What comes to mind when you think of a First Home Savings Account?

For Aaron Hector, the name evoked an investment vehicle only available to first-time buyers, which didn’t seem quite right to him.

“I made a joke online saying the FHSA should really be called the home savings account for people who haven’t had a home in the present or last four years,” he said. While just under a million Canadians have opened an FHSA, there are more than four million renters who may be eligible.

What began in jest for Mr. Hector turned into a thought experiment.

“If you focus on just the actual mechanics of all of these accounts, you might find different opportunities that are available to you that you wouldn’t think about,” said Mr. Hector, who began brainstorming other ways to call each one. (Instead of FHSA, he proposed Qualified Home Savings Account.)

As a certified financial planner and founding partner at Calgary-based TIER Wealth, he knows just how much labels can influence how often – and how effectively – people take advantage of savings vehicles.

“The name of an account can cause confusion and make people really not understand how they might want to use it,” said Mr. Hector.

Take the Tax-Free Savings Account. Although it’s not only for savings, the wording leads many to treat it as a cash account rather than an investment vehicle for long-term compounding, said Mr. Hector, who proposed calling it a “Tax-Free Investment Account” instead.

The confusion is real.

A 2020 TD survey found that one in four respondents admitted to not knowing the difference between a TFSA and RRSP while 22 per cent said they would choose a TFSA to help reduce taxable income for the following year, even though TFSAs do not allow this.

The Registered Retirement Savings Plan is another example of an account name that can obscure how it truly works and its biggest benefits.

“A lot of people hate RRSPs,” said Mr. Hector. But that’s because they focus only on comparing today’s tax rate with their rate in full retirement, leading some to delay opening one.

“Whereas, if you’re really just thinking about the mechanical way that account works, it doesn’t need to be only for retirement,” said Mr. Hector. “All it does is it’s lowering your income now, and it’s increasing your income in the future.”

Switching the name of a Locked-In Retirement Account to Locked Pension Account, “...could answer half the questions right off the bat,” said Mr. Hector.

“People don’t understand the terminology – they ask, ‘What is that? Oh, it’s for your pension?’ If you put the word pension in the account name, it suddenly becomes much clearer what it’s for.”

The goal of Mr. Hector’s thought experiment was to spark conversation.

But if he really had the chance to rename just one account, it would be the Registered Disability Savings Plan. He’s seen people avoid the RDSP – or at least talking about it – because of the stigma embedded in the word disability. An alternative might be Accessibility Support Investment Plan.

At the same time, he acknowledged that breaking the link to the word might make it harder for some to learn about their eligibility.

Mr. Hector also likes the option of “Matched Disability Retirement Account,” which highlights the massive grant benefit available with the fund while conveying its primary purpose. That is, long-term income security in retirement.

Which investment account names do you find most confusing and what would you name it instead? Drop me a line at mpostelnyak@globeandmail.com