Build your business with Manulife Bank

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Build your business with Manulife Bank

• Investment Loans
• Insert presenters name here

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When you succeed, we succeed

• Who is Manulife Bank
• Dedicated to providing banking solutions through
  financial advisors
• Wholly-owned subsidiary of Manulife Financial
• Canadas 8th largest domestic bank over 14
  billion in assets
• Your clients remain your clients

As at July 2009.
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Our mission

• Banking products are an essential part of a
  successful financial plan.
• We deliver products that enable advisors to build
  a complete financial services business.
• Strengthen and expand your client relationships
• Facilitate additional sales
• Reduce competition for your clients financial
  business

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Why sell Manulife Bank products?

• Give clients access to premium banking products
  and demonstrate additional financial value
• Build your business in three important ways
• Prospecting tool and conversation starter
• Increase referrals from existing clients
• Earn competitive compensation on all deposit
  products and mortgage referrals

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It takes money to make money. Therefore

• the more money your clients have, the more money
  they could make.

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Investment Loan basics

• Your clients benefit from the earning power of a
  much larger pool of assets
• Your clients borrow money
• They invest the money
• They pay interest
• They sell the investment
• Pay applicable taxes and fees, and repay the loan
• They keep whats left over

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A classic investing strategy

• Borrowing to invest is not new
• Home owners borrow to invest in their own real
  estate
• RRSP loans for borrowing to invest in retirement
• Student loans are an investment
• Alternative to saving and waiting
• Investment Loans provide the purchasing power
  clients need, today

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Leverage is simply borrowing to invest

• A proven wealth-creation strategy
• Appropriate for investors with a higher risk
  tolerance
• Who want the opportunity to potentially earn a
  higher long-term return

The risk-return continuum
Leveraged Investing, Options
Stocks, Equity Funds
Potential Return
Bonds, Fixed Income Funds
Bank accounts, GICs, T-bills
Risk
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Why do Investment Loans work?

• Tax deductibility
• If a loan funds an investment that is expected to
  produce income, the loan interest is generally
  deductible
• It reduces the cost of borrowing and reduces the
  rate of return needed to break even

Interest is generally tax deductible. Clients
should consult their tax advisor
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Why do Investment Loans work?

• Leverage and tax deductibility
• After-tax break even Example
• 100 interest deductibility
• 40 marginal tax rate
• 50,000 loan at 7.0 interest rate
• After-tax return of 4.54 over 10 years to break
  even
• Assumes taxable annual return of 33 tax rate on
  income is 35. Break-even return will differ
  slightly in Quebec.

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Why do Investment Loans work?

• Compound returns vs. DCA
• With Dollar Cost Averaging
• Only the first contribution works for the full
  investment period
• The majority of contributions work for a shorter
  period of time (less time to grow)
• With an investment loan
• 100 of the investment amount is working for the
  full investment period

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Invest for the long-termLeverage vs. non-leverage
Performance of leverage vs. non-leverage over
historical 10-year periods demonstrates that
leverage works.
1956- 2007
Assumes 10-year return of TSX Total Return Index,
the average interest rate of Prime 1.25 over
each 10-year periods, 45 marginal tax rate.
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Why recommend leverage?

• Benefits for your client
• Achieve financial goals sooner
• Compounding and tax deductibility may accelerate
  investment growth
• Create a disciplined savings plan
• Reduce the chance of an investment plan being
  derailed by other consumer needs
• Build non-registered assets
• Unlike RRSPs, non-registered plans do not require
  minimum withdrawals in retirement

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Why recommend leverage?

• Benefits for you
• Remove the single biggest sales obstacle access
  to funds
• Increase assets under management now and in the
  future
• Increase referral business
• thanks to an innovative and powerful investment
  strategy

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Who should borrow to invest?

• An Investment Loan may be right for your client
  if
• Theyve maximized their RRSP contributions
• Theyre looking to build non-registered assets
• They have a long-term investment horizon
• At least 10 years

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Who should borrow to invest?

