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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 15.03.2011, 15:07
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Re: Financial Mis-selling to expats

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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.
This is a very good point. These companies usually incorporate a branch office in Geneva or so with a limited remit but then seem to extend it.

Setting up such a branch office is legit, but not a huge investment and doesn't offer much safety. The question for me is to what extent is the regulator really monitoring this. There's a conflict of interest for all those "wealth management" companies run by Swiss citizens bringing in foreign investors to Swiss banks buying their investment products.

A Swiss resident contacted should ask for local certification and where none can be provided draw the appropriate conclusions in terms of risk, reward, redress and remedy.
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Old 10.03.2011, 15:03
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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?
Why do "Limys" call swiss people always swissies My apologies to the other people from england ,you know the normal oens
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Old 10.03.2011, 15:35
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Re: Financial Mis-selling to expats

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Why do "Limys" call swiss people always swissies My apologies to the other people from england ,you know the normal oens
Swiss = Swissies
Germans = Krauts
French = Frogs / Frenchies
American = Yanks
Canadian = Flappy Heads

It's just one of those things.
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Old 10.03.2011, 15:46
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Re: Financial Mis-selling to expats

I always tell these people that I have taken a vow of eternal poverty and give my money to the local Buddhist temple. Works a treat...
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Old 10.03.2011, 16:04
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Re: Financial Mis-selling to expats

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Swiss = Swissies
Germans = Krauts
French = Frogs / Frenchies
American = Yanks
Canadian = Flappy Heads

It's just one of those things.
Thanks Limey
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Old 15.07.2013, 10:14
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Re: Financial Mis-selling to expats

So glad I found this forum and 17Clarence.
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Old 15.07.2013, 11:40
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Re: Financial Mis-selling to expats

I get cold-called at least once per month by these guys. I very much suspect that they get their information from Linked-In as whilst the organization I work for is listed, my contact details aren't public. They therefore call the switchboard and we now have a couple of receptionists who have been sensitized to the problem and they are really good at picking off these guys when they call.
Most of the time they refuse to state their business, so the receptionist won't put them through. My banker and other financial advisors have my direct number, so I'm not concerned about not being available to people who might have a real need to speak to me.
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Old 15.07.2013, 16:20
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Re: Financial Mis-selling to expats

Another one to add is Dubai based Global Eye. Have an office in Switzerland. Same sort of stuff. Bad reputation. Google is your friend.
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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, 19:43
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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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