A total of $3 billion in savings from 110,000 disabled Canadians was invested in RDSPs as of the end of 2014. Although RDSPs are available through approximately 12 financial institutions including banks, credit unions and investment firms, no insurance carriers make the list at the current time.
"RDSPs are a long-term savings vehicle for people with disabilities that have been dramatically gaining in popularity since they were introduced," Carol Bezaire, vice-president of tax, estate and strategic philanthropy for Mackenzie Investments told the Canadian Press. "It provided a whole new opportunity for people with disabilities who often had been living in poverty for most of their lives to build cash flow and funds for the future."
The problem, ironically enough, is that the carriers want to ensure RDSPs are regulated through entities such as FSCO and not securities regulators such as the OSC. At least that’s the opinion of Toronto insurance consultant Sean Long.
LHP asked the veteran insurance advisor this question earlier this week in response to a comment posted by a reader earlier this summer about the potential opportunity that exists with RDSPs and seg funds.
“I'm a huge proponent of the RDSP. It's an excellent planning tool. So why I can't I find an insurance provider who offers it on the seg side? They offer every other type of plan!” commented Piper J. on August 22 in LHP. “The first carrier to offer it would attract $1M of free publicity and would likely attract a large amount of assets from plans transferring over from the MFDA side.”
Regulatory arbitrage aside, advisors could gain significant seg fund business through the availability of RDSPs. Let’s see if insurers are willing to follow through.
See more: Advisors missing critical opportunity
Recent statistics suggest the Registered Disability Savings Plan (RDSP) is growing in popularity. One of the biggest beneficiaries from this savings plan could be insurance advisors – but only if insurance carriers jump on board.