Expats in the Gulf States shun taking professional financial advice for at least the first two years they spend abroad.
Just over one in three expats consult a financial adviser during the first 24 months that they live in the Gulf, according to a survey by wealth managers Hoxton Capital Management based in Abu Dhabi.
The data suggests that the longer an expat lives in the Gulf, the more likely they are to take financial advice, with three out of four (74%) of those having lived there for more than 24 months talking to an IFA.
However, half of expats who did speak to IFAs did not proceed with their recommendations because they did not like the adviser or were unimpressed with their advice.
Why taking help with money pays off
“If you are looking for financial advice, the importance of doing your due diligence cannot be overstated,” explained Hoxton managing partner Chris Ball.
“There is a clear difference between those receiving advice and those who do not. On average people who receive advice get an increased return of 2% per annum on their portfolio compared with those who do not. So if investor A, who invests on their own makes 3% in a year, investor B who has a good advisor will make 5%.
“This may not seem like a huge difference but when compounded over time it equates to a substantial amount. If investor A has £100,000 and leaves it invested for 20 years at an average annual return of 5%, they will have £265,000 at the end of 20 years. Investor B who received advice on the same amount over the same time would have £386,000 by the end of 20 years.”
Expats save too little for retirement
In separate research, the firm also claims expats in the Gulf States are not saving enough for retirement.
Data collected by the firm suggests 85% of expats are failing to save for retirement, with around half making the excuse that they could not afford to save – and two out of three expats return home less well off than when they arrived.
“This could be as a result of expats paying off debts or saving elsewhere – although often it’s down to individuals simply overlooking a stage of life that seems so far in the future,” said Ball.
“Whatever the reason, expats must view retirement planning and safeguarding their financial future as an integral aspect of making their wealth work for them long-term.”