Why should financial advisors become familiar with this proposal? Even though it is only a proposal, and in its early stages, the CSPP is a good first step and does help to address some of the retirement savings and income problems in Canada.
It also draws on the experience of similar plans in other countries. For example, Australia has a superannuation fund in which employers are required by law to pay a portion of an employee’s salary and wages (currently 9%) into the fund, which can be accessed when the employee retires.
As well, it should receive widespread attention from government policy-makers and, if implemented, the plan could materially change the relationship between financial advisors and their clients.
It is this last point that financial advisors should pay the most attention to — how this proposal could materially change the relationship between financial advisors and their clients. By no means everyone enrolled in a CSPP is now, or ever would be, clients of financial advisors. But, a CSPP-type plan would reduce the need for Canadians to save for their retirement outside of the CSPP, which, in turn, could affect the role of the advisor.
Advisors may even now be saying to themselves that there is no substitute for individualized financial and retirement planning, and the personal relationship between financial advisor and client. But we all know that the only constant is change, and therefore we in the financial advisory community need to understand the factors and ideas that could alter our business, and start thinking about how we will need to change accordingly. Even if the CSPP paper does nothing else, it will bring attention to the very important issue of encouraging Canadians to save for retirement.
Peter Drake is vice-president, retirement & economic research, for Fidelity Investments Canada. With over 35 years’ experience as an economist, he leads Fidelity’s research efforts in examining retirement in Canada today. He can be reached at email@example.com.