Navigating expat finance and the world of “expat financial advisors” is a challenging task!
As someone living and working abroad, I understand the unique financial concerns that come with cross-border lifestyles and the need for expat financial planning.
That’s why professional help is critical for individuals like yourself to manage your wealth and investments efficiently the choice of expat financial advisors may seem vast at times, but choose wisely.
Hopefully, we can give you some financial tips on living overseas and maybe some investment strategies for expats from our comprehensive Expat financial guide.
Expat Financial Advisors: What Are Your Options?
Connecting with the right financial adviser/consultant is almost certainly the most crucial decision you will have to make when saving and investing abroad.
If you are an outgoing person who attends events, joins clubs and is active on social media, then you will no doubt be approached on numerous occasions by expat financial advisors who will be more than happy to discuss your options.
If you are more of a private person then you may have to independently look for one of the many expat financial advisors who may be able too help you.
Typically you will have 3 choices of expat financial advisors:
- Institutional Financial Advisers that work for big banks/institutions like HSBC, Citibank or AIA
- Multi-Office offshore financial adviser brokerages
- Independent office & Solo expat financial advisers (IFAs)
Institutional Financial Advisors
Big Banks focus 95% of their attention towards the local market, but they may have an expat sales team that employs expat financial advisors.
The advisors at these companies will only be able to advise you on their own in-house product range which they cannot deviate away from. Big banks build their own products and will have large sales teams focused on selling to as many policies as possible, in order to build up a vast customer base.
Multi-Office offshore financial brokerages
Brokerages of this nature will employ expat financial advisors who will have the ability to be more independent than the big banks.
Multi-Office brokerages may also have products of their own but they will also be allowed to use some bespoke options to help you build a more versatile portfolio. With these types of companies, you will see more of a blend towards quantity and quality investors. Often you will find a young, high staff turnover.
Independent Office & Solo IFAs
Small brokerages and solo expat financial advisors usually have complete freedom as to where they can invest on your behalf.
Due to the size of these companies, they will be able to seek out any investment that suits your needs and every individual can be looked at on a case-by-case basis, which offers great benefits when executed correctly.
The focus here is more on the quality of the client rather than quantity due to only being able to manage a finite amount of people.
Typical wealth management for expats at all of the above companies will be Expat Pension Planning, University Education Planning, Lump Sum investment management and expat insurance solutions.
All expat financial advisors should be well versed on all of these expat financial planning services.
Always try and make contact with an owner or Director to find out if the advice you are receiving is in line with the company’s policy.
Expat Financial Advisors: Services Offered
Expat Financial Advisors: Be Smart & Avoid the Pitfalls
Many expats are in search of the ideal offshore investment advisor as offshore capital management may appear vastly different from domestic investing when considering factors like tax law, currency fluctuations, and international regulations.
On the whole, the differences are small, limited and easily managed when approached correctly by professionals who are experienced in dealing with these challenges.
It is important to remember that your financial consultant is ‘the professional’. They need to clearly explain the advice, investments, products, risk and structures they are presenting.
The onus lies upon the client to do some research to check what they are being told is correct. expat financial advisors must have courage behind their convictions, if they bend to your decisions too easily and always try and accommodate your investment instructions then you may be dealing with one of the many expat financial advisors who are just trying to please you rather than doing a good job.
They must have a set and proven method which they stick to, similar to a doctor or lawyer. It is best for the advisor to work with people where both views are aligned, however, there is always room for discussion.
Do not place too much judgement on the personality of the advisor but more focus on their skills, ethics, experience and track record. The best salespeople are always the most sociable, friendly and easy to get on with, but this doesn’t mean that the advice they are giving is the best, often it is the opposite.
Whereas some of the most astute and professional advisors I have met are at the other end of the scale.
Do not forget that you are employing someone to do a very important job for you, this is not an exercise in making new friends.
Referrals, are they important?
Unless you personally know the person making the referral, the referral comes from a position of trust or the referrer is financially knowledgeable and has been using the advisor for many, many years, then referrals may not deserve the credit they receive.
If an advisor has 100 clients and 80 are unhappy and 20 are happy and you ask for a referral, are they going to ask 1 of the 80 unhappy people?
Also, be aware of people recommending advisors on “Wealth Management for Expats” FaceBook forums.
Often people are just trying to help friends, a lot of what is written on public forums is not necessarily correct, but it can be a good starting point if there are multiple people saying good things about certain expat financial advisors, then this might be a good starting point.
Backup Cash
Before you start your planning the first and most important question of expat financial advice should always be “How much backup cash do you have”?
I always tell my clients to have at least 6 months of living expenses in cash in a bank. Unforeseen events such as job loss, family emergencies, or natural disasters as their are many financial risks for expatriates that you may not consider.
Relocation financial planning is important when you move abroad and start a new life. Having a backup cash reserve provides peace of mind and reduces financial stress.
