Updated: Apr 1
With Dubai still ranking one of the top destinations for expats moving abroad. Life is good in Dubai, but financial advice in Dubai is a must to ensure that you live a tax free life.
It’s no good piling up your hard earned cash if you don’t have a plan. Keeping the family in mind now and in the future. Correct financial planning is needed.
Your working life doesn’t last forever, and at some time, you will want to retire to spend your time relaxing with family and possibly travelling.
Financial Advice in Dubai
Good financial advice in Dubai is one way to boost your choices to save, invest and eventually spend your money when the time comes. It’s all about choice and money can help expand your options.
Where there’s money, you will also find scams and crooks ready to prey on unwary victims. A good financial adviser will guide you through the dangers and will typically charge a fee instead of commission.
Things to consider when looking for an advisor
As an expat, probably your first step is to locate a good financial adviser, especially if you are new to Dubai and the way the local financial services sector works is to avoid the shady know-it-all lurking in social clubs, bars and anywhere else expats congregate to relax.
You need to know how to identify the right person for the job that you are seeking advice in.
Check if the financial advisor is authorised, make sure they are qualified to give you the guidance you are looking for.
Can you build a trust with your financial adviser?
The other important factor is that you can work long-term with your financial adviser now and in the future. We have all experienced advice where we no longer hear from the advisor.
The relationship may last for many years, like a trusted friendship or even a marriage. If you do not get along with your adviser, the relationship is likely to fracture sooner and put you back by having to search for someone else to work with.
What will financial planning help you with?
First, managing money is a personal discipline, just like finding the time to exercise or deciding to go on a diet. You need to actively monitor your spending, budget and look to the future with savings and investments.
Are you just looking for financial planning or do you need a family office? Speaking with an advisor will determine straight forward advice or the need for further information with a view of your needs.
Don’t forget looking at one aspect of your finances could have unintended consequences somewhere else, which is why financial planning takes a holistic approach rather than concentrating on a single factor.
You may find that you just need to information with regards to your pension however, full financial planning will look into insurance for you and the family whilst also looking into how your money is managed, expenditure and life goal.
Questions financial planning can help you with.
Should I save with a bank or a savings plan?
How much do you need to set aside for a pension and how should the money be invested?
How much can I afford for a mortgage to buy your own home?
How do cross-border taxes affect you as an expat?
Should you save money offshore?
How do you pay the bills if you are too ill to work?
Do you need to put aside money for your children’s education?
Does your family need private medical care?
Is my pension in a suitable place?
Are your loved ones protected financially when you die?
What are the tax benefits?
Can I have control over my investment?
Many of these questions are difficult to answer unless you are a financial expert. Returns on investments or detailed knowledge of international tax rules are a must for a financial planner.
Financial advisers have data and more at their fingertips, plus the benefit of back-office experts to answer the legal and tax questions that will inevitably crop up from time to time when offering advice to clients.
The questions are not can you afford financial advice as an expat, but can you afford not to take financial advice or at least look into it?
What does a financial adviser do?
A financial adviser guides you through the different life stages by devising and recommending strategies.
These include events like marriage, having children, changing jobs, accidents or illness. Each presents a financial challenge and an adviser is there to cast an unemotional eye over what’s happening and to suggest what you can do for now and in the future.
A good adviser will present options, discuss the pros and cons of each choice, but leave you to make the financial decisions after completing a full financial analysis of your current situation.
Qualifications of an advisor
Your financial adviser must have the relevant qualification to give appropriate advice. The qualifications from a recognised independent organisation. The main bodies are:
Chartered Insurance Institute
Personal Finance Society
The London Institute of Banking and Finance
Chartered Institute of Bankers in Scotland
CFA Society of the UK
Chartered Institute for Securities & Investment
Institute of Financial Planning
Pensions Management Institute
Scottish Qualification Authority
You should only deal with an adviser who has taken the correct qualification. Don’t be afraid to ask them which organisation they sat their exam with.
Advisers belonging to a correct organisation will have professional indemnity insurance that could pay compensation if you lose your money due to poor advice. Funds do go up and down and this is a must to remember.
Financial advisers can offer different levels of help to clients depending on their qualifications and who they work for.
Independent financial advisers – commonly called IFAs – should offer whole-of-the-market options because they are not restricted to discuss any specific provider’s products.
