Description: Four people in business attire sit together on a stage, engaged in discussion. Text: Samantha Johnson, Regional Vice-President, Advanced Advisor Practices & Elevate Services.

Samantha: So let's expand on how you use illustrations in real life, now that we’ve talked about the paper. In the article you talk about what an illustration is and isn't based on your experience. So how do you use illustrations in practice?

Description: Text: Patrick Kavanagh, Director, Actuarial Services, Pal Insurance.

Patrick: Thanks, Sam. So as you said, it's important to understand that illustrations are a tool, but they're not the only tool. And what an illustration is, let's start with that, is really to... it's a tool to help illustrate or communicate some product features and mechanics of a product. But what it's not, is intended to be a predictive tool for the future. I think it's also important to make a distinction between short-term and long-term values on an illustration. I mean, think about any other investment. If you shock an assumed rate of return up or down by, let's say, 25 basis points, that's a significant impact long-term. One of the unfortunate pieces of illustrations, in my opinion, in our opinion, is that they're presented to the nearest dollar. And when that's done, I think there's a degree of implied precision that's not intended to be on an illustration, especially looking at a value in 40, 50, 60 years. I think for the good of the industry, you know, you may as well round those values to the nearest 10,000, hundred thousand, because if you're using them as a predictive tool to help evaluate which carrier will outperform another carrier, I think we're losing sight of what an illustration is and how it should be used in the market.

Description: Text: Doug Kellar, Co-founder, Feigelsohn Kellar.

Doug: Yes, I guess the challenge, like to add on to what Patrick has said, when we're dealing with younger insureds and longer time frames, it's hard to sort of create context around what does this number mean? If it's presented in isolation, that's the decision criteria. Like, you know, is this... the large ten-digit, 12-digit number? Is it going to buy a house? Is it going to buy a hamburger? Like in isolation, it doesn't really mean anything. And I think that's one of the concerns that we all collectively share about how is this stuff being presented and how is it being used. There needs to be a broader spectrum, a fuller story to be able to help clients interpret what this illustration actually is. And I think that's a very, very powerful point.

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Description: Four people in business attire sit together on a stage, engaged in discussion. Text: Samantha Johnson, Regional Vice-President, Advanced Advisor Practices & Elevate Services.

Samantha: When we're talking about practicality in client meetings of what you say and what you don't say, if a client said X other advisor presented me with this, with a dividend scale interest rate of X, how would you approach that in a client meeting? I’m putting you on the spot here a little bit.

Description: Text: Doug Kellar, Co-founder, Feigelsohn Kellar.

Doug: Well, I think there's a question before that, which is how are you engaging with the client? Because if your business model is that you're always going to be in a competitive environment, you know, are you representing a single carrier? Are you representing a suite of carriers? Like what's the context of of how you got there? Right? Because I think that is very important, to frame the conversation with the client about what this is and what is the client trying to accomplish. So like you know, you're asking a direct question of okay well there's this company on the table and this company on the table. Well, I think from a sales perspective, maybe we need to be a little more proactive in trying to go... How's that good for the client to sort of have that A and B with these two little dimensions and make a decision. What? How is that advice? How is that engaging the client and thinking about their future, that they're looking to make a lifetime decision with an insurance contract. And we're going to boil it down to those two little data points? I don't think that's a fair process to anybody. Now, the reality is, I guess sometimes individuals are in that place. But like let's think about how we're engaging with the client rather than how we're going to sort of play with numbers is I think a larger dialogue.

Description: Text: Patrick Kavanagh, Director, Actuarial Services, Pal Insurance.

Patrick: I would agree with Doug. I mean the DSIR, it's again, it's very singular, single dimensional. And to have that one piece of information... It gets back to some of the practices that the Dom and I and the other actuaries that authored the the research paper have seen where in some cases, we've seen a defaulting to an illustration analysis, which is not the intention of how an illustration should be used. So that's, you know, one of the concerning things that we've observed in the industry and our hope is that, you know, this research paper will hopefully try to... it's not an overnight change but hopefully will help improve the dialogue and lead to better client experiences.

