Shifting your mindset to product allocation from asset allocation can be a complex undertaking, but it is precisely the reason why Toronto-based Manulife Financial Corp. developed its Retirement Solutions Centre.

The new Web site, which launched at the end of September, aims to teach financial advisors about the concept of product allocation and how it can help their clients better prepare for retirement.

“This is really aimed at advisors. It’s not aimed at the public at large,” says Roy Firth, executive vice president of Manulife.

Product allocation is a more complicated investment strategy than asset allocation as it takes into account all aspects of an individual’s balance sheet, he adds.

But to get the most out of the Web site, Firth recommends advisors sit down with their clients and work through the tools together.

Information on the Web site explains product allocation thoroughly, including case studies that apply the approach to specific investor portfolios. A number of videos also explain concepts such as longevity, retirement risks and other factors to consider in retirement planning.

By using these videos to educate clients, advisors will be able to save time and help clients gain a comprehensive understanding of the strategy, says Firth.

“It will make their time more efficient,” he adds, “because they won’t have to explain it all.”

The cornerstone of the Web site is the product-allocation tool, which will be available as of Oct. 27. The tool helps advisors determine the ideal product-allocation mix for each client.

To use the tool, advisors input a range of personal information on a client, including age, health status, years to retirement, desired income at retirement, portfolio size and breakdown, and guaranteed sources of income.

Based on this information, the tool calculates the client’s “retirement sustainability quotient,” a percentage indicating the sustainability of the client’s retirement income.

The tool then creates a model portfolio for the client — a recommended product mix, broken down into three classes: immediate annuities, guaranteed minimum withdrawal benefit products and non-guaranteed income sources, such as mutual funds with systematic withdrawal plans.

Advisors can tweak the model portfolio to fit their client’s personal risk adversity and specific retirement goals. As the portfolio is adjusted, the tool calculates and displays how the client’s RSQ would change.

The Web site provides information on specific Manulife products that fit into the three classes of products, but advisors can also use the tool to design portfolios containing third-party products that fit the categories.

In addition to the product-allocation tool, the Web site features other calculators and worksheets that advisors can use to assess a client’s financial situation in preparation for retirement.

The retirement savings calculator, for example, gauges whether the client is on track to meet his or her retirement goals, based on retirement income needs, savings, guaranteed income and other details.

Ultimately, the Retirement Solutions Centre Web site will allow advisors to play a more active role in their clients’ financial planning rather than simply selling individual products, Firth says.

“The aim is to sell a comprehensive plan,” he adds, “which includes a full suite of products, to their clients.”



— MEGAN HARMAN