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Old 09.01.2010, 15:35
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Financial Mis-selling to expats

Hello All,
I thought I'd start this one up again as before Christmas the very long thread on our favourite offshore financial advisers was pulled
This time however, please make sure no-one names names !

So, what is the scenario here?
You are an expat, usually from the UK, working in Switzerland.
You receive a call at work or home by a plausible character offering a free financial consultation. You show up, and are sold a tax efficient offshore savings plan that offers tax free growth and is a life assurance plan to boot!
Usually there will be a seemingly high interest paying bond with a bank paying 10% or more!
Also, you do not pay the advisor any direct commission at all!
Sounds too good to be true? Well, you are correct, it is too good to be true.

Basically you are sold a fixed term savings plan. They will use the phrases 'tax efficient wrapper' and 'tax free growth' when explaining that your investments are held under a fixed term life assurance policy (remeber endowments to pay your mortgage?) You are free to pick whatever investment funds offered by the life assurance company and are allowed to change between these funds as often as you like.

However, these policies are heavily front loaded with the charges and can take up to 8 years to break even or even longer.
Indeed, the first two years of payments to the assurance company goes to pay the commission to the salesmen who sold you the policy in the first place.
So after two years you do not have a penny banked. Then your money flows into the funds, and starts to 'grow'. However, the yearly admin charges are running at approx 5-6%, so even if your funds perform miracles and gets 8-9% return, your real return is 2 or 3%. This is why it takes so long to break even.

If you cancel your policy after any time, the provider will take all the commission that you contracted for. eg, you sign a 10 year policy, cancel after 6 years, the provider will take the missing 4 years of charges out of your fund and return what's left.
If you increase your monthly payments, the charges go up. If you reduce your payments, the charges stay at the higher level.
Payment holiday? No problem, but you pay those charges as if you were still paying in.

These salesmen are not qualified independent financial advisers. Indeed in Switzerland, they are not allowed to sell products to any Swiss citizen.
The salesmen are commission only, so no sell, no salary.

In effect, you are a temporary resident here, buying a foreign financial product product ( ie, non-Swiss) that is held in a further foreign country (usually the Channel Islands or Isle of Man, where the finance companies run the govt.), off an unregulated company. So you really have nowhere to go if you feel aggreived or ripped off.

The end result is a financial product with massive downsides and very little upside potential.
Remember, the charges are real and will happen, the predicted growth is only speculation.

So, this should get the thread going! I'm pretty sure there are many poor souls who have one of these policies.

As a final note, if anyone knows of anyone anywhere who has benefited from one of these plans then please let us know. I won't be holding my breath though.
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Old 09.01.2010, 17:35
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Re: Financial Mis-selling to expats

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...These salesmen are not qualified independent financial advisers. Indeed in Switzerland, they are not allowed to sell products to any Swiss citizen. .
Are you saying that the agents are prohibited from selling to Swiss citizens but permitted selling to Swiss residents?
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Old 09.01.2010, 17:43
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Re: Financial Mis-selling to expats

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Are you saying that the agents are prohibited from selling to Swiss citizens but permitted selling to Swiss residents?
I'm pretty sure of that, but have no way of confirming it, except that on the project I'm working on, with peaks of over 200 people, only the Brit expats ever get called.
I've also had this feedback from people at Novartis who also did an 'awareness' shout, and found the same thing, Swissies and other foreigners never get called. Maybe it's just a language thing.

However, that's moving away from the point of the post. Also, I know some of these salesmen are EF members, so maybe they'd care to explain who and why?
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Old 09.01.2010, 18:49
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Re: Financial Mis-selling to expats

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I know some of these salesmen are EF members, so maybe they'd care to explain who and why?
Doubt they will out themselves, given these inclement times.
If you know them, do at least ask them if they feel they are doing a good job!?
It's one thing to be an annoying "tele-marketeer", easily rebuffed, but knowing that lining your own pocket may also result in someone elses downfall, needs to be re-evaluated. You may also ask them if they would invest in their own product.
Would they? Not likely. That they can do this, plain stinks to me.
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Old 14.01.2010, 20:29
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Re: Financial Mis-selling to expats

Insurance products almost never make good investment vehicles anyway. Just get a cheap term life insurance policy and invest all your money separately.
There was a very good article by the way in the Wall Street Journal about what to look for in a financial advisor. Somewhat US-centric, but a lot of the points apply generally.
http://guides.wsj.com/personal-finan...ncial-planner/
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Old 14.01.2010, 20:41
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Re: Financial Mis-selling to expats

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I'm pretty sure of that, but have no way of confirming it, except that on the project I'm working on, with peaks of over 200 people, only the Brit expats ever get called.
I've also had this feedback from people at Novartis who also did an 'awareness' shout, and found the same thing, Swissies and other foreigners never get called. Maybe it's just a language thing.

