Investments always come with some risk, but there are certain things within your control that you can do to reduce your chances of walking into a disaster.
In the offshore financial services industry, expatriates are often exposed to broad spectrum of potential pitfalls, ranging from well-intentioned-but-poor advice to blatant mis-selling to outright scams.
Based on what I have experienced in the industry over the past decade, here are 5 things I recommend you do and don’t do when it comes to investing or meeting with a financial adviser as an expat.
DO work with an adviser who has qualifications. Many regions are not regulated and do not require the advisers to have any form of financial planning qualifications, but even if that is the case, a good financial adviser is committed to an on-going financial education and should care about doing as much as possible to achieve and demonstrate competency.
If you’re working with someone that can’t be bothered to study for a couple of exams to demonstrate that they might actually know what they’re talking about, then why are they going to give a damn about your investments, right?
Of course, qualifications do not guarantee you’ll get a competent, morally and ethically sound adviser, but not having them says to me that the adviser is only interested in making money and does not really care about providing the client with accurate, meaningful and useful advice.
DO work with an adviser who can provide references. A good salesman can promise the world, but when it comes to your investments, it is the on-going service that really counts.
Always ask for references, including contact details and check for recommendations given on the adviser’s LinkedIn page. Contact a few of them to gauge their experiences as a client.
DON’T believe anyone who says they can guarantee high returns. There are no guarantees in the stock market. However skilled they may think they are and whatever they may tell you, they cannot control the movements of the markets.
But you can control where and with whom you choose to invest your money, so make sure that you do it as carefully as you can.
DO stick to the plan. If you’re investing for the long-term, choose a long-term strategy and stick with it, rather than chopping and changing your holdings every five minutes. There is no need to buy and sell funds frequently if you have a longer term investment horizon.
If your adviser is doing it, question him.
Some firms make changes to justify their management fees and to be “seen to be doing something”. Hardly the mark of good portfolio management.
If it’s you that’s demanding the constant changes, stop reading Bloomberg, Yahoo Finance and Motley Fool. Chasing performance is a sure way to failure. Don’t get side-tracked by short-term financial journalistic sensationalism.
DON’T work with companies that offer you their own fund range or insist you use a portfolio made up of funds with particular fund houses – they’ll be making extra here and at whose expense?
I believe that if you can stick to at least half of these tips, you’ll massively reduce your chances of a bad experience with investments as an expat.
It's important to know what you're doing when investing. So, I firmly believe that the key to my prosperous financial career is by having open, honest and trusting relationships with my clients that last! I'm not here to sell you one product and to disappear into the wind.
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Have you had bad expat investment experiences? Do you have any tips to offer? If so, please feel free to comment below!