By Sam Kelly,
Brits living in Spain will inevitably seek some kind of financial advice. That could be a basic pension or investment review, or perhaps a complex overhaul of your finances.
We have many areas to consider as Expats living in Spain, from how income and investments are taxed, to how to structure our wealth when considering Wealth Tax and other tax concerns that are unique to Spain.
Whether you’re looking at a QROPs or International SIPPs from Momentum Pensions, Novia Global, Sovereign etc, or Spanish Compliant Investment bonds from the likes of Quilter International, Prudential, Lombard International, SEB, STM etc, these types of policies all have one thing in common. All of them will need a portfolio of underlying investments funds.
Now Chorus will always promise to secure you the lowest possible fees when it comes to all the products named above, and we will do so without commissions or tie-ins, but it is also so critical to consider what happens when your Spanish Compliant bond application or pension transfer has completed.
We see two approaches for British Expats here in Spain. The first is that your financial adviser will appoint a third party to manage your actual portfolio. These third parties are generally known as Discretionary Fund Managers (DFMs).
Now this option is getting more and more popular and does mean that a well-qualified and experienced professional will be managing your investments.
What it also means is another layer of fees because you will be paying your financial adviser for providing you with service, but then you will also be paying a DFM an additional fee to choose your investment funds for you.
I often question why you would pay a financial adviser a fee, for example 0.75%, but then be paying around the same figure again for someone to manage your portfolio. Those charges can really add up!
At Chorus we do not have a need to use a DFM, in fact our portfolios have outperformed the UK Adviser Fund Index every year for the last 5 years.
The Adviser Fund Index is a panel of the UK’s leading adviser firms, showing the average performance of their portfolios. So, Chorus are able to run your portfolio in-house, providing a personal experience and market leading returns.
But what is the secret to our success? The truth is, we aren’t doing anything groundbreaking, but we do work very hard to ensure our clients are in the best possible portfolios.
In real terms there are probably 5-6000 funds we could use to build a client portfolio. Whereas many of the larger firms in Spain have ‘special’ relationships with one or two fund houses, which means they really don’t have much choice.
If 5% of your portfolio is being invested, for example, into a US Equity fund, then firms with a ‘special’ relationship are going to put you into the fund they have that arrangement with, and performance and charges are fairly irrelevant in this decision process.
With Chorus, when we are choosing, for example, a US Equity fund, we will research the entire market. We will compare dozens of potential funds, taking into consideration the size and quality of the fund group, the past performance of the fund manager over various timeframes, the risk vs reward, the charges etc, and from this analysis we will find the very best possible fund in this class for your portfolio.
Once you are invested, on an ongoing basis we will monitor each and every fund you are invested in to ensure they are still performing at an optimum level.
Although our approach is clearly more time-consuming and harder work for us as your adviser, the client outcomes are so much better than us simply having a list of approved funds that we are forced to place every client into.
As you will all know by now, the success of Chorus Financial has been built over many years of our clients getting superior outcomes, and that comes because we will always put you first.