Many of you have probably come across Facebook posts concerning crew who have received bad financial advice. Sadly, in all too many cases, they have lost some or all of the funds they invested. When you consider the time taken and hard work involved in earning these funds, everyone owes it to themselves to ensure they are educated about financial services, the regulation of them and the associated risks with each type of investment.
When you speak to your lawyer or doctor, what level of qualification would you expect them to have? When you consider that your financial adviser is responsible for your investment advice, financial wellbeing and your eventual retirement, you owe a duty of care to yourself and your family to make sure that you are entrusting your financial affairs to someone who is sufficiently qualified.
There are various levels of certification: a Certificate-level adviser is qualified to a high-school level standard; a Diploma level 4 adviser to an undergraduate-degree standard; and a Chartered level 6 adviser to a graduate-degree standard. The highest level is the Fellowship, which is seen at a higher level still. To provide regulated advice in the UK, a level 4 Diploma is seen as the minimum required standard to give advice.
It's also important to know, when dealing with a financial adviser, the location where the firm they're working for is regulated, as this speaks volumes of their credibility. For example, if the firm is regulated in the UK, there are clearly defined regulations to which they must adhere in order to operate. However, in contrast, you may find firms that passport their operations out of other countries that aren't subject to such strict regulations. In some cases you may find the company you are working with is not regulated at all, and they are simply operating under their own terms.
Very simply put, if an investment looks too good to be true, that's probably because it is. It's essential before you sign up to any investment product that you understand the small print of what you are agreeing to. Some good questions to ask are:
• What is the term of the policy?
• Is there a cooling down period?
• Are there ‘initial units’ associated with this product?
• If you pay into the investment product monthly, are you allowed to take breaks with this?
There are certain types of investment products available on the market that are not regulated. One example is Buy to Let investments, which fall outside of FCA (Financial Conduct Authority) regulation, so be aware of this.
You should also be asking what level of guarantee the advice you are getting gives you and, should that company have problems, what government-backed compensation schemes are backing your investment. In the event of your investment failing, your first course of action is to go to your adviser, who should have a complaints procedure in place. If you do not have any success through your adviser you will need to formally complain. In the UK this would be done through the Financial Ombudsman.
Having a career in yachting affords you the opportunity to earn desirable income that, if invested wisely, can result in setting you up for a very comfortable future. Historically in the industry, regulation has been frowned upon, however, when it comes to investments, regulation is exactly what you need to safeguard your future. We recommend that you look for an adviser who is experienced, qualified and one who has the correct level of cover and protection behind them, to ensure you do not suffer from the same issues going forward that many have faced in the past.
Any advice in this article is not intended or written by Marine Accounts to be used by a client or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party matters herein.