The Overlooked Group Retirement Market How to Sell a Group Retirement Plan Gil McGowan, Vice-President, National Accounts

Why get involved? Higher client retention – sticky assets Access to high net worth clients Daytime activity in a high income-producing market Smooth commission flow – transfers, cash flow, trails – large monthly deposits Huge cross-marketing opportunities to sell additional products and services

Workplace payroll deduction marketing “Selling Group Retirement Plans is like fishing with a net instead of fishing with a line.”

Group market business development strategy Five core elements Lead generation – prospecting Moving prospects through the decision-making cycle Sales process / closing the sale – longer sales cycle Post-sales – cross-marketing Taking a step back – your ROI

Here is your opportunity Focus on firms with 5 to 100 employees Increased need for financial advisors to educate and inform employees in group retirement plans Business owners write bigger cheques Small percentage of advisors (5-6%) participate in the group retirement market – it is still an untapped opportunity

Developing your opportunity in “Group” Plan start-up – implementing a Group Savings Plan Transfers – Moving a current in-force plan from one provider to the other – this is the most profitable Enrolment and participation maximization – engaging, enticing and encouraging employees to join or increase their contributions

Cu rrent group retirement providers (Group RRSP assets only) Mutual fund company Mackenzie Investments – 3,986 clients – $624M AUM CI Investments – 3,434 clients – $400M AUM Life insurance companies Sun Life Group Retirement Services – 3,752 clients – $16.69B AUM Great West Life – 5,843 clients – $13.17B AUM

Current group retirement providers Manulife Financial 3,343 clients $8.07B AUM Standard Life 2,021 clients $6.88B AUM Desjardins Insurance 4,335 clients $1.9B AUM Industrial Alliance Insurance 3,398 clients $1.44B AUM

Current group retirement providers Bank Royal Bank Group Advantage  5,851 clients  $3.02B AUM BMO Group Retirement Services  - 34 clients  - $339M AUM * B2B Bank – former MRS Group Platform IIROC Scotia McLeod (not actively marketing their platform outside of Scotia)  195 clients  $2.68B AUM

CI Group RSP Plans – AUM tiers Tier Total AUM (Inclusive) Average Plan AUM Average Account AUM Average # of Accounts Top 100 Plans$150M$1.5M$22,70067 Top 500 Plans$286M$572K$21,30040 Top 1000 Plans$351M$351K$19,

Market potential There are 1.1M businesses in Canada with 1 to 99 employees – less than 25% have access to a retirement plan Small to medium businesses are moving to improve employee compensation packages Increased focus on retirement planning in the workplace caused by PRPPs / ORPPs? / VRSPs rollouts Favourable demographics – Every day, almost 1,200 Canadians turn 65. This will continue until 2030.

Prospecting methods Current clients Referrals Personal observation / cold calling is not dead Social media – LinkedIn Lumpy mail Networking / volunteer and service clubs Board of Trade / Chamber of Commerce The golf course

The “Tim Hortons” Gang R.O.M.E.O CLUB working with “The Next Generation”

Group retirement plan sales cycle Timeline – 3 months, 6 months, 1 year Phase 1 Phase 2 *Request for proposal Potential Client Proposal Accepted Employer Sign Up Proposal Accepted Employer Sign Up Fact Finder RFP* Present Proposal Present Proposal Ongoing Meeting Service Employee Meeting Rollout Sign Up

Question “Does anyone in this room currently have a client who works for a company?” *10% to 15% of your existing clients are potential candidates

Five simple questions Do you have a group plan at work? What type of plan is it – Group RRSP, DCRPP, DPSP, or DB? Does your employer contribute to the plan? Who is the current provider for the retirement plan? Who at the company oversees the benefits and group retirement ?

“The Ferris Wheel Approach” to prospecting A systematic method to prospect for group retirement clients Be patient – longer timeline than individual sales cycle Establish an inventory of 20 to 25 approachable prospects Drip on them with articles from Benefits Canada, Pension Benefits Monitor and Smallbiz Advisor bgmmagazine.comwww.benefitscanada.com

Sell the process not the product! Group retirement hype has provided an opportunity to open doors – Financial Advisor involvement is needed Promote your successes and your ability to inspire people to action – investing, retirement, debt management Don’t go it alone if you are uncomfortable – bring in a partner You can take the I.C.E. out of ADVICE.

“OK pal, tell me something I don’t already know” Probe for the corporation’s needs and issues – do your due diligence; the Internet is your best friend Listen to what they are saying. A wise man hears one word and understands two! Explain your value proposition – what makes you different from other advisors

Your value proposition What is your expertise – designations / affiliations Promote your strength and resources – dealer firm. You are not a one-man show. Play off the size of the dealer! Promote your ability to deliver investment education concepts and principles to employees – utilize CI Sales and Marketing Provide solutions and options for employers who are dissatisfied with their existing plan – ASAP

ASAP – A useful acron ym A – Administration S – Service A – Advisor communication P - Performance

Four key points in a Group Savings Plan Administration – simplified administration is the key to the success for a Group Savings Plan Service – what are your expectations on a go-forward basis – our team is positioned to ensure your are serviced in a timely fashion Advisor communication – because this is a unique plan, you have the benefit of working with a Financial Advisor who will help you understand the benefits of advice and provide ongoing communication from the initial enrolment to updates for employees Performance – an annual review of the investment offerings and returns is good plan governance

