How RRSP season has changed, and how it hasn’t

While technology, new registered account options and advisors’ efforts to sign clients up for regular contributions have made RRSP season less hectic, Clarke and other advisors we spoke to said this year’s season, which wraps up on Monday, has been on par with recent years.

Virtual meeting and account access technology adopted during Covid has made it easier to handle a large volume of work more efficiently, Clarke said.

The pandemic “forced a lot of financial institutions, where their technology was very backdated, to bring it up to speed … to something reasonable,” he said.

“RRSP season has the most transactions out of any two-month period of the year for us, so by extension, it just makes that easier as well.”

Gabriel LeClerc, a financial advisor with Edward Jones in Arnprior, Ont., said it’s still the time of year when clients are most engaged because the March 1 RRSP contribution deadline (this year March 3), is “imprinted” in their minds.

“I hear it all the time from other advisors that RRSP season isn’t what it used to be.” But LeClerc, who has more than 25 years of experience in the financial services industry, said based on meetings, extra contributions and other communications, he’s seen a 50% increase in engagement with clients this year. He adds it’s the perfect time to check if clients are on track to meet their goals, to consider if their objectives or risk tolerance has changed, and to update their financial plans.

Dave Hamilton, a certified financial planner with IG Wealth Management in Sicamous, B.C., said this year has been busier than the past couple of years.

“I believe this is because more clients have made a conscious effort to earn more as inflation continues to increase living costs,” he said in an email. “With the markets being as strong as they have been, more clients have confidence to invest in their future.”

Cost-of-living concerns have prompted some clients to adopt side hustles, Hamilton said, so they use a to reduce taxes on higher-than-expected income.

Josh Hosein, a senior wealth planner with Baun & Pate Investment Group, Wellington-Altus Private Wealth in Calgary, said his practice is seeing around the same volume of business. However, more people are in the habit of making regular contributions so there’s less of a need for large, lump-sum contributions at the beginning of the year. Instead, Baun & Pate advisors help clients assess whether they can do a “top-up” to bring their taxes for the year closer to zero.

The importance of making regular contributions, which takes advantage of dollar-cost averaging, hasn’t gotten through to everyone though. Hamilton estimates that less than a third of his practice’s pre-retirement clients have signed up for automated or pre-planned contributions.

“It’s important to note that many of these clients are family members of our larger clients and may not be as engaged as we would like,” Hamilton said in an email. “However, among our engaged pre-retirement clients, over 70% have signed up for automated or pre-planned contributions.”

Sometimes that’s just because there are better alternatives, such as a TFSA for clients in lower income brackets, or goals outside of retirement that are more important to clients.

“Many of our clients prioritize Tax-Free Savings Accounts over RRSPs unless they are in a high-income situation,” he said. “Additionally, many of our pre-retirement clients have employer-matching programs, which often drive them towards TFSAs or potentially spousal RRSPs as they are already contributing at a high rate with their employer plan.”

Account alternatives

“One of the big differences — and part of it is because of the planning that we’re doing for clients — it’s not necessarily ‘let’s put everything into an RRSP.’” Hosein said.

For younger clients who want to buy their first home, it makes more sense to target a first home savings account (FHSA) before an RRSP, since they still get the tax deduction for this year and it grows tax free, he said.

Before the FHSA was introduced in 2023, most younger clients buying a first home would transfer money from their RRSP to the home buyers’ plan for first-time purchasers. However, that money would eventually have to be repaid into the RRSP.

Many Baun & Pate clients have embraced FHSAs, Hosein said, with younger investors contributing their own money, and parents and grandparents gifting money for the accounts as well.

“So we are seeing just about every client as their kids turn 18,” are opening an FHSA, he said. “For younger investors, that is the No. 1 priority.”

It’s part of a shift away from the mentality of maxing out RRSP contributions every year.

An Edward Jones survey released in February showed only 15% of Canadians polled planned to contribute their maximum amount to their RRSP, a drop of six points from the previous year.

The survey also revealed that only 39% of Canadians planned to contribute to RRSPs this year —  a 10-point drop from 2024 — with respondents identifying insufficient income, high cost of living and debt repayments as the primary barriers to investing.

Economic uncertainty

As for client concerns around the potential economic and investing impacts of U.S. President Donald Trump’s plans to institute tariffs on imports from Canada and just about everywhere else, advisors report that clients largely understand that staying invested for the long term is the key to success.

“I am not surprised that our clients continue to invest, as we provide extensive education about the markets,” Hamilton said. “We emphasize that markets are very reliable in the long term, even with world events over the past 100 years. We also educate our clients that markets are unpredictable and unreliable in the short term, with obstacles like tariffs, wars, or other events affecting short-term performance.”

Since a lot of MCO’s focus is on long-term financial planning, it helps to show clients that even in a scenario where the markets drop 10 or 20%, they’ll still be able to retire, Clarke said.

For clients that need cash, MCO keeps one or two years of retirement needs or cash needs in some sort of short-term bond or cash position.

“So even if the market did drop 20%, they’re not withdrawing from the amount that’s dropped,” Clarke said.

While Hosein said there have been more ‘hand holding’ calls, especially during moments of greater market volatility, nobody’s panicking yet.

“We are by and large holding the line,” he said, rather than making knee-jerk reactions. “For the most part, once we’ve explained our situation and our rationale, clients are OK with that. We haven’t had anybody come through and demand we go all the cash or anything like that.”

This article contains a correction.