• The right clients continued
• They have adequate disposable income to
  comfortably pay loan interest and applicable
  taxes
• They have a reasonably high tolerance for
  investment risk
• They understand how the borrow to invest strategy
  works, including the potential for increased
  gains or losses

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Investment Loans for different stages in life

• Leverage for newer investors
• Secure rising income, long-term investment
  horizon, willing to accept higher investment
  risks.
• May use an investment loan to
• Establish a disciplined savings routine.
• Take advantage of a long-term horizon
• Prepare now for an early retirement.
• Build non-registered assets for future purchases

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Investment Loans for different stages in life

• Leverage for wealth builders
• Higher earnings, lower debt, retirement still
  distant but planning is now a key financial goal.
• May use an investment loan to
• Create a larger initial investment to maximize
  the years left until retirement
• Develop a savings strategy for life events
• Reduce taxable income by taking advantage of
  potential loan interest deductibility

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Investment Loans for different stages in life
I n v e s t m e n t L o a n s

• Leverage for retirement planners
• Peak earning years, low debt, quickly approaching
  retirement.
• May use an investment loan to
• Maximize savings for retirement with a large
  non-registered investment
• Utilize high-income/low-debt situation to build a
  tax-advantaged estate
• Establish a savings strategy that does not force
  withdrawals at any age

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Leveraging important considerations

• Leveraging increases risk
• Leverage can accelerate gains but may also
  accelerate losses.
• Regardless of the investment performance, the
  borrower is obligated to repay the loan.
• Diversification is key
• Leverage is one part to maintaining a diversified
  strategy. This will reduce the effects of a
  negative impact from any one part of a strategy.
• Leveraging is a long-term strategy
• Markets can be volatile in the short term.
• Investment Loans are only appropriate for
  investors with a long-term focus.

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Two unique leverage programs

• Two distinct programs to meet the leverage needs
  of your clients
• Manulife Bank Quick Loans
• Manulife Bank Multiplier Loans

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Manulife Bank Quick Loans

• 10,000 to 50,000
• No margin calls due to market fluctuations
• Interest-only payments
• Floating interest rate of prime 1.00
• 100 financing
• One-step application process
• Limited underwriting

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Manulife Bank Multiplier Loans

• 50,000 to 150,000
• No margin calls due to market fluctuations
• Interest-only or principal and interest payments
• Floating interest rate of Prime 1.00
• 31 financing

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Important considerations

• Leverage is a long-term strategy
• Access to growth is limited while the loan is
  outstanding
• Distributions from investments must remain in the
  account while the loan is outstanding
• Applications for larger loans require more
  information on the clients financial situation
• Ensure the strategy is right for the client

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Important note

• Borrowing to invest may be appropriate only for
  investors with higher risk tolerance. Your
  clients should be fully aware of the risks and
  benefits associated with investment loans since
  losses as well as gains may be magnified.
  Preferred candidates are those willing to invest
  for the long term and not averse to increased
  risk. The value of your client's investment will
  vary and is not guaranteed however they must meet
  their loan and income tax obligations and repay
  their loan in full. Please ensure clients read
  the terms of their loan agreement and the
  investment details for important information.
  Manulife Bank of Canada solely acts in the
  capacity of lender and loan administrator and
  does not provide investment advice of any nature
  to individuals or advisors. The dealer and
  advisor are responsible for determining the
  appropriateness of investments for their clients
  and informing them of the risks associated with
  borrowing to invest.
• Tax deductibility of loan interest depends on a
  number of factors, with the Income Tax Act
  providing the framework for determining tax
  deductibility Tax laws are subject to change and
  therefore, tax treatment of illustrated figures
  cannot be guaranteed. Results for Quebec
  residents may differ due to different
  deductibility rules. Clients should consult their
  own tax and legal advisors with respect to their
  particular circumstance.

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Thank you