In my last two articles, I laid out the patterns of globalization that are affecting the financial planning profession. In this final installment, I will share the results of two surveys I developed to find out how advisors are preparing to serve international clients.
In my first survey, I began by asking U.S.-based advisors if they are aware of the International Standards Organization (ISO) standards for financial advisors. ISO 2222:2005 was created to provide an agreed-upon set of requirements for financial advisors around the world. The program is voluntary, but the respect for ISO standards in many industries has led to predictions that ISO will form the baseline for licensing of financial advisors as more countries formally recognize the profession.
Half of the advisors who responded to my survey said that they are aware of ISO 2222:2005. About 60 percent had implemented (or are in the process of implementing) the standards. These responses indicate to me that there is a growing awareness of international standards and of the potential for serving international clients. Many advisors have already seized opportunities or are positioning themselves to appeal to clients from outside their home countries.
Several respondents noted the strong correlation between the ISO standards and the CFP requirements. This wasn’t surprising, given that 85 percent of my survey respondents have earned the CFP mark of distinction. Yet it also reflected the accurate perception that ISO standards track the CFP requirements very closely.
These responses lead me to Observation No. 1: CFP holders are well-positioned to provide the comprehensive, high-quality services that are expected by increasing proportions of consumers around the world. More than one survey respondent argued that having a CFP is sufficient for an advisor seeking global credibility. “The standards required to hold the CFP mark are much more rigorous and also recognize the fiduciary relationship that is required in service to a client,” wrote Thomas Fischer, an advisor in Cambridge, Mass.
In my second survey, I asked how advisors are working with international clients today. I did not get a huge response, which leads to Observation No. 2: Globalization, in the sense of advisors working with clients worldwide, is still more promise than reality.
Observation No. 3 comes from the description of typical international clients shared by survey respondents. In most cases, international clients are business executives, teachers or missionaries who have multi-year assignments outside of their home countries. In other words, they are people who have to maneuver in more than one country’s financial system for a limited period of time. These people seem content to have their current trusted advisor see them through the complexities.
The related takeaway observation is that advisors will have international issues thrust upon them, whether they seek them or not. Some clients will live and work overseas for a period of time. They will come to you for advice — and you need to be prepared to provide it.
According to the survey, the primary services that international clients are seeking include:o Lowest-cost, most efficient ways of changing money from one currency to another and transferring money from one country to another o Hands-on management of their financial affairs and investments while they are not in their home countryo Tax returns and tax exemptions
Clients’ needs were similar, whether the advisor said he or she was serving U.S. citizens who were living abroad, or was serving citizens of other countries who were living in the U.S.
Thus, here is Observation No. 4. Some services (such as transferring money) seem fairly easy to learn to provide. But some services (such as tax strategies) seem highly specialized, and probably should be outsourced to an expert in a particular nation’s laws.
Confirming this observation, survey respondents unanimously warned against trying to do too much for international clients. They said cooperation with other experts is the better solution. “I suggest that the client select an advisor from each country and then authorize both advisors to work with one another via telephone and e-mail,” wrote Bedda D’Angelo, an advisor in Durham, N.C.