Expat Investment Advisors

[noobexpat]

19 hours ago, wordchild said:

Not True, Many offshore IFA,s still use a product called a "portfolio bond", as a kind of wrapper,   this is a structure which effectively locks the customer in for a number of years, carries high annual costs and is expensive to get out of.

 

The IFA,s  love them because they tie in the customer but they are of zero benefit to the majority of long-term expats.

 

These , portfolio bonds, can be very detrimental to your financial well being and if any advisor proposes such a structure you basically know that they are not going to act in your interests so walk away.

 

 

 

Incorrect. In fact more nonsense!

 

The wrapper is called a non qualifying investment bond. We use onshore and offshore versions.

Typically there is no initial charge but a sliding scale 6 year penalty that reduces by 1% pa. You are not locked into them at all. Some have enhanced allocation.

 

These plans are 99% used for IHT planning. But you won't know why. Its because they are not income producing and when created within a trust, which avoids trust taxation.

 

So many amateurs here. Why the guesswork guys??

[noobexpat]

20 hours ago, Misty said:

 

That's great to hear that you think the only fees involved in this case will be between GBP50-1500.  However, there are insurance-wrapped investments that have been sold much more recently than the 1990s with long maturity dates.  It's the insurance wrapper, not the investment, that has the long date. 

 

Give me the product name. Hope you don't mean investment bonds, because they have no maturity date.

 

They are sometimes to referred to as life insurance bonds and thats what you are incorrectly referring to, no doubt.

[Misty]

1 hour ago, noobexpat said:

We use onshore and offshore versions.

 

Who is "we" ?  Are you one of these IFAs?

 

1 hour ago, noobexpat said:

they have no maturity date.

 

The insurance policy wrapped investment products pushed by IFAs in Thailand and elsewhere do, in fact, have maturity dates listed in their "Policy terms"

 

[noobexpat]

45 minutes ago, Misty said:

 

Who is "we" ?  Are you one of these IFAs?

 

 

The insurance policy wrapped investment products pushed by IFAs in Thailand and elsewhere do, in fact, have maturity dates listed in their "Policy terms"

 

 

No doubt similar to our offshore bonds, which don't have one and every other offshore bond i've ever seen.

 

So lets see these policy terms.

 

[wordchild]

4 hours ago, Misty said:

 

Who is "we" ?  Are you one of these IFAs?

 

 

The insurance policy wrapped investment products pushed by IFAs in Thailand and elsewhere do, in fact, have maturity dates listed in their "Policy terms"

 

https://www.aesinternational.com/wealth/reviews/offshore-investment-bonds/what-are-offshore-investment-bonds

 

This gives a reasonable, factual  and balanced  summary of the uses of offshore investment bonds.

In particular the section on "Problems with offshore investment bonds" is worth reading as it refers to the potential for excessive charging, which is what, i believe, you are referencing.

That section highlights the issue that many expats have experienced ie depending on the provider, the IFA/Wealth Manager can have a significant degree of flexibility with regards to the charging structure eg with the potential to impose a charging structure that could involve significant penalty (upto 9.5 percent)  for an early withdrawal from the scheme. That is , of course, on top of the other charges they impose on your assets.

 

The key takeaways for me are

     1) these products offer pretty much zero benefit for a long term expat who does not intend to return to the UK

     2) They offer the potential for loading exit charges which effectively tie in the customer.

     3) i am sure there exist honest IFAs who do not abuse these products but, for sure, some do 

  

 

[wordchild]

34 minutes ago, wordchild said:

https://www.aesinternational.com/wealth/reviews/offshore-investment-bonds/what-are-offshore-investment-bonds

 

This gives a reasonable, factual  and balanced  summary of the uses of offshore investment bonds.

In particular the section on "Problems with offshore investment bonds" is worth reading as it refers to the potential for excessive charging, which is what, i believe, you are referencing.

