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Why should you hire a financial consultant?


If you are like most expat investors, these 2 things are true:

  • You spend almost 100x as much time going out with friends, watching TV, etc. than you spend on your finances.
  • You would rather sit in the rush hour than rebalance your investment portfolio.

You may also be convinced that a real estate investment will yield a higher return than equities and that gold will likely yield a similar return to equities but with much less risk. However, nothing could be further from the truth! ...

Unsurprisingly, most expat investors find their finances boring, don't spend much time on it, and aren't interested in learning about investing. Fair enough - it's not given to everyone.

There are some crazy people like us who like investing and spend a lot more time than average on it. But we are indeed in the minority. For the vast majority who are not interested in investing, some form of outsourced asset management will almost certainly be the best option. For example, Expat Beleggen - an independent consultant - can be extremely helpful in arranging your financial life, especially for matters such as retirement planning, wealth planning and tax management. This is especially helpful if you are not interested in your personal finances or lead a messy financial life.

Reasons to call in a financial consultant.

A good consultant can do much more than just manage your portfolio. All good consultants offer a variety of non-investment services, aimed at improving your wider financial life beyond your investment portfolio. So, when should you bother hiring a financial consultant?

1. You are considering retirement

The transition from your professional life to retirement is a huge leap, both financially and mentally. The safety net to be able to contribute extra to your investment portfolio disappears when you retire, and your pension pot now becomes your only source of income.

Mentally, you move from an abundance mindset, where you always have the option of working a little longer to build up your retirement pot, to a scarcity mindset, as your finite retirement pot becomes the thing you depend on to survive until your retirement age. This is understandably a nerve-wracking time for most expats.

A financial consultant can help you answer the most important question you'll have as you think about transitioning into retirement: "Do I have enough?".

This is a surprisingly difficult question to answer, even for the professionals. But a consultant can help you analyse your income, expenses, and portfolio to help you decide when to retire. Using cash flow tools, a consultant can help you design, implement, and maintain an asset allocation and spending strategy to meet your retirement needs.

For example, Expat Beleggen can also help you answer questions about matters such as your entitlement to state pension, pension withdrawal options, tax-free lump sums and the various ways in which you can get money out of your investment portfolio.

2. You are already retired

If you are already retired, you have most likely already received financial advice. But it's never a bad idea to get a second opinion and double check your portfolio and withdrawal strategy with a financial consultant so he can reassure you that you won't run out of money anytime soon.

3. Something important is happening in your life

Major life events mean major changes in your financial situation. It's worth seeking financial advice if you find yourself in any of these scenarios:

  • You are getting married and are looking for advice on how to combine finances and how to manage them as a couple in the future,
  • You are getting a divorce and are seeking advice on how to manage your finances as a single person again (this is particularly relevant if you are not the one in the relationship who did the "money business"),
  • You inherit money and seek advice on what to do with it,
  • You change jobs or types of work (i.e., employee to self-employed or vice versa) and seek advice on how this will affect your finances,
  • You are moving and want advice on the consequences for your tax, employer, and state pension situation,
  • You make decisions about your pension and seek advice on what you can do best.

In any of these situations, the life event can change your progress towards what you've been saving for, and a financial consultant can help make sure you stay on track.

4. You plan your legacy

A financial consultant can help you prepare wills, powers of attorney, trusts and estate tax planning to ensure that your wealth is distributed in accordance with your wishes and in the most tax-efficient manner.

5. You have no time or interest in learning about investing/financial planning

Let's face it, most people find this boring. We all only have 24 hours in a day and few of us want to spend that time researching what to invest in, navigating tax rules or delving into sustainable withdrawal rates.

To make matters worse, it can even be difficult to know where to start when learning about investing and financial planning. There is an infinite amount of information on the internet about this sort of thing and much of it is contradictory, especially when it comes to investing. Finding a reliable source of information is a research project before you even make any progress in learning about finance.

If you hire a financial consultant, you don't have to spend time learning all these things - he has all the necessary qualifications and experience and can explain it all for you (if you want). Or you can just let him do his thing.

Yet another way to save time is that almost every part of your financial life is filled with mountains of administration. Paying someone else to do all the paperwork for you will always be an attractive proposition.

We also wrote in a previous blog about how many do-it-yourself expat investors have poorly constructed portfolios. They are more likely to have portfolios that don't fit their risk profile, hold too much cash, have too much exposure to home stocks, hold too much in active funds or individual stocks, are not tax-optimized, or have no sensible withdrawal strategy. By delegating all of this to a consultant, he can ensure that your portfolio is appropriate and well-constructed, maximizing the value of your investments over time.

