44 governance committee meeting minutes › documents › pdf › 2016_q4... · the benefits...

44th Governance Committee Meeting Minutes

Committee: Kevin Delaney - Delaney Financial Services

Tim Jones - Rock Harbour Wealth Management Inc. Andy Loscher - The Benefits Company Inc. Matthew Loscher - The Benefits Company Inc. Moe Mailloux Jr. - Moe Mailloux Financial Services Moe Mailloux Sr. - Moe Mailloux Financial Services Matthew McNeill - Matthew M. McNeill Inc. Jack Sullens - Windsor-Essex Children’s Aid Society Robert Tamblyn - The Benefits Company Inc.

Guests: Al Broadbent - Freedom 55 Financial

Evan Carrick - Freedom 55 Financial Stacey Caswell Kevin King - Freedom 55 Financial Rachael Veitch - The Benefits Company Inc. Megan Walker - Freedom 55 Financial

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() The Greenlight Retirement Program™ 44th Governance Committee Meeting Minutes – Dec. 7, 2016

1. Call to Order

The meeting was called to order at 8:10 a.m. Tim Jones, Moe Mailloux Sr., Matt McNeill, Jack Sullens and Rob Tamblyn were not in attendance. Quorum was not met.

Introduction of Guests

Al Broadbent of Freedom 55 Financial, Evan Carrick of Freedom 55 Financial, Stacey Caswell, Kevin King of Kevin King Insurance & Financial Services Inc., Rachael Veitch of The Benefits Company Inc., and Megan Walker of Freedom 55 Financial were welcomed to the meeting.

Approval of Agenda

[Motion] – Moe Mailloux Jr. made a motion to approve the agenda without change. Seconded by Andy Loscher. Motion carried.

2. Secretary’s Report

Distribution of Prior Minutes

The minutes of the meeting held on September 7, 2016, were previously approved via email and have already been electronically distributed to plan sponsors, administrators and prospects.

Intermeeting Communication

1) The Committee requested that additional information be sought regarding the possible mapping of Manulife’s Asset Allocation funds to the CI Portfolio Series. Since Great-West Life recently added the Portfolio Series to their platform, it was decided to request input from them on this potential move. Amanda Rattray, of Great-West Life provided responses to our questions and these were forwarded to the Committee members. Please see Action Item 301 for the responses.

2) The Committee requested that more information be obtained regarding the changes to the Fidelity

Canadian Asset Allocation Fund (S191) on Great-West-Life platform. Great-West Life advised that they will not be proceeding with any changes and that the fund will remain on their fund shelf. This announcement was forwarded to the Committee members. Please see Action Item 302 for the announcement.

3. Industry Updates & Discussion

1. Sun Life Financial – Announcement that Sun Life to issue special payments from CI and UBS to affected

plan members


2. Sun Life Financial – Member notice of special payments from CI and UBS 3. Actuarial Solutions – Ontario Pension Advisory Committees – Get Ready to Vote 4. Ontario.ca – Ontario Regulation 351/16 – Amendment to the Pension Benefits Act 5. Canada Revenue Agency – Canada Pension Plan Enhancement 6. Benefits Canada – CAP Member Survey 2016

[Action Item 308] –The Committee requested that The Benefits Company research further the Ontario Pension Advisory Committee amendment made to the Pension Benefits Act and what it means to the Greenlight Retirement Program™. The Benefits Company is to enlist the assistance of Actuarial Solutions.

[Action Item 309] –The Committee requested that The Benefits Company send the Canada Pension Plan Enhancement update as an email blast to the clients and advisors.

4. Administrative Review

Participating Plan Sponsors

The Committee was presented a summarized document, by Recordkeeper, noting the accumulated asset and demographic overview of Participating Plan Sponsors as at September 30, 2016.

