Ashleay: Welcome to iA Financial Group's "In Your Interest!" podcast, where our goal is to share with you the essentials of economic news and its impact on your finances. My name is Ashleay, and today we are celebrating the first anniversary of our podcast. So, since June 2022, we've filmed, well, we've recorded 45 episodes; we've had ten experts; and, above all, thousands of listeners who have tuned in every week to hear us and the latest economic news. To celebrate, we decided to invite none other than our--oh, sorry about that. None other than our Executive Vice-President-- goodness, Renée, I'll try that again. Our Executive Vice-President of Individual Insurance, Savings and Retirement, Renée Laflamme. And my long time sidekick, of course, Sébastien Mc Mahon. So hi, Sébastien. Welcome, Renée. Thank you very much. Thank you for being with us.
Sébastien: Thank you.
Ashleay: So do you want to start us off, Sébastien? Maybe you could share our top five best performing podcasts?
Sébastien: Yes, sure. So we're live from the headquarters in Quebec City, today. So, it's a special event. So we thought maybe we would recap. And when we were looking at the stats, I was surprised myself to hear that we've done 45 episodes, in French and in English, so we tend to record--it's 90 recordings, and maybe we could go through those that were the most listened to. And the first one, above the others and think maybe one of the most important ones that we've done, is the investor's worst enemy. And you wouldn't be surprised to hear that it's you yourself or your emotions as an investor. So it's important to have a plan; it's important to stick to the plan, so build the right plan that you will be able to follow through life; to get help; also to avoid the flavour of the month. So we like to say (jokingly) that investing for your future should be the most boring thing that you will do in your life. You need to have a plan, you need to save regularly and you need to follow that plan. The second most listened to episode was with my colleague and friend Marc Gagnon, one of our best all-star PMs here at iA, Mach one, the Top Gun Award for one of the best portfolio managers in the country, recently. So we were looking at 2023. At what's going to happen, where will growth come from, where will opportunities come from. That was hard to call. I would say it's still somewhat hard to call where we'll end up at the end of this year. We have opposing forces: We have higher rates, we still have a consumer that has lots of savings. So we have somewhat of a better idea today. There's no recession yet, but, you know, opposing forces this year: Wall Street is higher, AI is lifting the markets. So, that's where we looked at the future. And the third one would be our secrets for maximizing your investments with the expert Pierre Lafontaine. Lots of things that I've learned how to the tax implications of different products, how to get advice, how to have a tax strategy to help grow your savings. So that was a very informative session. In September of last year, 2022, we looked at the possibility that there's a recession: Should we fear a recession? We were saying that a recession is likely, but it's not a recession that should be deep, maybe something that would be more shallow or, let's say, the economy going sideways for a while. It's very important because this is one of the most important drivers of the markets. So, so far, so good. We think there's better odds in Canada than elsewhere that we avoid a recession now. But it's still something that's high up on our radar. And finally, the fifth most listened to episode was talking about the rising interest rates and the impact on your finances. So in November 2022, then we were at 3.75 on the leading rate. Now we're at 4.75. And we were thinking that maybe we could go as high as 4.52 to 5. We're pretty much there now, but maybe we're not done yet. So there's more to come. But anyone who has a mortgage with variable rates will know that this is a very important factor to consider in your personal finances. So yeah, lots of good content. That's only five out of 45. There's way more to come if--well, there's way more to find on the platforms and way more to come in the next year.
Ashleay: To sum up, Sébastien, think people have concerns, they want to be informed, and they're looking for advice to seize future opportunities.
Sébastien: Yeah, exactly.
Ashleay: Great. So that's a nice way of looking back over the past year. Before we turn to Renée, we're happy to announce that we'll be back for a second season. And our goal is not only to keep you informed about the latest economic news, it's also to increase your level of knowledge in anything financial. So it's just to simplify your day to day finances. All this in the company of Sébastien, who's particularly gifted at explaining things that are not always easy to understand. So I'd like to thank you for that.
