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Expat Investor : March April 2009
OVERSEAS PROPERTY Buyers risk exploitation to the tune of £242m 4X Currency Corporation explains how to avoid getting caught in a costly currency exchange net. The state of the struggling economy and UK property market is forcing Brits to consider emigrating or investing in homes abroad to make the most of their money. However, a number of banks could be inadvertently breaking the law and exploiting this group by not being transparent with charges, to a cost of more than £240 million last year alone. Some providers in the currency market (worth approx $1,683 billion a day in the UK) seem to be failing to comply properly with consumer protection regulations introduced in May 2008. This legislation requires all companies selling to consumers to openly tell them how a price will be calculated. Helen Scott, Managing Director of 4X Currency Corporation, an online currency exchange company, has noticed that some banks don’t appear to be doing this when dealing with large currency transactions, and she believes that the issue of transparent pricing should be highlighted as a major issue. Ms Scott comments, “It seems incredible in the age of the internet that consumers are able to openly compare the price of almost any other commodity except currency. Banks do not necessarily give the most competitive currency rates. Specialist currency providers can often save you around 1% of the value of the transaction, but consumers should be given enough information to be able to make an informed choice. “They should be able to insist on asking how the rate will be calculated when they come to do the deal. I would always advise people to ask these banks how much in percentage terms their rate will differ from the inter bank rate given on the BBC website.” Ms Scott is calling on the UK’s Financial Ombudsman Service to examine the sector much more closely to try and bring some simplicity to currency pricing and secure a better deal for customers. The latest figures from the Association of International Property Professionals (AIPP) estimate that there were approximately 242,000 overseas property purchases by British buyers last year. Over 85,000 families decided to EXPAT HEALTH Health issues in the United States A country profile from AXA PPP Healthcare With a population of approximately 298 million people, the United States of America is the third highest populated and fourth largest nation in the world. It also has the largest and most technologically powerful economy in the world. The US occupies 40% of the North American continent, as well as several island territories, and is made up of 50 states. The climate varies throughout these 50 states, ranging from arctic in Alaska to subtropical conditions in Florida. In January the temperatures in the coldest parts of the country average –12 degrees centigrade (10 degrees Fahrenheit), but can drop to –40 degrees centigrade or even lower. In July the temperatures in some parts of the nation can top 30 degrees centigrade (100 degree Fahrenheit). Although the US is the fourth largest nation in the world, the level A potentially fatal form of pneumonia In this regular column on medical conditions, Dr Sneh Khemka, Medical Director, BUPA International, explains Legionnaires’ Disease. of sanitation is high and a lot of care is taken over its repair. The water systems are well maintained, therefore it is safe to drink the tap water. However, if you prefer bottled water this is readily available. There is also no need to disinfect or peel produce in the US, and rinsing fruit and vegetables in water is sufficient to protect yourself from stomach upsets. If you do require a pharmacy (known locally as drugstores), these are easily accessible and some are open 24 hours a day. The standard of care received within the US health care system is also high, and medical professionals and specialists are generally highly proficient. The medical facilities, ranked amongst the best in the world, are well equipped to deal with most medical conditions and their treatment. In larger cities there are excellent public hospitals, and they are operated by municipal governments and subsidised out of public funds. They are less expensive for the patient, but they are typically less well equipped and more crowded than the private hospitals. There are also some teaching hospitals that are affiliated with universities, and these are well equipped for this purpose. Additionally there are private for- profit hospitals, some operated as chains by corporations that also sell medical insurance plans. With all of the above types of hospitals admission typically involves completing an admission form, presenting evidence of insurance coverage, signing a consent form for treatment, and specifying what form of payment is to be made – that is, credit card, cash or billed to www.expatinvestor.com Our new look, improved website: 24 EXPAT INVESTOR ? March/April 2009 expatinvestor.com When we hear Legionnaires’ Disease, we immediately think of outbreaks in unkempt, shoddy buildings that can cause death, and for which there’s someone to blame. And mostly we’re right. 