Four tips to help advisors make the most of RRSP season

In spite of the importance of personal finance, it's not taught in many schools, so most people have to learn on their own. Almost two-thirds of Canadians would like to be more confident in making financial decisions, and 40% don't feel good about their financial situation. That's where you come in, as Canadians who work with a financial advisor are:

• In a better financial situation
• More likely to feel good about their mental health 
• Having an easier time saving money
• More likely to be on track to retire
• Less likely to worry about affording basic expenses in retirement¹   

Registered Retirement Savings Plan (RRSP) season is a good time to reach out to help your clients save more in their plan. Once you have their attention, take the opportunity to get to know both their financial strengths and their knowledge gaps so you can provide personalized support and build a long-term relationship. Get started this RRSP season with a financial wellness assessment, tax optimization strategies, and setting up a calendar for year-round support. 

1 Assess and fill gaps in financial knowledge  

It's helpful to have a baseline to start from, so you know what types of guidance and advice your clients need. Take a few minutes to assess your clients’ current level of financial literacy and well-being. You can do it ahead of your meeting with a survey or questionnaire, or you can do it through a carefully guided conversation. Then you can start laying out the financial basics, keeping a few key things in mind:

Keep it simple—Even though you do this for a living, your clients have other specialties, so think carefully about your word choices. For example, instead of talking about contributions, talk about savings; instead of consolidating accounts, try combining accounts. 

Identify important dates—Consider providing them with a cheat sheet of important dates like the deadlines for RRSP contributions and tax returns.

Clarify plan limits—Contribution and deduction limits can be confusing. Make sure your clients know what limits apply to their plans and take the opportunity to help them maximize their contributions.

Caution against penalties—Warn your clients about the penalties they'll owe if they withdraw their money prematurely.

Offer easy-to-use tools—Provide them with tools they can use when you're not there to help them, such as:

• Calculators to help them make decisions about retirement savings, retirement income, contribution rates, investments, and withdrawals
• An investor strategy worksheet to help them determine their risk profile and investment strategy 

Share educational articles—Once you help them understand their financial gaps, you can share helpful articles to help them further their knowledge. 

2 Offer tax optimization strategies 

Wanting to save money on taxes is universal, but very few people understand how to do it. Here's another chance for you to shine. Help your clients understand how they can use RRSP contributions to reduce their taxable income and tax liabilities:

• Explain the effect that contributions can have on their tax return. 
• Guide your clients to a contribution amount that helps them maximize their retirement savings and take advantage of the tax benefits.
• Help your clients explore advanced tax strategies like spousal RRSPs, income splitting, or leveraging carryforward contributions. 
• For your clients who are retired or retiring soon, provide advice on withdrawal strategies that can help them minimize taxes in retirement, such as using a tax-free savings account and other nonregistered accounts. 
• Start an estate planning discussion and consider using RRSPs to help minimize the tax burden on beneficiaries. 

3 Make it personal  

People are more likely to take action when they receive advice that's tailored to their personal situation. Take the time to get to know their financial needs, goals, gaps, and wants, and help them develop a plan made just for them. Canadians’ top five financial worries are: 

1 Inflation/increasing cost of living

2 Rising interest rates

3 Current economic conditions

4 Credit card debt

5 (tie) Not having enough emergency savings 

5 (tie) Not having enough retirement savings

Find out where those worries rank for your clients and help them create a plan to reduce their stress. As you put together a plan, you might also consider including: 

Goal setting—Help your clients set both short-term and long-term financial goals, such as early retirement, buying a home, or funding a child’s university education. Make note of these goals and reference them in future conversations and goal-planning discussions.

Life events—Start a conversation about the major life events that your clients may face and make sure they're including them in their goals (such as having children or paying for a wedding). 

Then communicate. An occasional email isn’t enough to motivate people to take action—or to help you build a relationship. Create a communications calendar and regularly send helpful, personalized emails. 

4 Set up a calendar for year-round support

Use your conversations during RRSP season as a jumping-off point and set up regular follow-up meetings to help your clients learn more and take the right steps throughout the year. Your calendar can include:

A post-RRSP season review—Once the deadline passes, schedule time to evaluate plan contributions and recommend any necessary adjustments for the new year.

An asset allocation review—Set aside the time to help your clients understand the different types of assets and asset allocation strategies and then review their portfolio to be sure it aligns with their goals and risk tolerance. 

An annual review—Offer to go through all their registered and nonregistered accounts, discuss performance, contributions, taxes, and suggest revisions where needed.

People are looking for advice, so demonstrate your value

Even though only 44% of Canadians work with a financial advisor, 85% say doing so would be helpful.¹ Use RRSP season as an opportunity to reach out and show your value and start building a new and long-lasting relationship. 

^{1 2023 Manulife survey of stress, finances, and well-being.}