Successful people seem to know that they need help and advice to achieve their goals. The first thing that they do is decide who their team is and who the key people are before moving forward with any project. It is how they work in business, and it is how they manage their lives. It is usually why they are successful. They tend to apply the same approach to their financial planning.
If you think of project sizes, are there many bigger than uprooting your entire life from your home country, your family and friends, and everything you know and, for example, moving to France?
Who should your team be? Who are those key people? Maybe a relocation expert, a French accountant, a legal expert and certainly someone you can consult with regarding your finances?
You will need counsel on the financial complexities of living in France, such as French income tax, capital gains tax and property wealth tax, tax planning, social charges, as well as so many other issues, such as French succession law, inheritance tax, joining the health system (which may have financial implications).
As a resident of the UK, you might not have known everything about how to manage your finances; however, maybe you knew enough to get by, and if you needed help, you knew where to get it. You understand what an Independent Financial Adviser is, how UK accountants work and that having an ISA, was an obvious place to put savings.
However, when living in a new country, everything is different. All that knowledge is now totally irrelevant because, as a French resident, you are now, globally, under French fiscal and civil law.
Make sure they are truly independent and are speaking your Language!
“Never mind, I’m reading this English language website, newspaper or magazine and there are people who can help me with this … in English!”, I hear you say.
Suddenly, all the requirements for checking out financial advisers, to make sure that they are qualified, regulated and have suitable indemnity cover (protecting you as a client) become irrelevant.
Of course, if they speak English, they must be alright!
It is a little like having heart problems and booking an appointment to see a surgeon, only to realise that they are actually a tree surgeon but are very happy to have a go at a heart bypass. Hey, it’s still surgery … right?!
Clearly, it is vital to take financial planning advice only from a source that is competent to offer it.
When getting financial advice in France, the UK’s idea of tied, restricted and independent is not the same, so forget advice in these terms. In France, there is only independent or not; there is nothing in between.
Insurance companies have their own agencies everywhere, and clearly, advisers are using only the products of the company they represent, so they are clearly not independent.
You might think of a bank; however, this is not going to be a source of independent financial advice. Again, their only counsel will be to use one of their own financial products, regardless of suitability.
Importantly, a financial advisers independence status dictates exactly how the adviser is being paid. Under French law, an independent financial advisers may not accept any “inducements” from third parties, whereas a non-independent adviser may do so.
UK financial advisers cannot advise you on France, and a French adviser may not understand what financial assets you have or the laws and tax treaties that regulate them.
Naturally, if an adviser’s legal entity is situated outside France, they can call themselves whatever they please, with complete impunity, so they claim that they are independent and still take a commission. They are not being policed by anyone who knows what the rules are in France, so anything goes, as does any protection for you!
Many English-speaking financial planning experts, we have found, do not speak French at all. How, therefore, can they begin to know how things work in France? Where does their first-hand “expert” knowledge come from? If the person you need to trust is trusting another source (potentially not a professional one), it is probably best to eliminate them from your team.
How to Investigate Your Adviser
Firstly, no financial planning adviser who is doing things the right way will be remotely offended by you investigating them; indeed, they should actively encourage it, pointing you in the right direction to official sources and be willing to help in any way possible. You need to have complete confidence in who you are taking financial planning advice from, so deep due diligence is vital. Do not stop digging until you are completely satisfied, as it is you and your family’s financial well-being at stake.
How do you properly check out the official status of a financial consultant in France? The good news is that there are many ways, and it is very easy!
If, in the UK, we go to the FCA register to check out an IFA, so, there must be the same in France? Indeed, there is, and this can be found at www.orias.fr. If preferred, you can click “EN” for English.
To be clear, however, unlike the FCA, ORIAS is NOT a regulator of any kind! ORIAS is merely a register of intermediaries covering multiple financial job descriptions. However, if the person you are checking up on does not even appear here, you can tick them off your team sheet.
The next stage is to look at their status and if it matches what you are looking for. The generic term for an adviser is “Conseil en Gestion de Patrimoine”; a counsellor of one’s (worldwide) estate.
The regulated term, however, is “Conseil en Investissement Financier”, or CIF, and this is what you are looking for if you want French-regulated financial advice. A CIF is regulated by the “Autorité des marchés financiers” (AMF) and will affiliate via one of the four AMF-approved associations: La Compagnie CIF, CNCGP, CNCEF Patrimoine, or ANACOFI CIF.
To gain this French regulatory status, you must prove the following:
- To be a person of good repute
- Demonstrate professional competence through diploma, experience and professional training
- Be insured, not for the benefit of the adviser, but for the benefit of the clients, against adviser error.
- Join an accredited professional association (who reports to the French regulator) to police day-to-day activities.
- Must be a fiscal resident of France or have a head office in France.
How reassuring it is to know that the person you are taking French-focused financial advice from is of good repute, competent at offering French advice, accountable in France and that you are covered, in France, for any error! It is also reassuring to think that the advice is not being given to you by someone on a remote island somewhere, but actually in France.
Entrusting your family silver with a criminal (whether through ignorance or intent) is probably not the best of ideas!
There will be other kinds of licences, which may not infer regulation, merely registration, such as “Courtier en Assurance”, or COA (basically an insurance broker). A CIF will automatically have this licence, as life insurance-based investments, such as “assurance vie” are often essential to financial planning in France.
By law, any regulatory or regulated status must be on all advertising, websites, newspapers and magazines, including all printed stationary.
What about the EU financial passporting rights?
An EU passport permits the adviser / financial institution to do business in another EU state, offering what they are regulated to in their host country. If this was offering investment structures, then this is legal. This does not include tax efficiency advice and general counsel on the system in that country, as this is clearly not their area of expertise or regulation.
We have seen this system abused as confirmation of regulation, which is misleading. The UK’s FCA has never had any jurisdiction over advice given in another country and could certainly never mediate, as a UK regulator would not have the expertise.
Clearly, the passporting system has ended for financial companies situated in the UK, due to Brexit. However, we have seen UK companies simply set up within the EU and continue to use the EU passport in countries where they are not legally situated, citing the passport as sufficient regulation, thus, sufficient protection for their clients, which it is not since it offers zero protection.
What else do I need to consider?
- How are they paid and is how they are paid transparent?
- What experience do they have?
- Are they “truly” independent? (Are you the only one paying them?)
- What ongoing service can you expect?
Summary
It is natural to need help with complicated international financial planning. This goes double when the country’s language is different to yours. Speaking your language is not evidence of competence; however, some people will use that to their advantage. An incompetent or dishonest adviser will seek to avoid regulation to dodge scrutiny and accountability, preferring to base their legal entity outside the country on which they offer any sort of financial planning or wealth management advice.
Having read this article, as an expat in France, you will now be armed with the power to avoid the marauders and get the quality, expert advice that is vital to ensure your move to France is a success.
A move to France is an exciting, great adventure… however unaccountable financial advice can potentially turn that adventure into a nightmare, so it is certainly worth taking the time to do a little homework.