Manulife IncomePlus: The high cost of peace of mind

50 responses so far ↓

• 1 Nurseb911 // Nov 3, 2008 at 9:21 am

  As a shareholder I love the product, but I wouldn’t recommend it to anyone I like!!

  The principle of the product makes sense, but its certainly not structured that way. $14/month fee with quoted interest rates that are very high compared to a traditional mortgage doesn’t really make it very cost effective. Especially when you consider that they’re asking you to move your mortgage, chequing account and savings account to one company - there should be a meaningful savings for doing that.

  I think for anyone on a budget who can commit some extra earnings to their mortgage to repay it off effectively doesn’t need a product like this.

  It sells simplicity - but at a serious cost.

• 2 Dividend Growth Investor // Nov 3, 2008 at 9:39 am

  Annuities are pushed hard by financial advisers since they make much more on them than selling index funds.
  Btw I never understood why anyone would purchase an annuity instead of purchasing long-term govt bonds. The bonds would also guarantee income for life ( and beyond)

• 3 venter // Nov 3, 2008 at 9:40 am

  Nurse911, I think you are confusing Manulife One bank account with the IncomePlus variable annuity. Completly different animals. As an advisor, I have never pushed this product, rather it has been clients who want it. I explain the extra costs, how a portfolio that has a high income component will “based on history” provide better inflation protection etc. It usually comes down to “peace of mind”. The only alternative most of these clients will consider would be a GIC ladder.

• 4 Mintycake // Nov 3, 2008 at 10:28 am

  Manulife spent a lot of money on marketing this product, and with the recent market downturn, I believe there is even more appeal now for these “guaranteed rate” plans. They’re also designed to replace traditional pension plans (which become rarer and rarer these days). These products are very successful in the US. As long as clients are aware of the fees and the product is sold properly, it can be a good part of someone’s retirement portfolio. If you want a win - win, buy some of this and buy Manulife stock also.

  I also think the returns would be taxed more favorably than a bond or GIC. Also, they pay 5% DSC commission to an advisor, plus trailer fee.

• 5 mike at second opinions // Nov 3, 2008 at 10:57 am

  These types of products are popular for one reason only….fear sells! You can charge big fees and commissions to provide a vague guarantee that will likly be of little use. Clients often ask for the product because they are afraid. What I do not understand is why advisors have jumped on this so enthusiastically; other than for the fat fees. This product may be right for a small segment of the investor market, but it works for a huge portion of the advisor markets.
  Questions: How often in the past 50 years would a reset have been beneficial? How often would the underlying funds have earned a return greater than the fees plus inflation?
  Does fear sell better than sex…..and is this product the viagara equivalent for scared seniors?

• 6 Canadian Capitalist // Nov 3, 2008 at 11:45 am

  I wrote this post because a friend (who works with an advisor) was pitched this product and she asked for my opinion. The advisor didn’t mention anything about the high fees or why this product may or may not be suitable. While an annuity can be a form of longevity insurance, products such as this sell only because they create an illusion of getting a free lunch — excess returns without risk. Average investors may not understand this and be influenced by slick advertising but advisors should know better.

• 7 Philip S // Nov 3, 2008 at 1:09 pm

  A friend also asked for my opinion on this a while back and this is the response I sent:

  The fees on the product are 0.75% plus the average MER on any of the given funds you can choose for a whopping average of 3% in fees…..just to put your money with them. So even if your investments match or exceed the market, you’re losing money unless you beat the market by 3%
  every year.

  The Guaranteed Minimum Withdrawal Benefit only increases if the Guaranteed Minimum Balance increases. The GMB only resets and may increase every 3 years (if your funds make money but at 3% annual fees, good luck). Now here’s the kicker. They tell you you have access to
  your money anytime BUT if you withdraw ANY amount within the first 3 years (before they reset the GMB) your virtually guaranteed never to increase the GMB, thus never changing your income payments….for life.
  You only deplete your savings. They only guarantee withdrawals up to you Guaranteed Minimum Balance as of Dec 31 in the first year. Wow.

  Here’s the another thing. You’re basically allowed to withdraw 5% a year. If you don’t withdraw in the first 15 years, they add 5% to you GMB. Thanks. I didn’t take my 5% I’m entitled to in any year so now you add it to my earnings and they make it sound like they’re doing me a
  favour? Weird.

  Now get this. If I were to buy this and start withdrawing right away, I’d never increase my GMB, thus never increase my GMWB (of 5% a year), and I can only withdraw up to my initial GMB as of Dec 31 in the first year so I basically deplete my savings 100% in 20 years. AND I wouldn’t
  make any money since my GMB is never adjusted EVEN if my funds made money.

