The Signature Advisory Account Process
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The Signature Advisory Account Process

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The Signature Advisory Account Process The Signature Advisory Account Process Presentation Transcript

  • N o rt h W e St e r N Mu t uA L Your GoALS. Your Future. Your ChoiCe.61-1077 (0506) (REV 0209)
  • the MiSSioN oFthe NorthWeSterN MutuAL FiNANCiAL NetWorkis to develop enduring relationships with our clients by providing expertguidance for a lifetime of financial security. “Financial Security”means bringing to our clients a feeling of confidence that they willrealize their financial goals through the actions they are takingtoday; actions that are based upon a process that examines bothrisk protection and wealth accumulation needs. it is an integralpart of our investment philosophy.
  • OU R VISION OF FINA N CIA l S eCURITYAt the Northwestern Mutual Wealth Management Company, Confidence also comes from having the right tools, resources,we view investing through a lens that focuses on your financial and investment programs available to help you accomplish yoursecurity. Investing for financial security is about working with a financial goals. The Northwestern Mutual Signature Choicetrusted advisor who gives you confidence that your personal goals, program is built on strong beliefs in investment fundamentals anddreams, and needs can be fulfilled. That kind of confidence cannot the flexibility to establish an investment strategy that is tailoredbe found by working with just anyone. It comes from working to you. Your Wealth Management Advisor will take you throughwith a Northwestern Mutual Wealth Management Advisor. Your the process of determining your financial profile, developing anNorthwestern Mutual Wealth Management Advisor is committed appropriate asset allocation, and constructing a personalizedto developing an enduring relationship with you by providing investment policy statement. That’s just the beginning ... your Wealthexpert guidance for a lifetime of financial security. Management Advisor will continually monitor your situation and accounts and meet with you regularly to help keep your long-term financial goals in focus. This kind of approach helps you feel that you’ve done what you can to help manage your risk and strengthen your feeling of financial security. It’s what you expect from a company that carries the Northwestern Mutual name. View slide
  • THE SIGNATURE ADV I S O RY P RO C E S S Our Wealth Management Advisors appreciate that carefulplanning today is essential to reach your goals for tomorrow. Theyare professionals who often hold advanced degrees in business,law, and accounting, as well as industry-recognized certificationsincluding: Review and Monitor • Certified Financial Planner™ Identify • Chartered Financial Consultant GoalsOur advisors understand the complexity of issues faced byindividuals like you and the importance of following a sound THE SIGNATUREprocess. Your advisor will act in your best interests by following a ADVISORYcomprehensive process not just at the time of sale, but throughout PROCESSyour relationship, working with you to meet your long-term goals. Select Investments Create Personalized Investment Policy Statement View slide
  • Identify Goals – Your advisor will guide you through acomprehensive financial profile that will help determine your timehorizon, potential income needs, risk tolerance, and your attitudestoward investing.Create Personalized Investment Policy Statement – Based on theinformation gained from your financial profile, your advisor willdetermine an appropriate asset allocation strategy. This strategyis formalized through an Investment Policy Statement that helps provide the discipline to follow your investment plan and makedecisions free from emotion.Select Investments – Choose from a wide variety of investmentoptions such as mutual funds, exchange-traded funds, stocks, andfixed income securities to complete your asset allocation.Review and Monitor – Advanced account servicing tools help youradvisor analyze whether your account remains in line with yourInvestment Policy Statement. Your advisor will meet with you periodically to review any significant changes to your personal orfinancial situation and help determine whether these changes willrequire any repositioning of your portfolio.
  • IS THE SIGNATURE CHOICE PROGRAM RIGHT FOR YOU?Are you seeking a personalized investment process, diversified • Is it important for you to be involved in the development of investment portfolio, access to a variety of investment options, your investment strategy and the decisions regarding yourand ongoing consultation with a professional financial advisor? account holdings?If you are, then the Signature Choice program may be right for you.Ask yourself these questions: • Do you want access to a wide variety of investment options including mutual funds, exchange-traded funds, stocks, and • Do you have a significant amount of investable assets? fixed income securities? • Do you have a moderate to long-term investment horizon of at Answering “Yes” to some or all of these questions suggests that least five years? you may benefit from the Northwestern Mutual Signature Choice program. • Do you want to work with a professional financial advisor who will guide you in the development of an investment strategy?