What products do you offer? CI Group RRSP CI Deferred Profit Sharing Plan CI Group TFSA CI Group RESP CI Group Non-Registered Account

Why a CI Group Savings Plan? Attracting and retaining key employees Enhancing productivity Complementing a current benefit program Remaining competitive in the marketplace and reducing employee turnover

Features of a CI Group RRSP Cost-effective design that is easy to set up and manage CI’s streamlined on-boarding process – pre-populated applications, transfer forms and KYCs No account or administrative fees for all Group Savings Plans Sales and marketing support throughout the sales cycle

The value of financial advice Advice has a positive and significant impact on wealth accumulation. Advice improved savings behaviour. Advised households save at twice the rate of passive non-advised households. Advice positively impacts retirement readiness. Advice increases the probability that an individual saves, and among those who do save, it increases the rate of savings. *Source – IFIC / New Evidence on the Value of Financial Advice, by Dr. Jon Cockerline, Ph.D.

The Group Advisor advantage Small to medium-size businesses require the services of a Financial Advisor for their Group Savings Plan Employees are savers not investors – Portfolio Series There typically is no correlation between stock market fluctuations and switches in Group Savings Plans – less work Having advice is an important contributor to levels of trust, satisfaction and confidence in financial advisors – your value-add for the employer and employees

A door-opening sales idea Group RRSP versus Group RRSP/DPSP

Case study – Company ABC Company ABC – existing Group RRSP, 30 employees Employer / employee matching contribution – total 10% Total payroll, $1.6M / Annual contributions, $160K Payroll taxes – EI, CPP, QPP, additional payroll costs from EHT, WC and group benefits

Group RRSP Employees 5% contribution $80,000 Immediate vesting EE controls investment option Partial/full withdrawals Employee contributions subject to payroll tax Employer 5% contribution $80,000 Immediate vesting EE controls investment option Partial/full withdrawals Employer contributions subject to payroll tax

Why a Group RRSP / DPSP as an option V – employer contributions are subject to vesting rules, two years maximum – employer can determine the length of the vesting period E – employer contributions only – employer also has the option of determining where the money is invested S – having the employer’s contribution going into the DPSP stops withdrawals from the plan while employees still work at the company T – eliminates payroll taxes on the contributions the employer makes to the DPSP – whereas contributions to the Group RRSP are subject to EI, CPP, etc.

Eliminate payroll taxes with a DPSP Employment Insurance premiums CPP/QPP premiums Workers Compensation Employee Health Tax – where applicable Group life premiums Group STD and LTD premiums

Group RRSP / DPSP Employees 5% Contribution $80,000 Immediate vesting EE controls investment option Partial/full withdrawals Employee contributions subject to payroll tax Employee 5% Contribution $80,000 Two-year vesting ER controls investment option No partial/full withdrawals Employer contributions are not subject to payroll tax Annual CPP/EI payroll tax savings – $5,100 not including WC, EHT, Group Benefits

Do you ever see your clients’ tax refunds? Probably never RRSP refunds pay for credit card debt, vacations, golf clubs, barbeques, etc. Clients can’t spend what they don’t have – invest their immediate tax savings

Group TFSA / RESP from tax savings Individual RRSP Annual salary – $40K Pre-tax deposit – $0 Tax payable – $19, CPP & EI – $2, Net pay – $17, After-tax RRSP contribution – $2K Net Pay – $15, Group TFSA contribution – $0 Disposable income – $15, Group RRSP Annual salary – $40K Before-tax RRSP deposit – $2,000 Tax payable – $18, CPP & EI – $2, Net Pay – $16, Group TFSA contribution – $990.56* Disposable Income – $15, * At-source tax relief is deposited into TFSA, further savings if RESP is utilized with government grant

Handling objections Can’t afford it – Review of group benefit costs Employees don’t care – New increased awareness Employee turnover is too high – Plan design DPSP? Pay higher wages instead – Assisting in employees’ retirement Too much work – Monthly contribution, Advisor assistance Not the company’s responsibility – Competitive job market

Your service agreement Value-added services Provide general financial planning seminars to all employees, minimum every 6 months One-on-one meetings every 6 months at the request of the employee Financial Advisor will be available on an ongoing basis to answer general inquiries and respond to problems/issues Annual reviews with management covering administration, service, advisor communication and performance of investments – ASAP

Cross-marketing opportunity ABC Company / 30 employees / $40K avg. earnings $1.6M annual payroll Rollover of existing Group RRSP, $750K – Initial Sale Group RRSP and or DPSP – 5% employer / 5% employee matching contributions – $160K annual deposits Cross-marketing within the Group Plan * High Net Worth / Business Owner Opportunity to meet with 30 employees on a individual basis Key person insurance on owners Critical illness insurance for key managers Individual employee RRSP/TFSA/RESP accounts

Guiding employees through de-accumulation The baby boomer generation is moving from accumulation to de- accumulation – but still working. Don’t tell boomers that old age starts at 65. The typical boomer believes that old age doesn’t begin until 72. Financial worries are keeping employees up at night – even those who are still several years away from leaving the workforce. Evidence indicates employees / plan members have a tremendous appetite for information and one-on-one support.

Where have all Japan’s elders gone? More than 230,000 Japanese people listed as 100 years old cannot be located. 77,000 people listed as still alive in local government records would have to be at least 120 – 884 would be 150 or older! Families are hiding the deaths of elderly relatives in order to claim their pension.

Gil McGowan Vice-President, National Accounts Business Development Group Savings Thank you

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