Kirk McMillan

In this article, Kirk McMillan discusses gaps in legacy planning and the risks boomers face as they age.

Money is moving Boomers will inherit $ 1 trillion over the next decade
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Canadian baby boomers will inherit $1 trillion through 2016 to 2026. That means this money is already in motion.

This “Great Intergenerational Wealth Transfer” will be challenging, when you consider these two survey findings: [tweet this]

2 out of 3 of working Canadians don't have a will, 58% of affluent Canadians haven't discussed their wishes with their heirs
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This situation could leave clients’ family members in a bind. Dying without a will means a government-mandated formula is used to distribute their assets – and that could mean important people in their life could be left with less – or left out completely.

You have the opportunity to start a conversation with clients about inheritance planning – including those in the high-net-worth category.

Help clients overcome their fears about their heirs’ ability to manage their money. One way is to educate the next generation on how to manage their finances. Building relationships with clients’ heirs is a win-win: clients have peace of mind that their legacy plans are in place, and you’re setting the stage to bring new clients into your business.

In addition to legacy planning, boomers need your advice about how to handle three major risks: living longer, running out of money and the effects of market volatility.

3 charts showing longevity risk, risk of running out of money and risk of market volatility in retirement planning
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The period of five years before and five years after retirement is what I call the “retirement-risk zone.” As clients are turning 65 years old, and retirement is becoming a reality to many of these people, it’s so important to:

  • discuss locking in some of the gains they may have seen over the latest, extended bull market.
  • identify opportunities to lock in some guaranteed income, which we know is important to them.
  • prepare clients, so that if markets do turn, they’re not retiring at the wrong time and taking redemptions when markets are down. [tweet this]

Wealth products with guarantees

One of the Sun Life Guaranteed Investment Funds (GIFs) contracts that can provide lifetime guaranteed income is Sun GIF Solutions – Income Series. It can help give clients peace of mind with the certainty of guaranteed income for life. Clients can lock in current or future retirement income based on the deposit amount and current interest rates – giving them the safety and guarantees they want.

Clients moving money into Sun GIF Solutions – Estate Series take advantage of features to help them protect their legacy:

  • It pays the 100% death benefit guarantee at the greater of the death benefit guarantee or the market value at death.
  • The death benefit guarantee protects the value of the premiums paid on death, less a reduction for withdrawals.
  • The death benefit guarantee is automatically reset – locked in and increased – each year until age 80, if the market value is greater than the current value of the death benefit guarantee.

The intergenerational wealth transfer, aging population and desire for guaranteed retirement income have created key opportunities. You can help clients achieve lifetime financial security and plan for their legacies. You can also increase your engagement with clients, their children, and their grandchildren, potentially growing your business.

Great places to start

1 2019 Sun Life Barometer Report.
2 Environics Research and Investment Planning Council/Private Wealth Poll, January 2018.
3 Population estimates by age and sex, Statistics Canada, 2018.
4 Canadian Institute of Actuaries, 2017.
5 2018 Canadian Guaranteed Lifetime Income Study.
6 Results from the 2018 Global Survey of Individual Investors.