  If I bought this for 200K today and started withdrawing my GMWB of $10,000/year, I would have 190,00 at the end of year 1, 180K at the end of year 2, 170K at the end of year 3. Now, if my investments made money, and it placed the market value above $200K, my GMB would increase
  and my GMWB would increase as well. Now, with MER’s of 3%, I’d have to get returns in the neighborhood of 8% just to have a chance of increasing my GMWB. If not, I’m sunk. Now, they’re nice and they guarantee that I can withdraw up to my original GMB. So I can withdraw my money for another 17 years and that’s it.

  You’d really be better off holding funds in anything other than this fund. This is so stacked in Manulife’s favour it’s not even funny. There is no guarantee of anything. They’ll take all your money and hold it for you and give it back in small chunks….and they won’t even give your interest or earnings on it….unless you don’t take anything out.
  Then they’ll give you what you were supposed to take out. Wow.

  It looks really, really bad.

• 8 A.J. // Nov 3, 2008 at 1:27 pm

  “Why then are advisors pushing their clients to buy these products”?,,, Commissions of course.

• 9 brent // Nov 3, 2008 at 2:19 pm

  @ Philip

  I’m not suggesting this would be a wise investment, i don’t know enough about it. But I don’t think the program is quite as bad as you suggest. I’m pretty sure the guaranteed minimum withdrawal is guaranteed for life, not 20 years as you suggest.

• 10 Nurseb911 // Nov 3, 2008 at 2:46 pm

  Yes venter, my mistake.

• 11 Canadian Capitalist // Nov 3, 2008 at 2:53 pm

  Philip: I’m going take a closer look at IncomePlus in future posts. Also, I’m going to compare this with other options. I agree with your analysis that the product is simply smoke and mirrors and as Mike points out using fear to sell like hotcakes.

• 12 Hungry Gal // Nov 3, 2008 at 3:25 pm

  These are products absolutely irritate me about this industry… Mike @ 2nd opinion is absolutely correct about how fear sells.

  Manufacturers and IAs bank on the fact that many investors look to their IA to lead them toward some kind of finanical nirvana through these complex products. Investors abdicate responsibility in this respect and it costs them dearly.

  Some good advice from the Oracle of Omaha - to paraphrase - if you don’t know enough about it, don’t invest in it.

• 13 Canadian Capitalist // Nov 3, 2008 at 3:25 pm

  brent: Philip is talking about how much principal is available for withdrawal, not the income stream itself, which is set based on the balance at age 65. If an annuitant takes the annual income, the balance is reduced by that amount provided the underlying fund hasn’t grown. With 3.5% in fees and 5% in withdrawals, chances are it won’t grow as much. So in about 16 years or so, chances are the balance will be zero but the annual payments will continue.

• 14 Rob // Nov 3, 2008 at 3:35 pm

  First off, I understand that if it now has $5 Billion in only 2 years - obviously a lot of advisors are selling it.

  As an advisor, I have never seen more clients bring up a financial product to me and suggest they go into it. So obviously, this product is resonating well with consumers.

  That said, the product is terrible for all the reasons outlined in CC’s post and the above comments.

  I have had to talk so many clients out of buying this - more so than any other product I have ever seen. So far, I have been able to talk everyone out of it, and I would rather a client leave and take their account elsewhere than go into it through me.

  In other words, I won’t put anyone in it - regardless of how much they might want it. But newer advisors, or those with less confidence to disagree with clients may be putting clients in because they are asking specifically for it.

  Idealy, people should try to do their homework before going into questionable products. But as a fast rule, when it sounds like you are getting upside without potential downside, you can be sure the product has been crafted to be easy to sell, give you the impression you can have your cake and eat it to, and you will ultimately learn that the product just plain sucks.

• 15 brent // Nov 3, 2008 at 3:55 pm

  cc, thanks for the clarification, that makes sense.

• 16 NN // Nov 3, 2008 at 4:05 pm

  Investors seems oblivious to the fact that all companies have to make a profit. In any type of insurance, you pay the insurance company the amount they expect to have to pay to you in claims over a period, plus an additional 30% odd for administrative cost and profit.

  An investment ‘guarantee’ is nothing if not insurance, and the company that provides it has to make a profit, and the investor is going to pay for it, that is the bottom line.

