Monday, October 5, 2009

Great West Life - Segregated Funds with NEW Lifetime Income Benefit

I just got a huge package from Great West Life, on their new Segregated Fund product. They have jumped on the bandwagon and added a Lifetime Income Benefit similar to Manulife, IAP, DFS, Sun Life, Transamerica etc.

*BIAS DISCLOSURE*
I don't really like these products no matter who sells them, the fee's are just way too high.

Case in point, please see the MER (Management Expense Ratio) chart for the new shelf.



Lets look at the Mackenzie Financial Balanced Fund, once you add in all the bells and whistles and the Lifetime Income Benefit your MER is 4.01%

Yeah, no thanks.

More to come later.

2 comments:

  1. 2% and up?? Holy crap those are terrible!

    I assume the numbers under the options just add on to the advertised MER. Is that right, the MER for a money market account is over 1%?

    ReplyDelete
  2. @MSR,

    In the seg fund world MER's in the 2% range are normal. Most Mutual Funds might be 1.5%-2.0% but when you make it a segfund there are added costs for the guarentees so the fee's go up. when compared to ETF's both mutual funds and Seg funds just get destroyed.

    You are right in assuming that you take the base MER and add the cost of each feature to reach the total.

    Segregated Funds are an expensive investment, but for some people the fee's are worth it for the guanretees. I like Seg funds for businesses owners thanks to the creditor protection they offer, I also like them for very conservative people who want the maturity guarentee's. They may not be the best value for someone with neither of the above needs and they might be better served by a Mutual Fund dealer or ETF dealer.

    The Lifetime Income Benefit is very attractive to a lot of people, but I think you can do comparable with regular seg funds and an annuity, for far less in fee's

    Standard Life has some of the lowest Segfund MER's on their 75/75 funds, which is one of the reasons I really like their product shelf.

    ReplyDelete