Brandt Butt on independent investment advice

Adrian:

I'm joined today by Brandt Butt, who is with Endeavor Wealth Management here in Winnipeg. Welcome Brandt, please tell us a little bit about yourself and your company.

Brandt Butt:

Yeah, absolutely. First off, thanks for having me on. I am an investment advisor at Endeavor Wealth Management with iA Private Wealth. And we are a boutique financial planning and investment management firm. We mainly work with business owners and incorporated professionals across Canada and cross-border assist in implementing strategies designed to ultimately increase our client's wealth, reduce their tax burden and facilitate actually a transfer of this wealth, a lot of times to the next generation. And my focus at Endeavor has been around advanced financial planning strategies, that ultimately help grow and protect the client's wealth and help reduce corporate and personal taxes. I personally work with a number of family-owned and operated businesses, as well as a number of incorporated medical professionals, so a lot of dentists and doctors. And in Manitoba, I find the easiest way for me to describe what I do is to, it's kind of funny, to relate it to the construction industry.

Brandt Butt:

Most people have worked or at least understand what a general contractor does. And what I like to say is, I am like the general contractor to my client's personal financial situation. And ultimately, I help to ensure that the right specialists, mortgage brokers included, are introduced to the clients at the right times. And I work very collaboratively with all their specialists, so their accountants, their lawyers and lenders, mortgage specialists, and so on, making sure that the overarching financial plan of my clients is ultimately moving them a lot closer to the goals that they set out for themselves. So, in a nutshell, that's Endeavor Wealth Management and ultimately what I do, Adrian.

Adrian:

Now, a lot of us have a default trust in our major banks and credit unions. What makes you different from those major financial institutions, as a pertains to your investment and wealth management services?

Brandt Butt:

That's a good question. And it's actually a question we get all the time when we're sitting in front of new people because obviously, they see the banks and they see some of the larger institutions out there and that's what they ask, "Why you guys? What makes you different?" And I boil it down to, when I look at Endeavor, what's different about us, is our culture, our people, along with our financial planning process. And I'd say a key difference is our independence, we're boutique and we're a very high-touch business. In order for us to even compete with these large bank institutions Canada here, we have to ensure that our customer experience and our clients is just for our clients, is just that much better.

Brandt Butt:

And so at Endeavor, we built out processes for pretty much every stage of that client relationship, from the first time we talk to them, to when they're getting onboarded, everything is driven around a process so that clients can see this consistency, this transparency and communication. I find where they first begin to see this is really in our discovery stage. And this is when anytime we bring on a new client, we take them through a discovery meeting and we dive kind of deep into their family's financial situations, and ultimately, where they see themselves going, the hopes, the dreams, all the things that they want to do. We take a ton of time to really get to know our client's situations and ultimately what's important to them. And then as well on top of that, I think something that's very different than what our clients will typically see elsewhere, is the time that we take to understand how the clients think and feel about their money.

Brandt Butt:

Everyone has had different experiences in life and has come from different backgrounds. And so, that ultimately, forms how they feel and think about money and the decisions they make. And so it's important for us to understand that if we're going to be giving advice to someone is how they think and feel about money. And because of all of these aspects, the processes, getting to know the clients and understanding them, I find we build this really strong relationship with our clients from the get-go. And they have the comfort knowing that competent professionals that truly understand their situation are guiding them every step away.

Brandt Butt:

And I mentioned that independence, the independence means to the clients that they can trust that the advice that's being provided to them, is based upon their best interests and not because of some sales folder or some product that a larger institution wants to push. So, yeah, great question. I love talking about what makes us different. And I think when clients come in and go through our process with us, they see quite quickly the difference in the service offering and in the process. And that's, I find builds trust from the get-go.

Adrian:

Someone recently told me an analogy of the chartered banks and credit unions and it went something like, "If you were to walk into a Ford car dealership and asked the salesman, "What's the best brand or type of car?" Of course, he'll say, "It's a Ford."" And I think the same would apply to walking into your chartered banker credit union. And you ask about what mutual fund or what mortgage product or whatever other service is best at this bank and of course they will say it is their products. And if I understand you correctly, you have a myriad of products and you are not limited to the offerings of a single financial institution.

Brandt Butt:

That's absolutely correct. And this is why education around these things is so important, like the banks, yes. When you come in there, they're going to want to sell their products. That's ultimately, at the end of the day, what a bank does. If you're a shareholder of a bank, you want them selling their products, it means more profits. But, if you're a person looking for financial advice, it's important to be aware of that. And to be able to understand the biases that will exist. And if that's not something that you're comfortable with, then yeah, you want to seek out an independent advisor. And for us, we're independent advisors, we're IIROC licensed, we are not confined to one product. We can basically use any product that's out there on the market, as it relates to investments, ETFs, stocks, bonds, mutual funds from all the different major providers out there. And so you're exactly right. It's not just one product. We have all the products and we piece them in based upon that financial plan and what's appropriate for the client and their goals.