• 17 Toni // Nov 3, 2008 at 4:39 pm

  This product was pitched to us last week - the annuity by SunLife. I asked the advisor why a person would buy it if they had enough to live comfortably on their retirement funds. He suggested that everyone likes something that guarantees an income for life. However, if you have enough put away, you can guarantee your own income without paying any extra fees.
  I guess the only thing to be careful of is to have some critical illness insurance in case one does become ill - that could take a big bite out of a retirement fund.

• 18 Brad // Nov 3, 2008 at 4:43 pm

  For all those here who say that advisors would only sell this as an advantage to themselves, show me what you have been able to offer your clients over a thirty year history that provides some certainty to your clients’ retirement years. Also, these products are sold on the same basis as all mutual funds in terms of commissions paid.

  To say that such a product is ’smoke and mirrors’ implies that other pitches are not. When you sit down with your clients and explain to them the ‘advantages’ of a well-diversified, asset allocated portfolio, and give them projections, how much are you willing to stand behind that projection. Not at all, I suspect.

  You would rightly say both that over the long term equity MARKETS tend upward, but also that past returns are not predictive of future performance of any individual instrument.

  Here’s a question for all you ANDEX fans: how long did it take for the the Dow to recover to the same level it had reached immediately prior to the collapse of October 1929? Not sure? Try 26 years.

  Most clients’ portfolios cannot withstand a 90% drop that takes 26 years to recover because of their life circumstances. While I think it highly unlikely that such an event could occur again, most advisors would have said that we wouldn’t suffer a correction of the size we are experiencing now. And most advisors can’t predict what will happen over the next 3-5 years either.

  Modern portfolio theory has lots of great ideas, but your clients don’t live on theory, they live on their assets in retirement.

  None of you is examining either the death guarantees of such these products either, or the estate planning advantages of such products.

  These products offer the potential upside of equity markets, according to your choice of products within them, and a number of guarantees, as well as tax advantages. Yes, you pay for the guarantee, but then again what don’t you pay for in life when you get something in return.

  Other than well-to-do clients, who can undertake an increased amount of risk (but why would they even consider mutual funds if they’re well off), average people want to establish an opportunity to maintain their lifestyle in retirement, not speculate. They’re looking for the highest degree of certainty possible within an opportunity that will provide them with some better returns and tax advantages than the safest investments.

  One last point, I daresay that many/most advisors as well are pushing the products that they are instructed to flog by their companies. How much is that in the best interest of the client. And many advisors as well work in circumstances where their firms will not entertain clients with less than 100K+ of investible assets.

  These new products are trying to meet a market need, and seem to do so well. Certainly the timing of economic forces seems in their favor, for now.

• 19 Rob // Nov 3, 2008 at 5:38 pm

  Brad, I am not trying to be a jerk here, but I have read your comments three times and can’t grasp what you are getting at.

  I am thinking you are saying that these products are good because you can stand behind them, and 90% drops take 26 years to recover from. I am sure you are trying to say more, but I can’t pick it out.

  Surely there are other more client focused portfolios you can stand behind… and the range of alternatives are not limited to just a portfolio that can fall 90% in value vs. IncomePlus?

  You ask us to “show me what you have been able to offer your clients over a thirty year history that provides some certainty to your clients’ retirement years” OK … Let me try. …. What about laddered bonds or GICs for risk averse clients. You won’t make as much in terms of commissions (20 basis points per year vs 5% upfront and 0.5% in trailers) but your risk averse clients will be far better served. I can stand behind that.

  This is a very pro-indexing blog, and I am not a real fan of indexing. I do understand its appeal however. I personally think the very few good mutual funds out there are far better options for investors but I don’t think I would be able to convince the CC’s readership of that. In any event, this kind of garbage in an investment vehicle is why “active management” gets such a bad name.

  As for serving a need - like crappy PPNs, these types of guarantees are only serving the need of people that are easily misled, are too trusting, and can’t /don’t understand the better options.

  If you are an advisor, frankly, I feel you should know better.

• 20 Brad // Nov 3, 2008 at 6:48 pm

  Rob,

  I am not trying to say that GMWBs are the only way to go, but rather they offer a much better alternative than most of the service that most clients have received historically from the financial services industry.

  Calling something garbage isn’t really identifying what you think the downsides of the product are. Or were you just referring to PPNs? I’m not clear.

  When you can receive the upside benefit of managed portfolios from third-parties within the product with the downside protection of the guarantees, I don’t see what the problem is. The Dow is now in the same spot it was at 10 years ago (without adjusting for inflation), so unless you can offer clients a method that significantly outperforms the market, and are willing to guarantee it, I don’t see why you think clients are worse off with GMWBs. I am skeptical about GMWBs where there is no offer of third-party funds or portfolios.

