This article is part of a series. Please scroll to the bottom of the page to see all the articles in the series.
Congratulations! You’ve made it to the final part of this series.
This section is all about looking to the future and assessing the different options available to you for managing your finances.
You will learn:
1. Do you need a financial adviser?
The million pound question.
The short answer is... it depends on your situation, as well as your outlook on life... You may not need a financial adviser.
There is nobody who wouldn’t benefit from good financial advice. If it was free, everyone would take advantage of it.
Unfortunately, it isn’t possible for the advice to be free, so it then comes down initially to your level of wealth, and whether you need someone else to manage it for you.
As a general guideline, £250,000 of investable assets is roughly the amount at which most people begin to seek advice. This can be made up of money you’ve saved or invested, as well as any pensions you may hold.
What type of person are you?
If you’re the type of person who likes to spend their time:
- Researching government legislation
- Updating your knowledge on investments
- Rebalancing investments
- Designing future cash flow scenarios in Excel
- Considering your tax strategies
Then no, you may not need a financial adviser.
If, however, you’re the type of person who prefers spending their time with their friends and family and not researching things which they don’t find interesting, then financial advice may be for you.
You may also be willing to pay a mechanic to fix your car, a doctor to diagnose and treat you, or a lawyer to represent you in court. These examples are no different to paying for financial advice. With enough time, effort and research, you could probably do any of these things yourself. But you would likely not do them quite as well, and potentially question how well you’ve done them which may lead to sleepless nights… for you and your family…
Life is for living. It’s not a rehearsal. You don’t want to look back in future years and wish you had done more of the things you love but the reason you didn’t was because you were trying to figure out the recent changes to pension legislation.
If you need more convincing, my colleagues at Octopus Wealth have recently written blogs on this subject which may help you:
2. How to choose an adviser?
So you’ve decided that you would benefit from taking advice on your personal finance. What’s next?
You now need to sort the wheat from chaff and decide which adviser and company is the right one for you. A good place to start is by reviewing the questions we posed in one of our recent blogs:
A lot has changed in financial services in the UK in recent years. With the arrival of better and more stringent regulation, the standard of advice has significantly improved. However, there is still a very big difference between what different advisers do in the UK.
Many still focus on the product selling which has become synonymous with the term ‘financial advice’ (this is what the vast majority of people in the UAE have experienced).
Whether it’s which investment, which pension, which insurance, which tax wrapper… these are all product related conversations. Whilst these all have their place in the overall financial planning strategy, they are merely tools in the bag. The bigger issue should be centred around what you want to achieve in life.
Life is not a rehearsal.
Whether you are in your 30s or your 80s, the time you have left on this planet is precious. Your conversations with your financial adviser should therefore focus on what it is you want to achieve and how to go about doing it.
How can you get and keep the life you want?
You will likely have multiple goals, both short term and long term. You may not even be aware of some of them until you have sat down and talked out loud about them. Your financial adviser should provide a platform for you to do this.
Not enough financial advisers do this. It should all start with a plan.
Your adviser should ask questions which prompt you to consider your goals and objectives as well as taking into account your financial position. This information should be used to build a personal financial plan for you and your family.
At Octopus Wealth, this is how the journey starts. We have built our own technology to show you how your life looks, based on your current circumstances and desired future.
We call it your ‘Lifeline’. You can view more information about it here.
If you would like us to build a Lifeline for you, or if you have any questions about your financial planning, please do get in touch.
3. Should you keep your UAE adviser?
If you have an existing adviser who you have developed a relationship with during your time offshore, you may be wondering whether you should maintain the relationship or look to find a UK based adviser.
There are a few points to consider here.
Unfortunately, due to the lower levels of regulation in the UAE, some people who claim to be advisers in the UAE are not actually qualified. Hopefully, your adviser is not one of these people.
You can check this by doing a member search on the 3 qualification body websites.
To be a qualified financial adviser in the UK, an adviser must have completed the appropriate exams with one of three institutions:
- The Chartered Insurance Institute (CII). You can access the member search here.
- The Chartered Institute for Securities and Investments (CISI). You can access the member search here.
- The London Institute of Banking & Finance (LIBF). You can access the member search here.
The listing should show their professional designation. Simply being a member is not enough.
Level 4 is the minimum level required to be qualified. The following designations denote a Level 4 qualification:
- CII: DipPFS
- CISI: ACSI
- LIBF: DipFA
You should not accept this as the standard. Would you accept a partly qualified surgeon? No. Then don’t accept this for your finances either.
Level 6 denotes Chartership or Fellowship, which is what I suggest you look out for. The following designations denote a Level 6 qualification:
- CII: Chartered Financial Planner (APFS, FPFS)
- CISI: MCSI, Chartered MCSI, FCSI, Chartered FCSI
- LIBF: Adv DipFA
Assuming your adviser has the appropriate level of qualifications, they must also be licenced to give advice in the UK and listed on the FCA register.
This is important because it relates to your protection if something goes wrong. If your adviser and their firm are not FCA regulated, you will not be liable to compensation if you need it. Make sure you have checked and understand this before you make a decision.
Does your UAE adviser remain the best person to advise you in the UK?
Life is different in the UAE. There is less tax. Life is simpler.
Part of UK financial planning is negotiating your way through the plethora of rules and ensuring you are utilising all of the reliefs and allowances available to you.
There are good advisers in the UAE who used to work in the UK and have a good knowledge of this. But it’s not the same as being on the ground and doing it every day.
As is natural, you forget things, and are sometimes unaware of the practicalities of changing legislation.
