Advisors have the ultimate responsibility of knowing the client and determining whether any particular investment product may be suitable for them. As a Sun Life Global Investments Wealth Sales Director, my job is to help advisors understand our investment funds and solutions so that they are well prepared to work with clients.

For example, an investor who has 10 to 15 years before stepping down from a high-paying position may want to increase the value of their portfolio before they require income from their investments. To me, the ability to take on risk could be higher, with strong financial footing and considerable assets. I’d speak to the advisor about options we have at Sun Life Global Investments that could help clients not only invest for their retirement, but also develop a long-term plan for their family.

If the advisor’s client is looking for a more conservative managed portfolio solution, they may wish to look at Sun Life Granite Managed Portfolios. A possible solution could involve investing in a portfolio suitable for medium- to long-term investors looking for low to medium investment risk. For example, the Sun Life Managed Balanced Portfolio could be an ideal fit, since it aims for a target asset mix of 40 per cent fixed income and 60 per cent equity, offering the client broadly diversified exposure to equities around the world, in addition to Canadian and global fixed income. Clients could take comfort knowing that a team of professionals regularly review, monitor, and adjust these portfolios.

A less conservative approach may involve selecting a standalone fund suitable for medium to long-term investors, with medium investment risk tolerance. The Sun Life Sentry Value Fund, sub-advised by Sentry Investments, provides exposure primarily to Canadian and U.S. equities, focusing on stocks that are considered to be undervalued, compared to their perceived worth.

When speaking to investors, I remind them that it’s prudent to meet with their financial advisors regularly to evaluate their financial situation, portfolio, risk tolerance, and investment objectives and adjust for any changes. Often, as people approach retirement, they may wish to adjust their portfolio to become more conservative.

Clients may want to explore their options with their advisor as they move from the accumulation to de-cumulation phase and require cash flow from their investments. In this space, a variety of different product solutions exist for the advisor to consider, such as the Sun Life Granite Income Portfolios, or a variety of stand-alone funds, such as the Sun Life Dynamic Strategic Yield Fund or the Sun Life MFS Monthly Income Fund. T-series funds may work here as well, since they have targeted distributions of five or eight per cent (annually), paid monthly on a wide variety of funds. These distributions are generally comprised of return of capital, which is not taxed directly as it is not income. Return of capital does reduce an investor’s average cost base (ACB), and if the ACB goes below zero, an investor will pay capital gains tax on the amount below zero.

As the need shifts to drawing income, based on the clients’ investment preferences, the advisor may want to consider suggesting a bundled approach that could help protect their retirement income. For example, the advisor may propose that when clients move into retirement, they could use 10 per cent of their mutual fund portfolio to purchase a life annuity policy and 15 per cent of their mutual fund portfolio to purchase a SunFlex Retirement Income policy. This way, 75 per cent of the portfolio remains invested in mutual funds. Using this approach, clients could receive guaranteed income from the life annuity, while SunFlex Retirement Income would offer additional guaranteed income and some protection from market downturns. This can help create a retirement income portfolio that combines the growth potential and flexibility of mutual funds with protection in case of poor market returns.

Another strategy the advisor could suggest for clients to consider for their non-registered savings, provided it is suitable for their situation, would be to move their investments within a corporate class structure. By doing so, they have the ability to move between funds and asset classes without triggering a taxable disposition, provided they stay under the corporate class umbrella. Offerings from Sun Life Global Investments (Canada) Inc. would give them access to a variety of underlying fund mandates, including those sub-advised by BlackRock, Sentry, and MFS Investment Management Canada. Even as clients approach retirement age and begin to draw down their investments, they can still stay within the corporate class umbrella. Several funds offer a T-series that offers cash distributions monthly, based on a targeted annualized rate.

When clients ask about paying for their children’s or grandchildren’s post-secondary education, we find that advisors tell us the Milestone Funds are very popular for RESPs. They offer a dynamic asset mix that becomes more conservative over time, and with the added guaranteed value at maturity, clients feel comfortable that there will be funds available to help pay for their beneficiary’s post-secondary education.

Clients could also place money in a GIC to assist with post-secondary education. If they have some capacity for risk, they may want to consider placing a small portion of their assets into equities and a small portion into a GIC or a Granite Income Portfolio.

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Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual fund values change frequently and past performance may not be repeated. Mutual funds are not generally guaranteed, although the Sun Life Milestone Funds benefit from the guarantee described below.

We have structured each Sun Life Milestone Fund so that it will have sufficient assets to pay the Guaranteed Value per unit on its respective maturity date. If the net asset value per unit on the maturity date of a Sun Life Milestone Fund is less than the Guaranteed Value per unit, then Sun Life Assurance Company of Canada, as sub-advisor to the Sun Life Milestone Funds, (“Sun Life”, or the “guarantor”) has agreed to pay the shortfall to the Sun Life Milestone Fund. Any shortfall payment is subject to the financial health and creditworthiness of Sun Life.

The respective maturity dates for the Sun Life Milestone Funds is June 30 of the year in the corresponding fund’s name. The maturity date for a Sun Life Milestone Fund may be accelerated in certain circumstances, in which case an accelerated Guaranteed Value will be calculated. In such a case, the applicable Sun Life Milestone Fund will pay the greater of the net asset value per unit on the accelerated maturity date and the net present value per unit of the Guaranteed Value.

If you redeem your securities of the Sun Life Milestone Funds prior to their respective maturity dates, your redemption will be processed at the current net asset value per security, less any applicable redemption fees, and you will not benefit from the Guaranteed Value at maturity.

Additional information, including specific risks associated with the Sun Life Milestone Funds, can be found in the prospectus.

The payment of distributions is not guaranteed and may fluctuate. The payment of distributions should not be confused with a fund’s performance, rate of return, or yield. If distributions paid by the fund are greater than the performance of the fund, then your original investment will shrink. Distributions paid as a result of capital gains realized by a fund and income and dividends earned by a fund are taxable in your hands in the year they are paid. Your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, then you will have to pay capital gains tax on the amount below zero.

Sun Life Global Investments is a brand name representing the wealth distribution team of certain member companies of the Sun Life Financial group of companies carrying on business in Canada that market certain wealth products to financial advisors, including mutual funds managed by Sun Life Global Investments (Canada) Inc., insurance, annuities, and accumulation annuities issued by Sun Life Assurance Company of Canada, and GICs issued by Sun Life Financial Trust Inc.

The information contained in this article is intended for advisors for general informational use only and is compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made as to its accuracy. You should note that the views expressed are those of the author and not necessarily the opinions of Sun Life Global Investments (Canada) Inc. or its affiliates. This article is not intended to provide specific financial, tax, insurance, investment, legal or accounting advice and should not be relied upon in that regard and does not constitute a specific offer to buy and/or sell securities.

Sun Life Global Investments (Canada) Inc., MFS Institutional Advisors, Inc. and MFS Investment Management Canada Limited are members of the Sun Life Financial group of companies.