BMO Lifetime Cash Flow

[Larry6417]

Any opinions on this product?

Superficially, it looks like a GLWB product, but with some wrinkles. BMO uses its own funds/ PPNs (principal protected notes) though some advertising mentions the possibility of using BMO ETFs in the future. BMO's propaganda, I mean advertising, claims a MER of only 2.75%, substantially lower than other products. However, according to the fine print, BMO uses PPNs, which come with a built-in cost to the consumer even if no additional MER is charged.

Also, I dislike that your money is locked in for a minimum of 10 years, and the composition of your funds is automatically changed to a more conservative asset allocation as you age. GMWB products that allow a high equity asset allocation with automatic re-sets may have a superficially higher fee, but may actully grow substantially larger than a product composed of PPNs.

I don't think this is a product I would ever be interested in (I'm not old enough anyways), but as a BMO shareholder, I fully endorse the product. :D

See www.bmo.com/home/personal/banking/investments/mutual-funds/funds/managed-programs

[cannon_fodder]

Any opinions on this product?

Superficially, it looks like a GLWB product, but with some wrinkles. BMO uses its own funds/ PPNs (principal protected notes) though some advertising mentions the possibility of using BMO ETFs in the future. BMO's propaganda, I mean advertising, claims a MER of only 2.75%, substantially lower than other products. However, according to the fine print, BMO uses PPNs, which come with a built-in cost to the consumer even if no additional MER is charged.

Also, I dislike that your money is locked in for a minimum of 10 years, and the composition of your funds is automatically changed to a more conservative asset allocation as you age. GMWB products that allow a high equity asset allocation with automatic re-sets may have a superficially higher fee, but may actully grow substantially larger than a product composed of PPNs.

I don't think this is a product I would ever be interested in (I'm not old enough anyways), but as a BMO shareholder, I fully endorse the product. :D

See www.bmo.com/home/personal/banking/investments/mutual-funds/funds/managed-programs

http://forums.redflagdeals.com/bmo-lifetime-cash-flow-annunity-product-interesting-model-what-do-you-think-994174/

Consensus - bad for you while great for bank.

[Financial Cents]

Based on almost 3% MER, I wouldn't buy it, but I'm in my mid-30s and not mid-60s needing cash yet. Owning a few hundred shares of BMO that pays dividends would be a much better, cheaper, and more lucrative play.

[Brian Weatherdon CFP]

I recently figured (correct me if I'm wrong) that if the money is locked in for 10 years, and at that point it starts paying $6000 per $100K originally contributed, that I couldn't find any scenario where the likely return would exceed 4%. And it's locked in! Doesn't work for me.

That's my personal and considered opinion.

[LBCfan]

I think it's a great deal. BTW, I own BMO stock.

[Brian Weatherdon CFP]

LOL of course it's a great deal.....if you own BMO stock. I'd much prefer owning BMO stock and of course forego the presumed guarantee structure. Personally speaking :)