As it enters its twentieth year, the company founded by David Rumsey, above left in photo, begins a period of transformation, while keeping its focus firmly on Europe…
When David Rumsey relocated to Cyprus in 1996 – with his family, after a six-year stint in Hong Kong – the East Mediterranean island off the southern coast of Turkey was still eight years away from joining the European Union, and a decade away from joining the Eurozone.
The 1974 invasion of the northern part of the island had taken place 22 years earlier, but even then, as today, the divided nature of the island was unsettling to some, who were sensitive to the idea that the matter of who should be governing the northern district has never been officially settled. One doesn’t have to drive far, on such a small island (it’s just 9,251 sq km, including the northern piece, which is 3,355 sq km) to get to the dusty, unoccupied UN-patrolled buffer zone that runs between the two Cypruses.
But for Rumsey and his young family, Cyprus quickly became home, as it has for so many British expatriates over the years – and not just since its joining the EU made it a little easier to visit and relocate to. The first Brits to pitch up on Cyprus’s famed beaches actually did so as far back as the 1870s, although they were there to run the place rather than to bask in its sunshine, ahead of Britain’s formal annexation of the island in 1914.
“What struck me most was not the weather so much, but the fabulous infrastructure of the country – the roads, telecommunications and health services,” Rumsey recalls, of his early days on the island. “Everything worked.
“It was also a welcome break after Hong Kong. Accommodation and the general cost of living were much lower. Starting a business on Cyprus was pretty straightforward too, and back in the day – this was all before the EU – expatriates like myself received substantial personal and corporate tax breaks.”
Though often thought of by Britons as a retirement destination, Cyprus was also, the Rumseys soon found, “one of the best places in the world” in which to raise a family, with “its international schools following the UK curriculum” and its “healthy outdoor-activity-filled” lifestyle.
Global focus to start
In the beginning, Rumsey and his colleagues used Cyprus as an administrative base for their fledgling, globally-focused business, from which they would “travel – to the Far East, the Middle East and Southern Africa”, as they gradually built up their client list.
After Cyprus joined the EU, Rumsey saw to it that his firm had the MiFID and IMD licenses it needed to passport its services across the bloc. This shifted the focus slightly, as being able to operate cross border was, as it remains today, a strong competitive advantage, and an attraction for the large number of clients who live cross-border lives across the bloc.
Today, although 3D Global currently looks after clients in 52 countries, Rumsey stresses that its focus remains “mainly on Europe”.
After 26 years overseas, though, the Rumsey clan itself is on the move again, this time back to Blighty – for various family reasons, Rumsey explains.
He will continue to be involved in the now-thriving business he founded 19 years ago – 3D Global – but he’s sold 40% of his stake to four key members of the company’s top executives, who are taking over the running of the business and who will, he says, acquire more of the shares in due course.
At the same time, Rumsey is setting up his own UK-based financial advisory business alongside his 3D Global operation, which he’s calling XpatPro, which already has its own website, www.xpatpro.com.
However, at least initially, he will continue to be regulated out of Cyprus, which, given the current uncertainty of the UK’s continued ability to participate in European Union cross-border arrangements, is seen as an advantage, he points out.
The inexorable pull of Blighty
Like many of his clients over the years, Rumsey was drawn inexorably back to the UK by the pull of ageing relatives who needed looking after, and at the same time, a desire to remain close to now-grown and fully independent children who, after living their entire lives in expatriate British circles, seemed drawn to the mother ship.
“I will be based in London and Warwickshire, where I will be advising Brits abroad and Brits returning,” Rumsey says.
“As a Brit returning to the UK after 26 years, I know the issues they face better than someone who hasn’t.”
Back at 3D Global’s head offices in Limassol, meanwhile, Rumsey is being succeeded by Tony Pentland (right, in above photo), who joined the company as business development director in November, 2012, from the Fry Group, where he had been general manager of that firm’s Cyprus and Middle East businesses.
3D Global Wealth Management
Pentland, whose title is now managing director and chief operating officer of 3D Global, 3D Global Holdings and 3D Financial Services, says offices in every country aren’t necessary, as long as the EU stays together, and as long as the ability to passport financial services across EU borders remains.
