Financial wealth -
a broad measure of the financial assets of Canadian households. It encompasses those financial instruments and investments held for the purpose of accumulating and preserving wealth.
In the context of the balance sheet, financial wealth is shown by the underlying investment vehicle. These vehicles are the building blocks of the products shown in the financial wealth by business line exhibits. Throughout the report, financial wealth is presented through a variety of lenses, including breakdowns by product/business line, distribution channel, tax status, segment and region.
- Fixed-term - consists of guaranteed investment certificates and foreign currency guaranteed investment certificates with maturities of more than one year, guaranteed interest annuities, market-linked guaranteed investment certificates, and linked notes.
- Fixed income - includes Canada and provincial savings bonds, bonds, mortgage-backed securities (MBSs) and fixed income investment funds.
- Fixed income investment funds - are comprised of assets in mortgage, short- and long-term bond mutual funds, life insurance segregated funds and exchange-traded funds, with adjustments for double-counting resulting from the wrapping of mutual funds into life insurance segregated funds and insurance company group segregated funds. This category includes all fund products that invest primarily in bonds and fixed income securities, but excludes money-market funds.
- Fee-based assets - consist of any financial assets where the primary income stream is derived from sustainable recurring revenues, such as management fees that are based on the market value of the assets. Investment funds are an example of fee-based assets, as are any other financial wealth product held within a dealer sponsored fee-based account or program.
- Fee-based pricing - refers to a retail investment pricing structure in which fees are charged as a percentage of the market value of assets, as opposed to a commission per transaction. Fee-based pricing may also involve the use of instruments, such as mutual funds, which have an underlying management fee or management expense ratio (For more on the cost-to-customer in unbundled fee-based solutions, please refer to the definition of fee-based programs below.)
- Fund wraps - programs that use investment funds as building blocks. Fund wraps include segregated funds of funds, mutual funds of funds, packaged fund wraps and high-end fund wraps. Minimum investments range as low as a $25 pre-authorized contribution (PAC) for a fund of funds to $250,000 for a high-end fund wrap.
- Funds of funds (FoF) - investment funds that invest in units of other mutual funds or segregated funds. The investor purchases units of the fund of funds, but has no say over which funds and in what combination make up its portfolio. This product may be structured as a mutual fund or as a segregated fund that offers the usual benefits of an insurance contract, with a minimum investment of less than $25,000. Examples include Primerica Concert Allocation Series (mutual fund of funds) and Great-West Life Portfolio Funds (segregated fund of funds). Funds of funds with minimums of $25,000 or greater, such as Franklin Templeton’s Quotential, are classified as high-end fund wraps.
Fee-based programs -
formal programs with an open or semi-open architecture shelf—within the limits of the registrant and as structured by the program sponsor—and a negotiated fee structure. Fees are calculated on average assets held within the program and are charged directly to the client. In the case mutual funds, only F-series or HNW F-series funds are permitted. A comprehensive measure of the cost-to-customer, which is also known as the cost-of-ownership, or CoO, has to also reflect any internal product manufacturing fees associated with the ownership of specific products within fee-based account. An example is management expense ratios charged directly to an F-series mutual fund, an exchange-traded fund or a structured product.
Fee-based programs come in non-discretionary and discretionary varieties.