Policyowners' Examining Committee

An inside look at Northwestern Mutual from the policyowner's perspective

Policyowners' Examining Committee Overview

Our policyowners stay with us for decades. That's why our ongoing aim is to deliver sustainable strong business performance today while continuously evolving for tomorrow to meet clients' near- and long-term needs. Here, outside perspective is invaluable – it's one more way we optimize our strategy and its execution to ensure we're always best serving our policyowners.

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 2022 committee's complete report is provided here.

Northwestern Mutual is a company steeped in tradition and the 2022 Policyowners' Examining Committee is grateful for the opportunity to be a part of that tradition and serve its fellow policyowners by evaluating the operations, management, and strategy of the company. Northwestern Mutual's vision is to free Americans from financial anxiety – so people can live the life they want both today and tomorrow. Having achieved record sales of life insurance in 2020 and 2021, it might be natural for a 165-year-old company to rest on its laurels. However, that is not what the committee found during its examination. The committee found a company that has a clear mission and strong culture that set it apart from industry competitors. The committee found a strong leadership team that strives to improve its business model and talented and driven employees that are passionate about the company's mission. Despite rapid change in the world and the need to adapt, Northwestern Mutual has been able to stay true to values like integrity, mutuality, financial strength, and community, while advancing new commitments like building an inclusive culture and advancing equity.

The company has a comprehensive multi-year strategic plan that includes modernizing its operations and digitizing its client experience. In fact, the company's primary strategic areas of focus are on: (1) increasing the number of financial advisors while simultaneously improving their capabilities, (2) offering a seamless and differentiated client experience, and (3) bringing together the power of insurance plus investments ("protect and prosper" solutions) to produce better client outcomes. With this in mind, the committee focused its examination on the following areas:

The role of financial advisors in effectively delivering protect and prosper solutions
The client experience including the digital journey
The role of retail investment management to the strategy

Areas of focus

The role of financial advisors in effectively delivering protect and prosper solutions

First, the committee will provide an overview of its observations about the role of financial advisors in effectively delivering protect and prosper solutions. The size and capabilities of the company's advisor force is a tremendous asset and strategic differentiator. Clearly, there is alignment between the career Northwestern Mutual offers financial advisors and what advisors are seeking—career opportunities, multi-generational businesses and being part of a larger community. One of the financial advisors the committee met with put it best— "advisors are looking to be in business for themselves but not by themselves." As the committee expected, it observed high levels of trust between the corporate office and the company's financial advisors. In fact, the committee believes that bond has been the foundation for delivering impressive financial results again in 2022.

The committee believes that despite the pace of change within the business and the external environment, Northwestern Mutual financial advisors are confident in their ability to manage their businesses and deliver financial security to clients. In fact, the committee was impressed by programs like national training and other corporate-led initiatives intended to improve consistency among financial advisors without eliminating the uniqueness of each advisor's practice. The committee believes the company's focus on the advisor experience through these initiatives is a competitive advantage. In addition, the company's co-creation model with its financial advisors has robust feedback loops, which facilitate effective change management across a national footprint. The successful retirement of the company's traditional software planning application this year is strong evidence that the company's approach is working. Along with these strengths, the committee believes the company could benefit from clarifying the desired balance between entrepreneurship and the delivery of a more consistent client experience. Further, the committee recommends that the company continue to pay close attention to the growth of large integrated teams of advisors and remote work, which could make additional change management necessary.

The client experience including the digital journey

Second, with regard to the client experience, including the digital journey, the committee noted that the company's goal of providing comprehensive financial planning and better financial outcomes through protect and prosper solutions is clearly established and also resonating in the marketplace. In fact, Northwestern Mutual's planning philosophy helps clients navigate their individual financial journeys and have more timely conversations about goals and relevant financial products. The company facilitates the delivery of much of its planning advice through PX, a newly developed software application, that supports proactive conversations between clients and financial advisors throughout a client's life. Additionally, the committee believes in the soundness of Northwestern Mutual's vision for a seamless client experience, and the company should continue to simplify and remove manual processes across product lines in order to achieve it.

The committee recognizes that a number of the company's digital capabilities are new, and yet it believes Northwestern Mutual should further hone its vision for the intended digital experience to ensure that its aspirations and priorities are clear. This clarity will help the company align on the intended digital journey for each type of client segment. In addition, the committee believes that future versions of the company's planning software application PX can be further tailored to various client segments to meet different degrees of client sophistication and expectation. The committee also encourages the company to continue to: (a) accelerate delivery; (b) reprioritize the desired experiences based on market, advisor, and client input; and (c) take proactive steps to anticipate new planning experiences.

The role of retail investment management to the strategy

Lastly, the committee is excited about the future trajectory of Northwestern Mutual's retail investment management business ("wealth"), which has been growing rapidly and become a key part of the company's overall strategy. The committee believes that the role of the retail investment management business in delivering protect and prosper solutions to clients will continue to differentiate the company in the marketplace. Northwestern Mutual's insurance and wealth offerings are complementary and can make Northwestern Mutual even more relevant to clients. To that end, the committee believes there are unique opportunities for Northwestern Mutual to further develop its holistic asset allocation platform to enhance how clients experience financial security. The committee encourages the company to continue to scale this rapidly growing business and capitalize on its differentiated value proposition for the benefit of its clients. To do this, the company should continue to: (a) expand and integrate wealth product offerings, (b) advance capabilities that integrate the digital experience with the advisor experience, and (c) develop additional advisor training to augment its protect and prosper solutions. On a related note, the committee recommends that the company consider raising the visibility of its retail investment management business to emphasize that it is an integrated offering of life insurance and investments.

In closing

The committee praises Northwestern Mutual for continuing to attract and retain talented employees to deliver on its mission to improve financial security for clients. The committee is confident in the company's multi-year strategy and leadership's ability to execute that strategy and deliver exceptional results to policyowners. Northwestern Mutual is strong, and the committee believes its future will be bright for many years to come.