Deals & People March 25, 2015

Northwestern Mutual to Acquire LearnVest

Northwestern Mutual says it will combine the capabilities of its adviser network with LearnVest’s digital advice delivery technology.
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Northwestern Mutual announced it will acquire LearnVest, a provider of online financial planning and client experience technology. 

The partnership joins Northwestern Mutual’s financial professionals and products with LearnVest’s technology and financial planning platform.

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John Schlifske, Northwestern Mutual chairman and CEO, said there has “been a gap between what consumers want and what the financial industry has been able to offer.” He suggests Northwestern Mutual will fill that gap by taking more clients “from start to finish, addressing all parts of the planning equation, and to be a partner at the center of their financial lives through all stages.”

Alexa von Tobel, founder and CEO of LearnVest, says the organization will continue to offer unbiased and affordable financial planning, now with the support and resources of Northwestern Mutual. The firm will continue serving the retirement planning marketplace in two ways—by partnering with providers, such as Fidelity and Empower Retirement (formerly Great-West), and by working directly with employers (see “A Financial Wellness Program With a Human Touch”).

Von Tobel explains that when an employer decides to partner with LearnVest for an employee financial wellness program, LearnVest creates a cobranded Internet landing page specifically for that employer’s employees. A kickoff campaign from LearnVest makes employees aware of the new benefit—which includes posters, webinars, an online Q&A, and sending a financial planner to the employer.

Employees can go to the employer-branded LearnVest portal and schedule a session with a dedicated financial planner. They answer a profile telling their financial concerns and set up a phone call with their assigned planner. “The planner will provide the employee with a 360-degree financial plan,” von Tobel says. “We tell folks what they should be doing, and the follow through is usually high.”

Dedicated advisers, according to Schlifske, are a key part of the long-term success of a financial security plan. “It’s all about the client relationship—that’s what sets us apart,” he explains. “We know from experience that consumers want a trusted, experienced professional who can provide the best product solutions, planning process and technology platforms.”

The combination of Northwestern Mutual and LearnVest brings additional capabilities consumers want, the firms suggest, especially in the areas of easy-to-use financial planning technology and holistic financial education.  

“Over time, our dynamic planning platform will be a real differentiator in the industry,” adds von Tobel, who will remain CEO of LearnVest and be chairman of the LearnVest board.  “With Northwestern Mutual’s financial backing, we can quickly empower millions of Americans and the dedicated professionals who serve them. We’re excited about truly transforming how households plan for and achieve financial security, and we will continue to unleash our innovation over the coming years.”

Northwestern Mutual has more than 4.2 million clients served by a field force of about 16,000 advisers and representatives. LearnVest currently has about 1.5 million users, over 25,000 clients under LearnVest at Work (the direct to employer product), and close to 10,000 premium clients. As the companies combine, they will seek to expand both customer bases.

The companies did not disclose financial terms. At the time of closing, LearnVest will become a wholly owned subsidiary of Northwestern Mutual and maintain its own brand and offerings. 

Data & Research March 25, 2015

ICI Measures Retirement Assets at $24.7 Trillion

Total U.S. retirement assets grew 6% during 2014, according to the Investment Company Institute.
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An analysis from the Investment Company Institute (ICI) finds retirement assets of U.S. investors reached $24.7 trillion as of December 31, up 1.7% during the year’s final quarter and 6% from year-end 2013.

With the year-end 2014 results, retirement assets now account for approximately 36% of all household financial assets in the United States, ICI says.  

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Assets in individual retirement accounts (IRAs) totaled $7.4 trillion at the end of the fourth quarter, an increase of 1.4% from the end of the previous quarter. Defined contribution (DC) plan assets rose 2.1% in the fourth quarter, to $6.8 trillion, ICI notes.

Government defined benefit (DB) plans—including federal, state and local government plans—held $5.2 trillion in assets at the end of December, for a 1.9% increase over the end of September. Private-sector DB plans held $3.2 trillion in assets at the end of the fourth quarter, and annuity reserves outside retirement accounts accounted for another $2 trillion.

Overall, Americans held $6.8 trillion in all employer-based DC retirement plans on December 31, of which $4.6 trillion was held in 401(k) plans. ICI says those figures were $6.6 trillion and $4.5 trillion, respectively, as of September 30. In addition to 401(k) plans, at the end of the fourth quarter, $560 billion was held in other private-sector DC plans, $951 billion in 403(b) plans, $261 billion in 457 plans, and $427 billion in the Federal Employees Retirement System’s Thrift Savings Plan (TSP). 

Mutual funds managed $3.7 trillion, or 55%, of assets held in DC plans at the end of December.

The IRAs asset total of $7.4 trillion is up from $7.3 trillion at the end of the third quarter of 2014. Forty-eight percent of IRA assets, or $3.5 trillion, is invested in mutual funds, ICI says.

Other findings show retirement entitlements have increased in the past year as well. As noted by ICI, entitlements include both retirement assets and the unfunded liabilities of DB plans. To the extent that pension plan assets are insufficient to cover accrued benefit entitlements, a DB pension plan has a claim on the plan sponsor.

As of December 31, U.S. total retirement entitlements were $27.8 trillion, including $24.7 trillion of retirement assets and another $3.1 trillion of unfunded liabilities. Including both retirement assets and unfunded liabilities, retirement entitlements accounted for 41% of the financial assets of all U.S. households at the end of December, ICI finds.

Unfunded liabilities are a larger issue for government DB plans than for private-sector DB plans, ICI says. As of the end of the fourth quarter, unfunded liabilities were 1% of private-sector DB plan entitlements, 25% of state and local government DB plan entitlements, and 56% of federal DB plan entitlements.

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