How to get good Financial Advice - Expat edition
October 6, 2013 11:25 PM Subscribe
Hi, I'm an Australian living in Asia temporarily. I've been looking for financial advice for my needs for a while, most of my cash is in a bank account in Australia and I figure I could do more with it than just have it sitting in a bank earning 3.5% interest (say for example around $30k ior so in the bank).
I haven't had any luck, Australian financial advisors tell me that due to my tax status a lot of what they have to offer doesn't meet my needs and where I live I've struggled to find any. Then out of the blue I got cold called by Devant group. I was a bit put off by the cold calling but I figured I was looking for financial advice, they seem like a big international company from googling so I met with the financial advisor.
He suggested that I should be preparing for retirement, by investing in Royal London 360 Quantum plan. Basically you sign up for a period of time (say 20 years), you agree to a monthly deposit amount (say $500) and that money is divided up between various "funds". There's a 0.50% charge per month on the "initial allocation" (which would be 20 months worth) and then a charge of 1.5% per year, deducted as 0.125% of the current fund value every month in arrears.
I was all set to sign up for it when at the last moment I got cold feet. My questions are this:
1) Any general advice on how to get good financial advice as an expat Australian?
2) Does the above plan seem like a good deal (I can provide links etc if it would help)?
3) Does anyone have experience with Devant Group as financial advisors? They assured me they'd be giving me advice on what funds to invest in every 6 months but I read a few links online to state that once you've signed they disappear.
I haven't had any luck, Australian financial advisors tell me that due to my tax status a lot of what they have to offer doesn't meet my needs and where I live I've struggled to find any. Then out of the blue I got cold called by Devant group. I was a bit put off by the cold calling but I figured I was looking for financial advice, they seem like a big international company from googling so I met with the financial advisor.
He suggested that I should be preparing for retirement, by investing in Royal London 360 Quantum plan. Basically you sign up for a period of time (say 20 years), you agree to a monthly deposit amount (say $500) and that money is divided up between various "funds". There's a 0.50% charge per month on the "initial allocation" (which would be 20 months worth) and then a charge of 1.5% per year, deducted as 0.125% of the current fund value every month in arrears.
I was all set to sign up for it when at the last moment I got cold feet. My questions are this:
1) Any general advice on how to get good financial advice as an expat Australian?
2) Does the above plan seem like a good deal (I can provide links etc if it would help)?
3) Does anyone have experience with Devant Group as financial advisors? They assured me they'd be giving me advice on what funds to invest in every 6 months but I read a few links online to state that once you've signed they disappear.
Also, you do NOT need advice every six months for 30k...
posted by jrobin276 at 12:16 AM on October 7, 2013
posted by jrobin276 at 12:16 AM on October 7, 2013
Response by poster: The advice was for the fund, so you could for example have 25% mining, 10% gold, 25% shares etc etc and they would say "our research shows that mining is on the way down, time to move to renewables" or what have you.
posted by Admira at 1:27 AM on October 7, 2013
posted by Admira at 1:27 AM on October 7, 2013
Admira, I am in no-way-shape-or-form a financial advisor, but that seems like a lot of fees. My calculations could well be out but it seems your investment has to earn 7.5% a year before it breaks even. That's an 11% difference than you are currently earning in the bank.
What did your Australian advisors say about superannuation in Australia? Is this extra $30k on top of your super?
posted by Kerasia at 2:57 AM on October 7, 2013
What did your Australian advisors say about superannuation in Australia? Is this extra $30k on top of your super?
posted by Kerasia at 2:57 AM on October 7, 2013
And what happens when you want to get out? I suggest googling "ifa expat scam" - I am not saying that there is necessarily something wrong with what you are proposing but there are many bad deals that prey on expats.
posted by AnnaRat at 4:20 AM on October 7, 2013
posted by AnnaRat at 4:20 AM on October 7, 2013
Oh, and often these bad deals do appear to involve big name companies.
posted by AnnaRat at 4:23 AM on October 7, 2013
posted by AnnaRat at 4:23 AM on October 7, 2013
That is a bad deal, and they should feel like bad people for offering it.
