The public launch of Dundee Bank of Canada, the Schedule I bank subsidiary of Toronto-based Dundee Wealth Management Inc., signals the entry of the latest player in the competitive, and now a little more crowded, world of providing advisors with top-flight bank products with which to capture client funds.

“Our aspiration is to become the banking partner of choice to the 25,000 or so advisors in Canada,” says Greg Reed, president and CEO of Dundee Bank in Toronto.

With a concerted marketing push, Dundee Bank is trumpeting itself and its key product, a high- rate investment savings account, available to clients only through their advisors.

The product comes in two versions: an A-series, which currently pays daily interest of 3.85% to the client and a 0.25% trailer fee to the commissioned-based advisor, and a F-series for fee-based advisors, which pays 4.1% to the client. The account has no minimum and no fees.

Dundee Bank has been quietly preparing for a public launch this year since acquiring its charter two years ago. It has been hiring staff and developing capabilities and product lines, including guaranteed investment certificates, mortgages and other loan products.

At the time of the launch, the now-renamed Dundee Bank, which was previously named Dundee Wealth Bank, had $140 million in deposits and $90 million in mortgages, acquired almost exclusively through its advisory force.

“Once we put these products on FundServ and get the advertising behind them, we expect the acceleration in asset growth to be very rapid,” says Reed, who took the reins of Dundee Bank in February. Reed was formerly president and CEO of Toronto-based Altamira Investment Services Inc.and a senior executive of National Bank of Canada, which owns Altamira.

Reed says that what will set Dundee Bank apart is its commitment to not interfere with the client/advisor relationship. “We will not have retail branches; we will not have an online transactional site; we will not be cross-selling,” he says, adding that the firm has worked hard to make its products accessible and easy to use for both advisors and clients.

Dundee Bank says that it plans to introduce a complete lineup of banking products geared toward the client/advisor relationship in the coming months.

Reed says that, as baby boomers approach their retirement years, there will be a shift toward more clients seeking complete financial planning services from their advisors, and that banking products will be a key part of that service offering.

He also says that independent advisors are seeking ways to protect themselves against the Big Six banks, which can use their banking products as a way of eventually persuading consumers to move their investment dollars to the bank-owned brokerages.

“Financial advisors increasingly look at the Big Banks as competition,” Reed says. “Banking products are a way of locking in [client/advisor] relationships.”

A high-interest savings account available only through an advisor is also a way to capturing more of the funds that a client might now be keeping in an account with direct- banking companies such as ING Canada or ICICI Bank Canada.

But Dundee Bank is not the first bank that has been created by a non-bank financial services firm, nor the first to offer banking products that have been designed for advisors only.

Manulife Bank, a Waterloo, Ont.-based subsidiary of Manufacturers Life Insurance Co. of Toronto, was created in 1993 and has $7.3 billion in assets. All of its products are sold through financial advisors.

Although it has a full suite of deposit vehicles, including high-interest accounts, Manulife Bank’s best-known and most successful offering is Manulife One, a liability-side product that allows consumers to roll their chequing or savings accounts, mortgages, lines of credit and other debt vehicles into one product. Manulife employs a nationwide team of banking consultants who work with advisors and their clients to set up Manulife accounts.

With its huge head start and its many resources, Manulife Bank does not seem fazed by the entry of Dundee Bank. “We have always been committed to our strategy, and it hasn’t changed,” says Jane Strong, assistant vice president of product and marketing services at Manulife Bank. “We don’t feel that the competition is a threat. This is the only way we do business, and people have seen how our model works.”

@page_break@In September, Manulife Bank announced its plans to open a Halifax office as part of its overall growth strategy. Strong says the intention is to build a staff of 150 within five years. The Halifax office will initially function as a call-centre location, with advisor support and administrative staff. The Waterloo head office will not see a reduction in functions or staff.

Altamira, an investment pro-ducts subsidiary of National Bank, has enjoyed great success with its high-interest savings account, the High-Interest CashPerformer, since it and a sister account, U.S. High-Interest CashPerformer, were launched 18 months ago.

According to Charles Guay, who succeeded Dundee Bank’s Reed as president and CEO of Altamira, the CashPerformer product now has $4 billion in assets.

Although the cash account product can be bought directly by consumers, the majority of this product’s accounts are sold to consumers through advisors. It pays a 0.25% trailer fee.

“I think you have seen a product that is popular, easy to understand, easy to use,” Guay says. “The popularity of this product will continue.”

Guay is not surprised that other financial services industry players are trying to develop banking products for financial advisors, especially high-interest savings accounts.

“We could see even more of these products in the future,” he says.

Guay says that the evolution of advisor-based banking products is a good thing, as it is bringing high-interest savings to a wider range of consumers.

“It’s an investor-oriented change,” he says. IE