“As more Canadians retire and business owners sell their businesses, segregated funds will play a crucial role in protecting the wealth accumulated over a lifetime, ensuring it’s preserved for retirement and estate planning”

James McKay, senior vice president and head of wealth platforms, Canada LifE

“Advisors who understand and leverage these benefits can provide their clients with a powerful tool for wealth management and estate planning, building lasting relationships with entire families”

Kelvin Wong, director of private wealth, Canada Life

In Partnership with

Segregated funds: a wealth of opportunity

Canada Life segregated fund experts on securing your client’s legacy with funds that offer guarantees

Read on

Kelvin Wong

Canada Life

James McKay

Canada Life

Aurora Tancock

Tancock Financial Services

Industry experts

IN THE coming years, Canadians with over $1 million in assets are expected to comprise 80 percent of the country’s wealth population. This segment is growing rapidly and aging, with nearly half projected to be over 65.1 This creates an opportunity for financial advisors to introduce investment vehicles like a segregated fund policy that offers features to meet their needs, including: guarantees, privacy protection, probate bypass, and potential creditor protection. These features are increasingly important as individuals look to pass on their wealth efficiently. James McKay, senior vice president and head of wealth platforms at Canada Life, emphasizes, “As more Canadians retire and business owners sell their businesses, segregated funds will play a crucial role in protecting the wealth accumulated over a lifetime, ensuring it’s preserved for retirement and estate planning.”

Services Inc., recalls how a segregated fund policy provided comfort and reassurance to a client diagnosed with terminal cancer. Despite a marketdownturn in 2008 that saw the client's balanced portfolio drop by nearly 20 percent, the segregated fund guarantees ensured that his wife received the full original amount upon his death. Tancock notes, “He had peace of mind knowing those funds were protected. After his passing, his wife reinvested in segregated funds just as the market began to recover, ensuring her continued financial security.” The situation serves to highlight the importance of not only protecting wealth but also ensuring its continuity – an idea that resonates deeply with key client segments including: multi-generational and blended families. Advisors can start discussions about segregated funds with younger clients who are supporting their parents, potentially bringing the entire family into the financial planning process. McKay emphasizes the significance of this approach, stating, “The next generation, set to inherit over $1 trillion in the coming years, deserves to understand the benefits of segregated funds. too. Segregated fund features like the ability to designate beneficiaries naturally provide opportunity for advisors to meet and support entire families across generations. Advisors comfortable providing advice on segregated funds can also differentiate themselves with younger clients that have yet to learn about segregated fund benefits”

The appeal of segregated funds extends across various client segments, a key segment being retirees. As per an Abacus poll, over 80 percent of Canadians polled were satisfied with the product’s ability to provide protection against risk, offer reasonable returns, and deliver reliable income in retirement. Segregated funds offer guarantees such as principal protection and death benefit, along with other advantages like probate bypass and naming beneficiaries — features that ensure efficient transfer of wealth with minimum complications. “Segregated funds are no different from any other investment fund out there; they are managed by professional money managers,” says Kelvin Wong, director, private wealth at Canada Life. “Our job is to help you grow your money, but with the added layer of security that comes with guarantees.” Add to this, the wide range of underlying investment options that segregated funds provide. Wong also emphasizes the value segregated funds offer as protection against creditor claims and in the smooth transfer of clients’ estates. “By keeping non-registered money outside of your estate through segregated funds, you can ensure that in the event of death, your wealth is passed on quickly and efficiently to the next generation.” Aurora Tancock, CFP, Founder of Aurora Tancock Financial

The value of segregated funds is even more significant when considering business owners, who are often exposed to a higher degree of financial risk. For these clients, the creditor protection provided by segregated funds is not just a benefit – it can be a lifeline. Tancock looks back to a client who owned a small manufacturing firm and decided to consolidate his business with a larger company, but failed to do proper due diligence. Unfortunately, after the consolidation, he discovered significant financial issues with the larger firm, leading to its shutdown. As a shareholder, he was held responsible for these liabilities. Tancock details, “The client called me, saying his lawyer would contact me to get the information on his RRSPs. I informed the lawyer that the client’s RRSPs were invested in segregated

