Here's what happens when an old-school finance firm buys a startup

As technology startups disrupt the retail, healthcare, and finance sectors, many traditional companies - those getting disrupted - are choosing to partner with the innovators.

Last year the financial technology, or fintech, world saw more than 400 mergers and acquisitions, according to investment bank Berkery Noyes.

Companies like Fidelity Investments, BlackRock, and John Hancock Financial acquired robo-advisors and financial planning firms.

But there are challenges to joining forces with innovative tech companies, especially for large, established firms in heavily regulated industries like finance.

Tim Schaefer, Northwestern Mutual's executive vice president for operations and technology, highlighted some of those hurdles in an interview with Business Insider.

"You have to calibrate expectations," Schaefer said. "A lot of it is just working through what can be barriers in communication and expectations."

His insurance giant dove into the fintech world about two years ago and acquired the financial planning startup LearnVest last March. But it has also developed other forms of partnerships with fintech companies, from mentorship relationships to strategic investments to utilising technology as a customer of fintech firms.

Schaefer said one hurdle to overcome is helping both parties agree on things like timing.

"Startups are living day by day in many cases, so they run at a very high rate," he said. "We obviously don't run quite at that rate."

He said it's hard for strategic investment companies to make decisions in 48 hours, like a startup might.

Another challenge, Schaefer said, is the ability of startups to "articulate the complete message" of what it is they're trying to do.

Sometimes he meets with startups that are too narrowly focused - just trying to sell their current product - and he wants to know more about the companies' long-term business models.

Other times, startups pitch only the business model - how they plan to grow - but don't have anything to take to market in that moment.

Schaefer also pointed to cultural differences between legacy institutions and startup companies. That's something that Northwestern Mutual, which is based in Milwaukee, has encountered with New York-based LearnVest.

The differences themselves are not a challenge, though, Schaefer said. It's just a matter of convincing both teams that they're a good thing.

"We actually want that because we're going to learn from each other," he said.