One in eight expats unaware of banking jurisdiction
Despite the financial crisis, one in eight expats remains ignorant of the local jurisdiction which applies to their bank should it go into difficulties, reveals an Expatica survey.
The survey showed that two-thirds of respondents have their money spread over more than one financial institution. A quarter of expats placed all their money in one financial institution, with more than half confessing that they don’t know what will happen should their bank get into financial difficulties.
This seems surprising considering that banks around the world have either been collapsing, consolidating or turning to the government for state aid following the Lehman Brothers’ bankruptcy in September 2008.
Sophie Seesing, an investment advisor for Finsens in the Netherlands said she was not surprised at the findings as most banks provide information in Dutch and not every expat understands the local language.
“Expats should do their homework and ask their bank which jurisdiction they come under and how much they are protected in the event of a banking failure.” said Craig Welsh, a financial advisor with The Spectrum IFA Group.
However, Welsh observed that, as of this year more people are asking more questions about their bank; its financial strength and its investment activities.
The online survey, which ran from May to July 2009, was filled out by 400 expats from all over the world.
The survey also showed that only 30 percent of expats consult a financial expert or advisor when it comes to money matters. More than half of these expats use the services of financial experts who come recommended through friends or colleagues.
One expat based in the Netherlands admitted: “I don’t have a financial advisor because everything comes under the name of my Dutch husband and I trust that he will take care of everything. Plus it’s hardly worth employing a financial advisor to take care of a couple of thousands of euros, is it?”
Financial expert Welsh doesn’t agree.“Financial planning is a process of identifying your objectives, protecting what you have already and making the most of the money you do have. And with people living longer and company pension schemes not as attractive as they once were, people really should be starting to plan how they will fund their retirement,” he said.
The majority of expats or 70 percent who have a financial expert or advisor said they are happy with their services as they can simplify and explain otherwise complicated financial issues.
Effect of crisis on expats
Expats have been hit hard by the global downturn. Not only are companies sending less expats abroad, more expats are finding themselves unemployed as their contacts are terminated abruptly.
According to the survey, 55 percent of expats are tightening their belts with 91 percent admitting that they are spending less on luxury activities such as shopping for non-necessities, eating out and going out.
One expat living in Barcelona said her husband is paid in US dollars and that really cuts into their pay packet.
Fifty-seven percent of expats said they are trying to cut back on daily necessities such as grocery shopping and transportation costs.
As a way to overcome their money problems, some expats are taking on more work or eating food that they grow themselves.
One Amsterdam-based expat said: “I am taking on freelance work next to my job” while another based in Normandy revealed: “We have land and are producing more of our own food.”
The survey in jointly conducted by Expatica and Amsterdam-based market research company Ruigrok / NetPanel. To take part in future surveys and share your opinions on the issues that internationals face in every day life, join the European Expat Panel by going to http://onderzoek.netpanel.nl/ep.