CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade...
-
Upload
darrell-norton -
Category
Documents
-
view
213 -
download
0
Transcript of CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade...
![Page 1: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/1.jpg)
CI Financial Conference
Aria Resort & Casino
Canadian Wealth Market Opportunityin the Next Decade
“Change Is the New Normal”
Goshka Folda
![Page 2: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/2.jpg)
Presentation Agenda
• Canadian household financial wallet: A decade of change
Who will be your client?
• Evolving needs will drive product preferences
• Regulators stir while ranks of competitors multiply—Advisors need to be ready!
• Capturing wealth market opportunity in the next decade
2
![Page 3: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/3.jpg)
Canadian Household Wallet:
A Decade of Change—
Who Will Be Your Client?
![Page 4: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/4.jpg)
Household Wallet Will Grow but Pace Will ModerateIn billions of dollars
Source: 2013 Household Balance Sheet Report.
44
2013
2013-2022 CAGR
Financial wealth
Residential real estate
Credit
$3,416
$3,602
$1,824
2022
$5,460
$4,266
$2,029
Assets
5.4%
1.2%
1.9%
Financial wealth
Residentialreal estate
Credit
![Page 5: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/5.jpg)
Retirement Will Be the “Word of the Decade” for Customers and Financial Services Providers Alike
% of households
% of financial wealth
Retiree households2012 2022
25%
42% 48%
31%
1.3 million transfer events
(2012-2022)
Source: Household Balance Sheet Report, WealthMine.
55
![Page 6: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/6.jpg)
It's "Risk On" for Canadians Saving for Retirement—As Employers Transfer Risk to IndividualsAssets in billions of dollars
5.4% 9.2%5.7% 2.0% 7.5% 9.3%
Total CPP/QPP DB RRSPsDC RRIFsCAGR 2013-2022
8% 9% 9%
47%44%
33%2%
2%
3%
35%
33%
40%
7%
6%
9%
1%
5%
7%
2007 2013 2022
Other CAP
RRIFs
RRSPs
DC
DB
CPP/QPP
$4,578
$1,974
Individually-controlled$2,854
6
![Page 7: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/7.jpg)
Mass Affluent Segment Will Lead Household Expansion but High-end Clients Will Dominate the Asset Growth Opportunity
Mass affluent
HNW
$100k-$250k
$250k-$1 mil +811K 73%
+500K
Households Financial wealth
3.8 million $1.4 trillion
$1 mil+
54%
+486K 88%
1.1 million $3.7 trillion
Between 2012 and
2022
Source: Household Balance Sheet Report, WealthMine.
77
![Page 8: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/8.jpg)
Evolving Customer NeedsWill Drive Product Preferences
![Page 9: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/9.jpg)
Money on the Sidelines: The Opportunity Cost Rises as Markets Improve and Interest Rates Remain LowDeposit balances, in billions of dollars
2013
1.15%
2007
3.08%
Estimated effective interest rate on interest bearing deposits
Source: Insight Advisory Service.
99
![Page 10: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/10.jpg)
$106 $122 $140 $199
$282 $336 $397 $445 $431 $394 $443
$511 $601
$708 $746
$561
$705 $807 $808
$905
$1,060 $1,169
1993 1996 1999 2002 2005 2008 2011 Jun 2014
Canadian Fund Industry Breaches $1 Trillion in AssetsLong-term investment fund assets in billion of dollars
Source: Insight Advisory Service, Simfund Canada.
5-yr 15%
10-yr 9%
20-yr 12%
Trailing growth to June 2014
10
1-yr 22%
10
![Page 11: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/11.jpg)
Fund Industry Flow Tide on the RiseLong-term investment funds net flows, in billions of dollars
Source: Insight Advisory Service, Simfund Canada.
