While living abroad as an expat sounds exciting to many, you may find it tricky to manage your taxes, investments and retirement planning. So you turn to professional financial advice, hoping that this will help meet your financial goals and needs.
Many expats are like you. You hope that your Financial Advisor can help you to maximise your money and provide you with the security to make plans for the future.
But sometimes things don’t always turn out the way you want it to, and you find your wealth manager to be lacking something special. Yet you find it difficult to pinpoint what is wrong, and you end up sticking with your original advisor despite feeling that your needs and wants are not met.
Sounds like you? Are you missing out on that ‘WOW’ experience that some of your expat friends are talking about?
To avoid this unhappy situation of settling for bad performance, you can consider these three indicators in your quest to find the financial planner perfect for your needs.
Well-thought Out, Consultative and Conscientious Approach
How would you feel if your hairdresser coloured your hair without seeking your opinion?
Many would be very put off by such service. The same could be said of someone who manages your finances without truly understanding your needs, fears and wants.
The right professional to advise you on financial management is always thorough in preparation. Defining the completeness of preparation is difficult, yet there are some best-in-class practices that a top professional should develop as part of his financial consulting services.
These include:
• Making a committed effort to understand your fears and aspirations in order to identify your true financial issues and allow you to have ownership of such issues
• Truly understanding your values, goals and family
dynamics to design a balanced and well-considered financial plan that accounts for issues such as family education plans, lifestyle habits, retirement goals and risk appetite
• Regularly eliciting timely and sensitive information from you and your family to update and adjust personal and financial objectives
These practices are not fruitless activities, especially when conducted by an experienced and competent financial planner. They highlight that the advisor is interested in and committed towards achieving your goals.
How would you feel if your hairdresser coloured your hair without seeking your opinion?
Many would be very put off by such service. The same could be said of someone who manages your finances without truly understanding your needs, fears and wants.
The right professional to advise you on financial management is always thorough in preparation. Defining the completeness of preparation is difficult, yet there are some best-in-class practices that a top professional should develop as part of his financial consulting services.
These include:
• Making a committed effort to understand your fears and aspirations in order to identify your true financial issues and allow you to have ownership of such issues
• Truly understanding your values, goals and family
dynamics to design a balanced and well-considered financial plan that accounts for issues such as family education plans, lifestyle habits, retirement goals and risk appetite
• Regularly eliciting timely and sensitive information from you and your family to update and adjust personal and financial objectives
These practices are not fruitless activities, especially when conducted by an experienced and competent financial planner. They highlight that the advisor is interested in and committed towards achieving your goals.
Without truly appreciating your background, life plans and
environment, it is difficult for an advisor to make proper recommendations that are aligned with your interests and wants
Domain Knowledge
The Investment Management Consultants Association (IMCA) conducted a job analysis of a professional wealth advisor, and stressed that professionals should possess sufficient technical knowledge and skills to effectively serve their clients’ needs. We agree.
Financial planning and advice is more than recommending financial products. The complexity of tax planning, investment objectives and insurance products often mean that only competent advisors have the capabilities to navigate this environment for their clients in a user-friendly manner.
Does your trusted professional have this requisite knowledge? We highlight three main areas for your consideration:
• Portfolio and investment management. Your consultant or advisor should be able to explain clearly the current investment climate and its implications for your investment and financial portfolio. For example, will advantageous interest rates back home mean anything for the mortgage you are taking out in your current location? Ideally, the right professional will also keep you up to date in terms of market trends, and advise you on pre-emptive portfolio adjustments. A realistic portrayal of how your investments may turn out, backed by sound reasoning and evidence, is a good yardstick to look out for when your advisor provides investment recommendations. The track record of his or her past recommendations is also a measure of his technical knowledge and skills.
• Asset preservation and risk management. For some expats, the protection of assets and wealth is a top priority. A top-notch financial planner understands this and looks to the entire scope of insurance options so that the client can benefit from a risk-controlled approach. The right professional will also fully explain the risks of taking on leverage, including a walkthrough of scenarios that could happen with the use of leverage in your portfolio or to finance your daily needs.
• Tax planning and pension management. Living abroad presents a unique range of problems relating to tax and pension schemes. The complex array of possibilities, regulations and laws often make it tedious for expats to handle tax planning on their own. Understandably, a competent financial consultant is cannot have a poor understanding of tax regimes and pension schemes. Your advisor should be able to explain to you the tax implications of any financial decisions you have taken, and recommend a sensible approach towards tax planning. In today’s uncertain financial climate, we also find it useful to look out for the ability to design flexible pension solutions that can allow you to move into other countries.
Are you satisfied or comfortable with taking decisions without fully understanding the implications of your decisions? Will you sleep more soundly if you can articulate the reasons behind your financial decisions? If yes, your financial management and planning can go a long way if your personal advisor possesses the technical skills and knowledge we have identified above.
Financial Qualifications and Fee Transparency
There are several certifications that increase your chances of getting good quality advice, work done for transparent fees and regulatory protection.
For example, it may help to look out for Financial Advisors with UK level 6 financial qualifications such as the Chartered Financial Planner (CFP). Also examine whether your consultant is regulated in the country you are located in and whether they are covered under professional indemnity insurance.
Although many countries vary in the way retail financial advice is regulated, you can look out for planners holding financial qualifications from awarding bodies in the UK, where retail financial advice is considered to be amongst the best regulated in the world. These awarding bodies include the Chartered Insurance Institute, Personal Finance Society, ifs School of Finance, Chartered Institute of Bankers in Scotland, CFA Society of the UK, Chartered Institute for Securities and Investment, Institute of Financial Planning and the Pensions Management Institute in the UK.
While such qualifications are by no means a guarantee of good performance, it may help you to avoid bad or unscrupulous experiences and opaque fee structures that can result in conflicts of interests.
Need a Change? Don't Settle
Financial management is something that many expats hold close to their hearts. If you are currently engaged in a relationship that cannot meet your expectations and demands, you should look further and engage the services of a different advisor who can empower your dreams, goals, needs and wants. Don’t worry if you find it a hassle to change firms or advisors. It is much simpler than you would think.
You can explore your options through our Search or read up more insights from our Journal.
