How to choose a financial advisor when living overseas

how to choose financial advisor when living overseas

We don’t rely on the internet and tips from friends to manage our health – we go to medical doctors. Likewise, it’s important to talk to a financial advisor for customised advice on how to keep our finances healthy.

I’ve discussed the dos and don’ts of choosing a financial advisor extensively, but, as with doctors, choosing financial advisory services when living overseas can involve some extra care. Let’s look at how to choose a financial advisor overseas.

First, understand how the local regulation and market works. Regulation of financial advisory services in the UK is quite strict by global standards, so some extra care is usually required wherever you are. Within Asia, financial Advisors in Hong Kong, Singapore, Japan and Korea, for instance, are highly regulated, whereas Thailand, Philippines and Indonesia have less consumer protection.

Financial advisors & Insurance agents in Hong Kong are regulated by the Securities and Futures Commission (SFC), Confederation of Insurance Brokers (CIB) or Professional Insurance Brokers Association (PIBA) As in the UK, in Hong Kong, the term ‘Independent Financial Advisor’ is regulated, with specific requirements for determining independence.

In Singapore, financial advisors are regulated by the Financial Advisers Act. It determines that financial advisors must be licenced corporations, or individuals appointed by licenced corporations, with certain minimum capital requirements and which must report their finances to the Monetary Authority (MAS). Licenses are granted to financial advisory firms judged by the MAS to have adequate expertise and compliance capabilities. The MAS also regularly publishes the Financial Advisers Industry Review (FAIR), an assessment of the industry and its participants.

Bear in mind, also, that UK-regulated financial advisory firms operating abroad are not subject to UK regulation of their foreign subsidiaries. So, unless the subsidiary is itself operating in a regulated jurisdiction, the local practices could be different than what is offered back home.

Being aware of how your prospective financial advisor is regulated, and ensuring that they are properly compliant with regulations, is part of the way to avoid headaches. Another is understanding the kind of inappropriate practices that could go on.

What to watch out for.

Hidden fees. Financial advisor fees are either paid directly by the client or indirectly by taking a commission on products (such as insurance products) or a cut of the fees of the funds that you invest in. In principle, there is nothing wrong with that (although some jurisdictions do restrict how these fees can be charged), as long as the advisor is straightforward and transparent about the charges and as long as you are comfortable with them. But unscrupulous advisors have been known to add on fees that clients weren’t aware of when they took a certain investment decision, or take rebates on investments without their clients knowing.

Insurance Commissions. Certain investments are put in ‘insurance wrappers’, which means that they are, for legal and regulatory purposes, insurance rather than investment products. these can result in tax advantages for certain clients.

Inappropriate Investments. Even if you are working with a trustworthy financial advisor, you should always try to understand for yourself what you are investing in. Standard insurance products and investments in stocks, ETF’s, bonds and property are all you need to put together a sensible portfolio for the vast majority of people. Some higher risk investments such as commodity funds (those that invest in oil and metals) and Alternatives Funds (that seek to outperform the stock market, or invest in private equity, for instance) from established providers, may also be appropriate if you are comfortable with them. But, unless you are a very sophisticated investor, if your advisor is offering you investments in unlisted companies, exotic asset classes like wine and art, or so-called structured products that have complicated rules and formulas for how much they pay out and when, a yellow light should go off in your head.

Insufficient Expertise. Sometimes the issue is not even that the financial interests of the advisor are inappropriate, but simply that they are not fully qualified. Some jurisdictions require the individuals engaging in advisory services to have certain levels of experience and pass standardised exams, but where there is no such regulation, you sometimes have so-called advisors who have a limited amount training – sometimes as little as a week of company-provided workshops – donning their suits and business cards.

In conclusion, ex pats often have more complex tax and finances than average, so it’s advisable to rely on the assistance of a specialist. To avoid headaches, be aware of local regulations, and keep your eyes open for some of the most common risks. Good luck!


Chris has 9 years’ experience as a UK pension specialist and licensed financial advisor. He specialises in helping clients make balanced financial decisions to grow their personal wealth.

Chris is licensed with Holborn Assets, an award-winning international financial advisory firm established in 1999, with 10 offices and 15,000 clients worldwide.



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