“We’ve had cases where clients that have been overseas for four or five years have been paying inside of their super account for life and disability insurance when the terms and conditions of that account prohibit a pay-out because they are a non-resident,” he says.
In May this year, as part of his election campaign, the country’s prime minister Malcolm Turnbull backed the treasury’s decision to introduce a lifetime cap of A$500,000 on after-tax or non-concessional contributions made into a superannuation pot.
In stark contrast, those in the UK have a lifetime allowance for pension savings of A$1.76m, reduced this year from A$2.2m.
According to Evans, the move will affect Atlas’ clients in the UK, who are looking to transfer their pensions to Australia using a qualifying recognised overseas pension scheme (Qrops).
The superannuation changes come as a double blow to Australian expats already struggling against HMRC’s decision last July to remove all 1,600 Australian Qrops from its pre-approved list, leaving just one public sector pension scheme.
The scheme failed the UK government’s ‘pension age test’, introduced on 6 April 2015, which stated payments from a scheme’s beneficiary could only be made before age 55 in cases of serious ill health. In conflict with HMRC, Qrops in Australia, Ireland and New Zealand allow a pay-out in cases of serious financial hardship.
Since then, a further 113 schemes have been approved by HMRC, all self-managed super funds set up by providers to bypass the tax office’s proviso.
Similar to the UK’s self-invested personal pension schemes (Sipps), the products allow savers over the age of 55 to transfer money from the UK.
With an average age of 45, Evans says many of Atlas’s clients, some of whom have already repatriated back to Australia, are not able to use the self-managed super fund route and as a result have pensions “stuck in the UK”.
Taking the initiative
Late last year, spearheaded by assistant treasurer Kelly O’Dwyer, Turnbull’s government proposed a new professional standards law that would require all advisers coming into the profession to be degree-qualified, while existing advisers would need to ‘upskill’ by completing bridging courses.
Due to take effect from 1 January 2019, Evans believes the initiative will go a long way in lifting the standards of the industry by making it “a true profession”.
The reforms come in light of a series of lawsuits brought against Australia’s biggest banks for providing misleading financial advice on structured products.
In May, HSBC Bank in Australia reached a deal with industry regulator ASIC to compensate clients who had received “potentially deficient advice” on retail structured products sold between January 2009 and March 2013.
Evans feels the damaging press coverage generated from such high-profile cases has actually encouraged the “true professionals” to leave the large corporates and branch out on their own.
“A lot of banks are finally waking up to the way their remuneration packages are structured, with bonuses based on sales volume as opposed to the provision of good advice.
“There has been a massive boom in independent financial advice, particularly in the past two years. There is now a breed of adviser coming through which can provide real impartial advice.”
Having recently appointed an adviser in Singapore, Evans reveals that most of Atlas’s clients traditionally came from Asia, with Hong Kong providing the majority of “organic growth” for the firm due to China’s free trade agreement with Australia.
However, the fee-based firm is increasingly targeting expats based in the US and is looking to expand by teaming up with advisers there.
Adamant that Atlas will continue to focus on its core customer base of Australians overseas, which Evans describes as “the United Nations of client profiles”, he says the move will allow the firm to keep up with changing demographics.
Figures from the US Department of Homeland Security reveal the number of Australians living in the country hit more than 160,000 in 2011, with over 40,000 residing in New York alone, a proportion that is expected to balloon over the next decade.
Says Evans: “Essentially, our work is inch wide and mile deep. Advising Australian expats is quite a big market and we are constantly refining our product and processes.”
“People always ask us what we are trying to achieve, and we say we just want to make the world a smaller place.”
