This is the first article in a four-part series that focuses on the tremendous opportunity and responsibility of doing business in today’s retirement market, highlighting the value of trusted advice, Canadians’ desire for guaranteed lifetime income, longevity (especially among women) and intergenerational wealth transfers.

Right now, there is a tremendous opportunity at your doorstep.

In 2012, 1,000 Canadians turned 65 every day on average, a number expected to peak at 1,400 a day by 2021.1 The largest segment of the Canadian population—the baby boomers, who count for 9.4 million people and 27 per cent of the population2—is advancing into retirement. Over the next two decades, six million boomer households will turn 65 and need to convert assets into retirement income.3 The boomers control 40 per cent of Canada’s wealth—that’s $1.24 trillion in assets!4 And their shift from the accumulation to decumulation years will have a macro effect not only on our economy, but also on our society as a whole.

What does this all mean? It means money in motion, at a magnitude and speed we haven’t witnessed before in Canada’s history. And you, as a trusted financial advisor in the lives of fellow Canadians, have the unique opportunity to serve Canadians during this incredible transfer of wealth.

The need for financial advice from a trusted advisor has never been stronger.

Accumulation to decumulation

The boomers haven’t shied away from doing things their own way. As a generation, they’ve challenged the status quo through every step of their journey. Today, they’re more active and redefining the retirement we’ve known from days gone by. Some are downsizing to free up assets. Many are purchasing new or additional properties—in fact, a 2011 Conference Board of Canada study predicted that by 2030, about 80 per cent of new housing demand will come from consumers aged 65 and older. Other boomers plan to renovate their homes so they can live more comfortably in retirement.

The realities boomers will face during this transitional time could include a shift from two household incomes to one, changes in lifestyle, increased health needs with age and the potential loss of a loved one, to name a few. They need your advice to make sense of these changes and help guide their next move in the right direction.

Life—and money—is in motion unlike ever before in Canada and it’s only expected to continue in the years ahead. In 2011, the oldest boomers started entering retirement and over the next 15 years, the balance of this generation will follow. They’ll progress through retirement for an extended period of time—it’s true: boomers are even bucking trends when it comes to life expectancy. Today, Canadians are living significantly longer than they did even 35 years ago, and life expectancy for those who reach age 65 has only increased.

Increased life expectancy

Life expectancy has increased dramatically in the past few decades, and will likely keep improving. In Canada, a 65-year-old man now has an average life expectancy of 85.9 years, and the average 65-year-old woman will live to age 88.3.5 But these are just averages; a better way to think about life expectancy is by telling a story.

There are 10 high school girlfriends who all just turned 65 and decide to catch up over coffee. The conversation moves from their families to retirement plans and whether they think they’ve saved enough for retirement. Well, if this is an average group, the first of the 10 friends could live for five years to age 70, and the last for 35 years to age 100. One person needs to save for five years of retirement spending; another for 35 years. The problem is you don’t know who’s who! And that’s what the risk of outliving your assets is all about.6

So gone are the days of modelling a client’s retirement spending with a full stop at age 85 or even 90. Together, as an industry, we need to ensure Canadians are working with an advisor who is equipped with the latest insights, so they can make smart decisions about their money in motion and, ultimately, achieve financial security that lasts a lifetime.

Intergenerational transfer of wealth: the $895 billion opportunity

To add to this money in motion, we also expect a massive intergenerational transfer of wealth to change hands in the next 10 years: a projected $895 billion transfer of assets.7

The magnitude of this number might make some Canadians breathe easier if they assume it’s a one-shot inheritance that will fund their retirement. But realistically, it will evolve into a continuous process, where assets will monetize and re-allocate to new owners. It’s overly optimistic to expect it will fund most or even many of their golden years, especially as Canadians are living longer and spending more time—and money—in retirement. Here’s where the opportunity, and challenge, exists for advisors: the preferences, priorities, financial needs, attitudes and balance sheet circumstances of the coming generation of heirs will influence how and where inherited wealth is deployed.8

Now more than ever, Canadians need financial advice to help them find tax-efficient solutions, with some guarantees, so they can retire with confidence and enjoy these years.

The bottom line

Are you ready and positioned for this incredible opportunity to help Canadians? Are you deepening relationships with your clients and having important conversations with their heirs? Take stock of how carefully you’re listening to your clients—anticipating their needs and what lies ahead of them. Offer holistic solutions to help them through each of their life stages and prolonged life expectancy. Take advantage of the accessible and innovative products and services our financial institutions have to offer Canadians. And reinforce your clients’ decision to save for retirement or buy protection for their loved ones—making them feel good about the action they’ve been empowered to take through your insight. After all, they’re doing the right thing!

Reinforcing the value of financial advice from a trusted advisor is something we deeply believe in at Sun Life Financial. Together, as an industry, let’s build a brighter future for Canadians.

You might also like…

1 Statistics Canada, 2012

2 Statistics Canada, Canada’s Population Estimates, 2014

3 Investor Economics, 2013 Household Balance Sheet Report

4 Ibid

5 Office of the Superintendent of Financial Institutions, Mortality Projections for Social Security Programs in Canada, April 2014

6 Thanks to Allianz U.S. for this approach to describe life expectancy

7 Investor Economics, 2013 Household Balance Sheet Report

8 Ibid

Dean A. Connor was appointed President & Chief Executive Officer, Sun Life Financial effective December 1, 2011, and is a member of the Company’s Board of Directors.

Mr. Connor joined Sun Life in 2006 as Executive Vice-President with responsibility for the Company’s United Kingdom and Reinsurance operations, strategic international activities and corporate functions. In 2008, he was appointed President of Sun Life’s Canadian operations.

In 2010, he became Chief Operating Officer with responsibility for Sun Life’s Canadian and United Kingdom operations, MFS, Marketing, Human Resources, Information Technology and other shared business services.

Mr. Connor joined Sun Life following 28 years at Mercer Human Resource Consulting, where most recently he was Mercer’s President for the Americas, encompassing its business operations in the United States, Latin America and Canada.

Mr. Connor currently serves on the Ivey Advisory Board, and as Director of the Canadian Life and Health Insurance Association and a Trustee for the University Health Network in Toronto.

Mr. Connor is a Fellow of the Society of Actuaries and the Canadian Institute of Actuaries. He holds an Honours Business Administration (HBA) from the Richard Ivey School of Business at Western University.