When a long-standing client approached Garry Stratychuk about investing in a new venture with his son, the seasoned advisor faced a familiar challenge. The client needed significant capital but wanted to avoid dismantling years of meticulous financial planning. The solution was not found in a traditional bank loan, but within the client's own life insurance policy.
A Strategic Solution for Liquidity Needs
Garry Stratychuk, CEO of ITI Financial in Niverville, Manitoba, utilized an Immediate Financing Arrangement (IFA). This specialized lending product allowed his client to use the cash value of an existing life insurance policy as collateral for a loan. "The father already had significant life insurance coverage in place, and that policy became the key," Mr. Stratychuk explains. This approach provided the necessary funds for the business investment without forcing the sale of assets or disrupting the client's long-term estate plan.
This case highlights a common dilemma for business owners and professionals: the clash between needing immediate liquidity and preserving long-term wealth strategies. Specialized loans against insurance policies present a powerful, yet often overlooked, opportunity. "Advisors don't always see life insurance as a deferred asset that actually has cash value today and can be used as collateral in lending," notes Mr. Stratychuk.
Manulife Bank Streamlines Its Lending Suite
Recognizing this gap, Manulife Bank undertook a major simplification of its specialized lending platform. Kerry Reinke, Head of Specialized Lending at Manulife Bank, states that the revamp consolidated more than 20 complex products into four clear lending families. The goal was to make these solutions easier for advisors to navigate and integrate into holistic financial plans.
"It allows advisors to enhance cash flow and long-term wealth strategies without forcing clients to disrupt their plans," says Mr. Reinke. The restructured lineup aims for faster approvals, smoother planning integration, and greater client flexibility. "Clients have cash-flow flexibility, allowing them to access funds when needed without disrupting the compounding growth or time horizon of their investments," he adds.
Breaking Down the Four Key Lending Solutions
1. Immediate Financing Arrangements (IFA): Designed for high-net-worth individuals, professionals, and business owners, an IFA allows borrowing against a life insurance policy's cash value while keeping the coverage intact. This supports estate and tax planning without asset sales.
2. Access Line of Credit Plus (ALOC+): Available in 'Quick' (short-term needs) and 'Max' (limits over $1-million) versions, this line of credit is secured against insurance or securities. It enables clients to tap funds while their assets continue growing.
3. Investment and RRSP Loans: These help emerging affluent clients accelerate wealth building. Investment loans fund non-registered accounts, while RRSP loans maximize contribution room, ideal for those with strong income but not yet substantial assets.
4. Advisor Financing: This solution helps insurance and investment advisors grow their own practices, whether through acquiring a book of business or upgrading technology.
Partnership and Client-Centric Service
Mr. Reinke emphasizes that Manulife Bank's strategy is to augment an advisor's practice, not compete with it. "When we lend to someone, that person isn't our client, they're the advisor's client – we have to match the high standard of service that advisor delivers," he says.
For advisors like Garry Stratychuk, whose clientele includes many independent-minded family business owners, this alignment is critical. "We can get financing in place quickly, and the client feels supported throughout," Mr. Stratychuk concludes. "It helps them move forward with confidence."
