Thrivent Financial doesn't do anything necessarily fast, so it might have been easy to miss the evolution over the past several years of the world's largest fraternal organization, which has a history dating back 115 years.
But the Appleton, Wisc.-based diversified financial services organization is committed, in its uniquely deliberate way, to establishing a bigger footprint in the industry.
To that end, in 2014 Thrivent made the bold move of expanding its target market beyond the country's 6 million Lutherans to include the country's 200 million Christians. That move was followed by a decision late last year to place Thrivent's $27 billion family of 48 mutual funds on the platforms at Schwab, Fidelity, Pershing and TD Ameritrade.
The burning question for the chief executive of the organization that employs 2,400 financial representatives with more than $116 billion under management and advisement is, what took so long?
"This is a 50-year plan, not a five-year plan," said Brad Hewitt, who joined Thrivent in 2003 as the chief fraternal officer and has been CEO since 2010.
"Why did it take 113 years to go beyond Lutherans? Well, it's just one of those things where we saw the potential to reach the broader Christian community," he said. "We know that 70% of Americans have less than $1,000 saved for emergencies, and most live paycheck to paycheck and die in debt."
Although a target market for Thrivent is still Christians, Mr. Hewitt said the firm is dedicated to serving all "middle America," which helps explain the $52,000 average household income of Thrivent clients.
"Our target market is not, generally speaking, the top 1% or 2% of affluence in America, but we're happy with the other 99%," he said. "The reality is, for most young families starting out, they actually need insurance products as much or more than they need investment advice."
The insurance side of Thrivent is where you get to the origins of the company that was created in 2002 through the combination of the Lutheran Brotherhood and the Aid Association for Lutherans, which have histories dating to the early 1900s. The seemingly unhurried pace of Thrivent's growth strategy has a lot to do with the company's ultimate focus, but also has something to do with the organizational structure of a not-for-profit fraternal organization.
As part of the rules enabling Thrivent to maintain its tax-exempt fraternal organization status, anyone purchasing insurance must sign a form attesting to being an active Christian.
And as a fraternal organization, Thrivent is required to solicit votes from those two million insurance-holding members before any major business decisions are made. Thus, the measured pace of Thrivent's growth strategy.
Mr. Hewitt said about a quarter of the advisers left the newly formed Thrivent following the merger of the two Lutheran organizations in 2002.
"We've been inching our way back up," he said.
And by focusing on entry-level representatives, Mr. Hewitt said the rep numbers have been growing by between 1% and 3% per year, but asset growth over the past three years has averaged about 6%.
RONALD BLUE PURCHASE
While growth through acquisitions is not a formal part of the strategy, Thrivent did recently acquire Ronald Blue & Co., an Atlanta-based Christian-focused RIA with $7.5 billion under management.
"One of the things that attracted us to Thrivent was the real missional alignment of wanting to help people be wise with money," said Nicholas Stonestreet, a Ronald Blue executive who became the CEO of the combined $8 billion Thrivent Trust Company.
In terms of the seemingly narrow focus on Christian clients, Mr. Stonestreet does not see a challenge, and believes the broader financial services industry is opening up to such subcategories.
"At Ronald Blue, we took biblical principles around money and applied that to being wise with money," he said. "We're glad to serve anybody, but it will mostly resonate with Christians."
On the issue of potentially missing out on non-Christian clients, Mr. Stonestreet recalled a time when he worked as a managing director at Merrill Lynch and was helping Ronald Blue set up a platform for wealthy clients.
"I met a Ronald Blue client who happened to be Jewish, and I asked him about working with a Christian firm," Mr. Stonestreet recalled. "He said, 'I don't know much about the bible things they talk about, but I know I can trust that guy.'"
Ronald Blue, the man who founded the Christian advisory firm in 1979 and went on to start Kingdom Advisors in 2003, also believes the industry is moving toward "values-based investing," that should feed into the Thrivent model.
"Sure, it does narrow the market, but on the other hand, the whole industry is moving toward specialized values-based planning," Mr. Blue said. "I think it's where the financial services world is going, and it's causing a focus to change from transactional-based to planning-based in meeting the clients' needs."
Mr. Hewitt echoes many of those sentiments, describing Thrivent's mission as "helping people be wise with money and live generously. Our mission is not to sell a bunch of mutual funds."
THRIVENT'S DOL LAWSUIT
But some might see a conflict between such statements and Thrivent's 2016 lawsuit challenging the Department of Labor's fiduciary rule.
Asked about the apparent conflict of representing middle-America while challenging a rule designed to protect consumers, a Thrivent spokesperson responded with a company statement explaining that the legal challenge is narrow in scope and relates to the unique nature of a member-owned organization like Thrivent.
The spokesperson explained that as a member-owned organization, Thrivent is specifically challenging the parts of the law that could result in a member essentially suing him or herself.
"Thrivent has long supported the best-interest standard for financial services," the statement reads. "We support the overall goal of the fiduciary rule and we are not challenging the spirit or entirety of the DOL fiduciary rule. However, Thrivent has an established and effective member dispute resolution program through which disputes are resolved on an individual basis."
In terms of what's next for Thrivent, Mr. Hewitt is not predicting any sudden moves, but he does believe Thrivent has a model with staying power.
"What's really fascinating is that virtually none of the religions generally have a different view of what money is supposed to be; that it's supposed to be a tool not a treasure," he said. "At a 50,000-foot level, there's incredible unanimity in terms of what money is. But at a practical level, you can't even find agreement within the same church. We think that's part of the value we bring: a common theme of being wise with money."