Page 100 - Mumme Booklet

DRAFT

DISCLOSURES

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Compensation: Although the financial planning process is important, by itself, it will not meet your needs for
financial security. To become more financially secure, you have to act. Your wealth management advisor is
compensated only when you “take action,” by purchasing insurance, investments or advisory services. As an
insurance agent and registered representative, your wealth management advisor is compensated through
commissions which are typically calculated as a percentage of: (1) the insurance premium you pay; (2) the
amount you pay for an investment or annuity or (3) the accumulated value of your investments. Some
products pay more compensation than other products. This is usually because some products have more
complex features and require more work from your wealth management advisor in the sales process and/or in
the servicing of the product as compared to products with lesser compensation.
As a representative of NMWMC, your wealth management advisor receives as compensation a percentage of
the fees you pay if you are a client of any NMWMC advisory programs, or a percentage of the fees you pay to
receive trust or private client services.

Your wealth management advisor may also receive additional compensation in the form of cash bonuses,
non-cash compensation (e.g., achievement recognition, conferences, prizes, awards, preferential servicing)
and retirement benefits based on commissions received in connection with selling Northwestern Mutual
insurance products; these forms of compensation incentivize your wealth management advisor to recommend
and sell Northwestern Mutual insurance products. Your wealth management advisor’s total compensation for
insurance products is designed to encourage long-term relationships and a quality business.

Northwestern Mutual wealth management advisors know that in the long run they will benefit most by serving
you well. Your interests and theirs align because they rely heavily on the referrals they receive from satisfied
clients. Nevertheless, the fact that your wealth management advisor receives transaction-based
compensation when recommending investment and insurance products can present a conflict of interest.
Northwestern Mutual addresses this potential conflict of interest by educating its wealth management
advisors to act in your interests and by having a supervisory system that helps to ensure that insurance and
investment products are appropriately sold.

On the investment, as your wealth management advisor increases their sales, and reaches certain sales
production levels of both investment and insurance products, NMIS and NMWMC incrementally increase the
percentage of commissions and/or fees paid to your wealth management advisor. The higher the level of
overall commissions or fees that your wealth management advisor is responsible for generating, the higher
the percentage of commissions or fees they receive, which in turn lowers the percentage of fees or
commissions retained by NMIS or NMWWC. The different sales production levels and increasing percentages
tied to those production levels are known as a “grid” which is typical in the industry. The grid payout
percentages range between 35% and 95% payable to, depending on the level of commissions or fees
generated by that wealth management advisor during the previous year. Therefore, a wealth management
advisor's current year grid level is set based on the wealth management advisor's previous year's sales
production. The ability to improve grid placement in the following year incentivizes your wealth management
advisor to sell and service brokerage, variable annuity, advisory accounts and insurance products and
advisory services are not product specific, there is no incentive for them to sell you any particular investment.

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This plan is not complete without the Assumptions and Disclosures pages appearing at the end.
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