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Wealth Management for Expats in France

Submitted: November 2013

Wealth management (gestion de patrimoine)or private banking services range from traditional lending or investment management to tax planning or asset protection.

Generally speaking, you should look for a wealth manager if you think you need help with financial planning, or if you need to delegate this to achieve peace of mind. As investing in France is trickier than in other countries, such as the UK or Australia, wealth management services are often helpful, even for middle class individuals. Typically your investable wealth must exceed €150,000 before you qualify for private banking services.

Alternatively, you may seek fee-based financial advice. Such fees can be worth the price if you hold very large sums of wealth, as the fees may be largely offset by higher returns on your investable wealth.

The French wealth management industry is strongly regulated in order to ensure service quality, transparency and investor protection. As far as open-ended investment companies (OPCVM) are concerned, EU rules require that you be issued a Key Investor Information (KII) document.

As France is gradually shifting its pension system from social insurance to private saving, there is high demand for private banking services. As a result, the industry is booming.

General tip

If French wealth managers recommend you a complicated financial product, which they often do, think twice. Feel free to even think for a third and fourth time. What we mean by “complicated products” includes, but is not limited to:

  • Tax-efficient new-built property investment schemes (e.g. Scellier/Robien/Borloo/Duflot schemes)
  • Furnished property leasing
  • Real estate investments when a corporate vehicle is involved (e.g. an SCI)

Nobody knows what will happen to the long-term investments that French private bankers recommended at the 2011 peak. These may or may not work. What is for sure, however, is that commissioning agents (including private bankers) will be winners on this occasion.

Issues for expatriates

Financial planning complexity increases dramatically when you become an expatriate, as additional cross-border issues must be taken into account. These include, but are not limited to:

  • Availability of Euro-denominated assets
  • Availability of assets in your home country
  • Social security arrangements
  • Effects of international mobility on your pension rights
  • Your residency status for income tax purposes
  • Asset protection
  • Foreign exchange exposure See Foreign Exchange for Expats in France
  • Inheritance law considerations, and
  • Inheritance tax planning.

A French wealth manager will probably have enough expertise to advise you on issues specific to France. Things get trickier when there is an international element, such as UK QROPS compliance or US tax planning. Do check whom you can trust, and what the risks are if things go wrong.

In addition, departing from your home country may be subject to some paperwork there (e.g. tax compliance, letting your insurer know that you leave (See Insurance for Expats in France), switching to a non-resident bank account, etc.). A wealth manager in your home country is more likely to be qualified to help you with this.

In all cases, be wary of:

  • Language issues (the French speak poor English)
  • Product transparency, e.g. with regard to the underlying risk
  • Cultural differences, and
  • How contactable your wealth manager is.

 

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