COVER STORY
Dousing
Fire the
Bryan Borzykowski explains how advisors can prevent inflation from burning a hole in client portfolios
12 FORUM FEBRUARY 2022
that high, which was suspicious,” he says. Two months later, Westhaver’s concerns were validated as inflation numbers started spiking — 4.1% in August and then 4.7% in October, an 18-year high. “I was glad the numbers picked up. It was nerve-racking being told there’s nothing happening when it certainly felt like inflation was rising.” Westhaver, who got his first job in finance in 2008, has never had to factor these kinds of inflation spikes into his clients’ financial plans. While the cost of goods rose by 4.4% in 2021, between 2000 and 2020 prices climbed by just 1.4% on average, according to the BoC. It also doesn’t appear that these gains will be too short-lived, with many economists
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t was last June when Kyle Westhaver first realized that a potential postpandemic economic recovery could be in trouble. The Toronto-based wealth advisor wanted to buy a used Volvo, but he was shocked to see that the cost of a previously owned car was the same as a new one. When he went to the Volvo dealership to see if he could buy something new, there were no cars to buy. “There was the overlap in inflation and supply chain issues,” says Westhaver, who works for Nicola Wealth. Around that same time, he noticed the meat at his local butcher shop had risen by around 15%. “Everywhere you looked, prices were going up in a straight line. Yet, at the time, Canada’s consumer price index (CPI) had only increased by about 3% year-over-year, which was within the Bank of Canada’s (BoC’s) normal range. “The numbers would come out saying inflation was not really
PHOTO: ISTOCKPHOTO