  • Th e SIgNATURe ChO ICe A dVA N TAg eThe Signature Choice program is about having choices. Multiple Investment Options – A wide range of eligible mutual funds, exchange-traded funds, stocks, and fixed income • A choice to entrust your financial future with a company securities is available to help complete your asset allocation. that shares your values. Independent & Proprietary Research – Your Wealth • A choice to work with a trusted advisor to manage your Management Advisor has access to third-party, professional investments. investment research and ongoing monitoring from Morningstar Associates, a wholly owned subsidiary of Morningstar, Inc., a • A choice to participate in a personalized investment process. leading global investment research firm. The Northwestern Mutual • A choice to invest in a program with a wide array of quality Wealth Management Company may also review and recommend investment options. funds independent of Morningstar Associates’ process.The Signature Choice program offers: Multiple Account Management – The multiple account management feature allows for two or more accounts that shareProfessional Investment Advice – You’re not alone. Your a common goal (such as retirement or education) to be managedWealth Management Advisor will become your partner in together to a common asset allocation.identifying and prioritizing your financial needs and investmentobjectives. Your advisor will help you develop an investmentstrategy, implement your plan, monitor your portfolio’sprogress, and keep you informed through periodic meetings anddetailed performance reporting.
  • Comprehensive Reporting – You will receive detailed reportingon your account including: • Quarterly account statements (monthly, if there is activity in the account) - Current value of holdings - detailed trading activity (buys, sells, dividends, and reinvestments) • Quarterly Performance Reporting - Your portfolio’s current asset allocation - Your portfolio’s performance versus benchmark goalsFlexible Fee Payment – Signature Choice is a fee-based account inwhich you pay a quarterly fee, based on the value of your assets,rather than a commission. Your fee will be deducted from themoney market position within your account. If you have multipleSignature program accounts, you can designate one account to paythe fees for all accounts in the Signature programs*.NMIS Gateway™ Platinum/ProCash Plus™ – You are eligibleto open a separate NMIS Gateway Platinum or ProCash Plus account, free of charge, through our brokerage firm, Northwestern Mutual Investment Services, llC (NMIS). TheNMIS Gateway Platinum and ProCash Plus programs allow you to have unlimited checkwriting, direct deposit, and otheraccount features and benefits on a separate brokerage accountoutside the Signature Choice program.* The NMIS gatewayPlatinum account also offers an awards program and debit card. *Certain rules and restrictions apply.
  • Th e BleNd OF RISk & ReT URN Th AT ’ S RIg h T FO R YO USignature Choice is a flexible program that allows your advisor The eFFICIeNT FRONTIeRto create a custom portfolio of mutual funds, exchange-traded The goal of asset allocation is to produce an “efficientfunds, stocks, and fixed income securities to help you meet your portfolio,” one in which your expected return is maximized atpersonal investment goals. Your portfolio will be built around a given risk level – or – your risk is minimized at a given returnan asset allocation strategy that aligns with your goals, tolerance level. If all the “efficient portfolios” for a set of investmentfor risk, and time frame. alternatives at given levels of risk are joined together, they form an “efficient frontier.”Asset allocation is the process of diversifying your portfolioamong various asset classes, such as stocks, bonds, and cash The associated chart depicts an efficient frontier. each portfolioalternatives. These asset classes can be further divided into along the efficient frontier represents the most efficientvarious sub-classes. different asset classes have historically combination of asset classes, on the basis of risk and return. Anyresponded differently to economic activity and market trends. restrictions or customization to your portfolio could move yourVarying combinations of asset classes within an account may asset allocation away from the efficient frontier – potentiallyhelp provide investors with a balance between expected risks causing higher risk and lower returns.and expected returns that are most appropriate for them. The Northwestern Mutual Signature Choice program recommends portfolio asset allocations that are based upon an efficient frontier. Your Wealth Management Advisor will help you create an efficient asset allocation and recommend a combination of investment vehicles that are appropriate for your situation.