September 30, 2016 June 30, 2016

Recordkeeper PPS* PPM* PPA* ACF* PPS* PPM* PPA* ACF*

Desjardins Financial 8 451 17.3 1.28 8 431 18.1 1.04

Great-West Life 26 3,579 89.3 9.41 26 3,603 85.9 9.29

Industrial Alliance 4 228 8.0 0.53 4 198 7.9 0.19

Manulife 13 1,988 108.7 7.23 13 1,988 103.9 7.66

Sun Life 8 1,629 124.7 2.67 8 1,999 119.9 6.67

Totals 58 7,875 348 21.12 58 8,219 335.7 24.85

PPS – Participating Plan Sponsors; PPM – Participating Plan Members; PPA – Participating Plan Assets (displayed in $millions), ACF – Annual Cash Flow (displayed in $millions).

New Plan Sponsors Added

There were no new plan sponsors reported during Q3 2016.

Member Meeting Tracking

Member meeting tracking will continue to be reviewed on a regular basis outside of the committee meetings by The Benefits Company.


Certified Advisor Tracking

The Benefits Company presented a Greenlight Certified Advisor Log. There were 35 advisors listed. Five advisors were removed from the log for non-compliance. The log noted that the Committee has 34 advisors who were previously approved. Of these 34 advisors, there are six who need to sign/send back the Greenlight Member Care Handbook.

One new advisor, Megan Walker, has been added to the Pending list in the last quarter. She has submitted an application form and has completed the online training course. Since quorum for this meeting was not met, the Greenlight Committee approved her application via Intermeeting Communication.

Contribution Arrears & Form 7s

The Benefits Company confirmed that all clients were current in their contributions and filings as at September 30, 2016.

Prior Action Items

[Prior Action Item 301] – Completed – The Committee requested that The Benefits Company research different methods of creating a member care video – ex. whiteboard animation, PowerPoint presentation, etc. The Benefits Company hired Whiteboard Stories to create a whiteboard video which explains the advantages of working with a Greenlight advisor. The video is presently housed on the Greenlight website. The link will be emailed to the Certified Greenlight advisors to use for prospecting, with their present clients and in lieu of member sign up meetings in remote locations. [Prior Action Item 301] – Completed – a) The Committee requested that The Benefits Company request, from Great-West Life, a comparison of their overall total fees for their Asset Allocation funds and for the CI Portfolio Series funds at three different asset levels: i. Under $1 million ii. At $5 million iii. At $15 million. b) The Committee requested that The Benefits Company request from Great-West Life the following information regarding the proposed fund mapping of all our Great-West Life Asset Allocation funds to the CI Portfolio Series funds: i. What is required of The Benefits Company? ii. What would the process be? c) Would you please ask your investment team to review our proposal to change the asset allocation choice from GWL AA to CI PS and provide their thoughts on the move?

Please see the separate document for responses.


[Prior Action Item 302] – Completed – The Committee requested that The Benefits Company request from Great-West Life further explanation on the forthcoming changes to their S191 fund.

Great-West Life decided not to proceed with any changes to the fund and have advised that it will remain on the Great-West Life fund shelf. Please see the separate sheet for the announcement.

[Prior Action Item 303] – Completed – The Committee requested that The Benefits Company create processes for revoking Greenlight certification from advisors who are and who are not connected with retirement cases. Advisors that represent their clients should be notified that with their certification being revoked, that their clients would receive notification that they would be removed from the Greenlight Program.

In the event that an advisor fails to meet the Certified Greenlight Advisor requirements, their certification will be revoked. The Benefits Company will provide the advisor a formal written notification of such. Where an advisor has been assigned to a plan sponsor, the advisor must surrender all member documentation. Where an advisor represents a Greenlight plan sponsor, their client would receive notification that they have the option to be removed from the Greenlight Program or to have another Certified Greenlight Advisor assigned to them. In either case advisor must surrender all member documentation.

[Prior Action Item 304] – Completed – The Committee requested that The Benefits Company create a process including the steps an advisor would take if they would like to be removed from the Certified Greenlight Advisor list.