  As for indexing, while I expect markets to rebound over time, with the Dow in the same place it was in 1998, I remain as unconvinced as you state that you are.

  My point about guarantees is what can you offer your clients that exceeds a 5% bonus guarantee without having to worry about the timing of their investments. You suggest GICs. I don’t think that with the tax treatment of GICs that people will be ahead of where they would be at with GMWBs, especially with the addition of the death guarantees and the tax treatment of distributions at estate time.

  GMWBs are not a panacea, but I think they serve a significant (and vastly underserved) part of the market very well.

• 21 Canadian Capitalist // Nov 3, 2008 at 6:54 pm

  Brad: I don’t know what you mean by “standing behind a projection”. There is no certainty in anything (including IncomePlus), all you can do is put the odds in your favour. Take the income stream from IncomePlus, which isn’t indexed. It is a nominal income stream that at periods of high inflation would result in a rapid loss of purchasing power. So, what high degree of certainty are we talking about? Even in a low interest rate environment of 2%, in just 10 years, there will be a 22% loss of purchasing power.

  It is true that equity markets can be down for a long time. But why would a retiree be 100% in stocks in the first place. Even if he is, what about the income from stocks? Stocks do provide dividends that can be consumed. And unlike, bond coupons or annuity payments, there is good chance that dividend will keep pace with inflation. Future posts will look at alternatives: from 100% bond portfolios to a mix of stocks and bonds and how the effects of sequencing problems are over-stated in the IncomePlus product literature.

• 22 Brad // Nov 3, 2008 at 7:16 pm

  I still don’t see why selecting equities in a mutual fund inside a GMWB with baseline guarantees and tax advantages, is a worse alternative to purchasing the same equities inside a mutual fund with the GMWB and other advantages.

  Yes, there is an increase to the management fee, which when fully and properly disclosed to the client, enables them to determine whether they want the advantages at that price.

  The financial services industry has a lot to answer for right now, in my opinion, as to how clients have been served over the past 20 years, regardless of how advisors are being paid (DSC, fee for service or whatever).

  Telling someone whose retirement has just been set back 10 or more years by market performance, or who runs out of money in retirement that ‘all you can do is put the odds in your favour’ seems disingenuous and irresponsible to me. Most middle-income clients are not interested in ‘odds’ when it comes to their retirement, in my experience.

• 23 ETF2X // Nov 3, 2008 at 8:03 pm

  Excellent topic CC! Of course it is not a product that I would ever have an interest in.

  Fred

• 24 Canadian Capitalist // Nov 3, 2008 at 8:34 pm

  Disingenuous? You mean as opposed to pretending that inflation isn’t the biggest threat facing retirees? Irresponsible? As opposed to investing in a 80/20 equity-fixed income split, paying 3.5% in fees and hoping that you are going to get much more than the baseline benefits?

  An investor paying 8.5% in fees isn’t going to see many resets and a dwindling balance. Guess what? They could get the same “advantages” with a bond portfolio such as one in Rob’s comment and not run of money for the retiree’s lifetime and have money left over for heirs. The reason is quite simple: a 5% in nominal payments isn’t such a big deal. A retiree can put it in a chequing account paying 0% and have it last 20 years. If he dies in 15 years, there will be a full quarter of the capital left. Some guarantee! Or invest in a stock-bond mix and have very good odds of keeping pace with inflation. I think this is as close to a no-brainer as you can get.

• 25 NN // Nov 3, 2008 at 10:36 pm

  As I tried to point out previously, there is no way for the client to get a net benefit out of this ‘guarantee’ - the stable capital value is an illusion of safety; over any significant period (a full market cycle) the client will have to compensate the company for the payouts it had to make during a market downturn such as the present, plus its operating expenses and profit. That is the only way for the company to survive, and unfortunately the ‘guarantee’ for the client is that he/she will lose out.

• 26 Manulife IncomePlus versus a Bond Portfolio // Nov 4, 2008 at 12:20 am

  [...] Contact ← Manulife IncomePlus: The high cost of peace of mind [...]

• 27 Canadian Capitalist // Nov 4, 2008 at 8:54 am

  NN: Yes but in many situations it makes sense to offload a risk to an insurance company because we may be unable or unwilling to accept even a small risk (such as hitting someone while driving or the home burning down) even if the provider makes a healthy profit. That doesn’t seem to be the case here. Like you point out, there is little chance that the income stream will be reset at a much higher level and the nominal income stream will be whittled down by inflation. I don’t see how this product provides protection against longevity risk.