  • Each point on the curve represents a diversified portfolio Stocks and Bonds: Risk Versus Return 1970-2007 composed of varying asset class mixes. Keep in mind that an investment cannot be made directly in an index, and past performance is no guarantee of future results. This chart 13% is for illustrative purposes only and not indicative of any Maximum risk portfolio: 100% Stocks investment. No investment strategy can guarantee a profit or protect against a loss. The data assumes reinvestment of all income and does not account for taxes, transaction costs, management fees, or other expenses that would reduce the 12% return on an actual portfolio. Diversification does not eliminate the risk of experiencing invest- 80% Stocks, 20% Bonds ment losses. Risk is measured by standard deviation. Standard deviation is a statistical measure of the extent to which returnsReturn of an asset vary from its average. Risk and return are based on 60% Stocks, 40% Bonds 11% annual data over the period 1970-2007. The portfolios presented 50% Stocks, 50% Bonds in the image are based on modern portfolio theory. Minimum risk portfolio: Source: © 2008 Morningstar, Inc. All rights reserved. Used with permission. 25% Stocks, 75% Bonds Note: Government bonds are guaranteed by the full faith and credit of the United 10% States government as to the timely payment of principal and interest. Stocks are not guaranteed and have been more volatile than bonds. Stocks in this example are represented by the Standard & Poor’s 500®, which is an unmanaged group of securities and considered to be representative of the stock market in general, and bonds by the 20-year U.S. government bond. Risk and return are based 100% Bonds on annual data over the period 1970–2007 and are measured by standard deviation and arithmetic mean, respectively. Standard deviation measures the 9% fluctuation of returns around the arithmetic average return of the investment. 10% 11% 12% 13% 14% 15% 16% 17% The higher the standard deviation, the greater the variability (and thus risk) of Risk the investment returns. An investment cannot be made directly in an index. The data assumes reinvestment of all income and does not account for taxes or transaction costs. Bonds and other debt obligations are affected by changes in interest rates, infla- tion risk, and the creditworthiness of their issuers. High yield bonds generally have greater price swings and higher default risks than investment grade bonds. Return of principal is not guaranteed. In contrast to owning individual bonds, there are ongoing fees and expenses associated with owning shares of bond funds. When interest rates rise, bond prices fall. With a fixed income fund, when interest rates rise, the value of the fund’s existing bonds drops, which could negatively affect the overall fund.
  • SI gNATURe ReSeARCh M eTh O d O lO g YIndependent and reliable investment research and analysis is Mutual fund selections. Morningstar Associates and thecritical in helping you and your Wealth Management Advisor Northwestern Mutual Wealth Management Company havemake important investment decisions. The Signature Choice developed a quantitative and qualitative evaluation methodologyprogram brings together both independent and proprietary that looks to identify mutual funds that satisfy a number ofinvestment research to help you make more informed return, style, and expense characteristics.investment choices. Morningstar Associates provides independent investment Morningstar-recommended stocks. Stocks eligible for the research and ongoing analysis for certain mutual fund options Signature Choice program are followed by Morningstar, Inc. available within the Signature Choice program. The chart on Only those stocks meeting specific criteria may be recommended the following page illustrates the four-step process used to for a Signature Choice account. The Northwestern Mutual evaluate and select these funds. Wealth Management Company oversees Morningstar’s Certain investment options in the Signature Choice program maintenance of this group of stocks. Recommendations for a are monitored by the Northwestern Mutual Wealth specific security are made only after reviewing a client’s specific Management Company’s Investment Committee based on situation. mutual fund research and due diligence guidelines developed by Northwestern Mutual Wealth Management Company. Russell Diversification of individual fixed income securities. If you Investments mutual funds, exchange-traded funds, and some choose, your Wealth Management Advisor can work with you index mutual funds are included in the program as a result of to recommend a diversified fixed income allocation for your this process. portfolio. The allocation may include a combination of investment grade bonds, municipal bonds, U.S. Treasuries, Cds, or preferred The research and analysis used to select investment options for stock. Your advisor will provide ongoing monitoring of these the program, combined with the expert guidance of your Wealth securities if they are included in your Signature Choice account. Management Advisor, helps you rest easy knowing that you have an experienced investment team working with you.Russell funds are advised by an affiliate of Northwestern Mutual. Certain securities within the Signature Choice program, including Russell funds, do not undergo the same screening andongoing quantitative analysis applied to investments evaluated by Morningstar Associates.
  • MUTUAL FUND FAMILY ChOICeS ReSeARCh MeThODOLOGY FOR MUTUAL FUND eVALUATION AND SeLeCTION The Signature Choice program gives you access to the expertise of some of the most respected O investment management QUANTITATIVe ANALYSIS Fund Scoring System: companies. Below is a sampling of Me QUANTITATIVeONGOING MONITORING ANALYSIS • Risk & return some of the fund families availableSeek to identify possible style • Manager tenuredrift, performance concerns, in the Signature Choice program: • Peer group comparisonor funds that require furtherqualitative analysis • Performance consistency AllianceBernstein Investments • Expenses PIMCO Funds ONGOING American Century Investments® MONITORING CLIENT PORTFOLIO QUALITATIVe American Funds® ANALYSIS Fidelity® Advisor Funds Franklin Templeton Investments QUALITATIVe ANALYSIS “Top-down” process:PORTFOLIO BUILDING MFS Investment Management® • Evaluate manager performance“Bottom-up” Process: • Turnover Russell Investments • Assess how well funds work PORTFOLIO together in a portfolio BUILDING • Portfolio concentration • Style or market cap drift Vanguard® Funds • Determine overall correlation of managers and its effects on risk • Sector bets/market timing Fund family availability subject to change.
