Talbot Stevens

By: Talbot Stevens  09-12-2011

For the 78% of investors who have unused RRSP contribution room, Talbot's RRSP Contribution Optimizer software helps significantly increase the value of their RRSP plans and this year’s contributions by:

  • determining the optimal amount to contribute this year using available and borrowed funds, accounting for different tax brackets, clawbacks, and behaviour
  • using the best combination of forced and automatic savings approaches to reduce the behavioural risks of reduced or suspended contributions
  • creating a simple, one-page, personalized Action Plan

Benefits for Advisors, Fund Companies and Lenders

Those in the financial industry can help clients implement their own Optimal RRSP Contribution Strategy, while also realizing these benefits:

  • Increase client trust. Objectively showing how some clients are better off catching up less than the maximum demonstrates that the client's interests are first, increasing client trust in the advisor and firm.
  • Significantly increase short-term business. First-year RRSP contributions for most investors will be 2-10 times larger for those not using a catch-up loan.
  • Increase long-term business. Most investors can increase the value of their RRSP over 10 years by 28-92% or more, relative to their current approach.
  • Benefit over 75% of investors. Over 75% of investors have unused RRSP contribution room, averaging over $26,000.
  • Increase sales effectiveness using process-driven systems. The software is a business-building process, progressing through Education, Analysis, and personalized Action Plan.
  • Increase client perceived value and appreciation. The tool quantifies the immediate and long-term benefit of personalized, professional advice.
  • Increase referrals, delivering client-first value automatically leads to appreciative clients who tell others, and referrals can be further increased with an integrated 'Help a Friend' referral system.

Opportunity

With interest rates near all-time lows, the typical investor with over $25,000 of unused RRSP contribution room would benefit from objectively understanding the best amount to "catch up" on RRSPs this year. A better question to answer is ..

What is my optimal long-term RRSP contribution strategy, using available and borrowed funds?

What is the best combination of automatic and forced savings approaches, accounting for all factors, including different tax brackets, and most importantly, investor behaviour?

For most investors, the optimal RRSP contribution strategy will be at least 28 - 92% better than their current plan, also benefiting advisors, lenders, and money management firms by the same amount.

With the very low savings rate in Canada, getting investors to graduate from an "ad hoc" saving approach to an automatic savings approach of "paying yourself first" monthly is good. Getting investors to act on any combination of automatic savings and forced savings (paying off a long-term RRSP loan) is better, since the forced savings component locks in a higher level of commitment. Having investors implement the optimal combination of automatic and forced savings is best -- for everyone.

Education and Analysis Software

Talbot's RRSP Contribution Optimizer web-based software helps advisors benefit clients, demonstrate that clients' interest are first to increase trust, while growing their business.



The information in this article was current at 06 Dec 2011


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