Financial advice is an invaluable service, particularly for expatriates navigating the complexities of living overseas in a country with a different tax regime, social security system and currency. However, thousands of expats do not access professional financial support, often because of an assumption that a skilled financial adviser will be unaffordable.
One of the many considerations is that the role and focus of a financial adviser is to help you make good judgements, to preserve your wealth and improve your financial position – the fees payable will typically be a fraction of the amount you may save by avoiding inadvisable decision-making or choosing high-risk investments.
In this article we explain how expat financial advice costs vary and explore some of the reasons hiring a financial adviser may be the best investment you can make.
Factors That Influence the Costs of Expat Wealth Management Advice
Costs are, of course, important, and a credible wealth management firm will provide transparent fee structures and information before undertaking any work. Many local financial advisory teams will offer complimentary initial consultations to help you assess the knowledge on offer and discuss potential fees related to the advice you require or tasks you’d like a financial adviser to undertake.
Chase Buchanan does not provide standardised fees for the simple reason that every client is different and will need alternative advice and assistance adapted to their financial goals and aspirations. As a rough indication, wealth management costs are an average of between 1% and 2% of the assets under the supervision and management of a portfolio manager.
There are numerous variables that will affect the cost of professional expat financial planning and advice, which we explore below.
Scope of Financial Advice
Meeting with an adviser as a one-off to seek guidance about an individual transaction or ad hoc property purchase will carry different fees from an ongoing service where you work closely with your adviser to create a long-term investment and wealth management strategy.
Most accomplished wealth managers and advisers collaborate with clients over many years, getting to know their goals and aspirations and adjusting their services as their clients’ wealth grows or investment markets shift.
The Complexity of Your Affairs
Many expats need specific advice about restructuring assets, transferring pensions to a new country or establishing tax residency status. The more complex and intricate your financial planning needs, the more time an adviser will spend evaluating options and crafting projections and outlines to showcase the detail of the products or approaches they suggest.
Tasks Assigned to a Financial Adviser
Many financial advisers will offer a broad scope of services, from arranging tailored insurance coverage and education fee planning to more in-depth financial planning and tax management. If an expat hires an adviser for a particular task, such as facilitating a UK pension transfer and advising on the best-suited options or setting up a trust and helping them write a will, this will carry a different cost than ongoing estate or succession planning.
The Quality and Experience of Your Adviser
As in any professional sector, the more capable and experienced your financial adviser or wealth manager, the higher their fees may be in relation to the services provided. However, along with this level of proficiency comes the assurance that the advice you receive will be highly specific, independently assessed and designed to deliver the best possible outcomes for you.
The variations in regulatory standards around the world can also mean that local advisers are not bound by the same codes of conduct as in the UK, so it is important to research any prospective advisers and be satisfied they are competent and qualified.
For example, an adviser representing a bank or lender can only suggest products that the institution provides, and some businesses referring to their services as ‘financial planning’ may not be subject to regulatory oversight.
Chase Buchanan always advises expats to work with regulated, independent and established financial advisers to ensure the recommendations they receive are tailored to their requirements and take into account the full picture of their financial and residency status.
Risks of Making Financial Decisions Without Professional Guidance
An HSBC report found that only a tiny proportion of expats seek help from a professional financial adviser – 91% go it alone and make decisions based on their own assumptions, personal research or instincts.
The cost of either underpaying for low-quality advice or making consequential decisions about your financial affairs can be extremely high, as demonstrated in the same report, which shows that expats find their finances difficult to manage, with 52% of those saying it was due to their tax situation.
Among the most prevalent goals, 60% of expats surveyed said retirement planning was one of their primary objectives. Yet, without bespoke expat financial advice, it is highly unlikely they will have full access to the breadth of pension planning and investment products available, many of which offer tax efficiencies and other advantages.
Assessing the True Value of Expat Financial Advice
The value of your expat financial advice and the fees payable are not always directly linked. It is vital that any advice you rely on to make hugely impactful judgements, such as choosing how to manage your pension funds, understanding tax obligations, buying a property overseas or transitioning an investment portfolio, is valid, relevant and accurate.
With more and more people choosing to relocate to seek better living standards, a warmer climate and career opportunities, the knowledge available from experienced advisers specialising in expat wealth management can be impossible to quantify.
Advisers map out your wealth, assets, income and tax status, provide detailed suggestions to explain various options and the pros and cons of each, and offer advice to ensure any decisions you make benefit your overall finances and are consistent with your aims.
Our article Evaluating the Value of Your Financial Adviser During a Crisis provides further insights. It explains why your adviser’s support and suggestions can be necessary to making sound, informed decisions about your finances and wealth, particularly during difficult periods.
For more information about expat financial advice, tax and residency guides, services or the indicative fee structures linked with portfolio management, please get in touch with your Chase Buchanan Wealth Management local office at your convenience.
*Information correct as at July 2023