A reader asks: ‘Can we keep our clients when they go abroad?’

One of the hardest questions for many UK-based advisers to answer for themselves is whether they should continue to look after clients of theirs who go abroad, particularly if the clients ask them to, and if the clients say they’re only planning to stay abroad for a few years.

Is it, such advisers wonder, in the best interests of the client to agree to remain the adviser of record, and if so, what potential dangers and blind spots need they be aware of? Is there a point at which they should recuse themselves in favour of another, perhaps differently-regulated, entity?

Here, in the first of a new International Investment series, in which we invite readers to send us their technical questions on the subject of looking after international/cross border clients around the world, Sator Regulatory Consulting Ltd’s Helen M Hatton, pictured, replies to a reader’s question.

(This article first appeared in the May issue of International Investment.) 

The question:

I work for a UK-based investment manager, which provides discretionary, advisory and execution-only services. We also have an IFA service, which provides holistic financial planning advice.

Although we are perfectly comfortable with the Financial Conduct Authority’s rules as far as our UK clients are concerned, and there are passporting provisions with the European Economic Area that apply to most of Europe, the FCA does not have any jurisdiction over – or real interest, it seems – in people living beyond the EEA’s borders. Even if they’re British.

It is not easy, therefore, for us to understand what obligations we may have when we are asked to provide services to non-UK residents who are not physically present in the UK or EEA.

But we are finding that UK clients who then move abroad are an increasingly common phenomenon in our practice.

To what extent, then, should we then be looking at the local regulations in the place where the client now resides?

And do the requirements vary, depending on what type of service they want from us? Should we tell them to sign up with a wealth adviser in the jurisdiction in which they plan to live, even though they might not get as good a service as we are able to provide?

From what we can tell, the majority of UK firms don’t really investigate this matter, and simply continue to provide the same services they would offer at home to their clients, even after they’ve moved overseas. But I’m concerned that, in some cases at least, this may be a breach of local regulations, at least in some places.

What should we do?

(Go to Page 2 for Helen Hatton’s response)

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