Does Northwestern Mutual Uphold the Fiduciary Standard?

Rachel Curry - Author

Nov. 4 2020, Updated 10:53 a.m. ET

Financial advice is easy to come by, but whether or not the advice is actually right for you is another question. Northwestern Mutual is a financial services company that offers advice through its federal bank subsidiary. Here's the rundown on whether or not Northwest Mutual financial advisors uphold the fiduciary standard.

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What is Northwestern Mutual?

Northwestern Mutual is a company that offers various financial services, primarily in the realms of financial planning and investment management. They provide these services through NMWM (Northwestern Mutual Wealth Management), which is its subsidiary organization. NMWM is a federal savings bank. 

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Northwestern Mutual is also heavily involved in providing life insurance options. Another subsidiary, Northwestern Mutual Investment Services, offers investment products and retirement plans under the protection of a registered investment advisor and broker-dealer.

What is a fiduciary?

Financial advisors come in all shapes and sizes, but you can primarily segment them into two categories—fiduciary and suitability.

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Financial advisors who uphold the fiduciary standard must prioritize their clients' best interests and not their own. This means putting the thought of commissions on the backburner.

On the other hand, financial advisors who uphold the suitability standard are only required to provide suitable solutions for their clients. This can mean that the advisors focus on commissions because a product or service is suitable enough for their client.

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Is Northwestern Mutual a fiduciary?

Usually, financial and investment advisors (or brokers) are the ones who uphold the fiduciary standard. Their broker-dealers may only be tied to suitability, which can cause conflict between a broker-dealer and its brokers.

Most Northwestern Mutual financial advisors are bound by the fiduciary standard, while the broker-dealer isn't. It's crucial for clients to understand that advisors may be balancing their own fiduciary responsibilities with their responsibilities as an employee at a suitability-oriented company.

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In 2019, financial advisor Rick Scheeler joined an independent company after leaving Northwestern Mutual over conflicts regarding Scheeler's fiduciary standard. He says that Northwestern linked his income with how much insurance he sold, which is in direct opposition to fiduciary standards.

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Scheeler told Financial Planning, "It's a massive insult to what I do. My primary occupation is financial planning and wealth management."

What is Northwestern Mutual's current AUM?

Figuring out a financial company's AUM (assets under management) is a good way to determine their legitimacy, although it isn't the only piece of the puzzle.

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For all of fiscal 2019, Northwestern Mutual's total AUM reached $290.3 billion, which includes $29.9 billion in revenues and $1.9 trillion worth of life insurance protection. For client assets held through NMWM, the company had $161 billion under management. The tallies for 2020 will be out early next year.

Is Northwestern Mutual a reliable company?

Overall, Northwestern Mutual is a reliable company, according to the BBB. The company has been in business for 163 years. However, Northwestern Mutual isn't BBB accredited. Customers also need to understand that while their particular financial advisor may uphold the fiduciary standard, the advisor's ties to Northwestern may complicate the process. 

If you are going to get financial advice, investment products, retirement guidance, or life insurance from Northwestern, you should do your due diligence so that you don't get the wool pulled over your eyes.


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