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RDSPs start out with a low dollar value and generally take many years to grow to a level that generates compensation an advisor may consider sufficient.FG Trade/iStockPhoto / Getty Images

While uptake of the registered disability savings plans (RDSPs) remains low, the vehicle can play an important role in financial planning for people who qualify for the disability tax credit, say advisors who specialize in special needs planning.

More than one-third (35.1 per cent) of people under the age 50 who qualified for the disability tax credit had an RDSP in 2020, according to Employment and Social Development Canada.

The key to increasing that rate is for advisors to raise awareness among clients and either partner with a specialist or become one themselves.

“[The low uptake] is because there are very few people across the country who know enough about the RDSP to help people out in opening [one] up,” says Steven Williams, an advisor with Investia Financial Services Inc. in Calgary.

“People call me up after they’ve talked to their local [bank] branch and [were told], ‘Oh, we don’t do that anymore,’ or ‘Here’s a 1-800 number.’ Then, they contact the 1-800 number [and are told], ‘We’ll send you the paperwork. You fill it out and then send it back.’”

Without someone to help them navigate the paperwork, people may make mistakes and omissions that prevent the plan from being fully registered, Mr. Williams says. Even if everything is filled out properly, they’re often left on their own to sort out problems that may arise, such as not receiving the grants and bonds to which they’re entitled.

Yet, advisors who are in a strong position to help people coordinate RDSP planning with other disability-related planning often steer clear of providing advice in this area.

In part, that’s because the administrative requirements can appear daunting, Mr. Williams says. In addition, RDSPs start out with a low dollar value and generally take many years to grow to a level at which it generates the compensation an advisor may consider sufficient.

“If there’s only a couple of thousand dollars in the account, we’re making pennies on the dollar,” he says. “So, most advisors completely shy away from it because it’s not worth their time. For me, whether it’s worth my time or not, it’s important that all Canadians [who qualify] have access to the RDSP.”

More people are eligible than imagined

Eligibility for the disability tax credit and, therefore, for an RDSP, is broader than many may think.

Mr. Williams points out that depending on the severity, it can include diseases such as type 1 diabetes, Crohn’s disease, colitis or irritable bowel syndrome, for example. Opening the conversation about RDSPs with clients can be as simple as asking if anyone in their circle has these relatively common conditions.

There can be significant financial rewards for advisors who are willing to take the time to become knowledgeable in this area because, in many cases, the RDSP is “the tip of the iceberg,” says Ron Malis, advisor with Reegan Financial in Mississauga.

“[Many advisors] don’t recognize the value of the RDSP from a business perspective,” he says. “There is a very strong correlation between how much money I’m managing inside an RDSP relative to how much money I’m managing in other account types. … Whatever I have in RDSPs, I have close to double the assets from the same clients in the other account types.”

He would like to see planning for people with disabilities recognized as a separate discipline with a path to certification, similar to the way some advisors specialize in divorce planning. That would help the general public know where to turn for guidance on RDSPs, the disability tax credit, and the ins and outs of the provincial programs people with disabilities often rely on for support.

“Recognize the competitive business advantage is that there aren’t a lot of us, and there’s a lot of business to be had – more than you could imagine,” Mr. Malis says.

Specializing can pay off

Geoffrey Zaldin, co-founder and chief executive officer of Special Needs Financial Inc. in Toronto, says low awareness among advisors is a big reason why so few people who qualify have opened up RDSPs. But it takes more than awareness to provide people with disabilities the financial planning support they need.

“There’s really knowing what the RDSP is and explaining it to people … and then there’s explaining how that affects other government services, getting inheritances, and [provincial programs such as] the Ontario Disability Support Program,” he says.

His strategies for attracting more clients who require his specialized services include connecting with accountants, wills and estate lawyers, personal injury lawyers, and charities.

“I’ll just say, ‘I’m holding myself out as an expert in the field. If you have somebody who falls into this category, I can help them,’” he says.

For Mr. Zaldin, the investment in time to understand the complexities of special needs planning has been well worth it because the rewards go beyond the financial.

“You’re doing a lot of good … being able to help people get from a point of panic and concern to a point of where it’s going to be okay and, in fact, it’s probably going to be better,” he says.

“And you can still make a reasonable living just doing special needs [planning], even if people don’t come to you with other assets. But, generally, they will, because there’s a level of trust.”

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