Increase your wealth opportunities as Canadians live longer

With this shift, it’s a logical step for the big Canadian life insurance companies³ to increase their focus on wealth management and move up in the ranks of assets under management (AUM). According to Moody’s, asset managers owned by life insurance companies “have matured into significant operations with name brands and assets under management … Asset management can also serve insurers as long-term strategic investments, which supplement their core insurance business and diversify their asset holdings.”⁴

Bigger wealth management footprint

Canadian companies known primarily for selling life insurance have experienced significant growth in wealth, asset management sales, and AUM for many years; “all have strong business profiles and capital positions,” as well as “leading market positions, balance sheet strength … comprehensive product offerings and geographic diversification.”⁵ As an example, the Sun Life Financial group of companies had $944 billion AUM at the end of Q2/2017.⁶

These companies’ share of wealth assets is growing; see the growth in overall wealth, mutual funds and segregated fund contracts⁷:

Despite the low-interest rate environment, total individual annuity assets continue to climb, reaching $136.9 billion in Q4/2016 (annuities are sold exclusively by insurance companies):

Those are the statistics. What do they mean to you? Life insurance companies can do so much more to help you and the clients you advise.

Much more than investment advice

These current conditions create an opportunity for you to provide financial advice about diversification and the value of guaranteed solutions. Many big companies that sell insurance exclusively offer solutions such as annuities with lifetime guaranteed income, accumulation annuities, and segregated funds within plans stress-tested against long-term time horizons, low and varying interest rate environments, and market volatility.

Clients may have a wide variety of wealth products: mutual fund accounts; segregated fund contracts; payout annuities; accumulation annuities, also known as insurance guaranteed interest contracts (GICs); and guaranteed investment certificates (GICs). They may also have an array of insurance policies across life and health insurance; some may have cash values. All these products need to work together as part of a tax-efficient, goal-based financial and retirement plan.

Regardless of clients’ current investments and insurance, understanding what’s available and how these various solutions can accommodate clients’ best interests and needs are crucial considerations. Helping clients build their financial well-being is important, but helping them protect that well-being while meeting life-stage goals is key — a benefit insurance companies can uniquely offer. Partnering with an insurance company enables you to offer a broader array of protection, products, solutions and services to support your client needs.

Caring creates stronger relationships

What about the human element?

A deep understanding of clients’ families, relationships and goals is key to exceeding their expectations and locking in their trust from one generation to the next.

Step outside the product sales perspective and ask clients what their personal hopes and dreams are, and how they view aging, retirement, lifestyle needs and health needs. Get to know them better by asking these questions:

• What does retirement mean to you?
• What does retirement mean to your spouse/partner?
• What are your goals and aspirations surrounding family, lifestyle, travel, hobbies, etc.?
• When do you plan to retire, and do you want to work in retirement?
• What are your biggest financial and emotional worries about retirement?
• Do you plan to make any major purchases or initiate any financial events?
• Have you planned for life events such as health and long-term care?
• Do you want to leave a legacy, protect your estate, or donate to a charity or organization you support?
• Are family or community considerations key to your retirement?

Discussing, planning and laying the foundation

By fully knowing and understanding clients’ aspirations and needs, you can work with them to establish a suitable plan of action. Matching their goals and risk profiles to the solutions you present is critical. Take a holistic view across wealth and protection to address both growth and income aspects, but also help clients mitigate the life risks — a job loss, a health event, outliving retirement funds or a death in the family — that could derail their plans.

Going through clients’ financial situations includes projecting how much retirement income clients will receive based on their current assets and savings plans, coupled with reviewing their solutions to cover broader risk aspects. This process is foundational to having a robust conversation with clients. It gives you the ability to educate and inform, while ensuring clients are fully engaged and vested in the process. It also lays the groundwork for open dialogue and unbiased advice that’s fully aligned to what clients are trying to achieve.

They may need a “reality check” on how they viewed things when they first created a plan, versus the products and solutions they need to consider to attain their investment goals, or even how they’re saving and investing.

As you revisit clients’ financial situations and help modify their strategies and holdings, take advantage of the expertise and broad array of products and solutions from the organizations that own life insurance companies. Working with entities such as the Sun Life Financial group of companies broadens your opportunities to build trusted relationships with clients, manage their wealth, protect their assets, enhance their personal well-being, and lay the foundation for an enjoyable retirement and a secure future.

More on the advisor-insurance company connection

• For more highlights of the benefits of working with an advisor, your clients could check out the guide Financial advice – how it can help you build your net worth, protect your wealth and retire with confidence.
• To learn more, contact a member of your Sun Life wealth sales support team or send an email.

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¹ 2016 Census, Statistics Canada, May 3, 2017.

² The previous two bullets are from “Shifts in consumer spending,” Statistics Canada, May 14, 2014.

³ Media outlets refer to companies such as Sun Life Financial, Manulife and Great West Life as “life insurance companies”; however, these organizations conduct business through affiliated companies. For example, the Sun Life Financial group of companies includes Sun Life Assurance Company of Canada (manufacturing life and health insurance) and Sun Life Global Investments (manufacturing mutual funds). The total wealth referred to includes all these organizations’ operating units around the world.

⁴ “Moody’s: North American life insurers experience benefits, challenges of asset management business,” Moody’s Investors Service, May 16, 2017.

⁵ Fitch Ratings report, May 15, 2017.

⁶ “Sun Life Financial Reports Second Quarter 2017 Results,” Sun Life Financial Inc., August 9, 2017.

⁷ Investor Economics Report, as at December 31, 2016.

⁸ Captures the total investable assets of all Canadian households, including mutual funds, segregated fund contracts, deposits, insurance products, and directly held securities. This measure captures those products as they flow through seven distribution channels, from online brokerage and independent advisor to private wealth management channels, and everything in between.

⁹Meir Statman, the Glenn Klimek Professor of Finance at Santa Clara University, in “To Compete with Robos, Advisors Must Become Financial Physicians,” CFA Institute, April 13, 2017.