IFAs should put together a bespoke financial strategy to your needs based on a fact find, which is a detailed questionnaire about you current and future financial goals. The fact find should also address your attitude to risk so the IFA can determine the most appropriate savings and investments for you.
The fact find will benchmark your current financial status and gives the information the adviser needs to recommend products and services that match your needs now and in the future providing you have been open and honest with the advisor.
That depends on you and the advice you are looking for.
Everything comes at a price. In some cases, the adviser will charge a fee, while most will bundle commission with the products and services they recommend, which often means you never know how much you are paying for the advice you receive.
In Dubai, most financial advice is commission-driven and often what you pay is rarely disclose, our fees are straight forward.
All first meetings with an adviser generally come without any charge. A charge should only be paid upon taking the advice. This should always be agreed with yourself.
You should discuss your ongoing advice needs, which includes trying to negotiate a fee to keep costs down. How long will you need the ongoing advice for?
Questions to ask your financial adviser
What are your qualifications and experience?
Are you able to continue my advice if I leave Dubai?
Can I take my investments with me?
Am I able to view my investments on a regular basis?
Are you Independent or a tied advisor for recommending products and services?
Are you really an expat?
You can call yourself an expat if you have a main home in one country and move to Dubai on a contract for a year or two, but that does not make you tax resident in the United Arab Emirates.
If you still retain tax residence in another country, you will pay tax on your earnings there.
Some countries, like the USA and South Africa from 2020, expect expats to pay tax on their worldwide income regardless of where they live.
That’s why failing to understand expat tax is costly for anyone moving to a new country who ignores how the rules affect their finances.
Expats need to plan for the financial affairs in the country that they are leaving as well as in their new home.
FATCA and CRS
Factor in the Common Reporting Standard (CRS) and the US Foreign Account Tax Compliance Act (FATCA) and you will be found out if you try to avoid paying tax on the money you earn in Dubai.
The UAE and Dubai have signed up to CRS and FATCA, which means any bank or investment accounts expats hold in the UAE are reported to their home tax authority and compared to their tax filings.
FATCA only applies to US expats, but CRS is a network of more than 100 tax authorities swapping financial information.
Managing Your Money
The wisdom of looking after your pennies means the pounds will look after themselves still holds true, even in Dubai dirhams. Monies will grow in time with inflation however, are yours growing with the pace.
Keeping an eye on your spending pays off because you can identify wasted money and make small adjustments relatively quickly. The essential little bit here and there may mean that you can retire earlier.
The problem for many expats is they may earn more and pay no tax in Dubai, but they also spend more on housing, a car and day-to-day living because they have more free cash. Can you downsize and still live a comfortable life to save more?
The sensible expats live within their means and divert more to savings and investments resulting in early retirement with savings to enjoy a very good lifestyle.
If you have a partner and children, you no doubt want to look to their futures if you cannot work due to sickness, disability or even death.
Protection in the form of life insurance and income protection cover come into play to provide for your loved ones when you can’t.
Private medical insurance is a priority, especially if you are on assignment in a country with a limited health service.
A useful insurance add-on is critical illness cover that pays out when you are diagnosed with one of a list of specific conditions.
Once you have secured the basics, you can look towards savings and investments.
The difference between them is savings are considered a short-term place to keep your money which is easily accessible if you need an urgent cash boost as Investments are long term.
Investments would include savings plans designed to last five years or more, pensions and other online investments such as platforms.
If you are a British expat, or someone from another country who has money in a UK pension but now lives elsewhere, an IFA can help you with the Qualifying Recognised Overseas Pension Scheme (QROPS). These are special offshore pensions designed for expats supervised by HM Revenue & Customs in the UK.
For expats still UK tax resident, a self-invested personal pension (SIPP) is also worth considering.
Sooner or later will all die, and the only hope is that you should have a long and peaceful life before the inevitable happens. Having a will in place can ensure that all possessions are passed to your loved ones.
Correct estate planning estate planning will ensure no unexpected bills arise to the family upon death.
Do you need A Financial Planner?
If you are an expat in Dubai, there’s no reason why you should not have plenty of money to save if you are sensible about how you spend your salary. Follow our guidance and contact Expat Financial Advice Online today to see if you need advice in any area or more.