Advisors weak on tax management, investor survey says

Advisors have some tax management work to do for clients, according to a new survey of investors.

Natixis Global Asset Management surveyed 500 Canadian investors in April about their tax planning needs, including 329 investors who use financial advice. The results weren’t encouraging, with 46% saying their financial advisor has never discussed the impact of taxes on investment returns (54% said they had).

The results weren’t much better for those who did receive tax advice. Of those investors who said their advisor discussed the impact of taxes on investment performance, 27% said their advisor has taken no action to help them with tax planning; another 58% said they would switch advisors for better tax management.

Natixis conducted a separate investor retirement survey in February of 300 investors in Canada who had a minimum of $134,532 (US$100,000) in investable assets. That survey, also released Tuesday, similarly found that most investors (46%) said they need professional help with tax planning.

That was followed by a need for help on understanding risk (41%), managing debt (40%), estate planning (35%), budgeting (32%), long-term care planning (26%) and charitable giving (11%), according to the survey.

Read: Why CRA should reconsider taxing RRSP fees paid from open accounts

Financial security

Those who are investing cited not saving enough (30%) as the biggest threat to their financial security in retirement. The second biggest concern was long-term care costs and health care costs (18%), followed by inflation (14%), an insufficient government pension (13%), outliving their assets (12%), insufficient investment returns (7%) and divorce or the death of a spouse (5%), the Natixis survey indicated.

Canadian investors said they save 9% of their annual income for retirement — a lower amount than the global average at 12.1%, Natixis said.

Read: Bullish on Europe? The region leads corporate tax reductions

Those polled appeared to be optimistic about their retirement age, which came in at an average age of 61; and 64% said they are contributing to an employer-sponsored retirement plan.

Other highlights:

• 78% feel that funding retirement is increasingly their responsibility, not the government’s.
• 32% don’t believe government benefits will still be available when they retire.
• 63% have clear financial goals.
• 59% have a financial plan with goals.
• 81% of Canadians plan to leave an inheritance.
• 45% of investors expect to receive an inheritance.
• 41% plan to donate a portion of their money to charity.
• 43% of Canadians do not have a will in place.
• 65% believe they will still need financial advice in retirement
• 53% use financial advice today (financial planner or automated advice)

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Staff

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