When it comes to financial services and investments, two big names that often come up are Edward Jones and Northwestern Mutual. Both companies offer a range of financial products and advice to help individuals plan for their financial future. But how do you decide which one is right for you?
In this comprehensive guide, we’ll compare the key features, pros and cons of Edward Jones and Northwestern Mutual to help you make an informed decision.
A Brief Comparison Table
| Category | Edward Jones | Northwestern Mutual |
| Year Founded | 1922 | 1857 |
| Headquarters | St. Louis, MO | Milwaukee, WI |
| Primary Offerings | Investments like mutual funds and bonds | Insurance products like life and disability insurance |
| Account Minimums | No minimum | $50,000 to $250,000 minimum |
| Number of Advisors | 19,000+ advisors | 5,000+ financial representatives |
| Compensation Model | Salary plus commissions on products sold | Commission-based on insurance sales and fee-based for advisors |
| Planning Approach | Investment focused | Holistic financial planning |
| Typical Client Profile | Main Street investors, modest assets | High-net-worth individuals |
| Brand Reputation | Friendly and personalized advice | Premier quality and integrity |
| Pros | Local branches, no minimums, simple fees | Diverse products, established history, whole-life planning |
| Cons | Limited products, high fees for large accounts | High account minimums, complex compensation |
Overview Of Edward Jones
Founded in 1922, Edward Jones is one of the largest financial services firms in the U.S. with over 19,000 financial advisors across all 50 states. They offer investment services to over 7 million clients.
Some key things to know:
- They primarily sell mutual funds and bonds to individual investors. Other products include CDs, insurance, annuities, etc.
- Most Edward Jones advisors work from local branch offices in the community rather than a large corporate office. This allows them to provide personalized services.
- They focus on long-term investing strategies rather than active trading. Their philosophy is more about building a retirement portfolio through disciplined investing.
- Advisory services are their primary offering, but they also offer self-directed investing options through their online platform.
- There is no minimum account balance, making them accessible to new investors.
Pros
- Local presence and personalized services
- Simple advisory fee structure based on assets under management
- Good for long-term, buy-and-hold investors
- No minimum balance and accessible to new investors
Cons
- Limited investment product selection focused mainly on mutual funds
- Commission-based compensation on some products can be high
- Advisory fees can be expensive for larger portfolios
- Some advisors lack experience and industry certifications
Overview Of Northwestern Mutual
Founded in 1857, Northwestern Mutual is one of the oldest and largest life insurance companies. But today they offer a wide array of financial products and services.
Here’s an overview:
- Originally offering life insurance, they now also sell disability insurance, long-term care insurance, annuities, mutual funds, and other investments.
- Network of over 5,000 financial advisors located across the U.S.
- Ranked in 2022 as one of the “World’s Most Admired” companies by Fortune magazine.
- Over $308 billion total assets under management.
- Target market is high-net-worth individuals looking for retirement and estate planning.
Pros
- Strong financial strength and high ratings for claims-paying ability
- Holistic financial planning services
- Wide range of insurance products and investment options
- Established history and reputation
Cons
- Primarily fee-based advisor compensation
- High account minimums
- Complex fee structure
- More focused on accumulating assets than generating income
Now let’s do a detailed comparison of the two.
Also Read: Comparison Between Globe Life And Aflac.
Detailed Feature Comparison
- Investment Products Offered
Edward Jones focuses heavily on mutual funds, bonds, and cash equivalents like CDs. They offer funds mainly from their strategic partners like American Funds. Their advisors can also sell annuities, insurance, and specialty investments if licensed. However, the selection is limited compared to other firms.
Northwestern Mutual provides insurance products first and foremost, including life, disability, and long-term care insurance. For investments, they offer annuities, mutual funds, ETFs, equities, options, and fee-based investment advisory services. Overall, they have a much more diverse lineup of products.
- Account Minimums
Edward Jones does not require any minimum account balance to open an investment advisory account. This makes them easily accessible for new investors.