11
$32
$20
$4
$32
$58
$41
$15
$38
$11 $11 $11
$23$32 $28
$33
-$12
$28 $28 $28
$42 $44$34
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013Jun YTD2014
1993-1999 49.7% 2000-2007 5.9% 2009-2012 5.6% 2013 4.8%
YTD Jun 2014 3.2%
11
![Page 12: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/12.jpg)
Equity Renaissance Underway…But in a Risk-conscious Fashion. Foreign Diversification Back on TrackAverage annual mutual fund net flows in billions of dollars
Source: Insight Advisory Service, Simfund Canada.
12
2%29%
103%48% 39%
19%
35%
37%
20% 15%
5%
33% 16%16% 14%
24%
-11% -34% -17%-2%
9%
9%
7% 16% 9%
41%5%
-29%
17%25%
1993-2000 2001-2007 2008-2012 2013 YTD June 2014
International equityfunds
U.S. equity funds
Canadian equity funds
Equity income funds
Balanced funds
Fixed income funds
$25.7 $19.3
$15.7
$37.4
$31.9
12
![Page 13: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/13.jpg)
Shift to Solutions Underway: Pre-assembled Advice Solutions Resonate with Risk Management ThemeIn billions of dollars
2003-2013 2013-2022All funds 7.4% 5.8%Fund wraps 16.8% 7.9%Stand-alone mutual funds (ex. ETFs) 3.6% 2.6%Funds in fee-based accounts and discretionary programs 15.1% 13.6%
CAGR
80%71%
69% 58% 56%42%
16%
24%25%
33%36%
43%
4%
5%5%
8%8%
15%
$450
$709$556
$789$922
$1,537
2003 2007 2008 2012 2013 2022
Funds in fee-based accounts and discretionaryprograms
Fund wraps
Stand-alone mutual funds (ex. ETFs)
$217
$661
$651
Source: Household Balance Sheet Report, 2013 Edition, Section 2, Exhibit 9.
13
![Page 14: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/14.jpg)
Mutual Fund Business: Three Key Trends
(2) Long-term funds industry MER coming down:
2.13%2.05%
(1) Back-end load funds continue to lose share of total load fund assets:
58%39%
(3) Multi-series assets on the rise, original series assets losing share:
90%86%
2007 2013
2007 2013
2007 2013
2007 2013
14
![Page 15: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/15.jpg)
Mutual Fund Industry Pricing Flexibility on the Rise—Unbundled Approaches Gain GroundTotal assets in unbundled series*, in billions of dollars
Source: Insight Advisory Service September 2014.
*Includes F, F/T, F/HNW, F/T/HNW and all HNW-series which unbundle the management fee.
2007 2013$66.4 Assets $139.59.4% Share of long-term funds 13.7%
15
![Page 16: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/16.jpg)
Regulators stirwhile ranks of competitors multiply—
Advisors need to be ready!
![Page 17: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/17.jpg)
Global Focus on Investor Protection Shaping the Regulatory Discussion in Canada—and Worldwide—Will Put Pressure on Traditional Advice-givers
81-102Statutory best
Interest standard
81-407Change in fee
structure
31-103CRM II
81-102Point of sale
disclosure
NOW: Mutual fund manufacturers fee and performance At point of sale and in plain language.
Now to Mid 2016 : Dealers to report performance, all fees paid, service rendered on client statements.
Discussion paper: Proposes end to embedded payments to dealers/advisors—trailers and 5% commission paid on DSC.
Consultation: Proposes fiduciary-like standard on all advisors.
Source: 2013 Household Balance Sheet Report.
1717
![Page 18: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/18.jpg)
More Competition: Direct ≠ No Advice! Will Robo-Advice Take Hold?
Source: Household Balance Sheet Report, 2013 Edition, Section 2, Exhibit 13.
