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Yes, I appreciate you may have been cold-called and bamboozled with messages to such an extent you find the idea of sitting down with a financial adviser a nightmare. And yes, building rapport with them to discuss your sensitive financial affairs can be very difficult to do.
Recently I’ve been dealing with a client who is in the unfortunate position of paying various lots of obscure charges that amount to 3.5% per year. He’s not seen any growth on his investments since 2014 and he’s still locked in for several more years. Fortunately, you will not find a client in such an arrangement in the UK, but we still see such clients regularly across the Middle East and Asia.
It’s essentially a mixture of a lack of regulation, a lack of corporate ethics, a lack of advisor competency, and aggressive sales. And if the developed economies in the Middle East and Asia want to build a financial services industry on par with the UK then things will need to radically change. But you as an investor don’t need to wait for regulatory changes, you can upskill yourself now.
Hopefully these tips will help you sift through the advisers who can add value as opposed to time wasters as well as providing you with some key discussion points that will also allow you to explore the resourcefulness of your potential adviser.
Here are my top tips for High-Net Worth (HNW) expats and residents living in countries with an underdeveloped financial services industry:
1. Ensure your adviser is qualified at least to a Level 4 UK standard. Where you have a UK pension that you need advice on, ensure they hold a Level 6 UK Pension Transfer qualification. Don’t be shy to ask to see their certificates.
2. Put in place your international life and critical insurance plans with a company that has an excellent credit rating and claim pay-out rate.
Disregard the cover via your employer, as you may not be with that employer forever thus having to pay higher premiums to take out a similar policy when you are older and possibly in poorer health.
3. It’s often far better to pay for advice be it initial and/or ongoing on a fixed fee basis with no tie-ins. Avoid arrangements with a commission structure. Make sure you understand all the charges. Get a list of ALL charges. If you’re being charged 3% per year and your investment does 5% per year, you need to ask yourself is it worth the risk for only 2%?
4. Always provide your international financial adviser with accurate information for them to do their analysis properly so you’ll avoid surprises several years into your plan. Your adviser should be advising you NOT you leading them down a path.
If you don’t trust your adviser to provide them with your accurate income and liability information, get another adviser who you can trust.
5. Consider whether international mobility via a second residency or citizenship scheme is important for you and your family. If it is, structure a cost-effective savings plan to budget for it if you need to. Otherwise explore options now.
6. If you have significant assets in any of the developed countries, a simple will is rarely going to be enough. You need to be thinking about setting up trust funds for your beneficiaries.
Similarly, if you have assets in underdeveloped countries, asset protection will be even more important. Seek advice sooner rather than later with regards to how to transfer those assets to a more secure jurisdiction.
7. Similarly, you should also put in place a Power of Attorney. In the UK this is known as a Lasting Power of Attorney (LPA). It’s a powerful legal document that gives someone you trust the authority to manage your property and financial affairs in that particular jurisdiction in the event you are unable to.
Take financial advice seriously. It can save you hundreds of thousands, if not millions. And make you a decent sum too. You should be having reviews annually.
Don’t expect your financial adviser to make you rich. If they promise you market beating investment returns consistently, get another adviser.
Remember good advice is priceless, book an International Financial Advice consultancy call by contacting Mohammad Uz-Zaman via the following form or book a slot via our calendly widget below.
Mohammad Uz-Zaman MA DipFA PETR is an international wealth manager who holds dual accreditations across wealth management and trust planning. He advises high-net worth (HNW) individuals on how best to protect their family and structure their estate for the benefit of successive generations. Mohammad is also an associate member of the Society of Trust and Estate Practitioners (STEP).
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