Lending Products. Leveraged Insurance

Transcription

1 Lending Products Leveraged Insurance

2 An introduction to BMO Harris Private Banking BMO Harris Private Banking was designed for families who value personal service from a dedicated Private Banker We provide banking and wealth services on an integrated basis to affluent families at all stages of life We have assembled a remarkably talented team of professionals with diverse expertise including Senior Bankers, LLB s, CA s, CFA s, CFP s, Business Evaluator, who can address our clients unique requirements Our business focuses exclusively on a unique client segment high net worth families A Private Banker is the primary point of contact for our clients and their family How we work together sets us apart. Our bankers bring cohesive solutions through our expert team of professionals We are pleased to work with a clients other advisors to find the right solutions We work with clients: Who value a relationship that provides expert advice and highly personalized service Who have, or are on a clear path to achieve, a minimum of $1 million in net worth (excluding principal residence) 1 1

3 How do I manage my wealth? Platinum Banking encircle A dedicated Private Banker will partner with our clients and their family to choose and manage their banking services and wealth planning solutions: Bank accounts, cash management services, bill and tax payments Platinum Investments alternative investment options Lines of credit, mortgages and other specialized financing (to diversify investments, cottage or investment property, education financing and more) Unified management of personal, practice and personal holding company accounts U.S. banking connections in various states through Harris Bank If our clients need help with the day-to-day management of their affairs, are concerned about the capacity of a relative to manage his or her financial matters, or are simply planning ahead for their own security, encircle can help. encircle is a comprehensive, all-in-one service that offers a range of solutions whatever someone s life or career stage. encircle will organize and arrange for almost any type of assistance our clients need to manage their busy personal and financial affairs: Bill and tax payments Investment administration Platinum Banking services Coordination of tax return preparation Trust and estate planning Lifestyle and concierge services 2 2

4 How do I manage my wealth? Wealth Planning Services Balancing personal, professional and family financial priorities can sometimes be overwhelming. Our clients need to plan wisely for the future to ensure they administer their wealth in a way that will make a real difference and ensure they have enough for their retirement and possible other longer term needs (family education, eldercare, leave a legacy). Part of this would include access to our will and estate professionals to review a will or to help our clients create an estate plan that is clear, tax sensitive and either funded or insured. In addition to these services we offer exclusive education events that teach our clients children and family members financial basics so that they become comfortable with more complex issues of financial management. Family Trust and estate planning Financial planning and retirement planning Tax Planning services Post-Transition planning Philanthropic Services Family Wealth Education We are pleased to work with our clients other advisors to find the right solutions for our clients and their family BMO Trust Company The more complex the business and personal finances, the greater the need for a professionally prepared and administered trust and estate plan. Generations of Canadians have relied on BMO Trust Company, to guide their families in the preservation and transfer of their assets. BMO Trust Company can help establish a trust for family members and can also work with clients to help design their estate plan to ensure that their wishes are carried out and that their family is taken care of in the way they had intended. BMO Trust Company provides professional executor services and administration of personal trusts, carried out by experienced specialists. When it comes to administering a trust or an estate, retaining the assistance of a trust company is a practical and costeffective option. 3 3

5 Leveraging Our Target Market Canadian entrepreneurs and professionals, corporations, partnerships, trusts Financing is to be limited to clients who can demonstrate they would meet standard bank lending criteria: Are affluent, with steady cash flow Are not adverse to debt (leverage) and can afford the interest payments 4

6 For clients looking for additional tax free income Leveraged Life Insurance How it works: Prior to a financing commitment being provided the client applies and must qualify for financing Client accumulates CSV in their life insurance policy which can be leveraged Loans are granted up to a maximum of 90% of the accumulated CSV Margin tested at least annually Loan has no preset amortization and no scheduled principal payments Interest can be charged at a fixed or floating rate Bank must have a priority charge against the assigned insurance policy Quality of the issuer Insurer must be a Canadian based firm and rated by A.M. Best at A or Standard & Poor s AA- or better. 5

7 For clients who have an insurance need but don t want to tie up their operating capital Refinance contribution to Policy Prior to a financing commitment being provided the client applies for and must qualify for financing Lend up to 100% of the deposit paid into an acceptable (to BMO) insurance policy Typically margin to 90% of the CSV If financing above the CSV margin is requested additional security may be required until the CSV margin covers the advances. Incremental security would be returned at that time Loan has no preset amortization and no scheduled principal payments, interest paid regularly and charged at a floating or fixed rate Bank must have a priority charge against the assigned insurance policy 6

8 For clients wishing to - implement a succession strategy or increase nontaxable income and wish to stabilize a portion of their retirement income while preserving estate value Leveraged Insured Annuities Prior to a financing commitment being provided the client applies and must qualify for financing Due to the complex nature of this strategy BMO does not promote its availability directly to their clients Qualifying clients who can clearly demonstrate a strong balance sheet and proven cash flow to service the debt The Bank will take a pledge of an annuity income stream and an assignment of the insurance policy (death benefit) Note: additional security may be required - to be determined on a case by case basis Bank loan is carried interest only with no set amortization and no set principal payments BMO must have a priority position on the company cash flow 7

9 Terms and Conditions - summarized The assignment of a universal life or whole life insurance policy (excluding the leveraged insured annuity option) The insurer the policy and investments* within the policy are to be acceptable to BMO An acknowledgement from the insurer that the bank has a priority claim to the policy * Investments are to be in Canadian based mutual funds and/or fixed rate deposit instruments issued by a Canadian bank, Canadian provincial or federal government or Canadian insurer, and have a combined equity component that does not exceed 30% of the total value of the investments within the policy. 8

10 BMO Harris Private Banking Contacts Grant Burville Senior Private Banker, Vancouver Harry Wierenga Regional Director of Banking