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Northwestern Mutual to offer trust and investment services

Northwestern Mutual Life Insurance Co. has received a charter from the federal Office of Thrift Supervision that will allow the insurer to offer investment management and trust services.

The estate market is a rapidly growing segment of our business."

The Milwaukee-based insurer will form a new company, the Northwestern Mutual Trust Co., which will offer the services through its insurance agents nationwide. Northwestern, which received approval Aug. 11, expects the new company to be up and running by Jan. 1, 2001.

"The estate market is a rapidly growing segment of our business," says James Ericson, Northwestern's chairman and CEO. "Our policyowners have been asking us to provide trust services."

Northwestern says 20 percent of the death benefits it paid in 1999 were paid into trusts. Some wealthy policyholders opt to place their life insurance policies in trusts in order to avoid hefty estate taxes. P. Edwin Glass, who will serve as president and CEO of the new trust company, says one of the key aspects of the charter is now agents will now be able to offer trust services rather than having to refer clients somewhere else.

Products and services the new trust company will offer include personal trust accounts, investment management accounts, personal custody accounts, institutional investment accounts for endowments, foundations and charitable organizations, and financial planning for individual investors.

The Frank Russell Co., an investment management firm acquired by Northwestern in January 1999, will develop the investment products, most notably consisting of mutual funds. The products will be branded as Frank Russell products but sold by Northwestern agents. The Frank Russell Co. is based in Tacoma, Wash.

Glass says product training will be available for Northwestern's 7,500 agents, but he is uncertain on how many agents will become licensed to offer the new products. He says that if you are a Northwestern Mutual policyholder interested in trusts or investment products and your agent is not licensed to sell those products, the agent will refer you to a licensed Northwestern agent.

Not in the banking business

Northwestern is the latest company to seize the opportunity created by a 1999 financial services reform bill that allows financial services companies and insurance companies to sell each other's products, subject to federal approval.

Other insurance companies that have received federal charters to sell financial services or banking products are Aetna Inc., American International Group, Hartford Financial Services, Massachusetts Mutual Life Insurance Co., and State Farm Mutual Automobile Insurance Co.


However, unlike those companies, Northwestern does not plan to enter the banking business at this time. Company spokesperson Deanna Tillish says the insurer received a "limited purpose charter," which does not allow Northwestern to sell banking products such as savings or checking accounts.

"We never say never," Tillish says. "But we have absolutely no plans to do anything like that in the immediate future."

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