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Northwestern Mutual Financial Network

The insurance industry has long been characterized by independent brokers who maintain close ties with their communities. It was inevitable for the insurance industry to succomb to the new requirements of the online age. Two of the largest insurance companies, Northwestern Mutual Life and AIG employ nearly 20 thousand agents across the country to sell their products from independent community branches. Due to the complexity of products like life insurance and annuities, agents have traditionally been an integral part of the insurance business. As a result, the insurance industry is not as severely affected by the Internet as are the banking and securities brokerage industries. Nevertheless, insurance companies have been forced to adapt their services to the Internet in order to maintain their market share.

The defeat of the Glass-Steagal Act has allowed insurance companies to diversify across different financial services. Today Northwestern Mutual operates a network through which it provides securities brokerage, estate planning services, retirement planning, and employee benefits. It is largely because of the companies exposure to the securities brokerage market that it has needed to adapt its services to the Internet. Insurance is also sold through the website, however, to a lesser extent. Northwestern Mutual has in fact declared that it will recruit more financial representatives in 2002 than in any other year.

The traditional "sales" role is disappearing in the insurance industry. However, as evidenced by Northwestern Mutual, this does not spell disaster for those employed by insurance companies. The biggest change for employees is coming in the form of their function. The far-raching Internet will allow more people to purchase insurance and investment products. This translates to an increasing need for financial representatives to provide expert guidance and account maintenance.

The Internet has revolutionized the financial services industry. It has provided a means by which companies and consumers can save time and money. Unfortunately, it has also reduced the need for many employees who once performed routine tasks. The need for professionals will remain high as an ever-increasing number of Americans purchase financial products online. The Internet should thus be seen not as a threat to the industry, but a valuable opportunity for innovation.