funds and had been for several years. The lawyer responded, ‘That's all I need.’ This protection allowed the client to retain his RRSPs despite the shutdown, ensuring he had savings in place. He still owns his house and continues to pay down his mortgage, but those RRSPs were safeguarded because of the segregated funds.” While not every client may be an ideal fit for segregated funds, Tancock maintains that those who understand the value offered by these products recognize their critical importance in protecting wealth. A common concern among advisors is the cost associated with segregated funds. It’s true that the guarantees might come at a higher price compared to other investment products like mutual funds. However, it’s essential to consider the added layer of security that these guarantees provide, particularly for clients concerned about market declines. Segregated fund policies come with a range of guarantee types – 75/75, 75/100 and 100/100 – that allow investors to use a solution that fits their needs. Many Canadians who have purchased segregated funds find the higher costs to be justified. In a recent Abacus poll conducted for the Canadian Life and Health Insurance Association (CLHIA), 82 percent of Canadians with experience in segregated funds agreed that the fees were comparable to other investments. Moreover, the costs of segregated funds have come down over time, making them worthy of another look. By addressing these concerns up-front, advisors can better convey the value of segregated funds to their clients.

Often with significant exposure to market volatility, high-net-worth (HNW) clients are not just looking for growth; they are also seeking assurance that their wealth will be preserved and transferred to their heirs efficiently. Wong highlights a client experience: “I met a couple in their early 60s who had recently sold a share of their business for $17 million. Their goals were simple – they wanted tax planning advice, predictable retirement income, and a way to ensure that their wealth would be passed on to their children, not to anyone else. “The couple had previously met with independent private investment counsel firms, but found the solutions presented overly complex and lacking in guarantees. The intricate family

The Canada Life team, which included a director of tax and estate planning, an investment specialist, an insurance specialist, and a securities expert, worked together to craft a plan that was easy for the clients to understand. Within two weeks, Wong’s team had successfully opened the clients’ account and transferred the $17 million to Canada Life, rolling out a comprehensive plan for them. “We’re able to help advisors penetrate the high-net-worth market by offering solutions that resonate with clients and meet their long-term goals,” Wong says.

By including segregated funds, advisors can offer a broader range

Disclaimers 1 Growth in affluent segment source: ISS MI Market Intelligence • A description of the key features of the segregated fund policy is contained in the information folder. Any amount that is allocated to a segregated fund is invested at the risk of the policyowner and may increase or decrease in value. Canada Life segregated funds are available through a segregated funds policy issued by The Canada Life Assurance Company. • Canada Life and design are trademarks of The Canada Life Assurance Company.

Founded in 1847, The Canada Life Assurance Company was Canada’s first domestic life insurance company. For more than 175 years, our customers across Canada have trusted us to provide for their financial security needs and to deliver on the promises we have made. Today, Canada Life provides insurance, wealth management, and healthcare benefit products and services in Canada, the United Kingdom, Isle of Man and Germany, and in Ireland through Irish Life.

Find out more

Kelvin joined Canada Life in 2012. As a private wealth counsellor, Kelvin works with clients’ financial security advisors as a team to develop and implement a customized investment and estate plan, providing expert guidance to help preserve, build, and transfer wealth. Prior to joining Canada Life, Kelvin held a variety of increasingly responsible positions in the investment industry; most recently, he’s worked as a sales director for a private investment firm. Kelvin obtained his Chartered Financial Analyst designation in 2006. He has also completed the Professional Financial Planning course, the Canadian Securities course, and the Canadian Insurance Course.

Canada Life

Kelvin Wong

James joined Canada Life in 2020 to increase focus on helping advisors grow their businesses. Since joining, James’s teams have launched digital capabilities, developed data analytic tools, and grown the Financial Solutions Centre to provide advisors with more options. James leads the team in shaping Canada Life's longer-term distribution and wealth strategy. He joined Canada Life after 10 years with Sun Life, where he most recently oversaw field teams, sales leadership, and national operations for Sun Life advisors. Prior to that, he held several roles, including vice president, finance and retail business and CFO for Sun Life Global Investments.

Canada Life

James McKay

Aurora is the founder of Aurora Tancock Financial Services Inc. in St. Catharines, Ontario. She began her career with Prudential Insurance as an administrative manager. In 1999 she decided to pursue financial planning. In 2000, her first full year as an advisor, she qualified for the Million Dollar Round Table. She is now a 23-year MDRT member with 13 Court of the Table and four Top of the Table qualifications. She has served on various MDRT committees in leadership roles. She is currently the nominee to the MDRT executive committee, and will assume the role of secretary on September 1, 2024.

