One enterprising advisor has successfully tapped demand for a misunderstood registered savings plan, quietly forging leads and giving bank competitors a run for their money.
“A number of years ago I arranged my first Registered Disability Savings Plans (RDSPs) for a disabled client who’d been in a car accident and was confined to a wheelchair, suffering from brain damage,” Ryan Colwell, an advisor with IPC Investment Corporation, told WP. “He was 30 years old and I was doing business with a family member.”
Colwell quickly realized that client barriers to use weren’t as high as billed by many in the industry and that referral opportunities were tremendous.
His comments come as many advisors are looking for new opportunities. Colwell believes it’s an area where advisors can capitalize in an effort to grow their client books while helping particularly vulnerable clients at the same time.
While RDSP contributions are not tax deductible, they act much like an RRSP allowing advisors to use funds for mutual funds and other commission-yielding investments anyone who is eligible for a disability tax credit is eligible to participate in the plan, with family members usually contributing on that person’s behalf. You must have a client under the age of 60 and that client can only have one RDSP at any time.
The overall lifetime limit for the beneficiary is $200,000, and as Colwell notes contributions must hold for 10 years before you can withdraw, or you’d be forced to pay the money back in full.
Where it gets interesting is that for the first $500 contributed into the RDSP, the beneficiary will receive $3 for every $1 contributed. For the next $1,000, the beneficiary will receive $2 for every $1 contributed, according to RDSP.com.
Bank branches have been particularly effective in selling those myriad benefits and handing most the investments.
That could change as advisors follow Colwell’s lead in the hunt to diversify their books in the CRM2 world.
“We have sold many RDSPs, and while it’s a small portion of my total book, it’s helped in a number of different ways, dealing with people with learning disabilities, diabetes, and cognitive impairment.
“I wonder if many reps truly understand.”