Do I need a financial adviser to invest offshore?

While some investors have the time, skills and confidence to pick their own investments, most need the expert guidance and counsel of a financial adviser. This is especially the case when it comes to investing abroad, where foreign legal, financial and tax regulations can greatly complicate the process. There are four main benefits of consulting an expert when it comes to financial advice.

Four advantages of having a financial adviser

They are knowledgeable about managing money effectively

Financial advisers are qualified in financial planning and can help you decide on – and keep track of – your investment goals, savings strategies and retirement options. And if you wanted to increase your offshore exposure, your strategy would vary widely depending on whether you have a low-level living annuity income, you already have family or assets abroad, you’re very wealthy or you’re very young. An adviser would do a risk profile or financial needs analysis on you, and draw up a tailored investment plan to help you improve your savings and investment behaviours. This will include selecting appropriate financial products, improving the tax efficiency of your savings, and optimising your asset mix according to your personal circumstances and risk tolerance.

They are licensed to sell certain products

Only financial advisers who are registered with the Financial Sector Conduct Authority (FSCA) and have professional qualifications (passing regulatory examinations and undergoing training) can sell you specific financial products. These advisers are required to have extensive knowledge of the products they recommend and can, for example, compare the returns and different options, including whether to invest through a unit trust, or direct shares, or using a passive investment or active-managed investment.

They can offer objective advice

A good financial adviser should adhere to a strict code of conduct and avoid or disclose any conflicts of interests. They need to offer objective advice with your best interests at heart, so you can make informed decisions. This can be helpful because money advice from your parents, friends, children or colleagues – while well-meaning – can often be conflicting, limited, irrational or anecdotal.

They can walk you through your financial journey

Context and perspective can go a long way in helping you counter emotional decision-making and other behavioural biases that stand in the way of you achieving your investment goals, and that’s where advisers can help. They have better sight of all the varying and often interconnected factors at play; they can crunch the numbers on different scenarios, spell out pros and cons, and remind you of what’s at stake – or what you stand to gain, either way. Their job is to walk through your investment journey with you, so that you grow in financial confidence and peace of mind. It’s also worth noting that feeling accountable to ‘an outsider’ that you respect can help keep you disciplined in practising good financial behaviours.

Is paying for financial advice really worthwhile?

Sure, you could learn to rewire your own home or sustain the willpower to exercise without a trainer, but most people understand the value of outsourcing specialised work to a trained professional – and of having an accountability partner to keep you focussed on your long-term goals. More often than not, it pays off.

Public opinion surveys to determine whether financial advice is worth the cost have consistently found that those who seek advice are financially better off. Studies show that advised investors accumulate substantially more financial assets than their non-advised counterparts, regardless of age and income; advised investors judge their investment knowledge as better and improved; and advised individuals portray a higher level of financial confidence and peace of mind (Rice, 2008; Harris Interactive, 2008; IFIC, 2010; ING, 2010; Cicero Consulting, 2010; Sun Life, 2011).

In a seminal study titled Econometric Models on the Value of Advice of a Financial Advisor, Canadian researchers found that households assisted by a financial adviser accumulated 1.58 times as much wealth as non-advised households after four to six years. After 15 years, the increased wealth accumulation effect grew to 2.73 times.

How do I find the right adviser for me?

Finding an adviser you trust to help make critical financial decisions with lifelong implications is an important task, particularly when navigating the complex world of investing abroad. This person will help you develop a healthy relationship with your money, so choose an adviser the way you’d choose a personal trainer or a marriage counsellor.

Look for someone who takes the time to understand you and your personal situation; someone who is qualified and who has more experience and insight than you; someone you feel free to ask questions of; someone you can openly express your hopes, fears and wishes to; and someone who communicates clearly and openly with you. These qualities can make all the difference in helping you find and stick to an investment strategy that best suits you.

• Money advice from your parents, friends, children or colleagues – while well-meaning – can often be conflicting, limited, irrational or anecdotal.
• Studies show that advised investors accumulate substantially more financial assets than their non-advised counterparts, regardless of age and income.
• This person will help you develop a healthy relationship with your money, so choose an adviser the way you’d choose a personal trainer or a marriage counsellor.

This article is not financial advice. Please consult with a financial adviser for financial advice.

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