• Fri. Dec 8th, 2023

Why is this retiree having so much trouble finding a financial planner to help him draw on his savings tax-efficiently?

One of the hardest jobs in financial planning is helping people turn a lifetime’s savings into tax-efficient retirement income.

Don Jackson found this out the hard way. The 70-year-old retiree from Bayfield, Ont., has been searching without success for a financial planner to help minimize tax as he draws down on the money he and his 64-year-old wife have saved in registered retirement savings plans.

The couple has an adviser at their bank and they’re fine with how their investments have performed. But they need more than portfolio management now, starting with help in finessing the conversion of RRSPs into registered retirement income funds.

Mr. Jackson recalls asking his adviser for thoughts on this process, including tax advice. “He said, ‘I’ can’t give you that. It’s not what I do. I look after your portfolio and try to optimize it.’”

The financial advice business is happy to help people build assets, but it’s much less eager to provide help with what’s known as decumulation. In fact, some planners and advisers will pass on providing this kind of work.

In search of tax-focused planning, Mr. Jackson consulted a friend and got a referral to an adviser who said he’d be happy to manage his portfolio but wouldn’t be able to give tax advice. “He was a very nice person – all of them are pleasant on the phone.”

How much money to save yearly to retire comfortably

This planner referred Mr. Jackson to a second person, who impressed him with her focus on the entire family’s finances. “I said this is great, I really think we should go ahead. She said, I hate to tell you, but I am not taking on any new clients.”

This second planner gave him a referral to a third person, who heard what Mr. Jackson was looking for and said they weren’t a fit.

Mr. Jackson is still looking for help with his tax questions about retirement income. People in the planning business say his difficulties finding someone reflect how complicated decumulation is compared to pre-retirement planning.

“I think that many people really do underestimate the complexity,” said Rona Birenbaum, a certified financial planner, or CFP, with Caring For Clients. “A traditional adviser might be comfortable doing a retirement projection for a 40-year-old, but it’s different when you get into tax-efficiency.”

Natasha Knox, a CFP and founder of Alaphia Financial Wellness in New Westminster, B.C., said decumulation planning is a challenge because of the level of detail required, and the unknowns the planner must deal with in terms of longevity and future spending needs for things like health care. “I personally think it’s fiendishly difficult,” she said by e-mail.

Decumulation planning is demanding in terms of both skills and the time commitment, added Julia Chung, a CFP with Spring Planning Inc. in Vancouver.

“If the structure of the firm a planner works for is based on gathering and growing assets under management, it’s hard to justify, from a business perspective, the time, effort, and education that goes into doing a really great job with retirement income planning,” she said in an e-mail.

Another reason why planners can be picky in accepting clients is that they’re so busy. Canadians are increasingly comfortable with the idea of paying directly for planning, and some planners are either putting new clients on a waiting list or declining them.

There are some online resources for finding planners who charge a flat our hourly fee and are thus more likely than others to take on a client who wants specific help with decumulation:

Mr. Jackson said he’s tried some of these resources, but finds them unavoidably lacking in detail. “There’s no way when you’re reading them that you can say, ‘that’s the person – they understand me, they know what I need.’ ”

And yet, it looks like working through these lists and asking for referrals from friends and family is Mr. Jackson’s best way forward. Ms. Birenbaum’s thought on his struggles to find a planner: “It could be that he just didn’t call enough people.”

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