Confusion between a Salesman and a Financial Consultant


If you purchase any product (offshore savings plan/portfolio bond) or investment fund through a 'financial salesman,' you will be charged commissions, which will undoubtedly skew the 'advice' you receive. Financial product providers in the Isle of Man, Guernsey, Dublin, Mauritius, Cayman Islands, Bermuda, and other jurisdictions pay the financial salesman on commission. That is a system that has the potential to be anything but crooked. There are just a few truly excellent financial consultants in the world, but they are working inside a system that does them no favours. 

Assume you purchased a home and the real estate agent who sold it to you not only took the standard 3% upfront commission on the sale, but also insisted on charging 1% of the potential rental revenue per year for the duration of your ownership. What if you later discovered that the 3% upfront commission and 1% annual charge were not established by the real estate agent, but by the property's developer? And that there were equivalent properties for sale in the vicinity from another developer for only 0.4% up front, but your real estate agent had not presented them to you. You'd be shocked, wouldn't you? But that's what happens when an expatriate in Asia, China, the Middle East, Latin America or elsewhere purchases a product or investment fund through a financial salesman. If you buy an investment fund from a salesperson, you pay an upfront commission of a percentage of the money you invest, as well as a commission for each year you keep the investment they recommended.

This arrangement means that many expatriates never encounter a true financial consultant; instead, they meet commission-hungry marketers posing as advisors! These salespeople may also be unable to quit urging that you buy and sell products when you would be better off doing nothing at all. It's worth noting that if they look at your portfolio and think it's fine, you'll get nothing. If they look at it and tell you to sell everything and invest in new funds, they may make 5% of the value of your investments. To summarise, the only way to ensure you receive unbiased financial advise is to refuse commissions and insist on paying for performance-based guidance. This is what we do when we consult with other experts. Do you pay your notary a percentage of the value of your will up advance when they draught it for you? Obviously not. You simply compensate them for their time.

As far as we can tell, financial advisors should be treated the same way. They have passed numerous exams to get qualified, and they should be treated as reputable experts and compensated accordingly. There are just a few competent and excellent financial consultants out there, and we don't understand why people would consider anything else reasonable. Unfortunately, we do not have universal support. When we say "not everyone," we mean "not everyone who works as a financial salesperson." It's fascinating stuff when people get this furious and personal with our comments here, since you can bet they know they're on shaky ground, but the most striking thing is that not a single person actually makes a legitimate case for the commissions scheme they utilise.

All advisors must now offer you the option of paying commissions or a fee, but we believe you are better off using advisors who only charge a performance fee, not least because the more of you who choose this option, the more financial salespeople will be tempted to leave the commissions system. Performance fee-only financial advisors are difficult to find at the moment, but Expat Beleggen has been providing this level of financial planning guidance for more than 12 years, with 95% of our clients staying with us for more than a decade. We have long endured the plague of a bad reputation as a result of these financial salesman: we are grouped together as commission-hungry salesmen, slightly higher up the food chain than used car dealers. However, we are part of a new generation of financial advisors: we have created a client-centered service that is focused on helping customers achieve their financial goals rather than maximising commissions. As a result, we provide a performance fee-based service with complete cost transparency. Furthermore, we are highly qualified.

Expatriate clients are cost-conscious, and a competent financial consultant will demonstrate his value – whether it's in expanding your pension fund, saving you money along the way, or ensuring that your money works harder and lasts longer. If you're interested, please contact us at: