boomer couple signing contract with financial planner

With the RRSP season now behind us and the income tax deadline looming, this usually is a good time to take stock of your clients’ situations to ensure that their financial plans are aligned with their goals and to review their expectations.

You can take this time to go over various areas of each client’s financial life, including savings for retirement, asset allocation and insurance planning.

“It’s critical to spend time with clients talking about the big picture,” says Prem Malik, chartered professional accountant and financial advisor with Queensbury Securities Inc. in Toronto. “Each client is different and some situations are more complex than others, so the conversation is never quite the same.”

Heather Holjevac, senior wealth advisor with TriDelta Financial Partners Inc. in Oakville, Ont., notes that a post-RRSP season review offers a good opportunity to look at changes in clients’ situations that may have an impact on their financial plan, such as the birth of a child or grandchild; children heading off to college or university; changes in income, health or lifestyle; plans to make a major transaction, such as buying or selling a house; or any other anticipated or unanticipated life event.


The RRSP deadline should be a non-event, says Holjevac, who believes that clients should be making regular contributions throughout the year. “They should not be playing catch-up at the deadline,” she says, “or they will never get ahead.”

Many clients who make contributions throughout the year, Malik says, still are in the habit of rushing to make last-minute “top up” RRSP contributions just before the deadline.

Some clients, Malik says, take out RRSP loans to make a lump-sum contribution. Malik educates these clients about the pros and cons of borrowing to raise those clients’ awareness of the fact that the interest on RRSP loans is not tax-deductible, and that the anticipated return on the investment in an RRSP must be greater than or equal to the interest the clients are paying on the borrowed funds in order for the strategy to be beneficial.

Malik also reminds these clients that their tax refund will not be sufficient to pay off the loan, which could leave them with the same problem during the following RRSP season – no cash on hand to make a contribution. “Clients must have the discipline to pay off their loans,” he says.

Alim Dhanji, certified financial planner with Assante Financial Management Ltd. in Vancouver, says clients should develop good savings habits in order to avoid the rush of making last-minute contributions. “Proper budgeting and cash-flow management should enable clients to make adequate, regular RRSP contributions,” he says. Setting up such a program is part of his regular client-review process.

Holjevac performs a cash-flow analysis as part of a client’s plan for the year to determine how much the client should contribute to an RRSP and a TFSA.

Dhanji says he gets permission to review his clients’ notices of assessment from the Canada Revenue Agency “to determine their contribution limits and plan for the next year’s contribution.”

In some cases, Dhanji finds that making an RRSP contribution is not recommended for a client. For example, if the client’s projected retirement income, based on his or her current RRSP savings, is going to push the client into a higher tax bracket, the only benefit from making additional contributions to an RRSP is tax deferral. This can increase the client’s tax burden during retirement.

Holjevac adds that clients who max out their RRSPs could find that their minimum drawdown when they retire would result in a clawback of their old-age security benefits.

For a client who makes regular RRSP contributions, and not just at the deadline, Malik recommends automatic withdrawals from the client’s bank account. “It’s a form of forced savings,” says Malik, “which the client eventually becomes accustomed to as part of cash-flow management.”

If clients get a sizable tax refund by making regular contributions, Dhanji recommends using that money to pay down their mortgage or other expensive or non-deductible debt. Otherwise, clients should reinvest the refund in their RRSPs or TFSAs.

Better still, Dhanji advises clients who receive large tax refunds to file the necessary tax forms with their employer to reduce their income taxation at source, which would mean a bigger paycheque (and bigger monthly RRSP contributions) instead of a tax refund at the end of the year.


Once new RRSP money comes in, you must revisit the asset allocation of your client’s portfolio, says Vincent Tonietto, vice president and portfolio manager with Fiduciary Trust Co. of Canada in Toronto. Take into consideration the client’s current situation, whether retirement goals are on track and if there are opportunities to increase portfolio performance.

As part of this discussion and prior to making any asset-allocation decisions, Holjevac typically reviews market performance for the previous year and her outlook for the markets in the upcoming year.