And, for the moment at least, the company’s business development focus is on Malta. Compared with many of the other EU countries that are popular destinations for British expats, this other Mediterranean island, is – Rumsey and Pentland say – relatively under-served by rival expat-focussed financial advisers, at least at the better, more regulated end of the market, where 3D Global sits.
To this end, the firm has formed a business relationship with a well-known Malta-based accountancy firm.
Issues facing Cyprus, Malta expats
At the moment, Brexit concerns are among the biggest worries facing expatriate Britons living in Cyprus and Malta, Pentland says.
The weaker UK pound since the EU Referendum on 23 June has been a problem for many, as it makes prices higher in both other countries; and there are questions about whether British expats who have never taken Cypriot or Maltese citizenship will be allowed to remain indefinitely, once the UK is no longer an EU member state.
Many of 3D Global’s clients are retired Britons – Malta ranked second and Limassol, Cyprus fourth on a recent Knight-Frank league table of the ten “most favourable jurisdictions” in the world for retired couples, based on value for money spent.
“The initial shock [of the vote] has passed, helped by having a new prime minister, and the pound seems to have strengthened a little bit. Overall our clients are still quite positive, and seem happy with their investments, because they’re not in them for the short term. They are not leaving Cyprus and returning to the UK the way they did in 2008, 2009.
“If anything, we’re seeing a steady increase in people moving either back to Cyprus, or moving to Malta.”
One possible effect of Brexit, Pentland says, is that UK trained and qualified financial advisers, who are now looking after clients in Europe via EU passporting arrangements, may begin to look for “authorised and licensed and regulated firms in Europe” to sign up with, ahead of the UK losing its EU status.
“We want to send a message out to [such advisers] that, if they’re looking for a respectable firm that places honesty, integrity and transparency at the forefront, they should come and talk to us.
“A lot of firms in the industry are getting to grips with the problems of mis-selling that has been going on for decades, but at 3D Global, we got to grips with it 19 years ago.”
To read David Rumsey’s thoughts on overseas pension transfers, go to page 2.
QROPS: on the 3D Global menu, but not for everyone
In recent years many British-expatriate-focused firms have made the transferring of clients pensions out of the UK, via qualifying recognised overseas pension schemes and certain other structures, a major part of their business.
But as the UK tax authorities have unexpectedly cracked down on these over the last few years, in a series of measures, and as mis-selling cases have emerged, some higher-end wealth managers have become wary recommending them.
3D Global founder David Rumsey says that the decision to recommend a QROPS (or ROPS, as HM Revenue & Customs is now calling them, to remove any implication that the offshore schemes have been pre-approved by HMRC) at 3D Global has always been, as it should be, approached “on a case-by-case basis”.
“For all pension transfers, DB and DC schemes, we start with the position that it should not be done, and then go through a process which will lead to an answer – either the client stays where he is, or he takes a SIPP [self invested personal pension] or a QROPS.
“We expect there to be an increase in QROPS/ ROPS transfers from UK clients: for example, the unprecedented fall in interest rates means that companies will have to make greater provision for pension liabilities. This will mean that transfer values may well increase.
“The greater burden on companies will put pressure on schemes and, though DB schemes are protected, not all pensions will be protected to their full value.
“People with pension pots will start to look for ways to lock in higher transfer values, and protect their pensions.
“The government recognises the burden of pension liabilities and is considering legislation to restrict benefits – this may be another reason for pension holders to transfer.”
At 3D Global, Rumsey says, the company relies on a panel of “pension experts” who are “the only advisers in the company permitted to give pension transfer advice”.
Before a 3D Global pension transfer is approved, he says, the recommendation has to be signed off on by two members of this in-house panel. Unfortunately, other firms aren’t so careful, and sometimes these firms’ clients turn up in 3D Global’s offices.
“It is difficult to be absolutely categoric on when someone should not do a QROPS/ROPS, because so much depends on personal circumstances,” he continues.
“But we have been approached by a number of clients who have been sold a QROPS/ROPS, and have then been put into a portfolio bond which has then been loaded with structured notes. In one recent case an UK NHS pension had been moved to such a structure. We reviewed the case, and concluded that such a transfer should not have been made.
“We have seen other cases where people with teachers’ pensions have been advised to move to a QROPS. Again, such cases should generally not be transacted.”