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A 2010 Open Letter to Northwestern's Chairman, Ed Zore

An Open Letter to Northwestern’s Chairman Ed Zore

Mr. Edward Zore, Chairman and CEO June 21, 2010
Northwestern Mutual Life Insurance Co.
720 East Wisconsin Ave.
Milwaukee, WI 53202

Dear Chairman Zore:

I am writing to invite you and your associates to visit my website, Since its launch in late March, my site has received many favorable comments. I very much welcome your and your associates’ thoughts, questions, criticisms, etc. on my views and information.

In particular, in light of New York’s imminent broker compensation disclosure regulation, I was wondering how the compensation disclosure information that Northwestern is preparing compares with the information provided in Table 3 of my Policy Disclosure: Press Release. Would you also please ask Chief Actuary Remstad and his team to review/assess the calculated annual costs produced by my Illustration Analyzer spreadsheet with Northwestern’s own internal numbers?

Also, could you explain why Northwestern is no longer an IMSA member? In many past annual reports to policyholders, you have touted Northwestern’s IMSA membership, stating, “For consumers, the IMSA designation indicates companies that have demonstrated a commitment to ethical marketplace conduct in the sale and promotion of life insurance and annuities.” IMSA has always advised consumers that because “ want to be sure the company you choose is reputable and ethical. A good place to start is to look for the IMSA logo.” Is it no longer worthwhile to have IMSA’s endorsement? What has now changed that caused Northwestern to jump ship?

As you know, I have been a critic of IMSA since its inception in 1996, because despite its melodious sounding Golden Rule principles, its enforcement of such has always been a sham. In fact, during my July 2008 testimony at the NY State Department of Insurance Hearings on Compensation Disclosure I declared, “IMSA is a fraud.” Do you now agree, or is it that you recognize that IMSA’s principles, although unenforced, constitute a legal noose around Northwestern’s corporate neck virtually beckoning class-action attorneys, given the field-force’s pervasive misrepresentations? Indeed, when the chapter of our industry’s recent history is written, do you think that anyone will assert that IMSA, the brainchild of either a most duplicitous or absolutely incompetent group of corporate counsels, should ever have seen the light of day?

Please say hi to all my friends in the home office; their continuing notes and sentiments of support mean a lot to me. Although it has been disruptive to have been barred from attending Northwestern’s past two annual eastern regional meetings, perhaps your successor, President Schlifske, will find a way to make amends for such one day. Please don’t hesitate to call with any questions or concerns. I look forward to hearing from you.


R. Brian Fechtel, CFA & Agent

PS A client, Full Name Replaced online with XXX, informs me that he recently exercised his term policy’s conversion option through the agent Northwestern assigned to service him after Northwestern had terminated my agent’s contract. XXX, however, was not sold a best-value, maximally-blended policy like Consumer Federation Advisor Jim Hunt and other fee-only advisers recommend. Could you please have this situation corrected for XXX or have Mr. Remstad’s team provide the information regarding potential maximum annual costs under the two alternatives (the sold blend vs. the maximal value blend) so that Steve and others could make a more informed decision? Also could you ask your compliance folks ( “The Gestapo” as they are known by some in your field force because of their unquestioning adherence to terribly misguided and in fact downright unconscionable rules) to explain how the policy sold to XXX complies with Northwestern’s rules of agent responsibility to serve the client’s best interest? Or, has Milwaukee also disavowed and discontinued this never-enforced rule when it dropped the IMSA charade?

Happy Summer, Ed. Perhaps, the fireworks that we all so enjoy on the Fourth of July may, if we’re lucky, continue all summer long in the life insurance industry.

Copies: State Regulators, IMSA’s President, Blog, and Northwestern employee friends

PS to Blog Readers Interested in Public Policy Issues What do you think of IMSA’s practice of allowing a life insurer to drop-out of IMSA after the insurer has advertised for 3 years (since its last IMSA audit) that it was in compliance with IMSA rules, and yet the insurer might not have been? For instance, what if the insurer’s (i.e., Northwestern’s) internal files are now so full of incriminating information that it could now never pass even IMSA’s flimsy audit, or if the insurer had simply begun violating IMSA rules shortly after its last audit (3 years earlier)? Have you ever heard of such an inherently faulty supervisory/compliance/certification system as IMSA’s that doesn’t demand members provide proof of compliance after they have claimed such? Isn’t this akin to allowing an athlete to claim an Olympic medal without submitting to the post-race urine/drug test?


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