TORONTO - Canadians have until March 1 to make their 2009 contributions to their registered retirement savings plans and it looks like fewer will be taking advantage of the plan this year.
A survey done by Royal Bank late in 2009 indicated that just 35 per cent of Canadians have contributed to or plan to contribute to an RRSP for the 209 tax year - the lowest percentage of contributors since 1996.
Canada was still recovering from a recession at that time, just like now, and economists note that that could be one reason for the difference in intentions this year, since the recession has pushed up the jobless rate and squeezed living standards.
Higher household debt levels could also be making many nervous about contributing.
For those Canadians who are contributing, many will likely wait until close to the deadline and that can be problematic, because the last thing you want to do is put more of your hard-earned money into any sort of investment in a hurry.
If you must make your contribution close to the last minute, leave the money in cash for a few weeks before making a final decision.
"Just a holding pattern for three months - whatever it takes to look at your game plan and say, where am I going," said Adrian Mastracci, portfolio manager at KCM Wealth Management in Vancouver.
"If it takes you 90 days to figure that out, it's not going to be until the end of the world. Because what you're going to miss in 90 days is really peanuts."
By cash, that means the money can be put into a regular savings account that is registered, or into a Guaranteed Investment Certificate or a money market fund.
A big reason why an investor wants to think twice about where to put money this year is that the Toronto stock market's performance is expected to be very different from last year. During 2009, the main Toronto index ran up 31 per cent.
But a repeat of that showing is highly unlikely, with many analysts predicting a gain this year, though it will be much more of a grind.
"My view of the TSX is that on the high side I see 13,000, on the downside, depending how much bad news you get, you could see 9,000," added Mastracci.
"So to me it's a roller-coaster. I mean, it's not just a 13,000 or 9,000, it's somewhere this year you will probably hit both."
That sharp runup on the TSX last year still leaves many investors down from where they were in the middle of 2008 and Mastracci cautioned against trying to recoup that money too fast.
"You know what I'm seeing these days? People coming in and saying, after the runup that I've had in this last year, I'm still behind the eight ball, I want to take more risk, I want to recoup my little nest egg sooner than later," he said.
"So they're shopping for the adviser who will agree with them. And I'm saying, if you want me to do that, you give me one ironclad letter that says 'I understand every risk that I'm taking, and I also understand that I probably will lose more money than I'm making.' Actually, I've turned people away; I just won't do it."
Another good reason for not just plopping your money in any mutual fund at the end of February is that many financial advisers are very busy just then and it could be harder for you to discuss what you should do with your money.
Again, better to wait until a few weeks after the deadline.
At the same time, it's a good time to consider your relationship with your adviser. And if you don't have one, it's a perfect time to shop around for one.
Mastracci said good questions to ask are: "What advice am I looking for? Am I getting it? Is it objective? Am I overpaying for what I'm getting?"
"If you answer those questions and everything turns out well, then you got the right person. But if you have some things nagging at you," you might want to consider getting a second opinion.
Shopping for an adviser is serious business. For example, not all have the same training.
But the very first thing you should do, said Diane Kirkland, certified financial planner at Edward Jones in Pitt Meadows, B.C., is check credentials.
"You want to look at the adviser's qualifications and make sure they have the appropriate securities licences," she said.
"If you're dealing with a broker, when you walk in the door, there should be clearly labelled the little green magnet at the front which says CIPF, Canadian Investment Protection Fund. That provides (up to) $1 million dollars of protection per account if for example your broker goes bankrupt. Or goes AWOL."
She pointed out that disgraced Montreal financial adviser Earl Jones, who recently pleaded guilty to fraud in connection with the disappearance of an estimates $50 million of clients' money, wasn't a member of the fund.
The important thing is finding someone you can talk to.
And that means not only understanding your goals but explaining to you in plain language what you will pay in management fees and commissions.
And that means there is nothing rude about asking how an adviser is paid, "because it's a fair question," said Kirkland.
"And whether you're a banker, or a broker or insurance person, clients should know how they're paid and how that affects - or doesn't affect - their investments. I don't think an adviser should take offence at having that question asked. It should be on their appointment list to cover that with the client."