Transcript Slide 1

TAKE YOUR CLIENTS’ RETIREMENT PLAN
OFF PAUSE AND HIT PLAY
AGENDA
• Market realities, changing landscape and retirement risks
• How do you take your client’s retirement plan off pause?
• G5|20 Series structure and strategies
• Advisor support
What realities do investors face today,
before and during retirement?
MARKET REALITIES
• Investor fear, market anxiety.
MARKET REALITIES
• Investors’ response, for more than a decade, has been to choose
security over potentially higher returns.
Fund Flow
December 2000
Equity
Source: Investor Economics Inc.
Fixed Income
June 2012
Balanced
Money Market
Real Estate
MARKET REALITIES
• Interest rates are expected to continue at extremely low levels.
Source: Bloomberg
THE CHANGING RETIREMENT LANDSCAPE
• Decreasing financial support from company pensions and
government.
– Only 25% of private sector employees were members of company
pension plans in 2009.
– CPP/QPP and OAS combined provide a retirement income of about
40% of the average wage.
– Canadians are living longer.
RETIREMENT RISKS
• Investors preparing for retirement face several risks:
– The risk of outliving their money.
– The erosion of their buying power caused by inflation.
– The opportunity cost of staying out of the market.
RETIREMENT RISKS – LONGEVITY & INFLATION
• Your clients may need their money longer than they assume.
• Your clients may need more money than they assume.
RETIREMENT RISKS – OPPORTUNITY RISK
• Your clients’ fears may be unfounded.
• Why should your clients be invested in the market?
RETIREMENT RISKS – VOLATILITY
• The damage that volatility can do to assets.
RETIREMENT RISKS – TIME HORIZON
• Baby boomers don’t have the flexibility to wait out
a 15-year cycle.
RETIREMENT PLANS ARE ON PAUSE
• Many investors are still on the sidelines.
• Waiting for the “right time” to get back into the market.
• Missing out on opportunities.
• Retirement plans are effectively on pause.
HOW DO YOU ADDRESS THE CURRENT REALITIES
AND TAKE YOUR CLIENT’S PLAN OFF PAUSE?
• Market risk
– How do you protect your client’s retirement nest egg from market
volatility?
– How can they draw cash flow and grow their money at the same time?
• Retirement risk
– How can they be protected from inflation risk?
– How can they maintain their standard of living?
Guaranteed
20 Years
5% Cash Flow
G5|20 IS DESIGNED SPECIFICALLY
FOR RETIREMENT
• Predictable, sustainable, 5% guaranteed cash flows.
• Growth potential by participating in equity markets during the
five-year Accumulation Phase and the Distribution Phase.
• Preserve capital with the potential for capital appreciation.
• Reduce large negative market fluctuations on the investment
before and during retirement.
• Optimize performance to provide residual value.
WHO IS G5|20 SERIES FOR?
It’s for investors looking to:
• Secure retirement cash flow today.
• Draw cash flow in a few years, for retirement or other needs.
• Optimize long-term returns.
– receive sustainable, guaranteed cash flows.
• Gain more confidence and feel secure about their future.
G5|20 Series Structure
G5|20 STRUCTURE AND LIFESPAN
• Each G5|20 Series fund has a lifespan of 25 years with
three distinct phases.
Issue
Period
3
month
s
Accumulation
Phase
5
years
Distribution
Phase
20
years
THE ISSUE PERIOD
• Represents the purchase period for the fund.
• Targeting three months or less.
• Fund assets invested in CI Money Market Fund.
• Daily interest accrual, paid out as a distribution at end of the
period.
• Fixed NAV at $10.00.
• Fund closed to new purchases after this period.
• New G5|20 Series to be launched each quarter.
THE ACCUMULATION PHASE
• Represents the growth period of the fund.
• Five years.
• CI Investment Consulting and Nexus Risk Management manage
the fund to take full advantage of all market opportunities:
– CIIC: daily tactical positioning.
– Nexus: Risk Management Overlay Strategy reduces volatility on equity
positions.
• Allocation initially 70% equity/30% income: flexible mandate.
– Allows CIIC to increase/decrease equity allocation as required.
THE DISTRIBUTION PHASE
• Investor guaranteed to receive monthly cash flow for 20 years.
• Guarantee Distributions paid out substantially as return of capital
(classified as income if coming from registered accounts).
• Paid out on fourth business day of the month.
• Payments may be customized by reinvesting excess into another
CI Class A fund.
• Guarantee is unitized so redemptions will not affect Guaranteed
Distribution paid based on each unit.
