OPENERS Fodder For the Water Cooler INDUSTRY ASSOCIATIONS AND DEI INITIATIVES
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HELOCS AND MITIGATING RISK
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ixed rate, variable, or a home equity line of credit (HELOC)? The market has been such lately that depending on your client’s requirements and their capacity to deal with risk, any one of those three options might fit. According to Steve Meldrum, CEO of Swell Private Wealth in Medicine Hat, Alta., many people like the security that comes with a locked-in rate. But when the Bank of Canada raised its rate to 0.5% rate in early March, he says many turned to even lower variable rates to get the best deal they could. A HELOC can provide more options than a fixed or variable rate, such as
8 FORUM MAY 2022
In February, the CFA Institute brought in its DEI code with companies signing on to integrate their own policies and statements, with governance from senior team members within two years of signing. In its 2017 strategic plan, Advocis brought in eight imperatives, one of which was diversity. It retained a consultant a couple of years ago and put on a number of seminars and workshops on DEI. But Continued on page 10
locking in just a portion of a mortgage. With a HELOC, a person can lock in say, $200,000 of a $300,000 mortgage with some of it going for a two-year mortgage and the remainder for a five-year mortgage. “The idea is that you’re just trying to mitigate risk,” says Meldrum. “For example, you also have the risk that if rates don’t go up then you’ve lost all that opportunity cost. So, I think that sometimes having a blend is good for people.” And in the right situation, it’s a HELOC that can be the perfect combination. “If I treat a HELOC as a chainsaw I think it works wonderfully to get rid of
debt, and when people have free cash flow they can pay down their obligations very quickly,” he says. “But if I give that chainsaw to someone who is not disciplined, it can be dangerous and they can get hurt, because the HELOC interest rate is slightly higher than a regular mortgage.” But some people compare a HELOC to leasing a vehicle. They want to pay the lowest rates and if those rates go too high, they will simply sell their home, says Meldrum. HELOCs also offer investors the ability to take money out and put it into a business, but if things turn, they can take that money and put it back into their line of credit. — Susan Yellin
PHOTOS: ISTOCKPHOTO
wo of Canada’s professional membership groups for financial advisors and planners have instituted guidelines on the complex issues of diversity, equity, and inclusion (DEI), but they aren’t prepared to go as far as the CFA Institute in instituting a code for members to develop and adopt. “What the CFA Institute has done is good work, but I’m not sure we want to copy their approach,” says Tashia Batstone, president and CEO of FP Canada. “It’s early days for us in terms of whether a code is an appropriate strategy. We are considering whether there are other things that we should be doing to build confidence and trust in financial planning for a more diverse population of Canadian consumers.” Advocis also doesn’t believe in mandating that all individuals participate in its strategic plan for DEI, though president and CEO Greg Pollock says there is tremendous interest in the entire project. “My observation of our association is that it wasn’t really reflective of the Canadian fabric. When I looked at the membership of the organization, I realized we are missing something and wondered why we don’t have greater representation from diverse groups.”
