Say Goodbye to GMWB as You Knew it
Originally published on Advisor.ca
The clock is ticking for you to get your clients locked into guaranteed income products, as insurers continue to re-jig contracts, suspend sales or just get out of the business altogether.
Yesterday, Desjardins Financial Security announced it was suspending sales of “version 2” of its Helios GMWB product, effective April 27, 2012. DFS had already announced higher fees, effective April 1, 2012, and the termination of deposits to version 1 plans effective Dec. 30, 2011.
In making the announcement, the company cited—you guessed it—low interest rates and high regulatory capital requirements. These are the same reasons cited by Standard Life when it suspended sales of its Ideal Income Series earlier this month.
The trend has swept across nearly the entire industry.
“No surprise at all to me—and about time,” says Ian Whiting, CFP, CLU, in Vancouver. “While the product has some excellent applications for some clients, pricing and investment choices just didn’t stand up to long periods of stagnation and volatile markets.”
So far, only Empire Life has held firm, announcing no changes yet on its Class Plus product.