Canadians’ lack of knowledge about the products that can be used within tax-free savings accounts (TFSAs) should encourage financial advisors to explain fully the investment opportunities available within these accounts, says Jamie Golombek, managing director of tax and estate planning with Toronto-based Canadian Imperial Bank of Commerce’s (CIBC’s) wealth advisory services division.

“Have a discussions with clients and remind them that just because it’s a TFSA, it’s not [just] an ‘SA,’ in other words, a savings account only,” he says. “A part of the problem is that the name of the account itself is the tax-free savings account and I think that many Canadians think that it is only a savings account.”

This perspective is supported by CIBC research released on Thursday, which finds that half of Canadians are unsure of what they can hold in a TFSA. Although 40% admit they should consult a financial expert to learn more, 80% have never spoken to a financial advisor, the CIBC poll’s findings suggest.

What can improve that situation is if a team member who speaks to clients on a regular basis can have a deeper discussion with a client regarding their decision to open a TFSA. For example, a financial services representative who is being asked to set up one of these accounts for a client should ask that client what his or her goals are; if the client is clear that the account is meant to be a rainy day fund and will be needed within a year or two, then the TFSA should remains a savings account, says Golombek.

In contrast, clients with longer timelines and who are not contributing to other registered accounts, such as RRSPs or registered education savings plans, should be taking advantage of the contribution room available within the TFSA, he adds.

“I tell advisors that every single client conversation you have, whether it’s on the phone, by email or in person, you ask the question, if you don’t already know, ‘Have you contributed $41,000 to your TFSA?’,” Golombek says. “If they haven’t done it, you ask them why.”

The amount of money Golombek cites is the total that would be available to contribute to a TFSA for a resident of Canada who has never put any money into one of these accounts and was at least 18 years old in 2009, when TFSAs were introduced.

CIBC’s research also confirms a recently released study by Toronto-based Mackenzie Financial Corp. that found Canadians are still uninformed about some key details of the TFSA.

See: Clients still in the dark about TFSAs

For example, CIBC’s poll finds that only a small percentage of Canadians were able to accurately identify investment options such as mutual funds (29%), guaranteed investment certificates (GICs; 28%), bonds (23%) or stocks (22%) as possibilities for TFSAs.

The CIBC research also finds that 38% of respondents say they do not know what happens to unused contribution room within the account and 13% think the unused contribution room is lost after the current taxation year, when it is actually carried forward and accumulates over the years.

The survey was conducted among 3,011 randomly selected Canadian adults who are also Angus Reid Forum panellists between April 29 and May 1.