Group assets play vital role in planning

By Kathleen Peace | September 14, 2010 | Last updated on September 14, 2010
3 min read

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A Group RRSP represents an item on your client’s balance sheet that can’t be ignored. Contributions, investments and performance of this account all play a part in your client’s overall financial plan, and ultimately in your relationship.

Free money is a good thing

For many, this salient point seems to have slipped through the cracks. A client may assume that because they are already contributing to an individual RRSP that another one is unnecessary. But do they know that by not contributing, they may be missing out on matching employer contributions? A simple education is all that’s required here. Your client will appreciate the guidance, and their financial plan will look better as a result.

An at-source deduction is also a good thing

Okay, so it means less cash may be going into the RRSP the client has with you. However, this is another place where you can add value to your client’s situation. Advising your client to take regular contributions directly off their paycheque means that your client will see the tax benefit of their RRSP contribution the moment the contribution is made. Making the same contribution to their individual RRSP will benefit them as well, but they’ll have to wait until next year to see their refund.

Keep your clients out of hot water with the CRA

By maintaining a record of how much is going into the Group RRSP, you can ensure that your client will not over-contribute beyond their stated RRSP deduction limit for the year. This is especially important if your client is also contributing to an RRSP under your guidance.

Maintain the integrity of your recommended investment strategy

Often, clients with Group RRSPs have been handed a folder with a generic questionnaire, which they are expected to complete and then choose an associated product that best fits their overall “risk score.” It’s likely that this investment selection process comes up short compared to the due diligence that you yourself have completed with your client.

In some cases, clients disregard the questionnaire completely. They consider the benefit to be found money, with which they can “play” with, moving in and out of mutual funds according to what they believe to be the next big thing. Or they decide to invest 100% in GICs because they don’t know what else to do.

An inappropriately invested Group RRSP could derail your client’s financial plan if the Group holdings don’t complement the other investments you are helping your client to manage.

Take a look at the investment options offered by your client’s Group RRSP provider. Recommend that they invest in their Group Plan in the same way that they are invested with you. By ensuring that the investments in your client’s Group RRSP complement those under your auspices, you are making ALL of your client’s investments work together as part of your overall investment strategy.

Solidify your position as your client’s primary—and trusted—wealth manager and financial advisor

Take the Group RRSP provider out of the picture by providing superior advice and service. When your client has a question about their Group RRSP, ensure that the first call they make is to you, not the Group Plan provider. Capitalize upon this opportunity to manage all of your client’s assets with care. Show them that your interest is in their overall financial picture, not just those investment accounts under your auspices.

By giving equal weight to the Group RRSP’s investments, performance and contributions, you are demonstrating to your client that you will help them take care of their entire financial picture (regardless of whether or not you are “getting paid” on those specific investment assets). Continuously adding value in this manner confirms to your client that you have only their best interests at heart. It builds trust.

And trust, people, is the business we’re in.

This Special Report is sponsored by:

Kathleen Peace