• 28 Dividend Growth Investor // Nov 4, 2008 at 9:57 am

  Brad,

  Actually it took Dow Jones only 15 years to reach a breakeven point from its 1929 highs. So if you purchased $100 worth of Dow Stocks in the heights of the market, you could have had $100 in Dow Stocks by 1944-45.

  But I also do not believe that all the assets of a retiree would be in stocks. A 25% - 50% allocation to fixed income is essential for retirees, even if they are pretty good at picking dividend growth stocks.

• 29 Brad // Nov 4, 2008 at 10:11 am

  Dividend,

  Week of Aug 26, 1929: Dow 380

  Week of Nov 22, 1945: Dow 380

• 30 Brad // Nov 4, 2008 at 10:12 am

  Whoops, sorry:

  Week of Nov 22, 1955: Dow 380

• 31 Canadian Capitalist // Nov 4, 2008 at 10:55 am

  Brad: Aren’t you forgetting dividend payments? Dividend yields in the early part of the 20th century exceeded bond yields. It is incorrect to focus just on price levels; it is total return that matters.

• 32 WhereDoesAllMyMoneyGo.com // Nov 4, 2008 at 12:22 pm

  This chart may be of interest:

  http://www.qvmgroup.com/invest/wp-content/uploads/2007/09/rates1.jpg

  You’ll see that dividend yields were quite high in the first part of the century as CC points out.

  The full article is here which asks about the inversion of the dividend yield to interest rates that occurred in the 50’s: http://www.safehaven.com/article-9851.htm

• 33 A.J. // Nov 4, 2008 at 4:58 pm

  I still think that advisors motivation in selling these products is the commissions. Everything else is just rationalization and self-deception.

• 34 Canadian Personal Finance Blog » Blog Archive » Random Thoughts: Mr. President Elect // Nov 7, 2008 at 8:02 am

  [...] the Canadian Capitalist and a few other bloggers have been looking at Manulife Income Plus: The High Cost of Peace of Mind. The N.C.F.B.A. met last night and there was the usual friendly banter but the discussion around [...]

• 35 DAvid // Nov 7, 2008 at 10:58 am

  Manulife was in the news today, borrowing $3 billion:
  http://www.theglobeandmail.com/servlet/story/LAC.20081107.RMANULIFE07/TPStory/Business

  DAvid

• 36 Canadian Capitalist // Nov 7, 2008 at 1:15 pm

  DAvid: The solvency of companies offering these guarantees is a risk as well. I, for one, thought AIG was too big to fail (though it does seem that AIG’s obligations will be honoured).

• 37 DAvid // Nov 7, 2008 at 10:36 pm

  I took from it that Manulife may be in a more precarious situation than some (many) might have thought.

  DAvid

• 38 Thicken My Wallet » Blog Archive » The role of dividends in stock returns // Nov 13, 2008 at 5:02 am

  [...] worse off buying the exotic, I would refer you to Canadian Capitalist’s eye-opening piece on annuities (it’s a three parter- I only linked the first [...]

• 39 More Stock Trading Videos and Super Weekend Reading | Million Dollar Journey // Nov 14, 2008 at 7:31 am

  [...] Capitalist has an informative series regarding the Manulife IncomePlus product.  Like most of these types of products, the fees are [...]

• 40 Rusty // Nov 14, 2008 at 11:36 am

  People:
  What you are all forgetting is the magic of compound interest. If I put my $200,000 into a vehicle that compounds the interest every year for 15 years, I end up with far more than $375K that Manulife guarantees. Just using the crudest of forumlas,the money would be worth nearly $418K at 5%. I could take $20K out of the fund every year (5%) and never touch the principle which would be $418K.

  What am I missing here?

• 41 Jay // Nov 17, 2008 at 7:23 pm

  I am a Manulife Income Plus customer with PART of my portfolio invested with Income Plus. From what I am told:
  My initial investment will attract a 5% bonus in the GWB each year I dont touch it until I am 65 when I can begin withdrawing 5% a year from GWB — so for simple math … an initial $100K left in for 15 years will have a GWB of $105K after year1, $110K after year 2, $115k after year 3 etc with an ultimate GWB of $175K after 15 year — I then can withdraw a guaranteed income for the rest of my life. This is if the markets go down and show no improvements. Manulife will RESET the GWB every 3 years if the market has improved the value of your original $100K. As I said at the outset, this is a PART of a retirement portfolio and provides what I like to think of as a “pension” that can be banked on. Am I wrong?

