There are a wide number of regulatory bodies in Europe, covering areas such as insurance sales, and investment advice. Due to European directives it is possible for an advisor regulated in one country to use that regulatory authority in another European Union country, To find out more about the regulatory bodies and permission in Europe, click the image to the right. A regulated advisor will usually also be insured so if a client has an issue with the advice, there is some form of redress and protection.
There are a wide variety of financial products that are used by both both onshore and offshore clients looking to plan for growth or income. Popular expatriate products tend to focus on reductions in taxation and increases in flexibility. Other products are tailor made to expatriate needs, such as international insurance policies. Some key products include :
Advice in these areas can be given by financial professionals who are regulated to provide insurance (IMD) and/or investment (MIFID) advice. There is often a choice to pay for the services of an advisor via commision from the sale of a product, or a pre-agreed fee for the advisors time (similar to a solicitor)
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Historically financial and investment advice has been paid for via commision. This usually takes the form of initial commision - a percentage of the investment amount or premium amount (for insurance) which is paid to the advisor up front. Ongoing or trail commision a percentage of the investment or premium amount taken on an annual basis.
Whilst many clients have been happy with this arrangement for decades, there has been some issue around transparency, as it is less clear to see what the actual advice costs, than with a straight forward fee. The commision will also impact the performance of the investment, which the image below illustates.
It is now becoming increasingly common for advisors to charge fees for advice, in a similar way to a solicitor or accountant. One analogy that could be used is that you can pay a landscape gardener to produce a plan to improve your garden, put those changes into effect, then monitor the performance of the garden. The landscape gardener would want a fee for the plan, putting the plan into effect, and maintaining the plan. The client would know exactly what the cost was, and what they are paying for. In the UK commision sales on investments will be banned at the end of 2012.
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