Sébastien: Thank you. And thank you for being the secret ingredient, the thing that makes this thing work. It's a pleasure working with you, Ashleay.
Ashleay: Thanks Sébastien! And if you haven't already, please subscribe to our podcast. It's 100% free. We like to say that the only thing that is--well, not that's costly. How would we say that, Sébastien?
Sébastien: Well, I think you don't have to pay for the content that we provide, but I think it pays to listen to the podcast.
Ashleay: There you go! Yeah. See, this is why we make a good team. And don't forget to share it with your friends and share comments, suggestions if you have some. We've often based a lot of our podcasts and a lot of our subjects on things that we've received from colleagues, from friends, from co-workers. So, yeah. So let's get started, Renée.
Renée: All right, so if we start with iA Financial's social mission: behind our insurance and saving products, there lies a social mission, right? And for a group that's like ours, people don't necessarily think about that or know about it. So what is it? What's the difference we're making in people's lives? Yeah, So thank you for that. The purpose: Why is it that we exist? Right? So all organizations, they have a purpose: they have a purpose towards their employees, their clients, their shareholders, partners. And our purpose is really to make sure that our clients are feeling secure about their future and that Canadians have opportunities and have services and they can call upon us to feel secure about their future. And think it's important because (and we still have a bit of work to do on this) as we look at the population, 43% of the population doesn't have life insurance, for example. Now it's the whole population. So there are some older folks, some younger. But in the end, there's always, you know, there is an opportunity to continue to help everyone to feel secure about their financial future. And some, you know, within the population, you have the mass-market and the mid-market and there are interesting behaviors or ways of thinking. So for example, you'd have 44% of people would say, "What is important for me financially speaking, is to make sure that I leave something for my kids or my family." So life insurance is important. A little bit more than a third of people will say, "Well, I don't have any information, where do I get the information?" So they are under-informed. Two thirds don't feel so secure about their future. They're not secure, they'd like to have more advice. And there's a percentage--a very high percentage of those populations--that say, "Well, you know what, if I was earning a little bit more, I would save more. "So, there's work for us to do. Our purpose is important because we can make the difference in one's life and in households and families.
Ashleay: Yeah. So exactly. You know, so people (not just Canadians, but, you know, human beings) want to feel protected, we want to be informed, we want to feel secure, and everyone wants to build towards their long-term goals. Our job is to help them. This is the difference that we're making in people's lives. And we do that in partnership with our advisors. So we truly believe in the value of advice. So partnering with our advisors is one way for us to make sure that we can provide our product and services to the Canadian population. Yeah. And you need to have a plan, so an advisor helps you building the plan, follow the plan. And, you know, I also have some statistics here: You know, in Canada it's only 50% of children that have an RESP. The government provides grants, it's one of the best or most profitable ways to build wealth in your life. It's easy, yet only half the population, or at least half of the children benefit from that. 50% of the population don't have a retirement plan or even they don't really think about after work. So living paycheck to paycheck. So, the importance of a plan cannot be overstated here. So, the social mission, you know, very humbly that we gave ourselves with this podcast is to help raise people's knowledge of anything that's financial, so financial education. So it's all out of benevolence. This is what we want: to help people. That's the dent that we want to make in the universe, here. And if we look at, maybe, industry trends and strategic orientation. Let's look at the future: What changes, what are we to expect in the short-, medium- and long-term? Yeah, that's an interesting question, right? And if we knew, everything would be so easy. But we don't. But we have some sort of expectations and we do have a vision. So if we take, for example, car insurance, it is very likely that car insurance in ten years from now is not going to be the same exact product as it is today, because maybe you'll be insured based on the usage of your car. Maybe your insurer will provide you with advice, will provide you with some predictive information and help you do what you should be doing to protect your-- About the weather. --About the weather would be a good example, right? If there's going to be a hailstorm, then maybe it's okay to receive a text so that you put your car in the garage. But so those are the things. There are also items that it relates to life insurance or health. Having more data, being able to tell our clients because we have data that say, well, other clients like you, 35 years old, two children, you know, you would have a life insurance like this or would have a critical illness insurance. So using data, we can provide better advice. And all of this is for the benefit of the client. And it will be also for the benefit of our advisors: for them to be able to access data, to be more efficient and more precise or timely in how is it that they provide the advice to their client. Right. So data is going to be--is powerful and is going to be even more powerful going in the future.