• Fund is still actively managed by CIIC and Nexus.
G5|20 – GUARANTEED CASH FLOW
1. CI
2. Bank of MTL
3. Nexus
$12.50 NAV
*5% = .625/unit
125k
= $6250/yr (20 yrs)
100k
= $5000/yr (20 yrs)
$MV
@ $10.00 NAV
=10,000 units
100k
Selling
Period
2*$6250
$MV
18
5 yr
75k
Accumulation
(July 2-Sept 30) (2013-2018)
20 yr
Cash Flow
30i70e
www.ci.com/g520
Target End
Date
(2038)
PRODUCT STRUCTURE
G5|20'S TEAMS OF EXPERTS OFFER A ROBUST
SOLUTION FOR TODAY’S KEY RETIREMENT NEEDS
CI INVESTMENTS
• G5|20 is structured as a mutual fund trust, actively managed by
CI Investment Consulting (CIIC).
• Managed like a tactical balanced fund.
• Initially, the fund is approximately 70% equity and 30% income.
–
–
–
–
Select Canadian Equity Managed Corporate Class
Select U.S. Equity Managed Corporate Class
Select International Equity Managed Corporate Class
Mirrors Select Income Managed
25%
24%
21%
30%
THE ACTIVE PORTFOLIO IS TACTICAL
Global tactical, balanced and optimally allocated at all times,
based on market opportunities, market volatility and investment
time horizon
G5|20 Fund
Mutual Fund Trust
Income
- Diversified Income portfolio (mirrors SIM)
Canadian Equity
- Multi-manager Canadian Corporate Class
U.S. Equity
- Multi-manager U.S. Equity Corporate Class
International Equity
- Multi-manager International Equity Corporate Class
A STRAIGHTFORWARD APPROACH
TO MITIGATE RETIREMENT RISKS
• The Active Portfolio – designed to optimize growth potential.
• Four underlying multi-manager, diversified mandates.
• CI Investment Consulting actively adjusts overall asset mix.
• Flexible investment mandates.
• Starting with a 70% equity exposure.
NEXUS
Risk Management Overlay – systematic yet dynamic
• Reduces volatility and lowers market exposure in downward
trending markets.
• Incorporates equity risk, interest rates, volatility and time horizon
to create a systematic yet dynamic hedging overlay to protect
clients from downside.
• The strategy hedges the equity exposure.
• Enhances probability of client having a residual fund value after
25 years.
• Increases market exposure in upward trending markets.
NEXUS
Risk Management Overlay – systematic yet dynamic
• Nexus Risk Management uses a proprietary, systematic yet
dynamic hedging strategy.
• Same strategy used by pensions and insurance companies now
available to retail investors.
• Provides protection of the fund’s value in bear markets while
taking advantage of opportunities in bull markets.
• Optimizes growth potential by allowing fund to maintain
significant equity exposure.
• Provides a “walk away” value.
BANK OF MONTREAL
The Guarantee – bringing security to your client’s retirement
cash flows
•Provides a guarantee to protect the fund’s annual cash flows of 5%
over 20 years.
• Employs two fail-safes:
1. In a worst case scenario where adverse market conditions cannot be
contained preemptively by asset mix changes and the Risk
Management Overlay.
• Assets will be moved into a Protection Portfolio designed to pay all
guaranteed future cash flows from that moment forward.
2. If there is a shortfall in the Protection Portfolio, the bank will
guarantee full payment of all remaining cash flows to investors.
THE GUARANTEE – BRINGING SECURITY TO
YOUR CLIENT’S RETIREMENT CASH FLOWS
• If in the Protection Portfolio, client continues to receive cash
flows and advisor compensation continues uninterrupted.
• Equity markets need to suffer losses in excess of 50% for assets
to be transferred to the Protection Portfolio.
THE G5|20 STRATEGY: DOWNSIDE PROTECTION
• Historical representation of 70% S&P 500 Index + 30% FixedIncome versus G5|20 (2008 to 2012).
STRENGTH OF FUND IS ITS STRUCTURE,
FLEXIBILITY AND LIQUIDITY
• Cash flow guarantee is part of the fund’s investment objective,
as outlined in prospectus.
– No product features can be changed or removed.
– Fees cannot be increased.
• No capital requirements.
• Growth potential – in contrast to a GIC.
• Simplicity of administration and reporting.
• Liquidity of a mutual fund.
G5|20 Strategies
STRATEGIES
• Opportunity to lock in current portfolio values to create
minimum guaranteed retirement cash flow.
• Switch between tranches to re-establish new ACB (delays
Guaranteed Distributions).
