In an environment of generally low returns, and heightened scrutiny of investment costs, financial advisors should be emphasizing the value they can often create behind the scenes, suggests Investment Industry Association of Canada (IIAC) president, Ian Russell.
In his new letter to the industry, Russell calls on advisors to highlight some of the less prominent ways in which they create value for their clients, such as in ensuring the tax efficiency of investments.
“Often, some of the most important services you provide for a client are the least dramatic – and therefore the most taken for granted. Looking out for the tax implications of financial investments is a good example,” he says.
“The advice that ensures client investments with different tax consequences are managed in a tax-efficient manner is critical to maximizing after-tax returns,” he adds.
And, Russell says that the IIAC is working in a number of areas that aim to help improve dealers’ ability to provide tax-related value. For example, he notes that the IIAC and its Tax Reporting Committee have worked to improve the reporting of financial information by special investment vehicles.
He says it also continues to lobby for a tax incentive to encourage capital-raising by small and mid-sized companies, and for equitable tax treatment between contributions to group RRSPs and contributions to pension plans.
“Clients have come to expect these high standards and take them for granted, despite the complexity of the investment business and constant change in tax regulations,” he notes, adding that the value of this service “needs to be articulated and explained to the investing public.”