Advisors cringe at the term

(February 27, 2004) The 2004 RRSP season is winding down, with the March 1 deadline for a 2003 contribution arriving on Monday. But should the term “RRSP season” really be in an advisor’s vocabulary? In researching our annual coverage of the “last-minute contribution season,” Advisor.ca found hostility among some advisors toward the very use of “RRSP season.”

“I’m anti-RRSP season. I think it’s a marketing thing,” says Bradley Roulston, a CFP with the Roulston/Map Financial Group in Mississauga, Ontario. “It is important if people want to catch up or do the last-minute thing, but a financial plan is year-round — not just in February.”

Roulston is not alone, as other advisors point out that such last-minute planning may be common, but goes against the plan they offer their clients.

“There is no such thing as RRSP season anymore — it’s 12 months a year,” says Abe E. Toews, a CFP with the StoneCreek Financial Group in Regina, Saskatchewan. “In the season we used to have when I started in this business 24 years ago, I remember running around at 10 o’clock at night picking up cheques on the last day.”

Toews says the ability to transfer funds electronically has made life much easier and facilitates a year-round contribution program for investors.

“The people I’m seeing this week are just topping up what they’ve already contributed,” Toews says.

He says most of his clients are already on a monthly contribution plan and that those making contributions now are doing so for the 2004 tax season, not 2003.

“We encourage our clients to do their contribution for the year at the beginning of the year, for that year, as opposed to waiting until February of the following year,” says Michele Yergens, a CFP with Assante in Estevan, Saskatchewan. “Financial planning initiatives help develop the process whereby clients learn the potential benefits of monthly investing and tax sheltering of income as soon as possible.”

Yergens says she encourages her clients to make monthly contributions as well, with many following this advice. Having a professional planner is obviously an asset, since the personal relationship can help to keep the investor on track.

“I don’t have an RRSP season,” says Marc Lamontagne of Ryan, Lamontagne and Associates in Ottawa. “I worked in the banks for five years and we had people lining up during the last week. Now it’s not an issue because I do an annual update of the financial plan with clients.”

But, like Christmas shopping, many Canadians do leave their retirement plan contributions to the last minute — and focused advertising by investment product companies doesn’t help matter.

R elated Stories

Beware of performance ads, says fund analyst RRSP season brings lower contributions, advisors report

“They’re spending money on advertising to influence us and personally, I don’t read it,” says Toews. “Clients see it, but I haven’t had one client come in over the last month that said ‘I want this fund because it says it made 35% in the paper.'”

He says the investment product industry would be better served if it used its advertising budget on investor education initiatives.

“We only have 47% of the Canadian population covered by some sort of employer pension, so 53% are going to be responsible for their own retirement,” he says. “When you look at the average portfolio size in Canada, they’re not going to have a very well-funded retirement.”

But February remains a favourite marketing time for some financial institutions, with one Toronto bank branch issuing a press release advising of a “Last Day” photo op, including a jazz ensemble which would play throughout the March 1 deadline.

“That’s the problem with the phrase ‘RRSP season’ — it doesn’t make any sense,” says Roulston. “It’s like saying I’m going to go for a walk once a year and I’ll be fine to do a marathon. It’s not part of the plan.”

---

What do you think? Is RRSP season just a marketing ploy? Is the media blitz doing a disservice to advisors and investors? Share your thoughts about this topic in the Talvest Town Hall on Advisor.ca.

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

(02/27/04)

Steven Lamb