However, that's moving away from the point of the post. Also, I know some of these salesmen are EF members, so maybe they'd care to explain who and why?
I did phone the FINMA about a certain company which we aren't allowed to name on this forum, and I was told this company has the licence to sell products to certified investors but not to members of the public.
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Old 29.01.2010, 17:47
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Re: Financial Mis-selling to expats

Its good to see a thread on this subject again, however it is important not to name names as they are ruthless in getting threads shut down,

I can confirm, that most of the advisers are not from a financial background and are recruited as salesmen and women, and it is their ability to sell, that gets them the commission only job, they fly in from the UK, and have to pay their own air fare and find their own apartment, and then have to get some deals going to make some money, if they don't they can't afford to stay, so they are under real pressure, and this often is why they apply high pressure techniques to get you to sign up, they will appear to be your best buddy, even though they dont really know you.

Think of a Time Share salesman in Tenerife or somewhere and thats the type of guy youll be dealing with.

The investments themselves are loaded with heavy fees up front, that's why they have usually a two year or more term in which you are unable to cancel, because the first two years of premiums are basically most of the fees, if you manage to get a look at a projection of the investment you will often see that they do not break even until year 7 or 8, depending on the amount and length of the investment,

Also you have to consider not only the charges but also the service you will be receiving, they will tell you that they will be there for you, wherever you are in the world, but often people in this business last a year or two at best and then realise its not for them, or they get found out and lose their clients, then what will you do?, will they be there to advise you when the policy matures in 10 to 20 years? , I doubt it, no way.

They will often say they are independent and can look at the whole market and give you a tailor made bespoke investment which perfectly fits your requirements, when in fact they use two or three insurance wrapper type, whole of life policies, with high commissions and little flexibility.

An important crucial part of such a policy is who is going to allocate the money you put into it each month, in other words where will the premiums be invested, which funds will be used in the wrapper?, dont worry, they say, we can do this for you.

But most of them are not financially qualified to do this, and they end up picking the same funds each time, without consideration of whether the fund is growing or losing money, they don't care once they have your commission, they have been paid, and so all they care about is the next client they can snare.

Ask them about the funds, who is the fund manager?, what do they invest in?, why have you put me into this? Do they research each fund?, No, they simply look at a list of funds and put you into a couple of medium risk funds, one low risk and a high risk, depending on your attitude to risk which they will ask you about.

Bottom line is though, they don't care, because they have been paid by then, and have moved on.

Beware, Beware, Beware, the Independant Financial Adviser, who cold calls you at work,

You have Been warned.
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Old 29.01.2010, 17:58
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Re: Financial Mis-selling to expats

About their ruthless lawyers who go around shutting down threads who do as much as mention their name:

When I was considering buying into this junk, I did google them and that's what made me play it carefully.

If a company has been around for some time (as they claim) and has a broad customer base (as they claim) you would expect some commentary and indeed some negative comments among that. You can't please everybody so somebody is bound to be unhappy. It wss the complete inability of Google to find anything but the cofficial website that was my first warning.

So if any of these guys ever get to read this, remember that next time you thank your lawyers.
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Old 29.01.2010, 18:19
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Re: Financial Mis-selling to expats

This scheme sounds so much like the endowment policy i took out with a highly reputable 'big name' company in the UK in 1996 - still on the verge of break even after 13 years of monthly contributions....
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Old 21.02.2010, 18:20
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Re: Financial Mis-selling to expats

I have also been approached by a similar organisation that mis-represented an investment product that I sunk some money into. I am obviously looking for opportunities to claw back some funds.

My question relates to whether the person who sold a product to a person in Switzerland (B-permit) must be licensed in Switzerland in order to sell such a product. The person I purchased the product from was operating under a French licensed company.

If you know of other options for breaking these agreements, legal or otherwise, I would be happy to hear.
Thanks
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Old 04.03.2010, 19:31
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Re: Financial Mis-selling to expats

Hello all,
I am an adviser working for a fully independent fee based practice here in London. I am working on my full set of investment qualifications and take my job seriously.
I am quite realistic that a huge number of people in my line of work are commission driven and will sell you crap. I am also realistic that this has led to a, fully understandable and justifiable, view that many advisers are crooks. Some of the people I have come across I would not trust to work out how to split a restaurant bill let alone have a go at proper financial planning.

My wife is Swiss and we are moving after our baby appears in August. I am considering setting u my own practice in CH when we arrive and would base it on a fee model. The long winded question is do other users of this site think it would be a real option in CH??

All views and opinions will be taken seriously. Many Thanks.
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Old 04.03.2010, 19:41
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Re: Financial Mis-selling to expats

Depends what sort of product it was. However the answer can be, no they don't need to be regulated in Switzerland to recommend a product. Having said that, if they lied about the product, that's a crime. Need some more specifics about exactly what went down.


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I have also been approached by a similar organisation that mis-represented an investment product that I sunk some money into. I am obviously looking for opportunities to claw back some funds.

My question relates to whether the person who sold a product to a person in Switzerland (B-permit) must be licensed in Switzerland in order to sell such a product. The person I purchased the product from was operating under a French licensed company.

