Should I use a Financial Adviser?
By Peter Brooke
This article is published on: 24th May 2014
Creating a financial plan is NOT a complicated thing to do; it is an audit of where you are today, financially, and where you want to be at different stage of your life. This requires creating a list of what you have, earn, own and owe and agree with yourself to put something aside to cover different goals for the future.
If we don’t have goals in life there is probably little point in getting up in the mornings; unfortunately most things cost money and so having financial goals is also an important part of life. Money doesn’t buy happiness, as we all know, but it does buy some choice and, to some extent, some freedom. I have met yacht crew who have worked for 20 years without implementing a financial plan and want to leave yachting; as they have no pensions and minimal savings or investments they are left with a simple choice… live on very little or keep on working… I see this as a loss of freedom, and so do they.
So we can agree that having a financial plan, however simple, is a very important thing to have but why have (and pay) someone to help you bring this together?
The process – though doing a plan is quite simple a financial adviser will ensure that all areas are discussed and re-examined so nothing is left out. All of the horrible ‘what if’ questions should be covered:
Implementation – a good adviser will have access to thousands of products from to use with different clients who have different needs. The more choice available the more assistance you will need in choosing the best ones, but also the more independent the advice will be. A small advisory firm is likely to have only a few products to choose from and so will display less independence.
Professionalism – if we are ill we go to a doctor; they have qualifications to diagnose our problems and help to put together a plan to make us better. Likewise with a lawyer. A financial adviser should also have qualifications in his or her trade too. Some advisers also specialise in certain areas, like investment or protection etc.
Regulation – like a Doctor or lawyer a financial adviser will be regulated by a government body and will have to display a certain competency and have insurance in order to practice.
Knowledge – qualifications don’t guarantee knowledge, a good adviser should continually improve their knowledge and should be able to prove this through their ability to explain complex issues.
Humanity and perspective – most importantly you need to trust your adviser, this person or firm should be your trusted adviser for most of your life; they need to be able to empathise with the different situations you will find yourself in over the years. They should be able to draw on experience from other clients to help solve issues you face too; they should be able to offer perspective on the decisions you make.
This last point is the hardest to prove and is probably best achieved through a combination of your own ‘gut instinct’ and referrals from friends and colleagues. Do your own research on the all of the above factors, ask around and keep asking around until you have a short list of advisers to meet… then follow your own feelings as to whether you can trust them; the relationship should be a long term one and you will end up telling them a lot of very personal information over time.
This article is for information only and should not be considered as advice.
This article appeared on the FEIFA website. The Spectrum IFA Group is a member of FEIFA. (The European Federation of Financial Advisers and Financial Intermediaries)
Buying Property in France
By Peter Brooke
This article is published on: 23rd May 2014
Buying property is one of the most major investments we make in our lives. For yacht crew, it’s rarely for a primary residence, which makes the considerations for buying a little different.
Location will always come first, but when using property as an investment, yield should be a very close second. This is the net annual rental income (after all costs) divided by the value. One of the biggest reasons why property is considered the best investment is because it’s possible to leverage, or borrow, to buy it, especially when interest rates are low. For example, if you buy property for €200,000, and it gives a rental income of €8,000 per year, a four-percent yield is realized. If you only invested €40,000 and borrowed the remainder at three percent interest, then you immediately double your yield to eight percent. This is a compelling reason not to invest all your capital into a property. Even if interest rates are higher, it may still make sense, as it’s often possible to offset the interest against rental profits to reduce income tax.
Buying property in France is very popular amongst yacht crew, especially near the yachting centers of the Côte d’Azur. This is because the property can be a great escape in the winter when the yacht is in port or the yard, and also gives a great seasonal rental yield in the summer, the time when crew are hard at work.
These areas also are very sought after and selling a property is rarely difficult. The costs of buying in France are quite high; government taxes and notary (legal) fees total approximately 7.5 percent of the purchase price, and agent fees (when you sell) can be five or six percent. This means 13 percent growth on the property is necessary to make any capital profit, which is why property should be seen as a long-term investment and why rental yield is important. Annual taxes also apply and vary depending on where the property is located and its size. Borrowing in France is still possible for yacht crew, although it’s getting a little harder as banks tighten their rules. Generally, crew can borrow 75 (sometimes 80) percent of the purchase price. This means you need approximately 32.5 percent deposit (including notary fees) to start your property portfolio.