Adrian:

Given that our goal here is to do what is in the best interest of the client, we're going to go down the rabbit hole a little bit. And we're going to talk about a statistic from the Winnipeg Real Estate Association, which is, the 20 year average for a single home in Winnipeg, has increased by 6.5% per year. Now, a mortgage can help take out your home equity up to 80% at an interest rate of about 2, 2.5% right now, which is fully tax deductible, if the proceeds of those refinance mortgage funds is in fact investment. Now, do you think it would be a good idea to use that equity to invest in the stock market?

Brandt Butt:

Are you ready to go down the rabbit hole?

Adrian:

I'm ready.

Brandt Butt:

As I mentioned earlier, we take a ton of time getting to know the clients and how they think and feel about money. And so, every client's situation is different. Every client has a different level of comfort when it comes to things like debt and risk and stock market. And so, we always say there's a math answer, but then there's an emotional answer as well. And so, the math answer might say yes, use the equity in your home and get that growing in the market for you. But if the math answer's one that will cause the client stress or put the client at risk of not staying disciplined to their plan. Well, we have to take that into consideration when we're making recommendations to those clients.

Brandt Butt:

And so, to your question about interest rates, because of where they are, I've definitely seen an uptick in clients who were accessing equity tied up in their homes and using it for investment purposes. We are financial planners first. So, it's important that when we're doing this or even considering doing it, that we look at every angle and what is the risk and then discuss it with the client of what a recommendation might be. And then the discussion moves to, well, how comfortable is the client with the said risk? And unfortunately, I wish I had it, but I have no crystal ball to know where interest rates are going to go or things like the stock market. Personally, it's my belief that, this low interest rate environment is here to stay in the small to medium term. But when I am working with clients, I do have to ask the, what if, and that's the risk management side of what we do in financial planning.

Brandt Butt:

So, what if inflation ever got away from the Federal Reserve and the Bank of Canada? And what if rates did move upwards much quicker than the world expected? Rising rates are a tough environment for borrowers and for investors. And so, I have to help my clients understand what it could look like and how comfortable they are with that end result. And I'd say anytime that we absolutely are, like I said, seeing a lot more clients accessing equity, and it does make a lot of sense in so many different circumstances, I'd say for most of the clients that we're doing it with, we're not accessing the whole 80%. It might be 50, 60, 70 at most, especially if they have a shorter time horizon, we really want to protect them, if the unfortunate rise of interest rates came a lot faster than expected.

Brandt Butt:

We want to make sure that that's not derailing the plan. And so with those shorter term investors, we're definitely not going up to the 80%. And even in those cases, their portfolio is going to be a lot more conservative. So, yeah, your mortgage is at 2, 2,5%, but in a conservative portfolio, you're looking at a 4, 4.5% rate of return on average, over a longer time horizon. So, you still do get a little bit of a spread there, but markets aren't guaranteed, so we do have to be aware of that.

Adrian:

How does the saying go? Life is variable, your mortgage should be too.

Brandt Butt:

Hey, again, it comes back to us when we look at clients situations. It really comes back to what they're comfortable with. We have clients that end up variable. We have clients that end up fixed because they want to know what the cash flow's looking like. But again, it's really evaluating each of those with each client and using professionals like yourself in the mortgage side of things to help educate the client. And then our job is to really sit on the same side of the table as our clients and help them evaluate those options that a professional in the mortgage world would present them with. And so, I am seeing a lot more of the young professional crowd, so let's say age 35 to 45, originally they had this idea that they wanted to pay down the debt aggressively. And a lot of times that comes from their parents didn't like debt growing up. Again, it comes back to the, what was their experience with interest rates? If they grew up late '70s, early '80s, they remember rates that were a lot higher than they are today.

Brandt Butt:

But I'm seeing these younger professionals start to mature and understand how debt works and realize that their long-term time horizons, that they could ultimately pull some of this equity and use it for an investment portfolio and earn a higher rates. And as you mentioned, have the deductibility of the interest as well. And so it's case by case, the situations that we've seen it as of recently with some of that younger crowd, it makes a lot of sense, that the only asset that they had was really the home. They had maybe some minimal investments outside of the home, and this allows them to really diversify and have kind of equity divvied up among different assets. So, when you ask how we do it, well, as I mentioned, we utilize mortgage professionals like yourself, educate the clients. And like I said, sit on the same side of the table as the client and help them evaluate those options. So, it's definitely something we're seeing more and a welcome conversation, I'd say, when clients ask us about pulling equity.

Adrian:

Now, I think we went into some demographics there. There are, of course, many Winnipeggers that have significant equity in their homes, as we've mentioned. For those over the age of 55, there is in fact an option called a CHIP Reverse Mortgage, which is offered by a HomeEquity Bank, which requires no payments until a home is sold. And given that the interest rate is also tax deductible when used to invest, who or why is this an option that might be worth considering? And I realize that the answer may not be different from what we discussed prior, but have you seen any clients use a reverse mortgage to use those funds either to invest or even to live on, so that they're not having to pull money out of their other investments?