Ashleay: And speaking of the future, the industry in three to five years, but also in ten years, for example, car insurance, like we were saying, credit insurance, savings products and distribution. Maybe you could talk to us a little bit more about that? About distribution?
Renée: Yes. Well, maybe. Because I think we need to be cautious not to give the impression that the insurer is going to follow us everywhere around? No, no, no. Having the data is to be able to provide better advice, to be able to support the advisors. It's not necessarily the data on you, precisely. And maybe it is, but it's also on the population. We are deeply convinced that advisors will remain and that advice has a strong value. So we can project ourself in ten years from now: advisor will have their role, the value advice will be there. It may be that it will be given differently, given all the information that we'll be able to have and given also all the digital tools. So we've had tremendous evolution in our digital tools for clients and advisors. And we can only project that this will continue.
Ashleay: Absolutely. And if we look at every generation: we've all had--you know, we've seen in the past, each generation has a different profile, has different needs. What about today's generations?
Renée: Well, that is very interesting. So, you know, briefly, if we go through the generations. We have the baby boomers, so those people are between 56 and 75, they are about to retire or are retired right now. So they have specific needs as it relates to preparing or decumulating because they are in retirement. So we need to be really cognizant of what is their need in terms of product, in terms of services. Then they will transfer their wealth to either Generation X or the millennials. So generation X: they are 41 to 55. The youngest of them, they have trigger events in their life. And if we're able to capture that and if we're able to help the advisor capture that, there's a lot of opportunities to better support those clients. Some of them are getting into the retirement, so they have needs that is similar to the baby boomers. And that population is very important. The millennials, we all talk about them. They are 25 to 40. They have a strong growth and a lot of this growth is coming from immigration Yeah. So within the generation there's another level of segmentation that relates to immigration. And they have specific needs. They may have different objectives in their life, depending on where they're coming from. And it is very much growing population. And the other one that I like a lot are the Gen Zs. So the Gen Zs, they are between 9 and 24. They've never experienced life without a cell phone, so we call them the digital natives. Yeah. And they will be the biggest demographic group of consumers in the future. So what they are looking for, what they expect is highly important when we're trying to project ourselves in 10 years from now or in 20 years from now. They also are very close--and close to their heart they have diversity, diversity of culture, diversity of thinking, how is it that they go about the world. Well, you know, we talk about ESG, that's very close to their heart. So those needs for them is different than the baby boomers for many different reasons. The experience they're looking for is also very different. One thing that remains, however: they still need advice. So they may buy, purchase, save in a different manner, but they still need someone to take them through a plan, making sure emotion doesn't get in the way, making sure they do that in a disciplined manner. Yeah, the one thing that doesn't change in history is human nature. So they'll need to feel secure and they still need to have someone along with them on the way. And there's all of these generational changes, you know, economic growth means that we get richer as we move forward, so now the transfer of wealth through inheritance, that's going to be a very important, event that's going--or trend for the next decades. When you look at Generation X, we have some stats here that show that between 2035 and 2040, that's kind of the peak when Generation X will be inheriting wealth, after that, they will be distributing wealth down, likely to the millennials. The millennials are looking for, you know, wealth transfers that will be a record in history. So they need to be prepared for that. There's physicality that's involved there. So we need to evolve with these changing needs of society.
Ashleay: And Renée, you were mentioning also about the need to be, you know, to be able to consult someone and speak with a human being, basically.
