Individual pension plans present a significant opportunity for financial advisors to build client relationships and attract high net worth clients, and yet many advisors lack awareness of these plans, Trevor Parry, executive vice-president at actuarial consulting firm Gordon B. Lang and Associates Inc. said this week.

In a conference call on Thursday, Parry explained that individual pension plans, which are a type of registered defined benefit pension plan, offer more tax shelter room than a traditional RRSP.

The plans are best suited to business owners with a significant amount of income, and can substantially boost clients’ savings in retirement, Parry said. At a time when baby boomers are approaching retirement, the plans could become much more popular in the years to come.

“The IPP market in Canada is growing, but remains largely untapped,” said Parry.

There are currently fewer than 10,000 IPPs in place across the country, leaving a hefty market of potentially hundreds of thousands of small businesses and incorporated professionals needing a plan to address retirement, Parry said.

Furthermore, research by carrying dealer MRS found that only a small subset of advisors are familiar with IPPs, according to Mark Zochowski, business development executive with MRS. His research found that few advisors are knowledgeable enough on the plans to feel comfortable recommending them.

Gordon B. Lang and Associates is teaming up with MRS to launch a new type of individual pension plan called Total IPP. The new product lets advisors get their clients into an individual pension plan without burdensome administration, since Gordon B. Lang acts as a full-service provider that manages the administration process.

“The high quality and service-oriented approach of the Total IPP product helps cut out the red tape, allowing advisors more time to focus on their clients,” said Andrew Dalglish, CEO of MRS.

The new product is exclusively offered to advisors who use the MRS platform of investment services.

The ideal client for an individual pension plan is at least 42 years old with annual income of at least $100,000, and is self-employed, the executives explained. In addition, the longer the client been working the better, since this results in larger amounts of money contributed to the plan.

Advisors who educate themselves on individual pension plans could benefit in a variety of ways, according to Parry.

“They represent an opportunity to accelerate clients’ retirement savings, reduce their risk, enhance the client-advisor relationship,” he said, “and most importantly, the opportunity to recruit high net worth clients without having to rely on a market-based strategy.”

IE