Discover how Manulife RRSP options can strengthen your clients’ retirement plans and outperform generic RRSP accounts where it matters most
As a financial advisor in Canada, you often help your clients figure out how to save for retirement in a way that fits their financial goals. A Registered Retirement Savings Plan (RRSP) can have a vital part in that discussion.
But not all RRSPs are created equal, and often, the key to maximizing the benefits is choosing the right provider. In this article, Wealth Professional puts the spotlight on Manulife RRSP products. We also talked to Manulife leaders to provide insights into some of the plans they offer.
How does Manulife RRSP work?
A Manulife RRSP is a registered retirement savings plan offered through Manulife and registered with the Canada Revenue Agency (CRA). Your clients can put money into the plan and invest it in different qualified investments while benefiting from tax advantages.
"Manulife Wealth advisors can recommend a wide variety of investment options to be held within an RRSP," said Julie Seberras, Head of Wealth Planning and Practice Management at Manulife Wealth.
Manulife RRSPs are designed to hold a variety of investments such as:
Seberras confirmed this and said that Manulife RRSP offerings "are subject to the advisor's licensing, [and include] stocks, bonds, ETFs, mutual funds, and guaranteed products."
With Manulife, your clients can access RRSPs in two main ways:
- an individual Manulife RRSP, such as a Manulife Bank RRSP savings account or GIC
- a Manulife group RRSP that is sponsored by their employer
Each RRSP is still an individual account for your client. What changes is how the plan is opened and how contributions are made. For more on RRSPs in general, watch this video:
Gain a deeper understanding of how RRSPs work when you read this linked article!
Manulife RRSP options
Manulife Bank offers RRSP-friendly savings products that give your clients conservative investment choices within their Manulife RRSP. These focus on interest and capital protection, and can fit well for clients who value stability, or for the fixed income part of a retirement plan:
Registered Advantage Account inside an RRSP
The Manulife Bank Registered Advantage Account is a high-interest savings account that sits within an RRSP. It is designed for those who want cash holdings to earn interest while staying inside the registered plan. Some of the features include:
- competitive interest on every dollar in the account
- easy access to funds when your clients need them
- no minimum balance requirement
- no set-up fees
This type of Manulife RRSP account can work well for clients who are building RRSP savings gradually. It can also be suitable for those who anticipate short-term needs inside their registered plan.
Do you have clients who feel anxious about stock market swings and want part of their retirement money in cash? The Manulife Bank Registered Advantage Account might be a good fit for them.
"There is a daily high-interest savings account that is fully liquid and GICs ranging from 30 days to five years," said Kerry Reinke, Head of Specialized Lending at Manulife Bank.
When asked what set Manulife RRSPs apart from industry rivals, he said: "unlike the majority of the marketplace, Manulife Bank does not charge any fees on transfer outs for the Registered Advantage Account."
"This makes it an ideal solution for parking funds in a registered vehicle to meet CRA deadlines, while taking the time to decide or wait out market fluctuations prior to transferring funds into long term options with Manulife."
Long-term RRSP GICs
Manulife Bank offers GICs that your clients can hold inside their RRSP. Long-term RRSP GICs usually have:
- a minimum investment of $2,500
- terms ranging from one year to five years
- competitive guaranteed rates for the chosen term
- no set-up or maintenance fees for the RRSP GIC itself
Long-term GICs appeal to clients who value predictability and want to lock in a rate for several years. Inside the Manulife RRSP, they also benefit from tax-sheltered interest.
Short-term RRSP GICs
For clients who need more flexibility, short-term RRSP GICs are also available from Manulife Bank. These usually:
- have a minimum investment of $25,000
- offer terms from 30 days up to 364 days
- provide competitive fixed rates for those shorter periods
Short-term GICs can be used to manage near-term cash needs within the RRSP or to set up a ladder of staggered maturities. This gives your clients opportunities to reinvest regularly based on interest rates and their retirement timeline.
Many Manulife Bank RRSP deposits are eligible for Canada Deposit Insurance Corporation (CDIC) coverage, within the standard limits and rules. That added protection can help reassure your more cautious clients.
