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The Power Of Financial Resilience

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CEOs have a pivotal role to play in helping their employees achieve financial security, with or without a recession.

Many prognosticators are working to predict when a recession may hit. As that debate continues, people are facing real challenges. Between depressed equity markets, inflationary impacts increasing prices for consumers, and layoffs beginning across industries, the economic headwinds are here and only increasing. Many companies have been letting go of tech talent as well as temporary workers—a signal that wider layoffs may be coming soon.

Over the past few weeks, hundreds of our advisors and clients have asked me for my 2023 economic forecast. And while I don’t possess a crystal ball, you will be hard-pressed to find a more bullish champion of the U.S. economy than me. No nation has a greater entrepreneurial spirit or deeper commitment to financial prosperity than America—and over the long-term, I believe our country will continue to solve problems and flourish.

But in the short-term, as much as we all want the U.S. economy to continue to grow steadily and predictably, in reality, the global economy is cyclical—ebbing and flowing as cycles come and go.

Here’s the reality: an economic recession will happen eventually.

Predictions about when a recession will arrive might be excellent fodder for conversations around the dinner table, but there’s an even more important question that Americans should be asking themselves:

How can we reduce the impact of a recession on our lives—and create future prosperity?

The past few years have dealt most of us enough surprises to last a lifetime. A pandemic, nationwide business closures, an economic downturn, virtual schooling, supply chain issues and more. The last thing anyone wants to do is adapt to more of the unexpected.

Rather than brace for financial upheaval, I believe 2023 will be the year more Americans seek financial resilience. They want to get out of bed in the morning free from the financial anxiety that a recession can create. They want the freedom to make financial decisions that are in their best interest, not reactive choices based on factors outside their control.

The good news is this: people can take steps to create greater certainty in their futures, if they create comprehensive financial plans.

The ripples of an economic downturn can be unpredictable. Individuals may face layoffs, a prolonged period of wage stagnation, and the loss of employer benefits. Recessions can also cause sudden volatility in the stock market, weaken the housing market, and affect people’s spending on “nonessential businesses.”

The best step people can take to start a financial security journey is to audit their financial lives. Often, employees aren’t sure what financial tools they have in their toolbox, nor do they know the tools they’re missing. CEOs can play a pivotal role in solving this complexity. Senior organizational leaders can work with employee benefits teams to clearly define the investment tactics and insurance products offered by the company that employees can use to grow and protect their wealth. In addition, they can make available financial advisors to explain and explore supplemental financial security strategies that may strengthen their talent’s financial plans.

Financial literacy is a simple way to significantly impact people’s financial lives, and if CEOs place financial education at the forefront of the guidance they offer employees, it can make a big impact. According to the Edelman Trust Barometer, 63 percent of workers worldwide believe information provided from their employer is credible—more believable than national government (55%), media reports (54%) and social media (36%). Being able to wisely protect and grow the wealth employees have already built is needed now more than ever, and those organizations who can help their employees do so are well-positioned to lead.

Proactive and comprehensive financial planning can help shield people from potential financial surprises and the fear they create.

At Northwestern Mutual, our advisors help individuals, families and business owners to build financial security and become more resilient in their lives. That starts with helping our clients identify the stumbling blocks that could impact them financially, and then mitigating each one with a comprehensive financial plan.

Today, our advisors are helping clients build and bolster their plans—strengthening emergency savings accounts, paying down high-interest debts, protecting the wealth they’ve already built and accumulating assets for the future. A comprehensive approach to financial planning—combining permanent life insurance, disability insurance, investments, annuities and savvy budgeting—puts our clients in a position of growth, strength, stability and security. Moreover, we know from third-party research that our comprehensive approach to financial planning delivers superior results over the long-term more often than others.

We are proactively helping people rise above the noise and the disruption, and even act opportunistically in a time of falling values. Many of our clients have told me how well-positioned they are to act quickly if the stock market or real estate market declines—using the liquidity in their financial plans to purchase assets at deeply discounted prices.

For more than 165 years, Northwestern Mutual has followed many of these financial planning principles to run our company.

Northwestern Mutual is a “no surprises” business. We don’t offer insurance products that can’t outperform what we illustrate. We don’t chase fads like Bitcoin or invest in cryptocurrency exchanges due to their lack of regulation, volatility and speculative nature – and we don’t make promises we can’t keep. Instead, we plan for the long-term and do what’s best for our clients – delivering the highest quality and value to our policyowners while also ensuring our company’s sterling financial strength.

Over time, we’ve worked to further fortify that exceptional financial strength—accumulating a total surplus that currently tops $37 billion. As a result, we continue to earn the best-possible financial strength ratings, keep our promises, pay claims, deliver industry-leading value, weather financial turbulence and continue investing in innovations to promote our company’s future prosperity.

Our strength also enables us to act opportunistically in the markets. In 2020, when the onset of the pandemic caused the stock market to fall precipitously, we were ready to strategically purchase investments, adhering to the maxim, “buy low and sell high.” All told, we spent $14 billion to buy risk assets near market lows. That decisive action is still paying dividends today – literally. When we carefully manage the investments in our General Account, our underwriting standards and our expenses, we’re enabled to pay a dividend to our participating policyowners. In 2023, we expect to pay a record-setting, industry-leading $6.8 billion dividend to our clients.

This year, our goal is to help more Americans eliminate the impact of financial surprises on their lives and provide them with the financial resilience they seek. We are ready to help people create comprehensive financial plans so they can gain the same sense of control, confidence and optimism we feel about today and the future. In 2023, Northwestern Mutual is strong and well-positioned to help our clients thrive if there’s an economic recession. We don’t fear the future—we’ve prepared for it. And we are ready to help others do the same.


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