Tax-planning gaps for branch advisors

Advisors from all banks surveyed said they’re not allowed to give their clients comprehensive tax-planning advice, so they have to refer complex questions to a tax expert, either internally or externally. Yet advisors say clients want tax information at branches, and some advisors would like to be able to provide that information, either by educating themselves or through additional resources.

The needle is barely moving in that area, however. Similar to 2014, the Report Card found that less than 1% of advisors surveyed said they hold the CPA designation, up from 0% in 2018. As for the TEP designation, less than 1% have it; this amount was zero a year ago and less than 1% in 2014.

Of the six banks surveyed, Toronto-based Bank of Montreal (BMO) saw the greatest year-over-year drop in tax support performance, to 6.7 from 7.5.

“We aren’t allowed to do too much tax-planning advice, but a lot of people are asking,” says a BMO advisor in the Prairies.

In an emailed statement, a BMO representative noted that there’s a distinction between branch-based planners and full-service advisors: the former group “doesn’t provide advice on tax-planning services,” but can identify gaps and refer customers to in-house or external professionals.

Two other Toronto-based banks tied for lowest performance rating for tax support, at 5.7: Bank of Nova Scotia and Toronto-Dominion Bank (TD). In 2018, TD’s rating was 6.1 and Scotiabank’s was non-calculable due to insufficient responses.

Advisors from both banks said they wanted to provide more detailed answers to clients’ tax questions, and some said they need to address tax queries when selling products.

“Scotiabank doesn’t offer anything in regard to tax planning. Anything to do with tax we’ve been told to tell [clients], ‘Go to an accountant.’ But I’d like to be able to help direct them a little bit more,” says a Scotiabank advisor in Atlantic Canada.

One of Scotiabank’s advisors in Ontario says, “We cannot make tax decisions. But [for] the products we offer, we weigh in [on] what is the best product after tax, so we aren’t totally ignorant.”

As for TD, an advisor in Alberta says, “[I] don’t go too in depth because we’re not tax professionals. I wish we could do more or get more support.”

Jamie Auerbach, vice president of advice and service effectiveness at Scotiabank, says advisors at the bank level must refer clients to experts.

“If customers are referred to wealth management, [those advisors] have the ability to provide specific tax advice, but we don’t do that in the branch,” Auerbach says.

David Terry, vice president and head of TD Wealth Financial Planning, says TD allows advisors to provide basic tax information. Still, most questions should be referred to a tax expert the client knows; if they don’t have one, the bank can make a referral, he adds.

“We don’t want to be in a position where we’re providing specific tax advice, largely because that’s the realm of a tax accountant,” Terry says.

Royal Bank of Canada (RBC) received the highest performance rating for tax-planning support, at 8.7, edging second-place Canadian Imperial Bank of Commerce (CIBC) by 0.3. Advisors at the two Toronto-based banks gave the same importance rating for tax planning: 9.3.

“I don’t do a lot of tax planning, but if I do have a question, I can phone [my resource line],” says an RBC advisor in the Prairies, referring to the bank’s centralized group of experts.

While some RBC advisors noted shortcomings in the bank’s tax offering, most saw tax support as their ability to access these experts – not what they could provide clients directly. This strategy was confirmed by Michael Walker, vice president and head of mutual funds distribution and RBC Financial Planning at RBC. He says branch advisors are able to give some tax advice related to investment strategy, but must relay more detailed questions.

“Within wealth-management services, we’ve got a team of tax, retirement and estate experts, and that centralized group is available by phone for our advisors, including our branch-based financial planners,” Walker says.

CIBC takes a similar approach, says Kathleen Woodard, senior vice president of delivery and operational effectiveness, personal and small business banking at CIBC. Advisors don’t build tax plans but have “general tax knowledge.” In-house experts produce articles and webcasts, and the bank offers tax resources to branch-based staff.

Advisors across all banks made similar comments about their institution’s support for wills and estate planning as they did for tax planning. The overall average performance rating for the wills and estate category slipped to 7.6 from 7.7 year-over-year, while the overall average importance rating remained the same at 8.9.

“There isn’t any [estate-planning support]. I’ve actually asked for it. Their response was, ‘It’s coming, it’s coming.’ That was two years ago,” says a TD advisor in Ontario. The bank had the lowest rating in this area out of the Big Six at 6.3, down from 7.0 in 2018.

BMO was rated 0.5 lower year-over-year, at 7.4. “We do a lot with beneficiar[ies], but for actual wills it goes to BMO Private Wealth. We probably could do more; it’s the size of the client that makes a difference,” says one advisor in Atlantic Canada.

CIBC and RBC also led this category in performance, each receiving an 8.6 but falling year-over-year. While most advisors reported positive experiences, some mentioned issues.

“[We] do have support [from] CIBC Trust, but they are so busy. Increase the staff in regard to trusts and estates,” says a CIBC advisor in Ontario.

An RBC advisor in the Prairies says, “We don’t have as good support as we need. [There’s] no wills and estate planning team.” Another RBC advisor in Atlantic Canada adds, “We’re getting there. Our estate planning partners are capable but overwhelmed.”

Both the wills and estate planning and tax categories have remained among the 10 lowest-rated for all banks for much of the past five years.