“Expats may think hard at the moment about when to return to the UK and whether to repatriate funds,” David Pugh, the director of Singapore-based The Fry Group, told International Adviser.
Having gone into freefall against the dollar on Friday after Brexit was announced, the British pound tumbled to a fresh 31-year low against the dollar on Monday of $1.3193 while 10-year UK government borrowing costs sank below 1% for the first time ever.
Describing the decision as “unchartered territory”, he said the firm is advising its expat clientele not to panic but to maintain liquidity and flexibility in terms of investment portfolios so that investors don’t get “caught out”.
“Most expats are long-term investors, with family, property and savings in the UK. Like everyone else they have been waiting with bated breath for the result.
“The longer term impact on asset prices in the UK, from shares to property, will take time to become apparent,” said Pugh.
“The concern on pensions is how they’re going to be paid and what taxations and levies are going to be applied if we are a non-member state of the EU."
'Disruption to the status quo'
Expats need to seek financial advice to steer them through this period of uncertainty, warned Craig Featherby, the group managing director of South Africa’s Carrick Wealth, ahead Britain's decision to invoke Article 50 of the Lisbon Treaty - the formal two-year process to leave the EU which will not be announced until later this year.
“As with any disruption to the status quo, there will always be a degree of uncertainty, unease and nervousness, and in times such as these, strong leadership and the ability to give direction and good advice will always allow you to rise above the chaos,” he said.
John Westwood, the managing director of European IFA firm Blacktower Financial Management Group, said the main concerns for British expats living in Europe is their pensions.
In May, the online investment platform provider AJ Bell that UK retirees living in Europe could see their state pension slashed by up to £50,000 ($72,125, €63,372) if Britain leaves the EU.
The move is estimated to affect 472,000 UK citizens retired in the EU who receive ‘triple-locked’ pensions – those that rise yearly in line with inflation – who could see their payments frozen unless the UK renegotiates agreements with individual EU countries.
“Clients are calling us hourly to see what the future holds.
“The concern on pensions is how they’re going to be paid and what taxations and levies are going to be applied if we are a non-member state of the EU. Are we going to go into a higher tax regime?” said Westwood.
He revealed that there had been a spike in the number of clients buying dollars instead of sterling or euros in past six weeks ahead of the EU referendum.
Calling on the UK government to provide guidance on the issue, Westwood, whose Gibraltar-headquartered- firm has 15 regional offices across Europe including Spain, Portugal and France accused politicians of acting like “rabbits in the headlights” in failing to prepare for a Brexit outcome.
“Governments’ are behind the curve on this decision. Somebody needs to start giving us some urgent guidance from a governmental perspective on these matters.
“I think over the next month or two, the picture will become clearer on how we’re going to deal with this seismic event,” said Westwood.
Business as usual
Whereas, Jason Porter, director of international IFA firm Blevins Franks, said Britain’s exit from the EU will take “several years to work out.”
Porter, whose firm provides financial advice to British expats in France, Spain, Portugal, Cyprus, Malta, added that until then the “decision to leave does not affect residency status, nor the current healthcare benefits on offer to expatriates living in Europe”.
Meanwhile, Chris Marriot, founder and director of Swiss advisory firm Blackden Financial, told IA that the concerns for his British national clients centre on the immediate impact of the fall in the sterling, while the long term ramifications remain “unclear”.