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Who can you trust with your money?

By Susan Worthington - Topics: Investments, Mallorca, spain, Uncategorised, wealth management
This article is published on: 8th October 2014

During a recent meeting with a client we were discussing two topics; one being the continual closing down of offshore bank accounts and the other being the effect that the financial crisis has had on people and who they can trust with their finances. As they are inter-related I thought I would share my views.

Over the last few weeks one large Bank has been writing to most of their savers informing them that they need to hold a balance of at least £100,000 in their bank accounts or the account will be closed. This is part of a growing trend as banks undergo “strategic review”, resulting in many expats being forced to close their offshore accounts.

Bearing in mind that banks are paying minimal rates of interest, it seems unfair to expect someone to deposit £100,000 just for the privilege of holding a bank account when they receive next to no interest in return. On top of this, the interest is then taxable which must be declared on your “declaracion de la renta” (Spanish tax return) further reducing the true rate you receive.

There are now several insurance companies that offer Spanish Approved investment policies in which you can choose what level of risk you wish to take (low, medium or high) but where the income receives favourable tax treatment. Many people invest in banks because they feel they do not incur risk. This view is rapidly changing as a major risk to the money nowadays is inflation.

And so my client then went onto say that deciding on where to move their money is a major challenge. People don’t know who to trust these days.

A report by the Financial Times says: “Much damage has been caused by the breakdown in trust that took place in the wake of the financial crisis. Although financial advisers played little part in causing the crisis, it is clear that their relationships with customers have not escaped the fall-out”. This is a concern I respect which in turn means we as advisers must be aware. The report recently suggests the following:

i) An Adviser now needs to gain a truly granular understanding of the client’s needs and expectations. To really regain trust, advisers will need to gain much more granular insight such as client’s goals, aspirations, investment behaviour and expectation of service.

ii) Guiding and coaching will be important new skills for many advisers and asset managers to learn. Advisers should seek a more holistic perspective on the investor.

iii) Communication is vital but it needs to be tailored and relevant. Clients do not want to be bombarded with generic information. They want insight that they feel is relevant to their situation and demonstrates to them that their personal needs are being met.

The world of a Financial Adviser never stays the same, it is a constantly changing world which is what makes my work both interesting and very satisfying.

Article by Susan Worthington

Susan WorthingtonIf you are based in the Mallorca area you can contact Susan at: susan.worthington@spectrum-ifa.com for more information. If you are based in another area within Europe, please complete the form below and we will put a local adviser in touch with you.

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