IFAs should partner with international advisers as clients look abroad

Speaking to FT Adviser, Ritchie explored why it was beneficial for firms in the UK and internationally to have a partnership and what UK advisers should look out for when choosing a firm.

The opportunities for people to work abroad are coming “thick and fast” according to Ritchie, causing many to want to move outside of the UK.

Drawing from past experiences working as a financial planner in Scotland, Ritchie struggled with giving people advice once they had entered a new jurisdiction.

“We had a number of clients who were posted in the Middle East and we started to look into how we could look after them when they became non-resident. We hit a brick wall because as soon as the person left the UK, trying to give advice in the new jurisdiction was very difficult,” he said.

Problems Ritchie encountered included navigating the different tax rules that existed in different countries, as well as the implications of holding certain products like a pension in an international jurisdiction.

He added: “Once you get drawn into the tax advice side of things, you’re having to employ local tax advisers which starts to bump up the cost for clients.

"We weren’t able to do that so we started looking for partner firms to ensure our clients were being looked after when they moved abroad.”

Important to partner with the ‘right’ firm

While Ritchie believed UK advisers should partner with international firms, he said it was important for UK IFAs to find firms they would be comfortable to refer business to. 

He said: “Advisers need to have a really good understanding of the firm they are referring to. You want to deal with an international firm that does things very similar to what we would expect to see in the UK.

"Are they using financial planning software, is their investment process documented, are they fee-only?”

Ritchie said it was important to look at the credentials of the firm as well as making sure the financial planners themselves are chartered.

“Advisers should also look at the different specialisms international firms have in terms of what they can offer clients, because once you go international it becomes more difficult due to the various jurisdictions and products. You want to make sure the firm you're working with has the ability to utilise those products for the right clients,” he added.

International firms need to be more vocal 

Although Ritchie said the onus on building the relationship between firms should come from the adviser based in the UK, he felt international firms needed to be more vocal about how they could help, so they could be instantly recognisable to UK IFAs. 

He said: “As a profession we really need to be shouting more.

"In the Middle East you have the Dubai International Financial Centre [DIFC] that operates under English common law. Although we don’t like to talk about mistakes and complaints, they happen and it's important to highlight to UK advisers there are proper procedures in place for redress.

“Globally I have seen people operating unregulated and there’s very little recourse for clients that have been missold.”

Therefore, Ritchie emphasised the importance for regulated international firms to highlight they have the correct procedures, qualifications and the accredited staff in place so UK firms feel comfortable building a relationship with them.

Ritchie said he would like to get to a place where the standard of advice is the same wherever the client is and that due diligence is applied by firms on both sides to ensure a high standard of advice is provided to clients.

He said: “The Middle East is still quite a bit behind if we look at the majority of firms which operate there, but I would like to get to a place where people can see the standard of advice you get doesn’t matter where you are in the world, you can get good advice in any jurisdiction.”

Professional bodies can help build relationship 

In terms of how UK and international based firms can begin to form a relationship, Ritchie said professional bodies could help to forge those ties.

“It would be good to see professional bodies create a tie-up between firms, for example a CISI accredited UK firm could go on the website and see international accredited CISI firms they could work with and the same for the PFS and CII,” he added.

Ritchie also said a directory could be the way forward, where advisers can look up international firms that meet their criteria and they can get in contact with.

He said: “If we want to do the best possible job for our clients then we need to be able to look after them or have a network that allows us to look after them, this is where we need to get to.”

alina.khan@ft.com