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Northern Trust Investments Review

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Northern Trust Investments

Northern Trust Investments, Inc. (NTI) is a fee-based financial advisor firm that’s based at its flagship location in Chicago, Illinois. The firm has offices in 18 other states, in Washington, D.C. and throughout the world as well. Wealth and asset management are NTI’s bread and butter, and it even operates its own proprietary mutual funds and exchange-traded funds (ETFs).

Northern Trust Investments Background

Northern Trust Investments is the U.S.-based arm of Northern Trust Asset Management. However, Northern Trust Asset Management is merely a branch of the entire Northern Trust Corporation, a publicly-traded financial holding company. Northern Trust Corporation has been in business since 1889, while NTI was opened in 1988.

What Types of Clients Does Northern Trust Investments Accept?

Almost 35,000 clients are currently enrolled in Northern Trust Investments’ services, and nearly all of them are high-net-worth and non-high-net-worth individuals. The firm works with a multitude of other clients too, though, such as businesses, pension plans, employee benefit plans, trusts, foundations, endowments, public and corporate retirement funds, insurance companies, registered and unregistered investment pools, sovereign wealth funds, government entities, banks and collective funds.

Northern Trust Investments Minimum Account Size

Northern Trust Investment institutes a variable minimum account size requirement. Factors that decide both if you’ll have a minimum and what it’ll be if you do include the type of client you are and what investment strategy/asset classes you choose.

Services Offered by Northern Trust Investments

Here is an overview of the services available through Northern Trust:

  • Separately managed accounts (SMAs)
    • Individualized discretionary investment management based on:
      • Life goals
      • Risk tolerance
      • Liquidity needs
      • Tax situation
    • Wealth management
    • Asset allocation planning
    • Brokerage services
    • Financial planning
      • Retirement planning
      • Retirement savings rollovers
      • Cash flow maximization
      • Tax minimization
      • Risk management
      • Philanthropic gift planning
      • Business ownership planning
      • Trust planning
      • Estate planning
    • Family wealth management
      • Multigenerational planning
      • Wealth protection
      • Generational wealth transitions
      • Educational services
  • Investment management for investment pools, like:
    • Mutual funds
    • ETFs
    • Bank common and collective funds
    • Other U.S. and non-U.S. investment funds
  • Multi-manager strategies
    • Selection and termination of affiliated and non-affiliated investment advisors
  • Wrap programs
  • Proprietary and non-affiliated model investment portfolios
  • Investment research and advisory services
  • Overlay services
    • Currency hedging
    • Beta management
    • Cash equitization
  • Index provider
  • Transition management
    • Restructure or reallocation of assets

Northern Trust Investments Investment Philosophy

Northern Trust Investments uses a plethora of different investment strategies to fulfill clients’ needs. For example, there are equity, fixed income, multi-manager, model portfolio, transition management and overlay services. These are chosen based on your risk tolerance, tax considerations, liquidity needs and more.

Common investments used by NTI are stocks, bonds, registered and unregistered investment companies, money market instruments, ETFs, non-U.S. issuer securities, futures, warrants, forwards, inflation-linked securities, short sales, over-the-counter (OTC) securities, real estate investment trusts (REITS), Rule 144A securities, government obligations, derivatives, debt securities, options contracts, asset-backed securities and commercial paper.

Fees Under Northern Trust Investments

The majority of Northern Trust Investments’ fee schedule is listed in the tables below. These rates are charged to your account on either a monthly or quarterly basis in arrears. All fees will be relayed to you in writing via the investment advisory agreement. You can have your fees deducted from your account’s balance automatically, but you must authorize NTI to do this. If not, you will receive a bill in the mail listing your charges.

