Tapping into the opportunity of cross sellingChristine van Staden – Regional VP, Business Development

Agenda

1. Market context

2. Employees’ perspectives

3. Employers’ perspectives

4. Gaps and opportunities

5. Cross selling era

6. Case study

2Standard Life Canada – IFB Toronto Fall Summit – November 2013

Market context

Current Retirement contextGovernments

• 60% of Canadians do not have private pension plans (Higher in SME’s)

• Baby Boomers aging and coming to retirement with depleted assets

• Looming liability that the governments cannot afford

• Focusing on increasing private pension coverage

4Standard Life Canada – IFB Toronto Fall Summit – November 2013

Market size

A few key facts:

98% of Canadian businesses are small size businesses

1.7% of Canadian businesses are medium size businesses

48% of the total labour force in the private sector works for small sized companies

16% of the total labour force in the private sector works for medium sized companies

In total, SMEs employ about 6.9 million, or 64% of private sector employeesSource: Industry Canada, Key Small Business Statistics, July 2012

5Standard Life Canada – IFB Toronto Fall Summit – November 2013

Market appetite

Key findings from Standard Life research:

65% of SME employees are very concerned that they will not be able to retire comfortably

62% of SME decision makers indicate that employee retention in the first 3-4 years of employment is a challenge

87% of SME decision makers agree that having a workplace GS&R plan improves the company’s ability to attract new employees

86% of SME decision makers agree that GS&R plans help the company maintain a competitive position in the industrySource: SMEs Employees & SME Employers opportunities – Standard Life – September 2012

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Employees’ perspectives

Employees’ perspectives

• Increased concerns about financial security

• Increased focus on debt management

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Source: Retirement readiness study – Standard Life – November 2012

• Realization of financial unpreparedness (not enough money to

retire)

• Lack of GVT benefits raises an increase awareness about private

pension plans

Standard Life Canada – IFB Toronto Fall Summit – November 2013

Employees’ attitudes towards retirement

Canadian employees are concerned about their retirement

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Source: SMEs Employees opportunities – Standard Life – September 2012

Standard Life Canada – IFB Toronto Fall Summit – November 2013

Important factors in talent acquisition Employees’ perspectives

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Source: SMEs Employees opportunities – Standard Life – September 2012

Standard Life Canada – IFB Toronto Fall Summit – November 2013

Current Benefits offered by Employers Employees’ perspectives

Despite the importance assigned to GS&R plans, fewer than one-third of employees (32%) indicate that their employer offers a competitive GS&R plan.

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Source: SMEs Employees opportunities – Standard Life – September 2012

Standard Life Canada – IFB Toronto Fall Summit – November 2013

Employers’ perspectives

Employers’ perspectives

• DB plan sponsors are facing funding issues because of low interest rates

• Aging Baby Boomers in the workplace are starting to retire

• There is an increased competition for a shrinking pool of talent

• Has raised an increased awareness about private pension plans

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Source: Retirement readiness study – Standard Life – November 2012

Standard Life Canada – IFB Toronto Fall Summit – November 2013

Perceptions of retention and turnover Employers’ perspectives

Six in ten (62%) SME decision makers say that retention is a challenge with one in five (20%) stating it is a very significant challenge.

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Half (50%) say employee turnover is a concern for their organizations.

Organizations in growth phase are more likely to indicate retention (70%) is a challenge or that turnover is a concern (59%).

Source: SMEs Employers opportunities – Standard Life – September 2012

Standard Life Canada – IFB Toronto Fall Summit – November 2013

Perceptions of retention and turnover Employers’ perspective

While employers say that retention and turnover are a challenge, few connect this to a lack of competitive benefits

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Source: SMEs Employers opportunities – Standard Life – September 2012

Standard Life Canada – IFB Toronto Fall Summit – November 2013

Future offering of GS&R plans

% of employers who do not offer GS&R plans

Employee retention/acquisition 69%Remain competitive with others 20%Other 11%

Do not feel benefits justify the costs 31%Have never considered 13%Do not know 10%

22% increase in advocacy

Source: SMEs Employers opportunities – Standard Life – September 2012

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Important criteria influencing decision makers

• Ease of ongoing use, management and administration of the plan

• Reasonable cost

• Product selection/flexibility

• Member services

Source: SMEs Employers opportunities – Standard Life – September 2012

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Gaps and opportunities

Underestimating the underlying value of employee benefits

While employees view GS&R as very important (ranked 3rd of benefits measured), employers are much less likely to say it is important (ranked 7th)

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Source: SMEs Employees & SME Employers opportunities – Standard Life – September 2012

Standard Life Canada – IFB Toronto Fall Summit – November 2013

Impact of group benefits on likelihood to recommend a company

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Group benefits significantly increase the likelihood of employees being an advocate for their company

Source: SMEs Employees & SME Employers opportunities – Standard Life – September 2012

Standard Life Canada – IFB Toronto Fall Summit – November 2013

Cross selling era – setting you apart

Leverage cross-selling opportunities

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Source: SMEs Employees & SME Employers opportunities – Standard Life – September 2012

Standard Life Canada – IFB Toronto Fall Summit – November 2013

Retain existing relationships

Source: SMEs Employees & SME Employers opportunities – Standard Life – September 2012

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Information sought from advisors by decision makers

Source: SMEs Employers opportunities – Standard Life – September 2012

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Case study

Case study: make group benefits’ decision makers aware of turnover costs

Group RRSP

•Most advisors/plan sponsors have initiated a pension program with a Group RRSP because it’s simple

• Drawbacks – especially for businesses with turnover:1. Employer matches are through payroll – thus, employer

incurs payroll taxes in the range of 12-14%2. Money is immediately vested3. Employee leaves in a year – takes all of their money

26Standard Life Canada – IFB Toronto Fall Summit – November 2013

Case study: make group benefits’ decision makers aware of turnover costs

Standard Life Canada – IFB Toronto Fall Summit – November 2013

Group RRSP/DPSP

•Suggest restructuring the plan to save money by setting up a DPSP• Advantages – especially for businesses with turnover:

1. Employee contributions go into the Group RRSP2. Employer matches go into the DPSP – thus, no payroll

taxes and 2 year vesting window3. Employee leaves in a year – takes his money but

leaves employers

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Standard Life Canada – IFB Toronto Fall Summit – November 2013 28

Grab the opportunity!

Drivers

Impact

Opportunity

• Market – the statistics support the need!• Demographics – aging workforce not ready

for retirement

• Government to find solutions• DB sponsors need to react• Employees looking for alternatives

• To promote private pension• Cross sell to your existing book of

business

Now is the time to grab the opportunity!

Thank you!

Questions?