Kevin Dougherty, president of Sun Life Canada, says he believes that his company has all the assets it needs to be successful in Canada. When he looks at the company’s market position, he says it could not be better placed.
In an interview with The Insurance and Investment Journal, Dougherty said that Sun Life sees Canada as one of the best insurance markets in the world. There’s a great deal of opportunity to offer coverage and great demographics, he says. “There’s really good regulation. Canada is obviously going through a lot of regulation. But we see a lot of opportunities across Canada.”
The increasing number of retired baby boomers is a good thing for his company, he says. Many are reaching retirement age and are entering the phase of life where they are spending their assets. Each day in Canada, 1,000 people turn 65, he says, citing Statistics Canada data.
“The insurance industry can deal with challenges for retirement that the mutual funds industry can’t deal with. What if I outlive my assets? What if there is a market crash? The insurance industry is better placed to face that.”
He also says he sees millennials as an opportunity for Sun Life. “They are at a point in their lives where they are starting families. They now need to look at their alternatives with respect to ensuring their financial security.”
Immigration is a growth avenue
Immigrants are also an opportunity for growth in Canada, says Dougherty. “We see it in Montreal, Toronto, Calgary and Vancouver – people who left their family and their security in another part of the world. They need that financial security coming here. It’s a question for the industry: how do we reach those people?”
He says Sun Life is well positioned in this regard. Dougherty says half of Sun Life's 4,000 advisors are first- or second-generation immigrants. “It’s a great opportunity for us, he says.
Dougherty also underlines Sun Life’s network of independent advisors. He says several MGAs are successful in different segments of the market. Sun Life has half of its sales force in the independent channel. “We could not be in a better position,” he says.
Dougherty recognizes that financial analysts may not agree with his point of view regarding his company’s position. This is because they look at a horizon of 18 to 24 months. Sun Life's focus is on the next 20 to 30 years, he says.
“There is a lot of room for the insurance industry to have a higher profile. Awareness is better. People know Sun Life, because of our involvement in advertising and so on. In group business, we are one of the largest players. We touch millions of Canadians every day. We help six millions workers plus their families, for a market share of 24 per cent in group benefits and 40 per cent for businesses with a DC (defined contribution) plan. When people think about Sun Life, it’s about their work and their community.”
The market will change
Dougherty says he is aware that Sun Life will have to deal with changes in consumers' buying habits. He expects simpler products, such as travel insurance or term insurance, to be more web-based. However, it will still be necessary to make people aware of the need for life insurance, since they don’t wake up in the morning and tell themselves they should buy it.
Advice will play a role during clients’ key life moments, when they have to make important financial decisions, such as when they have to choose who will be their insurance beneficiaries. “It’s all about the moment. The consumer will build a partnership with an adviser to talk about things like succession and taxation. In between the run-up to retirement, people will need to sit down with an advisor. At the end of the day, it’s not a do-it-yourself project when it comes to retirement. Will you RRIF or not? Will you buy an annuity? These are all moments that advisors will continue to help with.”
Technology will play a bigger role, he says. The advisor will be able to talk face-to-face with his clients via Facetime. He points out that even the person who clicks to buy online might need to talk to someone. "We will reach out to people at those moments," he says.
Competing with banks
Dougherty also believes that life insurers are well positioned to compete with banks. “Where is the money? In the banks. We are at the work site. Banks are not. We can talk about their security. Banks cannot. We understand longevity and mortality. It’s not the core business of a bank. Getting a mortgage or a credit card, those concern transactional security. Life insurance provides financial security.”
He says the flow of mutual fund investments to Sun Life is business that was formerly at banks. Sun Life has $99 billion in assets. This is in addition to $11 billion in segregated funds.
Regulation is not a problem
And regulations will not conflict with the industry’s growth, says Dougherty. He says he views the direction that regulators are taking in a positive light. The transparency debate may be difficult, but Dougherty says he believes this disclosure is necessary, including for segregated funds. He also says he believes that the issue of management fees must be tackled head-on and that better disclosure must be made.
“I don’t think we need to be scared of transparency. The client understands that we manage his money and that we give him advice. It’s a very valuable service that we provide. We have to make it more understandable for clients.”
Dougherty says the biggest challenge for the industry is training more advisors. There is not enough at the moment, he says. He also says that this is why Sun Life believes so much in its career network. People need advice more than ever, he says.
He also had a warning for advisors. He suggests that they do not sell mutual funds only. Those who do so put themselves in a vulnerable position, according to him.
This doesn’t mean that an advisor has to be good at life insurance, investment and health. Sun Life’s career sales force has many specialists, he notes. “You have to be more team oriented. It’s about financial security. At a bank branch, they will give you some financial advice, but they won’t give you a full financial planning strategy.”
Sun Life’s group business has generated 80,000 leads for career network advisors
Thanks to requests from its group insurance clients, Sun Life Financial has been able to generate 80,000 leads for advisors in its career network across Canada.
Five years ago, that number was 24,000 leads, said Kevin Dougherty, president of Sun Life Canada. These are Sun Life group call centre agents who – based on their discussions with group plan clients – suggest they speak to an advisor.
Why do these leads only go to career network advisors? It would be hard to allocate them to independents due to the management involved, he says.