Moving from the UK to the Czech Republic? Why Your Financial Adviser Needs Cross-Border Expertise

Moving from the UK to the Czech Republic can change much more than where you live. It can also change the regulatory, tax and financial-planning rules surrounding your pensions and investments and this raises an important question-

Increasingly, the answer may be both. A recent International Adviser article Blevins Franks rolls out referral service for UK advisers with expat clients | International Adviser highlighted this issue when an advice firm announced a referral service for UK advisers whose clients move to selected European countries. The principle makes considerable sense. Following Brexit, a UK adviser’s FCA authorisation does not automatically give their firm the regulatory permissions required to provide investment advice to clients resident throughout the EU. I have recently dealt with a potential client who steadfastly refused to accept this, so I wonder what (if any) regulated advice he is now getting.

But there is another side to the question, simply finding an English-speaking financial adviser somewhere in Europe doesn’t necessarily mean they have the right combination of local regulatory knowledge, qualifications and UK financial-planning expertise either.

Imagine somebody who has spent most of their working life in Britain.

They might have-

•  several UK pensions;
• an ISA;
• investment accounts;
• UK property;
• inheritance tax and estate-planning considerations; and
• an established relationship with a UK financial adviser.

They then move to the Czech Republic and become Czech tax resident, but their assets haven’t necessarily changed.

The UK adviser may understand the client’s financial history extremely well, but their firm may not have the appropriate EU permissions to provide certain regulated services to a Czech-resident client. Meanwhile, UK tax wrappers do not necessarily receive the same treatment in the Czech Republic that they received in Britain.

An ISA is a simple example. Its tax advantages are created by UK legislation. Becoming Czech resident does not mean the Czech authorities are obliged to recognise the ISA as tax-free. Pensions can be considerably more complicated, I have written about this extensively.

Terms such as international adviser, expat adviser and cross-border specialist are widely used. But I think that consumers should look beyond the description.

A better set of questions could be-

• Who regulates the firm providing my advice?
• Does that firm have permission to advise somebody resident in the Czech Republic?
• What professional qualifications does my individual adviser hold?
• Do they understand Czech as well as UK regulatory and financial-planning requirements?
• Do they genuinely understand UK pensions?

And,

Being British and living in the Czech Republic does not automatically make somebody a UK pension specialist. There are many expat advisers that make such a claim- without any evidence of the relevant UK qualifications. Equally, being FCA regulated in Britain does not automatically provide the regulatory permissions or expertise required to advise clients resident in the Czech Republic. I would argue that good cross-border advice requires expertise on both sides of the border.

Financial advice is regulated for a reason. European and Czech rules impose requirements concerning the knowledge and competence of people providing investment advice. The precise requirements depend upon how a firm operates and the regulatory regime under which the individual provides services.

That means consumers should not assume that being “locally based” is the same thing as being locally qualified or appropriately authorised and that distinction is important.

An adviser may have lived in the Czech Republic for years and speak excellent English, but clients should still establish what regulatory framework sits behind the advice they are receiving. For British residents of the Czech Republic, there is another desirable ingredient, and that is UK expertise.

An adviser dealing with a British client’s pension should understand what a SIPP is, the differences between Defined Benefit and Defined Contribution pensions, pension drawdown, UK tax-free cash rules, beneficiary options and the regulatory issues surrounding pension transfers. The best cross-border solution therefore isn’t necessarily choosing between a British adviser and a Czech adviser. It can be combining the relevant expertise of both.

Suppose a UK financial adviser receives an email from a long-standing client “We’re moving to the Czech Republic next year. Can you continue looking after us?”

Rather than discovering after the move that regulatory restrictions make the relationship difficult, the adviser could introduce the client to Aisa International in the Czech Republic. The two firms can then establish, before advice is given, which regulated entity is responsible for each part of the client’s financial planning.

The UK adviser retains valuable knowledge of the client’s history. Aisa provides the Czech/EU regulated investment-advice capability within the scope of its permissions and can assess the client’s circumstances from the perspective of somebody resident in the Czech Republic. Where UK pension expertise is required, appropriately qualified UK pension expertise can be incorporated into the process where relevant and permitted.

This is not about one adviser replacing another.It is about making the client’s move from the UK to the Czech Republic work properly.

Ideally, cross-border financial planning should start before the client moves.

That allows both advisers to consider whether anything should sensibly be addressed while the individual is still UK resident.

For example, it may be appropriate to review-

• existing pensions;
• investment accounts and platforms;
• ISAs and other UK tax wrappers;
• investment funds;
• future pension withdrawals;
• currency requirements;
• estate planning;
• beneficiary nominations; and
• the suitability of existing arrangements once the client becomes Czech resident.

This does not mean everything needs changing and, often, the correct answer may be to leave an existing arrangement exactly where it is. The important thing is to establish that deliberately rather than discover problems after the client has changed country.

Moving abroad shouldn’t mean lowering the standards you expect from your financial adviser. If anything, cross-border financial planning can require more expertise, not less. A British national living in the Czech Republic may simultaneously have to consider UK pensions, UK assets, Czech taxation, EU investment regulation and investments held in several currencies or jurisdictions.

No adviser should pretend that one qualification makes them an expert in everything. A stronger model is for appropriately regulated and qualified professionals to work together, with clearly defined responsibilities.

If a client tells you they are moving to the Czech Republic, losing that client relationship isn’t necessarily inevitable. A referral relationship with an appropriately regulated Czech investment firm can provide another option. The original adviser can remain involved where appropriate and legally permissible, while the Czech-regulated firm takes responsibility for services that need to be provided within the Czech/EU regulatory framework.

Most importantly, the client knows who is responsible for what. That is what genuine cross-border financial planning should look like.

Whether you are moving to Prague, Brno, Ostrava, Plzeň, Liberec or anywhere else in the Czech Republic, where you live within the country should not determine whether you can obtain appropriate financial advice. Aisa International works with clients across the Czech Republic and can also work alongside UK professional advisers where appropriate.

For British nationals moving to or already living in the Czech Republic, the starting point should not be “Do I need a British adviser or a Czech adviser?”

A better question is “Do the people advising me collectively have the regulatory permissions, professional qualifications and UK and Czech expertise needed for my circumstances?”

For cross-border clients, that distinction can make all the difference.

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