14 EXPAT INVESTOR ? Legionnaires’ Disease is a potentially fatal form of pneumonia, caused by a bacterium found naturally in the environment called Legionella pneumophilia. This bacterium thrives in warm March/April 2009 water and warm, damp places and can reproduce very rapidly given the right conditions. Legionnaires’ Disease is, therefore, linked to poorly maintained artificial water systems, particularly cooling towers or expatinvestor.com evaporative condensers associated with air conditioning and industrial cooling, hot and cold water systems in public and private buildings, and whirlpool spas. The bacterium Legionella pneumophilia was first identified in 1977 as the cause of an outbreak of severe pneumonia in a convention centre in the US in 1976. Legionnaires’ is perceived as being a rare condition, but in fact it happens relatively commonly. This is partially due to many cases not being detected, and not all detected cases are reported to public health authorities.Mostly, cases in the United States and the United Kingdom occur infrequently and in small clusters; only a small percentage of cases occur as part of a multi-case outbreak, which then comes to the general public’s attention. The early symptoms of Legionnaires’ Disease include a ‘flu- like’ illness with high temperature, fever, muscle aches, tiredness, headaches and dry cough. Sometimes diarrhoea occurs and confusion may develop. Because of the generic nature of the symptoms, Legionnaires’ Disease is often diagnosed quite late and at a stage where the disease has become quite serious and a number of people have been infected. This is what gives it its notorious reputation. The incubation period (the time insurance. If you don’t have insurance, a deposit is normally required, which may run to several thousand dollars. It is definitely worth noting that the US is the only developed country in the world without a comprehensive national health programme. The elderly are covered by Medicare and the very poor can obtain limited care through Medicaid. Most employed Americans and their families are covered under group health insurance plans provided by their employers, although they may be expected to pay a portion of the insurance premiums, and services offered could vary depending on the employer. Therefore, if you are planning on working within the US you may wish to check with your employer regarding their arrangements prior to you commencing employment. Newcomers to the country must also consider medical insurance before moving there. You must also ensure that you have adequate benefits that will cover you in the US, as some policies may not cover this. The Foreign and Commonwealth Office states: “Medical treatment can be very expensive; there are no special arrangements for British visitors. The British Embassy and Consulates-General cannot assist you with medical expenses. You should ensure that you have comprehensive medical insurance, which includes hospital treatment and medical evacuation to the UK.” Currently no vaccinations are required for travel to the US. However it is always worth checking with your GP before departure. between exposure to the bacterium and the development of symptoms) normally ranges from two to 10 days. In rare cases some people may develop symptoms as late as three weeks after exposure. However, most people exposed to Legionella do not become ill, as their natural immune systems are able to mount an adequate response to fight the bacterium. Smoking, alcohol misuse, chronic lung disease and weakened immunity all increase the risk of a person developing the infection following exposure to the bacterium. The very old and the very young are more susceptible, as with all infections. Antibiotics are effective in treating Legionnaires’ Disease, but there are measures that can be taken to reduce the risk of contracting the disease. Appropriate and regular maintenance and cleaning of possible sources such as air conditioning systems and cooling towers can help prevent the spread of the Legionella bacterium. Cases are more common in the developing world, where infrastructure and maintenance are of a poorer quality. Luckily, awareness of the condition has grown amongst both the medical and the building communities and so cases are identified, treated or prevented much better than previously. For further information, go to http://www.hse.gov.uk/ legionnaires/ leave Britain for a new life abroad last year, and this looks set to continue, with almost a quarter of Brits thinking of purchasing an overseas property and moving abroad in the next twelve months. AIPP reported that the average spend on a new property is £99,200. Dealing rates vary enormously between providers, and not being able to shop around for the best deal can add thousands to your costs. “Let’s be honest, we wouldn’t dream of buying a car, holiday or anything else without shopping around and getting the best deal – so why can’t we do this with currency? After all, it’s a commodity like anything else,” adds Ms Scott. Jamie Hanley, Partner at Leeds law firm Morrish and Co, says, “Consumer protection is at the heart of government policy on regulatory reform.These regulations simplify and standardise the law and are wide ranging. “They outlaw unfair trading, and are designed to ensure that a consumer is able to make free and informed decisions. Transparency in business dealings is clearly at the heart of this. That the government is serious is illustrated by the fact that both the OFT and local trading standards are given wide powers to investigate and to take enforcement action. It covers all traders dealing with individual consumers. Banks and financial institutions are not immune from scrutiny under this regime.” ge 16 QUOTE, UNQUOTE Exed200903p1brickred.qxd 26/3/09 12:10 PM Page 1 Expatriate employment – recruitment tactics explored Serving expats for more than 16 yearswww.expatinvestor.com Mar/April 2009 Now celebrating our 21st In this issue 2 Banking on practicalities Featuring the most innovative and flexible offshore bank accounts for today’s expatriate market. 6 7 Gold outshines them all Read up on the case for gold outshining all other forms of jewellery investment. Flight to safety Lloyds TSB suggests the appropriate weightings you need to balance your investments in equities, bonds and cash instruments. 