Investment Advice and Financial Planning
The expat's need for financial services
Undoubtedly one of the attractions of expatriate life is the increased salary and allowances paid to foreign nationals while they are serving their companies on overseas assignments. Whether it's called hardship pay, location allowance, overseas bonus, or a plain 'ol raise and the additional funds paid to senior managers during their overseas assignments can be quite significant. For many expats, an overseas move is a part of a long-term strategy to save for retirement.
Paired with additional tax exclusions or incentives that your country may allow you because you are working overseas, as well as the additional allowances that cover or assist in covering the costs of housing, transportation, education, travel, etc. during your stay, the average expatriate on a corporate assignment makes a significant amount more money on an overseas tour than in his/her home country.
With these additional funds, comes the need to think about the future and ensure that the funds are safeguarded for your future needs.
Advantages to having a financial planning advisor in Asia
Financial planners in your hometown may not understand the tax implications of monies made on overseas investments. There are distinct advantages to working together with a financial planner who is fully versed in the tax and financial implications of working, living and investing overseas:
- Financial planners in the region are on the spot and accessible for a quick consultation or lengthy discussion at your convenience. No need to rush through important financial discussions when your adviser is available for a face-to-face meeting.
- Reputable financial planners who are based regionally specialize in the kinds of investments that best suit expatriate's personal financial needs and tax situations.
- An expatriate financial planner knows your situation because they have the experience and the same needs and concerns as you do.
What are financial services?
'Financial Services' is a phrase often used about the handling of money, indeed the oldest form of financial service is money lending which goes back millennia. In the modern day however the term financial services has come to mean looking after the long-term needs and meeting the aspirations of clients.
Financial planning in the main is divisible into two parts. Firstly, the protection of the clients current position and secondly, the planning for future requirements.
Protection of the present is mainly met by insurance, for example a young couple with a family will require life assurance and possibly critical illness insurance on the main wage earner to protect the family in the event of the death or the serious illness of the breadwinner. The clients may also need cover for medical expenses and illness, which again can be catered for. For amounts of money which are relatively small a family can be protected against death, serious illness and other catastrophes.
Once the client is protected against the calamities life can throw up, the main area of concern tends to be to acquire a sufficiently large sum of money so as to have the prospect of buying a house or a comfortable retirement. The acquisition of this money is normally done through regular investment in savings plans or pension plans utilizing spare income over a number of years.
The choice of investment company and the investment funds used is of primary importance to financial planners. They must try and match the appropriate fund with the client's risk profile. By doing so the financial planner will be able to maximize the clients opportunity for good growth whilst minimizing risk.
It may well be that for a number of years the clients will pursue a high-risk strategy but attitudes will change. As clients approach retirement and cannot afford large fluctuations in their capital base, they tend to become more conservative. A good planner will of course organize the movement of their investments to more conservative areas as retirement approaches.
When the clients are retired, a financial planner's job is then to obtain for them the income they require whilst preserving their capital as far as possible.
Coupled with the above, financial planning also involves knowledge of the tax rules and regulations which are, or may be, applicable to the client. By the use of simple financial instruments such as wills or trusts various taxes (such as capital gains tax or inheritance tax) can be reduced or eliminated altogether.
Financial Services therefore encompasses a vast range of product providers, savings schemes, investment funds and the like but in the end it all comes down to helping you protect your family and then plan, and have, a comfortable retirement.
What to look for in a financial planner
- Commitment to serving the expatriate community in Indonesia. You'd like to know that you are entrusting your long-term financial planning needs to someone who is going to be able to advise you throughout the whole period of your stay and beyond.
- References from current and past clients
- Experienced and qualified to operate in international markets
- Familiarity with tax regulations in your own country as well as regionally