Manulife Bank has streamlined over 20 lending products into four major product families with the aim of making it easier for advisors to find the right solution for their clients and for themselves, the financial services company announced Tuesday.
Under the legacy system, advisors had to have knowledge of more than 20 products, all with different underwriting standards and application processes, said Kerry Reinke, head of specialized lending at Manulife Bank. Advisors would sometimes apply for one product where the clients’ needs could be best met with a slightly different type of loan.
“It created a lot of friction in the system [and] distracted from the advisor being able to focus on the underlying strategy,” Reinke said. “We simplified the products so the advisor is thinking about, ‘What’s my advice?’ And then leverage the tool to enable that advice.”
The new categories are: immediate financing arrangement, secured line of credit, investment loans and advisor financing.
The immediate financing arrangement product enables a permanent life insurance strategy where clients can maintain insurance coverage while accessing funds. For example, a business owner with a large permanent life policy can get cash flow. After the policy premium is paid Manulife Bank re-advances that premium paid, Reinke said.
Another product, a line of credit, can be secured by insurance cash surrender value and securities. For example, if a higher-net-worth individual needs cash to pay for the down payment of a child’s home, they can borrow against their existing assets instead of liquidating them.
Secured loans of under $1 million can be approved in less than five days and Manulife Bank plans to shrink some application approvals to just hours, Reinke said. Higher limits are available with enhanced underwriting.
There are also investment loans that can support long-term investment strategies, including for Registered Retirement Savings Accounts.
Advisor financing
In addition to client financing, advisor financing helps approved managing general agencies (MGAs) and advisors grow their business with credit. The loans can be used with succession planning or practice consolidation, Reinke said.
When a newer advisor wants to buy a retiring advisor’s book of business, they can take out a loan to buy that mature book of business. Alternatively, advisors can have a standby loan with a specified credit limit to access cash instantly if the opportunities arises to buy another practice.
The refreshed credit products simplify lending so advisors can focus on the insurance and wealth strategy conversation with the client, Reinke said.
A correction has been made on how the immediate financing arrangement works.