French lending laws allow you to be up to one-third of your income in debt, so if you earn €3,000 per month, you cannot spend more than €1,000 on your debt repayments. Over 20 years at three percent, €1,000 per month equates to a loan around €185,000. For tax-resident yacht crew (in France or any other country), the loan-to-value can often be higher as tax documents make banks feel more comfortable about lending. Any rental income is taxable in France, whether you are resident or not, and capital gains tax and inheritance tax will be initially liable in France, too.
There are many considerations when buying property, so seek good, qualified advice especially if it’s part of an overall plan; a mortgage broker should be able to find the best terms for you, often at no cost.
Le Tour de Finance in France
By Spectrum IFA
This article is published on: 22nd May 2014
After a hugely successful run of events in Italy and Spain, Le Tour de Finance has come home to France for a run of 9 events throughout the country.
The first 5 legs of le Tour are taking place from 20th – 23rd May. The final 4 events are taking place towards the end of June from 17th – 20th.
These informal events are a great opportunity for expats of all ages to get those unanswered financial questions clarified in plain English.
The range of professional speakers is varied and will cover a multitude of subjects from; Pensions & QROPS, Currency Exchange, French Wills, Tax Efficient Investing, Estate Planning & Tax Advice in France.
These sessions are free, you’ll get to meet other expats in your area and can finish the morning with a complimentary buffet.
For further details on future events please click here.
Reflections on the recent ‘French Property Exhibition’ in the UK
By Spectrum IFA
This article is published on: 16th May 2014
For the first time The Spectrum IFA Group participated in this regular UK event on the 9th – 10th May as part of Le Tour De Finance Roadshow (www.letourdefinance.com)
Organised specifically for those UK residents looking to purchase property in France as either a second home or for a permanent move, the event brings together a range of experts to help delegates further their plans & aspirations.
Amanda Johnson & Bérangère Chabenat represented The Spectrum IFA Group this year, with the aim of providing attendees information on financial planning & mortgages which would assist potential buyers in their longer term financial situation.
The event was very well attended & many delegates took the opportunity to enter our free prize draw, the winner receiving a hamper containing some of the Loire Valley’s excellent sparkling wines, champagne flutes in which to enjoy it & local confiture de vin.
Le Tour de Finance was of great interest to many attendees, with eight people signing up to attend the events in June & several others expressing a wish to be informed of future seminars.
After a full day of manning the stand, Amanda & Bérangère found the opportunity to network with other exhibitors in the evenings over a glass of wine.
A good time was had by all.
Click here for information on Le Tour de Finance events during May and June 2014
Who is “Ask Amanda?”
By Amanda Johnson
This article is published on: 15th May 2014
As it has been over 2 years since I introduced myself to Deux Sevres Magazine readers, I thought a reminder of who I am would be helpful:
Along with drawing on the resources of The Spectrum IFA Group, one of Europe’s leading independent intermediaries, I have 25 years of experience in financial services.
For over 15 years I have specialised in personal financial planning. Whilst in the UK I worked for several UK high street banks as a financial advisor, attaining the following Certificate for Financial Advisers (CeFA®) qualifications: C.E.F.A I, C.E.F.A II, C.E.F.A III & CEMAP
After a permanent move to France in 2006, I have been addressing the unique financial planning needs of expatriates and those with cross-border interests. I have a detailed knowledge of the French rules & regulations for tax efficient investments, pension organisation, Inheritance planning & French mortgages.
In making recommendations we have access to some of the world’s most respected international banking, investment management and insurance institutions, bringing customers a widespread range of services.
There are no consulting fees for providing you with advice or ongoing service. Our Client Charter outlines how we work and what you can expect from us. Please do not hesitate to ask for a copy of this.
Whether you want to register for our newsletter, attend one of our upcoming road shows (June 17th & 19th) or speak to me directly, please call or email me on the contacts below & I will be glad to help you. We do not charge for reviews, reports or recommendations we provide.
Amanda Johnson tel : 05 49 98 97 46 or 06 73 27 25 43 e-mail : amanda.johnson@spectrum-ifa.com web: https://spectrum-ifa.com/amanda-johnson
Tax Returns, Pensions & Seminars
By Spectrum IFA
This article is published on: 28th April 2014
What do the above have in common? Well nothing really except they are all topical now! Let’s start with tax returns ……..