Brandt Butt:

So, admittedly, not a ton of our clients are doing this, and this just might be the type of client that we serve because they have accumulated significant assets outside of the home. But we do have, I'd say a small handful of clients, where this is something that we've evaluated and looked at. And a couple of clients that have actually moved forwards with reverse mortgage. And so, when we look at it, as you said, age 55, significant equity in the home, typically, likely it's someone who doesn't have ton of assets or enough assets to fund retirement outside of their home. And so, this ends up becoming a very viable option to look at. As you mentioned, you're able to use the funds for whatever you want. It's tied to the home there and at the end of the day, when you sell or move, pass away, you have that asset there, that's able to kind of tackle any money that was owed at the end of it.

Brandt Butt:

And so it's clients that have that equity, that don't have the assets, that are definitely in that retirement stage and needing to supplement their income. And it's definitely a very unique circumstance, but it can make a lot of sense in those cases. And on top of that, I think one of the considerations, and we always have these conversations with clients is, we're seeing a lot of people, where they're not ready to leave that home. Because one of the options, obviously, when we're looking at this is, you could sell and downsize, but there's a lot of people that are in these homes that have a lot of sentimental value to them and a lot of family memories.

Brandt Butt:

And they may not be large homes and the individuals continue to live happily there and they don't really want to sell that home. And so, the reverse mortgage in that case can become a very viable option as well. And as you mentioned, that cash flow comes to them tax free. So, when we're working with a client who is on a limited level of income, one of the pros to this is that it doesn't necessarily affect Old Age Security or the guaranteed income supplement for lower income earners. And so, it can be a great option to supplement the cash. But again, it's a very specific client that this would come into play with.

Adrian:

Yes, it is definitely a case by case. And I think the beauty of your service and expertise is, that you recognize that it is an alternative option and you have the ability to over from a high level, assess and give the advice. Now, you're on the money side of the world and on the investment side of the world, but obviously all of your clients, or most of your clients own their home or own various different real estate. What do you love about Winnipeg real estate?

Brandt Butt:

I just want to make one more comment on the last topic there to kind of hit it on the head before I go into what I love about Winnipeg real estate. But, you hear things like reverse mortgages and you hear a lot of people who say, "Don't do this or do that." A true financial planner doesn't rule out any of the options available to them. It just comes back to, as we've talked through this whole podcast, assessing the situation. So, you'll never hear me say, "Never do a reverse mortgage," because that's just silly. It's a case by case basis. What do I love about Winnipeg real estate? You're bang on, all my clients own real estate. I think real estate is probably one of the first assets individuals could own or should own.

Brandt Butt:

What I love about Winnipeg real estate, well we have a stability here in Winnipeg, that's... the markets like Alberta and some of those places don't necessarily have... BC, the Greater Toronto Area. It's just a different more steady, steady-Eddie markets. And what I really like about investing in real estate for my clients, is what it actually teaches them about investing in equity portfolios as well. People traditionally treat their real estate as a long-term investment, slow, steady-Eddie, pay the mortgage down, maybe at a later date. They're renting a property and having someone else pay that mortgage down for them and possibly even getting a little bit of cash flow. But people typically start to build that disciplined, long-term mindset as they work with their real estate. In the equity market, people have a lot more difficulty with it because we have the daily updates, or by second updates of what the market believes an asset to be worth.

Brandt Butt:

And so, when in reality, that doesn't necessarily... when it comes to stocks, what you read day-to-day, may not actually be what that investment is truly worth when you look at the business. And so, I think real estate is such a good asset to teach those lessons, that long-term mindset that's required to be successful in any type of investing. And so, I love when my clients own real estate, because I can use their experiences with that, to help educate them and create the behaviors that they need to be successful on the equity side of their portfolio. So, that's why I love Winnipeg real estate. I own it personally, all my clients own it. And like I said, I think it's one of the first assets individuals should own.

Adrian:

Brandt, how do people get ahold of you?

Brandt Butt:

Simply, they could give me a shout, phone number, so 204-515-3443. That is my direct line as well. They can contact me by email so, brandt.butt@endeavourwealth.ca. Brandt is B-R-A-N-D-T, dot B-U-T-T, at E-N-D-E-A-V-O-U-R-W-E-A-L-T-H, dot C-A. So, brandt.butt@endeavourwealth.ca, as well as they go to endeavourwealth.ca. online, our website. All my contact information can be found there. I'm active on LinkedIn, Facebook, Instagram. So, you can just search Brandt Butt. I don't think there's many of us out there in the world. So, I'm a pretty easy guy to find if you start looking online.

Adrian:

And of course, all of Brandt's contact information, as he mentioned, will be right on the episode site at, ilovewinnipegrealestate.ca . Now Brandt, you're a little bit of a celebrity yourself, give your radio show a plug.

Brandt Butt:

Yeah, you can check me out on CJOB Winnipeg, so Endeavor Wealth. You'll often hear us at morning, lunch, afternoon, giving you the update on what's going on in the market and the different things that are affecting people's money out there. So, I always love getting on and they say I have a face for radio, so I'm glad we're sticking to the podcast format, so...

Adrian:

That's also why I opted for a podcast instead of YouTubing, it's much easier. I'm a...

Brandt Butt:

Yeah.

Adrian:

Yeah, no, I'm with you. Thanks for your time today, Brandt.

Brandt Butt:

No problem. Thank you very much, Adrian. It was a lot of fun.