Renée: So we continue to rely on our distribution network, even if technology now facilitates anything that would be self-service for our customers. And so this is good for us. Even if there's a scarcity of manpower, I think there's something good about our distribution. Well, distribution is critical. And, you know, I've said it before: most of us don't wake up in the morning and say, "This is a great day, I'm going to buy life insurance." Yeah, right: "It's going to be a fun day, I'm calling." That is not happening. But if you do deal--if you do have that conversation with a financial advisor, it'll help you make that plan and say, "well, you know what? Given this and that in your life, it's probably time for you to think about this." So you can have all the digital tools in the world, but if you don't propose, expose a plan to someone so that it can be, you know, better secured about this financial situation, it won't happen by itself. So technology and advice, in my opinion, it goes hand in hand. It really is the hybrid approach. Automate, self-serve everything that you can so that everybody is more efficient. The service provider, the client has a better experience and the advisor can really concentrate on what he's good at, which is giving the advice and making the plan for the client. And looping back to the first thing that we mentioned about the most listened to episode: I mean, you can be your own worst enemy. I mean, it's easy--something that we've used in the in the podcast before-- it's easy when you're sitting on your couch on a Friday night with a glass of wine, talking to friends and say, "I have a plan, I'm sticking to; I'm there for the long run, I'm steady." But you know, when markets are moving and where something happens in your life, it's easy to say, "well, now it's different." So I'm getting my phone out and, you know, just selling stuff or buying stuff and diverging from the plan, which can be pretty costly. So just the presence of an advisor in your life means you need to have those conversations, you need to remove the emotions from there. And, you know, that's a very powerful tool just the presence of an advisor.
Ashleay: Absolutely. Yeah. And speaking of powerful tools, artificial intelligence: is there a place for it within an insurer such as ours?
Renée: Yeah. And probably the easiest way of thinking of it is, when we underwrite in life insurance policies, we gather lots of information and rather than having a blood test or any fluid test we would use the data to be able to assess the risk. And so there's different ways of using artificial intelligence. There's that deep learning, but there are more simple things (if simple is the word to use here). So we use artificial intelligence at different degrees, we will continue using it and making it more powerful. It's true, as well, for car insurance: We gather data and being able to provide the insurance. And, you know, when we think about that proportion of people who don't have life insurance, for example, well, if we underwrite everybody one by one, it's not going to be very efficient. If we have artificial intelligence, data driven analytic models or predictive models, then we will be able to provide more in a more efficient manner.
Ashleay: Absolutely. Absolutely. And speaking of data, you know, data collection, personal data, it's been in the heart of the debate in many recent years. It's not over yet. So how far are insurers willing to go to get that information? And, you know, the connectivity in our watches, in the car, in our phones, everything else. So--
Renée: Well, you know, there's two things in there. The first one is the confidential information. So whatever we do, if we want people to feel secure about their future, we need to protect that information. So that is very important. The other thing is, well, how much information are the clients willing to share with us and what do we need to be able to provide them with the best service? The question of how far are we going to go really belongs to how much the client is willing to share. And then, from an ethical perspective, you know, making sure that we use this wisely, we don't have a bias, we have sound models, those are not black boxes. So we're using that information in a very socially responsible manner. Yeah. And when it's financial information, everyone is very critical. You must not fail in protecting that information. Clients have a larger or bigger expectations from financial institutions and others and with good reason. So, yeah, it's just like an airline pilot: You can't crash a plane once in a while, you must never crash a plane.
Ashleay: No crashing. And I have a question here: With an average income, is it possible to get rich with financial planning?
Sébastien:Well, what is the question? Is it possible to get rich or is it possible...
Ashleay: Well if you have tricks we can talk!
Sébastien: ...to plan? So it is always possible to have a sound financial plan. It's all about the plan. It's all about the discipline. It's all about the time that you have,right? If you start saving at 55 to retire at 60, well, chances are you're going to miss some windows of opportunity here. If you start at 20/25, then, you know, there's a way to make sure that you have enough money to retire, that you're protecting your loved ones. And there are different products, you know, you talked the other day about the RESP which is an important product.
