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Every year, thousands of expatriates flock to the UAE to enjoy year-road sunshine, tax-free salaries and a luxury lifestyle – and those that fail to get the right financial advice all often return home with nothing to show for it.
With Dubai and Abu Dhabi leading the Mercer 2015 Quality of Living rankings for the Middle East and Africa region, the lavish lifestyle options and “upgrade” culture in the UAE leads many expats to end up spending far more money than they initially budgeted for.
That can leave expats vulnerable to changes in their circumstances, be that redundancy, illness or family plans, and ill-prepared for when they make the transition home, according to Sanjay Punjabi, Senior Executive Consultant at Nexus Group, the region’s leading insurance broker.
“Most people who come to the UAE get the opportunity to upgrade their lifestyle, and the urge to splurge can be very strong,” Punjabi warned. “There’s nothing wrong with liking the finer side of life – we all want the best – but it’s important to be able to sustain that lifestyle, if not improve it, which good advice and planning will help ensure.”
“You must be prepared in case something happens that stops you from earning that tax-free salary, or if you are unable to go back to work due to medical reasons. Money saved is money not spent,” Punjabi added.
Working with a trusted financial advisor can help people prepare for all eventualities – even unpleasant issues like illness, or deaths in the family, and ensure that people don’t lose their homes, have to take their children out of education, or leave the UAE altogether if they have tough experiences.
Clients’ financial planning needs also change in relation to happier events, Punjabi points out. As people rethink career plans, get married and start families, or move closer to retirement, then they are going to need to adapt their financial plans, so a good financial advisor will keep in regular contact with their clients, to ensure their needs are still being met and protect them from unpleasant surprises.
“Your relationship with your financial advisor should ideally be like that you have with your family doctor – it needs to be somebody you trust to be with you for the long term,” said Punjabi, who has been with Nexus for 16 years.
“A good financial advisor will understand your needs and will work with you to ensure you are properly covered. Sometimes, a client may be reluctant to opt for certain insurance policies, such as critical illness, but they will be very grateful when disaster strikes and they are protected.”
An example of the protection that sound financial advice provides was when Nexus Group helped a breast cancer patient with three children receive payment through critical illness insurance, which offers a lump sum payment to members should they be diagnosed with a chronic disease. How members then choose to use that money is up to them.
“This changed her life – she could not even imagine what would have happened to her and her three kids had she not opted for this cover,” Punjabi said.
An independent financial advisor may also offer a better service than an institution like a bank that is only interested in selling you specific products and is tied to a limited number of providers, according to Punjabi.
Nexus Group has terms of business with 15 different licensed providers and delivers competent, professional, trustworthy, ethical and quality advice on life, savings, general insurance and employee benefits for clients who wish to review their financial situation to meet specific goals.
“A bank may sell you a specific service, but what happens if the head office decides the bank doesn’t want to offer those services anymore? As a brokerage, we take on the interest of the client not the product – so even if your financial advisor leaves, Nexus will still look after you,” he added.
Nexus Group evaluates all financial consultants against the standards of the UK’s Chartered Insurance Institute (CII), to ensure the highest level of professionalism and quality. Following their initial training, Nexus requires to achieve CII certification within a set period of starting their role.
The company also has its own internal Compliance Department to ensure that all customers have the correct financial product to address their needs and that legal and regulatory requirements are fulfilled. Nexus Group also uses technology extensively for purposes including producing quotations and analysing client data.
“Ultimately the key issue is to make sure that you are comfortable with your financial advisor,” Punjabi said. “Spend time with them and make sure you’ve made the right decision, because it’s your money at the end of the day. Your choice of advisor has to be someone you see yourself meeting with throughout your life, and who you can trust will do the right thing for your family in the event of an emergency.”
“My general observation meeting people across nationalities, industries, genders, and ages is that most tend to earn, spend, and then finally save whatever is left, and so saving is the last priority,” Punjabi added. “Be the game changer - first save, and then spend whatever is left; this will change your future. No one plans to fail, we just fail to plan.”
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