Northwestern Mutual

Arthur Korsun, a seasoned leader, holds a stellar track record in efficiently managing investment equities, fixed-income regulation and financial contracts. His expertise extends to cultivating strong client relationships, encompassing both hedge fund and major organization clientele on a global scale.

Currently holding the position of Director of Investment Management at Northwestern Mutual, Korsun translates complex financial concepts into clear-cut explanation, making him an invaluable asset in the world of investment management.

In an interview with CIOReview, Korsun shares his insights on the challenges and emerging trends in the investment banking sector and modern ways to adapt to the upcoming changes.

Could you elaborate on your primary roles and responsibilities and how they impact the daily operations and long-term strategies of the firm?

In my current capacity, the central focus is the management of client assets, where we apply our expertise and experience in risk management and diversification strategies. Our approach extends beyond asset management to encompass comprehensive financial planning, regular monitoring, and necessary adjustments of client portfolios.

My team and I also emphasize the importance of behavioral discipline in investment decisions. By adopting a holistic methodology in our services, we offer significant value in professionally managed portfolios. This contrasts markedly with the outcomes typically achieved by individuals independently managing their investments.

Through this article, I would really like to highlight the distinct advantages of professional portfolio management over self-directed investment strategies.

Could you elaborate on specific strategies that you believe are crucial in your role as the director of investment management?

Our team’s collective expertise and experience are fundamental to our approach. For instance, I bring my Chartered Financial Analyst (CFA) credentials, and we also have a Certified Financial Planner (CFP) on board who specializes in financial planning, life insurance, and overall coordination. This diverse expertise enables us to tackle complex client issues effectively, particularly in areas like retirement distribution optimization and risk management.

In risk management, a common issue we observe is individuals self-managing their portfolios and inadvertently taking on either too much or too little risk. This misalignment can lead to significant financial losses or missed growth opportunities. Our role is to ensure the risk level is appropriately calibrated to each client’s risk tolerance.

Another key component of our strategy is comprehensive financial planning. While some individuals believe they can manage their finances independently, in practice, few possess the all-encompassing expertise required. Our approach covers not only risk management and diversification strategies but exclusive investment opportunities typically not accessible to individual investors.

  ​Separately Managed Accounts (SMAs) are equally distinctive offerings, especially for larger accounts. SMAs allow direct ownership of individual stocks, selected by skilled managers to align with the risk parameters of an index. This approach can yield additional returns while maintaining a similar risk profile  

For example, we use tax-loss harvesting, which can enhance after-tax returns significantly, potentially adding 1 to 3 percent in such returns. We also offer access to alternative investments like private equity and private credit, which generally present lower market volatility and higher returns compared to public markets. A strategic allocation to these private market investments can be quite beneficial.

Separately Managed Accounts (SMAs) are equally distinctive offerings, especially for larger accounts. SMAs allow direct ownership of individual stocks, selected by skilled managers to align with the risk parameters of an index. This approach can yield additional returns while maintaining a similar risk profile.

Last but not least, I would say continual monitoring and adjustment of portfolios is a cornerstone of our strategy. This involves rebalancing in response to market shifts, optimizing the portfolio’s performance.

How do you foresee the evolution of this industry in the next 18 to 24 months? Are there specific challenges or advancements, technological or otherwise, that you find particularly intriguing or significant?

One of the most significant trends I anticipate in the financial advisory space is the increasing availability of alternative investment products to advisors. This expansion will likely continue, with individual client portfolios increasingly incorporating various alternative investments, both liquid and semi-liquid.

Regarding technological advancements, companies like iCapital and CAIS have made notable strides. They have grown substantially in recent years, primarily by facilitating easier access for advisors to alternative investment opportunities. These platforms have significantly streamlined the previously cumbersome process of investing in alternatives, which involved extensive paperwork and manual tasks. This has made it far more feasible for advisors to allocate client funds to these types of investments.

We are also noticing a shift in fund offerings toward a broader range of clients. Some funds are now accessible to individuals with lower levels of accreditation, expanding opportunities beyond the traditionally required threshold of significant personal wealth. Moreover, these funds are introducing more flexible liquidity options, with quarterly or annual withdrawals, compared to the previous norm of 5 to 10-year lock-up periods.

I would say the future landscape of financial advisory services is likely to be shaped by these technological innovations and fund management strategies. This evolution will enable broader access to sophisticated investment opportunities for a wider range of clients, including those with more modest investment capacities.

What advice would you offer to peers and aspiring professionals aiming to succeed and grow in this industry?

The most crucial advice I can offer to those aspiring to thrive in asset management and asset allocation is the importance of standardization in your processes. It is essential to develop a consistent approach across your portfolio management strategies. Avoid relying on ad hoc models or making one-off decisions for individual clients. Instead, strive to align your strategies closely with the benchmarks that your performance is measured against. When you encounter the need for tailored solutions for specific clients, try to integrate these solutions into your overall framework. This ensures a more structured and coherent asset management strategy, vital for long-term success in this field.