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ARCHIVED - The value of local financial advice, by Blacktower Financial Advisers
Financial Advice Professional Keith Littlewood shares the importance of choosing an expert advisor
By Keith Littlewood, Blacktower International Financial Adviser
This is the fourth article I have written on the value of choosing a financial adviser who is well-established in your local area; not just because this is a matter of great importance but also because if you are forearmed, you can avoid the pitfalls and expensive mistakes that expats are encountering on a daily basis. In a previous article, I explained how some ill-informed advice from a UK-based adviser sadly resulted in the client receiving a €70,000 tax bill due to the lack of knowledge of the Spanish tax system. Today, I am going to share the uncomfortable and costly experiences that a new client of mine was recently confronted with.
Quite simply, the clients had a long-term relationship with their UK adviser. They held a large investment portfolio and over the years they have been transferring their investments over to ISAs to benefit from the tax advantages the ISA offered.
The clients had been in Spain since 2014 but kept most of their finances in the UK as they travelled back and forth between the two countries. Despite the clients becoming Spanish tax residents in 2019, the adviser continued to manage their investments with the same strategy.
Through the clients’ bank and the Common Reporting Standards requirements, the Spanish Authorities became aware of the recent transaction. This resulted in serious consequences:
- You are not allowed new ISA subscriptions if you are not UK resident
- Tax is due on profits from ISAs in Spain
- The clients are now having a full tax review from the Hacienda going back to 2016 (The Hacienda can only go back five years, fortunately for this client)
One can only imagine the stress these clients are facing and, frustratingly, this could have been easily avoided if they had found a Spain-based adviser when they became residents.
This is an ongoing investigation that is going to be very expensive for the clients.
Additionally, the financial adviser in the UK was completely ignorant to the products that were tax efficient in Spain and available to these clients. This is a common problem for advisers based in the UK.
They wish to retain their long-standing clients with whom they have a trusted relationship and from whom they will continue to receive the trail commissions and annual fees, but quite often they can be obtuse to the financial harm their clients risk. Following Brexit, it is very unlikely that a UK-based financial adviser will have all the passporting requirements needed to provide regulated advice in the EU anymore.
Arguably, a UK-based adviser should never be responsible for giving financial advice to someone based in Spain, as they have no idea of the implications the advice could bring on a client.
I often work alongside UK-based advisers to assist their clients in preventing catastrophic mistakes; please be vigilant with your financial planning in Spain and contact us for a no-obligation review of your portfolio.
The local Blacktower office address is:
120 Avenida Dr. Artero Guirao 2C. San Pedro Del Pinatar, 30740, Murcia, Spain.Our office suite is easy to find on the main N332 through road of San Pedro del Pinatar with easy parking.
If you want more information or wish to make an appointment to discuss your own situation then call 657684094 or email keith.littlewood@blacktowerfm.com
This communication is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional regulated adviser before embarking on any financial planning activity.
Blacktower Insurance Agents and Advisors Limited is authorised and regulated by the Cyprus Insurance Companies Control Service (ICCS) under Licence number 5101. Blacktower Financial Management (Cyprus) Limited is licensed and regulated by the Cyprus Securities &Exchange Commission (“CySEC”) with Licence number 386/20.
Financial Advice Issues for Expats in Spain
I have been a Qualified Financial Adviser for almost 35 years now. 25 years in the UK for major institutions such as Natwest, RBS and Royal London. I have been in Spain giving expats financial advice now for 10 years and it is quite remarkable the different approaches as well as advice that is required for an expat now living in Spain. Blacktower is a company that has specialised in providing the best solutions for its clients living outside the UK for 30 years also.
The currency issue is always high on the agenda and a discussion for the long term future has to be taken onto account. Questions like What will happen if one partner dies? Will the other remain in Spain? What about other family members? What Inheritance tax provisions do you have in place? The list goes on and on.
Existing portfolio’s and investments that were the mainstay of portfolios in the UK may now be obsolete. An example of this is quite often tax efficient products in the UK like ISA’s and previously held TESSA’s PEP’s actually have low growth rates and provide no tax advantage to a Spanish fiscal resident.
Existing Pension holdings either paid by the state or private pensions built up through working lifetimes are topics that have to be covered. Many expats have lots of small pensions from many ex employers and can be confused by the communications and administration in dealing with them. At Blacktower we specialise in advising on how to consolidate and bring all these pensions together in one place.
Bank accounts and investments in Spain always bring up lots of questions too. Quite often the small print associated with financial products in Spain is in Spanish this can make it very difficult even if you have a good grasp of the language. Understanding Jargon in English is sometime difficult enough. I provide clear easy to understand letters and documents in English so that you fully understand any terms and conditions before making a decision.
Advice on tax efficiency is just as important and offering good returns. There are products available exclusively for Spanish expats that can provide invaluable benefits. Having a good base knowledge of the tax implications both now and in the future is an essential ingredient to making a sound decision.
I will complete a thorough factfind, ask you the right questions, establish your individual needs, attitude to risk and capacity for loss and desired returns before providing you with a full written report of advice and my recommendations in plain English. You will then have time to read and consider all the information before contacting me with how you wish to proceed.
Click for more information about Keith Littlewood.
The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity.
This communication is for information purposes only and it does not constitute advice or a recommendation. The value of investments can go up as well as down, and investors may not get back the full amount invested. The Blacktower group of companies operates across multiple jurisdictions, each authorized under its respective regulatory license. For further information, please refer to the relevant regulatory page.
