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Expat Financial Advice

Expats leave Britain for lots of reasons – work, retirement, to be close to someone they love or plain wanderlust.

Around 5.5 million British expats live abroad, with a third living in Europe and the rest in farther-flung destinations.

Most – around 1.5 million – have started a new life in Australia.

The other favourite places for Brits abroad are Spain, where 761,000 choose to live in warmer climes, and America and Canada, both with Brit expat populations of more than 600,000.

But for whatever reason Brits leave the UK and wherever they go, they all must sit down and figure out their finances.

That can be tricky for some who do not understand their options and how the financial system works where they live, so here’s a heads up on finding the right financial advice for expats.

Finding Financial Advice For Expats

Forging a relationship with a first-class financial adviser is the best way to prosper in any country.

A good independent financial advisor (IFA) offers options and opportunity, but you need to know how to make your money work for you.

Expats will queue up with stories of scammers and fraudsters masquerading as qualified and regulated advisers.

These crooks linger in the corners of expat bars and clubs and dangle the bait of high returns before unwary investors who don’t realise that they are the prey.

The takeaway is always check out an adviser before you hand over any cash – if they are genuine they expect your due diligence, if they are not, then you are saving yourself from a financial disaster.

How Financial Firms Are Regulated Overseas

Most countries have government agencies that oversee standards and rules in financial services.

The two places to look are the International Organisation of Securities Commissions (IOSCO) web site and this list of international financial regulators.

If they are not on the register, they are not authorised advisers.

IOSCO also publishes regular scam alerts highlighting companies and advisers working without authorisation. Many are scammers and fraudsters listed because they have asked for money from clients under false pretences.

Overseas financial advisers 

European Economic Area financial advisers can ‘passport’ their authorisation in one country to another EU member state.

This allows them to carry on their business activities in more than one country, but they still are under the supervision of their home regulator.

In most cases, financial advisers for British expats in Europe will have passported their authorisation from the UK and their credentials can be checked on the FCA web site

Similar arrangements apply to advisers from other EEA countries.

Outside Europe, different countries have a varying degree of regulation, ranging from none to strict regimes, in places like the USA, Canada and Australia.

Qualifications To Look For

To give advice, you IFA must have the relevant qualifications from a recognised independent professional body. The main ones are:

For estate planning, the adviser should have more advanced qualifications and may belong to an organisation like STEP – The Society of Trust and Estate Practitioners or SOLLA – Society of Later Life Advisers.

Make Sure You Get The Right Adviser

Financial advisers offer different levels of advice to clients depending on their qualifications and who they work for.

Independent financial advisers 

IFA’s give whole-of-the-market advice because they can discuss any provider’s products.

IFAs will compose a bespoke financial strategy to your needs based on a fact find, which is a detailed questionnaire about your current and future financial goals. The fact find should cover your attitude to risk so the IFA can determine the right savings and investments for you.

The fact find is a benchmark of your financial status and highlights the information the IFA needs to recommend products and services.

Multi-tied advisers

Multi-tied advisers work in a space between IFAs and tied advisers. They are not true independents because they are part of networks that limit the products and services they can recommend to a small number of providers.

A multi-tied adviser will conduct a fact find but can’t talk about products offered by providers outside of their network.

Tied advisers

Typically work for a bank, financial advice firm or insurance company and can only recommend their employer’s products. The advice does not take in the whole market and is not suitable for many expats.

The problem with a tied adviser is you can miss out on a much better product offered by a firm outside of the tied adviser’s scope because they simply cannot include the details in their recommendations.

Do I Need Financial Advice?

Most people need financial advice at some time during their life and moving from the UK to a new home or on assignment as an expat is a good place to start.

Independent advice is helpful when big decisions need making, and these can crop up more often than you think.

Some of the life event triggers for seeking financial advice are:

  • Investing as an expat
  • Getting married and starting a family
  • Inheriting a cash lump-sum
  • Getting ready for retirement
  • Making a will

Why expats need a financial plan

A recent survey in the UK by independent think tank the International Longevity Centre revealed regular savers could be £47,000 better off on retirement if they follow advice from a financial adviser rather than manage their own wealth.

The surprising conclusion was the gain from taking advice about savings and investments increases wealth by an average 24% for the affluent, compared with 35% for the not so well-off. 

On pension wealth, the uplift is 11% for the affluent compared with 24% for the not so well-off. Don’t forget to find your lost uk pension when receiving advice. Your adviser will want to know about all savings and investments.

The data came from following the fortunes of savers and investors for a decade.

The data shows that investors do not have to be wealthy to receive help from a financial plan and even those with just a small amount of money to set aside can prosper from professional advice.

Everyone wants your money

The number of financial products and people willing to offer advice about what to do with your money is bewildering.