Keeping with the medical example: if you needed brain surgery, would you rather a surgeon who performs these operations every day, or a surgeon who is suitably trained but hasn’t performed the operation in 5 years? It’s a no brainer (pun intended!)
4. The importance of fees
As with almost everything in the UAE, the cost of advice tends to be more expensive than in the UK.
Just as with your supermarket shop or a family dinner out, you generally pay more for advice in the UAE than you do in the UK. Adviser fees in the UK will be 1% per annum or less. Offshore they are often more.
When it comes to your finances and investing, cost should be one of your top priorities.
How much is too much to pay?
If your total costs (inclusive of adviser fees, investment fund costs, platform costs, pension trustee costs if applicable) are above 1.6% per annum, you’re likely paying more than you need to now that you’re back in the UK.
For some of you, this will be significantly less than what you are currently paying. During my time in the UAE I frequently saw people paying in excess of 3% per annum.
It may, however, only be marginally more than your current costs.
Does it actually make a difference?
If, for example, you currently pay 1.9% per annum, it is only a saving of 0.3% per annum. Not much, right?
On an investment of £500,000, this equates to £1,500 per year. However, based on the 2 above costs, if you received 5% annual growth over a 30 year retirement period, it would be the difference of over £113,000.
That’s a pretty significant difference for just a cost saving of 0.3% per year.
Even in the UK, a recent article from The Times showed that the average costs across the firms surveyed were 2.8% per year, with some as high as 3.8%.
The lesson: know your costs and don’t pay more than you need to.
5. Doing it yourself
As mentioned above, not everyone wants, or needs, advice. You may be able to DIY. It will certainly save you on the cost of advice.
It’s harder to do this in the UK than in the UAE due to tax and pensions being a factor. But it’s still possible.
We wrote a blog on this subject relating to pensions. You can view it here.
Consider your options. Decide what’s important to you. Regardless of whether you take advice or DIY, you will need a roadmap to work out where you’re going. Without this, how can you ever know how much is enough?
There are numerous resources online to assist with this. Or if you’d rather save the time, hassle, and ensure you get it right, feel free to book an initial discussion to discuss your plans.
6. Who are Octopus Wealth and why should I care?
If you’ve been offshore since before 2015, you will likely never have heard of Octopus.
If you ask your friends or family who remained in the UK who Octopus are, they will almost certainly be able to tell you. It is now a household name.
The Octopus Group began back in the year 2000 as an investment business. It invested in young and exciting UK businesses. This is known as ‘venture capital’.
It did extremely well and now manages around £9 billion of assets. It even won the Five Star Investment Provider Award at the Financial Adviser Service Awards - 6 years running!
Over the years, other businesses in the group were born. The most recent success is Octopus Energy, the UK’s fastest growing energy supplier. It is one of a very small handful of companies who have 5 stars for customer service on Trustpilot. It’s the UK’s only energy provider to have won Which? Recommended provider for four years running.
Hopefully this tells you a little bit about our culture.
In 2017, Octopus Wealth was born. This was an obvious evolution from the investment business: to provide a comprehensive financial advice and wealth management service to our investment clients.
But we don’t just want to do that.
When Octopus enters into a market, it is not simply with the intention of being a participant. This is not what has happened in the past. We seek to change the market.
And this is what we have done in financial advice: using technology. We have changed what was an outdated and boring industry, into an engaging and visually stimulating experience for clients.
This means being able to clearly picture your future, and knowing what you need to do to get there.
We have done this in 2 key ways:
We use our Lifeline to help clients understand the impact of their decision making which in turn, allows them to realise and achieve their short term and long term goals and objectives.
We use our technology to make our business more efficient behind the scenes. We then pass on the savings to you!
An example is that we are paperless. So what? Well if you’ve ever had financial advice, you may remember the mountains of paperwork.
Application forms, advice reports, investment brochures, printing forms to sign by hand, scanning them back in… The list goes on.
Not with us. That was the past. The present (with us) is that everything is digital. And no more reports so thick that they could be used as weapons. Our advice comes in the form of a presentation with slides. We record it so you can watch it back if you wish. This is the future.
Feel free to come and try it.
7. The importance of a financial plan
We’ve come to the end.
A financial plan has been touched upon throughout this series. I expect you get the picture by now. It is the key to becoming financially free.
That is, the point at which you ‘choose’ to work, and no longer ‘have’ to work. Without a clear plan of where you are and where you want to get to, planning for your future is like driving in a foreign country. In the dark. With no map. And no headlights!
You wouldn’t set off on this journey without checking a map or your sat nav. You wouldn’t just rely on the vague directions someone gave you last week. Don’t do this with yours and your family’s financial future.
Get in touch today and we can create your map with you.
Thank you for reading this guide. I hope you have found it useful.
If you have any feedback, or feel that the guide is missing any information, I would love to hear from you.
If you know people who are due to move back to the UK from the UAE, please do share this guide with them. It is a free source and the intention is to help as many people as possible.
Enjoy your life back in the UK and if you do need any assistance with your financial planning, please don’t hesitate to get in touch.
Circumstances vary for individuals and any personal opinions or firm opinions represented above should not be seen as advice or a recommendation to take any specific course of action.
We are not tax advisers. The value of an investment, and any income from it, can fall or rise. Investors may not get back the full amount they invest. Past performance is not a reliable indicator of future results.
Personal opinions may change and should not be seen as advice or a recommendation. This post is based on current legislation as at the time of writing, which is subject to change and will not be kept up to date. This document is for UK retail investors.