The shuttering of LearnVest’s financial advice services and tools indicates it was a bad cultural fit for Northwestern Mutual, industry experts say, despite the fanfare surrounding the pricey acquisition and executive pronouncements to the contrary.

A number of anonymous employee postings on a job review site also deemed Northwestern’s management of LearnVest as a negative and described how the startup’s brand died after the deal. One employee who gave an overall positive review still referred to the firm as “LearnWestern Mutual.”

Northwestern Mutual 2016 revenue

The Milwaukee-based insurance firm, which operates the No. 5 independent broker-dealer, credits LearnVest for transforming its client experience after Northwestern purchased LearnVest for more than $250 million in 2015.

LearnVest founder Alexa Von Tobel remained CEO under Northwestern after founding the New York-based firm in 2009, and Northwestern appointed her its chief digital officer last June. The insurance firm named three other LearnVest executives to senior leadership roles at the time. One of them, LearnVest Chief Marketing Officer Aditi Gokhale, was named Northwestern’s CMO as well.

Speaking with industry trade publication Martech, Gokhale said she had “been welcomed into the Northwestern Mutual family with my new role. I’m happy about it — from the financial advisors to the leadership team and everyone inviting me in with open arms. It says a lot about the company culture and values.”

Industry observers, however, were less enthusiastic.

“I thought [Northwestern] grossly overpaid and that it was a tough culture fit,” says Joel Bruckenstein, founder of the Technology Tools for Today conference, who adds the firms’ May 3 announcement that LearnVest would drop its direct client and employer-plan services was no surprise.

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Acquisitions often pose risks for the buyer and seller, and Northwestern made its largest tech play ahead of some of its rivals. For example, LPL Financial plans to spend $100 million on tech this year, while Cetera Financial Group is rolling out a new proprietary client portal in 2018 as well.

Northwestern “got a digital platform that has potential. I don't know that they broadly have better digital delivery today, but that could be the end result,” Bruckenstein says. “As of now, they don't have much, given what they paid.”

Representatives for LearnVest and Northwestern did not make von Tobel or any other executives available for interviews. Von Tobel did not respond to an inquiry on social media.

The success of Northwestern’s new platform is also not clear, says Lex Sokolin, global director of fintech strategy at Autonomous Research. Regulatory and cultural issues and a team that became “less hungry” after they “cashed out” may have all played a role in LearnVest shedding its planning services, he says.

“The fintech partnerships are much harder to pull off than it appears,” Sokolin says. “Most B2C firms have terrible data architecture, which is a killer.”

Northwestern had been a Series D-round lead investor in LearnVest prior to the acquisition, notes Bill Winterberg of fintech consulting firm FPPad. However, he observed a notable drop in consumer-focused marketing by LearnVest and reduced public statements by von Tobel and her team after the acquisition.

Northwestern paid a lot of money “for them to eventually terminate the direct-to-consumer planning service,” Winterberg says. “It's disappointing that LearnVest, a business that had the potential to make an impact among mass-affluent households with low-cost planning engagements, was unable to sustain its business model under the ownership of an insurance company.”

Trying to mash up a storied insurance company with untested fintech was a bad idea to begin with, says Tim Welsh, head of industry consulting firm Nexus Strategy.

“The tech itself is not worth $250 million, you can get that these days white-label cheap from SigFig and Jemstep,” Welsh says, referring to successful robo startups that respectively partnered with UBS and Invesco not long after LearnVest’s acquisition.

“And it wasn’t the end clients,” Welsh adds of LearnVest’s some 8,000 users. “There was no value there, so they scrapped the whole thing. Insurance companies have never been known for innovation, so this train wreck was very predictable.”

The lessons from the acquisition and subsequent fallout include a disciplined approach on the asking price, an emphasis on finding a cultural fit and a clear implementation strategy with buy-in from employees, according to Bruckenstein.

LearnVest, which had some 10,000 retail clients and 25,000 employer-plan clients at the time of the acquisition, will “relaunch later this year as a fresh, digital resource focused on educating consumers on how to meet their financial goals,” according to Northwestern.

Onetime Morgan Stanley trader Alexa von Tobel launched LearnVest and helped start Drop.io, a file-sharing service acquired by Facebook in 2010. She remains CEO of LearnVest and chief digital officer of Northwestern Mutual. Bloomberg News


Northwestern spokeswoman Betsy Hoylman said in an email that no asset transfer will be necessary because LearnVest does not manage assets. CEO John Schlifske had said in 2015 that Northwestern intended to use LearnVest’s software to launch a new planning platform for its advisors.

“Now, with more consumers wanting an end-to-end experience — that is, working with an advisor to create a personalized financial plan and take action on it — the companies are further integrating under the Northwestern Mutual umbrella,” according to Northwestern’s statement.

“This move will allow us to focus resources and leverage Northwestern Mutual’s established nationwide network of financial advisors, using the cutting-edge planning platform and digital tools that we’ve created together.”

For her part, von Tobel told Bloomberg after the acquisition that “nothing about our business is changing,” with LearnVest at the time set to hire more planners for its Arizona office and programmers in its New York headquarters. LearnVest now lists more than 40 open staff positions on its website.

LearnVest staff, however, paint a grim picture of their firm after the Northwestern deal. At least nine employees posting anonymously on jobs and recruiting site Glassdoor reported cultural clashes and described a lack of clear direction from management.

“This is not a startup. As a company that claims to be such a thriving place for young financial planners with a mission on helping change people’s lives,” a former Arizona-based planning associate wrote, “they have a lot to be ashamed about.”

“You’re really working for Northwestern Mutual, LearnVest exists in name only,” wrote a former New York employee, who called the company “a once-great place that has turned into a derisive and caustic quagmire.”

Not all of the recent reviews posted on jobs and recruiting site Glassdoor describe the acquisition negatively, as several called the integration with Northwestern an excellent professional experience. One staff member wrote in March that the New York office was “truly reinventing” Northwestern.

The LearnVest New York office has grown from 80 to 100 at the time of the acquisition to 350 going on 500, the staff member said, noting the office had “catapulted in size and responsibility.” The employee acknowledged “plenty of headaches and culture clash” with a “duh.”

Still, many cited uncertainty about which employees would remain with the firm and which would be let go moving forward under Northwestern. Staff members gave LearnVest only 3.3 stars out of 5, on average, in 77 reviews, and many criticized the direction of the company following the deal.

Suleman Din

Suleman Din

Suleman Din is technology editor of American Banker and Financial Planning. Follow him on Twitter at @sulemandn.
Tobias Salinger

Tobias Salinger

Tobias Salinger is an associate editor for Financial Planning, On Wall Street & Bank Investment Consultant.