A look back at the 2004

(March 8, 2004) Evidence is mounting that the first two months of 2004 have been strong for the investment community, as the traditional last-minute rush to invest in RRSPs came to a close last week.

Net new mutual fund sales for February alone are estimated at about $5 billion — 10 times that of February 2003 — after January brought in $1.8 billion, according to IFIC.

So what did these spectacular sales figures mean to the financial planning community?

“This was an above average season for my practice,” says Johanne Gauthier, a CFP with Cartier Partners in Whitehorse, Yukon. “It seemed that with the markets finally picking up, clients were getting a renewed interest in their portfolios and their financial plans.”

And as much as planners may hate the idea of an “RRSP season,” it’s hard to argue the rush does not exist.

“Overall, I believe this ‘RRSP season’ was better because more people are looking ahead to their retirement plans and realizing they need to ensure their retirement plans are in place,” says Sandra McLeod of Investors Group in Scarborough, Ontario.

But for many advisors, it seems slow and steady wins the race and there was little difference between the “season” and the rest of the year. It appears the message of year-round investing has sunk in with their clients.

“I believe this year was roughly the same as previous years, however, the so-called rush was not as apparent this year, as many of my clients invested throughout the year through monthly contributions,” says Michele Yergens of Assante in Estevan, Saskatchewan.

This is a familiar refrain — which is good news, since financial planners have been urging clients to use the year-round strategy for years.

“I would say that my clients invested a similar amount to what they have in the past,” says Abe E. Toews, a CFP at StoneCreek Financial Group in Regina, Saskatchewan. “A few are investing a little more, but it’s interesting that they were investing cash before and now a few are taking RRSP loans.

“They had a reasonable year last year in returns and most of them are optimistic,” says Toews. “In Saskatchewan we’re always optimistic because it’s ‘next year’ country — it’s the way people think around here. Overall I think the mood of the clients is definitely more optimistic than it was several years ago.”

That optimism is not restricted to big sky country, according to McLeod.

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“I have had a number of clients utilizing their unused RRSP contribution room,” she says. “They are feeling better about the financial markets and the economy in general so they want to take advantage of this.”

The strong returns on equities markets in 2003 seem to be drawing investors, despite warnings not to chase returns. The upside for financial planners is this attraction to the markets eases their need to do marketing on their own.

“We do not do very much advertising to speak of,” says Yergens. “We do put our name in the paper two or three times during the season for name recognition purposes, but most of our business growth continues to be attributed to referrals.”

Some have argued that advertising during the so-called “RRSP season” diminishes the value of the advice and planning services they offer. The first two months of the year traditionally witness a surge in product advertising and planners may want to avoid the association between product and service.

“From a marketing aspect, many people are more aware of ‘products’ and not really interested so much in the ‘product’ as the service and long-term strategy,” says McLeod. “This makes our marketing much easier because of the overall financial planning service and client focus we provide.”

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How was your “RRSP season”? Did you experience a rush of orders or have your clients grasped the concept of year-round investing? Share your thoughts about this busy time with your peers in the Talvest Town Hall on Advisor.ca.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com

(03/04/04)

Steven Lamb