With the deadline for RRSP contributions just a week away, you may be flooded with requests from clients to make last-minute contributions. But in the face of all that pressure, it’s important not to rush the process.
What distinguishes an informed advisor from a mere order taker is a willingness to ask questions first, says Paul Shelestowsky, senior wealth advisor at Meridian Credit Union in Niagara-on-the-Lake, Ont.
Here are some pointers to keep in mind when handling those eleventh-hour RRSP requests:
> Send a “fast facts” email blast
Compile a list of “fast facts” on RRSPs that you can email to clients and prospects, Shelestowsky says.
Highlight major points such as the last day for filing, the contribution-limit guidelines and the penalty for excess contribution. “It’s just a way to get the conversation started, to get them to your office,” Shelestowsky says.
If you’re pressed for time, you might assemble some links to information your clients can explore for further research. For example, there are plenty of resources online, such as infographics and explainer videos, which explain the tax benefits of RRSPs and lay out the differences between RRSPs and tax-free savings accounts (TFSAs). You can also invite clients to call you to discuss their options.
> Don’t be an “order taker”
In the rush to process clients’ contribution requests, Shelestowsky says, don’t neglect to review their financial situation. Part of your job is to make a proper assessment of whether an RRSP makes more sense than a TFSA for each client.
Don’t just agree to their request without helping them weigh their options, he adds. Ask about their income level, cash flow and any financial obligations they might have, such as student loans, mortgages or car payments.
For example, a client might have cash on hand to make a substantial contribution, Shelestowsky says, but his or her income level isn’t “where it should be.” You won’t be doing them any favours if, in the near future, that client needs to withdraw from the account to cover expenses.
“If they’re only making $30,000 a year, it might not be the best thing for them,” Shelestowsky says. “A TFSA might be better.”
> Conduct a follow-up meeting
Some clients might phone Shelestowsky at the last minute because their accountant advised them to “throw” money into an RRSP account. When that happens, he says, it’s important to arrange to meet with those clients later to discuss how their RRSP fits into their overall investment and savings plan.
“Get them the receipt, and figure out the investment side when they’re settled,” Shelestowsky says.
That follow-up meeting is also an opportunity to plan ahead for next year’s RRSP contribution, to avoid the stress of dealing with last-minute issues. For example, if someone has a stable income, Shelestowsky says, you might set up a biweekly system that automatically routes a portion of his or her income to the RRSP account.
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