If you know of other options for breaking these agreements, legal or otherwise, I would be happy to hear.
Thanks
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Old 04.03.2010, 19:43
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Re: Financial Mis-selling to expats

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Hello all,
I am an adviser working for a fully independent fee based practice here in London. I am working on my full set of investment qualifications and take my job seriously.
I am quite realistic that a huge number of people in my line of work are commission driven and will sell you crap. I am also realistic that this has led to a, fully understandable and justifiable, view that many advisers are crooks. Some of the people I have come across I would not trust to work out how to split a restaurant bill let alone have a go at proper financial planning.

My wife is Swiss and we are moving after our baby appears in August. I am considering setting u my own practice in CH when we arrive and would base it on a fee model. The long winded question is do other users of this site think it would be a real option in CH??

All views and opinions will be taken seriously. Many Thanks.
Guess it depends on what guarantees and track record you can offer but they'll need to be in very fine form i would think
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Old 04.03.2010, 19:49
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Re: Financial Mis-selling to expats

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Hello all,
I am an adviser working for a fully independent fee based practice here in London. I am working on my full set of investment qualifications and take my job seriously.
I am quite realistic that a huge number of people in my line of work are commission driven and will sell you crap. I am also realistic that this has led to a, fully understandable and justifiable, view that many advisers are crooks. Some of the people I have come across I would not trust to work out how to split a restaurant bill let alone have a go at proper financial planning.

My wife is Swiss and we are moving after our baby appears in August. I am considering setting u my own practice in CH when we arrive and would base it on a fee model. The long winded question is do other users of this site think it would be a real option in CH??

All views and opinions will be taken seriously. Many Thanks.
I don't know what your experinece of Switzerland is or how well you understand the system here. But before you do anything else I'd consider getting some legal advice to find out what you can and cannot do.
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Old 04.03.2010, 19:51
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Re: Financial Mis-selling to expats

I have someone I know who is a friend of my wife's who s Swiss and has been explaining it to me. On the legal side does anyone have any recommendations for starting a firm or operating in this market?
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Old 07.03.2010, 15:07
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Re: Financial Mis-selling to expats

I would be extremely interested in getting elaborated accounts of the techniques and especially products marketed by these individuals.
I am not sure why we can't name names on this forum. But it is true that there are laws protecting crooks, especially in Switzerland.
If you d' like to give more publicity to your story , please PM me with more detail.




TalkingHorse:

The Swiss market is largely unregulated compared to the UK (whose stringent regulation I feel still does not protect the public adequately while imposing all sorts of barriers to entry into the profession). Switzerland has none of the sorts, and is a jungle in that respect, you can set up business in no time.
If you actually manage money , you need to register with one of the self regulatory body (annual fee, need to be sponsored and accepted) or the FINMA (one time registration fee ), the former being professional associations (cartels) of asset managers/advisors . There are however thousands of "advisors" in the country, they are either small independent advisors , running managed accounts for clients at bigger local banks (where they usually started their career) or when the firm is bigger they offer the whole gamut of traditional private banking services . It's fair to say that mid size and large private banks and the big Swiss banks have a strong hold over the market. Products are quite different than those offered in the UK , the pension system and of course the tax system are different. PM me if I can help.
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Old 22.04.2010, 18:43
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Re: Financial Mis-selling to expats

I've currently got one of these financial advisors bombarding me with phone calls and emails... I think the name rhymes with Top Gear They seem to know a lot about me, which suggests someone I know referred me or they are scouring LinkedIn for leads. Glad I know its all a con, the lady I spoke to sounded very convincing and pally.
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Old 22.04.2010, 19:52
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Re: Financial Mis-selling to expats

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I've currently got one of these financial advisors bombarding me with phone calls and emails... I think the name rhymes with Top Gear They seem to know a lot about me, which suggests someone I know referred me or they are scouring LinkedIn for leads. Glad I know its all a con, the lady I spoke to sounded very convincing and pally.
It's the ghost of Bernie Cornfeld. Quickest way out is to say that you're a "US person". In principle (if not in fact) he goes to jail if he persists with you. And if you were a US person (i.e., taxpayer) the tax consequences of buying would be catastrophic. http://www.aca.ch/joomla/images/pdfs/agefi8.pdf

As for expat Brits, just think back to Barlow Clowes (if you've forgotten, then Google it). Or the Lloyd's of London scam. Either way, like Madoff, the promise of just a "little bit more than gilts" lulled the target victims into thinking that the investments were "safe".

Another example: US variable annuities. Very profitable for the salesperson, not so much for the buyer (although in fact some lucked out with the anomalies of the latest market crash).
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Old 23.04.2010, 01:19
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Re: Financial Mis-selling to expats

We cannot even name the companies
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Old 23.04.2010, 02:30
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Re: Financial Mis-selling to expats

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We cannot even name the companies
Well you can, but your post would be deleted quicker than you could say C*******l or D* ***e.

And just avoid the word "p*rtners" generally.
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