A Year Later, Northwestern Mutual, LearnVest Reflect on Acquisition

Slightly over a year ago, Milwaukee-based life insurance giant Northwestern Mutual acquired LearnVest, a New York-based fintech startup.

Northwestern Mutual didn’t have a record of buying many early-stage companies, making the purchase a surprise to some observers. (At the time, CEO John Schlifske told Forbes that the insurer, which manages nearly $90 billion in assets, wasn’t about to go on a shopping spree; so far his words have held true.) Then again, the two groups did have a history: Northwestern Mutual’s private equity arm led a $28 million investment in LearnVest in April 2014.

But even if the deal didn’t come as a shocker, the two sides didn’t say—or, in all likelihood, know—exactly what their relationship was going to look like going forward. Now, the picture is starting to become clearer.

On Thursday, Northwestern Mutual said in a press release that over the past 12 months, it has worked to bring LearnVest—still led by founder and CEO Alexa von Tobel as an independent subsidiary of the insurer—into the fold. Among the fruits of this labor are a redesigned online portal and mobile app that Northwestern Mutual’s 4.3 million clients can use to manage their finances. These tools can help clients and advisors by putting “assets, liabilities, and insurance in one place,” according to the release.

In an interview with Xconomy, Northwestern Mutual chief technology officer Karl Gouverneur said that following the acquisition, the insurer “lifted concepts” from LearnVest’s technology and user interface, and he doesn’t anticipate there will be any sort of learning curve for clients when it comes to navigaing the revamped portal.

At the OnRamp Insurance Conference, which took place in Chicago earlier this year, one of the sessions featured a discussion between Gouverneur and John Gardner, co-founder and chief financial officer of LearnVest, that offered a look back at the acquisition and its aftermath.

“Northwestern Mutual wanted to be at the center of their clients’ financial lives,” Gardner told the audience. “At LearnVest, we thought we could help develop a platform to make Northwestern Mutual agents the most trusted advisor in the eye of their clients.”

Gouverneur explained the sequence of events leading up to the deal. He said that in 2012, he alerted Northwestern Mutual’s board of directors about the emergence of the fintech industry.

“That led to a conversation that started in late 2013 or early 2014,” he said, and eventually to the insurer’s eight-figure investment in LearnVest.

Gouverneur noted that Northwestern Mutual is a 159-year-old organization, but nonetheless one that must anticipate disruptive technological and generational changes.

“Are my kids going to buy life insurance from a person?” he asked rhetorically. “I don’t think so. I think my son will be allergic to that type of interaction.”

Terms of the deal have not been disclosed, but reports by Bloomberg and Fortune last year pegged the purchase price at more than $250 million, citing anonymous sources familiar with the transaction.

Northwestern Mutual said in Thursday’s press release that in addition to her duties at LearnVest, von Tobel is now the insurer’s vice president of client experience. von Tobel and the majority of LearnVest’s employees continue to work from the company’s New York offices.

For her part—and LearnVest’s—the timing of the exit may have been close to perfect. A service LearnVest provides—so-called robo-advising, where algorithms, not humans, counsel clients—has become one of the hottest areas in fintech, the Boston Business Journal has reported. So much so that deep-pocketed investment groups like Vanguard, Fidelity Investments, and Charles Schwab (NYSE: SCHW) have jumped in to try to get a piece of the action, which will likely make it harder for startups to compete. That’s not a pressing concern for LearnVest, though, thanks to the fact that it now operates as part of a well-heeled parent company.

Jeff Buchanan is the editor of Xconomy Wisconsin. Email: jbuchanan@xconomy.com Follow @_jeffbuchanan

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