Policyowners' Examining Committee Report

Northwestern Mutual has always put our policyowners first. As your company, it is critical that we deliver strong performance today while also transforming to meet the needs of clients both now and in the future.

Through our trusted advisors, personalized planning process and leading products, we help our clients live their dreams today and beyond. To deliver on this, we have to continually transform the experience we provide while maintaining the financial strength and superior product value that have served us well for generations.

Since 1907, a group of 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 along with the company's annual report. The 2020 committee's complete report is provided here.

Committee member bios

David Hollander

David Hollander

Chair of the 2020 Policyowners' Examining Committee and Board Director and the former global director for the Insurance sector practice at Ernst & Young LLP (EY)

Sandra Rogers

Sandra Rogers

Vice President, Supply Chain at Hillrom

Deanna Bannister-Walker

Deanna Bannister-Walker

Head of Product Operations for Fiserv's Prepaid Solutions Division

Claudia Valderrama

Claudia Valderrama

Global CEO at Wieden+Kennedy

Mark Davis

Mark Davis

Executive Vice President and Chief Operating Officer at American Transmission Co.

Scott Wrobbel

Scott Wrobbel

Vice-chairman and Central Region Market Leader and Milwaukee Managing Partner at Deloitte

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"We were impressed by the company's continued commitment to its core values—mutuality, financial strength, long-term product value and an exclusive system of trusted financial advisors focused on deep client service and relationships."

Policyowners' Examining Committee, 2020

It has been an extraordinary opportunity to serve on the 2020 Policyowners' Examining Committee. Despite the many challenges of the past year, it is notable that this time-honored tradition of transparency and openness continued virtually in 2020 and serves as an enduring example of Northwestern Mutual's particular brand of mutuality. We were impressed by the company's continued commitment to its core values—mutuality, financial strength, long-term product value and an exclusive system of trusted financial advisors focused on deep client service and relationships.

The committee observed many areas of progress since 2019.We noted a senior leadership team that is aligned on a crisp vision for the future…

We were also encouraged by leadership's continued pursuit of a bold, client-centric transformation agenda, which accelerated in 2020 in spite of the global pandemic and rapidly changing business environment. Shifting from a product-centric to an experience-centric organization while balancing pursuit of exceptional long-term performance and financial strength is both complex and commendable. Therefore, with a mix of pride and humility, the committee completed its duties and provides the following update on progress along these efforts to the policyowners.

The committee observed many areas of progress since 2019. We noted a senior leadership team that is aligned on a crisp vision for the future and endowed with a breadth and depth of skills and experience supportive of managing transformational change. In addition, the committee heard a cohesive discussion of specific goals and programs related to the advancement of diversity and inclusion and racial equity. The development of the Sustained Action for Racial Equity (SARE) task force, a committee led by CEO John Schlifske focused on fighting racism, discrimination, and prejudice, is an example of the company's willingness to address issues of racial inequity head-on and invest in drivers of real change. While work remains in growing the diversity of company leadership, we heard a palpable commitment from the leadership team to advancing this work and to continuing vigorous investment in growing a diverse and inclusive culture for its employees and advisors.

We commend leadership's efforts in 2020 to invest time in developing an integrated, multi-year strategy to serve as the blueprint for execution on a redesigned "go-to-market" approach. We agree with the focus of the strategy, which centers on advisor-led, personalized financial planning powered by "always-on" connected service in a "dynamic digital ecosystem." The committee strongly supports management's efforts to add digital enablement to the center of the strategy given the important role information availability plays in attracting and engaging clients. However, speed of execution has become increasingly important as the company's strategic focus has expanded to addressing a broader set of customer needs. Time is of the essence to move aggressively along this strategy, as the competition is fierce for targeted clients, employees and financial representatives. With this in mind, the committee noted four areas of focus to support the company's transformation efforts:

Four areas of focus

Scope of multi-year strategy

While the multi-year strategy is ambitious and thoughtful, its breadth and scope encompass nearly all aspects of the business. We encourage leadership to tightly monitor progress and engage in regular, transparent evaluations at the enterprise and project-level to track the status of budgets, timelines and the potential for variations. As it is unlikely that all projects will go as planned, reliable governance mechanisms will provide the ability to correct course and reprioritize aspects of the multi-year strategy as needed and are critical to staying on track.

