Expat pros and cons of choosing a financial advisor

Published:  5 May at 6 PM
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Tagged: Australia, Money
Expats looking to start a profitable relationship with a local independent financial advisor should cover their backs as far as possible when making the choice.

Apart from death and taxes, there’s one other certainty in expat life – employing an independent financial advisor is going to cost money. Provided you haven’t made the biggest misjudgement of your new life overseas and chosen the wrong man, you’ve more chance of making money from your investments using professional help than you might have should you decide to self-invest.

It’s sad but very true that legions of financial novices have been conned by a variety of unscrupulous fraudsters within a short time of beginning their new lives overseas, simply by being unaware of how common this practice is in the majority of expat hubs. Choosing an advisor you can trust varies according to your chosen country of residence, but only a few, mostly first-world, countries have strict government regulations and registration requirements. In many favourite expat destinations anyone can set themselves up as an IFA without having any knowledge except how to rip off their clients.

Financial advisers come in three flavours – international independent qualified FAs, restricted advisers and non-regulated advisors. The trick, harder than it may seem at first, is to separate the good from the bad and the decidedly ugly. The first category should be able to offer the most suitable products for your individual situation from across the world-wide market. IFAs are regulated in their country of practice, having gained qualifications, become licensed and must abide by independent ombudsman rulings, Attempting to find isuch a treasure outside first-world countries can waste a great deal of time.

Restricted advisers are tied to specific financial and insurance firms, effectingly acting as agents for these, mostly offshore, companies. The products they recommend range from the expensive through the unsuitable to the disastrous, but earn them high commissions. They should be regulated, but in many expat destinations they cannot legally register or, especially in Asia, are not even allowed to work in the sector.

However, it’s the non-regulated advisors who are the real threat to expats, especially retirees. as should things go seriously wrong there is no redress whatsoever. Too many expatriates have been caught by self-styled IFAs, with millions in total lost and lives ruined as a result.

Absolute essentials to protect your savings include checking how your cash will be protected, the qualifications, registration and background of the IFA, the product providers he recommends and whether he’s on a commission basis. Checking his details online can also produce results, even if he’s been recommended by your new best friend. If you’ve been cold-called or found the IFA though a website, the chances of being scammed are high.

Source: iExpats
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