The enlightened expat’s guide to choosing a financial adviser
[Estimated time to read: 3 minutes]
Five simple steps we can all do
Let’s get real here.
You’re a busy expat, not a post-doctorate in finance. So when those boring tax, pension, mortgage and investment questions start flowing, you would rather just trust someone else to take care of it.
Not to mention the time factor. As in, you can barely find the bandwidth to work out your expenditure, let alone fiddle about with getting the right accounts and investments.
But you also care about the security of your future and those whom you love. And you’re smart enough to know that nothing comes for free in life.
The problem is, the international marketplace is littered with horror stories.
Trusting an offshore ‘IFA’ can quickly lead you to signing a contract that would make "The Wolf of Wall Street” wince. And, shockingly, the information they given is often just plain wrong…
So what’s an expat to do?
Well, here’s the good news. Read on, to discover 5 simple tips to keep ‘The Wolf’ from the door!
Tip 1 – No one is ever as invested (or interested) in your future as you are
Your financial dreams, hopes and ambitions are yours. No one else cares as much as you about your financial well-being, your future or the security of your family.
This is why it is paramount you take personal responsibility for the decisions you make. Yes, you should expect expert help – and we’ll talk about that in the next four points – but ultimately you will only achieve your goals by gathering the best information, finding the best value and understanding the investments you make.
When choosing someone to help you make the right decisions, remember, whatever they say, they do not care as much about your future as you do – no one ever will. Question everything and be sceptical – only good can come of having an inquisitive mind.
Tip 2 – Trust organizations not individuals
You wouldn’t trust a one man band accountancy or law firm, so why would you do this with something as important as international financial advice?
Contrary to what you may think – it is far better to trust an organisation with growing your wealth than just one individual.
Why? Because an organisation sets the culture and the investment approach, while providing the systems, controls and incentive structure which will ensure your allocated adviser gives you the best advice and service.
Tip 3 – Think global not local
It’s easy to buy the line that in order to give good service, your adviser needs to meet you at least every few months.
The reality is that every meeting costs money. Whether you are paying via top-ups, investment switches, referrals or hidden commissions this is YOUR money that is getting eroded.
The right adviser will be able to manage your money from wherever you or they are in the world – checking in whenever you want using all the communication tools we now have.
The most cost effective way to manage your money and to gain the greatest peace of mind is not by sitting in front of your adviser four times a year.
It is by choosing a highly regulated firm which has deep international investment expertise, rock solid investment process and one which drives efficient, professional contact through computer portals, phone and email – with the additional capability to offer face to face advice where necessary.
These firms are rare and are worth their weight in gold.
Tip 4 – Only pay for what you need and value
Question whether you actually need advice.
Do you in fact just need a way to invest your money? If so, paying an adviser doesn’t make sense.
Find out if the company your adviser works for provides a low cost way of accessing investment funds. A good advice firm will also have negotiated discounts with the asset managers, meaning you pay less.
Don’t pay for products or services you don’t need. Advice is always there if and when you need it – but if you don’t need it, don’t pay for it.
Tip 5 – There is no such thing as free advice
If an adviser tells you their advice is “free” or that their cost is “paid by the product provider” walk away.
Advice is never, ever, free.
It is crucial to understand the difference between commission based and fee-based advisers.
A commission based adviser is motivated to sell you products. This is because they get paid every time they do.
A fee based adviser is paid for their time. This means they are motivated to deliver the best advice.
This is of paramount importance. Costs eat into returns and so every time an adviser takes commission, the value of your investments fall.
Oh and here is an additional bonus tip – that is perhaps the best…
Bonus Tip 6 – Just because your financial adviser is a really nice person, this doesn’t mean they should be your adviser!
PS. The guide below has far more information to help. Some of this challenges the status quo. My personal favourite is ‘the less you see an adviser the better!’ Don’t swallow that rubbish about quarterly reviews unless you have $20million or more. Find out why inside the guide…
About Simon Danaher
Simon Danaher previously worked for AES International, in marketing and communications.