Wealth managers are bracing for a busy day even though fewer Canadians say they plan to drop cash into registered retirement savings plans this year in the wake of the market turmoil.
A recent Bank of Montreal study found that 61 per cent of Canadians intend to a make a contribution to their RRSP accounts by Monday's end-of-day deadline, down slightly from 64 per cent last year.
Despite the decline, the last day of the RRSP season is expected to be a busy one for wealth managers. Toronto-Dominion Bank spent the past week contacting clients by phone and e-mail who already hold RRSP accounts – as well as notifying customers in-branch and online with RRSP reminders.
"We definitely saw higher movement last week and are expecting to see a higher-than-normal level of clients coming into the branch and using our call centres and online platforms," said Linda MacKay, senior vice-president of personal savings and investing at TD Bank.
Some Canadians may be sitting on the RRSP sidelines owing to this year's market volatility – and a fear of making a wrong investment decision, Ms. MacKay said. But that should not deter them, she said.
"The first goal is to make a contribution. Clients are able to park money in a low-risk cash account if they are unsure of what to do – such as a high-interest savings account – until they have the time to discuss other investment options," Ms. MacKay said.
Larry Moser, divisional manager at Bank of Montreal in Ottawa, also said that Canadians need not make any rash investment decisions during the RRSP crunch time.
"People spend more time planning for a vacation than they do planning on how to invest their own money," Mr. Moser said. "The important thing to remember is you don't have to make any last-minute investment choices. For today, you just have to decide how much you want to contribute to your retirement savings."
The average amount already contributed to an RRSP account for the 2015 tax year has increased marginally to $3,984 from $3,738 this time last year, according to BMO.
Those amounts are slightly higher in Ontario (an average of $4,253) and in the Prairies ($4,149).
Although RRSPs have been around for almost 60 years, one of the major hurdles for banks and wealth managers is that fewer than half of Canadians (41 per cent) say they are familiar with the specifics of the RRSP program, according to the BMO study.
As well, an online survey by H&R Block found that only half of respondents say they fully understand how RRSPs and tax-free savings accounts (TFSAs) can affect their tax returns, said Caroline Battista, a senior tax analyst at H&R Block Canada.
"Canadians should know that RRSP contributions are a tax deduction and TFSA contributions are not, and therefore do not impact a person's tax situation," Ms. Battista said.
The introduction of the TFSA in 2009 could also account for the dip in the number of RRSP users as Canadians now have an additional vehicle for retirement savings, said Frank Bilodeau, district vice-president of the Ottawa and West Quebec District at Bank of Nova Scotia.
"It now becomes important for the client to look at all the retirement savings options available to them. For some individuals, the RRSP account will be the best investment vehicle, where others may focus more on saving in a TFSA," Mr. Bilodeau said.
"Clients now have to decide if – and how – they want to split those retirement dollars."
Canadians looking to make Monday's RRSP deadline can do so in person at a bank branch, through online banking, through a discount brokerage (if clients already have an existing RRSP account) as well as through telephone banking – although be prepared for longer-than-normal waiting times.
Scotiabank has extended branch hours in select regions and will arrange after-hours meetings if scheduled.
CIBC has extended its wealth management call centre hours until 11 p.m. Monday to offer RRSP support.