More than ever and all the way across the socio-economic spectrum, individuals born in the UK are living, working or retiring abroad.
People in the UK are simply becoming more ‘international’ in their outlook; the advent of low-cost airlines allows for a ‘City break’ at a fraction of the previous cost, schemes such as the Erasmus Program enable students to study across Europe, those with sufficient capital will often purchase a property abroad and as consumers we are increasingly spending more and more on international brands.
The end result is that clients born in the UK increasingly have income, pensions, assets and liabilities held in more than one jurisdiction, potentially in multiple currencies. Their advisers, whether actively targeting such business or not, are encountering both new and existing clients that require assistance with this increasingly globalised financial planning.
Financial Planners and clients who are used to investing in the UK typically find that when moving overseas the international investment options feel very ‘old world’; with technology, opaque charging structures and business processes out of step with a modern fast moving investment world.
Platforms are increasingly coming to prominence outside of the UK. Indeed Novia Global was launched in 2015 with a view to bringing the benefits of platform technology to the international financial services market; a market that (much like the UK pre Retail Distribution Review) we have found to be heavily dominated by commission paying insurance products.
Whilst ‘offshore platforms’ will typically target the international adviser and trustee markets, they are also able to provide solutions for UK advisers for the increasingly globetrotting clients referred to above.
The vast majority of UK based platforms and providers are unable to accept business from Non UK residents and we hear anecdotes of advisers encouraging emigrating clients to change their address to that of friend or relative to ensure they are not forced to close their accounts!
An offshore platform is therefore ideally placed to service these ‘outlier’ clients with all the technology driven benefits the adviser and client expect; for example, at Novia Global we are happy to accept clients from numerous jurisdictions, offer seven different currencies and crucially, custody is held ‘offshore’ with BNP Paribas in Jersey.
A small number of offshore platforms (including Novia Global) come with the added benefit and security of being an FCA regulated business that is MiFID II ready. FCA regulation and offshore custody is a very attractive mix to offshore investors as the UK is one of the most tightly regulated environments in the world.
Some examples of the cases we’ve come across from UK advisers with these ‘outlier’ clients are as follows:
- A UK resident couple with a holiday property in France. Investment into a Euro denominated DFM model portfolio. The portfolio generates a yield to provide income to cover the maintenance costs of the property.
- UK expat, retiring to the US. Using an International SIPP to access his UK pension assets; investing in dollar denominated assets, withdrawing an income in the same currency into a bank account in the states.
- Non UK resident client, born in UK and will eventually return. Has spent over 20 years working in the Middle East. Looking to invest accrued savings in dollar denominated funds prior to his eventual return. The adviser’s UK platform would not accept the business.
The benefits of investing through an offshore platform apply equally to in-pats as they do to expats. Very often this type of client will be working on temporary contacts in different jurisdictions; non-UK domiciles would much rather invest their money offshore in a tax advantaged environment (even if the tax advantages are only a perception) and also in their home currency.
With regulation around the world gradually shifting towards RDR-style, where transparency and a service-based model rather than a sales model become the norm, the platform way of doing business is beginning to take off and will increase rapidly in the next few years. Hence UK advisers continue to seek out an offshore platform solutions when their go-to UK platform or provider cannot facilitate the business.