While few things can tame the whims of the TSX, NYSE or Nasdaq, advisors have a great deal of control over how much tax their clients pay. It’s often said a dollar that doesn’t make it to the CRA is as good as a dollar earned.
To get some conversation starters you can use with clients, start with columnist Michelle Munro’s excellent column on the four pillars of tax efficient investing.
If your client is a salaried worker, their tax planning is likely pretty straightforward. But if they are compensated with restricted share units, you may want to brush up on their tax treatment.
Does a client have too much capital locked up in an RRSP? David Friesen has a plan to access that. But Blair Corkum challenges the wisdom of such RRSP meltdown strategies, suggesting it is always better to leave money in an RRSP, opting to borrow to invest outside of the structure.
Lorne Saltman offers a creative approach to the family cottage, suggesting you can help your client reduce the future tax burden by converting it into a private club.
We also have an entire section devoted to Tax tips for cross-border clients.
Then, take a look at this excellent series by Andre Fok Kam that walks through many options you can explore with clients:
- Tackling tax-efficient investing
- Harnessing capital gains
- Dividend advantages
- The role of tax-efficient bonds
- Controlling investor behaviour
And, while you’re at it, take a Continuing Education lesson on tax-efficient investing practices and earn some credits for your trouble:
Another way to calm clients about the markets is to talk about something that exists outside that volatile world. Savings accounts, particularly TFSAs, can be just the thing. You can talk up the advantages of maximizing the TFSA, walk through ways to fold equities into TFSAs, or discuss the pros and cons of a TFSA vs. RRSP, help make sure clients Don’t over-contribute to TFSAs, and lay out residency requirements, and income splitting options for TFSA account holders.
With all the interest in ETFs, you’ll want to look at Mark Yamada’s take on the tax-efficient nature of those investments. And don’t miss his story on how to gain tax efficiencies by applying ETFs to core-and-satellite portfolio structures.
Given the market turmoil, Rayann Huang’s recent piece about how ETFs free advisors to interact more closely with clients is also worth a look.
And, of course, don’t overlook insurance. Business owner clients have many tax saving options within Individual Pension Plans and many of your clients cruising toward retirement would be interested in learning how a back-to-back annuity could be used to produce an income stream.
But make sure your recommendations aren’t overly aggressive, because the CRA has said it will be coming after clients who try to shave too much off the top.