How Expatriates Are Exploited By The Offshore Financial Services Industry

Every year around the world, greedy financial advisors and international insurance companies persuade expatriates to invest an estimated $5,000,000.00 or more in offshore savings/retirement schemes that are little better than a swindle

Imagine an advertisement couched in the following terms:




Expatriates – How to Save For Retirement

For regular savings toward retirement our Offshore Pension Plan is the perfect vehicle. Here are the great features:

1. You contribute, say, $1,000 per month over the next 25 years.

2. If we achieve, say 10% p.a. growth your fund at maturity should, in theory, be worth about $1,065,308

3. But our charges will have swallowed up around 47% of the $300,000 you contributed. That means about $140,000 of the growth is lost to you.

4. If you stop payments, for any reason whatsoever and at any time during the first 23 months you get not a penny back; we shall keep all the $23,000 you had paid in.*

5. If you stop payments at any time for any reason whatsoever we shall hit you with a substantial penalty. For instance, had you paid for, say, 7 years and then cashed in, the amount you would get back is uncertain but is unlikely to exceed the $84,000 you had paid in over the seven years.

6. You can reduce your monthly contribution at any time. However, If you do so we s hall continue taking our charges as if you were still Paying at the original level. That means if you reduce the $1,000 per month to $200 per month we will keep levying the charges that would apply to a contribution of $1,000 per month.

7. You can increase your contribution at any time but if you do we shall apply to the increase a fresh ‘initial period’ – i.e. the period during which you would get little or nothing back if you stopped payments.

8. You could stop payments at any time and leave the fund invested with us but we will still, month by month, take out the charges to a total of around $140,000 (see 3 above).

9. There are offshore savings vehicles that give access to all the same investment areas but with much lower charges and no hidden penalties but we prefer not to tell you about these.

(Throughout this article the $ sign stands for any major currency. e.g. EUR, GBP, YEN, AUD, CAD)


The above “advertising” copy is very different from the hype in the real advertisements but it accurately sums up the typical features of International “Contractual Regular Savings and Retirement Plans” offered by some offshore insurance companies.

If they were advertised as above, would anyone ever buy them? Surely not. Consider some of the details:

1. Forty Seven percent of payments gone in charges!

2. All of your money confiscated if you stop contributing before you have made 2 years payments!

3. Crippling ongoing charges applied even of you reduce or stop payments.

4. If you increase payments a new set of charges and a new zero return period is applied.

And yet every year, thousands of expatriates are talked into joining such schemes.

Accurate figures are not available but reasonable estimates suggest that over $500 million is directed to such plans annually.

Who has the effrontery to market such nonsensical investments?

1. International Life Insurance Companies

These companies are mostly the offshoots of British ‘household name’ insurance Companies, and

2. Offshore Independent Financial Advisors

An Offshore Independent Financial Advisor is anyone who chooses to call himself an Offshore Independent Financial Advisor (IFA). Anyone? What about training? What about experience? What about background?

In most countries there is no legislation to prevent anyone setting up as an Independent Financial Advisor (IFA). Offshore insurance companies make cursory, far from thorough, checks on background before giving agencies but they cannot check qualifications because none are specified.

For an experienced, sometimes unscrupulous, salesperson it is easy to “spin” the negative features into looking like advantages. He/she is usually a skilled communicator, subtle in gaining the trust of his ‘prospects’.

Why do so many IFAs take advantage of the expatriate’s vulnerability in a new and unfamiliar personal financial situation?

The answer, of course, is money. The salesperson is paid a percentage of the client’s first year premiums equal to 3 times the years of the contract. On top of that there is normally a 40% over-ride.

Actual figures depend on the amount being invested and the contract term but where an expatriate is saving $1,000 per month:

If the plan is for 10 years the salesperson’s commission with over-ride = $12,600

If the plan is for 25 years the salesperson’s commission with over-ride = $ 5,040

For no extra work, simply by extending the savings term from 10 years to 25 years the Salesperson/IFA/Consutant receives an immediate extra payment of $7,500. No wonder the consultant often pushes hard for the longer term often using falsehoods to achieve it.

With very few exceptions the financial consultant is self-employed. He/she receives no salary. In practice, the IFA works not for the insurance company, not for his brokerage but as a self-employed consultant retained to look after the client’s best interests.

Unbelievable as it may seem, the IFA does not have to wait for premiums to be paid in order to receive his commission. The insurance company calculates the commission that would arise gradually month by month from regular premiums over the term of the plan, then pays it all, the entire amount in USD, GBP, EUR, or YEN to the IFA just as soon as the client’s very first monthly payment is made.

The average period for which payments are actually continued on these plans is a little over 7 years. When the expatriate stops payments the penalties will probably come as shock. Almost certainly he/she will be sorry he ever heard of the deal.

A complaint to the insurance company will get nowhere. ‘”Sorry”‘, they will say “you bought the plan through your Financial Advisor who works for you not for us. Take it up with that Advisor”.

