Group Benefits

The big four companies dominate the Capital Accumulation Plan (CAP) market

In a report by Benefits Canada, the top four companies – Sun Life, Great-West Life, Standard Life and Manulife provide over $70 billion dollars of CAP assets. What’s amazing is these big four companies represent about 70% of the total CAP market.

The biggest provider of CAP plans is Sun Life with total assets of $30.5 billion. Next is Great-West Life with CAP assets of $17.7 billion. Standard Life and Manulife round up the top four with $11.17 billion and $10.6 billion respectively.

After the top four, there are a group of 5 companies with about $2 billion each:

  • Buck Consultants – $2.18 billion
  • RBC Asset Mgmt – $2.11 billion
  • Morneau Sobeco – $2.07 billion
  • Industrial Alliance – $1.86 billion
  • Desjardins – $1.82 billion

Rounding out the top 10 CAP provides is Mackenzie Financial with $1.18 billion.

These top 10 companies represent over 80% of the CAP market.

My two cents

The advantage of working with the big four companies is size often means more security. The other advantage that comes from size is greater depth and experience. The group retirement market is a scaleable business just like any other business. One you reach a certain size you have the economies of scale on your side. Once you get to a certain scale, you need to have certain systems in place, technology, service, products, etc to manage a bigger block of business.

Some would argue that working with one of the big four providers would be like being a small fish in a big ocean. Although there may be some truths to that, many of these companies have effective systems to ensure that all clients get appropriate services.

That being said, sometime working with a smaller growth company can be advantageous. There is less bureaucracy. It’s easier to negotiate deals. The companies can change and adapt to change quicker. The big four companies would argue that the smaller companies can be more competitive on pricing and fees but they cannot provide the same levels of services the big companies can offer because of the benefits of scale.

There are pros and cons to both sides so my opinion and advice is very simple – ALWAYS SHOP THE MARKET! As a fierce independent thinker, I believe it is in every companies best interest when implementing a Group Retirement or even benefit plan to get quotes from at least 3 different companies. Only then will you really be able to know if you are getting value. I always encourage shopping from at least one big company, one smaller company and another for comparisons.

You would probably shop around when buying clothes or a TV or a house so why wouldn’t you also shop something as important as a benefit plan.

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