NWFN Eyes Fayetteville

Northwestern Mutual Financial Network plans to quadruple its number of representatives in Fayetteville to 20 in two years.r

A diversified financial services arm of Northwestern Mutual Life Insurance Co. in Milwaukee, NWFN focuses on risk management such as life insurance, disability coverage and long-term care insurance and offers investment opportunities through a variety of vehicles such as the Russell Mutual and Mason Street families of mutual funds.r

“We know that to get to 20 percent market penetration [in Fayetteville], we are probably going to need to quadruple the [number] of representatives,” said Lance P. Franczyk, managing director for Northwestern’s operations in Tulsa and Northwest Arkansas.r

“The market was grossly underserved. About two years ago when we did demographic studies, we found that 1 percent of our target market was being hit.”r

Franczyk said during the last two years that figure has grown to 5 percent.r

“Fayetteville can support as many people as we have in Tulsa,” Franczyk said.r

The Tulsa office currently has about 30 financial representatives. Franczyk said the firm looks at demographic factors, such as median household income, to determine market feasibility.r

The 146-year-old private investment firm doesn’t broker its products out to anyone else, and its investment strategy has produced record dividends for investors. The firm is ranked No. 113 at $16 billion on the Fortune 500 in revenues and No. 37 at $103 billion in assets.r

NWFN takes a three-pronged approach to its sales: Offer exclusive products to clients, create specialized plans for them with a team of experts, and offer products to them from other national insurance firms.r

The firm said creating a branding network in 1999 helped shed Northwestern Mutual’s reputation as a life insurance provider and made it more recognizable in the financial planning sector. Since 1999, Northwestern has owned the global investment services firm Frank Russell Co. The subsidiary manages $70 billion in assets worldwide for NWFN.r

According to Northwestern’s annual report, 3 million policy owners are projected to receive $3.8 billion in dividends from the company’s $90 billion investment portfolio.r

The dividend payout is attributable to several factors. In 2001, about 12.52rcents of each revenue dollar were spent for general expenses. The industryraverage was about 28 cents. The firm’s mortality rate for 2001 was 18.5rpercent as compared to the industry average of 31.1 percent, and in 2001 itsrlapse rate was 4 percent and the industry lapse rate on average was 7.7rpercent.

“Our permanent insurance products are our biggest strength,” said Matt King, a financial representative for NWFN in Fayetteville.r

Northwestern’s permanent insurance program accounted for 25 percent of all dividends paid out by all insurance companies in 2002. Its next closest competitor, New York Life Mutual, paid out $1.2 billion in total dividends in 2002.r

Northwestern Mutual’s surplus, or retained earnings, is projected to increase by 5 percent to $7.2 billion, according to March annual report projections.r

“We can make longer-term investment decisions, and we can take more risk as well as a longer look at our investments,” Franczyk said. The portfolio allocation reflects the firm’s risk ability, with a lower than average percentage of fixed assets.r

“We are 82 percent fixed and 18 percent equity versus competitors,” King said. “We are a little more competitive on the asset allocation.” The industry average is 95 percent fixed and equity is 5 percent.