Northwestern Mutual is under scrutiny on how it recruits and treats employees after a story published in The Guardian says they were misled about what the job of an advisor entails.
The Guardian, a newspaper based in Great Britain, reported talking to 21 current and former Northwestern Mutual workers, and to five people who interviewed with the company but didn’t take a job.
Some felt “gaslit” by the promises of financial security and describe the culture as “cultlike.”
One of the story’s main sources is Jeremy Biar, a senior at Texas A&M University, who was first a intern with the company before being hired full-time.
“You’re not making any money and you can’t afford to live. You’re either racking up debt, or you’re living with parents,” Biar said. “You turn into a stoic human being. You really have to choose your Northwestern career over the friendships that you used to have.”
A spokesperson from Milwaukee-based Northwestern Mutual told The Guardian:
“Our profession isn’t always easy, as it requires a tremendous amount of hard work, grit and perseverance. Understandably, it isn’t for everyone.”
But, for those with “vision, drive and an entrepreneurial spirit” it can pay off, the company said.
Advisors receive “award-winning training” and 94% say the internship “helped them grow personally and professionally,” according to an internal survey.
Northwestern Mutual provided similar responses to the Milwaukee Journal Sentinel when asked to comment on the story.
Here are some of the points reported by The Guardian:
Goal of 40 calls a day
The Guardian reports seeing documents which shows the goal for advisors is 40 calls to “friends, cousins, ex-roommates, teammates, anyone who might answer.”
Biar said he told to leave 20 missed calls at a time so it looked “urgent”. When someone finally picked up, there was a script to follow: a cheerful announcement of his new role, followed by an invitation to meet and discuss their financial future.
“As part of growing a successful practice, relationship building and identifying strong, quality referrals are essential to building a clientele,” a Northwestern Mutual spokesperson told the Journal Sentinel.
“Financial services is a relationship business, and we encourage interns and new financial representatives to start with their natural market of known contacts to discuss their career and have an opportunity to expand their network through referrals,” the company said.
One current Northwestern advisor told The Guardian the company uses college students and new graduates to get sales leads.
“It’s gathering immense data and not paying for it,” that source said.
Whole life insurance sold to those who might not need it
The Guardian reported 20 sources said they were to always recommend whole life insurance even for young people without dependents. Such policies serve as investment vehicles along with providing death benefits.
It felt like “brainwashing tactics for the young and naive,” a source said.
Michael Denning said he was convinced to buy a whole life policy from a college friend.
“I really trusted him as a person, and so I agreed to do that,” Denning told The Guardian.
But a year on, he was struggling to afford the premiums, so sought out a financial advisor − who recommended he drop the policy. Denning said he lost about $2,400.
“It was really painful to know that the small amount of money I was saving, I’d lost,” Denning said.
High turnover, promise of high pay
Northwestern Mutual told The Guardian roughly half of full-time advisors drop out after the first year.
However, 19 sources with The Guardian estimated the majority exit before then. Three advisors said turnover was upwards of 90%.
One source The Guardian identified as “Megan” said she received a company projection saying her annual earnings could be $120,000 by the time she was 24 years old − and $1 million by age 32.
“What we advertise is representative of the average earnings for financial advisors who meet the expectations of the career,” a Northwestern spokesperson said to The Guardian.
First-year average earnings are $61,000 but advisors can also earn “allowances and bonuses,” the spokesperson said.
This article originally appeared on Milwaukee Journal Sentinel: Report: Northwestern Mutual former, current workers criticize company
Reporting by Ricardo Torres, Milwaukee Journal Sentinel / Milwaukee Journal Sentinel
USA TODAY Network via Reuters Connect
