Many British nationals have made their home in Portugal, and when you consider the lifestyle and attractions it is easy to understand why. However there are some drawbacks. You have to deal with unfamiliar local bureaucracy and a foreign tax system. Your new circumstances mean you have to rethink your investment strategy. You may need to consider all the complex options for your UK pensions, and how they work for a Portugal resident.
It can all be very confusing. Specialist advice is not only invaluable, but in most cases essential.
Your choice of financial adviser is fundamental. You should look to develop a good, long-term relationship with a wealth manager. This can be very rewarding and give you peace of mind. They will become familiar with your situation and needs, and understand what is important to you. Besides guiding you through your earlier days in Portugal, they will be there to support you and your family over the years including, eventually, your heirs.
There are various aspects to consider when choosing a wealth manager, but it is important to find one who is best placed to deal with all your current and future financial issues. This includes tax planning, investment advice, asset protection, pensions and estate planning. They should be able to help you here in Portugal, and if you return to the UK one day.
Your adviser should take the time to find out about your family situation, circumstances, objectives, requirements, risk tolerance etc, so that their advice and recommendations are personalised for you. They should be available for meetings when you need one.
They need to have a deep understanding of the financial planning needs of British expatriates in Portugal and the local tax regime.
So ideally you want a wealth manager who has lived and worked in Portugal for some time. They will be familiar with the challenges you face and have experience advising British expatriates over the years. You want to be as confident as you can be that the firm will maintain its local representation.
There has been some news recently about banks planning to close some of their overseas wealth management divisions. A spokesman for Barclays confirmed that it will reduce the number of markets it provides wealth management and investment services in, from 200 to 70.
He did not name the affected countries, but acknowledged they did not have offices in all of them and “it was more a case of or bankers flying out and meeting prospective clients”. This suggests that if your relationship manager currently flies out to see you, you may not be able to rely on him doing so in future.
Credit Suisse also confirmed plans to withdraw from a reported 50 countries, as part of a review into its wealth management business.
Many British expatriates have built up relationships with an adviser back in the UK. Unfortunately, they are unlikely to be qualified to give you advice now that you are resident in Portugal.
They will not know the best guidance for Portuguese residents, and how best to structure your investments and wealth to work within the local system. Importantly, they will not have in depth knowledge of Portuguese taxation and the frequent changes.
You therefore need to move to an adviser based here in Portugal. They should also be highly knowledgeable on UK taxation and how it interacts with Portuguese taxation. You need to consider UK inheritance tax, and what happens if your money returns to the UK one day, either with you or when your children inherit your assets. This should be taken into account when setting up your current financial planning.
Experience is very important, but so are qualifications, especially in today’s complex financial world. The UK’s Financial Conduct Authority (the new name for the Financial Services Authority) now requires all advisers it regulates to have obtained the Diploma for Financial Advisers (DipFA).
A professional who is part of a larger multi-disciplined firm is usually preferable to someone working on their own. This enables continuity and depth of service, and the ability to benefit from different areas of specialism within one firm.
Overall, you want to achieve the peace of mind from knowing that your financial affairs are in order, so that you can enjoy your new life here in Portugal.
Blevins Franks Financial Management Limited is authorised and regulated by the Financial Conduct Authority in the UK, reference number 179731. Where advice is provided overseas, via the Insurance Mediation Directive from Malta, the regulatory system differs in some respects from that of the UK. Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of trusts and companies. Blevins Franks Tax Limited provides taxation advice; its advisers are fully qualified tax specialists.
To keep in touch with the latest developments in the offshore world, check out the latest news on our website www.blevinsfranks.com
Written by Gavin Scott, Senior Partner, Blevins Franks