Financial Advisors Do Important Work

Every year I have the privilege of travelling across the country twice–in November and January–to host the Distinguished Advisor Workshops for tax and financial advisors who require continuing education credits and updating for their professional practices.

This teaching tour always ends with a feeling of inspiration about the important work these highly informed and engaged people do. As an education company, we are privileged to spur on their enthusiasm for personal and corporate taxation matters, and then watch the lights go on throughout the room as both tax and financial advisors start thinking about how working together can help them get better results and ultimately, peace of mind, for their clients.

Today, many Canadians still worry about their money and whether they have enough—for now and in the future. Some of that worry certainly comes from poor choices: too much credit, too little savings. But there is much advisors can do
this month to help overcome the financial hurdles. Here is what we heard on the tour:

1 – Many Canadians are behind in filing their tax returns. This means they are likely missing out on tax refunds and refundable credits like the Child Tax Benefit and GST Credit. What to do about it?

• Advisors should ask whether prior returns are missing and if so, encourage their clients to file to recover missed refunds or avoid penalties and interest charges.
• Advisors should inform clients that they are not building RRSP or TFSA contribution room and that can have a big impact on their ability to build and grow family wealth.
• They are likely also missing out on reporting capital losses, which help average income taxes downward by offsetting capital gains of the current year, three years back and indefinitely into the future.

2 – Most Canadians are still underfunding their RRSP contribution room, giving up double-digit tax savings which could be leveraged into TFSAs or used to pay down non-deductible credit card debt. Show your clients the follow of missing these important opportunities.

3 – Many Canadians are not benefiting from pension and investment income splitting opportunities that come from filing tax returns as a family. Tax and financial advisors can show their clients the benefits, working together.

Peace of mind—my definition of “affluence”—occurs when you stop worrying about whether your money will cover the necessities plus emergencies, and focus instead on how to use your money as a tool to build wealth for future generations.

If advisors can continue their important work in February to get more people focused on the twin goals of filing annual tax returns and minimizing their tax bills with fully funded RRSP contribution room, we could be more impactful in helping families build sustainable wealth for the future.

Evelyn Jacks is President of The Knowledge Bureau. A complimentary of The Knowledge Bureau Report can be found at www.knowledgebureau.com.