Why we’re lucky when it comes to financial advice in the UK
During a short trip to Madrid for an international networking event recently, I had the opportunity to speak with a few locals & other EU nationals about personal financial planning in their countries.
I was aware that financial advice in the UK today is widely considered to be among the best regulated in the world however had not come to appreciate just how lucky this makes us.
Financial Advice In the UK Is Some Of The Most Transparent In The World.
Since 2012, most UK firms have been required to agree explicit fees for their services, instead of being remunerated by commission from investment products and providers. The resulting transparency forces them to be clear about their services and continually justify the value they provide.
Another recent change the UK regulator set for financial advisers is a minimum threshold qualification at level 4. These higher level qualifications are not easy to acquire (take it from me, I’m about to sit my final exam for this qualification).
As well as this the continuing professional development obligation for UK-qualified financial advisers is now more onerous than for most lawyers and accountants.
As you might expect, not all financial advisers made the grade. Some did not want to get qualified to the threshold level required. Others thought they would not earn as much in explicit fees as they did under product-based commission or to be blunt, were simply incapable of providing advice at the required standard of competency.
It’s likely that a significant number of advisers left the UK to avoid the new regulations and work among the high-earning British expatriate communities in low- and no-tax places such as Dubai, the United Arab Emirates and Hong Kong, or countries with large communities of retired British nationals such as Portugal and Spain.
On top of all of this in the UK we have a number of different levels of protection including mandatory professional identity insurance, protection from the Financial Services Compensation Scheme (FSCS) covering £85,000 per firm & the Financial & Pension’s Ombudsman.
A Different Attitude To Financial Security Elsewhere.
Speaking to other networkers in Madrid I found that people generally turn to their high street bank to manage their portfolios or simply keep all funds in cash or in a savings account.
I couldn’t help but cringe, this means most of the population are losing money in real terms each year against inflation, akin to leaving your money in a bag with a hole in it essentially. But on-top of this when they are choosing to invest in an attempt to have their hard-earned savings at least keep their value if not grow in value they are receiving restricted advice.
Banks may seem like a safe bet as they are huge, household names however when it comes to financial advice they will only offer their own products and solutions ignoring the vast variety of potentially more suitable and superior options in the market.
I also discovered from the group that even the overseas banks active in financial services for expats are less focused on providing client-centred advice, but rather the selling of expensive financial products which they do not promote to UK customers.
It is telling that the main providers of international insurance bonds have one charging structure for UK investors and another, far less competitive one, for non-UK resident investors.
What If You Are Planning On Working Abroad?
I would recommend if you are intending to work overseas temporarily, then engage the services of a UK-regulated, fee-only, financial planning firm before you go. That way you will get a personalised financial plan, high-quality advice, competitively costed financial products and regulatory protection. All for a transparent, fair and agreed fee.
How to get started?
If you are thinking of moving abroad and would like to find out more about how you can achieve your financial goals, we offer a free initial consultation to discuss your options.
Call us on 0161 437 5999 or email us for more information.