A new provincial savings plan set to be introduced in Quebec on July 1 has independent advisors outraged and calling for reform.
By: Catherine Martellini
The introduction of the Voluntary Retirement Savings Plans (VRSP) in Quebec set for July 1 sends a message to taxpayers that financial advice isn't necessary to help build their savings, argues the Independent Association of Financial Advisors of Quebec (RICIFQ).
"The VRSP puts all advisors in one basket regardless of their license to practice" says Flavio Vani, President of the RICIFQ.
Vani said that for years, the government has insisted on obtaining permits to distribute specific financial products as a means to protect the public. However, under the new regime, this obligation is removed for those selling annuities. This legal requirement will be waived for 24 months for financial institutions that do not house subject matter experts.
"It is a slap in the face for the representatives who have complied with the legal requirements and this is in contradiction with the values of transparency ... the government advocates (for) during all these years," he says.
The government's commitment to improve retirement for taxpayers is welcome, but the savings choice is what's in question. Critics argue that the VRSP harms those the government is seeking to protect.
The product group annuity offered under the VRSP, for example, is not a one-size-fits-all approach, and is particularly unsuitable for individuals with low to moderate incomes. (continued)
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According to Maxime Lefrancois and Mathieu St- Onge of the RICIFQ's research and socio-economic information analysis team, the plan would be disadvantageous for employees with an annual salary less than 25,000, if 4 per cent was contributed to the VRSP. Workers who receive the Guaranteed Income Supplement benefit would be better served by a TFSA, or other savings products, dependent on the individuals' tax situation, they say.
The RICIFQ feel the government did not take into account their situation. "We are a group of independent advisors and have more difficulties than banking institutions, which are in a stronger lobbying position," says Vani, who wants to challenge the decision.
Independent financial advisors, who rely mainly on commissions for renumeration, are seeing their market shrink increasingly shrink in favour of financial institutions, Vani adds.
Despite a petition sent to the National Assembly in 2013 and protests from economists, the government went ahead with the plan.
Vani believes, however, there is still the possibility of fighting flor a change to the rules.
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