The growth potential is in segs and GMWBs

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					                    The need for guaranteed
                                    income:
                      segregated funds and
                                   annuities
                                                       The “new” future
                  Phil Marsillo, Senior Vice-President, Individual Distribution
                                                                  Canada Life




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            “The future ain’t what it used to be.”

    - Yogi Berra




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            Challenges facing the industry

  Less growth in financial assets

  Fewer players but more competition

  Lower client risk profiles

  “Comeback challenge” for intermediaries




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                    Assets have declined; especially for
                    older clients
        2008 Decline in Financial Wealth

                              Under 25   25 - 34    35 - 44   45 - 54   55 - 64     65 - 74    75+
                               ($2)
                     0.00%                ($7)                                                         $0

                                                                                                       ($10)
                     -2.00%                         ($20)
                                                                                                       ($20)
                     -4.00%
                                                                                                       ($30)
 Source: Investor                        -5.0%                                      ($42)
                     -6.00%   -5.4%                                                                    ($40)
 Economics,                                                   ($48)
 “Household                                         -6.3%
                     -8.00%                                                                            ($50)
 Balance Sheet                                                          ($60)
 Report, 2009”                                                                                         ($60)
                    -10.00%                                   -9.3%
                                                                                                       ($70)
                    -12.00%                                             -11.0%
                                                                                   -11.9%      ($85)   ($80)
                                                                                              -12.3%
                    -14.00%                                                                            ($90)

                                              % decline                     $ decline




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   “I have enough money to last me the rest of my life ...
                unless I buy something.”

    - Comedian Jackie Mason




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                      Control of financial assets

                  Percentage of households and financial wealth assets,
                  age 65+ segment

                              50.0%
                                                                  43.1%        42.7%
                                          38.7%       39.0%
                              40.0%

                              30.0%                                       27.4%
                                      23.0%       23.0%       24.8%
Source: Investor Economics,
“Household Balance Sheet
Report, 2009”                 20.0%

                              10.0%

                              0.0%
                                        2007        2008        2013          2018

                                        % of households         % of assets


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          A full complement of guarantees is
          important




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                  The next focus: Guaranteed income for
                  life

                                                          Regardless of markets, income is protected for life
                                                          Lifetime income benefit       = $25,000
                                                          Annuity                       = $38,900




  Client, age 65, contributes $500,000 premium. Begins immediate income and receives $25,000
  for life ($500,000 x 5.00%). Income is paid for life even if market value of policy is $0. Annuity
  income assumes a male, with immediate income. Quote provided as at March 31, 2010.




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          Where the lifetime income benefit fits




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          New risks present themselves near
          retirement




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                    Canadians need lifetime income at any
                    age

             Planned age of retirement, Canadians aged 45 to 59
           40%
           35%
                     Primary need: lifetime income at any age
                                                                     30.5%
Source: “The 30%
Retirement
Plans and     25%    22.0%      22.1%         22.6%
Expectations
of Non-retired
              20%
Canadians 15%
aged 45 to
59”, Grant    10%
Schellenberg,
Statistics     5%                                           2.7%
Canada, June
2004           0%
                    Before 60   60 to 64       65           66+    Don't know
                                Planned age of retirement




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                       The “new” future of investment funds

          Growth dynamics, selected product categories
                      $1,400                                                                                35.0%
                                                                    $1,285.0
                                                                                               29.5%
                      $1,200                                                                                30.0%


                      $1,000                                                                                25.0%
                                  $834.0
                       $800                                                                                 20.0%
                                                                $600
Source: Investor       $600    $545                                                                         15.0%
Economics,
                                                                                9.8%
“Household Balance     $400                                        7.9%                                     10.0%
Sheet Report, 2009”
                                 4.3%            4.7%
                       $200                                                       $160.0                    5.0%
                                                                                                   $108.0
                                               $44 $70.0                       $63
                                                                                              $8
                         $0                                                                                 0.0%
                               Fixed-term   Payout annuities    Mutual funds   Seg funds      GMWBs
                                deposits

                                        Assets, 2008           Assets, 2018      CAGR, 2008 - 2018




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            Summary

    The potential of segregated funds and annuities
      Investor psychology has changed, as has the Canadian population
    The market for segregated funds and guaranteed
     income will increase exponentially
    Annuities may be an unforeseen beneficiary of this
     demand
    What is important in segregated funds and GMWBs?
      Investors will look for consistency and certainty from
         Their products
         Their financial services providers
      Investors will expect products that fit their needs
         Multiple guarantee levels
         Lifetime income at any age



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                  Questions?




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posted:6/13/2011
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