I was really surprised to receive the French tax forms so early this year and then I realised why. The date for submission of paper returns has been brought forward to 20th May or if you submit your declaration over the net, then you have until 27th May to do this. Does this mean that we are going to get our tax demands a week or two earlier this year and perhaps with an earlier deadline date for payment? Well I guess that we will just have to wait and see.
No-one should ever try to second guess the Fisc or think that they can out-manoeuvre this government department. I hear some interesting stories of people being contacted and questioned about why they are not registered in the French tax system. You would be amazed at what is used to check – telephone bills, utility bills, etc., etc. How long will it be before our use of cash machines and our bank and credit card transactions in shops might be used to verify how much time we spend in France? Scary thought and actually they probably don’t need to go that far, as we can be tracked through our mobile phones and probably also our internet use.
Are you convinced now to register in the system? You’re still not sure if you are resident? OK, call me and with just a few questions, I will be able to tell you.
For those of you completing French income tax returns, don’t forget to include a list of foreign bank accounts and life assurance policies. You don’t have to declare amounts (unless you are subject to wealth tax), only the existence of the accounts and policies. If you don’t, the penalty is at least €1,500 per undisclosed account/policy or €10,000 if the bank account is in one of those uncooperative States or territories that have not concluded an agreement with France to exchange information. So even if it is an account that does not pay interest and there is very little in the account, declare the existence or risk the penalty!
Moving on to the other ‘hot topic’ of the day ……… I am already hearing about lots of people who are being cold-called about the UK pension reform. Apparently, these calls are being made by people operating from Spain or Cyprus or perhaps some other place. Typically, they are offering to liberate your UK pension plans now. What do these people know about the French tax system and the implications for you? For that matter, do they even understand the UK tax implications for you?
Rob and I have both written articles on this subject and I hope that we are sending out a strong message of the need to exercise caution. Every case will need to be considered on its own merits – there will be no ‘one size fits all’. Anyway being able to cash in large pension pots is only a proposal at the moment. We will have to wait for the result of the consultation and then probably a few months more to know the outcome. So if you get any of those calls coming from outside of France, my advice is to tell them not to waste your time!
The final thing that I want to mention is our client seminars – Le Tour de Finance. This is a tour that travels around France, where we bring ‘experts to expats’ and we are now taking bookings for the Spring tour for which there will be presentations on the following subjects:
- Assurance Vie (two of our favoured providers will be presenting)
- QROPS & Pension Investing (very topical)
- Currency Exchange (is this a good time to exchange Sterling to Euros?)
- Health Insurance (are you affected if the UK stop issuing S1s to early retirees?)
- Wills in France & UK (are you affected by the EU succession rules from 2015?)
- International Banking (do your current bankers meet your needs?)
- Tax Advice in France (do you need help with those tax returns?)
Spectrum advisers will also be on hand at all events to answer questions. Maybe you need to have a more in-depth review of your financial situation. If so, we can arrange this with you.
As always, there is no charge for any of our seminars and the speakers’ presentations are followed by a buffet lunch/refreshments. The dates for the local events are:
- 21st May – Hotel La Villa Duflot, 66000 Perpignan
- 21st May – Hotel Abbaye École de Sorèze, 81540 Sorèze
- 22nd May – Côté Mas, 34530 Montagnac
- 23rd May – Montpellier Massane Golf & Spa Hotel, 34670 Baillargues
Each event starts at 10.00 am with a welcome coffee and ends at 2.00 pm after a buffet lunch, with the exception of Sorèze, which starts at 5.30 pm, finishes at 9.00 pm and refreshments will be served. The seminars are always very popular and so early booking is recommended.
If you would like to attend one of the seminars or you would like to have a confidential discussion on your financial situation, please contact me by telephone on 04 68 20 30 17 or by e-mail at daphne.foulkes@spectrum-ifa.com.
The above outline is provided for information purposes only and does not constitute advice or a recommendation from The Spectrum IFA Group to take any particular action on the subject of investment of financial assets or the mitigation of taxes.
Why expats should be wary of new pension rules
By Spectrum IFA
This article is published on: 16th April 2014
There are tax implications for Britons overseas who choose to cash in their pension money under new rules announced in the Budget.
British expatriates with UK pension pots who believe they can cash them in tax free from next April are in for a disappointment, according to pension experts.
Rob Hesketh from The Spectrum IFA Group comments in a case study within this Telegraph Newspaper article, please click here to read more
How can I find out more about the financial services that are available to me in France?
