As debate over the rules governing retirement savings gains momentum, a study from the FP Canada Research Foundation is reminding financial planners that there\u2019s no one-size-fits-all approach to creating a RRIF withdrawal strategy.<\/p>\n
Drawing on research released in October, the foundation said some financial planners may be oversimplifying complex circumstances, leading to potential problems for clients.<\/p>\n
\u201cWhen helping retirees choose the right withdrawal strategy, financial planners must consider the full complexity of their circumstances,\u201d the FP Canada Research Foundation said in a statement on Tuesday.<\/p>\n
Its research paper, “Retirement Drawdown Choices,”<\/a> showed that many financial planners have a bias toward encouraging clients to withdraw more funds than required from their RRIFs each year \u2014 and doing so earlier than necessary in an attempt to help them achieve financial goals.<\/p>\n \u201cThe truth is more complex,\u201d the foundation said. \u201cNotably, financial planners recently surveyed said withdrawing a higher level of RRIF assets, up to the threshold of a client’s current tax bracket, was their top option for increasing the client’s income in the most tax-efficient way.\u201d<\/p>\n A simplistic approach is dangerous, it said.<\/p>\n \u201cThe research shows that projections based on just one potential future scenario are unreliable and misleading.\u201d<\/p>\n The report\u2019s author, actuary Doug Chandler, said financial planners need to take into account things like current and future tax rates, income-splitting opportunities, and investment risks and returns.<\/p>\n “This research demonstrates the importance of seeing the bigger picture,” he said.<\/p>\n RRIFs have become a hot topic this spring since the Department of Finance launched a review<\/a> of the program’s underlying assumptions. The review was sparked by a private member’s motion in the House of Commons and has since drawn comments from a number of industry groups.<\/p>\n