The looming RRSP deadline can lead to short-term thinking and performance-chasing.nixki/iStockPhoto / Getty Images
As the registered retirement savings plan contribution deadlines loom, advisors see the same patterns play out year after year: rushed deposits, tax-driven thinking, and portfolios motivated by whatever worked recently.
The biggest mistakes investors make this time of year tend to be behavioural rather than structural, says Natalie Jamison, senior wealth advisor at Scotia Wealth Management in Oakville, Ont.
Surprisingly, their most consistent mistake is missing the contribution deadline by a day, she says.
“We see it every year, when people come in on March 1 thinking they’re on time,” she says. “The deadline does change from year to year, and those calendar quirks catch investors off guard every season.” (This year’s deadline is March 2.)
Administrative oversights can be even more consequential. Ms. Jamison says failing to designate a beneficiary remains common despite the tax implications.
“Without a named spouse, the entire RRSP can be taxed in the year of death instead of rolling over tax-free,” she says, adding it’s an issue that often surfaces only during portfolio reviews.
It’s an important reminder that while RRSP season often revolves around a date on the calendar, its real value lies in the conversations that happen before and long after that day passes.
Short-term thinking and performance-chasing
The compressed decision window of the season can amplify short-term thinking, says Jason Desaulniers, president and financial planner at Excalibur Executive Planning in Edmonton.
As a result, portfolios are often shaped more by recent headlines than by long-range objectives. The mismatch can erode outcomes quietly over time, says Mr. Desaulniers, who cautions clients against making contributions without putting a proper framework in place.
“In an RRSP, where returns are meant to compound over decades, poor timing and excess volatility can detract meaningfully from outcomes,” he says.
“Long-term results are usually driven by consistency, not momentum. It has been proven time and again that it’s impossible to time the markets.”
Performance-chasing is another mistake investors make, says Carmela Lombardi, president of the Financial Boutique in Newmarket, Ont.
“By the time an investment is labelled ‘hot,’ much of the upside is often already priced in,” she says. “Chasing trends inside a long-term retirement account turns a disciplined strategy into speculation.”
Ms. Lombardi emphasizes that diversification allows clients to stay invested through market cycles. Smoothing returns and reducing reliance on any single investment helps preserve the compounding that RRSPs are designed to deliver, and keeps short-term volatility from derailing long-term plans.
The lure of the tax deduction
While deadlines are unavoidable, big planning choices rarely benefit from a countdown clock.
“You never want to make big financial planning decisions when you’re rushed,” Ms. Jamison says.
For many clients, the urgency of a deadline triggers a stress response that can undermine careful decision-making. Investors often make a contribution to their RRSPs simply to secure the tax deduction, without considering cash flow or whether the account aligns with their broader plan, says Alyssa Anderson, an advisor at Desjardins Financial Security Investments Inc. in Windsor.
Ms. Anderson sees an opportunity hidden in that moment: the tax refund. Too often, she says, it’s treated as extra spending money rather than as a planning tool.
“A strategy I share with clients is reinvesting that refund back into their plan, which can accelerate long-term growth meaningfully and turn a one-time tax benefit into a compounding opportunity,” she says.
For Joseph Guido, partner at KAAP Financial Group in Woodbridge, Ont., the conversation often starts with whether an RRSP is the right tool for the client at all.
“RRSPs work best when your tax bracket during working years is higher than in retirement,” he says, noting that having low income, high debt, or short-term liquidity needs can shift priorities elsewhere.
Mr. Guido adds that RRSP season underscores the value of co-ordinated planning across accounts and timelines, with RRSPs as one piece of a broader strategy rather than a standalone choice.
Editor’s note: A previous version of this article stated that Alyssa Anderson is based in Toronto. She's based in Windsor.