Northwestern Mutual

[Tim]

“ What do you care what "advice" the salesperson is offering?”

Typically on any product the salesperson has training, experience and knowledge to help a customer make reasonable purchase decisions.
“Brokers, however, serve the broker-dealers they work for and must only believe that recommendations are suitable for clients.”
The question is , is the pitch to be your Advisor or Insurance Agent is misleading? Many rightly expect advice that is “suitable”. It’s not all about price.

[G]

The difference is a car salesperson knows he/she is a car salesperson. An insurance salesperson is raised to think/know they are a financial advisor who is trying to help people.

Repeating what others have said, if you are familiar with the training the reps go through, they are specifically taught how to respond to certain questions about questioning a product. They are taught how to build long-term relationships because financial institutions know people are likely to buy more of their products once they own a single product. So, you get a customer a term life policy (i.e. the good stuff). You build up trust. You become familiar with the family and what the family likes to do. You perhaps connect well because you have similar interests/hobbies/family life. Then the salesperson says "hey, you still like that life insurance policy? If you do, there are some other things we can talk about that I think will help you meet your financial plan goals so you can keep providing for your family no matter what happens."

this.

afan , are you a physician? although true, you have a very simplistic approach to the insurers. I give a personal finance lecture to the housestaff every year and it is amazing how the insurance advisors already have their talons into the residents. I mean, the kids argue with me about how I don't know what I'm talking about when I throw up my slide equating whole life as melanotic stool. yeah, that is an inflammatory image, but the verbage to go along is simply, "at this point in your careers, don't mix investing and insurance."

the point is, these kids don't know that all they need is a used prius. if you don't get that, you're not paying attention.

[JBME]

Don't go to a car salesperson for advice about which kind of car to buy and don't go to an insurance salesperson for advice about which insurance kind of policy to buy. Decide what you want, then shop for price and features.

The difference is a car salesperson knows he/she is a car salesperson. An insurance salesperson is raised to think/know they are a financial advisor who is trying to help people.

Repeating what others have said, if you are familiar with the training the reps go through, they are specifically taught how to respond to certain questions about questioning a product. They are taught how to build long-term relationships because financial institutions know people are likely to buy more of their products once they own a single product. So, you get a customer a term life policy (i.e. the good stuff). You build up trust. You become familiar with the family and what the family likes to do. You perhaps connect well because you have similar interests/hobbies/family life. Then the salesperson says "hey, you still like that life insurance policy? If you do, there are some other things we can talk about that I think will help you meet your financial plan goals so you can keep providing for your family no matter what happens."

[zlandar]

So don't buy the cash value policies unless you started out shopping for a cash value policy and had a good reason for needing won.
If you need term life insurance, which describes almost everyone who needs life insurance, then shop for TERM. If an agent refuses to to quote you term then of course move on. They are not selling the product you want. If they quote you term but also pitch a cash value policy, tell them you are looking for term, not cash value.

Look, if you go to buy a car, the salespeople will try to sell you the most expensive car they can. They will try to convince you to buy every high margin option, use dealer financing and anything else they can.

But you don't have to do any of this. If you want a used Prius, then shop for a used Prius and ignore anyone who tries to sell you a new Lexus LS 500. It would be foolish to get angry at Toyota because some car salesperson tried to sell you a car you did not want. Used Priuses are good cars and many people are happy with them. So buy one if you want.

Don't go to a car salesperson for advice about which kind of car to buy and don't go to an insurance salesperson for advice about which insurance kind of policy to buy. Decide what you want, then shop for price and features. If NWML has the best price from a top financial strength insurance company for the policy you want, then buy it. What do you care what "advice" the salesperson is offering?

You are not asking them for advice, you are asking for the price of a policy. If they offer anything else, just say "I am not interested."

Many of these agents have ingratiated themselves in residency programs across the country. I don't see car salesmen being invited to speak in front of medical residents.

[afan]

No one is arguing that NWML term life policies are horrible. The issue is NWML has captive agents and if they only sold term life policies they would starve to death. Maybe there a few ethical NWML agents willing to live off the meager commissions selling term life. Most are going to succumb to the $$$ incentive to sell the much more lucrative whole/VUL policies.

So don't buy the cash value policies unless you started out shopping for a cash value policy and had a good reason for needing won.
If you need term life insurance, which describes almost everyone who needs life insurance, then shop for TERM. If an agent refuses to to quote you term then of course move on. They are not selling the product you want. If they quote you term but also pitch a cash value policy, tell them you are looking for term, not cash value.

Look, if you go to buy a car, the salespeople will try to sell you the most expensive car they can. They will try to convince you to buy every high margin option, use dealer financing and anything else they can.