Sébastien: Yeah. Their longevity risk (the risk of outliving your money) is a very important one. We always think that well I can work into my 70s because, you know, I do like clerical work, but you never know what's going to happen, so you need to plan. But yes, the RESP example, you know how to build wealth, you know, easily (I would say easily, I'm using that word). Let's say if you have an RESP for your kids, for each kid, you can put $2,500 a year into the product and you get subsidies from the government. So $2,500 a year is $48 a week. So it's something that, you know, it's a boost in your budget. And, you know, you can you can afford it. And if you do that for 18 years and then you start taking the money out, you would have put $45,000 in there. The subsidies from the government in Quebec is 30%, in other provinces is 20%. So if you work with 20%, that means that you have $54,000 there plus the returns from the market. So you can reach somewhere between $65,000 and $70,000 after 18 years by just spending $48 a week, it's about 50% gain on the capital that you put there. So just making good habits, starting early, benefiting from one of the most powerful forces in the universe, which is compound interest. It's easy to reach these objectives.
Ashleay: Absolutely. And we have a few personal questions now, Renée, if you will. The crunchy part. The crunchy part. So you climbed the corporate ladder gradually, but did you set a specific time or achievement target for each stage?
Renée: No, I didn't.
Renée: I'm kidding. Well no. No, I did not have a specific plan. I have--I had and I still have ambition and motivation. But, you know, if someone had told, me getting out of university, this is what you're going to be doing when you get old, probably I would not-- We're talking about the future. --I probably would not have guessed that. But it was clear in my mind that I wanted to grow, I wanted to contribute, I had some ambition of, you know, leading and being part of something successful like iA
Ashleay: Yeah, absolutely. So you had an orientation and you've been pushing forward ever since then. And then also you take some chances. I mean, you take some--
Renée: I've changed jobs as many others in the organization, and sometimes you certainly get out of your comfort zone. And this is when you get a lot of learnings, a lot of good people that you meet, new people, learnings, experience. Yeah, we have a lot of good people. So a growth mindset? A growth mindset for ourselves as well as for the organization. Yeah.
Ashleay: And if you had three pieces of advice for young people starting out in their careers, what would they be?
Renée: Yeah. So I often have that question. I don't know if I answered always the same thing, but here's a good answer. So the first one is learn. Be a learner. Learn in your job. It can be academic, you know, you do a different course, you do a new degree. It can be just to learn a new job, learn through your peers. So learning, to me, is an important part of one's career. Um, the team, you know, who you're working with, making sure that you're surrounding yourself with the right people. Nothing can be achieved on your own. You need others. You need to be part of the team. You can be leading a team, but you're always part of the team, so that's an important one. And the other one is more heart driven: So, you know, sometimes when you look at your career, whether or not you're making a move or you accept a promotion or a different task, people will do, you know, the pros and cons and be rationalizing all of this--which is great, and it's okay to do this--but you also need to fill it in your guts, right? What--okay, is this going to be fun? Do I have the ambition and the motivation? And that is something that you should never ignore.
Ashleay: Yeah. Absolutely. I 100% agree. And according to Renée Laflamme, who what are the basic elements that every individual should have in insurance and investment regardless of his or her financial wealth?
Renée: An advisor.
Ashleay: Ah yes. An advisor, a plan. And then it depends on where you are in your life. Like savings is always the safe bet. Obviously. Depending--you know, do you have dependents? Do you need life insurance? You know, you need to look at your situation, where you are in life. And the advisor will be there to support you in the plan. It's like a coach--like, you know, when you want to get in shape or you do some running or whatever that is-- you need a coach to help you grow and get better at it.
Ashleay: Yeah. Absolutely. So maybe we have questions from the audience? I don't know if, uh... All right. Yes.
Renée: Oh, yeah.
Ashleay: One question from the room here. So it's a question for Renée: emerging from the pandemic as a manager, how did your vision change or evolve?