12 18 23 Healthcare strategies Gap year travel, top health tips, expat lifestyles, Legionnaires’ Disease and healthcare conditions in the US – it’s all covered. Offshore savings Best buy savings accounts and offshore funds Dream locations Why you should look at the property market in Nicaragua. Britain’s £150bn expat army 1) The Institute of Public Policy Research (IPPR) estimates there are 5.5 million Britons living away from the UK. Do you see the overseas job market expanding or constricting for careerist Brits? There is a distinction to be made between permanent migrants and internationally mobile career expats. The IPPR research illustrates that of the 5.5 million Britons living abroad permanently, the majority emigrated to Australia, Spain, the United States working abroad on a temporary basis shows a somewhat different landscape. Here the most popular locations are more likely to be the United States, China, Singapore, Germany and Japan, with increasing opportunities in India, Russia and Poland. If you consider the output from various surveys, the indications are Alliance & Leicester International reports that British expats have savings totalling £150bn between them. Here we report on how you have amassed that wealth. Britain’s army of expats have saved a collective £150 billion between them, according to the latest research from offshore savings bank, Alliance & Leicester International (ALIL). The 5.5 million* British citizens who live around the globe have between them amassed far more wealth per household than those they have left behind. While savers resident in Britain have salted away £820 billion,** equivalent to £31,300 per household, expat households have on average saved up £54,621. According to ALIL’s survey, Australia is the top country for UK expats, with 1.1 million Brits living there. One million eight hundred thousand (1.8m) are spread across Europe, with Spain and France the most popular choices. A million live in North America, the majority in the USA. www.expatinvestor.com GLOBAL DISTRIBUTION BY REGION OF RESIDENCE Number ofUK expats Bringing advisers and investors together Africa 114,108 Asia 387,967 Europe 1,802,905 Middle East North America Central & South America Australia/New Zealand 547,718 1,026,971 273,859 1,346,473 However, the spread of wealth does not reflect the spread of expats. By far the wealthiest expats are the half a million in the Middle East, principally the oil-rich Gulf. Twenty-eight per cent of them have me&my easy option Enjoy a great rate and easy access. GLOBAL DISTRIBUTION BY SAVINGS Africa £2.3 £42,850 Asia £10.2 Europe Middle East North America Central & South America Australia / New Zealand been seconded there to work, and on average they have saved up almost £125,000 per household. So even though only 10% of the UK’s expats live in the Gulf, they account for a quarter (24%) of expat savings, a massive £36 billion between them. Those in North America are the second richest, with £70,000 per household. The least wealthy expats live in Central and South America, with just £26,000 per household. Outside the Gulf, the richest expats can be found in the regional financial powerhouse of Singapore, each with £101,000, while the richest Brits in Europe enjoy the lifestyle of tax haven Monaco, with savings of £150,000 (see above table). The wealthiest expats are those who have been seconded abroad for work, on average worth over £100,000. A quarter of these also receive free accommodation from their firms. Those with the least savings are those who left the UK to find a job in a new country. These are typically younger workers seeking a new life and new adventures. £33.7 £39,231 £36.0 £35.9 £3.5 £27.6 £70,000 £25,917 £43,085 SAVINGS OF UK EXPATS BY REASON FOR LIVING ABROAD Savings Seconded for work Own a business 16 EXPAT INVESTOR ? £101,495 £85,136 Retired £67,973 Moved to be with partner Moved to find a job One in five (19%) of all expats use a UK offshore bank for their savings. A third of those using offshore UK banks have been seconded abroad by their firms, and they are most likely to hold their savings in sterling. Almost three-fifths (58%) of expats use local banking services, while almost two-fifths (39%) use UK mainland banking services. Almost half (47%) do most of their banking over the internet. One-third (31%) of expat savings are in sterling, while 29% are in local currencies. The rest is split between US dollars and euros, with euros taking the larger share. Simon Ripton, Joint Managing Director of Alliance & Leicester International, tells Expat Investor,“Expats are far wealthier on average than their UK counterparts. Many who move abroad to work are either highly motivated young 3.00% .Minimumbalance only £1,000 Gross/p.a. . Interest available Annually, Monthly or Deferred . Internet Savings Account eAccess2 Offshore internet banking for expatriates To subscribe to Expat Investor, fill in the form on page 20 or visit: expatinvestor.com .Great for regular savings Interest rates are effective from4thMarch 2009, variable and quoted gross % p.a. that is,without any deduction of tax. Monthly interest is also available at 2.80%gross p.a. (AER 2.84%). This account is only available to applicants over the age of 18 and is not available to UK residents. Bradford & Bingley International Limited, International eSavings Unit, PO Box 263, Douglas, Isle of Man IM99 2JJ British Isles. EU Savings Directive rules apply to EU resident depositors. It is the responsibility of the depositor to declare any interest received to their relevant tax authority. AER stands for the Annual Equivalent Rate and illustrates what the interest rate would be if interestwas paid to the account once a year. Bradford & Bingley International Limited is registered in the Isle ofMan No. 052221C. Registered Office: 30 Ridgeway Street, Douglas, Isle of Man, IM11TA, British Isles. Licensed by the Isle ofMan Financial Supervision Commission to take deposits. . Deferred interest for tax planning March/April 2009 £30,303 £20,777 Total Savings (£bn) Savings per household £49,868 £124,979 people determined to make a success, or established, senior workers on secondment. The concentrations of wealth demonstrate how strong the opportunities are in