Hiring a consultant not only buys back your time by not having to learn all these things, you also improve your portfolio and thus improve your investment results.

6. You must separate all your financial products

Due to the endless paperwork that inevitably comes with things like pension transfers, many expats end up with an impressive collection of diverse financial products. Pensions with previous employers, insurance policies and the like can easily be forgotten, or put in the "we'll do it later" pile.

A financial consultant can also help here. Expat Beleggen will sift through your financial products, decide with you how best to consolidate them and place them in a coherent and manageable system.

7. You want a second opinion

Sometimes it's comforting to have greater control over your emotions. Many of the scenarios in this list are big decisions that you don't want to get wrong.

If you've done your own research, it doesn't hurt to check that your thinking is correct, and if you've already hired a consultant, it doesn't hurt to check that the advice you received from a previous consultant, wise.

Even if you're not making a big decision, many expat investors also value having a quick check to make sure they're on the right track. Whether that is to ensure that their investment portfolio is still balanced (in terms of risk profile, diversification, fiscal efficiency, etc.), or to ensure that their pension expenses do not lead them to bankruptcy within 5 years. An independent pair of eyes from another financial consultant on your financial plan can be immensely reassuring.

8. You worry about money

Your investments should be optimized for sleeping well, not eating well. And really, it should be that way for your entire financial life.

A consultant can help with that good night's sleep factor. As mentioned, we can give you peace of mind by providing a second opinion and reassuring you that you are on the right track.

But for those expat investors who don't want to manage their own portfolio, a consultant can also provide peace of mind as a portfolio manager. It can be comforting to know that there is a trusted fiduciary keeping a close eye on your portfolio, whose job it is to make sure that your portfolio always balances according to your circumstances.

And for those approaching retirement, having someone who can help answer the big questions, "Will I be okay?" and "Have I enough?" can reduce much of the worry and uncertainty associated with retirement decisions.

In this way, Expat Beleggen can offer peace of mind as a second opinion provider, portfolio manager and helper with major decisions.

It's a much lighter, more elusive benefit than something like wealth planning or retirement consolidation but providing peace of mind is nonetheless a tremendously valuable service we can offer you. If it helps you sleep at night, then it must be worth paying for it!

Should you hire a financial consultant?

Let us be clear: we do not call on a financial consultant because we practice the profession ourselves. We have a very simple financial life and are very experienced and confident, with minimal administration, we will not be retiring anytime soon, we sleep perfectly at night. Of course, we are not a "normal" investor. However, as an expat:

  • you do not work in the investment sector.
  • don't spend your weekends scouring investment papers, forums, and books to write about on your blog.

So, we cannot be used as a role model unless you are as obsessed with investing and finance as we are. For most expats, and in the right circumstances, a financial consultant can be immensely valuable.

He can help you with the big money questions of your life: "Am I okay?", "Do I have enough?", "When can I retire?"

But this consultant can also zoom in on the big picture and help with the day-to-day administration of your financial life. By delegating some or all your financial affairs to a consultant, you can choose how much of your life is spent filling out documents, calling customer service helplines, and other sickening administrative tasks. This is especially valuable for those whose financial lives are a jumble of old employer pensions, offshore trusts, or insurance policies.

By taking the administrative burden off your hands, a consultant not only saves you headaches, but also saves you more time. Time that you can spend on more meaningful things.

In addition to help with the big questions, the daily administration, and the time savings, Expat Beleggen ensures your peace of mind. Therefore, the value of a consultant is not quantifiable, and it is this "peace of mind" factor that our clients value more than anything else.

If you find yourself in one of the 8 situations above, hiring a financial consultant can be a very wise choice! But, of course, all of this presupposes that you hire a competent consultant who acts in your best interest. Trying to find out if a financial consultant is a) reliable and b) competent is not an easy task for any expat but even more so for those who may not be financially savvy.

This is a particularly pernicious problem in the expatriate finance industry, as the people looking for a financial consultant are often those who are the least financially savvy, and thus most likely to be taken advantage of, or unaware that they are being provided with bad financial advice by very dishonest salespeople!

Book a no-obligation introductory meeting with an independent financial consultant who only works with a performance fee.

Get expert guidance to help you better plan your financial future with independent financial advice: hello@expatbeleggen.com