Advisors with Sun Life Financial (Canada) Inc. will now have access to a wider array of banking products after the Waterloo, Ont.-based insurer struck a third-party provider agreement with Montreal-based National Bank of Canada.
Under the deal, National Bank will provide Sun Life’s 3,000-advi-sor career sales force with an RRSP loan product, available now, and investment loans by the spring of 2010. National Bank will also provide Sun Life advisors with both its All-in-One mortgage account and with conventional mortgages, through a referral arrangement with Sun Life’s advisors, in the spring. The products will carry the National Bank brand.
“[This] is about giving our advisors another set of tools and improving the value proposition for our clients,” says Kevin Strain, senior vice president of individual insurance and investments with Sun Life.
The deal appears to fit in with an ongoing industry trend in which advisors are being given access to a broader set of products and services with which to serve their clients, Strain says. “[Banking products] give our advisors another opportunity to wrap their arms around their clients,” he says. “It allows them to talk to their clients about their full financial plans, so clients aren’t going to other institutions [to get financial products.]”
In making the deal, Sun Life is keeping up with its insurance-industry competitors, in terms of providing its advisors with banking products. Winnipeg-based Great-West Assurance Co. offers its clients banking products, branded as Solutions Banking, through its own arrangement with National Bank. Toronto-based Manulife Financial Corp. also provides its clients with banking products, including the well-known Manulife One mortgage, through its wholly owned subsidiary, Manulife Bank of Canada.
“Adding more banking products has been on Sun Life’s slate [of things to do] for quite some time,” says Shane Jones, managing director and head of Canadian equities with Scotia Asset Management LP. “Sun Life must have felt it was too onerous [a process] to launch its own bank, so it decided to partner with a third-party provider.”
Although Sun Life advisors have been able to offer investment and RRSP loans as well as accumulation annuities and other banking products on the investment side through Sun Life’s trust company subsidiary, the mortgage products are new to Sun Life.
The All-in-One product, which gives clients a single flexible account in which to manage their mortgage as well as other credit and debit accounts, gives Sun Life a product to match Manulife One and similar products offered by other financial services firms. “The mortgage products address a client need,” Strain says. “We didn’t have anything in our suite.”
The access to mortgage products also will give Sun Life advisors the opportunity to talk to their clients about using individual life insurance products to insure a mortgage, Strain says, rather than traditional mortgage insurance.
National Bank’s suite of third-party banking products, plus its “non-solicitation” commitment — in which the bank promises not to poach business from its third-party customers — makes it an ideal partner for Sun Life, Strain says. For example, National Bank routes its third-party mortgages through a separate advisor distribution banking centre, and keeps that information separate from National Bank’s regular banking operations.
“These guys understand advi-sors and how to work with them,” Strain says.
The deal between Sun Life and National Bank doesn’t include any new arrangement for Sun Life to provide insurance products to National Bank’s insurance arm. Sun Life is already a third-party insurance provider to National Bank, through which Sun Life products are sold by licensed advisors in National Bank’s brokerage division, National Bank Financial Ltd.
For National Bank, the latest deal with Sun Life is part of the bank’s overall corporate strategy of building partnerships as a third-party provider of financial products and services. Although National Bank is a major player in its home province of Quebec, it is limited in how much it can grow as a branch-based bank in the rest of Canada. In order to expand, National Bank has pursued a strategy of forming partnerships with other financial services firms — particularly in deals that would allow the bank to grow outside Quebec.
“I would say [the Sun Life] deal is exactly the kind of deal we want to do,” says Martin Lavigne, senior vice president of third-party business solutions with National Bank.
@page_break@Last year, National Bank reorganized its third-party solutions unit, pursuing what the bank calls a more integrated approach to providing firms with third-party services. For example, the bank is also a leading provider of third-party, back-office services through its National Bank Correspondent Network subsidiary.
“There are many things we can do and accomplish with our partners,” Lavigne says.
For now, the latest Sun Life/National Bank deal is limited to the specific products outlined in the agreement, both sides say, but the deal could be expanded in the future to include other products or services.
Lavigne says National Bank is actively pursuing other third-party provider deals with independent advisors and is focusing particularly on referral agreements involving the All-in-One product. IE
Sun Life advisors gain access to more products
Deal with National Bank will give Sun Life advisors greater access to debt products, including mortgages, for clients
- By: Rudy Mezzetta
- December 7, 2009 December 7, 2009
- 13:03