• 42 Canadian Capitalist // Nov 18, 2008 at 11:03 am

  Rusty: Good point. A 5% addition to principal over 15 years is equivalent to a 3.8% CAGR. It is highly likely that the underlying portfolio would do better than 3.8% even with the high MERs. But like you point out, it is possible to draw 5% (without adjusting for inflation) from a low-risk portfolio for a long time.

  Jay: The key is that with the high fees paid, there won’t be many resets and so we are essentially talking about a fixed annuity. But, fixed annuities pay much more than 5%. As a reader pointed out, an immediate annuity for a 60 year old 7.4%, much higher than IncomePlus.

• 43 Robretire // Nov 24, 2008 at 11:12 am

  My advisor put me into the CI SunWise ElitePlus product in April of this year and I am planning on retiring at the end of 2009.

  My underlying portfolio is down close to 30% but because of the guarantees and bonuses, my retirement income will be based on my deposit plus the 5% bonus (plus another 5% in 2009).

  So, was it worth paying the “high fees” to get this benefit?

• 44 Jay // Nov 24, 2008 at 11:22 am

  Rob — exactly — I realize the fee is relatively high but it’s the same with my underlying portfolio as well — I got into Income Plus in February of this year. I am glad to pay the higher fee. I have not seen anything in this blog that shows me it was a stupid move to go with the guarantees earlier this year! Jay

• 45 Help Us Name A New Product : WhereDoesAllMyMoneyGo.com // Nov 27, 2008 at 11:53 pm

  [...] High Cost of Peace of Mind (Canadian Capitalist) [...]

• 46 Confused // Nov 28, 2008 at 6:08 pm

  What are these resets based on?

  Even my advisor doesn’t know.

  My financial advisor pushed me into Income Plus. And then he pushed me to be 100% invested in the market-related mutual funds during this huge downturn (rather than, say, directing at least some of the funds to a safe haven like money market fund or bond fund or whatever).

  As far as I can tell it is now impossible for me to ever see a reset in my entire life.

  I phoned him up and told him this is not what he promised me.

  He told me that the resets are not based on the value of your holdings in the mutual funds.

  I said “so what are they based on?”

  He said he’d check what’s happening with the other clients he has and see what their resets have been based on.

• 47 Mahendra Shah // Dec 10, 2008 at 5:22 pm

  Excellent discussion. I would like to add to this Death Benfit are also adjusted for Withdrawal and Fees. I do not think it will leave much after you start withdrawing funds.

  I still believe one has to look after their own interest, no agent or advisor will do it 100% Buyers Beware.
  Manulife Incme Plus is not easy to understand as it looks, one has to do lot of questioning and analysis.

• 48 otto // Dec 13, 2008 at 6:50 pm

  Will the M-IP portfolio give as much guarantee of 5% annually compared with a GIC @ 5% without loss of principle? Seems like true returns have to be 8.5% if fees are 3.5%. Lots of mutual funds have lost 30% so far so, like stocks, no guarantee there either, blue chip or not!
  Interesting how fund salesmen are so cash averse - no commissions!!!!

• 49 Who are really the smartest guys in the room? How Insurance Companies Forgot Their Way // Dec 17, 2008 at 4:40 am

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• 50 joseppi // Mar 4, 2009 at 4:13 pm

  I would like to thank all the participants to this discussion for their comments. My advisor has recommended that I get into Income Plus. Since this same advisor got me into bonds instead of stocks, and then Guaranteed notes instead of stocks, I am inclined to listen to his advice. I only lost half of what I otherwise would have lost in the downturn He urged me to protect my portfolio even further, since I was close to retirement, but I didn’t listen as well as I should have.

  I still have the bonds, and I would like to do something with them, since the yield is less than 3% over the next 3-4 years.
  I turned down the Income Plus option last September because I don’t like Manulife and I thought the fees were too high. Now I don’t think that the markets will recover very soon, and the guarantees look more beneficial. If I don’t take 5% this year, and take 5% for the following 2 years, maybe I can actually get a postive reset in year 3.

  I do wish that Manulife had constructed the product a little better, including a cost of inflation and lower fees, but they have to make money too.

  I get some detailed projections next week, and thanks to your comments, I’ll make sure it includes realistic fees and rates of return. I’ll be sure to quia my advisor about his take too.

  thanks again for your input.

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