Most people probably think of insurance when they think of Northwestern Mutual.
Yet, despite its 160-year legacy as a life insurance provider, the company has made a name for itself in the wealth management space over the last 10 years.
On Tuesday, Northwestern Mutual’s wealth management business – Northwestern Mutual Wealth Management Co. – announced that it reached $100 billion in assets under management as of Dec. 31.
Christian Mitchell, president of Northwestern Mutual Wealth Management, spoke to ThinkAdvisor about hitting this milestone. According to Mitchell, client investment AUM has more than doubled from 2006 to 2016.
Mitchell said the company’s strong life insurance history has helped drive this growth because the company already had deep relationships established with clients that often lasted “decades and decades.”
“As we brought investments into the picture and we had these deep relationships and this knowledge of what clients wanted, we were able to … drive tremendous growth in a short amount of time,” Mitchell said.
In 2006, Northwestern Mutual created its wealth management company, upgraded its advisory program and started the shift to a more “fully advisory approach,” Mitchell said.
Today, the company has more than 7,000 financial professionals “who are working day-to-day with individuals and families to create and manage personalized financial plans,” according to Mitchell.
“More and more of these financial professionals are building investment plans for their clients to help them grow, preserve and protect their wealth,” said Mitchell.
“We have advisors that were insurance only and now are some of the largest wealth managers in the communities they live,” Mitchell said.
According to Northwestern Mutual’s 2016 Planning & Progress Study, the majority of Americans report that integrating solutions that both grow and protect their assets is one of the most important factors in achieving their financial security.
Through its Investment Services and Wealth Management units, Northwestern Mutual provides individuals with a variety of investment products and services to help with financial protection, wealth accumulation, and estate preservation and distribution. These solutions include brokerage and advisory services, trust services and discretionary portfolio management for high-net-worth individuals.
Northwestern Mutual Investment Services has been consistently ranked among the top 10 independent broker-dealers, as measured by total revenues, by leading investment industry publications. (NM is among the top five IBDs based on revenue, according to Investment Advisor magazine.)
Record Inflows Into New Active/Passive Investment Solutions
In concert with the overall growth of Northwestern Mutual’s retail investment products and services, the company has also seen a growing use of the active/passive models.
Northwestern Mutual announced that the company’s Signature Portfolios Active/Passive models, first introduced in early 2016, have surpassed $2 billion in assets through the end of 2016.
And Mitchell predicts the models will hit the $3 billion mark soon, as clients seek lower costs and dynamic asset allocation.
The active/passive models, which are offered by the wealth unit, use both actively managed mutual funds and passively managed ETFs in an overall portfolio, with the goal of providing investors with competitive, risk-adjusted returns over the long term. “It takes away from never-ending unresolvable debate of active versus passive,” Mitchell said. “It transcends some of the things we’re never going to resolve.”
According to Mithcell, the decision to use active or passive solutions is considered by many in the investment world as an either-or proposition; an investor is either in the “active” or “passive” camp.
However, at Northwestern Mutual, “we believe it’s a both-and approach,” Mitchell said
For its active/passive models, Northwestern Mutual also uses a dynamic asset-allocation selection overlay to provide “measured tilts” from the static long-term strategic asset allocation, based on the intermediate-term attractiveness of an asset class.
Each tilt is evaluated in the context of the overall portfolio’s risk and return characteristics by Northwestern Mutual’s team of investment professionals and portfolio managers, led by chief investment strategist Brent Schutte.
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