Over the summer, I received an internship offer from Northwestern Mutual. I accepted this internship, realizing that this was considered as the number 1 finance internship, and I am going into investment management for my career. Northwestern Mutual is an organization which provides financial products and services to Americans. These financial products include life insurance, health insurance, disability insurance, long term care, 529 college plans, 401K retirement plans and other retirement plans, annuities, and mutual funds. The headquarters of Northwestern Mutual is in Milwaukee. In Milwaukee, actuarial scientists utilize mortality tables and other statistical measurements to provide the rest of the organization the cost that each of these products should be put onto the market for. Northwestern Mutual has offices in every state across America, with the Milwaukee headquarters being the most important office in the organization.
Northwestern Mutual is a mutual company. This signifies that the policy holders own a part of the company, and the company makes its decisions in best interests of the policy holders. On the other hand, a typical stock company has its profits go to shareholders, which isn't the case in this organization. Northwestern Mutual is also a very unique company in the sense that the financial representatives are able to offer, along with the products of Northwestern Mutual, any products from any insurance company. However, no company has the ability to offer Northwestern Mutual's financial products.
It is important for an insurance company to have solid financial ratings because potential customers typically review the financial strength of the insurance company that they will hold a policy with. Northwestern Mutual has the best ratings from every rater, making Northwestern Mutual the most attractive company for a customer to hold a policy with. This is key for the success of financial representatives, which is the position that I held over the summer.
Before my internship started, the college unit directors trained all of the interns. This training program was helpful for every intern because the 10 weeks that we were interning, we had knowledge of the company, exhibiting the importance of the college unit directors to the organization. The training took place via conference calls for two months, in person for 8 hours a day for a week, and in 4 booklets which were geared towards passing the life and health insurance exams. Since I made it through the training and passed all 4 of the exams, I was able to participate in a 10 week internship.
During the internship, there were several transaction costs which were incurred. Since we had to meet with current and potential clients, gas money was a big transaction cost. The Chicago branch for Northwestern Mutual has clients all over Chicago, so gas became the most heavy transaction cost by far. A way to cut down the cost of this transaction cost was to carpool and set up meetings with other financial representatives and financial representative interns that had potential and current clients near other potential and current clients. Another transaction cost that was incurred is phone call fees, because for an hour a day, we would have to call people and explain the work that we do at Northwestern Mutual. Calling people was only 1/8 of the internship, but I called a lot of people in a short amount of time, so that transaction cost became moderately heavy. Other transaction costs included buying suits which is important in business and being a part of the market and a professional environment, buying a bus ticket to Milwaukee for the annual meeting, and all of the materials which were necessary to complete the internship for the summer of 2014.
Let me start with a bit of reaction to your writing style before getting into the economics content. You seem to have a preference for superlatives....Northwestern Mutual is the best (place to get an internship, place for a person to get an insurance policy, etc.) In an economics class, such usage can get you into trouble when you are not looking for it.
ReplyDeleteHere's a simply example to illustrate. Faculty and staff get some life insurance through the U of I as a condition of employment and they may buy optional additional coverage. The provider is Minnesota Life, a competitor of Northwestern Mutual. Is the state of Illinois being stupid in contracting with a company other than Northwestern Mutual for such coverage? If not, then what you said in your piece is not strictly correct.
You would be much better off as a matter of writing, to use the comparative, rather than the superlative. Northwestern Mutual is a good financial services company. There are other companies in the industry that are also good companies. If a large buyer is procuring from one of these companies in a sole source contract, then getting a good deal can matter in which company to choose. So in some cases one company's offering is better, but not always.
Let me turn to the economics. The training discussion was interesting but I wish you had expanded on it. In particular, the following questions seem relevant given how much discussion there has been in the news about unpaid internships.
(a) Were you paid during the time you actually did intern?
(b) Were you paid for your time during the training?
(c) Where did the training fit in during the academic year calendar?
(d) Did you receive any academic credit while you interned?
Addressing these questions would have given your piece a different orientation. The focus would have been your internship, which you have experiential knowledge of. I hope that in future posts you can focus on that. In this piece you might have written a little background about Northwestern Mutual, but less than you've provided. Ask how relevant the background info is to understanding your internship.
You might have also explained more the role of the College Unit Directors. I gather there were other interns from our campus and the College Unit Director for our campus coordinated their activities. Was this person a former student at the U of I? If not, how did the person know how to blend the internship activities with your academic ones in a way so the two didn't compete with each other to the intern's detriment?
I also found it interesting that you didn't think of what the College Unit Directors did as managing transaction costs (it sure seems that was the case) but you did consider commuting costs as transaction costs. They really aren't. Getting to where work occurs is a production cost, when telecommuting is not permitted. It may be a production cost that is incurred by the intern rather than the company, but it is a production cost. We'll discuss this in class on Tuesday.