Delivering an exceptional client experience hinges on the company's ability to personalize services, reduce friction and anticipate a variety of client needs. Knowing this, we believe continued advancement of digital client bonding efforts, as outlined in the multi-year strategy, should be considered for acceleration. The features available through the company's proprietary planning software, "PX," are compelling in their ability to bring together the various pieces of a client's financial life in a way that is clear and actionable. Expanding on the planning experience through accompanying digital tools, services, and mobile capabilities should allow for more frequent and personalized client interactions, which yield richer insights. The possibilities are exciting given their potential to shape the future of how Northwestern Mutual serves its clients, supports its advisors and sets consumer expectations for its brand.

We also encourage expansion of "PX" adoption strategies to potentially engage broader segments of existing clients, particularly those who want to engage in digital planning, once "PX" functionality has developed to support a comprehensive set of life-stage planning needs.

The possibilities are exciting given their potential to shape the future…

Enterprise program management

Execution of the multi-year strategy will significantly increase the need for project and program management skills across the enterprise. The company recently developed a centralized team (Enterprise Program Management Group—EPMG) to oversee program management of the multi-year strategy. This team will be instrumental in providing leadership with real-time visibility into progress and the ability to say "yes" and "no" to work as needed. In addition, greater access to project management, tech estimation and other programmatic skills and capabilities will be necessary to advance a larger volume of interdisciplinary projects. We recommend utilizing high—potential, rising talent to manage projects aimed at improving process efficiency as a way to develop project management capabilities and test new ways of working. Overall, an investment in employee skill development will pay dividends in ensuring consistency and quality of project management and knowledge retention over time, as well as ongoing alignment with the broader strategic rationale. The EPMG will be a key partner in furthering these efforts, as well as serving as a liaison between business and technology integration.

Accelerating execution

There is a race for relevancy underway in the financial services industry to compete for the mindshare of the mass affluent customer. This trend accelerated during the pandemic as companies in most industries moved to embrace digital customer experiences.

…data-driven insights have become foundational in determining the right advice at the right time…

From a financial planning standpoint, data-driven insights have become foundational in determining the right advice at the right time for an array of clients and financial needs. The committee encourages leadership to explore ways to increase speed of delivery and accelerate the rate at which the company can leverage a more holistic set of data to bond with clients and prospects. Key deliverables, such as the aggregation of existing client data into a "golden client record" and a "unified data store," are critical to supporting many aspects of the multi-year strategy and should continue as top priorities. In addition, as the mass affluent customer segment is growing increasingly digital in all aspects of their lives, we encourage the company to seek to deploy new "PX" planning capabilities as soon as practical as part of the broader efforts to deliver an "always-on" "digital ecosystem" for advisors and clients.

The future of work

The pandemic ushered in a new era of virtual and remote work and confirmed that many skillsets, particularly those supporting financial services and other information-centric industries, can be reliably and consistently administered in a remote setting. We urge leadership to reflect on and evaluate these learnings in planning for the "future of work" across the company's core business units. A structural change with respect to embracing a hybrid work environment could serve to broaden the company's reach in targeting highly competitive skill sets, as well as growing the diversity of its workforce. While the committee observed isolated examples of workforce planning efforts, the development of the multi-year strategy demands a comprehensive look at opportunities to align the workforce with future organizational needs.

With technological innovation and expanded process automation, it is also reasonable to believe that the very nature of work across the enterprise may be conducted differently in the future. Leaders should work to design a vision for the future of work, particularly in areas ripe for technological enhancement, such as financial services operations (New Business, Claims, Servicing, Underwriting, etc.). The development of a shared leadership vision for the future of work has implications not just in driving execution of strategic priorities, but in evolving the strategy itself. For example, it may be prudent to accelerate the pace of retiring legacy technology systems if doing so stands to usher in meaningful improvements to workforce productivity and engagement. We strongly endorse continued partnership between Human Resources, Technology, Finance and senior leadership to develop workforce plans addressing these considerations as the multi-year strategy matures.

Finally, as discussed previously, the committee strongly supports and encourages the company to continue to make clear and compelling progress in both the home office and field with regard to leadership D&I activities. Specifically, tangible progress at the executive leadership level in increasing representation across women and people of color to serve as a role model for the enterprise.

In closing...

... we underscore the critical juncture at which the company finds itself today. Successful execution on the multi-year strategy will require a balance between vision, practicality, and other constraints. However, delivering an "always on" digital experience for clients as soon as practical is of the utmost importance. We applaud the company for the boldness of its vision and its willingness to double down on longer-term planning at a time when many are pressured by uncertainty in the current business environment. It's a testament to many years of prudent focus on fundamentals and disciplined operations, which has yielded numerous advantages. Now, however, is a time to balance excellent, historical habits with an intense focus on new mechanisms required for future success. We are confident that the company's future is bright and management's efforts to innovate within the context of its longstanding commitment to "doing right" by the policyowners will guide success for years to come.