That section highlights the issue that many expats have experienced ie depending on the provider, the IFA/Wealth Manager can have a significant degree of flexibility with regards to the charging structure eg with the potential to impose a charging structure that could involve significant penalty (upto 9.5 percent)  for an early withdrawal from the scheme. That is , of course, on top of the other charges they impose on your assets.

 

The key takeaways for me are

     1) these products offer pretty much zero benefit for a long term expat who does not intend to return to the UK

     2) They offer the potential for loading exit charges which effectively tie in the customer.

     3) i am sure there exist honest IFAs who do not abuse these products but, for sure, some do 

 To quote from the intro in the above linked piece;

 "The overseas use of offshore bonds has , unfortunately become associated with high charging , opaque, commision-based salespeople- who sell risky investments to unsuspecting expats" 

   That pretty much sums up the Devere approach and many other non-UK based IFA,s.

 

To Quote from the intro to the above;  " 

[wordchild]

" The  overseas use of offshore bonds has unfortunately come to be associated with high charging, opaque structures from commision-based salespeople who have sold risky investments to unsuspecting expats" Quoting AES from the above.

 

[noobexpat]

2 hours ago, wordchild said:

 

The key takeaways for me are

     1) these products offer pretty much zero benefit for a long term expat who does not intend to return to the UK

     2) They offer the potential for loading exit charges which effectively tie in the customer.

    

 

Fair enough for reading the literature but you don’t actually understand when, why and who they are for. Because how could you?

 

Offshore bonds are not just used in connection with periods of non UK residency. They can also be suitable for people for have never left the UK and never will. Confused?

 

So what else don’t you understand about them. Everything really. You focus on exit charges but what about enhanced allocation, for example.

 

Personal finance is a strange subject. It brings out some peculiar over-confidence in folks. 

 

[noobexpat]

1 hour ago, wordchild said:

" The  overseas use of offshore bonds has unfortunately come to be associated with high charging, opaque structures from commision-based salespeople who have sold risky investments to unsuspecting expats" Quoting AES from the above.

 

 

Don’t use this ....use our's instead!

Come on don’t be naive.

Fear sells.

 

Added: no mention of maturity dates, right? no need to reply i already know the answer.

 

[Misty]

21 hours ago, noobexpat said:

 

No doubt similar to our offshore bonds, which don't have one and every other offshore bond i've ever seen.

 

So lets see these policy terms.

 

 

They seem to be variously referred to as "offshore bonds" and also "offshore savings plans" "offshore investment schemes" "offshore pension schemes" and perhaps other terms.

 

When you say "our" offshore bonds -- whose offshore bonds do you mean? Is it possible you've only seen a subset of what seems to be out there?

 

As you note, these offshore IFA pushed products are "policies" - as in insurance products. Maturity dates are included.  And surrender penalties if the policy is surrendered ahead of the maturity date.

 

 

 

 

 

 

 

[Mike Lister]

Let's not personalise this, if you have a point or an argument to make, please make it.

[Maximus33]

In theory, portfolio bonds are for tax purposes, but in reality they are almost always used as very expensive trading platforms to hide large initial commissions paid to sellers. They have 5, 8 or 10 year initial charging periods with around 11% charges, paying 7% commission to sellers. I've never seen one set up as a trust, which also costs extra. If you want to surrender the plan within the initial charging period, you have to pay all the unpaid initial charges for the rest of the period as a penalty. One of the main problems with these are the sellers choosing the underlying investments which Thai SEC rules do not allow them to do without an investment management license. These sellers often don't have the experience, qualifications or knowledge to choose investments and are mainly selling them based on levels of hidden commission they receive, often 4%-5%. Underlying investments are sometimes unregulated and for professional investors only whereas nearly everyone they are selling to would be classed as a retail investor. There are much better and cost effective trading platforms available and firms available to manage investments in highly regulated areas, with no exit penalties. Insured regular savings plan as even more expensive, giving the seller the incentive to sell long terms which aren't of benefit to the client. This is because the longer the term they write, the higher commission they get for selling exactly the same plan. These have very low retention rates and limited investment options and are really hard to make money on.

