This week, we speak with John E. Schlifske CEO of Northwestern Mutual. The 160-year old firm underwrites over $2 trillion in life insurance, and has about $300 billion in client assets; they are ranked #102 on the Fortune 500. Schlifske joined Northwestern Mutual in 1987 as an investment specialist, and climbed through the ranks, becoming CEO 11 years ago. The firm announced a record $6.2 billion dividend in 2021.
We discuss how he began scraping paint off of trucks for his father’s small trucking business, and it made him want to go to college ands work in an office. Northwestern was his second job a few years out of grad school, and he rose through the ranks over 34 years.
He explains the challenges that low interest rates present to managing assets for policy holders. It has created a headwind for policy holders — in the 1990s, long term rates were as high as 8% versus 3% today. He notes that the Japanese experience was a sharp warning for insurers to get their financial holders in order, and to recognize the downward trend over rates as persistent and long lasting.
Insurance is one of the industries that have not (yet) been disrupted by technology. The reason is likely due to the massive capital requirements of the industry. But he believes eventually disruption will eventually find its way to the insurance industry on both the risk side and the wealth management side.
He was an extremely vocal supporter of the “Black Lives Matters” protests, noting inequality is just a matter of justice, but an ongoing economic problem in the United States. The firm has a very diverse Board of Directors, and began looking to hire more women and people of color 8 years ago. When any of his diverse senior executives gets hired away, he takes that as a proof point their recruitment and training is creating executives sought after within the industry.
A list of his favorite books is here; A transcript of our conversation is available here.
You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Rob Arnott, founder and chairman of Research Affiliates. The firm created & patented a methodology for basing indexes on fundamental metrics instead of market cap weighting, and its strategies runs over $160 billion in assets. Arnott is the author of over 100 academic papers, and is the co-author of the book “The Fundamental Index: A Better Way to Invest.”
John Schliske’s Favorite Books
Oliver Wiswell by Kenneth Roberts
Lincoln’s Mentors: The Education of a Leader by Michael Gerhardt