In the event that a certified Greenlight advisor would like to be removed from the Certified Greenlight Advisor list, they would need to provide The Benefits Company a formal written notification of such. Where an advisor has been assigned to a plan sponsor, the advisor must surrender all member documentation. Where an advisor represents a Greenlight plan sponsor, their client would receive notification that they will be removed from the Greenlight Program or given the option to have another Certified Greenlight Advisor assigned to them. In either case, the advisor must surrender all member documentation.

[Prior Action Item 305] – In process – The Committee requested that The Benefits Company create a compliance process for Greenlight advisors taking/filing/up keeping documentation for Greenlight


Members. The compliance process should include, but not be limited to: file requirements, meeting signup sheets and review documents. [Prior Action Item 306] – Completed – The Committee requested that The Benefits Company extend an invitation to Mawer Investment Management to the June 7, 2017 meeting. Mawer is requested to present a general overview of their Company, investment philosophy and economic forecast. Jean-Philippe Giguere, of Mawer Investment Management, advised that their funds are not available on institutional record keeper platforms due to the fact that they can close and reopen at any time. The invitation to attend the June 7, 2017 meeting has been rescinded.

[Prior Action Item 307] – Completed – The Committee requested that The Benefits Company extend an invitation to Invesco to the September 6, 2017 meeting. Invesco is requested to present a general overview of their Company, investment philosophy and economic forecast.

5. Investment Review

Comparison of 5 Year GIC Rates and Enhancements

The Benefits Company presented a quarterly breakdown of a 10 year history of each Recordkeeper’s 5 year rate, noting the available enhancement on $5 million accounts.

It was noted that without enhancements Sun Life had the best rate this past quarter.

There is a 0.72% spread amongst the rates the carriers are offering.

As at September 30, 2016, the average rate for 5 year GIC’s was 1.084%.

Fund Mapping Log

The Benefits Company presented an ongoing report of the mapped funds with the various Greenlight investment menus. There were no updates to report this quarter.

Analysis of Asset Allocation Funds

The Benefits Company presented an analysis of institutional asset allocation funds as at June 30, 2016. The analysis was developed and is maintained by Great-West Life. It was noted by the Committee that the asset allocation funds for the Desjardins Foresight program are not included in this analysis.

It was noted for the 5 year rates of return, that SEI and Sun Life Granite tied for the best performance with two categories each.


Active Member Asset Report

The Benefits Company presented an asset report, dated September 30, 2016, of participating plan sponsors by Recordkeeper broken down by asset category.

Investment Performance Review

The Benefits Company presented investment performance results for each fund in the Greenlight investment menu for all carriers as reported by the carrier and the Morningstar software Principia.

Carriers were reviewed as follows:

1. Desjardins Financial 2. Great-West Life 3. Industrial Alliance 4. Manulife 5. Sun Life

Review of the rates of return, Morningstar ratings and asset distribution.

6. Presentation by Great-West Life (GWL)

Amanda Rattray, Account Executive, and Robbin Dichter, CFA, Vice-President, Investment Counselling, Institutional Investment Solutions, of Great-West Life Group Retirement Services; and Brandon Hutchison, CFA, Assistant Vice-President & Portfolio Manager, Portfolio Solutions Group, provided an investment and fund overview. A handout was provided to the Committee and a copy is archived at The Benefits Company.

1. Portfolio Solutions Group (PSG) Overview

Joined GLC at the beginning of the year.

Supports the investment managers review process.

Shares expertise and knowledge about investments and asset allocation portfolios.

A multi-manager approach focused on a single asset-class.

A customized investment solution based on an investor’s risk tolerance.

A long-term investment solution tailor-made to meet a future financial goal.

A diversified investment solution with a selection of fixed-income to equity allocations to choose from.

Invested time: 30% of the year is spent on active portfolio management, 20% of the year is spent to

develop and model PSG’s proprietary macro-economic and market scorecard, 40% of the year is spent

on oversight and analysis of each underlying fund and the portfolio as a whole.


