Northern Trust’s Katie Nixon: Why financial services innovation is an evolution, not a revolution

JARED JOHNSON: Katie, from a client perspective, what do you think it's going to look and feel like to be a Northern Trust Wealth Management client in five years? What do you think is going to be the same? What's going to be different? Are there certain views into the markets or portfolios that are becoming more or less valuable or different types of touch points Northern clients are interested in?

KATIE NIXON: In considering this question, I separated the what from the how because I do believe what we provide to clients and what they expect from us will probably remain pretty much the same.

They expect us to be their trusted advisor. They expect us to have a deep knowledge of their goals. They expect us to be experts in portfolio and asset allocation theory. So I think the what is going to probably stay the same, but perhaps the how will be different, and I do think that we'll be using different methods to deliver our value proposition to clients. First thing, and I know we're going to talk about technology a little bit later, but I think the way that we deliver [technology] might be different over time — much deeper use of digital tools and digital communication tools. We'll probably be using, as advisors, different tools in order to deepen the discovery process. What we've learned from our clients in the last several years is the importance of a really truly deep and customized discovery process, so enabling our partners to do that in a high quality way is going to require technology.

So I'm thinking about things like our goals-driven wealth management framework that is really enabled by our GPS application [Goals-Powered Solutions — an investment approach that aligns clients’ portfolios with their life goals, rather than focusing solely on maximizing returns and minimizing risk], and perhaps opening up parts of that application for clients to work with on their own. One of the things that we've heard is that clients, once they see the power of GPS, as we call it, is they want to fool around with it. They want to take it home, they want to do some what-if scenarios. They might want to do some what-if scenarios that they're not even comfortable talking to us about. What if they make a decision to sell their business? What about a divorce? Things like that, that they might want to noodle around with before they talk to their advisor about it. The fact that we're going to still be our client's trusted advisor won't change, but perhaps how we deliver that will.
 

JJ: Sticking to the theme of collaboration, will the partners or advisors at Northern Trust change their methodology to be more collaborative? How would you expect to lead that kind of change and get Northern employees comfortable with a new way of working and new technologies? There's some learning curve, and it's always difficult in a large institution — especially like Northern that's been around for 130 years, to change — so what are some of the things that you would do or that you see happening at Northern to change culture and to help your employees adapt?

KN: Great question, and it's a really important question, because when you change anything at an organization like Northern Trust that has 130 years of experience in dealing with clients, you want to do so in a manner that at the end of the day, you get the best of both worlds.

You maintain that culture that's been building for 130 years around taking care of clients, client comes first, the fiduciary culture, but you also want to make sure that you have that innovation engine and that you're constantly learning and growing. To achieve the best of both worlds is really hard. But I think it's an evolution, not a revolution, and I think in launching goals-driven wealth management seven years ago, we did so much work upfront in making sure that the methodology was pristine. We did so much work upfront making sure that the tools would support the client conversation. What we didn't realize or recognize is that change is just hard. It almost doesn't matter if you have the best process and the best tools and the best training. Change at large organizations takes time, and so it's much better to go into it believing that it's an evolution and not a revolution. 

That's the approach we'll take with the evolution of goals-driven into being a much more collaborative experience. It requires the development of completely different muscles. My job as CIO is to make sure that we have the right exercise equipment that will help develop those muscles, tone those muscles, and prepare our portfolio managers for very different kinds of conversations, recognizing always, though, that it's going to take time. We can't force a big change management effort onto a very large advisor base in a company that has this 130 years of experience. We're really careful about the way that we engage with it, but what's been really interesting to me is, when it's introduced this way, partners really embrace it, because it helps them become better advisors. Once they see the value to them as advisors, then the change kind of becomes very self-fulfilling. Once it stops becoming something you're making me do, and it becomes something that I want to do because it makes me better, it makes me feel better about what I do and what I deliver to clients, then you're on the right track. You tend to see just it becoming a very positive feedback loop and self-fulfilling prophecy. 

JJ: I see, so it's about helping the employees understand the value and the positivity that comes from the change, and it's not about change for change’s sake?

KN: Yeah, and I think one of the early pieces of pushback, honestly, to that point exactly was, “Are you telling me that I haven't been doing a good job for my 20 years of experience or my 10 years of experience?” So the way you introduce change is also so critically important. And to your point exactly, this change is designed to benefit not just the clients, where we're confident that it will provide a better outcome, but it's designed to benefit the partners. It's designed to let you learn and evolve and grow, and I oftentimes say ... this is someone who's been working in this business for 30 years ... that it's a blessing this late in our experience, in our careers, to be able to learn something really new and really interesting and really different. 

