Smaller players gain market share

par Donna Glasgow | December 19 2011 04:04PM

While the largest players in the segregated fund market saw their net sales decline, some of the smaller players are grabbing a bigger piece of the pie.

At $298 million, Standard Life’s net seg funds sales for the first nine months of 2011 were up $90 million compared to the same period the year before, according to Investor Economics’ data. Michel Fortin, the company’s vice-president, business opportunities and pricing, retail and pension products, says the company is experiencing “accelerated sales growth compared to the industry with an annual growth rate YTD of 25.5% versus -2.1% for the industry.”
Additions to line-up
Mr. Fortin says the factors behind this growth include the insurer’s “holistic approach…We offer three different series of segregated funds that meet clients’ needs as they evolve over a lifetime.” Among these is its guaranteed lifetime withdrawal benefit product – the Ideal Income Series – which was introduced earlier in 2011.
Another factor, he says, is that in the past few years “Standard Life has not made any negative changes to its segregated fund product line, contrary to most of our competitors, and this seems to have been received positively by advisors…On top of this, we have been able to make additions to our Ideal Segregated Funds – Signature Series line-up, such as the 100/100 Series, new 3rd party fund managers, and of course our GLWB.”
Mr. Fortin adds that although Standard Life’s GLWB has been “very well received” in the market, it is not the only driving factor of the insurer’s increased seg fund sales. “As of September 30, we had $37 million of GLWB sales. What advisors seem to appreciate is that our segregated fund line-up is complete, competitive and offers three series that meet their clients’ needs as they evolve over a lifetime.”
RBC Life Insurance, which entered the seg fund market in 2006 saw sales of $55 million in the first nine months of 2011, which compares to $39 million for the same period the year before, according to data from Investor Economics.
Tony Bagnato, the company’s vice president, wealth management, says investors’ “slow and steady return to equities” is one factor explaining the sales increase.
Another major growth driver is RBC Insurance’s focus on broadening its distribution channel to IIROC firms, including RBC Dominion Securities. “We’ve had some success with that.” A ballpark estimate is that the IIROC channel now accounts for 20% of seg fund sales for RBC Life, he says.
Mr. Bagnato adds that the company has made efforts to help IIROC and MFDA advisors understand the value of seg funds and the features and benefits of the product, which are particularly important as clients get older.
He underlines that the company’s push into this channel doesn’t change its commitment to advisors in the managing general agency network, which remains RBC Life’s largest distribution force.
Since the company is a relatively recent entrant into the segregated fund market, some advisors are still not aware that RBC Life offers seg funds, Mr. Bagnato says. So, over the next 12 months the company will continue to focus on “getting the word out” to advisors in all of its channels, because “when they know about our segregated fund products, they are interested.”
Asked whether the company plans to introduce a guaranteed withdrawal benefit option, he replied, “We have no plans today to launch a GWB product, but we are always looking at the market.”

New GMWB certification program for advisors
Advisors who would like to deepen their knowledge of the various guaranteed minimum withdrawal benefit (GMWB) products available on the market and how to sell them may now take a one-day program that leads to a certification.
Qualified Financial Services, an Ontario-based managing general agency, is offering the program. Recently approved by Advocis, the course will give advisors 7.5 continuing education credits and a certificate from QFS and Advocis attesting that the advisor has completed the course and is a certified GMWB product specialist. Advisors who attend the course and successfully pass an exam at the end of the day, will receive this certification, explains Nick Simone, president of QFS (and recently acquired Marketing Concepts Group), who says that he believes this is the first time such a program has been offered.
The first three sessions were to be conducted in November in the MGA’s boardroom for groups of 20 advisors. The next course for 50 to 80 advisors is scheduled to be held in a Toronto hotel on Jan. 26.
The course is open to advisors generally, not just those who work with QFS. Mr. Simone says that the course will be offered throughout 2012 in other parts of Canada as well.
David Spector, director of wealth for QFS came up with the idea of the course after realizing how complex it is for advisors to fully understand all the features of these popular products and how they work. He says he is a big believer in the product but became concerned that there might be compliance issues down the road. “I got worried…a lot of people selling this product really don’t understand how the wheels turn...We realized there had to be someone to take the lead in the educational area when it came to this product.”
The course includes presentations by leading GMWB manufacturers and others who will talk, not in general, but about the specifics of their products, he says.
“The goal is, at the end of day, they will have a full understanding of every single element related to the product, which makes them better at what they do. They can go out there and speak confidently to their clients about this product…” said Mr. Simone. (DG)