PAID CONTENT
There are always scenarios where one of your clients will need quick access to funds. It’s wise to anticipate your customers’ borrowing needs. One way to meet them is Available Line of Credit (ALOC).
Individuals or corporations may be faced with unexpected expenses or perhaps want to consolidate high-interest debts. When the need arises, are you there for them? Or maybe they contact you at all?
May not. When your clients want to discuss investment or planning strategies, you are their most important advisor. However, when they need to borrow money, they may look for other options.
Traditionally, customers go to their bank and obtain a personal or corporate line of credit, usually unsecured. They can be very expensive in terms of fees and interest rates.
Sometimes clients may choose to liquidate an asset to finance an expense. This can unnecessarily disrupt your investment plan and can be even more costly in cases where surrender charges or capital gains tax apply.
Regardless of your customers’ current requirements, it is almost certain that they will need to borrow money in the future. Establishing an ALOC now will help provide them with the flexibility they will need in the future.
Manulife Bank’s ALOC (up to $100,000) and ALOC Plus (over $100,000) are backed by Manulife products, such as unregistered investments or TFSA assets held in segregated fund contracts, mutual fund accounts and guaranteed investment certificates, or cash surrender value in permanent life insurance policies.
Manulife Private Wealth lines of credit are secured by Manulife Private Wealth investments and provide customers with the ability to access funds similar to ALOC Plus.
Win-win
How does applying this strategy benefit both parties? For customers, the line of credit costs them nothing until they use it. When they do this, the interest rate will likely be better than an unsecured bank loan. Creating this tool now means your customers won’t have to look for money when they need to, which they inevitably will.
This is also beneficial for you. You have another chance to demonstrate your value by anticipating customer demands. You can help them implement their investment plan by avoiding premature liquidation. You can also reduce the risk that your clients will turn to another financial professional in times of need.
Customers can use all line of credit options at their discretion. They have convenient access to funds via check, ATM withdrawal, online banking or Interac® e-transfer.*
ALOC Plus and Manulife Private Wealth lines of credit are fully underwritten, which means customers must provide all financial information to provide proof of debt service as well as a satisfactory credit bureau. For Manulife Private Wealth lines of credit, more weight is placed on the customer’s quantifiable net worth relative to the loan amount.
Both lines of credit only require monthly interest payments. Principal payments depend on the client.
Show your customers how it can work
Increasing the feasibility and practicality of this lending strategy should be part of a client’s routine reviews. Customers can rest assured that this option exists.
Consider the range of possibilities when showing customers how a line of credit can help them.
It can provide an emergency account to cover expenses, a way to consolidate debt, or a means to borrow money to invest. Clients can use the leverage strategy whenever they want (as long as they like the idea) on any investments.
By helping clients secure liquidity, you can complete a key element of their financial picture.
Learn how to set up Manulife Bank ALOC Plus and Manulife Private Wealth lines of credit today.
® Registered trademark of Interac Corp. Used under license.
*For an extra charge.
