Serious looking couple, ages 40-55, receives financial advice.
iStock / JohnnyGreig

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The COVID-19 pandemic has upended our lives and rattled confidence in the concept of planning for the future. Two years on, shaken by this experience, many investors worry about whether they can count on financial markets to help them reach their goals.

Nearly six in 10 Canadians (59 per cent) were concerned about the effect of COVID-19 on their savings and retirement plans in late 2020, according to an Ipsos poll conducted in November of that year. In search of market exposure with less risk, many turned to segregated funds. Figures compiled by Investor Economics (an ISS Market Intelligence company) show seg fund gross sales reached a 12-year high in 2020, at $13.7 billion. The trend is continuing in 2021, with first quarter gross sales at $5.4 billion, up 25 per cent over the previous year.

Part of the appeal is that the cost of the seg fund insurance wrapper has dropped. In some cases, the management expense ratio (MER) of a seg fund is equivalent to the MER of the underlying mutual fund. That makes seg funds attractive to people of all ages who are looking to put a floor on potential market losses.

A multi-generational crisis of confidence

It is all ages that are experiencing pandemic-induced anxiety about market returns, according to a recent survey by Beneva, the firm created out of the coming together of La Capitale and SSQ Insurance.

More than half (57 per cent) of millennials who don’t yet invest worry about losing money in the financial markets. An even higher number (80 per cent) of Gen Xers, scarred by their experiences investing through the dot.com and global financial crises, think they will have a harder time achieving financial security than their parents.

Then there are the boomers, who are transitioning into retirement and moving from accumulation to decumulation. They’re on a quest for continued growth, but they’re also in need of capital preservation and estate planning solutions.

Guarantees offer a path back into investing

“Clients need to get back into investing, but we need to be there for them, understand their needs and make sure they’re also managing their risk,” says Lara Nourcy, executive vice-president, individual insurance and financial services, at Beneva. “That balance is what an insurance product can bring to clients.”

This RRSP season, Nourcy suggests advisors use products such as La Capitale investment accounts and SSQ Insurance guaranteed investment funds to give clients of every generation the potential for significantly better returns than fixed-income investments, with guarantees that protect assets from the worst effects of volatility.

“It’s important for advisors to provide Canadians with product solutions that give them the assurance of reasonably managing risk and also attaining their goals,” says Nourcy. “At Beneva, we’re focused on the client more than the product. The product is meant to help the client invest and be secure, but the client is at the centre and we work to make sure the product fits the client’s need to protect what’s most precious for them.” 

Market returns plus guarantees at a reasonable price

La Capitale investment accounts SSQ Insurance guaranteed investment funds
Insurance protection 100% capital guarantee on death on contributions made before age 75 75%/75% maturity/death capital guarantee

75%/100% maturity/death capital guarantee

100%/100% maturity/death capital guarantee

Investment opportunity Name-brand funds from AGF, CI Investments, Dynamic, Fidelity, TDAM and more Institutional money management from Beutel Goodman, BlackRock Asset Management, Jarislowsky Fraser, PIMCO and more
Management fees Range from 1.41% to 2.60% Range from 1.30% to 3.30%
Value-add of guarantees No additional fee charged for capital guarantee Offers more generous protection, including maturity and death capital guarantees

Lara Nourcy

Lara Nourcy
Executive vice-president, individual insurance and financial services, Beneva