– Provides a reset option without paying for the feature.
• Laddering strategy.
AVAILABLE FOR REGISTERED
AND NON-REGISTERED ASSETS
• For client-held and nominee accounts for both non-registered
and registered accounts.
• Ideal core holding for registered plans, including RRSPs, RRIFs and
TFSAs.
• Cash wedge strategies for non-registered accounts.
• Tax-efficient cash flows for non-registered accounts (payments
are characterized as either return of capital or capital gains).
• Guaranteed distributions from a non-registered account do not
contribute to clawback of Old Age Security.
G5|20 CAN HELP MEET YOUR CLIENT AND
PRACTICE NEEDS
• Distinguish yourself as a retirement specialist.
• Provide a ready-made solution that addresses the need of many
investors for a predictable, stable guaranteed cash flow stream
during retirement.
• Offer a guaranteed cash flow without the cost or complexity.
• An attractive alternative to move clients from GICs and fixedincome investments.
• Retain clients or prospect for investors with a long-term
approach.
G5|20 CAN HELP MEET YOUR CLIENT
AND PRACTICE NEEDS
• Easily integrated into practice.
• Simplicity of a mutual fund.
• No special licensing requirements.
• Distinguish practice as a retirement specialist.
• Application of sustainable retirement cash flow strategies.
• Enhance value proposition as part of new National Instrument
31-103.
• Provide sophisticated hedging strategies.
• Flexibility and liquidity.
SIGNIFICANT POSITIVE IMPACT ON THE VALUE
OF YOUR BOOK
• Competitively priced
• Only 50 basis points more than an average global tactical
balanced mutual fund.
Active Portfolio:
• Management fee:
CI 1.90%, Nexus 0.25%, BMO 0.40%
(includes advisor comp.: 1% ISC,
0.50% DSC/LL)
Protection Portfolio:
• Management fee:
CI 1.20% (maximum), Nexus 0%, BMO
0.30%(includes advisor comp.: 0.75%
ISC, 0.40% DSC/LL)
• OpEx: 0.22%
• OpEx: 0.15%
COMPETITIVE COMPENSATION
• Preserves advisors’ revenue stream, regardless of composition
of G5|20 portfolio or investor's investment time horizon.
Active Portfolio:
Commission:
• ISC: 0-5% negotiable
• DSC: 5%, 7 year schedule
• LL: 2.5%, 3 year schedule
Service fees:
• ISC: 1%
• DSC/LL: 0.50%
Free unit switches supported
(will not affect guarantee).
Protection Portfolio:
Service fees:
• ISC: 0.75%
• DSC/LL: 0.40%
Competitive versus income products and
target date/glide path funds.
CI 1.20% (maximum),Nexus 0%, BMO 0.30%
(includes advisor comp.: 0.75% ISC,
0.40% DSC/LL).
Reduced fees help avoid fund assets
moving to Protection Portfolio, reducing
calculation of future obligations.
Advisor Support
ADVISOR SUPPORT
Dedicated G5|20 website
at www.ci.com/G520.
ADVISOR SUPPORT
• Dedicated G5|20 website at www.ci.com/G520.
• Website includes presentations and an illustration tool for
advisors, along with an Advisor Guide, an At-a-Glance, Client
Guide, Product Comparison, Case Studies, FAQ, Client Flyer,
Prospecting Letter, and an Admat.
• Heavily integrated marketing campaign.
Thank You
FOR ADVISOR USE ONLY
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund
investments. Please read the prospectus before investing. Except as described below, mutual funds are not guaranteed,
their values change frequently and past performance may not be repeated. Bank of Montreal guarantees that, following
the five-year Accumulation Phase of the fund, an amount equal to the greater of the net asset value per unit or the
original amount you paid for the unit will be paid back to you over a 20-year period in equal monthly instalments. This
guarantee does not apply to units redeemed before the end of that period. You will receive the net asset value per unit
for any unit redeemed early. Mutual fund securities are not covered by the Canada Deposit Insurance Corporation or by
any other government deposit insurer. ®CI Investments and the CI Investments design are registered trademarks of CI
Investments Inc. G5|20 Series, the G5|20 Series design and CI Guaranteed Retirement Cash Flow Series are
trademarks of CI Investments Inc. BMO Financial Group and Bank of Montreal are marketing names (also referred to as
trade names or brand names) used by Bank of Montreal. "BMO", "BMO Financial Group", "BMO (M-bar roundel symbol)
Financial Group", "Bank of Montreal" and "BMO Capital Markets" are trademarks owned by Bank of Montreal.