Graeme Allan Regional Sales Manager Word of the decade: Retirement Next on deck: Inheritance Projected intergenerational inheritance transfers $794 billion "in motion" Real estate; 33.13% Ages
65-74 193K 15% 1,033K 85% Financial wealth; 66.87% Ages
75+ Number of wealth transfer events Share of wealth transferred Source: Investor Economics Household Balance Sheet Report. Consequences of dying without a plan Estate divided according to provincial provisions
Lose control over who administers estate Assets potentially frozen Potential for higher fees and taxes Whats on the mind of elderly Canadians Protecting money Overwhelming estate process Control
80-90 year old Transfer assets to family Dont want to be burden Family harmony Family concerns
Unsure of responsibilities Uncomfortable discussing death Bad advice Adult children Wary of
parents being taken advantage of Executor horror stories Would your clients like the opportunity to: Save money, time and effort Preserve and protect wealth Keep it simple Estate Protection secure your clients legacy
Harnessing the power of segregated fund estate planning features for a tailored offering for investors age 80-90. Only 75/100 segregated fund offering in Canada that provides 100 per cent death benefit protection immediately, for contracts issued for investors up to age 90. Features Issue age: 80-90 years (on or before youngest annuitants 91 st birthday) Death benefit guarantee: 100 per cent, immediately Policy Maturity: age 105 Sales charge: Front-end load 0 per cent only Policy type: available as registered, TFSA and non-registered policies Joint annuitants: available for non-registered
Minimum initial premium: $10,000 (lump sum or PAC) Joint annuitants Non-registered policies can be set up with joint annuitants. Spouses or common-law partners only. More tailored estate planning without the costs of setting up a trust. Fund options expanded offering
CATEGORY FUND Balanced funds Monthly Income (London Capital) CATEGORY Asset allocation funds
Income (Portico) FUND Conservative Allocation (PSG) Moderate Allocation (PSG) Income (Mackenzie) Balanced Allocation (PSG) Managed (Laketon) Income allocation funds
Balanced (Bissett) Income Focus (PSG) Cambridge Asset Allocation (CI) Income Growth (PSG) Balanced (Greystone) Income Growth Plus (PSG) Balanced (Invesco)
Canadian All Cap Balanced (Mackenzie) Canadian Large Cap Balanced (Mackenzie) Cash and cash-equivalent funds Fixed-income funds Money Market (Portico) Core Bond (Portico) Core Plus Bond (Portico)
Case study Estate protection in action George and Carol Mid 80s Two grown children John (bachelor) Julie (single mom with two children) Estate Protection in action Goals: George and Carol: Want to create a plan together now that will last until both of them have passed away. Want to provide ongoing financial support to Julie.
Want to maintain family harmony. Are conservative, risk-averse investors. Want a simple and cost-effective plan. Solution Estate Protection funds policy Solution Conservative Allocation Fund Solution - joint annuitants Joint ownership, joint annuitants to plan together to second death Solution - a customized inheritance Settlement option form available for non-registered policies
Preset options for how assets are distributed at death Lump sum Monthly income for life Monthly income over a set period of years A combination of all three options Estate protection in action This is how Estate Protection helps meet George and Carols goals: The option for having joint annuitants allow for planning that will last until the second partners death. The fund choice for George and Carol is a conservative, managed solution aligned to their risk tolerance and goals and is automatically
rebalanced and monitored. Its a simple solution that will put assets quickly into the hands of both children while continuing to provide Julie with ongoing income. Their assets are to be distributed privately, in a cost-efficient and timely fashion outside the estate, which should help ease family tensions. Your legacy matters you choose how you want it to live on The cost of market volatility Other estate costs
Which legacy would you prefer? Whats it going to cost me? Segregated funds typically have higher fees than mutual funds. Segregated funds offer powerful features complimentary to estate planning: Capital protection
No DSCs at death Seamless way to pass on wealth Potential for creditor protection Privacy Potential costs Mutual Funds, GICs and securities Potential Costs Estate tax (probate) Projected costs on
a $250k portfolio Up to 1.5% $3750 Estate legal fees Between 2% to 5% Between $5,000 to $12,500 Executor fees
Between 2% to 5% Between $5,000 to $12,500 Accounting fees* Between 2% to 5% Between $5,000 to $12,500 Up to 5%
Up to $12,500 Up to 21.5% Up to $53,750 Surrender fees Total potential cost * Executors can perform accounting duties depending on the complexity of the estate All information contained herein has been obtained from sources we believe to be reliable; however, we do not guarantee its accuracy or completeness. Accordingly, this document should not be considered a reference, and we assume no liability whatsoever in providing it. We recommend you contact a lawyer or notary to discuss you specific situation.
6.5% Potential Costs 21.5% Cost comparison Industry AVG Mutual fund costs (*246 funds) Industry AVG Segregated fund 75/100 costs (**142 funds)
Fixed income fund : 1.61% Balanced fund: 2.44% Fixed income fund : 2.14% Balanced fund: 2.68% Difference between Mutual fund and Segregated fund costs Mutual Fund - fixed income 53bps
Segregated Fund - Fixed income Mutual Fund - balanced 24bps Segregated Fund - balanced If we used a very conservative assumption of 6.5 per cent as the estate settlement savings
with segregated funds, at what point would the additional cost of the MER eliminate the benefit of segregated fund estate bypass? Years that will take to break even (Balanced Fund) Pay more to keep more Industry average mutual fund costs (246 funds) MER
Industry average segregated fund 75/100 costs (142 funds) MER Years needed to stay in MF to recover probate fees
Fixed income fund 1.61% Fixed income fund 2.14% 11.91 Balanced fund 2.44%
Balance fund 2.68% 26.27 Note: The difference in MER are compounded using PV formula in order to find the numbers of years required to break even (Difference between MER are summed to be compounded annually) Supporting the Estate Protection conversation Tax and planning articles: Steps to bypass probate fees
Joint ownership Segregated funds and beneficiary designations Supporting the Estate Protection conversation Getting organized and family engagement Secure your parents legacy online brochure to approach adult children/executors form 99-6013 Secure your legacy client brochure for 80-90-year-old target client market form 46-10517 Estate planning guide form 46-7780-6/15 For your executor - form 17-8130 8/13 Personal records organizer - form 17-8125 6/14
Placing the business New contract available for premium deposits Nov. 14, 2016 Available on a client-held and nominee basis Has its own information folder, contract and application Your administrative and back office teams will have the resources and support needed to easily place the business Providing a framework for success 169 years of partnering with advisors to support Canadians financial wellness
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