Financial Advice in Abu Dhabi
Life in Abu Dhabi is glamorous for expats, with high salaries and no taxes. The sunshine and large expat community have attracted many foreigners to the region. While it is a beautiful place to raise a family and develop careers, most expats in the UAE are transient and do not plan to live in the country their entire lives. It is very easy to get caught up in this glamorous lifestyle that the UAE can offer and many expats fall into this trap, forgetting to make financial provisions for their future. Therefore, they need to take advantage of the competitive financial rewards and tax-free environment to improve their future economic status and growth global wealth.
Since it is not good to pile up cash without a plan, you need to seek Abu Dhabi financial services from experts. For instance, UK expats residing in the UAE do not pay tax, but their income may be taxable in the UK. You need to be aware of the tax implications applicable when you return and how to safeguard your assets. Read on for insights on the benefits of financial planning, wealth management and ways to solicit financial advice in Abu Dhabi.
Why UK Expats Need Financial Advice
When planning a road trip to an unfamiliar territory, you need a sat-nav to reach your destination without any delays. The concept is the same for financial advice. You might have clear financial goals, but you need a map to get there. It is important to remember that no matter what “map” you use, you are ultimately in control. The final decisions lie with you. An adviser plots a map and guides you on the route, but you can make changes along the way.
Abu Dhabi and Dubai have highly competitive salaries, and the low taxes boost the income of many expats. Unfortunately, most expatriates get carried away with the glitz and glamour and choose to live in expensive houses and drive high-end cars. They end up spending all their income and leaving the country with little savings and not having made any progress towards their future financial goals.
While some expats are wise to divert income into savings accounts and investments, they can easily make mistakes and put their money in the wrong investments. To make the most of your stay in Abu Dhabi, you need guidance on the best savings accounts and investments that will grow your money. An expert adviser understands the intricacies of financial planning and can help you analyze the options available to you, assess them, and provide guidance on how to best navigate them.
Since most expats in Abu Dhabi have short to medium-term financial goals, a financial adviser can assist them in safeguarding their assets when they leave the country. Alternatively, the advisor can help you to manage your pensions, consolidate them to avoid losing track of some of your retirement pots and ensure that they continue to grow in line with your financial plan.
Many expats in Abu Dhabi and other countries presume that financial planning is for the wealthy. This is a wrong assumption since a good adviser analyses your expenditure and frees up some cash for investment savings. Financial advice will save you more money than what the advice costs.
How to Find the Best Financial Advisers
The presence of money often attracts crooks and scammers. Some of them may have the trappings of professionals, but they can ruin your appetite for financial advice. That is why it is critical to fork out the best adviser.
Regulations for independent financial advisers are tightening in the UAE, but you still need to have your wits about you to avoid scammers. In Abu Dhabi, you can find restricted advisers, who offer product-specific advice as well as IFA’s (International Independent Financial Adviser). Here are key factors to keep in mind when looking for financial advice in Abu Dhabi.
If you want to smoke out under-qualified advisers, ask for their firm’s registration details with a recognized regulator. In the UAE, regulated financial firms should be registered with the Security and Commodities Authority, Insurance Authority, or Dubai Financial Services Authority.
Quality financial advice costs a pretty penny, but you should be wary of anyone offering free advice. It means they are getting a commission for the products they persuade you to buy. This creates a situation where the advisers are more interested in selling a product than focusing on rendering a comprehensive and relevant financial plan. IFAs charge fixed percentage or hourly rates. In Abu Dhabi, some financial advisers are commission-driven. If you need ongoing advice, it is wise to negotiate affordable prices.
Range of Services
Some financial firms offer services as part of a larger package, which can save expats some money. For example, the advisor could have deals with the banks and investment firms, enabling them to offer lower rates than advice-only firms do. When engaging with your financial adviser, what is often discussed is limited to just one or two aspects of financial planning, such as only focusing on retirement or insurance. There are many aspects to a financial plan. Many of these are interdependent and overlap. It is critical to focus not only on a few aspects but on the bigger picture.
What UK Expats Need to Know About Taxes
So why is tax significant in financial planning?
As you grow your global wealth, there could be tax implications. Paying tax diminishes your global wealth and decreases your disposable cash. This can create a cash flow problem if not budgeted for in your financial planning. Seeking financial advice should go along with good spending ethics. Keeping track of your spending gives you an insight into how you can minimize costs and invest more in growing your global wealth. UK expats should also keep an eye on their taxes and how they can affect their income.
Moving to Abu Dhabi for a three to five-year work contract does not make it exempt from UK taxes. Therefore, ignoring the expat tax can be costly when you want to go back to your home country.
A financial adviser can help you to understand and navigate your tax obligations in Abu Dhabi and the UK. Having a financial plan will ensure you do not lose your savings and investments to tax penalties and overdue obligations.
Another example as to why it is important to know what the tax implications are of your financial planning is because UK expats are required to pay tax when transferring their pension schemes and benefits from another country. Therefore, a financial adviser will lead you to the best schemes to safeguard your investments like QROPS and SIPPs, which allows consolidation without heavy taxes.
If you are an Abu Dhabi expat, there is no reason not to have a lucrative retirement package and a few investments. However, it would help if you were wise enough to control your spending habits and put your cash in the right investment. Financial advice from a professional and reputable IFA can help you put your finances on track.
Even though you may not have the means to build a fully bulletproof and comprehensive financial plan immediately, it is important to have an understanding of what your specific “road map” looks like. There is no “one shoe fits all” type of solution. This is why it is important to have a discussion with a financial professional in order to understand the specific plan applicable to you and then work together with that financial professional to carry out tax optimisation and achieve it.
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About Mike Coady
Mike Coady is an expat expert based in Dubai and is on hand to help with all of the above and more.
Mike is an award-winning money coach and industry leader in the financial sector.
Qualified to UK Financial Conduct Authority (FCA) standards, a member of the Chartered Insurance Institute, a Founding Fellow of the Institute of Sales Professionals (FF.ISP), and a Fellow of the Institute of Directors (FIoD) and featured as a highly qualified Financial Adviser in Which Financial Adviser.
To learn how to choose a great financial adviser, download our free guide.
Blog published by Mike Coady.