87% of CDNS looking for investments that grow & guarantee principal yet 60% not familiar with Seg Funds

Eighty-seven per cent of Canadians aged 55 and over agree that they’d like an investment product with guarantees on their principal that also offers growth opportunities, but 60% are unaware this option exists with Seg Funds. Seg Funds offer the growth potential of a mutual fund with the comfort of an insurance contract to guarantee the principal at maturity or death, yet only 17% of respondents are exploring Seg Funds as part of their retirement plans.

As Canadians review their financial plans and make investment decisions ahead of the RRSP deadline, they lack awareness of a solution to help them plan for retirement. According to a recent RBC Insurance survey, 87 per cent of Canadians aged 55 and over agree that they’d like an investment product with guarantees on their principal that also offers growth opportunities, but 60 per cent are unaware this option exists with Segregated (or Seg) Funds that are available from insurance companies.

Seg Funds can play a valuable part of an investment portfolio by bringing unique benefits that can’t be found with other investment products, yet only 17 per cent of respondents are exploring Seg Fuds as part of their retirement plan. Seg Funds combine the growth potential of mutual funds with the comfort of an insurance contract securing principal guarantees at maturity and at death, allowing investors to save for the future with peace of mind.

“Our survey shows that there’s a general lack of awareness and understanding around Seg Funds in Canada. Seg Funds can play an important role for clients looking to grow and protect their money while ensuring assets are smoothly transferred to beneficiaries,” says Jean Salvadore, Director of Wealth Insurance at RBC Insurance. “Seg Funds offer a number of benefits that other investment products do not – it’s worth understanding how they can contribute towards an overall retirement plan.”

Estate Planning Benefits and Seg Fund Costs
With 80 per cent of respondents not passing the Seg Fund quiz, most Canadians are in the dark when it comes to the fundamentals of Seg Funds, contributing to missed opportunities for broader investment portfolios. For example, 83 per cent of respondents indicated that Estate Planning was important to them, yet 72 per cent of respondents didn’t know that Seg Funds have unique estate planning benefits such as the ability to bypass the probate process ensuring beneficiaries get their payout faster, privately and with less cost.

Cost may also be a barrier to the overall lack of awareness of Seg Funds and why Canadians aren’t considering them in their financial plans. While 33 per cent agree that they wouldn’t mind paying a higher fee for the added protection that Seg Funds guarantee, 47 per cent disagree and 20 per cent were unsure. “When purchasing a Seg Fund, you are buying an investment with guarantees to protect your money from market downturns,” said Salvadore. “For instance there is a death benefit of up to 100 per cent so that your assets are preserved for your loved ones, in addition to bypassing the probate process. Depending on risk appetite and investment goals, for many clients these benefits outweigh the additional cost of a Seg Fund.”

Seg Fund Quiz Stumps 80% of Respondents

  • You can invest in a RBC Insurance Seg Fund for as little as $50 per month. True. Most Canadians (72%) weren’t aware that investing in Seg Funds doesn’t require a large monthly financial outlay.
  • You have to be 65 to invest in Seg Funds. False. However only 39% of Canadians know they don’t have to meet this age requirement.
  • With Seg Funds, my money is locked in. Also false. 67% of Canadians didn’t know you can access your investment at any time minus any fees.
  • You can have Seg Funds in both registered (i.e. TFSA, RRSP) and non-registered account. True. And yet, 59% of Canadians were not aware of the flexibility Seg Funds offer.
  • I need a life licenced advisor to buy a Seg Fund. Only 16% of Canadians know this is true. Speak with your licensed insurance advisor to see if a Seg Fund is right for you.

About the RBC Insurance Survey
RBC Insurance commissioned Ipsos to conduct a survey to assess the knowledge of high-income Canadians over the age of 55 and with an annual household income of $100K or more, relative to Segregated Funds. The survey was conducted between November 14 and 17, 2016. The survey queried 1,002 Canadians aged 55 and over, with a household income of $100,000 or more according to Census data. The precision of Ipsos’s online survey are measured using a credibility interval, in this case the results are considered accurate to within ±3.5 percentage points, 19 times out of 20, had all Canadians aged 55 and over, with a household income of $100,000 or more been polled.

About RBC Insurance
RBC Insurance® offers a wide range of life, health, home, auto, travel, wealth and reinsurance advice and solutions, as well as creditor and business insurance services to individual, business and group clients. RBC Insurance is the brand name for the insurance operating entities of Royal Bank of Canada, one of North America’s leading diversified financial services companies. RBC Insurance is among the largest Canadian bank-owned insurance organizations, with approximately 2,500 employees who serve more than four million clients globally. For more information, please visit rbcinsurance.com.

SOURCE RBC Insurance


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