PAID CONTENT
The Covid-19 pandemic has turned our lives upside down and shaken our confidence in the concept of planning for the future. Two years later, shaken by the experience, many investors worry whether they can count on the financial markets to help them achieve their goals.
Nearly six in 10 Canadians (59 per cent) were concerned about the impact of Covid-19 on their savings and retirement plans at the end of 2020, according to an Ipsos poll conducted in November this year. In search of market exposure with less risk, many people have turned to segregated funds. Data collected by Investor Economics (an ISS Market Intelligence company) shows that gross sales of segmented funds reached a 12-year high in 2020 at $13.7 billion. This trend will continue in 2021, with first quarter gross sales of $5.4 billion, up 25% from the prior year.
Part of the appeal is that the cost of packaging seg fund insurance has dropped. In some cases, the management expense ratio (MER) of a seg fund is equivalent to the MER of the underlying mutual fund. This makes seg funds attractive to people of all ages who want to limit potential market losses.
Multigenerational crisis of trust
All age groups are experiencing pandemic-induced anxiety about market returns, according to a recent study by Beneva, the merger of La Capitale and SSQ Insurance.
More than half (57%) of millennials who are not yet investing are worried about losing money in the financial markets. Even more (80%) of Gen Xers, dismayed by their dot.com investing experiences and global financial crises, believe they will have a harder time achieving financial security than their parents.
There are also boomers who are retiring and moving from accumulation to decumulation. They strive for continuous growth, but they also need capital protection and estate planning solutions.
Guarantees enable you to return to investing
“Clients need to get back to investing, and we need to be there for them, understand their needs and ensure they are also managing risk,” says Lara Nourcy, executive vice president of individual insurance and financial services at Beneva. “That balance is what an insurance product can provide to customers.”
This RRSP season, Nourcy suggests advisors use products like La Capitale Investment Accounts and SSQ Insurance Guaranteed Mutual Funds to provide clients of every generation with the potential for significantly better returns than fixed-income investments, with guarantees that protect assets from the worst effects of volatility.
“It is important for advisors to provide Canadians with product solutions that give them the confidence to manage risk wisely and achieve their goals,” says Nourcy. “At Beneva, we focus more on the customer than on the product. The product is intended to help the customer invest and ensure security, but he is the center of attention, and we work to ensure that the product meets his needs and protects what is most valuable to him.”
Market returns plus warranties at a reasonable price
| La Capitale investment accounts | SSQ Insurance Guaranteed Investment Funds | |
| Insurance security | 100% capital guarantee in the event of death for contributions made before the age of 75 | Maturity/death capital guarantee 75%/75%.
Maturity/death capital guarantee 75%/100%. 100%/100% maturity/death capital guarantee. |
| Investment opportunity | Branded funds from AGF, CI Investments, Dynamic, Fidelity, TDAM and others | Institutional money management from Beutel Goodman, BlackRock Asset Management, Jarislowsky Fraser, PIMCO and others |
| Maintenance costs | Range from 1.41% to 2.60% | Range from 1.30% to 3.30% |
| The added value of a warranty | No additional capital guarantee fee | It offers more generous protection, including maturity and principal guarantees upon death |
Lara Nourcy
Executive Vice President, Individual Insurance and Financial Services, Beneva
