Financial advisor? Northwestern Mutual

I have a financial advisor through Northwestern Mutual, but I’ve been seeing mixed reviews. Are they not legit? How do I find a legit advisor? It’s a college friend of mine, and I wanted to get started somewhere, so I figured it would be nice to support a friend.

I have whole life insurance (which I’ve heard is a scam?), and I make payments to a brokerage investment account. My 401k is through my employer.

Do they have more of a sales structure? Are they all this way? Sometimes it feels a bit pushy.

Northwestern Mutual is a legit life insurance company, but not great for investing.

Their financial advisors are often more like insurance salespeople, pushing expensive whole life insurance before discussing real investing.

If you’re paying for whole life insurance, I suggest you look into term life insurance instead. Surrender the whole life policy, buy term insurance, and invest what you save in a low-fee mutual fund, like an S&P 500 index fund. In the long run, you’ll come out ahead compared to sticking with whole life insurance.

@Marlo
Good advice. Before surrendering the whole life policy, make sure to get a term policy in place first, especially if you’ve had any health changes since getting the policy.

A small note: At Northwestern Mutual, you’re considered a ‘financial representative’ until you pass certain licensing exams (like the SIE, Series 6, and Series 63). Then you become a ‘financial advisor.’ It’s mostly a semantic difference but worth noting.

@Chelsea
Thanks for the info!

There’s a 99% chance you’re being sold something you don’t need and wasting money. Why do you need a financial advisor right now? Why do you need whole life insurance? These are typically only useful for people making $400k+ who have already maxed out other retirement accounts.

How much are you paying monthly for the whole life policy and investments? Let’s start with your income. Do you have an IRA or Roth IRA? Are you married? Do you have kids? How old are you?

@Cale
I’m 27, making $100k a year. I pay $45/month for whole life insurance and contribute $100/month to a mutual fund and an additional $2,000 annually. My job offers both traditional and Roth 401k options, but I only contribute 6% to the traditional, which my employer matches.

Is life insurance only for certain people? I’m single, with no kids, living in Los Angeles.

@Maci
At $45/month for a $50k policy, that’s likely a whole life insurance policy. Honestly, if no one relies on your income, you don’t need life insurance yet.

Instead of whole life, you could get term life insurance (cheaper and better for most people) and invest the rest. Since you don’t have kids, your money would be better put into your retirement accounts like a Roth IRA, and in taxable accounts for growth.

I’d recommend you start with 10–20% into your 401k and max out a Roth IRA. Any extra can go into your brokerage accounts. Life insurance might make sense later, but for now, focus on building your investments.

@Cale
The mutual fund I’m in is Dreyfus Government Securities. I’m going to ask more questions and see if there’s a better approach I should be taking. Thanks for your advice!

I worked as an advisor at Northwestern Mutual for three years. You need to carefully vet the advisor you’re working with. Some are good advisors; others are just insurance salespeople. ONLY work with advisors who have been in the business for at least 10 years and have an investment-focused practice. Otherwise, you’re more likely to deal with someone focused on selling insurance.

Whole life insurance can make sense in certain situations, but it’s often not the best starting point. Focus on maxing your IRA, HSA, and employer retirement accounts first. If you still have extra savings beyond that, then maybe consider whole life insurance.