Separately Managed Account (SMA) Fees
Portfolio Strategy Annual Fee Range
Active Equity 0.25% - 1.00%
Engineered Equity Up to 0.60%
Passive Equity 0.06% - 0.70%
Fixed Income 0.01% - 0.30%

 

Investment Pool Fees
Portfolio Strategy Annual Fee Range
Active Equity 0.40% - 1.10%
Engineered Equity Up to 0.55%
Passive Equity 0.01% - 0.70%
Fixed Income 0.01% - 0.80%

 

Fees for Other Services
Service/Program Annual Fee Range
Wrap Programs Up to 1.00%
Model Portfolios Up to 0.30%
Investment Research & Advisory Services $15,000 - $30,000
Multi-Manager Strategies negotiable
Transition Management negotiable
Index Provider negotiable
Overlay Services negotiable

Northern Trust Investments charges performance-based fees to some of its clients. For the most part, these charges will be based on a percentage of your portfolio’s capital gains or capital appreciation.

What to Watch Out For

Clients of Northern Trust Investments may have performance-based fees included in their fee schedule. This raises a possible conflict of interest, as NTI’s advisors may be inclined to utilize riskier investment philosophies to induce higher returns, and, in turn, more compensation. Northern Trust also has a number of affiliated investment pools and proprietary ETFs and mutual funds. Because of this, advisors may include these funds in clients’ investment portfolios. However, doing so will garner more compensation for NTI and its affiliates. Despite the two conflicts of interest listed above, Northern Trust and its team of advisors are fiduciaries, meaning they are legally bound to act in your best financial interests at all times.

Aside from this, Northern Trust has a disclosure listed on its SEC-filed Form ADV. You can find more information regarding this in the next section.

Disclosures

In 2012, Northern Trust Investments was ordered by the ICE Futures U.S. (ICE) to pay a $75,000 fine in connection with the firm’s violation of ICE Exchange Rule 27.21 [now titled 4.02(i)]. This law states that “a Person may opt to transact a cross trade only in futures (not options) by separately entering one order and allowing it is to be exposed on the electronic trading system (ETS) for a minimum of five seconds before entering the opposing order.” NTI was found to have not followed this regulation, and therefore was hit with a cease and desist order and the aforementioned fine.

Opening an Account With Northern Trust Investments

To get in touch with Northern Trust, visit the contact page on its website. This online resource offers a tool that will help you locate one of its branches in the U.S. or elsewhere. You can also call the firm’s general inquiries line at (312) 630-6000 to find out more information.

Where Is Northern Trust Investments Located?

Although Northern Trust Investments can be found around the globe, it has locations in Washington, D.C. and 19 states, including Arizona, Florida, Georgia, Massachusetts, Ohio, Colorado, Nevada, Minnesota, New York, Washington, California, Illinois, Texas, New Jersey, Delaware, Wisconsin, Connecticut, Michigan and Missouri.

Tips to Step Up Your Investment Game

  • Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
  • While deciding upon your risk tolerance may seem a bit abstract, devising a specific asset allocation makes it more concrete. This investment principle dictates what percentage of each investment type you should include in your portfolio in order to stay in line with a predetermined risk level. SmartAsset’s asset allocation calculator can help simplify this sometimes complex process.

How Many Years $1 Million Lasts in Retirement

SmartAsset's interactive map highlights places where $1 million will last the longest in retirement. Zoom between states and the national map to see the top spots in each region. Also, scroll over any city to learn about the cost of living in retirement for that location.

Least
Most
Rank City Housing Expenses Food Expenses Healthcare Expenses Utilities Expenses Transportation Expenses

Methodology To determine how long a $1 million nest egg would cover retirement costs in cities across America, we analyzed data on average expenditures for seniors, cost of living and investment returns.

First, we looked at data from the Bureau of Labor Statistics (BLS) on the average annual expenditures of seniors. We then applied cost of living data from the Council for Community and Economic Research to adjust those national average spending levels based on the costs of each expense category (housing, food, healthcare, utilities, transportation and other) in each city. Using this data, SmartAsset calculated the average cost of living for retirees in the largest U.S. cities.

We assumed the $1 million would grow at a real return (interest minus inflation) of 2%. This reflects the typical return on a conservative investment portfolio. Then, we divided $1 million by the sum of each of those annual numbers to determine how long $1 million would cover retirement expenses in each of the cities in our study. Cities where $1 million lasted the longest ranked the highest in the study.

Sources: Bureau of Labor Statistics (BLS), Council for Community and Economic Research