Financial Advisor's rhetoric doesn't match action

06/22/2020

Many expat financial advisors in Asia, the Middle East and beyond who claim to offer 'qualified' advice, 'tax-efficient' investments and 'award-winning' fund management have a lot of rhetoric intended to persuade you but in the end their action is totally different.



Most of today's 'offshore' financial advice firms are still running their product-focused, commission-based sales operations which were widespread in Europe and beyond in the 1990s. They won't reveal you the fees for their services and they are purely remunerated by commission from investment products and providers. There is no transparency whatsoever to be clear about their services and justify the value they provide to you. They often claim that with no tax on capital gains, an offshore investment will provide better returns than an equivalent investment held back in your home country. They also try to persuade you with free fund switching, additional allocations & bonuses, choice, flexibility and accessibility.

Expensive financial products, laced with enormous commission payments to financial salespeople, are the norm. As for an obligation to give you suitable advice, forget it! In the world of lightly regulated retail financial services, anything goes. expatwealthatwork has seen numerous "advice" letters from offshore financial advisors which are so bad on every level that in Europe they would be grounds for serious misconduct fines and financial compensation awards. There is systematic, widespread and damaging mis-selling being carried out by offshore financial advisors.

'Offshore' arrangements (such as the insurance linked expensive offshore bond "wrapper") are lucrative for offshore financial advisers. The typical initial charge is about 7 per cent with typical ongoing charges of about 2 per cent a year. The cost of the underlying investments, often "alternative" funds typically take another 5 per cent commission.

A $100,000 initial investment therefore becomes $86,000 after deducting the set-up costs and commissions. It then incurs total annual costs of about $2,000 a year (as this is based on the initial investment amount) before you get a look in.

Another widespread practice is to encourage you to save monthly or annual amounts into a long-term savings plan (15-25 years), because the longer the contract term, the higher the commission payable. A typical 20-year savings plan will see 50 per cent of the first year's premiums swallowed in set-up costs, mostly to fund commission.

Our advice is to engage the services of a regulated, fee-only, financial advisor. That way you will get a personalised financial plan, high quality advice, competitively costed financial solutions and regulatory protection. All for a transparent, fair and agreed fee.

Don't let your hard-earned money decimated by sky-high commissions and product charges or highly speculative investments by an unscrupulous salesman whose rhetoric doesn't match his action, contact us instead!