A growing trend of departures from Northwestern Mutual has left many of the firm’s advisors wondering what’s driving the momentum—and what their colleagues are finding on the other side.

Since 2017, InvestmentNews reports that nearly 1,000 financial advisors left Northwestern Mutual. That’s an exceptional amount of movement away from the firm—especially considering that some of the moves were made by the most productive and long-tenured of the lot.

What’s driving the momentum? 

Where are these advisors going? 

What kind of transition deals are they getting? 

With any advisor’s decision to leave a firm, there are always “pushes and pulls” at play. These “pushes” or frustrations may be an overly restrictive compliance culture, a lack of local control or an inability to service clients with customization and creativity.

Yet there is plenty of work and some level of risk involved with any transition, so it’s rarely enough to make a move driven solely by frustrations. Most advisors who are leaving their firms are motivated by the potential of or “pulls” towards something better.

That is, they’re excited by the notion of accomplishing what the status quo may not allow them.

What’s driving the momentum?

To be sure, Northwestern Mutual is a name with tremendous brand recognition—a robust insurance platform that allows for the seamless cross-selling of protection, planning and investment management services. This “all-under-one-roof” model is powerful, and in fact, the firm has worked hard to elevate its top practices—so it takes a lot for an advisor to choose to leave it behind.

But, as things have changed at the firm, so has advisor sentiment. And with only $1B of $30B in annual revenue attributed to wealth management (as reported in a recent article on Financial-Planning.com), Northwestern advisors are starting to think more about the potential conflict in their abilities to serve their clients as true fiduciaries.

While every advisor experiences the firm differently, there seem to be consistent themes driving the recent moves. These advisors were seeking “something more,” such as:

• The desire to move away from a “sales-driven, insurance-first” culture to one that puts a less limiting wealth management ethos first.
• Access to more modern technology, better trading tools and the products and services that appeal to higher net worth clients.
• A more entrepreneurial culture that prizes innovation.
• Superior take-home economics that eliminates conflicts and incentivizes growth versus product sales.
• A counter to “management to the lowest common denominator.”

Where are they going?

For the most part, advisors leaving Northwestern have joined competing independent broker dealers (IBDs) that are strictly focused on wealth management. But, for those set on building an enterprise, the RIA space has proven to be the best place to maximize freedom, flexibility and control—significantly enhancing their service model, customizing their tech stack, and increasing the likelihood of more sophisticated buyers having interest in the business at the end of the day.

One $500mm Northwestern advisor who left to form his own RIA last year described his own pushes and pulls this way: “I felt for a long time that our business had not only out-grown Northwestern, but the model as well. I was tired of the ‘insurance tail wagging the dog’ and wanted to build our business in a more creative and conflict-free environment where the best interests of clients would supersede an over-arching corporate agenda.”

What kind of transition deals are they getting?

Advisors joining another broker dealer can often expect to receive transition deals in the range of 25–55% of GDC with some outliers on both ends of the spectrum. The size and structure of a deal depends on scale, business mix, the specific broker dealer and overall fit. Advisors who left Northwestern for a competing broker dealer have reported 5–15% improvements in their payouts and ongoing expenses, including administrative and platform costs.

Northwestern practices that launch RIAs typically begin with a 100% payout, eliminate administrative and platform fees, and pay only for the services needed.

The truth of the matter is, things have changed everywhere in the wealth management industry. And Northwestern Mutual too, has been impacted by a new world order. That is, one in which advisors and the clients they serve are demanding more from their firms and have a wider landscape of options to choose from.

So regardless of whether you’re perfectly content at Northwestern or simply wondering why so many of your talented colleagues have chosen to leave the firm, you might owe it to yourself and your clients to get educated on a landscape that has greatly expanded in the last 5 years alone.