2013 Policyowners' Examining Committee Report
Since 1907, a group of three to five policyowners has been given unrestricted access to the company to independently evaluate its operations, management and strategic plans. Each year, the committee’s findings are published in the Annual Report. The 2013 committee’s complete report is printed here.
John Schlifske (center), chairman, president and chief executive officer of Northwestern Mutual, meets with the 2013 Policyowners’ Examining Committee. Members include: (left to right) Nicholas Brathwaite, founding partner of Riverwood Capital, Menlo Park, Calif.; Bryan Timm, (chair) chief operating officer and executive vice president of Columbia Sportswear Co., Portland, Ore.; Barbara Daniel, senior vice president and treasurer of Sirius XM Radio Inc., New York; Esther Campi, chief executive officer of Campi & Co., Chapel Hill, N.C.; and Jose Motta, vice president of total rewards & shared services for Dean Foods Co., Dallas.
As members of this year’s Policyowners’ Examining Committee, we’ve had the opportunity to meet with Northwestern Mutual leaders and learn about the company’s performance, operations and strategic direction for the future. Through this experience, we were positively impressed by management’s transparency and openness in our interactions. As clients, each of us has trusted our own financial security to Northwestern Mutual. After this experience, we are confident that our trust in Northwestern Mutual is well placed.
The company’s strong foundation is built on its exceptional financial strength, reflected in its record surplus level and expected dividend payout. In 2014, Northwestern Mutual expects to pay $5.2 billion in policyowner dividends, the largest payout in company history. Additionally, for the first time the company’s total surplus has exceeded $20 billion. This financial strength is a key differentiator for Northwestern Mutual.
Northwestern Mutual’s foundation is also built on a suite of products and services, delivered through a comprehensive planning approach that offers excellent long-term value. The dedicated and highly trained financial representatives who deliver those products, services and planning tools are a clear competitive advantage. Company leadership is focused on strengthening this foundation by growing the number and productivity of financial representatives in order to help deliver financial security to more people.
We were also impressed by the company’s strong management team and the commitment of both the home office and the financial representatives to not just doing things right, but more important, “doing the right thing” for the clients who put their trust in Northwestern Mutual.
Meeting the growing needs of its clients for over 156 years has been a hallmark of Northwestern Mutual’s strategy. To continue to address those needs, the company’s strategy and brand have evolved from that of predominantly a life insurance company to a comprehensive financial security business. With an eye toward the future, the company is evolving to meet the challenges of a highly competitive financial services marketplace, to address the preferences of the nation’s changing demographics, and to adapt to the rapid pace of technological change. Following are three areas that will position Northwestern Mutual for continued success: an enhanced and more consistent client experience, additional financial representative support, and a company culture that is increasingly accountable and diverse.
Company leadership is focused on continually improving the client experience. We believe Northwestern Mutual should enable its field force to be brand ambassadors. This means helping financial representatives communicate a more consistent brand message of financial security and then delivering a consistent brand experience through integrated product solutions.
Northwestern Mutual is making much-needed investments in client-facing and field-facing technology. We emphasize the need to leverage technology to enhance the client experience. The company must improve the user interface between its clients and its technology to meet clients’ growing expectations. We encourage the company to continue to build technology tools that enable the field to provide seamless and consistent service to clients.
In keeping with Northwestern Mutual’s brand promise, we want to reinforce the importance of consistently delivering holistic, needs-based planning to more people. We encourage financial representatives to continue to collaborate with one another in order to allow their clients to experience the financial security that comes from a solid planning approach coupled with access to high quality products and services.
We applaud the strong partnership between Northwestern Mutual’s home office and its field force. Through this partnership, the company seeks to fulfill its brand promise to deliver financial security to clients. We encourage the company to explore flexible ways to further support financial representatives throughout the different stages of their careers.
The company’s infrastructure, training programs and incentives should all be aligned with the financial security brand promise. For instance, consider more ways to encourage experienced representatives to do joint work with newer financial representatives so together they can offer the full suite of insurance and investment products and services. This will help ensure a more consistent delivery of financial planning to clients. The company should also look to newer financial representatives for insights on the expectations of younger clients.
Northwestern Mutual has built a strong culture by aiming to always do what’s right. We were pleased to see the management team also working very cohesively to foster a culture in which leaders deliver results, maximize employee engagement and envision the future. We were impressed with the depth of Northwestern Mutual’s steady commitment to diversity and inclusion, which is evident in its “tone at the top,” training and development programs, succession planning and promotional opportunities. We strongly support the company’s continued efforts to increase the gender and ethnic diversity of its field force and home office employees by measuring progress and infusing diversity and inclusion into the culture.
Some things will never change – Northwestern Mutual has always been there for its clients and will continue to be there for generations to come. Our future, however, certainly will look different from our past. Northwestern Mutual is preparing for the future by evolving from predominantly a life insurance company into a comprehensive financial security company. We all have a role to play in that evolution. The home office must support the field force in furthering the company’s ambition to deliver enhanced financial security opportunities to more people. The field force must embrace and respond to this evolution on the front lines. Lastly, all clients should take ownership of their financial future by contacting their financial representative to create and implement a comprehensive financial security plan.
Report submitted Nov. 18, 2013