  • MA kIN g The RIghT C hO I CeS SIGNATURe PROGRAMSMA ke S All T he dIF Fe ReN C e Clients with significant investable assets often require more tailored investment services and therefore may benefit from the level of professionalSignature Choice is a program offered by the Northwestern advice and personal service that is available throughMutual Wealth Management Company, which is a wholly owned our Signature programs:subsidiary of The Northwestern Mutual life Insurance Company(Northwestern Mutual). Signature Annuities is an investment advisory program that combines the benefits of a tax-deferredFor 25 years, a FORTUNe® Magazine survey has named variable annuity with the expert guidance and personalNorthwestern Mutual “America’s most admired” life insurance service of a financial advisor.company. What’s more, Northwestern Mutual’s well-earnedreputation is based on its financial strength, its long-standing Signature Portfolios is an advisory mutual fundcommitment to the principles of mutuality, and its history of wrap solution. It utilizes select mutual funds and/orconsistently delivering long-term value to its policyowners. exchange-traded funds to construct comprehensive,Northwestern Mutual maintained the highest available ratings for fully diversified investment portfolios. The one-stopfinancial strength from all four major rating agencies.* solution gives you access to personalized assetTalk to your Northwestern Mutual Wealth Management Advisor allocation, world-class fund management, andtoday to learn more about Signature Choice and other products systematic portfolio rebalancing.and services. Before opening a Signature Choice account, reviewthe information contained in the Northwestern Mutual Signature Signature Managed Accounts is an investmentChoice Program Disclosure Brochure. You will also need to agree advisory program that provides investors accessto the terms of the Northwestern Mutual Signature Choice Client to third-party asset management and specializedAgreement. We look forward to having an opportunity to help you portfolio managers to create a highly customizedpursue your financial goals. investment portfolio of individual securities.* These third-party ratings are a measure of an insurance company’s financial strength and do not apply to the performance of any investments in the Signature Choice program. Investments in the Signature Choice program are not guaranteed, and their value can be less than your original investment.
  • This brochure is intended to provide general information and is for educational purposes only. This is not intended to provide legal or tax advice.Please consult your legal or tax professional for specific information.Investment products and trust services are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Northwestern MutualWealth Management Company® or its affiliates and are subject to investment risks, including possible loss of the principal amount invested.You should carefully consider the investment objectives, risks, expenses, and charges of the investment company beforeyou invest. Your financial advisor can provide you with a fund prospectus that will contain the information noted within thisbrochure, and other important information that you should read carefully before you invest or send money.The Northwestern Mutual Signature Choice program is an advisory program offered by Northwestern Mutual Wealth Management Company, awholly owned company of The Northwestern Mutual Life Insurance Company (NM) and limited purpose federal savings bank. NM does notguarantee or insure the account’s performance or investments made in the account and is not responsible for the investment advice given.Morningstar Associates, LLC is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. Morningstar Associates provides fundselection and investment monitoring and analysis services to Northwestern Mutual Wealth Management Company, but is not serving in the capacity ofinvestment advisor to individual investors. Morningstar Associates is not affiliated with Northwestern Mutual Wealth Management Company or its affiliates.Russell Investment Group is a Washington USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is asubsidiary of The Northwestern Mutual Life Insurance Company.Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registeredCFP (with flame logo), which it awards to individuals who successfully complete initial and ongoing certification requirements.Northwestern Mutual Financial Network (NMFN) is the marketing name for the sales and distribution arm of NM and its affiliates and subsidiaries.Securities are offered through Northwestern Mutual Investment Services, LLC (NMIS), member FINRA and SIPC, a wholly owned subsidiary of theNorthwestern Mutual Life Insurance Company, and a dually registered broker-dealer and investment adviser. Northwestern Mutual Wealth Management Company® Milwaukee, WI 61-1077 (0506) (REV 0209) www.nmwealthmanagement.com