This article was produced in partnership with Desjardins.
Desmond Devoy, of Insurance Business Canada, sat down with Philippe-Olivier Dumas, section manager, product development, Guaranteed Investment Funds and Annuities, to talk about Desjardins’ Guarantee Advantage program.
No investment comes without risk – but having the backing of insurance, with the offer of good potential returns, can make investing less worrisome for clients.
So if a client is sitting across from you, worried about their investments – or whether they should invest in the first place – what assurance can you give them that it is possible to invest safely? You can differentiate yourself by suggesting the Guarantee Advantage (GA) program, which can offer them some peace of mind.
“It’s the right time because there's a lot of uncertainty and we offer the protection,” said Philippe-Olivier Dumas (pictured), section manager, product development, Guaranteed Investment Funds and Annuities, with Desjardins.
Markets are uncertain and inflation is still high, but this context favours products such as GA, since high interest rates make it possible to offer:
GA is a term investment whose returns are tied to a basket of securities in targeted or diversified activity sectors. Some options offer a guaranteed minimum return, and the principal is guaranteed at maturity and death. GA is also an insurance product.
To be sure, there are other options, like stocks. Like GA, when a stock rises, your client gets a bigger return. But if the stock crashes, you lose, unlike with GA, where your client’s initial investment is protected at maturity and for certain products, guaranteed minimum return is offered even though the market is negative. That’s capital protection plus growth protection.
Dumas likens GA to a market-linked GIC, but in an insurance product.
“We are the only one1 in the Canadian market with that kind of product,” said Dumas.
Here are some interesting features of GA.
A variety of maturity options are available (two, three, four and five years). Your clients can also invest as much as they are comfortable in different investment brackets that offer more favourable conditions based on the amount invested.
GA also offers the owner the chance to designate a beneficiary in case of your death. And in case of bankruptcy, your initial investment is protected from creditors, in certain circumstances.
“You don’t buy this product to protect against that,” Dumas hastened to add. “But there’s protection just in case it happens.”
As an added feature, GA can be held inside an RSP or TFSA.
“It’s a product that can be held in a registered account. It can also be held in a non-registered account,” he said.
So what type of client would benefit the most from GA?
For clients who are skittish about the market despite knowing that their initial investment is protected, Desjardins does its due diligence to select the right investments to put in their portfolios.
“We choose big, solid companies with well-established brands, products and services,” explained Dumas. Desjardins has a team that designs the products and leverages their expertise, totalling more than 25 years and several international awards. “We are able to negotiate with counterparties and lower option prices. That enables us to offer better features in the product.”
All of which leads to one final question: Have you introduced your clients to this product yet? Now, it’s the time.
For more information, check out the representative’s guide here.
[1] Desjardins Internal Market Watch, June 2023.