By Amanda Johnson
This article is published on: 15th April 2014
For the past few years in addition to running financial surgeries, where people can pop in & ask me questions they may have, The Spectrum IFA Group have also held tremendously successful “Tour de Finance” roadshows in the area in conjunction with Currencies Direct.
This year we will be at the beautiful Chateau de Saint Loup, in Saint Loup sur Thouet on Tuesday 17th June & our aim is to provide you with the opportunity to listen to various market leaders & complimentary service providers you may not have access to directly and informally, over a buffet lunch after, ask any questions you may have regarding your personal situation.
In addition to Currencies Direct and The Spectrum IFA Group we will be joined by a number of financial institutions including Prudential International, SEB & Standard Bank, as well as Chartered Accountants & international tax experts, PetersonSimms and experts in the French health system, Exclusive.
Starting with registration over coffee at 09.30 followed by a series of brief presentations and then a buffet lunch after, we plan to finish at around 14.30. Once the event is over you will be able to enjoy walking in the grounds of this lovely chateau.
Whether you want to register for our Tour de Finance road show, receive our regular newsletter or speak to me directly, please call or email me on the contacts below & I will be glad to help you. We do not charge for reviews, reports or recommendations we provide.
For more information on Le Tour de Finance please click here
Do I have to pay French Social Charges on my Assurance Vie?
By Amanda Johnson
This article is published on: 14th April 2014
Under the most recently approved & ratified legislation the French Government announced that certain Assurance Vie’s should be subject to annual social charges of 15.5% for gains on the investment and this charge is to be deducted at source.
This is not the case for every Assurance Vie in circulation however, so it is worth reviewing any Assurance Vie you hold to understand whether yours will incur this additional taxation.
This amendment here in France, coupled with recent UK budget changes around private pensions may make now an ideal time to have a free financial review. I am happy to sit down with you, at a convenient time and consider your current situation in France. We will cover:
- changes in legislation
- inheritance tax planning
- current investment returns
- achieving maximum tax efficiency
- pension planning & options
At The Spectrum IFA Group, we believe that regular face to face reviews are important to ensure that your financial situation is aligned to your current needs and plans, so if you have not considered your position recently, the month of May could be a good time to remedy this.
Whether you want to register for our newsletter, attend our June road show in San Loup sur Thouet, or speak to me directly, please call or email me on the contacts below & I will be glad to help you. We do not charge for reviews, reports or recommendations we provide.
Delaying Savings
By Peter Brooke
This article is published on: 12th April 2014
No one wakes up in the morning and thinks, “I must start my pension planning today.”a “I must start my pension planning today.” I’ve not even done that, and it’s my job! Perhaps if someone had pointed out to me 15 years ago what the impact this thought process may have had on my own financial future, I may have listened and (may have) done something about it.
Let’s consider the rather simple examples of two people who joined the yachting industry at the same time, with similar careers, but different saving scenarios.
Scenario 1: James took his first job as a deckhand at the age of 23, earning €2,000 per month. His income went up by a healthy five percent each year, every year until he left yachting at 45 with a final salary of €7,300 per month.
From the very start of his career, James invested 25 percent of his salary every year. This means that by the end of his yachting career, he had earned a total income of €1.25 million and had put aside €310,000. He had managed to achieve an average annual growth rate of five percent on his invested money, which meant his savings pot was now worth €495,000. If he leaves this to grow for another 15 years before using it as a pension scheme, he will retire at 60 with a fund of just over €1 million — a very healthy fund.
Scenario 2: John had a very similar career, but only started saving 25 percent of his salary after being in the industry for 10 years. Even though he still had earned €1.25 million over his career, he only had put away €225,000, which, with the same growth as James, was now worth €290,000 due to the lesser amount of time to compound the growth. Leaving this amount to grow for another 15 years would give John a pension fund of €600,000 — quite a bit shy of James’s healthy fund.
In the real world, yachting salaries rarely grow in a straight line, but this simple example shows how delaying the start of a long-term savings program has a massive effect on your long term wealth and control. In order to retire with the same fund as James, John would have to save approximately €1,500 per month, every month from when he leaves yachting. If he is now working on shore, this could be difficult to achieve as costs normally not associated while aboard will now be added, such as rent, food and every day expenses.
It’s interesting to note that James still actually spent more than €930,000 over his 23 years in yachting, which is an average of €3,400 per month for that period. Are there many yacht crew who actually spend this much on living costs, and if not, could he have saved even more for his long-term future? The answer is obvious.