As the world gets smaller, more people choose to leave their home country either for work, retirement, a better environment or to follow their partner. Not surprisingly many of those who go down this route struggle to get good advice, as it is hard to know who is qualified to help them.
The ability to find a suitable advisor is further hindered as most of us expect that, as the world develops, the ability for business and consultancy to cross ‘International Borders’ should become easier.
Unfortunately, this could not be further from the truth, as governments all around the world look to protect their territories, so they can have more control of who provides advice. This means that advisors, for instance, based in the UAE, regulated by the financial authorities there, are limited to the products and advice, the regulator allows them to offer.
This is no different in Europe, where despite the talk of a common market, the reality is that countries are becoming more insulated and also looking to control the advice their citizens and expats receive. This means that amazingly product providers now have to put together products for individual countries in Europe, which seems a far cry from what most of us imagined the EU would become. These changes offer no additional benefit to the end client. Generally, the regulated product will also offer less flexibility and may not be suitable should the client change location again, but are created solely to satisfy the regulator.
This illustrates that when a ‘potential client’ meets with an advisor who works in the market where they currently live, they may not end up getting the best advice. This is because a regulated advisor will be limited by the products they are allowed to promote by their regulator. Advice is therefore constrained by the rules the regulator imposes, which may not suit the needs of the individual client.
This is a major concern for international clients who may only stay somewhere for a few years. They may also be encouraged to buy products, which although promoted and approved by the local regulator, may end up representing poor value for the client when they move on. The fact that a ‘regulated advisor’ can only offer products approved by their regulator may not again be the best advice for the client. This could be due to the fact that there are other products, which have chosen not to be regulated in a particular market, which offer better value and better service.
New and innovative product providers, when they first become established will not be able to afford to get regulated in all the markets, where their products may be relevant. This means that often clients will not be presented with the best solutions for their particular needs.
Those who choose to work and live abroad are likely to move jobs frequently and will be more comfortable dealing with an advisor, who is able to provide the advice in the different countries where they may work and live. Ideally, they will also want the same advisor or firm to give them advice when they finally retire, wherever that maybe. Clearly, choosing an advisor or firm who is limited to working in one country and who are restricted with regard to providing advice by their regulator, is unlikely to be a good option for the client.
It is obvious that choosing the right ‘financial advisor’, or company to deal with, will not be an easy decision. There are many questions clients need to ask their prospective advisor to confirm if they are right for them. Clients are also likely to want an advisor to be able to offer any advice on all aspects of financial planning, to save time and it is important your advisor can cover all your needs.
This will include areas like; existing and future pension needs, life insurance, critical illness and medical cover, savings and maybe school fees. Your advisor, should also be qualified, to review any existing ‘Will’ a client may have and confirm if it still suitable given your current circumstances. For certain clients, the advisor will also need to be able to assess whether trusts are appropriate to protect a family estate and any potential inheritance tax issues. For clients who are married or in a relationship where there are different nationalities, a more specialized understanding of how this impacts financial planning will be required.
For clients who find the right advisor, the benefits can be huge and not just in giving you peace of mind in knowing that your investments are being well looked after. Having someone who can discuss the various scenarios which happen in life, like death, divorce and the impact this can have on a family, is perhaps as important as it enables you to make plans for all eventualities. Ideally, your advisor should be able to continue to give you advice through the different locations, where you work and through the various stages of life. This will be of comfort, as you know they are more likely to understand your situation and provide you with the right advice at a reasonable cost.
So when considering who you want to act as your financial advisor, don’t just believe that because someone is regulated in the market where you currently live, this will make them the best choice for you. Ask them if they are restricted in the products they can offer and what will happen when you move to another location.
Your financial advisor should be able to offer you all products and be able to provide you with ongoing advice or recommend someone else who is reputable. As governments tighten up on advisors crossing borders and restrict the products that can be offered, it is important to remember that these changes will not necessarily be positive for clients. The old saying that the best way to find an adviser is to get referred from a friend who has received good advice and has known their advisor for many years, is probably the best way to try to find the right person for you.
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