Our very first comparative study on leverage loans to advisors has revealed an unexpected treasure trove of products and services that go beyond simple conventional investment loans.
In addition to regular RRSP loans, the Bank of Montreal also offers Retro-Activator RRSP Loans, which it describes as instalment loans with retroactive payments at a fixed or variable interest rate.
This is suited for clients who want to make bigger investments in their RRSPs to use up accumulated room and therefore need an amortization period over several years to benefit from lower and more affordable monthly repayments. This type of loan also suits borrowers looking for a fixed interest rate. (See Table 1.)
Web services
Financial institutions that cater to advisors have also increased their number of online banking services. (See Table 2.)
For example, many institutions allow both advisors and their clients to submit loan applications directly over the Internet.
B2B Trust pushes the envelope: Their clients can transfer money between accounts and sometimes even from an account at another institution, while advisors can switch, redeem or purchase funds on behalf of their clients using an investment loan. (AT)
Retro-Activator RRSP Loan: BMO
| Limit | Available in amounts of more than $7,500. |
| Rates offered: Prime Guaranteed fix rates? Term? | Prime rateFixed rate 1 year: 6% 2-5 years 7.75% (March 31, 2007) · Variable rates: up to 180 months · Fixed rates : up to 60 months |
| Payment options: Capital + interest Capital only | Capital+ interest Partial or full repayment at anytime, without penalty |
| Fees: Modifications Repayment at anytime | No fees Partial or full repayment at anytime, without penalty |
| Eligible investments |
Online services offered to advisors and their clients
| B2B Trust | |
| For clients | Savings Accounts = transfers to/from another Advisor’s Choice accountChequing Accounts = transfers to/from another Advisor’s Choice account or account at another FI, bill payments |
| For advisors | RRSP Loans = application submissionInvestment Loans = switches, redemptions and purchases of funds |
| BMO | |
| For clients | Loan application available online (BMO.COM) |
| For advisors | None |
| Manulife | |
| For clients | Online account inquiry, account transactions, bill payments. |
| For advisors | Online inquiry - summary of all Manulife Bank products by client. Online RRSP Loan application. |
| MRS Trust | |
| For clients | Investor access to account |
| For advisors | Online application for RRSP LoansOnline Investment loan reports |
| National Bank of Canada | |
| For clients | Yes |
| For advisors | Yes (POS - WEB platform) |
Alain Thériault
