There’s a change to the rules affecting how independent financial advisors work and earn their money coming which will set higher standards for the profession, introduce fairer fees and bring peace of mind.
But expats should still go to a professional advisor who can deal with their specific circumstances or they could face losing out.
Essentially, the changes are part of the retail distribution review (RDR), which will see IFAs cover all of the market or be restricted to selling specific products.
One of the biggest issues for an IFA who has no expat clients is that they will not have the experience or knowledge to help an expat find the right Qualifying Recognised Overseas Pension Scheme (QROPS).
The new rules under RDR will see the advisor either having to decline to help or outsource the client to another company.
Look for a specialist
The solution is for British expats or international workers with UK pension rights to go to a specialist financial advisor to start with.
That’s because often, keeping all of the expat’s financial affairs with one advisor is the best bet.
By doing so, expats avoid potential problems because an issue has arisen through an oversight between their financial advisor and the outsourced company.
The onus is on the expat to find an independent advisor who has a ‘whole market’ knowledge because they will understand their needs better and will have to advise on all of the products that are suitable.
Under the RDR regulations, they will need to offer the best product for the expat and not one that brings them the best commission.
Some IFAs who have clients who are expats, British taxpayers working overseas or high net worth clients holding unregulated collective investment schemes, are unfamiliar or unsure about the potentially suitable products and structures.
Don’t put up with restricted advice
It’s these advisers who provide a restricted advice service which may have to find another solution for their clients because their requirements fall outside their expertise.
One such solution is for them to outsource or refer their client to a specialist offshore adviser firm.
But to comply with the new RDR regulations, this move must be in the best interests of the client and not a way for the advisor to maintain their regulatory status.
It’s also important for financial advisors that any outsourcing arrangements do not jeopardise their professional indemnity cover.
The result is that British expats or international workers with UK pension rights will receive better financial advice.