steve mannebach's presentation
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Presenting Sponsor: Produced By:
Presenting Sponsor: Produced By:
America’s Protection Gap: An “Exclusive” Approach to Meeting the Need
Steve Mannebach, CLU, MSM
Vice President – Field Growth & Development Northwestern Mutual
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Northwestern Mutual Facts
Located in Milwaukee; founded in 1857 Mutual Company operating for the long-term benefit of
policyowners $190 billion in assets; $24 billion in annual revenues $5 billion of dividends expected to be paid to
policyowners in 2013 $1.3 trillion worth of life insurance in force; 3.5 million
policyowners 300 offices nationwide; 6,500 full-time financial reps
(FR), 2,500 college FRs, 1,000 senior FRs
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Structure of Our Distribution System
Affiliated Independent
Employee Status common law, statutory, independent
contractor
Direct/3rd Party
Direct Response Branch
Office General Agency
PGA Insurance Broker
Financial Institution
Advisor &
Planner
Exclusive (Career or MLEA)
Non-exclusive
or
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Sales Force Trends
195,141 178,864
165,024 162,271 163,814
118,685
151,977 161,955 163,409 149,187
313,826 330,841 326,979 325,680 313,001
1998 2001 2004 2007 2010
Affiliated agents Independent producers Total sales force
4
LIMRA’s Census of U.S. Sales Personnel
Number of advisors
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The Northwestern Mutual Paradox:
Strengths of our distribution model means that any attempt to mitigate
them through change in model (e.g. diversifying away from the risks),
by definition reduces or weakens those very strengths
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The Northwestern Mutual Paradox: (continued)
Therefore, we face a dichotomy, either:
1. Change distribution model and risk unintended consequences in exchange for reducing distribution model risks, or
2. Maintain distribution model and redouble company efforts to ensure that risks don’t occur.
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Core Belief
Our products and the value they provide are created as much by the way we distribute them
as by the way we design them.
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Circle of Success
Exclusive NM Financial Rep
The NM Policyowner
Superior Product Value
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The Northwestern Mutual Recruit
Excusive NM Financial Rep: College educated; age 30 99% are inexperienced to the industry 80% of candidates will score a 13+ on LIMRA’s Career
Profile FRs will be trained to develop life-long relationships with
clients – before clients build wealth Risk management will be their initial focus Processed 240,000 leads to recruit 2,400 FT FRs in 2012 Recruited 3,200 college interns FRs in 2012
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The Exclusive NM Career FR
Average age is 40; median 37 60% hold a professional designation Aligned with the value of doing what is in the best
interest of the policyowner for the long-term and therefore does not demand: - Lowest going-in premium - Loosest underwriting standards - Product gimmicks for a quick one-time sale - Highest first-year commissions
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“The fact is with most agents a salary is more demoralizing than whiskey, it seems to persuade them to put off until
tomorrow what could be accomplished today.”
• Matthew Keenan, Superintendent of Agencies, 1870s
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Source: LIMRA International - 2011 Agent Production and Retention Survey * Includes earnings on annuities and investment products. ^ Annualized premium on life insurance, DI & LTC. Excludes deposits on annuity and investment products.
Protection Products Premium^
Total Earnings (All Products)*
2011 FR Productivity For Average 5+ Year FR
Northwestern Mutual $226,259 $188,835
Industry Average 141,919 104,771
Closest Competitor 192,174 119,785
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NM Lapse Ratio vs. Industry Average Superior product value:
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NM Mortality Rate vs. Industry Average
Source: Society of Actuaries Intercompany Mortality Studies
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NM Unit Cost vs. Industry Average
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Dividends Over Time
* Dividend Scale Interest Rate (DSIR) for unborrowed funds for most traditional permanent life insurance policies with Direct Recognition.
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
$5,500
1993 2003 2013
Disability Income, Annuities & Long Term Care Life: Mortality, Expenses & Additional Benefits Life: Interest
$1.8 billion
$5.0 billion (estimated)
71%
26% 3%
60%
37%
32%
61%
DSIR* = 9.25% DSIR* = 8.20% DSIR* = 5.60%
3%
7%
$3.8 billion
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The Challenges of Growing an Exclusive Distribution System
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OUTCOMES CAPABILITIES
More: Client centricity Keep: Financial discipline
More: Proactive strategies to guide the Field
Keep: Responsiveness to the Field
More: Accountability Keep: Collaboration
DRIVERS
Deliver Expert Guidance To Clients
Manage The Fundamentals
Ensure Financial Strength
Live By Mutual Values
Deliver Financial Security
$300K
Total Field Revenue per 5+ yr FR
$150M FYC <5yr FRs
Strengthen Exclusive Distribution
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Under Five Year Growth Core 4 Recruiting Internship Program Early Productivity Leadership Development
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<5 Total Lives and New Clients
2008 2009 2010 2011 3-YearCAGR
Lives 106,313 123,203 140,529 150,475 12.3%New Clients 59,813 68,014 75,131 80,321 10.3%
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Tota
l Liv
es
N
ew C
lient
s
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Leadership Development
Presenting Sponsor: Produced By: Source: Northwestern Mutual Financial Security Study – August 2010
Client perception of FR as broad-based planner
Clients Prefer a Comprehensive Approach
1 to 2 3 to 4 5 to 6 7 to 8 9 to 10
7% 13%
36%
55%
87%
97%
Satisfied with FR
Will consider FR for future financial needs
Willingness to provide referrals
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Planning Personal Planning Analysis
Customized to our unique planning process Allows our FRs to plan for their clients at every
life stage, from simple needs analysis to comprehensive financial planning Provided to/supported free of charge to our
Field Integrated with CRM software for product
downloads Graphical and/or numerical presentation Easily illustrates results of recommendations
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Our Opportunity,
Our Responsibility
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Declining Individual Life Sales
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Increasing Life Policy Lapses
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Sales Force Trends
195,141 178,864
165,024 162,271 163,814
118,685
151,977 161,955 163,409 149,187
313,826 330,841 326,979 325,680 313,001
1998 2001 2004 2007 2010
Affiliated agents Independent producers Total sales force
27
LIMRA’s Census of U.S. Sales Personnel
Number of advisors
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Morality Protection Gap $20,000,000,000,000