Renée: Well, that's a good question. It did change and evolve because from one day to another, we were not back in the office. So, we now know--and myself and we collectively know--that we can do things differently. And it changes the way we manage, because not everybody is in the same location all the time. You need to be closer, I guess, to people because, you know, if I meet you, I know you're doing well or not so well; if you're on the screen, it's a little bit different. So getting closer to people, even though there's a distance, even though there's that digital tool that we're using. And, you know, learning to manage differently. People will be at home, they will come to the office and that also can be done. I think we've all learned it and it's a different, it really is a different mindset. Yeah.
Ashleay: Yeah. Sébastien, let's talk about artificial intelligence, the big buzz of recent months. Is it kind of a bubble? Is this growth sustainable in the medium- and long-term?
Sébastien: AI has been all over the markets this year. It's hard to tell if it's still a good theme because, you know, just the parallel with the dot-com bubble, if anyone listening was investing at that time. If you were in 1999 and you looked at the future and you said, "Well, the Internet's going to be taking over the world, technology is where I should invest." You were 100% right, but you would have lost money over the next five/six years and then after ten years would break even. And then after that, you would have had some gains. So it's always about what's in the price. And right now with AI, when you look at Nvidia and names like that, they're pretty expensive. Doesn't mean that they can't get more expensive. But, maybe, when everyone is talking about something, usually it's a good time to be a seller rather than jumping on a bandwagon.
Ashleay: Thanks. Renée, You talked earlier about intergenerational transfers, so lots of money for the new generation, big opportunities for philanthropic organizations. So how do you see the future for this sector--the philanthropy--and what causes do you support?
Renée: In philanthropy and what causes I'm supporting? Yes. So I'll start by saying that philanthropy is very important. The organization is very much involved, you know, giving back to the community. What causes do I support? Well, some of you may know them much involved with United Way. And I think there's some very good reasons for that and won't get into the details of it. But, you know, United Way is a good way to support a lot of causes. And you know, I'm very proud to say that that's what we're doing at iA, you know, giving back to the community.
Ashleay: Thank you. Sebastian, ESG: Is this still a team to consider for investors? High visibility in the last 2 to 3 years? How does it line up for the future?
Sébastien: Yeah, it's--We talked about generations and the Ys and the Zs, they're very aligned in that. And I have kids and, you know, discussing the future with them, they can't even understand how you would not consider ESG in everything. This is how far they are. So, as an industry, we need to make sure that we provide the right solutions for them and also that we evolve with the changing needs of our clients. So of course, it's going to be everywhere, even more than right now. Thank you. So one last question for everyone. Let's start with Ashleay.
Ashleay: Yeah. A word that summarizes the last 12 months in a word for the next 12 months?
Sébastien: All right. So the past 12 months: "Fun." I had a lot of fun. Not only in this podcast, but in in every aspect of our lives. And the next year I think will be "Learning." Especially with our second season coming up, I think we're going to be able to learn a little bit more about a lot of different subjects. So I'm looking forward to it.
Ashleay: Thank you. Renée: The last 12 months and the next?
Renée: So, I know, I'm going to cheat again a bit, but the past 12 months it was "Challenges" and "Success." So you can write it in only one word. They'll work-- With a hashtag before, it works. Exactly. And the coming 12 months I'd say "Transformation."
Ashleay: Yeah, great. Sébastien: The last 12 months?
Sébastien: The last 12 months, likely, I think the "Relationships." Building new relationships and getting to work with my partner in crime here, Ashleay, that was a good part of it. And I'll copy Ashley: in the next 12 months, adding "Fun" will be dominant. Yeah, that's how I expect it.
Ashleay: I thought you would say cold imperial style beer by the pool, but yeah. But barbecue: there's a barbecue podcast episode brewing here for sure. Okay. Thank you. Oh, well, listeners, once again, thank you so much for listening. And Renée and Sébastien, as always, thank you both so much.
Renée: Thank you for having me.
Ashleay: Yeah, it was very fun, very interesting. And we hope you all like this episode. If you did, please share, as I was mentioning, questions, comments. We'll be there to hear them. It'll be our pleasure. So have a great day, everyone.