Canadian seniors are keeping significant assets in cash and financial advisors have an opportunity to help members of this growing demographic manage their money, said John Dargie, president and chairman of Independent Financial Brokers of Canada (IFB), at the IFB’s annual spring summit in Toronto on Wednesday.

With Canadians living longer than ever before, seniors are increasingly worried that they’re going to outlive their money, Dargie said. As a result, they’re putting their assets in vehicles they perceive as safe, such as bank accounts and guaranteed investment certificates (GICs), which are generating little or no interest.

“They’re downsizing their homes and they’re getting out of any investments that they had,” he added. “They want safety because they fear that they’re going to outlive their money.”

The problem with keeping such a large portion of assets in cash — aside from the dismal returns — is the exposure those funds will have to hefty taxes and probate fees upon the client’s death, Dargie said, as many people are unaware of the estate planning implications of holding cash.

“Seniors don’t know, generally speaking, about the charges that will be levied against their estate once they’re gone,” he said.

Seniors would be better off putting their assets in a vehicle that allows them to designate a beneficiary and bypass those fees, such as an immediate annuity with a guaranteed period, he said. That serves the dual purpose of ensuring the client will not run out of money and protect his or her estate from probate.

“Immediate annuities today, for the senior demographic, are probably the best kept secret, product-wise, in the industry,” Dargie said.

Financial advisors should be working with the individuals in this demographic and informing them of these kinds of options, Dargie said: “Nobody is talking to these people. You can be of great, great help.”

The opportunity for advisors is huge, he added. The population of seniors is set to comprise of 25% of Canada’s population by 2020, Dargie noted, and the members of this demographic have plenty of investible assets.

Editor’s Note: Investment Executive conducted a draw at the IFB Summit in Toronto for a $100 Petro-Canada gift card. The winner of the draw is Andrew Frith, Newmarket, Ont.