Having backup cash on hand allows you to seize unexpected opportunities that may arise, such as a promising investment, a business venture, an unexpected holiday or a new career anywhere in the world.
Retirement Planning for Expats
Planning for the later years of your life is the cornerstone of nearly all financial planning and regardless of your nationality, your government-backed scheme will always fall short of an ideal retirement.
Many countries have agreements that allow you to contribute from overseas, however, expat pension planning is something you need to address.
Unless you have everything in place, then everybody needs to save on a regular basis towards their pension. Choosing the correct pension plan with the right terms, charges, flexibility and most importantly “affordability” is where you need a good financial adviser to guide you.
This is the “bread and butter” work for expat financial planners, but it must not be taken lightly.
Employ a healthy balance between your enjoyment today and your future goals. It is your expat. financial advisors’ job to install this ethos into you and not to over or under-commit you. You are employing the services of a professional to help you hit your goals in the most hassle-free manner.
Try calculating all of your monthly living expenses. With the money that is left over, your disposable income, commit 50-60% of this towards a structured savings account and with the remaining 40-50% put this in a liquid bank that you can access. If you do not need it then invest it at the end of the year.
Being recommended the right products for the right reasons with consistent, high-quality, ongoing attention should see you safely to your retirement.
Please read this here to see what all of your options are.
Children’s Education Planning
As a parent, ensuring your child’s tuition is often very near the top of your priority list and something you should discuss with your advisor.
The earlier you start investing, the more time your money has to grow.
Compound interest is a powerful tool that can significantly enhance the return on your investments over time. By investing in your child’s future, you’re not only safeguarding their future but also ensuring financial stability for yourself.
The first step to investing is creating a financial plan. This should include an estimation of future costs, accounting for inflation and rising fees.
The strategy behind University Planning is similar to Retirement Planning but over a shorter time scale with a smaller amount of capital needing to be grown.
All expat financial advisors should be able to help structure you a plan tailored to your specific needs.
Please read this article to help you understand further about the costs involved.
Investment Management & Choice of Investments
When you have established your goals, you have found the correct advisor who works for a reputable company, this is where expat financial advisors should start making investment recommendations.
Expat Financial Advisors should not be giving out advice on individual stock picking unless they are experts in this field, which is highly unlikely and a profession on its own.
The way you access the stock market is through mutual funds and ETFs.
Your investment portfolio should mainly consist of mutual funds and ETFs which will either try and track an index or beat it through active management. A good benchmark for an index is the S&P 500 which is an index that tracks the growth of the 500 largest companies traded on the American stock exchange…Google, Amazon etc.
Only 1% of mutual funds beat the index by more than 2% a year, so there is a very good argument to only invest in index funds. For many people, index investing is the preferred route, but there are mutual funds that consistently outperform the index. Expat financial advisor should be able to bring you examples of mutual funds that do this.
As a simple rule, do not invest in a fund with less than a 10-year track record, has less than $1 Billion under management and regularly fails to beat the S&P 500, FTSE, MSCI or DAX.
Approach Alternative Investments with absolute caution. Forestry, wine, whiskey, litigation the list goes on in this link which I implore you to click.
You can read about the risk of investing in alternative assets here.
Through strategic decisions, risk mitigation, and continuous adjustments, expat financial advisors can guide you to achieve your financial objectives.
Expatriate Banking Solutions
As an expat, managing your money across borders can be a daunting task.
International banking, however, provides an effective way to augment your expat savings and forms a major foundation of overseas financial planning.
There are three major categories of international expatriate banks to consider:
Global Banks
Banks like HSBC and Citibank operate internationally and can help you manage your finances smoothly across borders. They employ experienced, qualified Cross-border financial advisors.
Keep in mind that when using big mega banks, you are just a very small fish in a very big pond.
Digital Banks
With the rise of technology, digital banks like Wise (Previously Trasferwise) or Currenxie have grown popular amongst the savvy expat community.
Wise is one of the fastest-growing online banks offering some of the cheapest rates and speed of transfer available. Banking and transfer fees form a crucial part of your financial planning for living abroad and your day-to-day living.
Local Banks
Depending on your destination, a local bank will offer significant benefits and better integration with the local economy. Ask on forums which banks are the best suited to foreigners, this is a very common question.
Please read here for more details.
If you would like to set up an account with Wise, which we strongly recommend then:
Click this link and as a reward Wise will allow you to transfer the first $550 completely free.
Real Estate
Real estate and overseas property is very complex and can be read about here
Insurance Planning for Expats
Read our full and comprehensive article on “What is Expat Insurance” here.
Choosing the right insurance is a crucial part of expat financial planning. I would advise you to go onto local forums on Facebook where you are living and get a broad view of what people are saying. EXPAT HEALTH INSURANCE IS EXPENSIVE, especially if you are a family of four, and the older you get the costs can spiral out of control. Always try and negotiate a good healthcare package for your family into your employment contract if possible. If you are retired, hired locally or have to look after yourself then I would advise you to follow some simple rules.
