Written by Stuart Ritchie, Managing Partner at GSB Capital, offers practical tips for advisers looking to retain clients – especially HNWIs – who become ex-pats
In 2023, the UK was expected to experience a substantial outflow of high net worth individuals with an anticipated net loss of 3,200 millionaires, marking a twofold increase from the previous year, according to Henley and Partners. This positioned the UK as the 3rd largest global loser of millionaires following China and India. The report stated political volatility, rising debt, healthcare concerns, high crime rates and a prevailing sense of malaise as the main factors contributing to the diminishing allure of the UK.
Another recent survey by Investing Reviews revealed that 42% of Brits would consider retiring abroad, shedding light on shifting sentiments around retirement and pension concerns in the UK. The desire to retire abroad presents an on-going challenge for UK-only financial advisers hoping to retain clients.
However, one solution is to collaborate with international firms which specialise in cross-border expertise. These partnerships not only broaden the scope of services but also address the complexities associated with different jurisdictions, ultimately enhancing the quality of advice and services received by clients.
There are five areas to consider for UK financial advisers when they are assessing potential cross-border international advice firm partners.
Fees and professional reputation
UK financial planners have been through the Retail Distribution Review where commission was ultimately restricted to protection only policies. However, many advisers in the cross-border advice world still use commission models.
It is therefore important that they work with cross-border advisers who are also compensated directly by their clients, reducing the potential for conflicts of interest with recommendations that benefit the adviser more than the client.
Also, collaborating with certified international firms specialising in cross-border financial planning enhances the professional reputation of UK financial planners. Clients are increasingly sophisticated and demand advisers with a global perspective. By aligning with international experts who are certified by professional bodies like the CII or CISI, financial planners demonstrate a commitment to lifelong learning and providing comprehensive solutions that meet the challenges of an interconnected world. This, in turn, enhances their competitiveness in a market where clients value advisers with a broad understanding of international financial dynamics.
Diverse client needs
Clients today are diverse, with many having financial interests and assets in multiple jurisdictions.
Whether it’s expatriates, business owners with international operations, or individuals with cross-border investments, the need for comprehensive financial planning that transcends borders is evident.
International firms bring a nuanced understanding of various tax regimes, legal structures, and financial systems, along with a wider network in professional services ensuring that financial planners can address the intricacies of their clients’ diverse needs effectively.
Jurisdictional landscape
Navigating the legal and regulatory landscape of different countries is a daunting task. International financial planning often involves adherence to complex and ever-evolving regulations, tax laws, and compliance requirements in multiple jurisdictions. International firms specialising in cross-border expertise are regulated in numerous jurisdictions and financial centres allowing them to provide advice to transient clients.
One of the most intricate aspects of international financial planning is taxation. Each country has its own tax laws and regulations, and navigating the complexities of cross-border tax planning requires specialised knowledge. International firms bring expertise in understanding the tax implications of financial decisions across jurisdictions, enabling UK financial planners to optimise tax efficiency for their clients and prevent unintended tax consequences.
For clients with international lifestyles, retirement and estate planning can become complex affairs. Different countries have varied rules and regulations regarding pensions, inheritance, and estate taxes. Cross-border specialists can assist UK advisers in crafting retirement and estate plans that seamlessly navigate the legal and tax landscapes of multiple jurisdictions, ensuring that clients’ wishes are fulfilled with minimal complications.
Currency and exchange rate considerations
Dealing with multiple currencies and fluctuating exchange rates is crucial when managing investments, planning for retirement, or structuring international transactions.
International firms with expertise in cross-border financial planning possess the necessary tools and insights to mitigate currency risks, ensuring that clients’ financial plans are robust and resilient in the face of global economic fluctuations.
Investment opportunities, diversification and risk
Specialists in cross-border financial planning bring a wealth of knowledge regarding international investment landscapes, allowing UK financial planners to guide their clients towards diversified and strategic investment portfolios ensuring that strategies are domiciled in the correct jurisdiction. This collaboration expands the range of available investment options, potentially enhancing returns while managing risk through geographic diversification avoiding any UK home-bias in portfolios.
The global nature of financial markets introduces new dimensions of risk that UK financial planners must consider. Economic, political, and geopolitical events in one part of the world can have ripple effects across various markets. Partnering with international firms specialising in cross-border expertise equips UK financial planners with the tools to assess and manage global risks effectively, ensuring that clients’ portfolios are resilient in the face of unforeseen events.
Conclusion
The importance of this partnership cannot be overstated. The globalised nature of financial markets, diverse client needs, complex legal and regulatory landscapes, and the challenges of cross-border taxation all underscore the necessity for collaboration on an international scale. By forging strategic partnerships, UK financial planners can ensure that their clients receive high-quality advice that encompasses the complexities of the global financial landscape, ultimately leading to more robust and tailored financial plans.