2. Portfolio Solutions Group Tailored Approach


3. Target and drift methodology

Asset Mix: fixed income/equity split allowed to drift +/-2 percent points

Individual Fund: fixed income funds +/-10% of target allocation - equity funds +/-20% of target allocation

When rebalancing is triggered, all underlying funds brought back to target weights

Daily cash flows used to offset market movements: reduces frequency and cost of rebalancing

4. Investment Review of the Possible Fundmapping in the Greenlight Program


7. Presentation by MFS Investment Management Canada

Bradley Hicks, Managing Director, Relationship Management, MFS Investment Management Canada, provided an overview of MFS and investments. A handout was provided to the Committee and a copy is archived at The Benefits Company.

1. Overview of MFS

Three distinct tenets that form their comparative advantage versus their peer group:

1) How they are structured

Integrated Research – MFS looks at investment opportunities across the globe by integrating fundamental equity, quantitative and credit disciplines in their analysis.

2) How they leverage that structure – incenting our investment colleagues to collaborate with their global

peers.

Global Platform – MFS aligns its incentives and the competition structure to incent the right desired behaviour. Investors are measured over 3-year and 5-year rolling time frames, giving them the opportunity to think longer term. That’s about 2/3 of compensation. The other 1/3 is how well they work with global collaboration, how well they are working within peer groups and sharing information across the global platform to make their peers better investors. Three hundred and sixty degree review and how well they are working to advance the entire effort. This drives a very powerful culture like a guiding principle – it reminds employees how they should share information across the platform.

3) How we protect the structure and the firm and client portfolios through their risk management capabilities.

Active Risk Management – MFS takes a holistic approach to actively managing risk with review in place at security, portfolio and firm levels and a clear focus on generating alpha for their clients.

No hierarchy between analysts and portfolio managers, which is unique to their firm. The other unique feature would be their investors being evaluated over long terms (3 or 5 year metric) – not worried about quarterly or even annual results.

Business profile – Globally, they have just over $579 billion assets under management. They are proud of and work hard at diversifying the business; presently one of the top 10 sovereign wealth players in the international market.

They have 8 global sector teams organised by region and sectors.

There are 9 quantitative research teams that provide proprietary research models, quantitative stock rankings, and scenario testing backed by 15 quantitative research associates.


2. Canadian Fixed Income Fund

The Canadian bond market delivered another strong quarter where yields were marginally higher in the short and middle parts of the curve. Long-term Government of Canada yields finished the quarter near all-time lows. We continue to view the macro backdrop as inconsistent with a global or US recession.

Canada corporate spreads narrowed during the quarter, led by lower quality energy and communication bonds. We continue to see good value in overweighting credit given the current backdrop of slow but non-recession global growth, low inflation, and easy monetary policy but we remain selective as the credit cycle continues to mature.

The Bank of Canada again maintained it policy rate at 0.50%. However, the challenging growth environment and falling inflation pressures have raised the possibility of a future Bank of Canada rate cut though action does not appear imminent.

8. New Business

No new business was discussed.

9. Future Meetings & Presentation Invitations

Meetings will start at 8:00 a.m. and will be scheduled to last until 1:00 p.m.

Future Meeting Dates

#45 Wednesday, March 8, 2017

#46 Wednesday, June 7, 2017

#47 Wednesday, September 6, 2017

#48 Wednesday, December 6, 2017

Presentation Log

The Committee reviewed the log and determined the next invitations for presentations.

Future Presenters

Record Keepers

March 2017 – Desjardins Financial / iA Financial Group

June 2017 – Sun Life

September 2017 – Manulife

December 2017 – Great-West Life


Investment Companies

June 2017 – TBD September 2017 – Invesco

[Action Item 310] – The Committee requested that The Benefits Company extend an invitation to Portico Investment Management to the June 7, 2017 meeting. Portico is requested to present a general overview of their Company, investment philosophy and economic forecast.

10. Adjournment

[Motion] – Matthew Loscher made a motion to adjourn the meeting at 12:05 p.m. Seconded by Kevin Delaney. Motion carried.

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