Take one year of what you would pay them in fees, and invest in a personal finance class at your local adult-education college. What you'll learn will pay for itself almost immediately.
posted by blue_beetle at 8:54 AM on October 7, 2013
Take one year of what you would pay them in fees, and invest in a personal finance class at your local adult-education college. What you'll learn will pay for itself almost immediately.
posted by blue_beetle at 8:54 AM on October 7, 2013
This kind of plan makes a lot of money ... for the company. From fees they charge you. Do not do this. Good for you getting cold feet and seeking advice.
What should you do? You need to understand the basic philosophy behind investing in index funds, because this is the safest, lowest cost way to go. This does not require paying someone a fixed percent of your income, and if it's done correctly, it protects you from all sorts of bad market moves. You don't need to pay high fees, and you shouldn't be moving money around based on some analyst's interpretation of what's happening in the market. You should instead determine an appropriate balance based on your age and plans, invest in appropriate index funds, and rebalance every quarter or six months. You can do this for a trivial amount of work and money.
To do this, first do a bit of online reading: Go to bogleheads and learn from that site.
To get a better, deeper understanding, buy a book on the subject. There are a lot out there; look on bogleheads for reviews, read Amazon reviews. Here's one option: The Power of Passive Investing. There are plenty of good books out there on the subject.
Good luck.
posted by Capri at 10:37 AM on October 7, 2013
What should you do? You need to understand the basic philosophy behind investing in index funds, because this is the safest, lowest cost way to go. This does not require paying someone a fixed percent of your income, and if it's done correctly, it protects you from all sorts of bad market moves. You don't need to pay high fees, and you shouldn't be moving money around based on some analyst's interpretation of what's happening in the market. You should instead determine an appropriate balance based on your age and plans, invest in appropriate index funds, and rebalance every quarter or six months. You can do this for a trivial amount of work and money.
To do this, first do a bit of online reading: Go to bogleheads and learn from that site.
To get a better, deeper understanding, buy a book on the subject. There are a lot out there; look on bogleheads for reviews, read Amazon reviews. Here's one option: The Power of Passive Investing. There are plenty of good books out there on the subject.
Good luck.
posted by Capri at 10:37 AM on October 7, 2013
Do you have an Australian super account? If you put money into that your are doing 99% of what the managed fund would have. Most if not all of the funds let you balance your portfolio in terms of cash, shares, property etc. Profits are taxed at 15%. The only downside is that you can't access the money until you retire.
Alternatively you could buy shares on the ASX in one of the traded funds - SPDR.AX is an example. They essentially pool everyone's cash and buy shares in Australian listed companies the same way managed funds do, but they are traded on the stock market. Pretty much if the ASX goes up or down, the share price goes up the same percentage. There are funds that are more geared towards one sector or another, but you don't have the flexibility to swap around what the portfolio entails, but it is much easier to buy/sell. Their "fees" get taken out of the 6-monthly dividend that they pay.
posted by trialex at 6:20 PM on October 7, 2013
Alternatively you could buy shares on the ASX in one of the traded funds - SPDR.AX is an example. They essentially pool everyone's cash and buy shares in Australian listed companies the same way managed funds do, but they are traded on the stock market. Pretty much if the ASX goes up or down, the share price goes up the same percentage. There are funds that are more geared towards one sector or another, but you don't have the flexibility to swap around what the portfolio entails, but it is much easier to buy/sell. Their "fees" get taken out of the 6-monthly dividend that they pay.
posted by trialex at 6:20 PM on October 7, 2013
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I worked for them when they operated off their kitchen table eons ago, they're really nice people, both accountants, who just gottired of paying ongoing commissions for one off advice. They also lived overseas, and may know of someone who specializes in that. Good luck! memail me if you have any questions.
posted by jrobin276 at 12:15 AM on October 7, 2013 [1 favorite]