“You have to be mindful of changing clients’ expectations, which is a function of changes in their risk profile,” Holjevac says. “If their [portfolio] return expectations are lower, you will have to rebalance their portfolios to match their new risk profile.”


Holjevac advises that while reviewing “know your client” questionnaires, you must ask clients whether anything has changed or if they anticipate any changes.

“This will help you plan for these changes,” Holjevac says, “and make adjustments to their financial plans, if necessary.”

Tonietto, who works primarily with wealthy clients, says he helps clients budget for changes to avoid disruptions to their financial plans. “We have a buffer for these needs,” he says.

Tonietto looks at clients’ total net worth as well as their liabilities to determine whether “the assets they have will generate enough cash flow.”

For young families, having their children grow out of daycare, which can be expensive, can free up significant cash, Malik says. Similarly, older families whose children move out on their own or join the workforce will have reduced monthly expenses.

In certain instances, clients might get an increase in employment income, which also will lead to higher cash flows, Holjevac says.

Whatever the source of an increase in cash flow, you must discuss with these clients how they will use or invest their newfound money.

“If you don’t talk about [what to do with] an increase in income,” Holjevac says, “clients will spend up to their new income level.”

When discussing cash-flow management, Holjevac says, “you need to put it in writing so that clients can actually see the numbers to make a decision.”

On the other hand, some clients will experience higher expenses. They may have to plan for the expenses related to the expected birth of a child or grandchild, Holjevac says. Or, clients may choose to pay for a child’s or grandchild’s college or university education.

Given the rising cost of education, Dhanji says, the RESPs set up by some clients may not contain sufficient funds to pay for all education expenses.

“You therefore have to make the most efficient use of available funds,” Dhanji says, “and explore options such as student loans instead of dipping into savings.”

Holjevac points out that two of the biggest trends among older clients are downsizing their homes and helping their children financially. She advises her clients: “Be careful not to give too much away, too early” or risk running out of money.


Changes in insurance needs typically are driven by life events. While the acquisition of additional coverage comes at a cost, ensuring that clients have adequate insurance coverage at all times or, at least, making them aware of any shortfalls is important.

“Health-care costs are one of biggest unknowns,” Holjevac says. “Ask clients: ‘Who will take care of you if you become ill?'” Some clients expect their children to provide for their care, she adds.

Tonietto agrees that health care is a potential vulnerability for older clients, given that Canadians are living longer and medical expenses are increasing.

Your clients need to consider acquiring either long-term care, critical illness or disability insurance, Dhanji says, to reduce the risk of having to use savings to pay medical expenses.

The earlier clients acquire such insurance, the better, says Holjevac: “At a certain point, it is too late because the cost of insurance becomes prohibitive.”

Holjevac reviews her clients’ employer-based health insurance coverage to ensure that her clients are getting the maximum benefits. She views this as being important for clients, given the potential shift toward privatization of health care.

Malik also advises his clients, especially those with young families, to acquire term insurance to protect against potential liabilities such as mortgages and other debts. For older clients, Holjevac suggests revisiting life insurance coverage and beneficiary designations.

Dhanji suggests that his clients who are about to retire check the availability of “follow me” insurance, which would allow a policyholder to convert his or her group insurance to an individual policy. Individual premiums for such coverage may be higher than the group rates, but the client will not have to provide evidence of insurability.


Malik reviews his clients’ employer- sponsored pension plan to ensure they are taking maximum advantage of matching employer contributions.

Dhanji recommends taking a holistic approach to reviewing potential tax liabilities at the individual level, as well as from an estate planning perspective. For example, ensure there is a balance of retirement assets between spouses to achieve a lower average tax rate during retirement. For estates, ensure that clients understand the potential tax liabilities of their estate and recommend strategies to reduce those liabilities.

Malik recommends ensuring clients’ wills and powers of attorney are up to date. You may have to refer your clients to a specialist for those services.