We're all pretty much in a global lockdown.
People and businesses are having to adjust to this 'new normal' of self-isolation.
How lucky we are to be living in such a tech-enabled time...
Where people are able to keep in touch with loved ones...
And businesses, like ours, are able to operate as usual.
Decades ago none of this would have been possible...
A lot of information has been shared around the world lately.
Especially related to COVID-19 and viruses in general.
One infographic in particular gave me better perspective.
Looking back at past pandemics...
(As far back as the 15th century)...
The spread of COVID-19 is much lower in comparison and survival rates much higher.
This is largely due to technology and the advancement of health services.
Because of information being so readily available our fingertips...
Governments across the world have been able to take swift action to combat the spread of the virus.
It's proof that times have changed.
Thinking back to the days before the Internet, all business was local.
I’d often visit my bank or the offices of my accountant.
Financial advisers would visit at your office or even your house.
One firm I know of even flew its salespeople in to meet prospective clients!
But those are the old days.
Today, millions of investors feel relieved, confident, empowered and good about their financial futures without ever meeting their advisers face-to-face.
In the same way digital banks are fast replacing brick-and-mortar branches.
It’s no surprise that millions of people get their financial advice solely via the telephone or Internet too.
And while no one expected one-fifth of the world to be quarantined today...
Having the assurance that the adviser looking after your financial future can continue doing so with little interruption...
Is a welcome relief.
Based within an international financial centre, we receive questions from expats and clients from around the world.
Every so often, those expats choose a local adviser over us.
We can certainly understand the urge to look into the whites of their eyes.
After all, you should be working with them for a very long time…
(Not to mention putting your trust in them to guide your financial journey).
But choosing an adviser purely so you can meet face-to-face brings a unique set of risks.
Facts don't change our minds. Friendship does.
“Faced with a choice between changing one’s mind and proving there is no need to do so, almost everyone gets busy with the proof.”
The economist J.K. Galbraith
James Clear wrote a blog about why so few innovations become a commercial success.
He concludes that, as humans, we are creatures of habit.
We dislike change and resistance to it is human nature.
Disruption conflicts with our established beliefs which historically we’ve relied upon for survival.
It can alienate us from our tribe.
What has this got to do with where your adviser is based?
1. Fiduciary: investor ratio
The earth’s surface area is approximately 510 million km².
If, like me, you’re English and both happy and used to UK standards of regulation/protection…
You have 130,395 km² of inhabitable English space.
You have 509,869,000 km² of expatriate living space in which you need to hope a well-qualified, regulated and ethical face-to-face adviser lives.
The overseas talent pool for well-qualified advisers is small.
The number of well-regulated and transparent firms perhaps even smaller.
The chances of you living in an area where you have face-to-face access to a highly regulated, knowledgeable professional is slim.
The chances of both you and the adviser staying in that area (let’s say within 500 km²) over the number of years a relationship exists…
Is likely very small.
Finding an independently certified fiduciary is not only the best thing you can do for your finances...
But the best way to ensure your peace of mind that your adviser is truly on your side.
Would you prefer to maximise your money?
Or meet face-to-face?
Living in Dubai, I am often asked to travel to Abu Dhabi.
These trips cost time and money.
They’re not free.
Commission-based salespeople are normally happy to travel (even by plane) so they can either sell you a product, churn your funds or press you for referrals.
Even if you think you’re not paying – the products they vend more than cover these costs.
Ultimately it is you who pay these costs through the often-hidden charges on these products.
And a second time through underperformance.
And a third time through exit penalties!
Would you prefer seemingly ‘free’ advice from face-to-face salespeople OR to reduce your costs, increase flexibility and maximise your returns?
After all, costs compound over time and diminish your returns.
(You may remember the blog we wrote on this recently).
Communicating with your adviser through Skype, email or Facetime costs nothing.
It’s software and technology you’re already comfortable with.
No time is wasted in transit.
No incentive exists to re-coup sunken costs through hidden commissions.
Chances are you’ve already conducted many business meetings this way already.
With the same intentions to save on time and money.
3. Company vs. individual
The traditional financial services industry promotes ‘lone wolves’.
Typically self-employed salespeople who try to vend as many products as possible in order to make the biggest commission.
By their nature, many of these ‘salespeople’ also move cities, companies or even countries fairly often.
You’d have to start all over again and find a new adviser.
However, when you work with an ensemble practice – your relationship is with the firm, not a person.
Yes, people come and go.
They start and they retire.
But your relationship remains with the firm and the team within it.
This gives you added protection and peace of mind, knowing your future isn’t in the hands of a single person.
4. Regulation doesn’t work if you move countries
As an expat from country A and living in country B…
You may move back to country A after a few years.
Or move on to a new country entirely.
The regulatory system will likely not support you and many people fall between the cracks.
With a local adviser, you’d have to find a new one in each country you’re in.
Making the process confusing and tiresome.
An international firm will likely be able to work with you wherever you are in the world.
The clients we have today, have comfort in knowing we’re with them for the long haul.
Whether they move to Spain, the UAE, China or Argentina…
The relationship remains unaffected.
To understand how this works, download this brochure.
More food for thought
I still vividly recall the first time a prospective client in Asia contacted us.
He met a local ‘adviser’ who encouraged him to buy an offshore insurance bond packed full of junk.
But his plan was to live there for 3 more years and move back to the UK.
The salesperson knew this, yet kept singing the praises of this product…
Which made him feel uneasy.
Researching regulated advisers, he found us – and saw we offer free second opinions.
We investigated his product and showed him the evidence…
He would have paid the adviser an upfront commission of at least 12%.
And that’s excluding the annual performance and management fees.
After realising how ‘easy’ it is to choose the wrong type of ‘adviser’, he decided to work with us.
Granted, the distance made him a little apprehensive at first.
But it didn’t take long for the geography barrier to disappear.
We’re still able to get to know our clients…
And provide them with effective advice and service just as easily over the telephone and through email as we can face-to-face.
Think about it…
Do you really need to hire a local adviser?
Do you want the comfortable lies from a smooth-talking salesperson over a round of golf or a pint?
Or do you want the uncomfortable truth from a professional who is dedicated to saving you money and maximising your returns so you can lead a better life?
Should you limit your search to the local talent pool, denying yourself great advice and ultimately, better results?
Our organisation is dedicated to helping you make more informed and effective financial decisions that allow you to feel relieved, confident, empowered and good about your wealth regardless of where you live.
Hopefully you’ve found value in this blog and understand some of the implications of choosing a local adviser.
Not everyone will agree with my points.
And that’s OK.
Because we won’t be the best fit for everyone.
But by being transparent about the subject…
We hope you can make the right decision for your future.