Sometimes, it can be difficult to work out how to best manage your resources when bombardment from so many companies competing for your cash.

An independent financial adviser will have the skills and resources to draft a tailored financial strategy to match your personal circumstances.

The strategy will take into account your financial goals – considering when you want to retire, how much money you would like after you stop working and savings for funding key events like education, marriage and buying a home for you children.

Many people think about a financial plan is just for retirement, but a good strategy should look at so much more. 

What does a financial adviser do?

Your IFA is a middleman sourcing products and services offered by financial providers, like pensions, investments, bonds, and savings plans that match your financial goals.

Life’s not always plain sailing – major events that effect your finances will happen, including marriage, having children, changing jobs, accidents, or illness.

Each event is a financial challenge or opportunity. Your IFA can cast an unemotional eye over what’s happening and can discuss what you can do for the best outcome.

Good IFAs give you options, pointing out the pros and cons of each choice, leaving you to make the final decision.

How Much Does Financial Advice Cost?

How much does financial advice cost is a question that should really be how much is financial advice worth to you?

If taking advice is worth that £47,000 margin shown by the International Longevity Centre, then investing some money in your financial future seems worthwhile.

But what you pay depends on you.

In the UK expect to pay £500 for investment advice and up to £5,000 for detailed pension planning.

Fees are often open to negotiation, so don’t be scared to challenge them.

Fees come in three categories –

  • Fixed fees for specific services but get a written spec of the work before agreeing the cost to make sure everything is covered.
  • Percentage fees – these are often related to managing investments as a percentage of their value each year. The idea is to encourage the adviser to improve your fund value by increasing their return.
  • Hourly rates – An open-ended arrangement that can runaway with costs if you don’t know what the adviser is doing for their money

Fixed fees are best if you can pin down exactly what they cover.

Commission is banned in some countries, like the UK. Instead, you pay a fee to your IFA and premiums to your financial provider. In other places, IFAs will waive fees and collect a commission.

Watch out for double charging for the same advice – either pay a fee with the commission waived or disclosed, or accept you pay commission as part of the price of any recommended products or services.

The rule of thumb is advisers charge fees and salespeople work for commission.

Questions To Ask Your Financial Adviser

You need to trust your IFA and knowing that they have other clients like you helps.

Also consider continuity. What happens if your adviser moves on or retires? Are you dealing with a firm that you can rely on or a specific adviser?

Check the firms and advisers out online but take any comments with a pinch of salt.

Testimonials will be favourable, otherwise there’s not much point in publishing them, while some people always complain. The silent majority lies in-between and rarely bothers to make a comment.

Make some checks to find out who you are dealing with. Here are some tips of what to look for:

  • Qualifications and experience working with expats
  • Independent status for recommending products and services
  • Status with the local financial regulator
  • Fee and commission structure
  • Arrangements for continuing advice should you move or leave your expat home
  • Professional support for handling tax and estate planning between your home country and expat home

Expats With Assets In Two Or More Countries

If you are a tax resident in one country but still have property, possessions or money in the UK or another country, you should consider making a will and testament for expats in each country where you have such assets.

Will writers are unlikely to be cross-border tax experts, but your financial adviser should have links to legal and tax professionals who can help.

Financial Advice for Expats FAQ

It’s easy to put off taking financial advice when you move to a new country.

There’s always so much to see and do, that your finances always seem to go to the bottom of the pile.

Eventually they need looking at, and here are some of the most common questions expats ask about finding the right financial advice.

How do I know an IFA is not a scammer?

You can protect yourself to some extent by checking out your IFA’s credentials with the local regulator and his or her professional body. Stay away from cold callers and bar hangers who claim they can help – professionals don’t try to find business in bars.

Why do I need expat financial advice?

Expats who have moved to a new country may inadvertently trip up on cross-border tax rules or miss out on tax breaks because they don’t know the financial markets and how they work. A good financial adviser will steer you away from the pitfalls and help make the most of your money.

Where do I find an IFA?

This depends on where you live. Ask neighbours, colleagues, or your employer if they can recommend a suitable IFA. Otherwise, look online for a reliable web site that can recommend a suitable adviser. Or complete the form here to request advice.

Should I pay a fee for financial advice?

A fixed fee is best if you can pin down exactly what you are paying for – that way you are controlling how much you spend. Commission always works out more expensive and is banned in some countries, like the UK.

Can I consult a British IFA in Europe?

Many British IFAs ‘passport’ their services to Europe, but this may stop after Britain leaves the EU on December 31, 2020. Passporting means European regulators recognise UK qualifications if the IFA is authorised by the Financial Conduct Authority in the UK.

Financial Advice in the Country You Live

Each country will have their own rules and regulations that expats need to be aware of. The following links will guide you to a better financial position while living overseas as an expat.

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