Dundee introduces advisor-friendly bank

Many advisors seem to have a love-hate relationship with banks. While they have been willing to invest their clients’ capital in bank-sponsored funds and deposit-notes, they also recognize the banks as competitors for clients.

But there’s a new bank in town — one with the stated mission of becoming the “partner-of-choice” for financial advisors. Dundee Bank of Canada, as the name suggests, is a new division of Dundee Financial Group. It is also the newest Schedule I Chartered Bank in Canada.

“We know that from the advisor’s standpoint, most banks in the country compete with them in one way or another,” says Greg Reed, president and CEO of Dundee Bank. “We’ve built a bank for the exclusive use of the advisor and everything we do is tailored to make that advisor more effective with their clients.”

As such, he says Dundee will not be available to clients as an online bank, nor will branches of Dundee start popping up on street corners across the country.

“The other commitment we make to advisors is that we will not compete with them. We will respect the relationship that they have with their clients,” he says. “We will not cross-sell. We will not end-run. We will never contact their clients directly.”

One of the core offerings of the new bank is its Investment Savings Account, which is available in Series A and Series F versions. The A series account pays a trailer of 25 basis points, while the F series is aimed at fee-based advisors and tacks the 25 bps onto the interest rate paid to the client. The A series and F series accounts are currently paying 3.85% and 4.10%, respectively.

These savings accounts are listed on FundSERV, making the savings account as easy for the advisor to access as a money market fund. The savings account differs from the money market fund in that it is insured by Canada Deposit Insurance Corporation for up to $100,000.

“This really does eliminate paperwork and transactional hassles for the advisors,” says Reed. “We know their time is valuable, so every product we bring to market will be easy-to-use so they can deliver value to their clients and not be tied up in administration.”

Aside from the Investment Savings Account, Dundee Bank currently offers GICs of varying durations and mortgages, available through mortgage brokers. The GIC pays a trailer of 20 bps, while mortgages offer an origination fee, which will vary from case to case.

Reed says in the future, Dundee Bank will offer investment and RSP loans, personal lines of credit, credit cards, debit cards and home equity lines of credit.

“For an advisor these really link all aspects of a client’s financial life together and puts them in a central position in helping clients manage their financial lives,” Reed says. “The baby-boom cohort is increasingly looking to an objective, professional individual to help them make sense of their financial affairs and simplify life as well.”

With these additional services available, Reed suggests independent advisors can now better compete with the bank-based advisors. In fact, he believes non-bank advisors have “much higher standards” in terms of client service and often offer better advice.

“The banks have invested very heavily in moving into the wealth management arena. One of the original impetuses for this bank was to help those already in the wealth management business compete on a level playing field with the banks,” says Reed. “We want those individuals to be able to cater to the full set of financial needs their client have, and frankly, over time, look more and more like private bankers.”

Dundee Bank of Canada has actually been up and running since the summer of 2005, under the name of Dundee Wealth Bank. Products were first available in January 2006, with the company running what Reed calls “an internal trial run” to get the products listed on FundSERV and working out the kinks.

The bank changed its name last week and made its products available to advisors coast to coast, operating as Banque Dundee du Canada in Quebec.

“The orientation of the bank is to, over time, give investment advisors a larger toolkit so they are not only serving the investment needs, but so they are beginning to serve some of the savings and lending needs as well,” he says. “That way they are developing fuller and longer lasting relationships with their clients and delivering more value.”

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com

(09/25/06)

Steven Lamb