[Estimated time to read: 3 minutes]
Expats everywhere are being scammed; cheated out of their hard earned savings.
They’re being tricked by those they think they can trust most with their money – their international financial adviser.
Every expat around the world knows a friend, or a friend of a friend, who has fallen victim to this crime – and yet we all keep falling for it!!
I’m sure you think you’ve heard it all before, that it won’t happen to you, or that your adviser “is different”. Well let’s be clear, everyone who’s ever fallen into their tried and tested trap, thought exactly the same.
Luckily, there are 10 golden rules to live by, the ten commandments of financial advice, so that none of us will ever be fooled again:
1. Don’t buy offshore bonds.
Unless you’re sure they’re right for you. It’s unlikely you’ll need them. Unethical advisers may use them to hide commission.
2. Don’t mix-up insurance with investments.
If this sounds confusing, or you aren't sure of the difference, just remember not to mix them up! Buy insurance for your car, home, travel and health. Not your international investments.
3. Think very hard before buying structured products.
They often exist to hide vast commissions for the salesperson and the company they work for.
4. Think very hard before buying very long term contractual savings plans.
These can be completely unnecessary and lock you in to inflexible (and often inappropriate) expensive investments.
5. Only invest in stuff that you have researched online.
And that you GENUINELY understand. Weirdly, most people do more research on their next holiday than on their investments.
6. Transferring your pension might not be right.
If you have a good pension arrangement at home and you may return there, it’s often a VERY bad and expensive idea to switch it into an offshore pension.
7. Don’t, under any circumstances, leave the investment stuff to your spouse alone.
You'll both be devastated when you realise the damage caused by a financial salesperson. Sadly, by the time you work it out, he'll have disappeared.
8. Don't believe anyone who says there is no fee.
If someone tells you they're doing something for no fee – for example, the charges are paid by the product provider – they're often lying.
9. Only take advice from those with qualifications.
And who work for a regulated firm (not one based offshore with a posh-sounding name). Whom you can (hopefully) sue if they steal from you. Most expat jurisdictions have minimal, if any, legal protections for investors.
10. Own your decisions.
Investing is really easy, and can be very cheap. Don’t let someone make it harder, or pricier, than it has to be, particularly if they are doing so for their benefit and at your expense.
If there are two things to take away it is this:
- If it doesn’t make sense to you, don't do it.
- If it doesn’t match your time frame, don’t do it. (see point 4 above).
I'd add one more. If your adviser turns up to a meeting with a big flashy watch and a big flashy car, tell them to go away.
Please don’t become the next story someone tells their friends about over brunch. If you’re not sure, then ask.