Northwestern Mutual typically requires minimums of $50,000 to $250,000 for investment advisory accounts depending on the program. This caters more towards higher net worth clients. Certain insurance products like annuities may have lower minimums.
- Financial Advisor Model
Edward Jones advisors work from local office branches in the community. This franchise office model allows them to provide personalized services and get to know their clients’ unique needs. Many Edward Jones advisors live in the communities that they serve.
Northwestern Mutual also has local advisors but they are more likely to work out of larger regional offices. Their advisors have greater flexibility to serve clients remotely or travel to meet clients when needed.
- Fees and Costs
Edward Jones charges an advisory fee based on the dollar amount of assets under management. Their tiered fee starts at 1.35% for the first $250,000 down to 0.70% for over $10 million. The more assets you have, the lower the marginal fee.
Northwestern Mutual also charges asset-based fees but on a much higher starting point of over 1.20% on average. Certain investments and insurance products have embedded commissions and expense ratios that also factor in. Overall, Northwestern’s pricing is less standardized and more complex for the average investor to assess.
- Financial Planning Approach
Edward Jones focuses more on portfolio investments and asset allocation models like retirement planning. The advisors provide guidance and recommendations but clients make the final investment decisions. Their services are best for disciplined long-term investors who don’t need comprehensive planning in areas like taxes and estate planning. Also watch this video!
Northwestern Mutual serves clients looking for extensive financial and life planning. Their advisors take a holistic approach to understand their clients’ entire financial picture including insurance needs, estate planning, business planning, etc. They provide highly customized solutions. This caters well to high-net-worth investors with complex financial lives.
- Brand Reputation
Edward Jones has built a reputation as a trusted neighborhood financial advisor. They are known for their friendly face-to-face service and long-term client relationships. However, they have faced some criticism recently around excessive fees and advisor knowledge gaps. But most clients are still happy with their services.
Northwestern Mutual is recognized as an established leader in life insurance with strong financial ratings. Their brand is associated with premier quality and integrity. While not as personalized as Edward Jones, they are still respected for sound financial advice. Overall, both firms have good reputations.
Also Read: Comparison Between Fisher Investments And Edward Jones.
Frequently Asked Questions (FAQ)
There is no definitive “better” option as it depends on individual needs. Northwestern Mutual is better for comprehensive financial planning given their wide range of products and holistic approach. But Edward Jones may be preferable for long-term buy-and-hold investing on a modest budget.
High-pressure sales culture, lower compensation, and lack of support resources have led to higher turnover rates among Northwestern Mutual advisors. Many go independent for greater freedom and earning potential. The intense focus on life insurance sales can also drive away more holistic planners.
Yes, Edward Jones enjoys a strong brand reputation as a trusted provider of personalized investment guidance to average investors. They score well in client satisfaction surveys for their friendly neighborhood feel and long-term advisor relationships. However, they have faced some criticism recently around fee transparency and advisor expertise.
Northwestern Mutual is highly regarded as a top-tier financial services firm for high-net-worth clients based on their established history, diverse products, and holistic planning. They are seen as premier but can be expensive. On advisor expertise, their certification requirements lag some peers but recruiting standards remain high.
Also Read: Comparison Between LPL Financial And Charles Schwab.
Conclusion
So, which financial services firm is better – Edward Jones or Northwestern Mutual? The right choice depends on your specific needs and preferences as an investor.
So, in summary, both Edward Jones and Northwestern Mutual have good reputations overall but target different market segments based on services offered and costs. Do your research to find the right fit.
If you want commission-free investments, broad fund selection, and holistic financial planning, then Northwestern Mutual is likely the better fit. The drawback is high account minimums and fees.
For hands-on advice for long-term investing on a modest budget, then Edward Jones is a great choice. But product options are limited and some advisors are better than others.
Think about what products you need, how much you have to invest, and what level of service matters to you. That will guide you towards selecting between these two highly respected firms.
And you can always get a second opinion or quotes from both before making a decision!