By Tom Bradley

I am on a list to receive a daily email advertisement from Advisor.ca.  I see a different product from a different company every day.  For me, it’s a great way to keep in touch with what products are being pushed and how they are being represented.

An ad this week for Standard Life segregated funds prompted me to write.  It said, ‘Lead your clients to safer ground’ and highlighted features such as ‘Enhanced guarantees’ and ‘50+ funds from select managers’.   I was amused by the words ‘50+ funds’ and ‘select’ being used in the same sentence, but that’s not the reason for the post.

I question the wisdom of buying, or marketing, ‘guaranteed’ products at this point in the market cycle.  As regular readers will know, I’m not a fan of these products at the best of times, but paying for a principal guarantee when we’re bouncing along the valley floor seems particularly wasteful.  I don’t expect that everyone agrees with our view that returns are going to be good over the next three years (based on the fact that we’re starting from a point of low valuations and high dividend yields), but surely even the most bearish of bears would expect the markets to be well above current levels in five to seven years?

We know it’s hard to buy stocks right now.  It’s a scary time.  For those who are ready to increase their equity exposure, however, you don’t want a watered down product.  You want to participate fully in the coming recovery.