Do expat retirees really need a financial advisor
Rampant misselling of unsuitable or downright dodgy financial products in expat hubs overseas has received maximum publicity over the past few years, but totally eradicating it seems beyond the capabilities of governmental financial watchdogs and the legal system. From long-term investment schemes with rip-off fee structures and massive commissions paid to salesmen posing as FAs to deliberate Ponzi schemes and other cons, what’s a financial novice to do to make sure he’s not just another victim?
The internet is crammed with do-it-yourself investment tips written by (hopefully) professionals in the field, but the jargon used could fool a rocket scientist on an off-day. First-time investors invariably loose their cool at first sign of an inevitable downturn, proving time and time again that letting emotions get in the way of common sense won’t protect your hard-earned pension pot. Finding a straightforward, knowledgeable IFA is a little like winning the lottery – someone’s got to get the numbers right.
The first question to ask is ‘how do you get paid?’, with the answer either reassuring or a sign to immediately cut and run. The right answer should be a description of a fee-based compensation structure, with the wrong answer including the word ‘commission’ as it identifies a greedy salesman rather than a qualified, experienced advisor. Managing clients’ affairs is part of a financial planner’s job, paid for by the client thus eliminating any conflicts of interest. So-called IFAs who rely on commissions from insurance companies whose products they peddle have only one loyalty – their paymasters in offshore tax havens.
Clues you’re about to get scammed include any mention of ‘guaranteed returns’, the dodging of questions about how the FA's paid and insistence on one specific financial product. Over-friendliness before a pitch is made is an important clue, as are recommendations of a particular IFA from people you’ve only just met. Watch out for expat organisations such as social clubs, British Legion and local Chambers of Commerce, as they offer respectable cover for unqualified, often illegally working financial product salesmen.
The only way to be sure your financial planner is what he or she should be is to do your own research and learn about finance from the bottom up. That way, you’ll be able to ask intelligent questions which keep your advisor interested in your financial survival.
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