Tancock Financial Services

Aurora Tancock

Blaine Shewchuk is the new Executive Vice President, Individual Wealth. Blaine joins Canada Life from Investment Planning Counsel (IPC) where he has been President and CEO since 2021. With an extensive career in wealth and asset management at IGM Financial – which included the role of EVP, Chief Strategy and Corporate Development Officer. Blaine brings deep experience to support the growth of our wealth business. Blaine will continue to lead IPC while we bring our wealth capabilities together to establish a leading wealth management platform for entrepreneurial advisors and their clients. Blaine has a Bachelor of Commerce (Honours) degree from the University of Manitoba, holds the CPA and CMA designations and is a CFA Charterholder, CFA Institute.

Canada Life

Blaine Shewchuk

In Partnership with

Segregated funds: a wealth of opportunity

Canada Life segregated fund experts on securing your client’s legacy with funds that offer guarantees

Read on

Aurora Tancock

Tancock Financial Services

James McKay

Canada Life

Kelvin Wong

Canada Life

Industry experts

Canada Life

Kelvin Wong

Canada Life

James McKay

Tancock Financial Services

Aurora Tancock

Canada Life

Blaine Shewchuk

In Partnership with

Segregated funds: a wealth of opportunity

Canada Life segregated fund experts on securing your client’s legacy with funds that offer guarantees

Read on

Aurora Tancock

Tancock Financial Services

James McKay

Canada Life

Kelvin Wong

Canada Life

Industry experts

Canada Life

James McKay

Tancock Financial Services

Aurora Tancock

Canada Life

Blaine Shewchuk

Canada Life

Kelvin Wong

Key client segments for segregated funds

Published September 12, 2024

Blaine Shewchuk

Canada Life

“This [segregated fund] protection allowed the client to retain his RRSPs despite the shutdown [of his business], ensuring he had savings in place ... those RRSPs were safeguarded because of the segregated funds”

Aurora Tancock, Tancock Financial Services

Crawford’s Commercial Transportation Unit

Key client segments for segregated funds

High-net-worth

Segregated funds policies provide reasonable returns, reliable income in retirement, and protection again risk

Retirees

Segregated fund policies provide protection against risk, reasonable returns, and reliable income in retirement

Blended families

Segregated fund policies help protect their wealth and avoid potential fees and administrative complications during the inheritance process

Business owners

The potential credit protection provided by a segregated fund policy is not just a benefit — it can be a lifeline for business owners

1 - Growth in affluent segment source: ISS MI Market Intelligence

Crawford’s Commercial Transportation Unit

Benefits to your practice

A broader range of solutions helps you tailor advice to the specific needs of your clients and differentiate yourself in a competitive market

An easy solution to consolidate your clients’ assets and ensure that benefits are paid out exactly as they wish

Allows you to bring the entire family into the financial planning process. This could be a significant differentiator, especially if you’re serving younger clients

Protecting business owners

Benefit to advisors

High-net-worth clients and volatility

trust structures were time-consuming and required ongoing maintenance.”

of solutions tailored to meet the specific needs of their clients. This not only enhances their service offering but also differentiates them in a competitive market. As clients seek to simplify their finances, segregated funds present an opportunity for advisors to consolidate a client’s assets and ensure that benefits are paid out exactly as clients wish. This allows advisors to streamline their offerings. As the population continues to age and the affluent segment grows, the role of segregated funds in financial planning will only become more critical – a need Canada Life, with over 170 years of experience, is well-equipped to meet. Not only does Canada Life provide a comprehensive suite of tools and resources, but the team also has a wealth of expert guidance to help advisors leverage segregated funds in their practice. This includes access to award-winning products, and a digital application process that allows for the opening of a new segregated fund policy in under 10 minutes, notes Wong. As he says, “Advisors who understand and leverage these benefits can provide their clients with a powerful tool for wealth management and estate planning, building lasting relationships with entire families.” For more information on Canada Life Segregated funds

Companies

About us

Privacy

RSS

People

Newsletter

Authors

External contributors

News

Your Practice

iNVESTMENTS

bEST IN WEALTH

Resources

Companies

About us

RSS

People

Newsletter

Authors

External contributors

News

Your Practice

Investments

Resources

Best in Wealth

News

Your Practice

Investments

Resources

Best in Wealth

Companies

About us

Privacy

RSS

People

Newsletter

Authors

External contributors

Blaine Shewchuk

Canada Life

Blaine Shewchuk

Canada Life