Description: Text: Dominik Briault, Vice-President, Actuarial Services, Feigelsohn Kellar.

Dom: Now, having said that, like, let's be real about one thing, we use illustrations to figure out which product that is appropriate for the client, like we all do. The point we're making is you need to be careful about the assumptions you're using when you're making that comparison, and you're making sure that you're actually comparing apples to apples and you're comparing apples to apples over the long term, not just as of today. And to me, that's the big point of the document we put together is for people, for the industry to realize that what is differentiating the products today is not necessarily appropriate to be used over the next 40 years, because, as we saw in the paper, it just took 25 years to wipe out the majority of that difference away. So it's to realize that and be careful in the assumptions you're using when you're making that comparison.

Description: Text: Insurance Matters 2025. Presented by Canada Life. Brandmark of Canada Life. Text: Canada Life and design are trademarks of the Canada Life Assurance Company. canadalife.com. 1-204-946-1190

Description: Four people in business attire sit together on a stage, engaged in discussion. Text: Samantha Johnson, Regional Vice-President, Advanced Advisor Practices & Elevate Services.

Samantha: So, you're lucky to have an actuary on the team, and your firm is as well. Do you have any advice for the advisors that aren't as lucky to have that level of support on their team?

Description: Text: Doug Kellar, Co-founder, Feigelsohn Kellar.

Doug: My comment would be that, I think there's a lot of focus paid on the relative DSIR and the client isn't buying a DSIR, the client is buying an insurance contract. And I think we need to balance that. What does this contract actually say? How are the values going to be accumulated? How is the DSIR going to impact how it's translated through this contract? What are we trying to do? Because again, carriers as we say, have different strengths, different weaknesses. And so that's a conversation that I think needs to be more fulsome. I think advisors, we as advisors, I think have a responsibility to maybe do a deeper dive into understanding the product suite that we sell, rather than default to the easy DSIR delta and have that be the only variable that's driving client decision making.

Description: Text: Insurance Matters 2025. Presented by Canada Life. Brandmark of Canada Life. Text: Canada Life and design are trademarks of the Canada Life Assurance Company. canadalife.com. 1-204-946-1190

Description: Four people in business attire sit together on a stage, engaged in discussion. Text: Samantha Johnson, Regional Vice-President, Advanced Advisor Practices & Elevate Services.

Samantha: Doug, you've mentioned, I think twice now about the importance of the contract.

Doug: Yes.

Samantha: What do you say about the contract?

Description: Text: Doug Kellar, Co-founder, Feigelsohn Kellar.

Doug: Well, it's not so much what you say about the contract, but understanding that the DSIR input is translated by the contract. Right? So a DSIR number in isolation to be used as a comparative point, well we need to really move that around to see how the contract translates changes in DSIR. That's what we really need to understand to be able to give good advice to our clients. Okay? So some contracts are very, very efficient at that type of translations, other contracts maybe aren't as efficient at that, or they're efficient in certain regimes or at certain durations. That's what we're trying to play with, to understand what is the optimal answer for the client.

Description: Text: Insurance Matters 2025. Presented by Canada Life. Brandmark of Canada Life. Text: Canada Life and design are trademarks of the Canada Life Assurance Company. canadalife.com. 1-204-946-1190

Description: Four people in business attire sit together on a stage, engaged in discussion. Text: Samantha Johnson, Regional Vice-President, Advanced Advisor Practices & Elevate Services.

Samantha: How do you evaluate a carrier other than... you know, we've talked about illustrations. What are some other areas that you look at to evaluate who might be the right fit for this specific case?

Description: Text: Patrick Kavanagh, Director, Actuarial Services, Pal Insurance.

Patrick: As Doug said, the DSIR is a very singular element. So that's, it's just one piece of data. Between carriers, there are significant differentiators, I think, in terms of underwriting, in terms of, you know, product design, servicing, how carriers assist with large cases, capacity, differentiators in terms of their par investment account. There are so many differentiators, I think, that aren't fully appreciated in the market. And they should definitely all be considered in terms of making a comprehensive and holistic and sound overall recommendation. But in addition to the choice of carrier, in my opinion, oftentimes more emphasis should be placed on appropriate product design and understanding, you know, are the design elements, are the design features appropriate for the client? And the whole carrier discussion? That should almost be done on a secondary basis, if you don't have that solid foundation to start with.

