by Northwestern Mutual
Northwestern Mutual as a whole offers investing, financial planning and insurance services and products:
- Investing services
- Planning services
- Financial planning
- Retirement planning
- College savings planning
- Private client services
- Estate planning
- Long-term care planning
- Business services
- Insurance
- Life insurance (whole life insurance, universal life insurance, term life insurance)
- Disability insurance
- Long-term care
- Annuities
Northwestern Mutual Investment Philosophy
Northwestern Mutual develops a long-term investment strategy for its clients based on their risk tolerance, time horizon and goals. The firm believes that identifying an investor’s level of risk tolerance is key to determining a suitable portfolio. Its portfolio models range from conservative to moderate to aggressive, with more conservative portfolios having a much higher ratio of bonds to stocks and aggressive portfolios having a much higher ratio of stocks to bonds.
In addition to stocks and bonds, Northwestern Mutual can manage IRAs, mutual funds, 401(k) plans, ETFs, 529 college savings plans, annuities and certificates of deposit (CDs).
Northwestern Mutual manages risk in clients' portfolios by diversifying through asset allocation. To maximize your portfolio's success, it recommends diversifying across industries, asset classes and companies. It believes that it’s also crucial to take inflation and taxes into account when making investment decisions. To overcome these impacts, the firm recommends a larger allocation to stocks or tax-deferred investment vehicles.
Once a client's portfolio is created, Northwestern will periodically rebalance it and review the client's goals and asset allocation strategies. Northwestern Mutual discourages attempting to time the market, instead espousing starting early and staying the course with a chosen investing strategy.
Fees Under Northwestern Mutual
Northwestern Mutual negotiates advisory fees on a case-by-case basis. Fees vary depending on the services that the company provides to clients. According to its Form ADV that's filed with the SEC, Northwestern Mutual may earn fixed fees and referral fees.
Northwestern Mutual Awards and Recognition
Northwestern Mutual, which currently ranks No. 111 on the 2022 Fortune 500 list, has been recognized numerous times in recent years. In 2017, Fortune ranked Northwestern Mutual No. 1 for "Quality of Products and Services" and "Financial Soundness."
It also has the highest financial strength ratings from three of the four main assessment companies, Moody's, A.M. Best and Fitch. Its rating from the S&P is the second-highest on its scale, at AA+. The company also ranked as a top 10 U.S. independent broker-dealer in terms of 2022 revenue.
What to Watch Out For
According to its government filings, Northwestern Mutual Investment Services (NMIS) has a total of five disclosures.
Northwestern Mutual has a complex structure that prospective clients should be aware of, as the company has a number of interconnected subsidiaries that work together and may have referral agreements. All Northwestern Mutual financial advisors and wealth management advisors are registered representatives of Northwestern Mutual Investment Services, a broker-dealer and registered investment advisory, and they can also provide advisory services as Northwestern Mutual Wealth Management representatives. They also may be licensed life insurance agents.
Northwestern Mutual Investment Services has a brokerage services agreement with Northwestern Mutual Wealth Management, and it offers support for its investment advisory services. Though Northwestern Mutual Investment Services refers investors to advisors, it does not offer advice on certain investments, instead screening and selecting sponsors who then use their own investment strategy. However, some Investment Services advisory representatives may also be Wealth Management financial advisors.
Opening an Account With Northwestern Mutual
If you are looking to open up an account with Northwestern Mutual, you can go onto the firm's website. Northwestern Mutual has many offices across the nation.
All information is accurate as of the writing of this article.
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