some parts of the world. The draw of the Gulf has become irresistible to many in recent years and UK expats there are clearly doing extremely well. With the lure of careers in financial markets likely to diminish over the next few years, we may see a further concentration of UK expats in the Middle East. By contrast, with the pound now much weaker against its main trading partners, retiring abroad will be a much more expensive option for British pensioners and may deter many from doing so.Making the right choices on banking services is especially important for those living overseas. Using offshore UK banks can allow for efficient tax planning while internet access ensures it’s quick and easy to manage finances from anywhere in the world.” * Source Institute for Public Policy Research (IPPR) ** Source – A&L Borrowing Monitor research July 2007 ALIL analysed the responses of 1,070 expats. The survey was conducted over the Internet in September and October 2008. The researchers identified where expats were located and how much their savings were from their survey responses. They grossed up the averages using the total UK expat population of 5.5million to calculate the total amount of savings on a regional and global basis. firstname.lastname@example.org June 2005 and Canada for a variety of reasons; some work, some retirement, for example. However, the picture for people Stephen Asher of Frank Hirth plc is the main contributor to The Corporate Guide to Expatriate Employment, just published by Kogan Page. Here he answers five key questions on expatriate career and recruitment opportunities. anniversary that expatriate employees are involved in a large number of industry segments including financial services, information technology, machinery, shipbuilding, manufacturing, pharmaceuticals, medical diagnostics and healthcare. The majority of the employers in those segments anticipate continuing increases in expatriate numbers. Emerging sectors that might also see a need for expatriate skills could include biosciences, green energy and waste management. To understand the overseas job market you also need to consider the myriad ways people work abroad to recognise why there is likely to be a continuing demand for Britons to work overseas: while there remains a hard core of financial and administrative staff on overseas posting there are also media, entertainers and sports people, offshore oil and gas workers, seafarers, pilots and of course visiting professors and teachers. Business demand is often for highly skilled employees working at non- UK client sites such as IT engineers, and marketing and sales specialists operating on a country specific or regional basis. Having said all ofthat, at the present time the full impact ofthe global economic mutations are impossible to predict as none of us have experienced before this type of global economic downturn. The challenges for the financial industry segments in particular are profound; however,the response across industry segments is likely to involve short-term, less expensive assignments in place of longer term overseas employment rather than a significant reduction in overseas opportunities. 2) Are there any indicators forecasting what types of postings are most likely to succeed? An important place to start is to consider how you define or measure success for these purposes. Very few employers measure the return on their investment in expatriate employees. This may be because the majority of secondments are, in fact, in response to business demand rather than corporate career development programmes. But regardless, success has to have something to do with accomplishing assignment objectives at the expected costs. These will be seen differently from the perspectives of the expat and the employer. One of the common measures of an assignment not succeeding is the early termination of the assignment because the expatriate could not expatinvestor.com adjust to the new environment. So the postings most likely to succeed are those with a clear set of agreed personal and business objectives for which the expatriate and the employer have properly prepared. 3) Even after much care is taken by companies to recruit the right person for an overseas posting, some assignments fail. Are there common pitfalls which could be avoided to prevent such costly mistakes? The most common pitfalls to avoid in limiting the risk of failed assignments are around expatriates not able to integrate with the local community. Perhaps overlooked on too many occasions is that family issues remain a major factor in the failure ofoverseas postings. These two areas can lead to a sense of isolation and anxiety that can impair performance. Inadequate or ineffective candidate selection and assessment, lack of communication about assignment objectives, and little or no cross-cultural training particularly in non-English speaking locations, are all contributors to these challenges. 4) What are the best ways a company can keep an expatriate motivated in an overseas posting? It is important for expats to maintain motivation so that they are physically and mentally healthy, and stay that way. They will need to have self-confidence and a sense of the purpose of their posting, be resistant to stress or at least be able to manage stress. Continued support from head office will help the expatriate remain motivated to accomplish the agreed objectives. How the employer can do this will depend on a number factors but it is likely to involve internet use such as intranet/extranet sites, e-mail, teleconferences to keep in touch with the team at home. However,this has to be balanced with recognising that motivation can also be maintained by integration and engagement with the local Apply online now at www.bbi.co.im EXPAT www.expatinvestor.com To register for Expat Investor digital edition, visit the website at
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