Description: Text: Dominik Briault, Vice-President, Actuarial Services, Feigelsohn Kellar.

Dom: Yeah. And again, one of my... I have many pet peeves from an insurance industry perspective, but one of them is the fact that the industry has spent a lot of time over the last ten years to try and understand what an illustration is and how to use it. I haven't seen a lot of information or a lot of agents or advisors or even carriers put a lot of thought into, okay, I have two illustrations from two different carriers. Which carrier has the best probability of actually meeting that illustration? Which one has the investment strategy that I feel that this illustration is actually more likely to happen than this illustration is likely to happen. And to me, that's a big part of the work that we do. Those illustrations are promises for the long term. And there's a... does the investment strategy, does the management of the insurance company fit with the promise that's being made? And that's often being missed, I think.

Description: Text: Doug Kellar, Co-founder, Feigelsohn Kellar.

Doug: I think, too, that, when we're engaging with the family and having product discussions, we know two things right at the outset for facts. One is that the assumption we're making about a DSIR is going to be wrong for the entire duration. And two, the values that would be illustrated on a ledger are going to be wrong for... those are the only two things that we know. So on that basis, we really need to focus on helping the client understand how are they going to... how's this product going to respond? You know, we have to make funding duration assumptions. We have to make again, ADO dynamic assumptions. And, you know, what are we going to do here? How is the client going to actually live with this product? Those are very... those are way beyond the idea of what a DSIR assumption is.

Description: Text: Insurance Matters 2025. Presented by Canada Life. Brandmark of Canada Life. Text: Canada Life and design are trademarks of the Canada Life Assurance Company. canadalife.com. 1-204-946-1190

Description: Four people in business attire sit together on a stage, engaged in discussion. Text: Patrick Kavanagh, Director, Actuarial Services, Pal Insurance.

Patrick: I think it's important to keep in mind that done properly, this is one of the longest term investments that a client will make. So for you as an advisor showing an illustrated value, how comfortable are you? You know, given that you'll be servicing this policy for decades into the future, how comfortable are you showing this and making the recommendation to your client and helping deliver on that promise? Because it's really important for you to be acting in your client's best interest, obviously. And because at the end of the day, you're helping build their long-term financial security.

Description: Text: Dominik Briault, Vice-President, Actuarial Services, Feigelsohn Kellar.

Dom: Yeah. I agree with Patrick. The only thing I would add to that is and again, I'm not sure that the industry as a whole is doing a good job of that. If I'm looking at clients in their 60s and I'm working with some with clients that have a 25-year life expectancy versus clients in their 30s with a 60-year life expectancy. I'm not necessarily looking at illustrations the same way. I'm not looking at the product differentiation the same way. I'm not looking at the difference in carriers the same way. I'm more going to be looking at... the short term is much more important if my life expectancy is shorter. But then over the long term, like I, I cannot predict what's going to happen over the next 60 years. So it's a lot harder to make a call in that sense. So then it becomes more about product flexibility, product dynamics and management of the companies and investment strategy and making sure that you believe in what they are doing in that regards.

Description: Text: Doug Kellar, Co-founder, Feigelsohn Kellar.

Doug: I think I would say that if your business or your sales process, if I can use that language is really predicated on the delta and DSIRs. And that's how you sell. I would suggest to you that you're missing out on a lot of possibilities to more deeply engage with your clients, because that can be a real differentiator that... there's a lot of other stuff that is available to dive into with these types of products, rather than just that singular focus. And I think your client could benefit from that broader discussion. And then ultimately your business benefits, because anything that benefits a client is going to end up benefiting your business. So I think it's a very virtuous circle to try to broaden that conversation rather than just that single input.

Description: Text: Insurance Matters 2025. Presented by Canada Life. Brandmark of Canada Life. Text: Canada Life and design are trademarks of the Canada Life Assurance Company. canadalife.com. 1-204-946-1190