Partnering like a pro: Advisors and mortgage brokers

Many financial advisors who refer their clients to mortgage brokers do so with little thought as to how a mortgage will suit a financial plan, says Andrew Feindel, senior wealth advisor and portfolio manager with Richie Feindel Wealth Management, which operates under Richardson Wealth.  

But Feindel said he and his business partner Kyle Richie, senior wealth advisor and senior investment advisor, prefer to get a full snapshot of their clients’ debt situation so they can come up with an efficient financial plan. He agreed to speak on behalf of himself and Richie.

The two maintain an open line of communication with Jeremy Enwright, a mortgage broker with SafeBridge Financial Group, to whom they have sent hundreds of client referrals over the past 12 years. Together, they discuss topics such as reverse mortgages, bridging loans and tax-efficient debt structuring to map out the best financial outcome for their clients.  

“Most advisors have no focus on that. They’re like, ‘What’s your debt? OK, it’s $500,000. Good. Great. I’ll update that,’” Feindel said.  “It’s completely independent, the mortgage broker would almost never talk to the financial advisor other than just getting an investment statement.”  

Enwright estimated that some 98% of referrals mortgage brokers receive from advisors are superficial in nature. “Most advisors are like, ‘Oh, I heard this guy’s good.’ But are they really sort of collaborating well with each other, uncovering and making sure that the … mortgage is fitting into the plan as efficiently as possible?” he said.  “That’s where we are bridging that gap.” 

Here’s why Feindel and Richie have worked with Enwright for so long, and some of the benefits of their partnership.  

THE PARTNERS    

• Accepting professional: Jeremy Enwright, mortgage broker with SafeBridge Financial Group in Toronto 

• Referring professionals:  Andrew Feindel, senior wealth advisor and portfolio manager, and Kyle Richie, senior wealth advisor and senior investment advisor with Richie Feindel Wealth Management, Richardson Wealth in Toronto 

• Number of households they’ve collaborated on:  A few hundred  

• How long they’ve worked together: About 12 years 

Why they chose each other    

Feindel and Richie met Enwright when they were all working at IG Wealth Management.  

“IG used to have a dedicated mortgage specialist to each region,” Enwright said. “I was dedicated to Toronto downtown, and Andrew and Kyle came to Toronto downtown. We worked together there for eight years.”

The three would carry on their partnership after they all left IG.  

“We became friends through this as well. And I think it’s really important to have a go-to person,” Feindel said, noting it would be difficult to engage with a different mortgage broker for each of the more than 200 families he works with. 

“Over time, we got to know our style [of working together].”  

Another perk for Feindel and Richie is that Enwright is a chartered financial analyst (CFA) charterholder.  

“Jeremy is a CFA, which means he understands our industry. He understands financial planning,” Feindel said, noting only a small percentage of mortgage brokers have the credential. 

For Enwright, there are a lot of benefits, too.  “The quality of clients, the fact that there’s a trust relationship already in place,” he said.  

“If the advisor trusts me, then usually the clients also trust me. I don’t have to convince anybody. And usually, the clients see the value in planning, so I don’t have to convince anybody there either.” 

Typically, Feindel and Richie refer clients to Enwright. Neither of them receives referral fees. 

Client examples 

There’s more to a mortgage broker’s job than finding the best mortgage rate possible for a client.  

“If I can make rate a non-issue, by just being a mortgage broker with a lot of options out there, then I can move on into what actually matters,” Enwright said.  

For example, Enwright once received a referral from Feindel and Richie that involved a client with an outstanding mortgage, a salary of $100,000, a corporation and three years left until retirement.  

Together, they weighed the pros and cons of obtaining a reverse mortgage for the client. 

The pro, Enwright said, was that the client could save on taxes by not taking money out of their corporation to pay off the mortgage on their house — a plus because their salary already put them in a high tax bracket.  

The con, he added, was that reverse mortgages have higher interest rates than regular mortgages. 

They also took note of the fact that the income of the 62-year-old client would decrease on retirement, putting them in a lower tax bracket. 

“The math that we kind of worked out together is that, OK, they might pay x amount of interest [on the reverse mortgage] over three years. However, the tax rate would have been 50% and when they retire, they’re gonna be in a lower tax bracket, let’s say 20%. So that 30% in tax savings is greater than the 5% or 6% they pay on interest,” Feindel explained. 

Enwright said he initially suggested the reverse mortgage for the client, but it was after consulting with Feindel and Richie and gaining a thorough understanding of the client’s finances that he felt confident in that strategy.  

“We’re really making sure whatever we do is beneficial to the client and we’re not operating in silos,” he added. 

Another client they served had a non-registered account with about $500,000 in investments, “with not a lot of capital gains” and $500,000 left on a mortgage.  

They decided it made most sense to do a debt swap in that situation. In other words, the client could sell their non-registered account to pay off their mortgage debt and then borrow $500,000 in a line of credit to invest. 

“In the end, for a client, it’s exactly the same on their balance sheet. They still have $500,000 in a non-registered account, they still have $500,000 of debt,” Feindel said. 

“However, now the debt is tied to the investment, and the rules in Canada [allow you to] deduct the interest,” he said, specifying that line 221 on the T1 General return “allows you to deduct the interest if debt is used to serve an investment that generates returns.”  

Good, bad and best debt 

Feindel said they often do this kind of “good debt, bad debt, best debt analysis” to ensure that clients are saving the most money from both an interest rate and tax planning perspective. He defined bad debt as debt that comes with high interest rates, is not tax deductible and is inflexible, while good debt carries lower interest rates. Best debt, he said, is debt that is tax deductible.  

“If you look at a balance sheet, there are ways sometimes to restructure things, to have bad debt go to good debt, or sometimes good debt go to best debt,” Feindel said. 

And it’s not just clients who find the process rewarding.  

“We do get excited when we can find creative solutions, and it makes our job fun,” Enwright said. 

Today, when many homeowners in Canada are set to renew their mortgages, this type of collaborative decision-making between financial advisors and mortgage brokers can be especially beneficial to clients. 

“If their payments are going to go up $1,000 a month, where’s the financial planner on that?” Enwright said. “A client becomes a free agent at renewal. They can really take that opportunity to restructure and to make sure that [the mortgage] fits efficiently within the plan.”   

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