- Before purchasing a policy, find a good local clinic/surgery close to where you live. Speak to the doctor and find out what services he offers, does he speak good English, does the surgery operate in a clean, professional, friendly manner etc. Most of the time you need medical attention it will be for minor things like a rabies or typhoid jab or some stitches for one of your children falling off their bicycle or developing some kind of rash from the heat or something they have eaten. You do not need medical insurance for these kinds of procedures. Often you will be able to drive to the clinic in 5 minutes, be finished and back home in 30 minutes and all at a grand total of $20 or less.
- Once you have established point 1 then start looking for a policy that suits your family’s needs. You may find that even the most cost-effective policy will cover the above medical procedures, but your loading/excess charge on each claim, which can be a time and patience enduring process, may be as much as $100-$250. So even if you are insured for these services it is often far quicker and cheaper to use and pay for a local clinic to look after you. Medical insurance for many people is the “what if” insurance, car crashes, serious illness, repatriation, and overnight care, these are the types of services you will need comprehensive coverage for.
This can be a challenging subject, especially when dealing with multiple jurisdictions.
Work with expat financial advisors who have experience in assisting expats with their needs.
They can help you evaluate the various policies that best suit your requirements.
Please contact us and we can help you! We can quote you here.
Estate Planning for Expats
Estate planning is another critical aspect to consider as an expat.
By creating a comprehensive estate plan you can save your family from potential legal and financial hurdles, such as probate, after your passing, expat. tax advice can become extremely complicated.
Proper estate planning can require drafting a Will, Trusts & Power of Attorney. You must pay attention to all of the places you hold assets, where you are currently living and your nationality.
Some expat financial advisors will not be in a qualified position to help you with this if your situation is complicated and you may need to speak to a specialist. This can be arranged by most expat financial advisors.
Fees and Pricing Models of Expat Financial Advisors
When seeking financial advice, it’s crucial to understand the fees and pricing models associated with expat financial advisors.
When considering fees, it’s important to compare the potential long-term value you’ll receive from a expat financial advisors against their costs.
Lower-cost options may be appealing, but you need to weigh up whether they provide the necessary expertise.
Expat Financial Advisors: Advice for UK Nationals & UK Pensions
This section is for British expats, non-UK residents and people who have worked in the UK, unfortunately not if you are currently a UK citizen.
As part of your retirement planning, understand the portable retirement planning options involved in transferring your pension savings to suitable retirement accounts. Some of these options include International SIPPs, QROPS, or QNUPS services, which offer tax-efficient and flexible solutions for expatriate pensions.
Most offshore advisors will only know the basics, Hampton Bridge employ in-house expert financial advisors who can help you with these services as we are part of a network of specialists that deal with this on a day-to-day basis.
Approach pension transfers with caution. They can offer very beneficial IHT advantages and access to your capital, however, often it is better to leave your money where it is.
This is a very common topic for British expats and The Financial Times (UK) often writes on this subject and the role that expat financial play, which often leads to questionable advice.
US Nationals: DO NOT USE EXPAT FINANCIAL ADVISORS
US Nationals MUST not use expat financial advisors and only deal with SEC-regulated financial advice companies, who understand the Foreign Account Tax Compliance Act (FATCA) and US citizenship-based taxation.
As a US expat, you must take into account your American pension, Social Security benefits, and any other pensions you may have. Working with a Fiduciary-standard financial advisor can provide you with a tailored service while taking into account any regulatory and tax implications that will apply to US citizens living abroad.
Firms like The Brink Financial Group are a good example.
*Many people from Canada have worked in the US and this may apply to you, although for future planning or money inside of Canada, using expat financial advisors is fine.
Achieving Financial Goals and Success as an Expat
The first step in your financial journey abroad is to establish clear personal goals, both short and long-term. Create a realistic budget based on income, expenses and saving potential. Make a budget that allows you to live comfortably while setting money aside to achieve financial goals.
Working with the right advisor, giving high-quality financial advice helping you choose the right investments that provide you with excellent service, regardless of what country you come from, is invaluable.
You are now on the right path and we hope this helps you choose from the plethora of expat financial advisors. discussed in this article.
Frequently Asked Questions
What services do Expat Financial Advisors provide?
Expat financial consultants understand will advise you on which investments are correct for your unique situation, whatever country you live in. They offer services such as investment management and retirement planning, helping you with all of your financial decisions.
How to choose a reliable Expat Financial Advisors?
When looking for a reliable expat financial advisor, it’s important to find someone with experience and expertise in dealing with international financial and tax planning. Their financial plan for your situation must be clear and easy to understand.
What are the typical fees of Expat Financial Advisors?
Fees for expat financial consultants can vary widely for their service depending on an individual’s finances. Some charge a flat fee based on the complexity of your financial situation or the investments they provide, while others charge a percentage of the assets they manage on your behalf. You need to work out which will benefit you the best.
We would be delighted to hear from you so feel free to contact us!
