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Separating the wheat from the chaff

Many expats would really like to use a professional financial adviser but they are either scared by the industry's reputation or have suffered a bad experience. This is often exacerbated by friends who share their own unfortunate and sometimes exaggerated past experiences.

The reality is that the industry has a number of unwanted people who ruin the reputations of the true professionals. This has become more apparent in countries where there are no formal regulations, leaving it open to the "cowboys" who were once used-car salesmen, electricians, etc, before they spent a week on an intensive course and became full-blown independent financial advisers (IFAs). Little wonder these relative few spoil it all for the majority of serious advisers who really struggle to uphold their own reputations in this climate and keep their own business operations working well.

So, what should you look for in an IFA? How do you go about trying to find someone who is going to give you genuine professional advice and top-drawer service?

The answer is that it is not easy, and this results in confusion and indecision for many people, so they end up doing nothing. This is sad because it often means individuals don't achieve their lifetime financial goals when they could have done so with professional help. I also hear the sceptics out there saying that an unprofessional IFA may well have a similar effect. This has some truth, but if you select your adviser carefully and know that he is a true professional you will not suffer from the pitfalls that come from the unethical faction.

The first step is to find some candidate adviser firms. This is not a difficult task, the trick being to try and identify the right ones. Perhaps recommendations from friends or colleagues may help. It is also going to be worthwhile to look for advisers who are clearly stable, visible and well known. If they've been in the public eye for lengthy periods of time they are usually reputable. If on the other hand a random Google search shows up a less that glittering reputation, it would be wise to give them a wide berth.

Remember also that one of the keys is going to be the personal relationship you have with the individual consultant within the firm you choose. That relationship must work for you and you will need to be totally comfortable with the individual who is looking after you. Only upon meeting such candidates will you be able to judge this.

One of the other factors that could be very relevant to you is the performance result you are looking for. Do you feel you would benefit more from a dynamic fast-moving firm that keeps up with developments, or perhaps a more traditional organisation that is rather staid and much slower but conservative? Those with the flexibility to move in either direction might be best if you would prefer to start walking before you run.

In creating an evaluation system you may wish to follow a pattern similar to the one represented in the graph on this page, which has been used by some expats in Bangkok in the past. This creates a marking system to pitch different organisations to your personal preference:

Using this type of scoring system will allow you to make a good start of looking at the options open for you. Many possibilities exist to amend the categories shown in the chart and the way you personally mark them. You are thus able to select an adviser based on your evaluation and opinion of what is important.

One of the difficulties in the industry these days is that regulations are very stringent in some countries, yet almost non-existent in others. This results in the creation of unwanted advisers in some areas. A key area to consider is whether your potential adviser firm is regulated. If there are no specific local regulations, such as those laid down in places like Hong Kong, Singapore and the UK, ask whether any other regulations are voluntarily followed. A positive answer will at least give you comfort that the firm you are talking to is serious about giving true professional advice.

Ask yourself whether the adviser you are engaging in discussions is well versed in expatriate affairs and if he or she has sufficient experience in the ways of the world. Perhaps someone with some time under his belt will be a better bet for you than a smart young person who is very keen to lay out products in front of you for the sake of simply enhancing his own reputation as a skilled salesman in his firm.

Good advice is available, but you need to be careful to ensure you choose it properly. Remember that clients don't have to live with their choice of IFA firm forever. If the relationship, quality of service or investment performance ends up falling short of expectations you are able to get a second, often more candid opinion. You are quite within your rights to change advisers. The exercise of getting a second opinion very often proves useful and costs nothing, so what are you waiting for? To keep your existing adviser on their toes or to seek alternative opinions take time out to review your choices and make sure you have the adviser you deserve.