Advice on cross-border financial planning and investing offshore

(This transcript has been lightly edited for clarity) 

Tell us a little about yourself

I am lawyer by trade with 10 years’ experience. I moved into finance in 2008 and have been doing that ever since.

How do you define cross-border financial advice and planning?

In a nutshell, it's where people find themselves or their assets in multiple jurisdictions. You need to take into account multiple countries' legislation, rules and tax systems – and that's where the cross-border space really comes into play.

What is different about investing offshore?

Primarily from a diversification point and opportunity set, somebody in South Africa is fairly limited by the advice they can receive, given the regulatory constraints in South Africa. In their individual capacity, they can invest into anything worldwide. The big issue is, how do you find what to invest into? It’s a smaller market than you'll find internationally and to be able to get that advice becomes difficult.

What are the advantages of offshore/cross-border investing?

Opportunity sets. You get access to products that you cannot find in South Africa as a resident investor. If you’re investing only in South Africa, you're investing into a very small country. Our GDP is tiny in comparison to the global GDP, and currency limitations are in place. If you go offshore, you open up currency opportunities and asset classes; the world’s your oyster really.

What are the primary considerations when investing offshore?

Tax, first and foremost. I'd also say to know who you're dealing with and how safe your money is. We live in a world that is so prone to scams, we see it daily. People get conned by thinking they're getting into something that looks and sounds legitimate. If it’s coming from abroad and you don't know who you're dealing with, you open yourself up to problems.

What are the main tax concerns that come with cross-border investing?

All the normal taxes come into play, such as income tax, capital gains tax and dividend tax from foreign shares. Inheritance tax becomes an issue as well, specifically if you look at the various jurisdictions that you deal with. You may open yourself up to inheritance tax issues in the other countries and succession administration issues.

Should something happen to you, how would you get your money to your beneficiaries?

How should investors consider risk?

Risk levels are interesting. Everybody's got an attitude to risk which is only one of the criteria you look at.

You also have to consider:

• What is your need to take risk?
• What is your capacity for loss?

We blend all of that into an overall profile to find a level that suits somebody. I've had people come to me and tell me they are extremely conservative investors, but all their money is on the Johannesburg Stock Exchange (JSE). That person’s definition of what is conservative and mine are completely different things.

What is your advice for choosing investments?

If you are conservative, it doesn't mean your entire portfolio has to be conservative, as long as your overall blend gets down to that level. So, you won't necessarily go and stick everything into a money market account. You need to take a more balanced view. As long as you end up at the same level where the client should be, then you’re doing fine.

Why is international diversification important?

Diversification is important in portfolio construction, and you need to ensure that the client understands the difference types of return that you get.

Knowing what the drivers of returns between equity, bonds and property are. What the different risk levels and historical returns are. All of this will blend into a portfolio that should generate returns at the level that the client is looking at from a risk point of view.

What are the advantages of using a financial planner?

The most important advantage is controlling investor behaviour. We see currency spikes and people want to get all their money out of South Africa because the Rand's going to blow out. You see movements in the market and people start panicking – it's really a case of controlling that behaviour and trying to get them to tune out the noise, because the press is full of noise. It’s reminding them of the fundamentals of the plan. The important thing is having a plan and sticking with it.

What is Sable International's investment philosophy?

We default to a smart beta strategy, which is essentially a passive type of investment philosophy. The important thing is that we have a philosophy and we stick with it.

We go through our investment process throughout the year with two major meetings to make sure it's still valid. We then benchmark it again against what's going on in the markets. If there are changes required, we bring them in. If not, we stick to what we know. It's based on very strong research from some of the top minds in the industry and that's how we look at investment – don't try to reinvent the wheel. If there is space for a client that needs something different, we can facilitate that. We have a base view that we start off with and we work from there.

What services does Sable International offer?

On the wealth side, we cover international tax and financial planning, which primarily focuses on people who are either in the process of changing or looking to change country of residence. This ties in with quite a number of our other services such as forex, nationality and immigration.

Somebody leaving South Africa needs advice on tax, currency and planning all their assets that may remain behind as well as assets they can take with them. You’re going to need to blend it all together and you're going to need somebody who actually understands this process and the planning opportunities – the laws in a country like the UK are different to South Africa's.

For someone who's moving to Portugal, that becomes even more complex. They are a civil law jurisdiction and not common law like we're used to. There is a lot of complexity around that and we're able to cover all of those aspects in-house. We can assist with UK mortgage facilities and business expansion into the UK. It's quite a wide range of subjects that we cover as a team.

How can someone get hold of you?

You can email or call us using the contact details below and the correct person from our team will get in touch with you.

If you have any wealth-related queries, you can contact our wealth advisors by calling +44 (0) 20 7759 7519 (UK) or +27 (0) 21 657 154 (SA). Alternatively, you can send us an email at wealth@sableinternational.com and we’ll get back to you.