If there was ever a lesson to learn from the current financial crisis, then managing our finances better would top the list.
Playing the blame game becomes a wee bit tiring, especially when many of us have abetted the crime of mismanaging our financial portfolio.
As we map our way through this quagmire, now more than ever comes the time to take stock of the investment options with the help of an Investment Financial Adviser (IFA); this especially rings true if retirement plans are on the cards and that little savings nest egg shattered into a million pieces with that neighbourhood Ponzi scheme.
Darren Ashley, Managing Director of Candour Consultancy, providers of financial and insurance advice, tells
Emirates Business: "This may seem an obvious answer from a financial adviser but everyone needs one from the day they move offshore.
"Even if they do not need investments and life assurance, they need someone to explain the differences between being onshore and offshore, what would happen should a family member die whilst a resident here, why at least some money should be held in an offshore bank account, the implications of not having good medical insurance, etc..."
And don't think you are alone in asking for help. According to research findings released last year by Zurich International Life, an offshore insurance and investment firm, more and more Gulf expatriates were seeking advice from professional financial planners on how to manage their money.
ZIL's Expatriate Wealth Monitor survey numbers would have probably leapt off the pages had people been aware of the magnitude of the global recession at the time, coupled with the more simpler problem of not knowing how to go about finding an IFA in the first place (a 57 per cent of UAE expats).
Earlier this year, ZIL's Zurich Wealth Monitor III figures claimed that 75 per cent of respondents in the UAE were concerned about not saving enough; while 44 per cent of respondents made saving their number one priority in the country.
The survey also showed an increase in retirement saving plans for 31 to 40 year-olds from 35 per cent in 2008 to 45 per cent.
If getting started on the road to future financial security appears rocky and securing an IFA is your ultimate finish line,
Emirates Business makes things easier by giving you top tips to get you started.
Plan for a planner
Figuring out your need for a financial adviser is the first step. Are you looking for comprehensive advice? Are there plans to start up a new business? Or is this a simple exercise to safeguard you during your retirement years?
You can also brush up on your technical terminology. "I found it useful to read up on the different acronyms, designations and certifications to help me understand better what I was getting into," says long-time investor Jason Hartley, 33. A Personal Financial Specialist (PFS) provides a broad range of financial advice; a Certified Financial Planner (CFP) is one step above a PFS; while a Chartered Retirement Planning Counsellor (CRPC) does the obvious.
How do you find one?
"When looking for an Investment Financial Adviser, narrow down the candidates," says Darren Ashley, Managing Director of the Dubai-based Candour Consultancy, providers of financial and insurance advice for individuals and corporates.
Ask friends or colleagues for recommendations. Ashley adds: "Moneyworks magazine provides a list of IFAs. Have a look at the company's website. If it offers free advice, the company is probably interested in advising rather than selling to you. If you have to register for information, they may not have your best interests at heart, leaving you with unwanted calls and spam."
Check qualifications and background
Experts advise that qualifications should be asked for and checked – they will show you certificates when asked. It is also vital you find out how long have they been working in the UAE and where they were beforehand. Ashley says if they have been working for the same company in the UAE for several years, it is unlikely they will disappear tomorrow because they run out of money or decide they miss home. He adds: "If an adviser has been in Dubai only a couple of months and was in Singapore for nine months prior to that and Hong Kong for nine months prior to that, it is possible that they are selling policies with the promise of a long-term relationship before moving on to the next expat haunt."
Ask for references and speak to the person, (emails can be doctored) and ask whether the adviser is regularly in contact with them.
Questions for your IFA
According to
Meccaonmoney.com, once you are comfortable with your planner's qualifications, you then need to discuss your financial situation and what you would like to achieve. For example, what experience the advisor has with people in your situation, and what services they offer. In return, the adviser explains the ways his company can help you and the payback involved. They use their teaching skills to ensure your understanding and further your knowledge on financial matters. It is also worth asking the adviser's establishment has ever been disciplined by any government regulator for unethical or improper conduct or sued by a client who was not happy with the work they did. You want to protect your money, not lose it.
Payment advice
Advisers can be fee-based or commission-based. The former will charge an hourly fee but will receive no commission on recommendations. This works out economical long-term, resulting in low premiums or enhanced allocation of investments. However, many expats do not like this as it requires an upfront outlay and the adviser is paid whether you take up their recommendations.
A commission-based adviser will only get paid once the policy is running; they don't get a dirham if you are unhappy. Often, the commission will be clawback if the policy is not long-term so there is an incentive for the adviser to look after their customer.
Long-term relationship
According to Ashley, the relationship between you and your IFA is “more dependent on the client than the adviser.”
He explains: “Some clients meet once a quarter, whereas others meet up every six months or once a year. It is also dependent on the policy – an investment will need more interaction between adviser and client than, say, a bank account.”
Your IFA and you should meet up occasionally to review your progress. It is vital to tell them if you’ve switched jobs, had a baby, or someone in the family has passed away.
Also, get a confirmation each time your adviser buys or sells something. You should also get a statement at least once a year; check for errors.
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