Response to CCIR’s consultation on upfront commissions in sales of segregated funds
DistributionInsuranceMarket conductSegregated Funds (IVICs)
All Submissions
CLHIA has responded to the CCIR/CISRO consultation on upfront commissions in sales of segregated funds.
The arguments include: that segregated funds and mutual funds are complementary within an investor's portfolio (not substitutes); that providing advice to the mass market will be uneconomical and advice is more important for segregated funds due to their unique features; and the risk of conflict is low since fund switches without incurring chargebacks are allowed to optimize holdings and segregated funds have a long average hold time of nearly 8 years.
The submission also includes the results of market research conducted by Abacus Data for the industry which show strong satisfaction among buyers of segregated fund products and insurance brokers.
The arguments include: that segregated funds and mutual funds are complementary within an investor's portfolio (not substitutes); that providing advice to the mass market will be uneconomical and advice is more important for segregated funds due to their unique features; and the risk of conflict is low since fund switches without incurring chargebacks are allowed to optimize holdings and segregated funds have a long average hold time of nearly 8 years.
The submission also includes the results of market research conducted by Abacus Data for the industry which show strong satisfaction among buyers of segregated fund products and insurance brokers.