February is still the busiest time of the year, but it has become less frantic in the past decade as clients spread out contributions with regular RRSP contributions, said Devin Cattelan, a portfolio manager at Verecan Capital Management in Toronto.
“It’s definitely not to the same extent as it was when people rushed in before the deadline to make contributions via cheque,” he said.
But lump-sum contributions haven’t disappeared. Those with commissions, bonuses or distributions from holding companies still make large one-time investments through their RRSP in the first 60 days of the year, said Stephanie Pantaleo, vice-president of wealth management and family office services at Pembroke Management in Toronto.
Advisors said the beginning of the year has increasingly become RRIF withdrawal season as clients age while younger clients look to meet the December deadline for other registered accounts. And in every case, advisors are leaning on support from their firms and colleagues to make the most of these client touchpoints.
It’s RRIF season, too
As clients age, advisors are spending more time on those in decumulation mode, said Julie Seberras, head of wealth planning and practice management at Manulife Wealth in Toronto. Advisors will review their retirement clients’ income for the year and plan to avoid clawbacks.
“Asset transfer strategies are huge for us. A lot of people are trying to lessen that deemed disposition at end of life,” said Jason Szeto, a Sun Life advisor in Bedford, N.S.
The beginning of the year can also be a great time to withdraw RRIF minimums and LIF maximums and put it in a TFSA, so clients aren’t taxed on the next 12 months of growth on those withdrawals, Szeto added.
First home savings accounts (FHSA), RESPs and registered disability savings plans are also popular, Seberras said. “We’re seeing the younger generation diverting some of their savings more towards these other registered plans, which are on a calendar-year basis.”
With a contribution deadline of Dec. 31 to take advantage of tax deductions and government grants in these other account types, “there’s a little bit more of a time crunch around December,” Cattelan noted.
Younger clients are attracted to the FHSA for its tax deductibility and flexibility, Seberras said. Even if account holders don’t buy a home within the qualifying period, funds can be transferred to their RRSP without impacting contribution room.
While tax planning takes place at the beginning of the year, advisors make sure the plan is followed through by the end of the year. For clients with non-registered accounts, December is prime time to review tax-loss harvesting, Szeto said. “As the [client’s] wealth gets bigger, you’re going to be running into those things and want to check in on those transactions.”
High-touchpoint season
Advisors look to their firms for administrative support and their colleagues to share the heavy workload in busier seasons.
Szeto uses Sun Life’s technology applications, such as an AI notetaking app and automated client outreach that includes templates for messaging.
Manulife sets clear expectations on when advisors need to be in touch with clients prior to a tax deadline and helps clients find tax receipts, Seberras said.
At Verecan, advisors work together on client cases as no one advisor owns a specific client’s business, Cattelan said. If an advisor is working on many cases at the same time and a client has a time sensitive issue, they can ask a colleague for help.
Regardless of what kind of transactions take place during the February planning checkpoint, advisors should use the opportunity to look at the whole picture, Pantaleo said. “We call this RRSP season, [but] it’s also the beginning of the year. We’re reflecting on the past year and also the year to come.”