Manulife bank of Canada has launched a trust company subsidiary with the intention of offering independent financial advisors a wider array of banking products and services for clients across the country. And although Manulife Trust Co. is offering just a few products at its launch, it could provide a variety of trust services, targeted at wealthier clients, at some point down the line.

“Adding a trust company was something we felt was important to our continuing growth strategy,” says Doug Conick, president and CEO of both Manulife Bank and Manulife Trust, both based in Waterloo, Ont. “And as we look toward the high net-worth or affluent client that financial advisors deal with, there are some things that we can offer through the trust company that we couldn’t necessarily offer through the bank.”

Unlike banks, trust companies can perform a variety of trustee services, such as estate executor services. Companies that offer these types of services are putting themselves in a position to capitalize on a key demographic trend, as one observer says.

“I think trustee services will experience a bit of a renaissance in Canada,” says Keith Sjogren, director of research and advisory services with Toronto-based research firm Investor Economics Inc. “There are a lot of aging boomers and wealthy boomers. And as they move from the accumulation stage to the de-accumulation stage to the wealth-transfer stage, they are going to need trust services.”

For now, Manulife Trust will begin by offering an investment savings account, guaranteed investment certificates and a fixed-rate mortgage product.

Manulife Bank, itself a subsidiary of Toronto-based insurer Manulife Financial Corp., will continue to offer a variety of banking products distributed through advisors, including the well-known Manulife One product.

Adding a trust company will also give Manulife Bank another means of generating deposit funding — and it provides clients with another layer of Canada Deposit Insurance Corp. insurance, Conick says. For example, a client could have funds in an account with the bank and other funds in an account with the trust company; both sets of funds would be eligible for CDIC insurance.

Including a mortgage product in the initial product lineup is a way to manage the trust company’s balance sheet, Conick points out: “As we’re raising deposit liabilities, at the same time, we want to raise assets to match that off.”

Although Conick would not disclose any plans regarding what new trust company products or services would be added — or when they would be offered — he did say he expected that the trust company would have new products and services to add every year. And the trust company subsidiary would allow Manulife Bank to develop a stronger platform from which to reach, retain and serve affluent clients.

“We do see opportunities to expand a little bit of what we do,” says Conick, who took over as head of Manulife Bank in April. “We know that there is some demand for customized loan facilities, credits and cash-management services that we have the means to deliver — particularly through the trust [company]. But it hasn’t been a major focus, and so we want to start evolving down that road over the next few years.”

Manulife Bank, which had assets under administration of $16.7 billion as of July 31, offers a wide variety of products, including savings accounts, credit cards, mortgages and loans — all available exclusively through advisors. (Manulife Bank does not make products available directly to the public.) Its feature product is Manulife One, an “all-in-one” credit and deposit account that represents 85% of the bank’s AUA.

The potential to add new products, and reach different clients, through the trust company will give Manulife Bank the opportunity to diversify assets, Conick acknowledges: “We’ve been very successful with Manulife One, and we’ve seen opportunities in which we can apply our approach and our service model and be just as successful. We do want to extend into complementary areas and grow our business a little more broadly.”

Manulife Bank sells its products through a team of 200 banking consultants, who provide support to Manulife’s network of 12,000 independent financial advisors. Manulife Bank has relationships with a number of dealers, including Mississauga, Ont.-based Edward Jones, and with managing general agencies in the insurance sector across the country.

The banking consultants provide most of the support around the Manulife One product, although the clients must be referred to the banking consultants by advisors, who are prohibited by regulation to sell mortgages directly. The products offered through the new trust company will also be sold through Manulife’s banking consultants.

The trust company, which received its order to commence and carry on business from the Office of the Superintendent of Financial Institutions in June, will have offices in Waterloo and Halifax. The trust company’s savings account and GICs will be offered across Canada, while the mortgage product will be offered in all provinces but not the three territories. IE