Rebuilding Trust in Expat Financial Services
The expat financial services industry is improving but it remains haunted by past misdeeds which are still raw in the minds of victims of bad advice. Financial advisers in Asia, the Middle East and beyond have still the worst reputation while they are lambasted as the least trusted. Why is that?
Before talking about the changes that need to be made, the conversation needs to start around how this expat financial services industry found itself with this problem. Many expats have been burned by taking the wrong type of advice and feel compelled to share their stories with people in their communities – and so the news spreads. The media also plays a big role in this by helping to expose unregulated financial advisers to avoid others falling prey.
Moreover, there are several reasons for the bad image, including too many inexperienced and unqualified advisers, plus a growing number of unregulated companies making wild claims like high 20% per annum returns etc. Expat Beleggen continues to see too many financial salesmen using expensive products with opaque structures and poor underlying investments with little or no regard for ongoing servicing or accountability for lack of performance. This trust deficit is very much an industry-wide global issue and Expat Beleggen wants to forcefully end the misleading sales, inappropriate advice and exploitation that are rampant in this offshore expat financial services industry.
Fundamentally, all businesses need to do their part in trying to change the reputation of the industry, otherwise expats will try and do it all themselves instead of seeking advice, and will undoubtedly make very big mistakes.
Expat Beleggen focus on doing the right thing and we have the appropriate qualifications and we fully disclose fees and charges. We feel product providers such as the life providers in Isle of Man and beyond should stop providing products and terms to advisers that are not at all in a client's best interest. There should be a total ban on commission on investments and pension products.
Of course, the task of improving the reputation is not only on our shoulders, the expat financial advice industry. Regulators worldwide need to clear out the problem advisers from the sector. Of course, such a tough stance will only come with a joined-up regulatory system and stricter compliance. Regulators needs to enforce exams, qualifications and a crackdown on unqualified advice. The best way forward is:
- Outlaw cold calling
- Ban on upfront commissions/fees
- No trail- and commission paying funds
- Cap ongoing advice fee to 0.5% per annum
- Make it easier for complaints to be made and a strict timeline and process to deal with these complaints
Far too many brokerage companies still do as they please, especially in Asia and the Middle East. The worst thing is these brokerages can efficiently operate and generate business through misleading blogs and adverts on social media platforms. Local regulators should fine and remove licences of these brokerage firms and advisers because they clearly keep on flaunting the rules and are not treating expats fairly. It is in all our interests to ensure trust in the expat financial services industry can return.
Financial advice in Asia and the Middle East still lags behind Europe and the UK. However, when more like Expat Beleggen operate transparently with a performance fee, expats will slowly but surely become aware of what good wealth management looks like and what it should cost. The more publicity around what not to do, i.e., get locked into commission products and expensive funds, the better the advice will become. The brokerage firms that still continue to relentlessly linger around with commission loaded products will have to leave.
Expat Beleggen are fully qualified pension planners and we enjoy a good reputation with our clients. It just takes you to give us a chance, having completed your own due diligence, and see that quality advisers like us do exist!