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As an expat in the UAE, you will need some form of financial service at some point, whether it be a bank account or insurance policy.

If it isn’t possible to do it yourself or make sense of it all, you can hire the services of an independent financial advisor to help.

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Here are key questions you should consider when picking the right professional.

Are they licensed?

There are 3 main regulators in the UAE that you need to be aware of as they all cover different areas. These are the Insurance Authority (IA), Securities and Commodities Authority (SCA) and the Dubai Financial Services Authority (DFSA).

Dubai Financial Services Authority – The DFSA regulates financial services that are conducted in or from the DIFC. However, this authority is mostly restricted to the financial free zone.

Insurance Authority – The IA is responsible for regulated insurance companies, insurance brokerages and insurance-based products. This does not include health insurance – that’s a different regulator.

Securities and Commodities Authority – The SCA regulates investments, which includes fund houses, investment advisers, traders and stock brokers etc.

The most important thing is to ensure the adviser is licensed by at least one regulator. If you have dealt with an unlicensed company, you won’t be able to make a formal complaint or seek redressal of an issue.

Are they qualified?

Always seek out an advisor’s qualifications. Financial advisors without qualifications may attempt to dodge the question. So that you’re prepared, these are the most recognised qualifications you should look out for:

Chartered Institute of Securities & Investments – CISI, as the name suggests, is focussed on investments. This is a requirement for advisors regulated by the SCA. Post-nominal letters to look out for here are ‘ACSI’ or ‘MSCI’.

Chartered Insurance Institute – CII is a renowned accreditation in the UK for financial planners and insurance brokers. Whilst there is no minimum requirement in the UAE, you should look for an advisor who holds level 4 (Ofqual). Typically, you will see post-nominal letters, for instance, ‘DipPFS’ or ‘DipFA’ after their names, not ‘CII’.

CFP Board – Established in the US but recognised internationally, being a Certified Financial Planner, is a benchmark in financial planning and a good qualification to look out for. Advisors will carry CFP after their name.

These are only a handful of evaluatory bodies that are amply recognised and there are other qualifications that advisors can have. If you come across an advisor who is ‘chartered’, that is considered as the top of the qualification table.

Are they credible?

You can know if an advisor has a good reputation by researching about them online. Looking at an advisor’s online presence can give you a good indication of how trustworthy they are. Profezo is a directory that only lists qualified advisers and collects customer reviews about them.

While researching their brand online, either on Google or through their Linkedin profile, also check their company’s website to see if they have a profile and any information you can gather before making a decision.

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Speak to a financial planner to ensure your nest egg will withstand the risks of inflation Image Credit: Shutterstock

How much does the service cost?

There are two ways advisors in the UAE are remunerated, its either through commission and fees. It’s evident that fee-based advisers are more likely to work in your best interest, and here’s why.

Using a fee-based advisor means they’re not incentivised to sell you a product because of the commission they will receive. Instead you pay for agreed deliverables and the ongoing service. Fees will vary between companies, so make sure you do your research and get all the charges disclosed upfront.

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What product and fund charges should be looked out for?

There are charges for giving advice, charges for using a product, then there are charges on the underlying funds (which are often hidden).

Many investment plans in the UAE are insurance-based contracts and most are expensive. Some of these plans charge up to 9 per cent for the first year or more then around 4 per cent per year after that to manage. With charges this high, it becomes very difficult to make any gains whatsoever.

The other question you should ask your financial advisor is how much you will be charged for being an investor in a particular fund. Funds have what’s called a ‘ongoing charge’ or ‘total expense ratio’ (OCF/TER), which covers the cost of running the fund and is paid by you the investor.

A high TER (more than 2.5 per cent) can eat away at your returns, so make sure you get a full breakdown before you commit.

How does the entire advisory process work?
An independent financial advisor will gather as much information about you, your family, life and goals, conduct a comprehensive analysis of your current financial position, and research the market for suitable products.

They will then present a full financial report covering everything you have discussed, with their recommendation and why it is suitable for you. This is an extensive document, so if you are given a two-page report on an investment plan only, then you should probably steer clear.

If you’re satisfied with the recommendation and proceed, then you will need to review your financial plan at least annually or as often as you agree with your advisor.

The process of giving financial advice is a consultation, so you should expect to be asked lots of questions. Also, caution is advised as there are increasing number of salespeople that may try and use scare tactics and fancy diagrams to push you into a contractual investment or savings plan.