In this article, Rocco Taglioni discusses the increasing interest in segregated fund products and the potential education gap, with insights from wealth sales director Alex Goldmaker, CFP, CFA.

With Canada’s population aging, the financial services industry is offering investors more products and solutions to address longevity risk. Other risks also influence their decisions: market volatility, future inflation and health-care costs. The wide variety of segregated (seg) fund products can answer some of your clients’ questions about these risks.

Seg fund products, available exclusively through insurance companies, provide the growth potential of market-based investments, with the benefits of an insurance contract. They first came into popularity over 20 years ago, when interest rates began to fall and conservative investors turned to them as an alternative to GICs (guaranteed investment certificates). Seg fund contracts continue to provide a way to increase the value of assets while providing some protection from market downturns.

Headlines in the media this year suggest an increasing interest in seg funds:

Overall net assets in segregated funds rose to $113 billion as of March 2015, compared with $104 billion the previous March.5

Canadians’ concern with solving for risks will continue to drive demand for seg fund products. That’s according to Alex Goldmaker, Certified Financial Planner and Chartered Financial Analyst.6 Goldmaker has been having a lot of success providing seg fund products as a solution to the risks clients need to address in their portfolios.

When asked about the rise in seg fund product sales, he says, “I don’t believe that seg funds are making a comeback. I believe they’re coming into their own.”

Why would clients add seg fund products to their portfolios?

Depending on the seg fund product, they can be particularly suitable for clients who are:

  • looking for guaranteed income for life.
  • seeking enough return on their investments to reach savings goals.
  • looking for a broad range of quality investment options.
  • building their savings, but looking for protection against market downturns.
  • seeking insurance benefits, including prompt estate settlement and guarantees.

Despite the rising popularity of seg funds, Goldmaker admits advisors have challenges positioning them with their clients. Understandably, he says wholesalers can help advisors explain the features and benefits.

For example, “if a client has non-registered assets, a seg fund product is a great way to expedite the estate settlement process, potentially saving the client estate and probate fees.”

He says another reason is to create liquidity. A client may have bigger accounts and lots of money, but putting a portion of non-registered retirement savings into a seg fund product, with a named beneficiary, gets proceeds paid out quickly. Then they don’t have to worry about those fees and having money tied up.

Seg fund products can provide a harmonious balance of insurance and investments. Clients want investment choices. But the features and the benefits address risks. Clients don’t have to worry about market volatility as much with seg fund products, because they offer guarantees on the principal.

New products to meet changing needs

Goldmaker says new products are coming online that address inflation, market and longevity risks. He uses the example of the suite of Sun Life Guaranteed Investment Funds (GIFs) products: “You’ve got products that you can mix and match with different features and benefits to achieve the right solution. For example, the Sun GIF Solutions – Investment Series addresses inflation risk by offering a wide array of funds. The Sun GIF Solutions – Estate Series and Sun Protect GIF products offer a 100% death benefit guarantee and have annual, automatic resets until age 80 – a great way for clients to outsource their market risk to the insurance company. Sun Lifetime Advantage GIF and Sun GIF Solutions – Income Series address longevity risk by providing guaranteed income for life.”

By combining — mixing and matching — these different products, he encourages advisors to help manage the risks their clients face.

Goldmaker says many firms haven’t provided the right sales support to assist advisors in positioning seg fund products in the right situations. Because these products do require a lot more education than other products, he believes many insurance companies could do a better job making the seg fund products conversation easier for you to have.

“I think it’s really important that the wholesaler is there to properly position the products and ensure the advisor understands that if you call me with a situation, I’ll get you the best materials so that you’re not doing it yourself.”

Seg fund products can be complex, so Goldmaker’s understanding of them can add a lot of value to an advisor’s practice. “I can say, ‘Here’s the right solution in our opinion. Here are the right materials to present that,’ and support my recommendations with illustrations, case studies, and simple, easy-to-understand marketing material.” He gives the example of a one-page document advisors can use to show the emotional cost of settling an estate.

It starts with sales support

With 18 years of industry experience focused on investments and insurance, Goldmaker has accumulated extensive knowledge about financial services and investors’ evolving needs. He’s passionate about working with advisors to demonstrate how retail wealth management products can help Canadians reach their financial and retirement goals.

“I’ve had two jobs in 18 years. One of my strengths is helping advisors put solutions together and explain them to clients. I really get a lot of satisfaction from the relationships I generate with advisors.

“It doesn’t matter how good the product is if you don’t get back to advisors and they have trouble doing business with you. Your customer service has to be as good as your product. Or people won’t buy it.”

He ends his conversation by delivering this challenge: “Give me a case that you’re working on and let me demonstrate how seg fund products can address the client’s risks, in a way that you may not have thought of before.”

Go to the web pages below for more information about the products, sell sheets to help you explain the products to clients, client videos and other marketing materials:

Segregated fund products Advisor web page address
Sun Life GIFs – full suite
Sun GIF Solutions
Sun Lifetime Advantage GIF
Sun Protect GIF

You can also use the interactive Choose your path tool to help your clients understand more about building for their future, getting ready for retirement living in retirement and preparing a legacy.

For more information, send an email to Alex Goldmaker or contact a member of Sun Life’s Wealth sales team.

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1 Clare O’Hara, The Globe and Mail, May 11, 2015.

2 Donna Glasgow, The Insurance and Investment Journal, April 14, 2015.

3 John Archer, Montreal Gazette, July 9, 2015.

4 David Pett, Financial Post, April 21, 2015.

5 Insurance Advisory Service report, Investor Economics, 2015.

6 Since January 2015, Goldmaker has been a Director of Individual Wealth Sales at Sun Life Financial.

Rocco Taglioni, Senior Vice-President, Head of Distribution, Individual Insurance and Wealth, is responsible for the overall leadership of Sun Life Financial’s distribution organizations across its Retail business in Canada. His role encompasses the leadership of the distribution company, as President Sun Life Financial Distributors Inc., as well as the Insurance and Wealth wholesaling sales organizations. Through the various leadership teams he oversees the development, direction, and execution of the Distribution strategies centered on wealth management, protection, retirement, and estate and financial planning.

Since joining Sun Life in 2004, Rocco has held various executive leadership roles, including Vice-President Business Development, Group Benefits; Head of Individual Wealth Management; Senior-Vice-President, Client Solutions; and most recently Senior Vice-President, Distribution and Marketing, Individual Insurance and Wealth. Throughout his tenure at Sun Life, Rocco has led various business strategies centered on building, transforming, and evolving organizations and teams to drive higher levels of performance and success.

Rocco has 36 years of experience in strategic leadership in the insurance and investment industries. He has served on and is a member of a number of boards. Rocco is currently President and Chair, Sun Life Financial Distributors (Canada) Inc. and is a member of the Sun Life Financial Investment Services (Canada) Inc. board. He is a member of various industry associations, including Advocis, GAMA Canada, the Canadian Pension and Benefits Institute, and the Association of Canadian Pension Management.

Rocco holds a Bachelor of Arts in Economics from York University.