Clients don’t understand RESPs, poll suggests

You may need to help your clients who are parents understand RESPs, based on the results of a recent study from Winnipeg-based Canada Life Assurance Co.

The study, which surveyed 1,510 Canadian adults online in August, found that more than 80% of Canadian parents say they don’t understand the benefits of this savings tool.

Additionally, while the majority of Canadians (92%) are aware of RESPs, only 17% say they’re knowledgeable about the contribution limits and benefits they offer.

Among those aware of RESPs, just under half (49%) currently contribute or have contributed to one, with an average total contribution of about $22,800.

Some Canadians use other methods to save for education, like in-trust or bank accounts in their child’s name (39%) and TFSAs (27%).

“Many Canadian parents need expert guidance and financial advice to help make the most of RESPs,” said Paul Orlander, executive vice-president, individual customer, Canada Life, in a release. “With the rising cost of post-secondary education, an RESP can be one of the most effective ways to save for your child’s education while helping them avoid excessive student debt in the future.”

The polling industry’s professional body, the Canadian Research Insights Council, says online surveys can’t be assigned a margin of error because they don’t randomly sample the population.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.