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Insurance and Financial Planning

Mandatory written mandate for group insurance

It’s important to note that requirements regarding written mandates in group insurance apply to representatives working in group insurance if they work directly with the purchaser (the client), but not to those who work with these representatives (e.g., a representative working for an insurer working with the representative or the actuary working for the purchaser).

The representative must never minimize the importance of ensuring that the client designates an appropriate intermediary to discuss with him, on his behalf.

The designated contact person must be the person who will make actual decisions regarding the plan, and with whom the representative will determine the terms of the mandate.

A good intermediary is therefore not necessarily the plan administrator. It could be the inspector, president, vice president of finances, or union representative, for example. It is also possible for there to be two intermediaries or even multiple purchasers.

By discussing with the designated person, the representative will be able to confirm whether he is able to take on the role of contact person. If there are any concerns, he should discuss them with the client.

Also, the representative must verify whether this person fully understands group insurance or group annuities, as applicable. The representative’s duty to advise and inform must be shaped particularly based on this person’s knowledge on the topic.

A representative working in group insurance or one of the categories of this field (group insurance or group annuity plans) who wants to provide services or offer products to a client must write, date, sign, and provide a written mandate to the purchaser or the contact person designated by the purchaser. The representative must keep a copy of it in his client file, along with the proof of delivery of the mandate, such as a copy signed by the client or a confirmation of receipt.

In practice, the representative often obtains instructions from his client for the insurer on various topics, such as the representative’s right to access information on the client’s plan or the right to receive fees. These instruction letters from the client do not exempt the representative from his obligation to prepare a written mandate in accordance with regulations.

Even though these daily usage documents are commonly called “mandates” (for study and submission or transfer), they cannot be categorized as mandates under the regulations because these are simply instruction letters to the insurers.

 

Specific defining characteristics of the two document formats
Instruction letter to the insurer Mandatory mandate
Involves the client and the insurer Involves the client and the representative
Gives instructions to the insurer Frames the relationship between the client and the representative
Is dated and signed by the client Is dated and signed by the representative
Is provided to the insurer Is provided to the client


Although instruction letters to the insurer and the mandatory mandate based on the regulations are different, they are complimentary in the execution of the mandate given by the client. Together with the client or the contact person, the representative must therefore verify their consistency to ensure proper execution by all parties.

Three mandate types are normally given to the representative.

  • Full management
  • Plan transfer
  • Study and submission

Under the full management or plan transfer mandate, the representative becomes responsible for the file. He can obtain all necessary information from the insurer to study the current plan, negotiate with the insurer upon receiving renewal notices, make recommendations to the client in this regard, and receive fees from the insurer.

As for the study and submission mandate, it allows the representative who doesn’t have this management responsibility to view the insured client’s file for plan analysis and requests for submission to insurers.

At a minimum, the mandate must include the following items:

  • Identification of the purchaser and the designated contact person
  • Mandate type and scope, including…
    • The financial needs analysis (FNA)
    • In the case of a call for tenders for one or more products, a comparison of coverage, including costs and differences observed
    • In the case of a renewal, a description of the existing plan and an analysis of the group’s experience

The mandate cannot stipulate that the purchaser is required to purchase a financial product or service. The term of the mandate may be specified, but this is not required.

If the representative requires pay from his client separately from the fee paid by the insurer (e.g., commissions, fees for services rendered, etc.), he must also disclose to his client in writing, either before or upon his provision of services…

  • the requested pay
  • the fact that he receives other pay, regardless of the type, such as fees, shared fees or any other benefit for which he is eligible for products he sells to him or the services he provides to him
  • the name of the co-partitioner, if applicable

This disclosure does not need to be included in the mandate; it can be in a separate document. The mandate is, however, a good way to combine the two conformity requirements.

For more details on the information to declare on pay, see the tool Mandatory mandate in group personal insurance.

An existing mandate is revoked if there is a clear note to this effect in a new contract, or if the former representative is informed of the revocation of his mandate and the new mandate covers the same items as the prior mandate.

Mandatory written mandate for financial planning

When the advisor provides financial planning services, they must have a written mandate signed by their client in all cases.
The requirement to draft a mandate applies to both partial and full financial planning. Even if a client only requests the services for one of the seven areas of financial planning, the financial planner must draft a mandate.

At a minimum, the written mandate must include the following items:

  • Mandate type and scope
  • Estimated number of hours required to execute the mandate
  • All the fields or field categories in which the financial planner is authorized to work, and description of the financial products and services that may be offered under the mandate execution
  • Signature of the client confirming his acceptance of the mandate

The financial planner must also disclose to the client in writing, either before or upon his provision of services…

  • the requested pay
  • the fact that he receives other pay, regardless of the type, such as fees, shared fees or any other benefit for which he is eligible for products he sells to him or the services he provides to him
  • the name of the co-partitioner, if applicable

This disclosure does not need to be included in the mandate; it can be in a separate document. The mandate is, however, a good way to combine the two conformity requirements.

Also, this mandate cannot stipulate that the client is required to purchase a financial product or service.

Finally, it must be dated and signed by the financial planner and provided to the client. It’s important to remember to keep a proof of the mandate delivery, such as a copy signed by the client or a confirmation of receipt, in the client file.