But you don't have to do any of this. If you want a used Prius, then shop for a used Prius and ignore anyone who tries to sell you a new Lexus LS 500. It would be foolish to get angry at Toyota because some car salesperson tried to sell you a car you did not want. Used Priuses are good cars and many people are happy with them. So buy one if you want.

Don't go to a car salesperson for advice about which kind of car to buy and don't go to an insurance salesperson for advice about which insurance kind of policy to buy. Decide what you want, then shop for price and features. If NWML has the best price from a top financial strength insurance company for the policy you want, then buy it. What do you care what "advice" the salesperson is offering?

You are not asking them for advice, you are asking for the price of a policy. If they offer anything else, just say "I am not interested."

[zlandar]

Customer service could be part of it. State Farm, also showing high levels of satisfaction, also has captive agents. It could be that these agents, focusing only on one company, know the products better than an independent agent can for a range of companies. Of course, there are insurance companies that sell through independent agents and have high customer satisfaction.

I do not agree that the policies are overpriced. For some people they might be. Cannot generalize. You have to shop your coverage to get prices. If the prices are too high, move on. If the prices are right, then do not rule out a company with data suggesting high customer satisfaction because of bad reviews on some websites.

When I was shopping, years ago, NWML had among the lowest net payment cost index for term life insurance. At the time, I came away thinking that the high persistence of customers was one reason for the low costs. I did not care about the individual- I have never met anyone who sold me life insurance- but the premiums were good.

No one is arguing that NWML term life policies are horrible. The issue is NWML has captive agents and if they only sold term life policies they would starve to death. Maybe there a few ethical NWML agents willing to live off the meager commissions selling term life. Most are going to succumb to the $$$ incentive to sell the much more lucrative whole/VUL policies.

[Tim]

This not the NWM model for introducing residents to the “benefits” a NWM Advisor can provide.
Anecdotally, a MLB game in the suite, food and drinks with “social conversation”. A discreet sign-in sheet (with contact info). It is what it is. Residency programs are fertile territory for sales leads. The difference between WL, term, DI, let alone there options, needs and strategies are a completely foreign territory for most. The goal is to establish “Trust”. The trust is misused to make sales. Your model is an informed consumer making a decision. NWM model is not to educate, 100% to making a sale.

[CordMcNally]

....

You’ve misinterpreted the post.

[Andrew Musbach]

The few times I've tried it, the answer to most of these questions is "I don't know, but this is what my advisor recommended and he seems knowledgeable and trustworthy."

The one about how much commission they get is a good one. However, even that is anticipated by most savvy advisors. They just give the client an illustration showing millions of dollars of value in the future and suddenly 30K doesn't seem so bad.

This is generalized (and nothing to do with your post or approach), but I think there is a big disconnect between physicians when it comes to managing their finances. You all deal with enough stress/work enough hours that not everyone is interested in managing their own finances, so many physicians want to outsource managing their finances to someone they hope to trust.

Then the smaller % of physicians that enjoy or know they can manage their own finances, many very well-intentioned like most on WCI, give tidbits of advice and raise questions to their peers without providing the complete solution many of their peers want (someone to address all areas of their financial lives so they don’t have to and someone to actually help them implement it).

This ironically leads to many physicians discounting their peers financial recommendations and going with a “trusted” advisor that says they have a solution to their problem, which for younger physicians, often results in an insurance salesperson.

Instead of bashing peers that don’t want to manage their own finances or grouping financial advisors into one bucket, I think we’d all be better off just helping people make better educated decisions based on their options without trying to force someone into the way we think.

[AR]

I bolded the least important part.

I don't think he was talking about the salesperson. He was talking about whether you liked the colleague to whom you might give advice.

[afan]

I'm always a fan of decision trees to help me when trying to decide what to do. The first (and only) fork in the road is arguably the most important.

1.) Do you like the person?
A.) If no, tell them that they're an idiot with such a knowledge deficit that they'll never amount to anything in life. Make sure they know how much they disgust you.
B.) If yes, just tell them about WCI, Bogleheads, etc. and that the best thing you've done is invest in personal finance/investing knowledge that will save you hundreds of thousands of dollars over the course of your life. If they specifically ask about WL then tell them you don't mix insurance and investing and that you're not one of the select few that a WL policy could benefit. Make sure they know that they also disgust you.

*I bolded the most important parts for emphasis.

I bolded the least important part.

I would not get as far as forming an opinion as to whether I liked the salesperson. What earthly difference would it make?

I would be buying a policy from and signing a contract with an insurance company, not a salesperson. I would never meet the salesperson. I would have a brief telephone conversation (this was before everything was online), tell them my age, health and amount of term I wanted to buy and ask for a price. If the price were in range then I would ask for an illustration with net payment cost index for the duration I wanted, annual renewable as well as level term. I would add that information to my spreadsheet and move on. Depending on how the price compared to other companies with great financial strength and high customer satisfaction, I might buy from them. Even if I did, somehow, form an opinion about whether I liked the salesperson, it would have nothing to do with the decision of what policy to buy.

