NORTHWESTERN MUTUAL FINANCIAL NETWORK*
The Todd Organization
Disclosure Regarding Structure, Compensation, Product Selection and Role
The Todd Organization ("Todd") is a national executive benefits firm specializing in the design, implementation, administration, and financing of nonqualified deferred compensation plans and is a provider of such services within the Northwestern Mutual Financial Network. The Todd Organization is a marketing name under which two companies operate: Todd Consulting, Inc. ("TCI") and Todd Securities, L.L.C. ("TSLLC") TCI is the parent company of TSLLC. TCI is a state licensed insurance agency. TSLLC is a registered broker-dealer, FINRA member firm and state licensed insurance agency.
Todd contracts with independent sales agents across the United States who act as consultants or specialists to provide services and products related to nonqualified deferred compensation and other executive benefit plans. Some independent sales agents are stockholders of TCI. All independent sales agents are licensed insurance agents of The Northwestern Mutual Life Insurance Company ("Northwestern Mutual") and many also act as appointed agents for certain other insurance companies. Additionally, these independent sales agents are registered representatives of Northwestern Mutual Investment Services, LLC ("NMIS"), a registered broker-dealer and FINRA member firm.
Through an investment affiliate, Northwestern Mutual purchased a minority ownership interest in TCI in June of 2003. Through this same affiliate, Northwestern Mutual also made certain loans to TCI. Northwestern Mutual has a right to attend all meetings of TCI's Board of Directors as an observer. Northwestern Mutual employees work closely with and assist TCI and Todd independent sales agents. Despite Northwestern Mutual's interest in and assistance to TCI, Todd independent sales agents offer and sell products from a number of third party insurance companies. Todd independent sales agents, however, do not represent all insurance companies nor do they necessarily offer to sell all products from the insurance companies which they represent.
TCI is selective about the insurance companies for which it offers insurance products and about the products that it offers in the corporate market place. TCI performs certain analysis with regard to insurance companies and the products such companies offer in the corporate market. The analysis TCI undertakes to make these selections includes a number of factors such as, but not limited to, quantitative product performance, subaccount fund information and third party credit ratings. Working in conjunction with a Todd independent sales agent, clients ultimately determine the product most appropriate to their investment needs and objectives.
TSLLC is a limited purpose broker-dealer that will refer clients to NMIS, for which TSLLC will receive compensation computed as a percentage of commissions and fees paid to NMIS by each such client. TSLLC does not carry or handle client accounts and does not maintain the securities registrations of any registered representatives servicing client accounts. NMIS carries and is solely responsible for client accounts, maintains the registrations of registered representatives that are Todd independent sales agents and is responsible for all compliance and supervisory functions relative to the opening and servicing of client accounts.
When a Todd independent sales agent interacts with a client, he/she is doing so as a Todd executive benefit consultant or specialist when engaged in plan design and analysis, as a licensed insurance agent of Northwestern Mutual or a third party insurance carrier when offering non-variable insurance products and/or as a registered representative of NMIS when selling variable insurance products. In such capacities, the Todd independent sales agent is not acting in a fiduciary role with respect to any client.
Todd independent sales agents do not provide, offer or receive compensation for legal, tax, accounting or investment advice. Todd independent sales agents are compensated by commissions and fees. Commission and fee schedules vary by product, service and insurance company. What and how a Todd independent sales agent is compensated when a client purchases an insurance product depends on the product and the insurance company issuing the product. While the exact amount of compensation payable to the sales agent for any particular transaction may not be determinable until the arrangement is finalized, an estimate of such compensation can be provided to the client.
Todd independent sales agents have entered into contracts with TCI to compensate TCI through TSLLC for analysis, design, marketing, and other support services. Todd independent sales agents may pay certain fees, a portion of commissions, or both, to TCI through TSLLC for these services. TCI may also charge the client certain additional fees, not related to the purchase or sale of products, for the design, analysis, administration, and/or servicing of executive benefit plans. Other than revenues directly related to sales, neither TCI nor TSLLC receive income from insurance companies. However, certain insurance companies have periodically provided funds to TCI for the specific purpose of attending and hosting certain Todd events, including bi-annual sales and marketing meetings. By attending such events, companies have greater access to Todd independent sales agents to provide training, education and product information. TCI has and does not, however, provide a financial incentive to Todd independent sales agents to sell insurance products of insurance companies that have periodically provided funds to TCI for such events. Details relative to such funding are available upon request.
Should there be any material change that affects the arrangements described herein, this disclosure statement will be amended accordingly. For additional information, please contact Ward Russell, at 336-299-2333 or russellw@toddorg.com or Dennis Fitzpatrick at 414-665-7069 or dennisfitzpatrick@northwesternmutual.com.