Phil Billingham on advising ‘world citizens’

Experienced Financial Planner Phil Billingham launches a new column for Financial Planning Today looking at Financial Planning client topics, planning opportunities and views of the profession.

Pick up any book on Financial Planning, or read any FCA document, and it’s very clear that they are written with a particular client profile in mind. One born, living and dying in the UK, with the occasional two week holiday ‘abroad’. The reality is not that simple.

According to the Office for National Statistics, the 2021 census figures showed that in 2021, 10 million (16.8%) of the usual residents of England and Wales were born outside of the UK.

If you add in the numbers of UK passport holders living abroad (permanently, or as ex-pats) – estimated at between 3m and 5m people – then that is a significant number of people who do not fit the client profile above.

By accident – a long story – I spend a lot of my time working with people in these groups, and I’d like to share some of the joys, challenges, the bear traps and some of the opportunities:

The joys: Many of the people I deal with are highly successful, interesting and interested in the world around them. They can be good company and engaged in the planning process. They tend to be risk adverse in their personal financial dealings, wanting clarity rather than the top performing fund of the last 20 minutes or clever tax schemes.

The challenges: Too many of these people have encountered the sharks before they met me. So they have been scarred by huge charges, fly by night salespeople and unfulfilled promises. And QROPs. Lots of QROPs. In addition, getting information from German, Swiss or Dubai based schemes is harder than extracting blood from stones

The Bear Traps: First and foremost, do not, ever, assume that what the UK does applies elsewhere.

• ‘Tax Free Cash’ may not be tax free wherever they are living.
• US residents / citizens / Green Card holders are a challenge.
• UK pensions payable to South African residents may – may! – be tax free. In South Africa…
• Pension switches may be a taxable event for Canadian tax residents.
• You will be asked to give advice on monies or assets arising in other countries – it is highly unlikely that regulation allows you to do this legally.
• East / West time differences are a pain!

In short, be very careful of the word ‘normally’ and get tax advice in the country at the other end of the conversation.

Most UK providers are not as set up for these clients as they could be – it requires some careful due diligence to ensure they can not only receive the assets and accept the client but that they can also pay out benefits and provide proper client service.

The opportunities: We live in an increasingly connected world, with an estimated 200 million people around the world who have some form of connection – perhaps a few generations ago – to the UK, it means that UK based Financial Planners are in a unique position to work with interesting clients who have – with honourable exceptions – often been badly served by financial services in general.

It requires care, and an ability to put planning ahead of product and a willingness to work in collaboration with other professionals. That should fit most Financial Planners’ business structures very well.

Phil Billingham FPFS CFP Chartered Financial Planner, Chartered Fellow (Financial Planning). He is a Financial Planner and a director of Perceptive Planning, a Chartered Financial Planning firm based in London and Essex. https://www.perceptiveplanning.co.uk/

Biography: Phil joined the industry in 1982 and is a past director of the Institute of Financial Planning (IFP) and the Society of Financial Advisers (SOFA). He is a past member of the Financial Planning Standards Board (FPSB) Regulatory Advisory Panel. He is a specialist in helping advisers cope with regulatory change and has worked with advisers, planners and regulators in the UK, Europe, USA, Canada, South Africa and Australia. Phil is an Associate of the Chartered Insurance Institute (ACII), a Fellow of the Personal Finance Society, a Certified Financial Planner (CFP), a Chartered Fellow – Financial Planning and a Chartered Financial Planner. Phil will be writing regularly for Financial Planning Today.