Plan your future financially



Financial planning is fundamental for everyone to meet their goals in life and ensure a safe future. Noel O’Leary, Head of UAE Business, Acuma talks about the way they help clients match their risk profile through appropriate financial solutions in the marketplace.


Given the great number of British expats in the UAE, please elaborate on the pension legislation in their country?


Her Majesty’s Revenue and Customs (HMRC) govern the benefits available under your UK pension scheme. Whether it is a company final salary scheme or a personal pension you have, all providers must comply with not just the letter of the rules, but also the “spirit” of them. You have probably read a lot about QROPS and to a lesser extent QNUPS. These are international pension schemes that enable you to transfer your UK pension. Benefits typically include enhanced wealth preservation, greater tax efficiency upon pension drawdown and ring-fencing your specific pension-pot as your own, thereby insulating yourself against the potential failure of a company pension. The QROP provider however still has to report to HMRC so as to ensure that they are complying with the rules.



As an independent financial advisor, how do you ensure that your UAE based client’s savings and pension plans are secure?


Working at Acuma is a pleasure as we are independent and therefore work on behalf of our clients. The advantage of being part of the world’s largest independent financial advisory group is that we have direct access to top tier investment managers such as Goldman Sachs, Morgan Stanley, and JP Morgan. It is their expertise and knowledge built up over hundreds of years that is passed onto our clients in terms of investment performance.

We carefully manage our client’s savings through a combination of: • Assessing each clients needs via a personalized risk profile

• Matching the clients risk profile with the most suitable financial solutions in the marketplace


• Using internationally recognized and safe jurisdictions


• Engaging with top tier institutions and providers on our clients behalf


• Regularly meeting with our clients to keep them appraised of their savings / pensions and ensuring that their specific investments continue to meet their requirements.


Please highlight how you deal specifically with British expats and their UK benefits?


The advisors within Acuma are highly qualified and have specialist knowledge of UK Pensions. When we meet with a client for the first time, the emphasis of the meeting is on engaging with and listening to a client to get a full understanding of their specific financial requirements. This typically involves getting a clear understanding of where someone is today in a financial sense and where they want to get to in the future. Only after this can we begin to cultivate a plan that is tailored to someone’s specific needs. From a UK Benefits perspective, the starting point of assessing someone’s UK Pension is to complete a Letter of Authority. This allows us to obtain information on the clients existing UK Pensions and perform an independent analysis in order to allow the client to make an informed decision on what course of action is best for them.


Which key guidelines one should take into consideration in terms of financial planning?


Financial Planning essentially involves two key areas, namely protection and investment. In terms of protection, a client may often require some or all of the following:


- Life Insurance


- Critical Illness Cover


- A Valid Will


- Wealth Preservation Planning


In terms of investment, we typically commence by helping a client articulate what their future financial requirements are, including areas such as education and retirement planning. Once we have done this and got an accurate indication of the client’s propensity for risk and ability to invest, we then source a solution that matches a client’s personal requirements. Typical solutions involve either saving a specific amount regularly over a sustained period of time or lump sum investments with top tier global institutions.



From your experience, what are the main challenges you face while advising both individuals and corporate clients in the local market?


Apathy and lack of awareness are the two biggest issues we experience. Our typical client-base are busy professionals who often find it difficult to commit the time to focus on their finances. Our role is to help them understand the potential consequences of not taking their finances seriously and engaging with them in a manner that is clear and transparent.



What is your opinion on financing real estate deals both locally and abroad?


I personally believe that for the majority of people property ownership whether as a home for your family or as a pure investment, is an essential part of someone’s overall personal wealth portfolio. Leveraging can be a positive and effective tool to build wealth. If we use a property purchased to rent out as an example, you are effectively getting someone else to pay your debt for you; however there is a big warning - over leveraging is a very high risk strategy. Like any financial investment, it needs to be understood and you need to ensure that you are in a position to make an informed decision about what is best for you.


As Albert Einstein is quoted as saying - “Compound interest is the eighth wonder of the world. He who understands it, earns it, he who doesn’t, pays it.”



How do you update your regional clients about legislations and their impact on their savings?


We engage with our clients on a regular basis to ensure that they are always up to date on any legislative changes that impact on their investments. Our preferred mechanism is via face-to-face meetings, although recognizing our clients’ busy lifestyles we typically also keep our clients appraised of relevant changes through quarterly bulletin reports and other electronic communications. One of the greatest risks facing ex-pats, and in particular those who have worked in the UK, is complacency. It is easy to sit back, enjoy the sunshine and hope that affairs back home don’t change. If only it were that easy! Even the word “pension” is enough to polarize people into either a) I’ll think about it when the kids have left home or b) yes I had one once, won’t that be enough? We know from very recent experience, that all governments around the world are coming to terms with the fallout from both the global financial crisis and also the problems resulting from longevity i.e. people living longer.


The Chancellor of the Exchequer has the difficult task of balancing the books and needs to generate revenue. One key area that his predecessor targeted was an individual’s pension pot and it looks like the current Chancellor is doing the same. Until recently, the total amount you could save over your lifetime was £1.8 million, without punitive tax of 55% being applied to the surplus. Now on the face of it, this figure sounds huge; however as from April this year, that figure is being revised down to £1.25 million. Again the figure sounds high, but when broken down, it means a husband and wife having total pension income of £28,000 a year. Considering many ex-pats are on six figure salary packages, that is a substantial drop in their income. What do you enjoy doing now that would have to stop due to cost?


History lesson 1


The first state pension in the UK was the Old Age Pension. The law was passed in August 1908 and the first pensions paid on 1 January 1909 to around 500,000 people aged 70 or more. It was 5/= (five shillings or about 1.5AED) a week and was paid in full to individuals aged 70. At the time only one in four people reached the age of 70 and their life expectancy at that age was about 9 years.


We then had a couple of World Wars, Spanish Flu epidemic and a few other natural disasters that helped keep the population numbers / life expectancy down, which was good for those that claimed their State Pension. We then had the “baby boomers!”


History lesson 2


How are pensions funded? The UK uses the tax revenue that the employed paid last week to give to those retired a pension this week. It is this lack of investment opportunity that is compounding the problem of people living too long. Why? If we look at the ratio of those in employment versus those who are retired it would look like this:


1950 – 7.2 aged 20-64 for every person 65 or older


2010 – 4.1 aged 20-64 for every person 65 or older


In other words, during the past 60 years there are nearly 50% less young people paying tax to support those drawing a pension and it’s predicted that by 2050 this figure will fall by half again.


A similar situation applies to those who may have accrued benefits via a company pension scheme.


History lesson 3


Company pension schemes have similar issues except their benefits have been adversely affected by additional factors. During the 1980’s (boom times), company pension schemes had so much money in their investments, the Trustees (those responsible for managing the pension) took payment holidays i.e. stopped contributions. When bad times came (1992, 2000, 2007) company profits fell and so did the value of the pension pots


A man retiring today aged 65, can expect to live on average nearly 20 years.


About Noel O’Leary

Noel O’Leary is Head of UAE Business at Acuma, one of the Gulf region’s most successful wealth management companies. He is known throughout the industry as a committed advocate to delivering holistic financial advice to high net worth clients and for ensuring a dynamic and progressive work environment for his colleagues to operate within.


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