RESPs are too Hard for Mommies

It appears this service has gone off the radar and returned to the business of selling Insurance for Children.

This is what I keep seeing and reading, and it makes me (as a father of 3 smart, sophisticated young ladies, and a wife who is much smarter than me) absolutely irate. The dumbing down of most things (OK everything) is annoying enough, but the portrayal that Mothers and Parents (in general) can’t understand a simple financial idea like an RESP is insulting.

The case in point I am displeased with is Giraffe and Friends RESP, which is an insurance company that is offering a Guaranteed Growth RESP (and also insurance for children). This company has been getting a lot of Mainstream Media play and many financial bloggers seem to think that it is a godsend for families.

Giraffe

What’s an RESP?
Photo Courtesy kraifreedom at FreeDigitalPhotos.net

Let me be clear, “Giraffe Feces“.

They are simply selling an RESP Bond Fund, with insurance thrown in, which most families can easily set up themselves.

When did RESPs get complicated? You get a Social Insurance Number for your child, and you set up the RESP with your favorite financial institution, you do a little research, beforehand and there you have it. Evidently it is much more complicated than that, as the Giraffe and Friends site explains:

We use direct, simple language. We take the worry out of big decisions by giving you all the information like our frequently asked questions you need to make the right choice for your family. We want you to understand how your savings work so you can feel confident, not confused. giraffe & friends is online, and our mission is to be so easy that you can set up your child’s RESP during a single naptime.

Is it just me, or is this someone being condescending  to the consumer? When I read “…simple language…”, I get the feeling someone is calling me Simple (but then again, I am also known for being a hot-head).

Another question that arose after seeing this was when did RESPs become risky? The site makes the statement:

A giraffe & friends RESP is for parents who don’t want to take chances with their children’s education savings. There’s enough uncertainty in the world.

  • Your personal savings are 100% guaranteed to grow, no matter what happens out there in the stock market jungle.
  • We go a step further by offering insurance for YOU, the parents. So if the unthinkable happens like a death or permanent disability, and you can’t make your RESP contributions, giraffe & friends will still meet your RESP goal.

What kind of growth are we talking about here? I couldn’t really find a lot of information about what growth meant, but the guarantee seems to be a 2% growth per annum, but given the government kicks in 20% every year in CESG, for your first $2500 deposited each year (more possible depending on your income), is this on top of the kick in? (I hope so).

To those folks out there clutching their stuffed animals reading this, you do realize you can buy GICs, or set up a savings account type RESP that will never lose money as well, right? The FAQ on the site says they invest your money in Bonds mostly, ” We back your RESP with dependable Canadian government and corporate bonds as well as a small percentage of equities.“, you know you can buy Canada Savings Bonds in an RESP too?

The really telling part of the web site is in the Terms and Conditions page, which states:

Except for on-line applications, the Website is provided for informational purposes only, and is not guaranteed to be accurate, complete, or timely. You should obtain appropriate, qualified professional advice before acting or omitting to act based upon any information provided on or though the Website.

It is also important to read the Exclusion of Liability section very carefully as well (as you should with all similar products).

Am I missing something here, is the concept of an RESP something that is causing parents to stay up late at night worrying that they don’t know what to do? I must also give Mrs. C8j her “props” on this, as this article was her idea, and, yes, she does feel insulted by the tone of the service.

Maybe I need to start the Friendly Big Cajun Man RESP fund, and I could get Jerome the Giraffe and Rusty the Rooster to help explain things to folks?

Look up… waaaay up… and now let’s talk about RESPs….

{ 17 comments }

{ 17 comments… add one }
  • Holly August 27, 2015, 10:45 PM

    Very confused. The RESP website for the company seems to no longer exist. They make no mention of RESP on the website only insurance for your children. Is this a scam? Does anyone know if this is really a legit company?

    Reply
    • bigcajunman August 28, 2015, 5:26 AM

      You are correct, it looks like they no longer advertise that service (RESPs) any more. As for it being legit, that is not for me to comment, they seem to offer insurance policies for children, as their main service.

      Reply
  • Elizabeth January 25, 2015, 8:07 AM

    Yeesh. Using plain language means that you write for your readers’ comprehension, not that you talk down to them!

    Though, you have to admit they’ve got a brilliant marketing angle — playing on people’s views of big bad banking institutions that don’t speak their language. They also seem to be the only RESP program getting media attention or advertising at the moment.