JJ: Let's talk about the voice of your client. What do you do to get a sense of how your clients are feeling about the markets and how that applies to their portfolio? Is there a process where you, portfolio managers, or the partners interview them? Is there a way to get feedback digitally? Is it more of a person-to-person way to gather that feedback? And once you've got all of that information, how do you distill that down to something that you can make actionable?

KN: I would say two things. There's tactical communication and strategic communication.

We want communication, we want to know what you think. So we anticipate that, and we sort of pepper our partners with soundbites and materials that they can share with clients, related to what's gone on in the market. Now, I will say it's a balancing act, because while we want to communicate during times of market stress, we want our clients to take a longer-term view, and we don't want to overreact. Our clients are going to take their cues from us, and if we overreact and are alarming them with lots and lots and lots and lots of bullet points, they're going to be alarmed. So we want to take a measured approach to making sure clients recognize and realize that we're here and that we're on the case, that we understand what's going on. We want to make sure our partners are well informed to be able to provide that point of view to their clients. And to the extent that we're not doing enough, we get feedback from our network. And what is our network?

We have a spiderweb network within Northern Trust that includes senior investment leaders, regional senior investment leaders, obviously portfolio managers, and then we have our regional directors, which are really our foot soldiers in each market that are there to really be constantly taking the pulse of partners and providing feedback to the center. Now, on a strategic level, how do we know how we're know how we're doing for clients? How do we know if there are any gaps in our delivery or gaps in our messaging? We use that same network from a strategic perspective, and we have some very intentionally developed feedback loops, where we are always sure that we are on top of what our partners want. Now, with clients, we do use the phrase "voice of the client". We do rolling surveys for our clients, asking them a myriad questions that cover not just the investment practice but across practices. We regularly share that feedback. That feedback is shared directly with the practices, so that we can either modify or enhance some of the messaging and some of the methodologies that we're using for clients. That has been so incredibly important, that voice of the client feedback, to affirm, frankly, to us that our change, our evolution towards a goals-based investment approach has been exactly the right thing to do, because our clients have told us point blank, "I am more satisfied now. I feel more confident now. I feel you are listening to me, and you understand me now." So we're getting very, very good feedback. And that becomes very self-fulfilling, because advisors love to know that their clients think they're doing a better job, so they're much more willing and open to embracing new ways of thinking about asset allocation, for example.

JJ: That positive reinforcement, especially coming from the clients, is always music to any client-facing person's ears.

KN: Of course. 
 

JJ: You're one of the most well-regarded people in finance today, and you oversee hundreds of billions of dollars for Northern Trust investors. In addition to all of that, you've gotten to that place in the world of finance that's a bit of a boys' club. Could you share, what are some of the challenges you've had to overcome to get to where you are today, and do you think that these challenges have become more surmountable over time?

KN: It’s a hard question because I think everyone's experience is so different. Talking to my peers, there is a broad and deep recognition of the need for more diversity in roles like mine. I feel really good about the future not looking like the past, in terms of it being so male-dominated. The best advice I can give anybody — but particularly women as they try to advance in areas that are male-dominated like investments and asset management — is to find a mentor. Someone who will care about you and your career, someone who will put you in the position to show your value, because I think there are so many talented people that just haven't had the opportunity to step on the stage. The second thing I would say is, when you're offered that opportunity, you gotta take it, and sometimes it's uncomfortable, and sometimes you don't feel fully prepared, and sometimes it requires a ton of work, and sometimes it also requires a lot of sacrifices. But you have to take that chance, and you have to take that leap of faith and believe in yourself.


This might sound kind of stupid, but it worked for me: Take advantage of every single opportunity you have, no matter how big or how small it is. If it's a course that you can take, if it's a conference that you can attend, if it's some networking meeting that you have the opportunity to be a part of, take advantage of every single opportunity that you have in front of you that helps to build your personal resume and make you much stronger. And then the last I would say is do the work, especially in the investment business. This is not easy, this is a very complex ecosystem that we all work in, and it's difficult, and it requires a lot of work. It requires a lot work not just during the day, but a lot of reading and research and commitment to your profession and your professionalism. I think that's really important. But I'll tell you, I am really heartened when I look around. I am fortunate enough to be in the media for Northern Trust, representing Northern Trust, and whether I'm at Bloomberg or CNBC or CNN for that matter,

I see a lot of incredible women around me all the time, and it gives me hope that things are changing, and changing for the better, and perhaps changing a little bit more quickly than we feared. 

JJ: I love that attitude. That's a really interesting perspective, and I think having gotten to where you are, that's some great advice, really for anyone.

Follow Katie Nixon on LinkedIn.