All I would want from the salesperson is that price information. I don't want to go bowling with them, I don't want to marry them. I am never going to hear their advice. I want the price of an insurance policy. No different than getting the price from another captive or from an independent agent. No different than getting a price online. Do I ask whether I "like" the anonymous person who coded the website? Of course not. I would have no basis for an opinion and even if I did, it would have nothing to do with whether I should buy the policy.

I am buying something for my family. The purchase decision is based on the product, including the strength and customer satisfaction data of the company and the price. My purchase is not a reward for the insurer hiring a personable agent.

I should mention that the one time my NWML agent tried to sell me a variable life policy was because I had asked. That kind of policy was new, I did not know much about the product, so I got a prospectus and read it. Once stimulated to send me information, the agent was enthusiastic about the policy. I was not interested in her opinion, so her enthusiasm did not figure into my evaluation.

Term is ALMOST a commodity. You should buy the best price provided the company has the financial strength to make you comfortable that it will be around for as long as you need insurance, which could be decades. If a company meets those standards and has the best price, then buy from them. Whether you like a particular employee has exactly nothing to do with the decision.

[AR]

I’ve found questions to be the most impactful/least intrusive way to help educate. If an advisor works at NWM then at some point a whole life insurance policy pitch is coming - not a matter of if, but when. Just ask your peers why whole life insurance is so good? Why should I pay this much for whole life insurance before maxing out my retirement accounts? How much life insurance does your advisor say you need and why that much? What does your advisor say about addressing your student loans or saving for a down payment or college down the road? Do you know if we have any discounts through our residency for disability insurance? How does your advisor recommend allocating our retirement accounts? And ask if they know how much their “advisor” makes if you (or they) buy a whole life insurance policy. I’d think most eyebrows would raise if they knew their advisor would make $30k upfront from the $60k/yr $4 million whole life insurance policy they are about to buy. You don’t have to ask those questions all at once, but over time, they should realize their “advisor” isn’t addressing many (or any any) of them. Then you can tell them even a fat little pig could give better advice than that

The few times I've tried it, the answer to most of these questions is "I don't know, but this is what my advisor recommended and he seems knowledgeable and trustworthy."

The one about how much commission they get is a good one. However, even that is anticipated by most savvy advisors. They just give the client an illustration showing millions of dollars of value in the future and suddenly 30K doesn't seem so bad.

[Andrew Musbach]

I’ve found questions to be the most impactful/least intrusive way to help educate. If an advisor works at NWM then at some point a whole life insurance policy pitch is coming - not a matter of if, but when. Just ask your peers why whole life insurance is so good? Why should I pay this much for whole life insurance before maxing out my retirement accounts? How much life insurance does your advisor say you need and why that much? What does your advisor say about addressing your student loans or saving for a down payment or college down the road? Do you know if we have any discounts through our residency for disability insurance? How does your advisor recommend allocating our retirement accounts? And ask if they know how much their “advisor” makes if you (or they) buy a whole life insurance policy. I’d think most eyebrows would raise if they knew their advisor would make $30k upfront from the $60k/yr $4 million whole life insurance policy they are about to buy. You don’t have to ask those questions all at once, but over time, they should realize their “advisor” isn’t addressing many (or any any) of them. Then you can tell them even a fat little pig could give better advice than that

[fatlittlepig]

Tis unwise to challenge others’ beliefs in their financial advisors or strategy. Why should they listen to a fatlittlepig over their charismatic advisor. The best thing is to do your own thing and let’s others do their thing.

[CordMcNally]

So I'm a new intern and have had multiple upper-level residents texting myself and the other interns about their "great financial advisor" who works at NWM. I've already helped many of my co-interns set up their 403b and educate them on the different funds we have access to (what funds are, expense ratios, etc.).

What do you guys recommend in terms of warning people about NWM? I don't want to act like a know-it-all, but I also don't want any of them to get suckered into a WL policy or pay exorbitant fees in exchange for mediocre advice. I don't want to insult any of the upper-level resident's intelligence either since they use the NWM "advisor"

I'm always a fan of decision trees to help me when trying to decide what to do. The first (and only) fork in the road is arguably the most important.

1.) Do you like the person?
A.) If no, tell them that they're an idiot with such a knowledge deficit that they'll never amount to anything in life. Make sure they know how much they disgust you.
B.) If yes, just tell them about WCI, Bogleheads, etc. and that the best thing you've done is invest in personal finance/investing knowledge that will save you hundreds of thousands of dollars over the course of your life. If they specifically ask about WL then tell them you don't mix insurance and investing and that you're not one of the select few that a WL policy could benefit. Make sure they know that they also disgust you.

*I bolded the most important parts for emphasis.