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Here is your sample chapter of:
"The Great Expat Financial Planning Ripoff"
CHAPTER 4
THE STORY OF HARRY PATTER AND THE TROPICAL GOLD MINE
Harry Patter, a registered financial advisor in U.K., is a bit jaded. Harry feels he needs a break and decides on a holiday in the West Indies. He has some expatriate contacts in Trinidad.
“Hold on” he thinks to himself, “why not make some money while I am at it? A lot of time on the beach and a little time doing some easy work; sounds good to me. I’ll bet there’s a gold mine waiting for me there”.
It doesn’t worry him that, although he does a fair job back home, he has no special training in offshore work, other countries’ tax rules, the implications of working in other currencies or the intricacies of the needs of nationals other than those of his own country. Lists of names are easily obtained and he telephones some ‘prospects’ before he visits Trinidad; he is an expert ‘cold caller’.
“Hello Mr Expat, I’m calling you from U.K. Can you give me a few moments now? Good. Mr. Expat my company is one of the leading Independent Financial Advisor firms in U.K. and we work under the strict investor protection regulations of the U.K. Financial Services Authority. ΔΔ
"I’ll be in Trinidad on business the week after next and I thought you might like to hear about some of the latest developments in Expatriate Financial Planning and how our services may be of benefit to you. Would it be possible for us to meet for an hour so on say the 20th at 10 a.m. or the 21st at 2.30 p.m?"
With several appointments in his diary off goes Harry to the West Indies.
Harry had a great time. Trinidad did turn out to be a 'gold mine' of modest proportions. He loved the social whirl and without much difficulty he signed up two clients, Carol a British advertising executive aged 34 and Anders a Danish civil engineer aged 40 each of whom took out “International Retirement Plan” contracts for 25 years, at premiums of $1,250 (£800 app) per month.
As soon as the first monthly premiums were paid Harry Patter pocketed an immediate ,000 (£18,000 app.) in commission. Nice going; holiday paid for and some profit.
Harry never went back to Trinidad and eventually lost contact with the clients. Years later Carol found her policy was never likely to produce the £¾ million or more he had been led to expect. That figure had featured on the illustration calculated at an optimistic 12% p.a. growth and the actual figure came nowhere near.
Anders fared worse. A company take-over and a bout of illness brought a radical change in his circumstances. He was forced to cash-in after 12 years at which point he had contributed a total of $180,000. After the insurance company hit him with a penalty of over $43,000 he got back a little less than $132,000. Not only is that an investment disaster (even in a fixed deposit at 5% p.a. he would have got back $196,000) but he has, from a retirement planning point of view, lost those 12 years which he can never have again.
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The ‘prospects’ cannot be blamed for assuming this means they will be protected by U.K. regulations even if the wording used does not specifically say so. As already pointed out, such protection does not exist.
Protection under any financial services regulation depends on where advice is given and where contracts are signed, not on where the advisor is based. Such a person may or may not give good advice but that depends on his skills, his expertise and his integrity not on another country’s irrelevant compliance rules. If Carol and Anders had known the adviser started off with a lie would they have trusted him with their money? Not likely. |
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