Advisor questions proposed financial planning tax credit

Citing the results of FP Canada’s 2022 Financial Stress Index survey, the planning tax credit policy paper from StrategyCorp said only 4% of Canadians work with a financial planner. The stress index survey also found 16% of Canadians say they work with a financial advisor, 8% work with an investment advisor, 5% with an insurance agent, and 2% work with a different type of financial professional.

“It’s probably more accurate to say only 4% of Canadians work with a financial planner who charges only a fee for tasks or by the time worked. I don’t charge that way with my work, and nor do the vast majority of financial advisors,” McGruer says. “This initiative would qualify only a specific type of advice for the credit, and effectively discriminate against Canadians who choose other types of advice.”

To promote financial resilience across the country, the paper also suggests that the federal tax credit be geared towards Canadians who are using financial planning advice for the first time. The proposed credit would only be applicable to plans covering advice across multiple areas, to reflect “the comprehensive approach of financial planners and the multifaceted character of financial resilience.”

“Who decides what qualifies as a first-time user? Is that when they need it, or when they just want to use it? Is it when they feel like it, or when they get marketed?” McGruer says. “If an advisor wanted to help their clients access the credit, they could game the system by giving more advice than they actually need or want, so their clients could get invoiced and become qualified. … Not everybody is going to be honest about this.

“A core part of FP Canada’s mission is to promote the value of financial advice, and I support that,” McGruer adds. “But when you step into using the force of government to have some people’s financial advice paid for by others, I think that goes well beyond any kind of mandate that a voluntary association like FP Canada has.”

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