Be Careful Who You Trust With Your Money

18.03.14

Please note that this article is over six months old. While Blevins Franks takes care to make sure that information is accurate on the date of publication, some content may change over time. You should not rely on the accuracy of legislation and tax information in this article; take professional advice for your circumstances.

Many people take financial advice to protect their assets from tax and inflation and to provide financial security for a long and comfortable retirement. What many do not realise, however, is that their choice of adviser is probably the most important financial decision they need to make.

Many people take financial advice to protect their assets from tax and inflation and to provide financial security for a long and comfortable retirement. What many do not realise, however, is that their choice of adviser is probably the most important financial decision they need to make.

One of the key questions for British expatriates is whether to use their existing UK adviser, or move to a new adviser based here in your new country of residence. However, before you start discussing your financial affairs with anyone, you need to establish if they are regulated to provide advice to residents of Spain, and that they are competent.

This particularly applies when choosing an adviser to guide you and your family for the long-term, but it is also important if you are buying a one-off investment. Make sure that the investment and person selling it to you are regulated.

When taking financial advice abroad, do not presume that because the adviser is British and has worked in the UK, that he must be reliable and regulated – unfortunately this is not always the case.

For security and peace of mind, choose an advisory firm which abides by national and international regulations, with advisers who are professionally qualified to a high degree. They should also be experienced at advising expatriates in your area.

While countries like Spain, France etc. have their own regulation system, the UK’s Financial Conduct Authority (FCA) – formerly known as the Financial Services Authority (FSA) – is considered one of the most rigorous and professional regulators in Europe. Using a firm authorised and regulated by the FCA gives you reassurance and confidence that it can be trusted to advise you over the long term in a wholly appropriate way, and that the investments they recommend are also well regulated.

The Treaty on the Functioning of the European Union enables regulated entities within one EU country to legitimately conduct business in another EU country. This is done through a ‘passport’ obtained under the EU’s Insurance Mediation Directive.

Blevins Franks Financial Management Limited, for example, is a UK incorporated company, fully authorised and regulated by the FCA, with passports to provide advice in Spain, France, Portugal, Cyprus, Malta, Ireland and Gibraltar. They are therefore regulated to provide investment and pension advice in both the UK and these countries.

This is the ideal situation for British expatriates who need financial planning involving both their country of residence and the UK. Even though you are an  expatriate, you probably have UK assets such as pensions, and need to consider UK inheritance tax and estate planning issues for UK beneficiaries.

You can check out a firm’s FCA regulation status on the Financial Services Register on their website, at http://www.fsa.gov.uk/register/home.do. Click on “Financial Services Firm Search” in the tabs at the top, then search by firm name or reference number. Once you are on the firm’s page, you can view their passports.

A UK based adviser may be regulated by the FCA. This provides protection to their clients in the UK, but are they regulated to provide advice outside the UK? Unless they have many clients in your country of residence, to the extent that they have sought regulatory permission from the FCA to extend their services into your country of residence, this is unlikely.

Another vital reason for using a locally based adviser is that a UK one is unlikely to be familiar enough with the local tax rules in your country of residence and financial planning needs of expatriates there. This means his recommendations may not be suitable for you now that you are resident outside the UK. It is hard to understand the intricacies of local tax and succession law, and the frequent changes, unless you are living in that country.

So you need an adviser with an in-depth and up-to-date knowledge of local and UK tax and estate planning concerns and the way that the two tax regimes interact.

Qualifications and high professional standards are also very important. The FCA now requires all advisers it regulates to have obtained the Diploma for Financial Advisers. This involves considerable professional study and various examinations.

In summary, three key things to look out for when choosing an adviser are regulation, qualifications, and personal, local experience. You should accept nothing less for your and your family’s wealth and financial security!

Updated 21 March 2014

Blevins Franks Financial Management Limited (BFFM) is authorised and regulated by the Financial Conduct Authority in the UK, reference number 179731. Where advice is provided outside the UK, via the Insurance Mediation Directive from Malta, the regulatory system differs in some respects from that of the UK. Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of trusts and companies. Blevins Franks Tax Limited provides taxation advice; its advisers are fully qualified tax specialists. This promotion has been approved and issued by BFFM.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.

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