How I compare investment funds and insurers

Investments

I compare the large fund providers on return per unit of risk and per dollar of cost, with one goal: the most growth for you after fees and after taxes. The review takes in mutual funds from the big banks, the major investment companies and the insurers, as well as boutique managers, and segregated funds from several insurers.

Returns are compared net of everything charged to the client. I use the versions of each fund that report returns after the management fee and the advisor's compensation, so the comparison shows what an investor actually received.

Your money is managed by professional portfolio managers inside those funds. My work is choosing them, monitoring them every six months, and fitting them to your corporation: how each fund's distributions are taxed, whether it pays out mostly capital gains and Canadian dividends rather than interest, and what it does to the passive income that can reduce your small business deduction. A portfolio of individual securities, or of ETFs that pay out taxable income every year, can carry a tax cost inside a corporation that a headline return doesn't show. Accounts with WhiteHaven Securities Inc. can hold ETFs too, and they are compared the same way, after tax. The corporate class vs ETFs comparison walks through an example.

Mutual funds are offered through WhiteHaven Securities Inc., currently to clients in Québec only. Segregated funds, which are insurance contracts, are offered through iAssure Inc. Specific fund names and up-to-date performance data are available upon request.

Insurance

iAssure Inc. holds contracts with 14 Canadian insurers, including all the large ones and almost all the mid-sized ones. The few I don't work with were left out deliberately, based on what my clients need. For term, whole life, universal life, critical illness and disability insurance, I can usually quote most of the market the same day.

The first comparison is what each policy gives you for the premium: the benefit and the long-term growth per dollar. Then what is guaranteed against what is only projected, each insurer's dividend history and how openly it reports actual dividends against illustrated ones, room to deposit more later, conversion rights on term, how each insurer underwrites your health history, and its financial strength. On large cases, above $10 million of coverage, I also look at each insurer's capacity to take on the risk: how much it keeps itself and how much it passes to reinsurers.

Investing, insuring, or both

When part of the surplus could go either into investments or into a permanent policy, the written comparison shows three paths side by side: investment only, insurance only, and a combination. Each uses the same capital and the same time horizon, shows taxes and costs, and keeps guaranteed policy values apart from projected ones. Your accountant gets the same document.

What you receive in writing

The written recommendation shows how the policy or the portfolio affects your business's and your family's net worth over the long term, how it fits your family's succession and growth goals, how it compares with other strategies, and how it fits the values and policies your family has set, such as a family code or a giving policy. It comes with the needs analysis, and with final figures only once the insurer confirms the pricing. If a new policy would replace one you own, you also get a written comparison and the regulator's notice of replacement.

How I am paid for each of these is on how advisor fees work and the compensation page. The steps from the first call onward are on what to expect.