    I’m not saying that’s a good thing.

    Reply
    • bigcajunman January 25, 2015, 8:40 AM

      No I can admire the sheer marketing genius of playing of the “Big Banks don’t Care” side of things, but doesn’t mean I have to like it.

      Reply
  • Jackie Bolen January 25, 2015, 2:05 AM

    Mixing insurance and investment plans always seem like a dangerous mix to me, and I’ve been a long-time hater of whole-life insurance. Why make things so complicated? It’s pretty simple just to set up an RESP and then get a term-life insurance policy (only for the parents, if needed!).

    Reply
    • bigcajunman January 25, 2015, 6:45 AM

      Yeh, insurance on the kids is an interesting question, I was never sure why you would have any amount more than $10K term on each child (cover memorial service and whatever).

      Reply
      • Joe Schmoe January 26, 2015, 10:45 AM

        With respect to why you would insure your kids, I asked the same question not very long ago to a financial advisor. She said that starting and maintaining a life insurance policy on your kid – if you have the money – can be a wise decision because that kid may become uninsurable or insurable only at excessive rates, typically due to health conditions. By obtaining life insurance for them before they develop any issues, you leave the kid the option of continuing the policy into their adult years (and thus ensuring some financial security for the grandchildren). There’s also the benefit of covering funeral expenses, pre-death out-of-pocket treatment expenses (if any), etc.

        The advisor herself was an example – no one would insure her but because her parents took out a policy for her before her genetics/health issues started, she had a policy (albeit a small one of several hundred thousand dollars).

        Reply
        • bigcajunman January 26, 2015, 11:47 AM

          Insurable, and insurable for a price are different things, though. My insurance from Nortel when I got laid off was “continuable”, however, the rates quintupled (and I was only 47 at the time). I suppose that is one reason though.

  • Robb Engen January 23, 2015, 11:41 PM

    I saw this advertised on TreeHouse (where else?) and looked into it a bit. I was convinced it would be a scammy scholarship trust type product but to be honest I couldn’t really find any big “gotchas” when I checked it out. Yeah, 2% growth is nothing, but that’s before the grant money – which is where RESPs really shine anyway. I wanted to hate it, but couldn’t find anything worth hating on. I mean, it’s no e-Series funds, but it looks better than any scholarship trust and better than when you have no plan and the bank parks your money into term deposits.

    Reply
    • bigcajunman January 24, 2015, 6:49 AM

      Something about this just wrankles me, and I am not sure what. I suppose it is better than the old time “Education Savings Plans” where you gave money in, and if your child didn’t go to school you lost all growth and got back the principle (if you were lucky).

      Reply
  • Barry @ Moneywehave January 22, 2015, 10:10 AM

    I despise companies like that, way too many of them try to guilt you into buying terrible products. By the time you realize what you’ve gotten yourself into, it’s near impossible to get your money back.

    Reply
    • bigcajunman January 22, 2015, 10:38 AM

      That would be my concern, is that once some firms have your money, you never get it back…

      Reply
  • Frugal Guy with Balance January 21, 2015, 8:14 PM

    Hey Big

    Thought there was only one of me…(some what HOTHEADED)

    FI’s in general think I am a Dummy….I take great pride in squeezing them when I get the chance.
    My youngest is having our first grand baby guess who has been doing HIS OWN Research.
    I am teachable but as you said RESP’s are not rocket science…

    Thanks for Blogging you are heard and I APPRECIATE your messages. Thank You!

    Reply
  • canadianbudgetbinder January 21, 2015, 9:29 AM

    If companies can make something seem difficult to a specific demographic and that they require a service because they won’t be able to figure it out on their own, they’ll do it. Sad part is people believe it and if they only did more research they’d realize it’s not that difficult at all.

    Reply
    • bigcajunman January 21, 2015, 10:08 AM

      Precisely, what concerns me are the “experts” on TV talking this kind of program up.

      Reply
  • Emily @ Simple Cheap Mom January 21, 2015, 8:44 AM

    Yes! I think I saw that commercial and was offended. I think it was a similar reaction as my husband’s reaction to commercials that assume he doesn’t know how to change a diaper.

    Online applications do sound convenient, but setting up an RESP isn’t tough. They also don’t come bundled with other products that you probably don’t need!

    Reply
    • bigcajunman January 21, 2015, 9:10 AM

      As I pointed out in the article, it was Mrs. C8j that was first “offended” by this 🙂

      Reply

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