How to go global with your advice

The growing international economy and prevalence of virtual communication continue to flatten the world making it easier for individuals to cross national borders and find opportunities to work and live abroad.

As investors, these global citizen clients have unique needs and we must ensure that we can meet clients’ niche financial planning, wealth creation and protection, reporting and tax requirements. With clients’ assets in multiple jurisdictions, it forces financial advisers to think about different countries’ laws, rules and tax systems whilst maintaining world-class financial advice.

This conclusion was part of a panel discussion at Momentum Investments’ first Global Citizen masterclass, which focusses on the factors to consider when structuring offshore investments for global citizens.

The globalisation trend is opening up an entirely new playing field and countless opportunities to ensure a client’s financial success. It is, however, essential to first understand the intricacies and complexities of creating a global financial plan.

How to do it

Before you start creating a global financial plan for a client, consider the following:

1. Are you licensed to give advice to your client if they are a resident of another country? In other words, do you need any additional advisory licence in that country, or can you just continue to assist your client? If you cannot advise your client living in another country, you could partner with a business that has a licence and continue to manage your client.
2. If you can still advise your client, try to keep the current adviser/client relationship intact as it is often a long-standing trusted relationship.
3. It’s impossible to be an expert in every jurisdiction across the world and aspects such as tax becomes complicated and essential to get right. Once you have a solid understanding of the client’s needs and required outcomes, the relevant knowledge and expertise of the different jurisdictions involved are essential. This includes the appropriate licences, in-depth understanding of the regulatory requirements, tax regime, estate planning, liquidity restrictions, and the inter dependencies between each.
4. Be deliberate on the expertise and solutions that your practice wants to offer and then carefully select which to obtain in-house and for which to select suitable long-term partners that can work alongside your business. By partnering with legal, tax and a suited offshore platform like Momentum Wealth International, an advice business can have access to the required tools to execute effectively across borders.

Some of the successful advice models that we have seen include either a focus on specific, more popular jurisdictions such as the United Kingdom, Mauritius and Australia, and strong partnerships with professional experts to augment knowledge. Some larger businesses also set up local advice practices in foreign jurisdictions for seamless referral of clients to advisers with the relevant knowledge and required licences.

Questions for beneficiaries outside South Africa

For the clients that are not emigrating but have beneficiaries abroad, we suggest that advisers think of or ask the following questions as a possible starting point:

• Where are the beneficiaries and do they intend to return to South Africa?
• Are the beneficiaries still tax residents in South Africa or not?
• Do I understand the tax laws, regimes or double tax agreements in that jurisdiction, or do I need an outside opinion from a tax specialist?

Globalisation adds layers of complexity to every aspect of doing business, creating greater risk exposure and uncertainty for all participants. However, the importance of being able to effectively help a global citizen with their financial planning needs is no longer a nice to have but a valuable part for an adviser’s business.

To watch the Global Citizen event, visit our events page here.

*This article is from our panel discussion at our first Global Citizen event, which took place on 20 April 2023.