Most read: Stephen Jarislowsky explains why you shouldn't put your clients' money in an RRSP

Most read: Stephen Jarislowsky explains why you shouldn't put your clients' money in an RRSP

Most read: Stephen Jarislowsky explains why you shouldn
The new print issue of Wealth Professional is out. If you can't find the print version the e-version can be found online, here.

One piece not to be missed in the issue...an extended Q&A with the moral voice of Canadian capital markets, Stephen Jarislowsky. It is always a privilege to interview this country's most successful financial advisor. Hard truths and deep wisdom…a chat with Mr. Jarislowsky is always a revelatory experience. This time was no different. He talks out on everything from the real dynamics driving the Montreal corruption scandals to post-war interest rates before explaining (perfectly rationally) why you shouldn't put client money in RRSPs, which is not a bit of advice one hears that often, but is something Jarislowsky has said for years. Think about it: RRSP payouts are taxed as income, while investment funds invested outside of an RRSP are taxed at the lower dividend and capital gains rates. As Stephen Jarislowsky puts it in the WP Q&A:  "You can prove that anyone with relatively large means, an RRSP is something you should never buy. Once you start paying out of your RRSP you pay as income. You don't get any benefit for the lower capital gains tax. If you take the capital gains tax, you only pay half tax. If you have a two million dollar RIF, only one million belongs to you, the rest belongs to the government. If you make 9%, as our firm has done for private clients, I can assure you, if you paid the capital gains you would make more money than if you took it out at the as a RIF. The only reason for a RRSP is to get someone to save. But other than that there is no advantage for a person who is disciplined.”

Also out right now is the WP "Advisors on Fund Providers Survey 2014" If you haven't had a chance to fill it out yet, please, take a minute or two—we'll publish the results in the October issue.
 
10 Comments
  • Michel Guimond 2014-09-12 1:39:57 PM
    One can only be impressed with Mr. Jarislowsky's reputation, but his comment on RRSPs is baloney. We can mathematically prove that RRSPs are good to great vehicle for most people. The deduction and sheltering beats the advantageous tax rate. And if done properly, most people will pay lesser marginal tax rate at retirement than while at work. His comment is so unfortunate given that already so few people invest in RRSPs. Sincerely. Michel Guimond
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  • John Wallace 2014-09-12 3:01:56 PM
    I agree that for most people, RRSPs make sense. One good example, the spousal rrsp. When spouse A earns good income and spouse B very little, it's tough to find a better solution than a spousal plan.
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  • Judy Mulder 2014-09-12 3:55:54 PM
    I agree with both comments and take an individual view for each client based on their personal information. Do they have a pension plan that will cover their basic retirement expenses and what is the spread between current tax rates and retirement tax rates? For the average Canadian without a pension and paying tax at a rate of 25% or more while employed, I'd suggest both an RSP and TFSA. Each client is unique and each situation is also unique. KYC
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