Tax season a reminder that value isn't found in portfolio management

Maxing out high-net-worth clients' RRSPs or TFSAs is table stakes: now's the time to up your offering

Tax season a reminder that value isn't found in portfolio management
Myron Genyk, personal finance expert and CEO and Co-Founder of Evermore Capital.

As tax season ramps up, higher net worth clients should have the ability to max out their contributions to both, making full use of the contribution room and of all the tax benefits that come with it, says Myron Genyk, personal finance expert and CEO and Co-Founder of Evermore Capital. But this is the low-hanging fruit, and advisors can and should do better.

Especially for this client cohort, Genyk stresses that the value advisors provide isn’t so much on the portfolio management side — in fact, he believes the advisors who are laser focused on outperforming the markets are the ones who risk becoming obsolete over the next decade — but on being a financial coach.  

There are a lot of great products out there that do the management for a low fee, including Evermore Capital’s Retirement ETFs, which are all-in-one retirement solutions. If that one fund is put into a client’s RRSP or TFSA for the purpose of retirement, “that’s the whole portfolio managing piece set aside and advisors can look at creating plans around cashflow management, intergenerational wealth transfer, and insurance strategies,” Genyk says.

Those high-value topics are where advisors can really shine, especially given a collective acknowledgement of an emerging retirement crisis in Canada. It’s table stakes to help clients maximise various options available to them and guide them on best usage, such as the TFSA being a better vehicle for an emergency fund or money for short-term purchases while you wouldn’t want to touch the RRSP because of how it’s structured specifically for retirement, but increasingly that won’t cut it — especially in today’s uncertain environment. In light of the changes wrought over 2022, there’s a golden opportunity for advisors: the best thing they can do for a client’s future is properly assess their financial status and wellbeing, starting by revaluating their budgets and plans and making adjustments where necessary, and this approach not only benefits the client but the advisor in cultivating that relationship.

Genyk recommends reminding clients concerned about that big picture that while stocks and bonds historically have outperformed inflation with positive real returns over the long run, the same can’t be said of GICs and saving accounts. For longer-term goals like retirement, “the value will erode over time,” he says, adding that in those longer-term accounts, “you shouldn’t be fiddling too much with the investments” — and that’s why products that have the portfolio management piece built in make a lot of sense.

“We put a lot of thought, analysis, and rigor into designing our products to be the perfect product for advisors to put in client’s RRSPs,” Genyk says. “Then they don’t need to worry about the portfolio management side, and can focus more on being a good coach and mentor for their clients and helping them navigate times of uncertainty.”