UK Expat Financial Advice | A Step By Step By Step Guide
This article is intended for UK expats overseas who require financial advice.
In this guide, we will explain the steps you need to take before engaging with a financial adviser to manage your UK pensions and investments.
01 Firm Due Diligence
Who are you regulated by?
The very first step when taking cross-border financial advice is checking the firm you are speaking to is regulated where you live. So for example, if you live in Europe, is the advice firm regulated in Europe? Or in the United States, is the adviser SEC regulated?
You can check this on registers (for example, the SEC broker check in the US). Furthermore to this, any financial advice firm should have all of their regulatory information listed clearly on their website, along with the relevant licensing numbers.
02 Expat Financial Adviser Due Diligence
Is the adviser qualified, and to what extent?
Offshore financial advice is not like the UK, or even the US. In the UK or US, you have to be qualified to high standards to provide independent financial advice.
Overseas, the framework is less strict, and some firms will employ financial planners who do not have UK qualifications, or even years of experience in the industry.
Before dealing with any expat financial planner, be sure to request any industry qualifications, and further background about the adviser's career and experience. As a bare minimum, any financial adviser providing regulated advice on UK pensions or investments should hold a Level 4 Diploma in financial planning in the UK. Other qualifications are desirable, as cross-border matters require more technical knowledge.
03 Adviser Fees
How much does the advice cost, and how are you paid?
Perhaps one of the most important concerns is the cost, whether that's relating to a UK pension transfer or foreign investment account. Different firms charge different amounts, and also charge their fees in different ways. Again, as the international pension advice market is regulated differently to the UK, charges can be excessive and in certain instances unethical.
There are 2 types of charging structures you may encounter as an expat.
Commission Payments
Commission payments are the most controversial, and typically cost the client a lot more. Commission structure means the adviser is being paid to sell a product, and the adviser will receive a lump sum payment once your pension transfer is completed or your investment account goes live. Commission payments are very easy to spot, as they will almost certainly contain exit penalties, early withdrawal charges or lock-ins.
If you see any of these, or an adviser confirms any of these exist, it usually guarantees that a commission is being paid to the financial adviser. These commissions can vary from 1% to 7% depending on the product. You may not explicitly see this figure anywhere, as it is built into 'ongoing management costs' and is designed to be fairly opaque.
Generally speaking, the longer the lock-in period, the larger the commission being paid to the expat financial adviser.
Personally, we have issues with this charging structure. For UK pension transfers abroad, not only is this excessive, but importantly in these cases the adviser is paid everything on day one, meaning there are no ongoing fees received for maintaining and looking after your retirement accounts.
So, essentially the adviser has no financial interest in ensuring your portfolio performs well, as they have already been paid fully on the account set up.
Fee Payments
This structure is more in line with UK regulations and is more common. In this scenario, advisers will explicitly charge a fee for set up, and a fee for the ongoing management.
For the initial fee, this tends to be anywhere between 1% and 5%. For the ongoing management fee, this is typically 1% per annum based on the average value of your invested assets.
Flat-Fee Expat Financial Advice
The Wealth Genesis charges a flat-fee for all UK pension transfers, regardless of the number of pensions in question, or the total value of the pensions. This flat-fee ensures minimal drag on your hard-earned retirement money.
We charge an industry leading annual management fee of 0.85% per annum, reduced further for larger account values.
04 Servicing Standards & Aftercare
What does the ongoing relationship look like?
If you are paying a professional adviser to look after your money, they should be doing exactly that with regular communication, valuation updates and generally speaking give you peace of mind knowing that your assets are being looked after.
Before committing to any firm or adviser, find out how often you will speak. How often will you be updated on the portfolio management, and what else is included in the client/adviser relationship?
Working With The Right Expat Financial Adviser
The above list is not exhaustive, but should give you a could understanding of things to look out for and stop you falling into any traps, whether cost or service related.
At The Wealth Genesis, we operate on a forward thinking model and place the client at the centre of everything we do. Whether it's UK pension transfers, International SIPPs, QROPS or offshore investment accounts, our independent advisers are here to help and make things simple for you.
We are fully regulated in multiple jurisdictions, and all our advisers are qualified to the highest industry standards as well as having a minimum 10 years experience in advising clients overseas.
To understand how we can help you, book a free discovery call using the diary below.
Expat Financial Advice FAQs
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Most firms charge between 5% and 1% depending on the overall value of the assets invested.
We feel anything over 3% is too expensive, and anything over 1% per annum as an ongoing advice fee is excessive. -
Check the small print and read everything very carefully. Get a second opinion, and ask a friend to re-read any terms and conditions.
Fees should in most cases be very clear, but always ask for a breakdown, as well as requesting an ‘illustration’. This is the document that will show the effect of charges on your investment performance. -
In Europe, most financial advisers are regulated via Cyprus and CySec. This allows the adviser to service clients throughout the European Union.
Other common regulatory locations are Belgium, France and Germany. You should be able to check and cross-reference and licensing numbers on the respective websites of the regulatory bodies. -
Yes, just like with anything you buy, it makes sense to shop around and get quotes, so you have an idea of what is ‘normal’ and what is deemed as competitive.
Not only this, but you may get on better with another adviser, which is important as it’s a relationship that can last for years. -
Transferring your UK pensions abroad is a big decision, and you need to ensure that you speak with an independent advice firm to discuss this.
Generally speaking, if you live outside the UK, a vehicle such as an International SIPP will help your retirement and give you full flexibility. -
It is likely that your UK adviser has FCA permissions to advise UK residents. Post Brexit, UK advisers cannot assist non-UK residents like they could previously, so it is likely you will have to find a new international financial adviser.
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We hold multiple licenses to provide regulated advice to clients all over the world. Our only restriction is that we do not provide advice to UK residents.
