Expert warns against long term fixed savings plans in UAE

Published:  9 Nov at 6 PM
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One major risk which can cause more devastation to expat finances than the average natural disaster is being publicised by one man who’s dedicated to educating expats on the dangers of investing.

Andrew Hallam, a personal finance educator and author, has one mission in life – to warn expats worldwide against being taken in by dodgy IFAs punting fixed-term investment plans. The plans come with heavy commissions for the IFAs, with locked-in penalties as well as poor returns and high charges for the investor, but are sold across the expat world by unprincipled, often unregistered and illegally working advisors with just one thing on their minds- their own bank balances.

The UAE is one of many expat locations which are home to these sharks, with one newly arrived expat investor learning the hard way. Mathew Miller arrived in the UAE with the sensible wish to save as well as spend. He set up two long-term savings accounts as his answer to pension provision, but by the time he realised his mistake he was $45,000 down due to commissions and locked-in fees. Pulling out after just three years saved him from complete financial disaster, but cost a pretty penny.

Miller has now been a teacher in Abu Dhabi for nine years, and bought his first savings plan in 2009, paying in $2,000 every month. In 2012, he set up another 10-year plan at another $2,000 a month. By 2014, he’d saved $140,000, but discovered his savings weren’t achieving any growth. After a number-crunching session, he realised his profits were being wiped out by various fees and had no option but to shut both plans down.

Fortunately, he’d managed to get a copy of Hallam’s book on expat investments, thus realising he’d been taken in by one of the oldest tricks in the overseas IFAs’ repertoire. Hallam’s Global Expatriate’s Guide to Investing lays bare the common mistakes made by novice expat investors confronted by their local friendly financial advisor. Hallam’s pet hate, with good reason, are fixed term investment plans containing built-in commissions and vastly-inflated fees. In his 82 seminars given so far in his 2017 tour to Asia, Africa and the Middle East, he calls such products a form of ‘financial malaria’.

Hallam believes the fixed-term plans sold in the UAE as long-term savings and investment products are the most expensive in the entire world. He’s hoping his seminars in the Gulf States will help save tens of millions of dollars’ worth of expat savings. He understands people are afraid as financial literacy isn’t found in school curriculums, making them easy prey for commission hungry operators and even downright scammers. Numerous complaints have been received by the UAE authorities about these plans, with the UAE Insurance Authority now introducing tough new laws intended to protect savers from getting locked in to toxic investments.
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