Online brokerage
Full-service brokerage
Private investment counsel
Branch delivery
Direct sellers
adviceDirect
PH&N IS
Do it yourself Get help to do it Get someone to do it for you
Financial advisors
18
![Page 19: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/19.jpg)
Deposit-takers Formidable Competitors. Beware of Their Quest for “Customers for Life”
• Foster seamless passage between channels and optimal allocation of corporate resources• Customer retention throughout the customer’s financial lifecycle top priority• Branch direct a critical point of initial customer engagement and discovery
Source: Big Six Banks Comparative Analysis—The Mass Affluent Segment: Sales and Service Models of the Big Six Banks.
Private Wealth
Serv
ice
/ Ad
vice
com
plex
ity
Investable assets
Branch Direct
$50K $100K $250K $500K $1M
Branch Advice Specialized Salesforces
Full-serviceBrokerage
Deposit-takersOnline DirectOpportunity?
IIROC
19
![Page 20: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/20.jpg)
Unfolding Transformation of the Financial Advisor Channel: Less Embedded Compensation, More Unbundled Fee-based ApproachesPercentage of channel assets in unbundled fee-based programs
0
2.5%
18.3%
33.3%
Full-service Brokerage Financial Advisor Financial Advisor
2013 2022
20
![Page 21: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/21.jpg)
Capturing Wealth Market Opportunityin the Next Decade
![Page 22: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/22.jpg)
Sufficient nest egg?
YesYes
- Reverse mortgage
Payout annuity
Outside of registered account?
No
Permanent life insurance loan
GWBs
Principal protection?
- Mutual Funds- Fund wraps
No
Yes
Fixed-term deposits
Market access/ liquidity?
Guaranteed income?
Yes
No
Upside potential?
Yes
No
Yes
No Yes
No
- Corporate class funds- T-class funds
- Principal-protected notes- Fixed income securities
Segregated funds
Upside potential?
Insurance product
Expand Your Retirement Planning ToolkitPayout Phase = Growing Complexity for Advisors
22
Mutual fundse.g. CI G5/20
![Page 23: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/23.jpg)
Retirement Market Jumpball—A 360° View of Payout Phase Product LandscapeIncome product continuum in flux
Source: Household Balance Sheet Report, 2013 Edition, Section 3, Exhibit 8.
23
Principal Protected
Notes (PPNs/PARs)
GICs GIAs Payout annuities
Hybrid payout
products
Guaranteed Withdrawal
Benefit funds (GWBs)
Traditional segregated
funds
Investment funds*
Deposit-based Fund-based
Permanent life insurance
Reverse mortages
Credit-based
Guaranteed income for life
Upside return potential
Upside income potential
Sun Life SunFlex Retirement Income (Jan 2013)
Manulife PensionBuilder (Oct 2011)
CI Investments Guaranteed Cash Flow Series G5|20
(Jul 2013)
Number of MLNs issued2007………………..4852012………………..4672013…........………757
Market-linked GICs2007……………..$18 billion
2013..........…….$40 billion
*Investment funds includes: mutual funds, mutual funds of funds (MFoF) and exchange traded funds (ETFs)
ManulifeRetirementPlus
(Sept 2013)
DesjardinsHelios GWB(Feb 2014)
BMOGuaranted Investment Funds
(Dec 2013)
![Page 24: CI Financial Conference Aria Resort & Casino Canadian Wealth Market Opportunity in the Next Decade “Change Is the New Normal” Goshka Folda.](https://reader035.fdocuments.net/reader035/viewer/2022070412/56649ec75503460f94bd3be2/html5/thumbnails/24.jpg)
Wealth Management Landscape Now Stretches Far and Wide
• Adapt to evolving consumer needs by executing a “Growing with Your Customers” strategy and focusing on holistic wealth management
• Deepen expertise in emerging areas, such as risk management, retirement and estate planning
• Crystallize and articulate value of advice to strengthen value proposition and combat competitive challenge
• Address time constraints and rising compliance and technology costs
• Develop practice efficiencies to allow for expansion and new revenue opportunities to strengthen economic model
24