How a Cross-Border Financial Advisor Can Help Expatriates (and How to Choose the Right One)

Chad Creveling, CFA and Peggy Creveling, CFA |

Choosing an offshore financial advisor carefully is as important as choosing a doctor or lawyer. You'll want to find someone who is competent and trustworthy, and who works in your best interest. To help you find the financial advisor who may be right for you (as well as to protect you from those who could do harm), we've put together some characteristics to look for in choosing a cross-border financial planner:

  1. Transparency and full disclosure: Research your advisor, don't be afraid to ask questions, and get details in writing. If you find the answers confusing, it may be that the advisor is trying to cloud the issue—not a good sign. Have the planner provide you with a written agreement that explains the services to be provided and the fee structure.
  2. Relevant experience: Find out the planner's work experience. You want to know if your potential counselor has just set up shop after leaving an unrelated field. Does the advisor have experience working with clients in situations like yours? Or does the advisor offer a “one size fits all” solution?
  3. Services offered: Check to see which services the financial planner offers and how the services are provided. In some cases, long lists of advertised services are met with the sale of a few financial products. If you're an American, make sure the advisor plans for how you'll be taxed over the long run—the IRS has punitive rules for offshore investments and insurance products.
  4. Professional qualifications: Research your potential advisor's qualification(s). Don't be satisfied until you understand what the qualification is and what's involved in obtaining it. Contact the granting organization to make sure your planner has the qualification in question and that his status is current.
  5. Licensing or registration: To protect consumers, most countries require that advisors operating in their jurisdiction be registered or licensed. Contact your local regulator to ensure that your advisor is regulated. Be sure that it's the advisor you're working with who is regulated, as opposed to an outside company within the same group, or a third-party supplier of financial products.

    Remember that with the exception of the U.S. SEC, most outside regulators (including the U.K.'s FSA) do not regulate firms or individuals giving investment advice outside their borders. So if you're misled, receive inappropriate advice, or are overcharged by individuals or firms in the country where you live, an offshore regulator will not be able to help you.
  6. Avoid being locked in to a long-term arrangement or buying a scheme with surrender charges: There's rarely a benefit to having your money tied up for long periods or to being forced to make contributions or face penalties. Be sure that you will have control of your funds and that you can easily access your money if needed.
  7. How is the advisor paid? Does he or she receive commissions on products sold to clients? If so, the advisor is rewarded only when he sells you a product, and in the offshore world this is typically an expensive insurance-wrapped investment scheme. A product salesperson may have very different objectives than an advisor who gets paid only for providing advice.
  8. Hidden fees: While front- or back-end commissions are usually disclosed, additional fees and commissions often are not. In some cases, investments can have several layers of fees, with the basic management fee that is usually disclosed being only part of the total amount involved.
  9. Professional affiliations: Find out which professional organizations the financial planner belongs to and how credible they are. Professional planners typically affiliate with networks of specialists in a variety of jurisdictions that provide additional legal and tax information. Be wary of firms that say they have all the expertise in house or try to pass off sales or distribution offices as a professional network.

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