Northwestern Mutual today announced that its application for a limited purpose federal thrift charter has been approved by the Office of Thrift Supervision. The charter will enable the company to form Northwestern Mutual Trust Company, which is expected to be operational in January, 2001. Northwestern Mutual Trust will offer a full range of personal trust products and services, as well as investment management services, according to James D. Ericson, Northwestern Mutual's chairman and CEO.
"The estate market is a rapidly growing segment of our business," Ericson said. "Our policyowners have been asking us to provide trust services and Northwestern Mutual Trust will increase our financial representatives' ability to bring clients the full range of financial products and services they have been calling for," Ericson said.
A unique advantage of Northwestern Mutual Trust will be the involvement of Frank Russell Company as a provider of investment products to trust clients. Northwestern Mutual acquired the Tacoma-based Russell on January 1, 1999. Russell is one of the world's premier investment management firms known for its Multi-Asset, Multi-Style, Multi-Manager™ approach.
Creating Innovative Solutions to Meet Needs
"Russell's highly-regarded investment management methodology and its broad range of well-respected financial products will be invaluable in creating innovative solutions to meet diverse client needs," Ericson said. Russell has $63 billion in assets under management and provides investment advisory services on additional assets of more than $1 trillion worldwide.
Ericson said today's announcement is a continuation of Northwestern Mutual's strategic growth plan that was set in motion many years ago as the Company kept pace with a steadily evolving marketplace and the changing needs of its policyowners. For the past 20 years, Northwestern Mutual has been building throughout its distribution system a network of specialists in estate planning, long-term care, business continuation planning, group key person insurance and investments. The Company recently announced that its sales and distribution arm has a new identity, Northwestern Mutual Financial Network, to better reflect the broad range of products and services provided through representatives and specialists.
Northwestern Mutual Trust services will be available primarily through investment management and trust specialists of The Network and through Trust Company employees housed in select locations around the country. Although trust services will be available through referrals nationwide in January, the Trust Company plans to expand its geographic offices gradually over the next three years. Northwestern Mutual Trust will be headquartered in Milwaukee.
Executives Named to Head New Trust Company
P. Edwin Glass, Jr., will become president and chief executive officer of Northwestern Mutual Trust upon its formation. Glass, who joined Northwestern Mutual on March 1, 2000, was a senior vice president at First Union National Bank, where he was the Managing Director of Personal Trust with national responsibility for the Personal Trust group.
Thomas R. Anderson will become the Vice President of Sales and Marketing for Northwestern Mutual Trust. He joined Northwestern Mutual in December, 1999. He will be responsible for marketing, development of new products and training. He has more than 15 years experience in the financial services industry.
Brian D. Powers will be the Director of Operations and Administration for the trust company. Prior to joining Northwestern Mutual, Powers was Vice President, Investment and Support Services at Firstar Bank.
$10 Trillion in Wealth Transfer Creates Trust Services Demand
"In the greatest transfer of wealth in the world's history, American baby boomers and their parents will pass on more than $10 trillion to their children," said Glass, "and many of these heirs will require trust services. Already, thanks to the vigorous economy of the past decade, the growing number of affluent families and individuals has greatly expanded the demand for the kinds of wealth accumulation and preservation products that the Trust Company can offer," he said. "Our financial representatives, who already have an established, long-term relationship with their clients, are in an optimal position to bring the added services of Northwestern Mutual Trust to these individuals and families."
Glass added that trust services will also provide an intergenerational link between Northwestern Mutual Financial Representatives and their clients.
Among the products and services that will be offered by Northwestern Mutual Trust Company are all types of personal trust accounts, investment management accounts, personal custody accounts, institutional investment accounts for endowments, foundations and charitable organizations and fee-based financial planning.
20% of Death Benefits Paid to Trusts
In addition to meeting client needs, the Trust Company will also benefit Northwestern Mutual's insurance business, Ericson said. He pointed out that last year about 20% of the company's death benefits were paid into trusts. Additionally, Northwestern Mutual representatives are involved in selling insurance to about 10,000 trusts annually.
"In complex cases involving life insurance policies, these are areas in which policyowners' special needs will be well met by Northwestern Mutual Trust," Ericson said.
As announced late last year, in addition to seeking approval to form its own trust company, Northwestern signed an alliance agreement with Chicago-based Northern Trust Company. Among other things, Northern Trust will provide Northwestern Mutual Trust with individually managed portfolio capability as well as management of special assets such as closely-held businesses and real estate.
Industry Built on Relationships of Trust, Personal Service
The personal trust services market is an industry built on professional, personal and trusting relationships. Managing a client's wealth and estate requires a close understanding of the client's needs and desires. As a part of the professional team of advisors, the trust services provider works closely with the client, as well as the client's team of advisors, including an accountant, tax advisor, attorney, insurance counselor, and financial planner.
"The close relationship that our financial representatives have with their clients," said Ericson, "provides the foundation for the success of the Northwestern Mutual Trust Company. We believe this new subsidiary meets genuine market needs and will over time be a meaningful player in the trust services arena."
Northwestern Mutual Financial Network, through its 7,500 Financial Representatives, provides expert guidance on insurance, investment products and services, retirement and estate planning, education funding and employee benefits. The Network has more than 350 offices across the country. It is consistently ranked one of the "Best Sales Forces" in its industry in Sales and Marketing Management magazine surveys and in 2000 was named the best in the nation, in any industry.
Northwestern Mutual, the nation's leading provider of individual life insurance, has always received the highest possible ratings for financial strength from Standard & Poor's, Moody's, Fitch (formerly Duff & Phelps) and A. M. Best. Besides life insurance, the Company and its subsidiaries provide annuities, mutual funds, long-term care insurance and disability income insurance. In its category, it was named the most admired company in the world in Fortune's latest corporate reputation survey.
SOURCE: The Northwestern Mutual Life Insurance Company
Contact: Thomas W. Towers, 414-665-7179, or Deanna Tillisch,
414-665-2705, both for The Northwestern Mutual Life Insurance Company