Sun Life moves into millionaire market

Headrick said they plan to offer corporate-class funds with higher minimum investments early next year, and will also provide customized reporting to investors.

“[We’re] leveraging [our] current suite of funds and putting them together in a unique way,” says Headrick. “A lot of the assets are non-registered with the higher net worth segment, so corporate class works very well.”

Read: Why use corporate-class funds?

Corporate-class funds are deemed more tax-efficient because they allow investors to move assets from one type of fund to another without triggering a tax event. Last August, Sun Life rolled out 17 corporate-class funds that also allow investors to switch from one fund manager to another without triggering a tax hit. The minimum investment to purchase the funds is $500.

“We launched the corporate-class funds in August and we really needed that to be able to launch private client,” says Headrick.

Sun Life has not yet finalized the number of funds and the minimum investment for the private client corporate-class funds, but Headrick said the minimum could be as low as $100,000.

Most fund companies have been offering corporate class for years, so “we’ll see what Sun Life is launching,” says a Richardson GMP advisor who declined to be named. “Corporate-class funds are pretty prevalent in the high-net-worth space,” adds the advisor, who uses these funds in client portfolios.

Read: Corporate-class, ETFs still tax efficient after budget

Sun Life plans to launch the private client funds come after it sold McLean Budden’s private wealth unit to CIBC in 2012. The unit, which Sun Life absorbed when it fully acquired McLean Budden in 2011, had $1.4 billion in assets from high net worth individuals and families, endowments, and foundations at the time of sale.

“We didn’t see a way to really evolve that business,” says Kevin Dougherty, president of Sun Life Financial Canada. “They were basically dealing directly with customers as an asset manager.”

Dougherty adds McLean Budden’s private wealth arm didn’t have a strong advisory component, which is unlike Sun Life’s business model.

And with Sun Life’s mutual fund arm going from zero funds three years ago to 82 funds today, Dougherty says the company’s now positioned to reach the high-net-worth segment.

Read: Adapt to wealthy client needs, or else

As of the third quarter, total wealth sales at Sun Life hit $29.1 billion, up from last year’s $23.2 billion during the same quarter. Revenues were driven by strong annuity and mutual fund sales. The 25% growth in total wealth sales trumped the 6% growth in insurance sales during the last quarter.

Aside from Sun Life, its top rival Manulife has also inched its way into the high-net-worth market with the launch of Manulife Private Wealth last year.

But Manulife’s head of private wealth unit, Bernard Letendre, said its business model is different. “We are not selling a product; we are advisors to the client,” Letendre says in an interview.

Manulife has private bankers and investment counselors who deal exclusively with investors with at least $1 million in liquid assets, he says. He also notes his firm is one of the world’s largest managers of timberland and owner of other agricultural properties, so it can provide access to real assets and direct ownership in stocks and bonds. “Our business is not funds,” says Letendre.

Evelyn Juan is a Toronto-based financial journalist who writes about the wealth management sector. Follow her @evelynjuan on Twitter.