"With the added benefit of CDIC coverage, [these] options offer clients a secure place to invest their retirement savings," said Reinke.
Manulife group plans
As for members of Manulife group plans, they can choose an investment style that suits their knowledge and interest in investing. Within the group RRSP, they can:
- choose simpler, packaged options if they want a hands-off approach
- build a customized mix of funds if they are more engaged and informed
You can encourage your clients to sign in to the Manulife app or secure member site and review the investment options available in their specific plan. Then, discuss which mix aligns with their retirement goals and risk comfort.
When your clients leave their workplace
If your clients leave the employer that sponsors the Manulife group RRSP, their retirement savings do not stay behind. The RRSP balance moves with them. Most plans allow these options:
- take the money out in cash by cheque or direct deposit, which would be taxable
- transfer the RRSP to a new group retirement plan if their new employer offers one
- move the funds into an individual retirement plan in their own name
- transfer the money into a group plan they can join on their own, such as the Manulife Personal Plan
The exact options and steps appear in the plan booklet, but the critical point is that the RRSP assets belong to your clients, not to the employer.
When your clients retire and approach age 71
Retirement itself does not force any instant change to a Manulife RRSP. As long as your clients have RRSP contribution room, they can keep contributing to their RRSP until December 31 of the year they turn 71.
However, by that date, they must convert their RRSP into some form of retirement income plan, so they can begin drawing the money as income. You can help them prepare for this shift several years in advance.
Look at expected spending needs and other income sources. You can also review the timing of your clients' withdrawals. Learn more about group RRSPs when you watch this clip:
Curious about how your clients' RRSP contributions will grow in the next few years? This online RRSP calculator can provide an estimate.
HBP and LLP with Manulife RRSPs
One advantage of having a Manulife RRSP is access to government programs that allow specific withdrawals without immediate withholding tax, such as:
- Home Buyers' Plan (HBP)
- Lifelong Learning Plan (LLP)
With these programs, eligible clients can withdraw up to a set amount to help buy a first home under the HBP. They can also withdraw up to a set amount to fund education or training under the LLP.
Normally, RRSP withdrawals trigger withholding tax. But under HBP and LLP, qualifying withdrawals do not have that upfront withholding so long as your clients follow the program rules. Over time, they must repay the withdrawn amount back into their RRSP according to government repayment schedules.
For Manulife group RRSPs, some sponsors restrict withdrawals in general but still allow exceptions for HBP and LLP. Your clients should review their plan booklet to see the exact rules for their arrangement. You can help them decide whether using RRSP savings for a home or education makes sense, given the impact on their long-term retirement income.
Want to know how to withdraw funds from an RRSP? Find out when you read this guide!
Where Manulife RRSP accounts shine versus generic RRSP accounts
A Manulife RRSP gives you many ways to help your clients build retirement savings while managing their tax bill, both now and in the future. With individual Manulife Bank RRSP accounts and GICs, your clients can choose stable, interest-bearing options.
With Manulife group RRSPs, they can benefit from payroll deductions, possible employer contributions, and a guided investment lineup. For those searching for an RRSP that fits their financial goals, the Manulife experts have this advice: "Always be sure to do your research and understand the features offered on each product," Reinke said. "The key points one wants to seek out are liquidity, fees, and rates of return."
"It is always recommended that [clients] work with [financial advisors] to ensure [that they] are investing in the most optimal product that meets [their] unique and individual needs."
As for Seberras, she said that you must "determine what level of advice is appropriate for [your clients] to help navigate whether an RRSP is the best account type for [their] objectives, tax situation, and savings strategy and which investments are most suitable."
"RRSPs are an important aspect of a financial plan, and it is important to understand how they will help [your clients] achieve [their] retirement goals."
When your clients realize the benefits of having a Manulife RRSP plan, they are more likely to stay disciplined and committed. With your guidance, that discipline can turn regular contributions into a solid base of retirement income over time.
For more tips and strategies on how to maximize your clients' Manulife RRSP plans, visit our Practice Management page.
