AGF Trust CO. had been in the mortgage-lending business for 18 years when Mario Causarano arrived at the company in 2001 to become its president and chief operating officer. Tucked under his arm was a five-year plan to build the company, including a major new line of business — investment and RRSP loan products — designed to build financial advisors’ businesses.

Six years later, Causarano and his team have built a diversified company that serves 15,000 advisors, insurance agents and mortgage brokers, and has $2.5 billion in total assets under administration. AGF Trust now offers RRSP loans, investment loans, home-equity loans, GICs, and first and second mortgages.

It is now more integrated with parent AGF Management Ltd. Before AGF Trust developed its lending business, it didn’t have any offerings for the AGF advisor channel, Causarano says.

Meanwhile, he is quick to note, AGF Trust’s lending program is available to advisors looking to offer investment loans to their clients.

AGF Trust wants to be the virtual bank for advisors and their clients, he says. “We want to put a bank terminal on every advisor’s desk.”

If growth at his firm is any indication, the use of loans to boost RRSP savings is increasing. At AGF Trust, loan volume has increased an average of 35% a year since 2003, says Causarano.

His move to AGF Trust began in 2001, when he ran into AGF president and CEO Blake Goldring, who was looking for someone to run AGF Trust. At that time, Causarano was managing director of estate and trust services at the former Canada Trust Co. It was to be a big switch for him — dealing with advisors instead of directly with clients. But he was up for the challenge.

Causarano, now 49 years old, has a solid background for the job. He earned an honours business administration degree in 1980 at the Richard Ivey School of Business at the University of Western Ontario, and went on to earn his chartered accountant designation in 1983. He also passed the Canadian securities course and has the trust and estate practitioner designation from the Society of Trust and Estate Practitioners (Canada).

He worked for accounting firm Coopers and Lybrand (now PricewaterhouseCoopers LLP) from 1988 to 1989. In 1989, he joined Canada Trust Co. (now TD Canada Trust), holding a series of positions, including: tax consultant; manager, private banking and investment management; manager, business development investment and wealth management; assistant vice president, private advisory and investment services; and managing director, estate and trust services.

At AGF Trust, Causarano set out a five-year plan. First on the list, he says, was “parking” the mortgage business. AGF Trust continues to maintain existing relationships and do subprime lending, but has turned its focus toward building infrastructure for investment lending.

AGF Trust quickly built relationships with MGAs and independent advisors. It also developed “marketing relationships” with two insurance companies: Transamerica Life Canada and Equitable Life of Canada.

AGF Trust is now more diversified; it’s in both the mortgage and investment-lending businesses. Its connection to AGF Management provides a third leg, creating a strong tripod of support. AGF Trust’s sales force connects with AGF Management wholesalers.

Causarano considers his main competitors to be B2B Trust, a subsidiary of Laurentian Bank of Canada, and M.R.S. Trust Co. , a subsidiary of Mackenzie Financial Corp., as well as major banks such as TD Canada Trust and Bank of Montreal.

However, he notes, one of AGF Trust’s key selling points with advisors is that, compared with the banks: “They won’t lose clients to us. We work through the advisors.”

One of the concerns many advisors have about clients going to the big banks for RRSP top-up loans, says Causarano, is that the clients will end up taking their business to the bank. The “machine” inside the bank kicks in once it has a connection to the client, he says. “But we’ve never done that,” he adds. “The advisor owns the relationship.”

Six years have passed since AGF Trust began offering RRSP loans that can help advisors build their businesses. Although other companies can replicate the loan products AGF Trust offers, Causarano says, his company distinguishes itself with its service and delivery: “We add value to the advisor’s life. We’ve put a lot of effort into constructing the system.”

@page_break@AGF Trust provides 24/7 online access and cross-country phone service. “Advisors are meeting clients mainly in the evenings during RRSP season,” Causarano notes. “They need quick answers and want to know what is happening.”

To meet this need, AGF Trust will offer immediate responses to loan applications. If a client doesn’t qualify for the desired amount, an immediate counteroffer will be made. “We will provide options for the client,” Causarano says.

A client who is borrowing to invest inside an RRSP can benefit from rates that start at 1% below prime, with guaranteed approval on amounts up to $2,500, payment deferrals of up to 180 days and no ceiling on the amount borrowed so all available RRSP room can be used.

One of AGF Trust’s key offerings is the AGF Trust Plan, a four-point strategy that uses leveraged lending and, at the same time, reaps tax savings. Here’s how it works:

> instead of committing to a pre-authorized contribution plan, a client could use that cash flow to offset the cost of a $50,000 AGF Trust “no margin investment loan”;

> the money from that loan would become a $50,000 non-registered investment;

> from the resulting monthly cash flow of approximately $500 a month, $291.67 can be used to pay interest-only payments on the loan (with payments on the principal deferred for up to 20 years), and the remaining $208.33 can be used for either a monthly RRSP contribution or a “systematic investment plan”;

> at the end of the year, the client will have made a $2,500 RRSP contribution and incurred $3,500 in tax-deductible interest, for a total tax benefit of $6,000.

According to AGF Trust’s “loan strategy” materials, the loan’s interest rate is 7%, while the rate of return on the investment is 8%.

If the client is taxed at a top marginal rate of 40%, the tax refund will be $2,400, and the refund can be used as an additional RRSP contribution, loan repayment or put toward other savings or debts.

One of the services AGF Trust offers advisors is segmentation of their books. Older clients will have accumulated a lot of wealth within their RRSPs, whereas a younger client will just be starting to save.

“We’ll work with advisors to see what products work for them and their clients,” says Causarano.

One of the keys to building a healthy financial picture for clients, says Causarano, is to help them manage liabilities as well as assets. Credit card debt, for example, is bad debt. That’s where AGF Trust can help advisors serve their clients. A loan geared toward paying off non-productive debt and building wealth will act as “forced savings,” he says.

Day-to-day operations at AGF Trust reflect Causarano’s belief in disciplined, interactive goal-setting. The company’s sales force sets quarterly business plans, which are followed up on in the next quarter.

“The meetings are an opportunity for managers to see what worked and what didn’t,” he explains. “They are also a form of self-policing. They can set the framework for monthly plans.”

As well, the meetings help AGF Trust build relationships with AGF Management wholesalers. “They feed our understanding of them,” Causarano says.

When Causarano is not building AGF Trust, he enjoys spending time with his wife, Joanie, and their two daughters, Danielle, 18, and Natalie, 20. He exercises regularly and has a black belt in karate: “I like the discipline and focus required in karate. It applies to many aspects of life and business. We take a very disciplined approach to driving sales and product management.”

Causarano was born in Rome. He speaks a little French and Italian, and is working on his French because of AGF Trust’s large French client base: “It is important that I show my respect to our clients by conversing in their language, if possible.” IE