[wordchild]

4 hours ago, Maximus33 said:

In theory, portfolio bonds are for tax purposes, but in reality they are almost always used as very expensive trading platforms to hide large initial commissions paid to sellers. They have 5, 8 or 10 year initial charging periods with around 11% charges, paying 7% commission to sellers. I've never seen one set up as a trust, which also costs extra. If you want to surrender the plan within the initial charging period, you have to pay all the unpaid initial charges for the rest of the period as a penalty. One of the main problems with these are the sellers choosing the underlying investments which Thai SEC rules do not allow them to do without an investment management license. These sellers often don't have the experience, qualifications or knowledge to choose investments and are mainly selling them based on levels of hidden commission they receive, often 4%-5%. Underlying investments are sometimes unregulated and for professional investors only whereas nearly everyone they are selling to would be classed as a retail investor. There are much better and cost effective trading platforms available and firms available to manage investments in highly regulated areas, with no exit penalties. Insured regular savings plan as even more expensive, giving the seller the incentive to sell long terms which aren't of benefit to the client. This is because the longer the term they write, the higher commission they get for selling exactly the same plan. These have very low retention rates and limited investment options and are really hard to make money on.

Excellent summary 

Whatever the self interested pushers of these schemes might argue on here, there is absolutely no genuine reason for any expat to  lose control of their investments to schemes such as these.

This world is filled with chancers and scammers we all need to be careful and watchful.

 

[gamb00ler]

On 4/29/2024 at 10:15 AM, john donson said:

I am so jealous of you USA, UK, Australia expats

 

get 5% from the bank

 

TH and home country MAX 2.3% gross

 

I would be so happy with 5%

 

guess impossible to register just an address for that purpose...

 

lol

Schwab (US broker) will open an International account for investors living in Thailand.  Minimum balance is 25K US$.

[Cameroni]

On 4/28/2024 at 5:02 PM, save the frogs said:

I don't think the mutual fund industry is "regulated" in home country either.

 

As it's all basically gambling and the fund manager takes 2% and most funds don't do well. 

 

 

 

 

That's wrong.

 

The fund industry is regulated very heavily.

 

Nor is investing gambling in the sense of throwing up dice hoping a six falls down.

 

 

[swissie]

23 hours ago, Cameroni said:

That's wrong.

 

The fund industry is regulated very heavily.

 

Nor is investing gambling in the sense of throwing up dice hoping a six falls down.

 

 

They take their annual 2%, but (mostly) they can't "beat the market".😂

[swissie]

Let's face it. If you are a customer at J P Morgan, Blackrock, UBS etc etc etc, able to throw around 10 million, you will receive the "fruits of their resarch" first.

When you read it in the newspaper, it will be "old news". Explaining "surprising" moves in equities, before they appear in the regular news channels.

The average "financial advisor" doesn't know more than the average newspaper reader.

 

[Cameroni]

17 minutes ago, swissie said:

They take their annual 2%, but (mostly) they can't "beat the market".😂

 

It's not just 2%, it's 2% for managing the fund, but also 20% of the profits they make.

 

It's true that most managers did not beat the market lately, it was 43% who did in 2023. In 3 of the last 10 years it was above 50% but not since 2017.

 

https://www.ft.com/content/d7d4b190-fe07-4fa3-9b42-164f4eee3c6b

 

This has to do with market conditions. Markets are notoriously difficult and unpredictable lately.

 

However, some of the star performers who do beat the market do so by incredible margins.

 

This notion that funds are not regulated is complete nonsense though, and I'm not implying you would say such a stupid thing Swissie, I just read it upthread.

 

Funds are among the most highly regulated financial vehicles you can imagine.

 

This is because funds are quite dangerous for the economy, one, LTCM, almost caused the world economy to go into recession. Ever since then regulation has steadily increased.

 

There are also extremely highly qualified, intelligent people on the boards of funds, reviewing the figures, ie the administrators, usually several teams of lawyers in different countries are involved in setting up these funds.

