As to the question of how bespoke advice needs to be for specific client groups, Bates first pointed out that its private client business also dealt with a handful of highly screened professional advisers and intermediaries.
“We’d like to think that all of our advice at some level is bespoke rather than in terms of geographical or segmentations of current markets.”
One exception here, however, is with US clients who needed to be compliant with the Foreign Account Tax Compliance Act (FATCA), he said.
“A number of institutions and banks no longer wish to work with US-connected parties. We welcome US clients in the same vein that we welcome all other nationalities. We are fully FATCA-compliant, do all the reporting, have all the required global intermediary identification numbers (GIIN), but that doesn’t mean we’re targeting or setting up a specific product just for that sector.”
Story said from a product provider’s perspective, there were definitely some opportunities. “A lot of the products you see here are still 20 years old, and there really need to be some new ones.”
Speaking your language
The multilingual capability of ITA’s system for international investors, covering expats as well as local investors who want to invest internationally, means versions in Mandarin, Cantonese, Japanese, Spanish, Portuguese, English, Russian are all catered for.
“That makes a really big difference when you are talking to the clients as an adviser and you can give them something in their own language,” he said.
As a licensed and regulated Cayman Island business, he said the regulations were more flexible than for Isle of Man, Guernsey and Jersey-based companies. “Some of the regulations are more modern, such as not requiring signatures, and e-signatures, as nowadays everything is online.”
For Bates, a natural ground to win business has been the western expat market, but he also said Nedbank’s South African parentage “leads a lot of South Africans to our door”.
The UK effect
Turning to the global impact of the UK pension reforms, David White, partner of The QROPS Bureau, on behalf of Hansard International, said the main issue in Dubai was the need to ensure a route to properly regulated advice for people wishing to transfer out of UK defined-benefit schemes.
“As from 6 April, this requires FCA regulated advice from an appropriately qualified individual in the UK. Advisers in Dubai are looking at ways to facilitate this for their clients by considering partnerships with appropriate UK FCA-regulated advisers.”
White also pointed out that those with defined-contribution UK pensions, wherever they lived in the world, would be able to access up to 100% of their pension fund at age 55.
“In the short term, this raises tax revenue, potentially estimated at as much as £1.6bn in 2015, and increases the flow of money into the economy.
“There are immediate planning opportunities for advisers around the world as clients will need continued advice as to how to invest this money and may be creating IHT issues for themselves by moving money out of their pension into their estate.”
While there was a danger that individuals would access their pension funds and spend it, giving them and potentially the state a problem in the longer term, there was also an opportunity for advisers around the world to provide this advice.
“In addition, it is likely that the pension flexibility will encourage people to save into their pensions, in the knowledge that the funds can be accessed after age 55 if they need them. This, too, will require advice,” White said.
In search of clarity
Story added that the twists and turns with the new rules were driving clients and advisers mad.
“Advisers are trying to give the best advice to the client, and almost every week there’s a new story coming from the UK. Clarity with the regulations would make it far easier for the advisers and better for the clients.”
Bates said he did not envisage a rush of people cashing in their pension pots and buying Lamborghinis.
“In the main, people who have built up a sizeable pension pot will have worked very hard for that, so I don’t imagine that just because they can take it, they are going to go and squander it.”
However, HM Revenue & Custom’s continued temporary halting of rule changes for non-EU QROPS, requiring these schemes to continue to use 70% of funds to provide an income for life, rather than full flexibility, had caused confusion, he said.
“A lot of pension providers and advisers had planned and made changes, thinking there would be 100% access, and are now having to reverse- engineer decisions.”
The regulators in Dubai were also causing confusion among the providers, said Story. One of his concerns was that the regulators at the moment “are restricting competition”.
“This then means the clients don’t get the best choice of product as well, because you just get a closed market where there’s no incentive for the existing providers to change, develop and do something new.
“Clear regulation everyone can follow is good for both the companies, the brokers and the clients because it provides them with more choice as well,” he said.
Bates agreed with Story on this point, and added: “The new capital qualifications criteria for the Insurance Authority-licensed firms is another step in the right direction, but I do fear that, until full transparency or commission disclosure is mandatory, the insurance industry will continue to be abused by some advisers at the expense of their clients.
“It’s been addressed in a number of other countries, but sadly not in this region yet.”
