Viewing posts from: November 2000

We don’t have a crystal ball but we know how to prepare for the unknown

By Alan Watson
This article is published on: 10th November 2020

10.11.20

For most of 2020, nobody in France has been able to escape the misery of the daily Virus update; even as I write this article, it gets worse by the day. From a financial planner’s viewpoint, and thinking of my family, long term Rhone-Alps based, it can spin one’s head wondering, “how much, and for how long, will our children be paying extra taxes and social charges to balance this black hole.”

President Macron has certainly not been slow in pressing his Eurozone political colleagues to secure a massive support package for France (so all those excessive Urssaf charges have clearly not been enough!) Did anybody analyse, offer some statistics as to how this will be paid back? If so, sorry I missed it, but we all know the harsh reality is payback time will be long and heavy.

Many of my clients in the Alps are either retired, considering it, or working hard in their business to secure a tidy financial future, not only for themselves, but for their families also. It’s a part of life’s pattern that many of us become beneficiaries of a family estate, and being a French fiscal resident, this brings up potential questions and complications, “what are the limits I can receive before the tax man becomes an unwelcome beneficiary?”, “my children deserve a portion of this, but the bank offers a derisory return, not even Eurozone inflation proof,”, “our young daughter dreams of studying in the US, how much will that cost?”

So how do we approach such matters ? You may be surprised and relieved to hear that the French fiscal system can be both generous and highly tax efficient when it comes to financial planning for ourselves and our families. For example, a gift of €100,000 can be made every 15 years from parents to children, free of tax and social charges, which could be used for that far off house purchase, a highly regarded study program, or even setting up a business. A lower, but still highly valuable, allowance of just over €30,000 applies for gifts between grandparents and grandchildren.

Currency is also an important consideration. French banks are always happy to offer short and long term saving vehicles. The wording of the contracts, terms, and fund choices, even for somebody who has spent over 30 years in European financial services, can be rather bewildering, plus they always insist on converting your Sterling to Euros, and currently this is not a sensible proposition. In the last year alone we have seen swings between the two currencies of 10%; the Pound is still a global currency and will return to its former glory, so a far better facility is to be able to choose your exchange date, then take advantage whenthe currency is stronger to move to your new Euro based need. This flexibility coupled to tax efficiency, could make a gift for your loved ones a very sensible and well planned move.

As a financial adviser, I meet many people in sometimes complex and misunderstood situations, “I have actually lived in France for the last two years, is it now time to declare fiscal residency?”, “My children have UK ISAs set up by their grandparents, so living here as a family, is this tax efficient?”

A no obligation meeting may help to unravel the complex French reporting system, and allow you to enjoy all the things that brought us here in the first place.

There’s never been a more important time to speak with your IFA

By Alan Watson
This article is published on: 24th March 2020

24.03.20

I have a routine I have followed for many years. Every day, after walking the dog and eating breakfast, I get up to date on the markets, currency movements and global financial news. CNBC is my favourite, but things are changing and I now find it harder to concentrate with the worrying growth of people contracting COVID-19. It gets worse by the day. Northern Italy is barely three hours’ drive away which is nothing for today’s connected planet. But the tempting solution of ‘Bury your head in the sand; it will go away, it always does’, could cost a great deal in our current global situation. The answer is to take action and deal with it.

Over the past week, I have spoken via telephone and Skype with many of my clients. All of the conversations were intense and based around worries about what will happen next. Clearly, the need to protect what you have built up over the years and prepare for a potentially uncertain future is paramount.

One client quizzed me over the pros and cons of buying property in Lyon; we got into a deep conversation analysing all aspects, from the French property purchase costs to the insurance quotes (some were just too high; one was clearly sensible and produced by somebody who knew their business).

Another Skype meeting demanded the analysis of the greatest market crashes, discussing the question, ‘Could we now be at the bottom?’. This client wanted not only the potential to buy into a rather cheap market, but also to gain the benefits of doing this via the French Assurance Vie: discounted markets plus serious tax advantages.

Other calls were long and varied in content, but all focused around ‘what if’ questions. Good old Brexit still keeps raising doubts and concerns and I always enjoy explaining how we have been confidently prepared for this roller coaster for years. We only deal with large and secure internationally minded companies who made their preparations years ago. Brexit is not and should not be a point of worry for Spectrum clients; flexibility is always our primary tactic.

Many of us are now sitting at home; working, but getting a little bored. I would suggest this is an ideal time to talk, to discuss everything, get your worries off your chest. Preparation reduces stress; this is what we do – and if last week’s conversations are anything to go by, I believe I did a pretty good job. If you would like to chat, contact me to arrange a call with the details below.

The luxury of your own local financial adviser

By Alan Watson
This article is published on: 17th March 2020

17.03.20

To say we are living in volatile times could be somewhat of an understatement. The French stock market, the CAC 40, experienced its largest ever one day fall last week, over 12% in just one trading day!

The market crash in October 1987 was severe, the dot-com boom and bust caused great misery, a global banking crisis in 2008 even caused the mighty Lehmans to fall. Why am I reciting this? Because, like most of my colleagues, I witnessed all of these events.

