The rise in offshore investing for UK advisers

People in the UK are simply becoming more ‘international’ in their outlook; buying properties abroad, booking cheap flights overseas and consuming more international brands.

This increasing globalisation is not a new phenomenon when it comes to consumer spending. But in the financial services markets we are now starting to see a rise in investors looking for international solutions for their investment portfolios, or looking to hedge currency risk by having the opportunity to hold investments within a multi-currency facility.

Consistent with this trend in financial markets becoming more international in thinking, clients born in the UK increasingly have income and assets held in more than one jurisdiction, and these assets are frequently held in many different currencies around the world.

A modern offshore platform should also facilitate investment in multiple currencies and, as custody is normally through an offshore-based bank, the investment never comes ‘onshore’ to the UK.

The income and assets may be held in multiple currencies but the same applies to personal liabilities as well, as when you live overseas your cost of living is determined very much by the local currency and those people living overseas will want their assets to match their liabilities.

Currently, however, the vast majority of UK platforms will not accept business from clients with a non-UK address.

This is a huge issue for those living abroad who want to maintain investments across a number of different jurisdictions in a variety of currencies with access to the flexibility and transparency a platform structure provides.

Advisers, in these instances, will be blocked from having access to the necessary tools and monitoring systems that an online platform proposition can provide.

The market, however, is changing. At Novia Global we are seeing an uplift in UK-based advisers with international clients and we expect this trend to continue as more international jurisdictions move towards a more RDR compliant method of investment advice. 

A modern offshore platform should also facilitate investment in multiple currencies and, as custody is normally through an offshore-based bank, the investment never comes ‘onshore’ to the UK.

All of the points above apply equally to in-pats as they do to expats.

Non-UK domiciles would much rather invest their money offshore in a tax advantaged environment (even if the tax advantages are only a perception) but also in their home currency, particularly if they are working in the UK on a temporary contract.

Investing through an offshore platform is an ideal solution for these clients. Very often this type of client will be working on temporary contacts in different jurisdictions and the benefits become even more obvious.

The offshore platform can also come with the added benefit of being an FCA regulated business and as such gives a strong sense of security as the UK is one of the most heavily regulated and politically stable environments in the world. FCA regulation and offshore custody is a very attractive mix to offshore investors. 

Typical clients from UK adviser firms include UK expats (including those living in the US with pensions); UK inpats looking to hold their assets offshore but in a safe environment; UK resident clients with multi-currency requirements (currency FX charged at just 0.07 per cent) or with assets already held offshore; offshore trusts and Qrops holders looking for platform-based management of their assets or looking to alleviate Lifetime Allowance concerns.

With regulation around the world changing to RDR-style regulation, where transparency and a service-based model rather than a sales model become the norm, the platform way of doing business is beginning to take off and will increase rapidly in the next few years.

Paul Boston is sales director at Novia