When I sit back and think about the effects Covid-19 has had on our economy, our society and everything in between, I see a clear path forward.
Not forward in a granular sense, as it pertains to the correct way to reopen the economy on a macro level or what programs will best serve customers and businesses through this time, but more in the common thread that I believe will benefit both the customer and financial institutions through Covid-19 and in the years to come—creating and sustaining genuine relationships.
The value of a genuine relationship is the ability to provide relevant advice, during favorable and unfavorable market cycles. The client's goals will ultimately change over time and that advice needs to be relevant to their goals and desired outcome.
Below are a few examples of how advice and relationships can drive favorable outcomes for clients.
Adjusting To Current Trends To Possibly Save Money
Before and when Covid-19 hit in March, jumbo interest rates (for a loan greater than $510,400) were lower than conventional rates (for a loan of up to $510,4000) as banks were looking to attract affluent borrowers. Today, we are seeing the opposite, where conventional rates are lower because banks can sell these loans to Fannie and Freddie MAC and transfer the credit risk.
A good relationship with an advisor can provide the necessary advice to help a client: 1) navigate subtle differences and 2) potentially obtain better rates which may save thousands of dollars during the life of a loan.
A "Liquidity Check-Up" Could Be The Key To Know Which Door To Unlock
At TD, and within the wealth space, we continue to lend with a historically human approach to banking. We know our clients and try to actively look at their situation to see what's right for them. A trusted advisor can take an objective point of view to deliver advice.
Many wealth clients are small businesses owners who likely are wondering how the pandemic might affect their business. Unfortunately, a lot of those same business owners do not have time to think about cash and reserves until they need it because they are occupied with running the day-to-day of their businesses. Today, many small business owners are considering reshaping their plans to include safety precautions, like lines of credit on home equity and lines of credit on securities. They may never touch it, but after the last few months, they will have a greater peace-of-mind knowing it is there.
Technology Leads To New Opportunities
Securities-based lending is one of the fastest growing segments in banking today, and unexplainably remains one of the industry's "best kept secrets." Historically, securities-based lending was for the affluent, people who had major assets in financial markets and had access to advisors. For those not familiar, securities-based lending is the ability to pledge a taxable investment account as collateral for a loan or line of credit.
With the advent of technology, lenders have real-time monitoring which enables less friction in the underwriting process, providing a bank the ability to process applications in as little as 24 hours, and then deliver approved funding in a matter of days.