{"id":332,"date":"2012-02-11T08:20:40","date_gmt":"2012-02-11T08:20:40","guid":{"rendered":"http:\/\/www.globalbuzz.net\/uk\/?p=332"},"modified":"2012-02-11T08:26:06","modified_gmt":"2012-02-11T08:26:06","slug":"investment-traps-expats","status":"publish","type":"post","link":"https:\/\/www.globalbuzz.net\/uk\/news\/investment-traps-expats\/","title":{"rendered":"Investment Traps for Expats to Avoid"},"content":{"rendered":"<div id=\"attachment_334\" style=\"width: 541px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/www.globalbuzz.net\/uk\/files\/2012\/02\/coins-uk.jpg\" target=\"_blank\"><noscript><img decoding=\"async\" aria-describedby=\"caption-attachment-334\" class=\"size-full wp-image-334 \" title=\"Investment Traps for Expats\" src=\"http:\/\/www.globalbuzz.net\/uk\/files\/2012\/02\/coins-uk.jpg\" alt=\"Investment Traps for Expats\" width=\"531\" height=\"225\" srcset=\"https:\/\/www.globalbuzz.net\/uk\/files\/2012\/02\/coins-uk.jpg 590w, https:\/\/www.globalbuzz.net\/uk\/files\/2012\/02\/coins-uk-300x127.jpg 300w\" sizes=\"(max-width: 531px) 100vw, 531px\"><\/noscript><img decoding=\"async\" aria-describedby=\"caption-attachment-334\" class=\"size-full wp-image-334  lazyload\" title=\"Investment Traps for Expats\" src=\"data:image\/svg+xml,%3Csvg%20xmlns%3D%22http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%22%20viewBox%3D%220%200%20531%20225%22%3E%3C%2Fsvg%3E\" alt=\"Investment Traps for Expats\" width=\"531\" height=\"225\" srcset=\"data:image\/svg+xml,%3Csvg%20xmlns%3D%22http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%22%20viewBox%3D%220%200%20531%20225%22%3E%3C%2Fsvg%3E 531w\" sizes=\"(max-width: 531px) 100vw, 531px\" data-srcset=\"https:\/\/www.globalbuzz.net\/uk\/files\/2012\/02\/coins-uk.jpg 590w, https:\/\/www.globalbuzz.net\/uk\/files\/2012\/02\/coins-uk-300x127.jpg 300w\" data-src=\"http:\/\/www.globalbuzz.net\/uk\/files\/2012\/02\/coins-uk.jpg\"><\/a><p id=\"caption-attachment-334\" class=\"wp-caption-text\">Investment Traps for Expats<\/p><\/div>\n<p>Those working\/living abroad are a promising target for promoters of packaged investments. They usually have large savings to invest, lack the expertise and information flow to invest wisely, and need good advice on tax planning for their home countries\u2026 yet they\u2019re far from their usual sources of personal advice.<!--more--><br>\nUnfortunately they easily become victims of financial advisers who, while promoting products that are usually perfectly legal, channel them into investments that deliver poor returns, lock up their capital for years, and are burdened with high expenses\u2026 while generating good commissions for the advisers.<\/p>\n<p>In Thailand, where I live, I was recently given two examples of expats being lured into such poor investments.<\/p>\n<p>In one case the investor has discovered, too late, that his money is locked in for seven years, with huge penalties if he tries to withdraw his money to avoid high ongoing fees. In another case an American was talked into placing a million dollars with a high-profile British insurance company before discovering that fees totalling 4 or 5 per cent a year are being levied \u2013 he is also effectively locked in for years to come.<\/p>\n<p>Don Freeman, one of the handful of US-registered investment advisers living in Thailand, argues that the problem is that most of his competitors earn their living from commissions paid by insurance companies and other financial firms for promoting their products or services.<\/p>\n<p>Typically the investor finds himself locked in for years to pay for the adviser\u2019s sales commission, and facing large redemption fees \u2013 typically 5 to 9 per cent \u2013 if he wants to move the money elsewhere before the contract completes its term.<\/p>\n<p>Freeman doesn\u2019t say so as bluntly as I can &#8212; but such advisers have an obvious incentive to channel clients\u2019 money into investments that are more remunerative for them, even if they know they are a poor choice in terms of probable investment return, safety and flexibility.<\/p>\n<p>In my experience, not all such commission-earning advisers allow such bias to influence their advice. But most of them do.<\/p>\n<p>In the US and the UK the commission-based model is being banned or at least heavily penalized. In many countries where expats live, however, such advisers continue to operate, free of such home-base regulation.<\/p>\n<p>Freeman argues that the structure of compensation that advisers receive for their investment counsel can be \u201ca good gauge\u201d of their soundness. \u201cA fee-only compensation model guarantees the highest degree of impartiality regarding the enforcement of the adviser\u2019s fiduciary duty.\u201d<\/p>\n<p>Compensation derived from fees paid by the client \u201cprovides an obvious built-in incentive for advisers to act in the investor\u2019s best interest\u201d:<\/p>\n<ul>\n<li>If they fail to do so, \u201cthey will lose you as a customer\u201d and lose income derived from you;<\/li>\n<li>\u201cWhen fees are assessed as a percentage of assets under management, managers have an incentive to grow your assets.\u201d<\/li>\n<\/ul>\n<p>However, as some advisers who \u201ctout themselves as \u2018fee-based\u2019\u2026 also accept other payments that could influence their recommendations,\u201d before anyone makes an investment, he\/she should first insist on full disclosure by the adviser of how he\/she is compensated.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Those working\/living abroad are a promising target for promoters of packaged investments. They usually have large savings to invest, lack the expertise and information flow to invest wisely, and need good advice on tax planning for their home countries\u2026 yet they\u2019re far from their usual sources of personal advice.<\/p>\n","protected":false},"author":1,"featured_media":334,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[231,59,1],"tags":[490,488,489],"class_list":["post-332","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-featured","category-news","tag-expats","tag-investment","tag-traps"],"_links":{"self":[{"href":"https:\/\/www.globalbuzz.net\/uk\/wp-json\/wp\/v2\/posts\/332","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.globalbuzz.net\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.globalbuzz.net\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.globalbuzz.net\/uk\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.globalbuzz.net\/uk\/wp-json\/wp\/v2\/comments?post=332"}],"version-history":[{"count":4,"href":"https:\/\/www.globalbuzz.net\/uk\/wp-json\/wp\/v2\/posts\/332\/revisions"}],"predecessor-version":[{"id":338,"href":"https:\/\/www.globalbuzz.net\/uk\/wp-json\/wp\/v2\/posts\/332\/revisions\/338"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.globalbuzz.net\/uk\/wp-json\/wp\/v2\/media\/334"}],"wp:attachment":[{"href":"https:\/\/www.globalbuzz.net\/uk\/wp-json\/wp\/v2\/media?parent=332"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.globalbuzz.net\/uk\/wp-json\/wp\/v2\/categories?post=332"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.globalbuzz.net\/uk\/wp-json\/wp\/v2\/tags?post=332"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}