 

I was a funds lawyer for over 15 years, and even in the Cayman Islands funds are regulated, unless they fall under exceptions, ie closed ended funds or large minimum subscriptions..

 

 

[swissie]

19 minutes ago, Cameroni said:

 

It's not just 2%, it's 2% for managing the fund, but also 20% of the profits they make.

 

It's true that most managers did not beat the market lately, it was 43% who did in 2023. In 3 of the last 10 years it was above 50% but not since 2017.

 

https://www.ft.com/content/d7d4b190-fe07-4fa3-9b42-164f4eee3c6b

 

This has to do with market conditions. Markets are notoriously difficult and unpredictable lately.

 

However, some of the star performers who do beat the market do so by incredible margins.

 

This notion that funds are not regulated is complete nonsense though, and I'm not implying you would say such a stupid thing Swissie, I just read it upthread.

 

Funds are among the most highly regulated financial vehicles you can imagine.

 

This is because funds are quite dangerous for the economy, one, LTCM, almost caused the world economy to go into recession. Ever since then regulation has steadily increased.

 

There are also extremely highly qualified, intelligent people on the boards of funds, reviewing the figures, ie the administrators, usually several teams of lawyers in different countries are involved in setting up these funds.

 

I was a funds lawyer for over 15 years, and even in the Cayman Islands funds are regulated, unless they fall under exceptions, ie closed ended funds or large minimum subscriptions..

 

 

I diden't say the funds are not regulated. This is about the "news-flow". = How fast the news gets where. Regardless of regulation, the next telefone is only a heartbeat away. Informing "important" people first.

Surely you would agree, that there are plenty of "backroom-politics" taking place. An equal amount of "backroom-economics" take place as well.

Those that get "the news" first are at a tremendeous advantage.

[Cameroni]

45 minutes ago, swissie said:

I diden't say the funds are not regulated. This is about the "news-flow". = How fast the news gets where. Regardless of regulation, the next telefone is only a heartbeat away. Informing "important" people first.

Surely you would agree, that there are plenty of "backroom-politics" taking place. An equal amount of "backroom-economics" take place as well.

Those that get "the news" first are at a tremendeous advantage.

 

Indeed, and some fund managers famously got into trouble for this backroom economics. It is illegal, when caught penalties apply.

[swissie]

55 minutes ago, Cameroni said:

 

Indeed, and some fund managers famously got into trouble for this backroom economics. It is illegal, when caught penalties apply.

Between 1991 and 1996 I worked for "Credit-Suisse". Main branch, "private banking". To enter the kingdom of "private banking", you really had to be a "financial heavyweight".

We got the results of their "research" departement first. To be distributed quickly to our "financial heavyweights", several hours before those facts became "common knowledge". Incredible amounts of money were made in a matter of hours, due to "advance knowledge".

To believe, that such "immoral" financial behaviour has come to an end, due to "stricter legislation", is the equivalent of believing in Santa Claus.

 

Nothing personel, just rejuvenating memories. Realising that nothing much has changed. "Immoral" behaviour just harder to track than before.

[Cameroni]

16 minutes ago, swissie said:

Between 1991 and 1996 I worked for "Credit-Suisse". Main branch, "private banking". To enter the kingdom of "private banking", you really had to be a "financial heavyweight".

We got the results of their "research" departement first. To be distributed quickly to our "financial heavyweights", several hours before those facts became "common knowledge". Incredible amounts of money were made in a matter of hours, due to "advance knowledge".

To believe, that such "immoral" financial behaviour has come to an end, due to "stricter legislation", is the equivalent of believing in Santa Claus.

 

Nothing personel, just rejuvenating memories. Realising that nothing much has changed. "Immoral" behaviour just harder to track than before.

 

Undoubtedly it does persist still. However, given the requirements to notify regulators of purchases or sales of listed shares, it is not impossible for regulators to figure out whether insider trading happened or not based on certain information.