Covid-19 now appears to be at its most prevalent exactly where all Spectrum advisers work: Europe. The French Prime Minister has declared that all non-essential shops, offices, cinemas and restaurants should now close, and as I write this my mind wonders about the next weeks’ market activities, especially as traders and brokers will most likely decide to work from home. We have a very long climb to recover from the exceptional falls of late.

When I make initial telephone contact with a person who has requested information from our website, or maybe a personal referral, or interest from our advertising, it quite often happens that they appear surprised just how local I am, “Oh, so you’re not based in London, you live in Chambery? But that’s so close, you must be a keen skier,” and this opens up a very important conversation, mainly because the person on the other end of the phone has rarely spoken with a financial professional who has 25 years of experience in this region of France. At this stage the conversation explodes, “Where did your children go to school? Can you suggest a good one? Do you know a good company to insure my car with? How do you start to build a pension in France?” The questions are many, and I consider it my personal duty to assist, after all what is all the experience worth if you cannot help your fellow expatriates?

In the last few days such local contact has taken on a whole new meaning, “Could we meet up soon? I need to decide on my new fiscal residence, the UK tax year is so close, but due to Brexit my old UK adviser cannot help me.” Or, “I have so many UK based investments, they are all severely beaten down, but the phone lines are blocked, nobody can update me, and the annual statement is eight months away.”

And this is what Spectrum is all about; we, the advisers who live close to you, all have not only many years behind us in financial services, but equally importantly have lived, worked and paid taxes and social charges in France for many years. We know how the system works, the good and the not so good bits. We know the better accountants, the real ones who actually work for you, the client, not administrators/book keepers who collect for the system. We are supported by some of the world’s best investment houses, insurance companies and trust companies. Our knowledge is vast, and often a short car trip from your home or office. There is no cost or commitment in meeting up for an initial discussion, but the luxury of having so much available experience on your own doorstep, and in your own language, makes us a unique financial services company locally.

The concern currently is real, the media has caused Europe to panic (I just tried shopping with my wife, high stress levels everywhere). We are close, capable and can at least put your mind at rest during these testing times.

Try us, you will be amazed how quickly we respond, arrange a meeting and help to guide you through this rather bizarre period.

The Changing Financial World

By Alan Watson
This article is published on: 18th October 2019

18.10.19

It was December 15th 1996; my wife and I were happy to be in Morzine and were enjoying dinner at hotel Les Airelles. Jean-Claude, the owner, was very attentive – we were his only guests! Heavy snow was falling, so the drive back to our home in Le Biot was a slow one, spotting just one other vehicle parked suspiciously in St Jean D’Aulps, the Gendarmes, who looked bemused that a Dutch plated car should mess up the untouched snow cover.

During Christmas I worked as usual in my IFA business covering Europe, but it was a stress free time; international clients had little to bother them, the main concern being market direction. The FCA did not exist; tax people were only after the big fish; even the Financial Ombudsman, for complaints, was years from formation; regulation was unheard of; QROPS transfers were an age away. The Isle of Man, Guernsey, Jersey, and of course Switzerland were the favourite hiding centres. Clients were happy to deposit large sums resulting from their global company contracts. Banks happily took in and paid out in cash, accepted transfers from third parties, and asked minimal questions to new arrivals in the beautiful French Alps; they were simply hungry for this amazing new flow of business. The financial world was a relaxed place, where large sums of “tax free” money could be transferred to the Notaries, who would inform the local land sellers that they had become wealthy; keys were given, dreams were realised and that much expanded supermarket just out of town saw the wine shelves emptying like never before. Travel businesses sprung up with sexy names like, “Utah snow and sun”, and their chalets were full the whole winter. The French tax people started to scratch their heads. Not only were local people driving back and forth through the Swiss border every day, but now a new irritation had arrived in town and some serious checking was necessary. The French Fisc. suddenly had many more employees, serious computer power, and somebody could apparently speak ENGLISH !

It’s now October 2019, my wife and I still love to eat in Morzine, but things have changed. Conversations with my clients all over the Rhone Alpes region take on a very different and focused tone. A global directive of information exchange requirements has shaken up the old world called CRS, “Common Reporting Standard”, which means the UK will exchange all financial, bank account, insurance policy and investment account information with France. Even that renowned haven of Swiss Private Bankers are happy to flood Europe’s tax offices with full financial disclosure information on former residents and clients. If that’s not enough, I regularly hear of clients being pestered by cold calling IFAs based in Paris, the south of France, even Dubai. The pleasure of being seen on social media! But now the approach is somewhat different, we have tight European regulation, or do we?

Making life changing investment decisions is a delicate operation. If somebody tells you they are part of XX group in Gibraltar, but due to “flexible” European financial regulation, they can passport, operate in France – beware: if things go wrong the UK, FCA or French regulator Orias will be unable to help you. A fully regulated French company holds the correct licenses and your chosen adviser should know French rules and regulations, preferably from many years experience in the region. Some individuals choose to keep a leg in the old country, just in case, but this half-half decision could cost you dearly. “Is a UK ISA tax efficient in France?” “My money is 100% Sterling, so impossible to move it over here.”

Your chosen IFA should know a great deal. Test their knowledge on markets, tax issues, currency movements/history, inheritance. Can they introduce you to competent local professionals? Moving from one country to another is a big step. Do make sure all fits into place, you should enjoy this wonderful region for years to come.