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Mind Your Money: Made your investments? But are you reviewing them too?

Annual financial reviews are not a choice but a necessity for expatriates navigating today’s dynamic world

Gone are the days when expatriates could seamlessly alternate between different currencies, tax regimes, and regulatory environments. The increased global mobility in recent decades and tense geopolitics have cumulatively shaped a world where expats face unique challenges in their wealth management. Navigating the intricate financial terrain today requires a deep understanding of various investment instruments and country-specific monetary policies. Financial intricacies and their dynamic nature require expats, particularly globe-trotting high-net-worth individuals (HNWIs), to review their portfolios periodically.

In the GCC, where an astounding 71 per cent of expats have reported feeling better off financially in 2023 compared to the previous year and find themselves well-positioned to make strategic investments, it is topical to discuss the importance of financial reviews. Based on our recent discussions with many expats seeking cross-border wealth management planning, we have outlined the factors that make periodic financial reviews a necessity rather than a choice.

Insuring against evolving risks

One of the core considerations for financial advisers reviewing portfolios is risk management. The idea of ‘risks’ has expanded in scope and magnitude in recent years, with personal liabilities, natural calamities, thefts, and the like becoming commonplace globally. On the personal front, the growing incidence of critical illnesses without age correlations, protracted economic downturns, and mass layoffs constitute risks to insure against. Financial advisers can help in this regard. They can perform a risk assessment and adjust your emergency funds, insurance protection, and investments to safeguard your interests for the foreseeable future.

Financial advisers emphasise comprehensive insurance protection for expats due to their mobile lifestyles and geographically distributed holdings. As personal and professional circumstances evolve, existing insurance plans must be optimised to ensure continued protection. Similarly, investment portfolios should be rebalanced factoring in changes since the last review.

Rebalancing investment portfolios for sustained returns

The volatilities in financial markets underscore the importance of periodic portfolio reviews. It is critical to revisit asset allocations, analyse performances, and make changes, if any, compatible with current market conditions. If your time horizon, risk appetite, and financial health have changed since the last review, you can rebalance the portfolio by yourself, or with the help of financial advisers, to ensure it suits your new goals. Personal circumstances such as marriage, retirement, vacation, and a new house can significantly change a person’s financial goals in just a few weeks. That is especially true for expats, whose portfolios must also reckon with currency fluctuations and ever-evolving domicile laws in the home or host country.

Come to think of it, an annual review is an opportunity to understand if you are on track to achieving your long-term financial goals, like voluntary repatriation to your home country following retirement. Simultaneously, it gives you the financial perspective to accurately plan short-term goals such as refinancing a mortgage or taking a vacation. If the portfolio performance is below expectations, it could be a sign to seek a second opinion or change the strategy.

Navigating the cross-border regulatory landscape

Cross-border wealth management demands a deep understanding of international financial regulations. Working with a financial adviser, therefore, helps. By virtue of their experience and expertise, financial advisers can help you navigate the world of investments. Typically, a financial review for expats will involve the formulation of strategies to manage wealth across different jurisdictions cost-effectively while ensuring timely compliance with regulations. Due to the dynamic nature of such regulations individually and in relation to a specific country, periodic reviews are essential to avoid legal issues.

Most expats face complexities in managing tax due to incompatibility in employment and business policies between host and home countries. Some countries have double tax avoidance agreements (DTAAs) and foreign tax reliefs, among other policies in place, simplifying compliance for expats. Financial advisers tend to be up-to-date with such provisions, enabling you to minimise your tax liability and maximise savings without legal ramifications.

Going forward, as global financial systems tighten regulations to combat evolving threats like cyberattacks and introduce policies aimed at greater transparency, expats may have to visit their portfolios more frequently. While there are no set-in-stone rules on how often a portfolio should be reviewed by experts, you can benefit immensely by doing it once every six months or at least a year. At a time when small changes are making a big difference in financial markets, periodic reviews are nothing short of an investment in itself.

Akshay Sardana is the vice-president of strategy & international development at the Continental Group.