Complaining to the IFA will also be futile. Even if he/she can be found, no laws have been broken and civil action in a foreign country is likely to be hugely expensive and pointless.

It is easy to say the victim should have read all the small print in the policy rules but deciphering all the meaning of that small print is often difficult. Easy too to say that he was foolish to contract for 10, 20, 25 years or other long term only to find he had to stop payments within 24 months and lost all or almost all of his contributions.

But the expatriate life is full of uncertainty. Right now thousands of expatriates are fleeing Lebanon. How many will also face job changes? How many will unexpectedly have to stop contributions to contractual savings plans?

There are, of course, offshore insurance companies that, to their credit, refuse to market these types of high products. Likewise, there are Offshore Financial Advisers who possess the skill, knowledge and integrity to offer service of great benefit to their clients.

One might suppose that expatriates would be better advised to deal with advisers based where there is regulation of the financial services industry. But home based advisers are not subject to regulation on business conducted overseas. In addition, many home based advisers will lack sufficient breadth of experience and skill to deal with the requirements of an international clientele.

To sum up, expatriates are financially exploited by being enticed into saving through offshore contractual policies that are little better than a swindle, presented to them by ill trained but persuasive and unprincipled sales ‘consultants’ masquerading as professional practitioners.

How many expatriates might be at risk is uncertain but with an estimated 6 million Americans living and working overseas and other countries’ nationals probably amounting to a similar number, the total must be substantial.

Could anything be done about this abuse? Almost certainly it could. If the insurance companies simply abandoned contractual savings plans or at least did away with ‘indemnity commission’ the shady offshore advisors would almost certainly disappear because they would be deprived of the mechanism that gives instant high income for little effort.

Copyright 2006 Hugh Stevenson

Service Industry Woes Will Affect Teenagers Seeking Jobs

Teenagers are going to have a difficult time in the coming year finding jobs for many reasons. As teens have little to no job experience, they will either be the first to get laid off or never hired. Teens are usually in the bracket of minimum wage earners and employers will have to cut more of that group first.

The service industry is where many teens get their first employment opportunities and that area is being hit just as hard or harder as any other sector. People are cutting back in all areas of their spending and especially so in areas such as eating out and entertainment. With fewer people willing to spend money, restaurants, bowling alleys, movie theaters, and other such service industry businesses are being hit hard. People are choosing and will continue to choose to stay in instead of go out for that evening on the town.

Other areas where teenagers traditionally get jobs are in a similar situation. Babysitting jobs will be fewer and more people will choose to mow their own lawns just because they don’t have the money they once did to have the teens in the neighborhood do it. Everybody will be holding back and unfortunately teens are going to find it rough going in the job finding departments.

If there was ever a time to get creative to find ways to make money and find a job it is now. It seems that those who work the hardest to get that job will have the upper hand. No one is going have a job handed to them as the demand for jobs is too high. Teens who are willing to do something extra and/or work a little harder than the next guy will be first in line to get hired. Those that are lazy in nature will be the losers and that may be one of the first life lessons they get.

Break the Mold in the Service Industry – Compliment Your Services With Affiliate Products

Being a small company can make it hard to effectively do everything that you want to do. Knowing your strengths and weaknesses will help you focus on what the company will do and what will be outsourced. If you feel that you cannot effectively create products to enhance your services, there is another option. You can always joint venture with another company who compliments your services.

For instance, a hair salon may not create their own line of gels, conditioners, and shampoos, but they will partner with the top designer brands so that they can earn a percentage of the sales of those products. With the internet it is even easier to joint venture with other companies. The trick is to make sure that the company truly compliments and enhances the services that you provide.

As you build your brand both offline and online, you will start to see a flow of traffic that is more consistent. Just like business in the traditional sense, a webmaster is going to want to partner with sites that generate the most traffic just like companies prefer to joint venture with other companies that land big contracts. When you reach 50 to 100 unique visitors a day, it would then be a good idea to start looking at affiliate products to offer.

Until then, build relationships with the companies you would like to partner with so that they are aware of your company. They may even help promote your company and allow you to become an affiliate that much faster. Become part of the community of your niche and spread the word about your company and its services through good, quality content. You will gain visibility and credibility as well as more and more potential clients.

Hospitality Service Industries Are Going the Geek Way

Companies in the hospitality business are under constant pressure to service their clients without any complaints and this nature of the business has given rise to the necessity of catching up with the enterprise mobility technology. With these days all the businesses embracing mobile solutions at the enterprise level, hospitality industry too has a lot of scope to grow with mobile enterprise.

Efforts put in standing upto guest satisfaction without proper technology upgrade is not even remotely tangential with the hospitality business. The major area where the hospitality centers fail to impress is during the maintenance of the equipment and scheduling of the servicing times of the clients. It is under these circumstances that MEAP or Mobile Enterprise Application Platform will be the best service operation that will ensure effective efforts in keeping the guests elated.

Accepting MEAP for hospitality will aim at improving operational activities without any glitches in the routine of the health clubs. Smooth functioning of these institutions is also influenced by the coordination standards between the management and the staff that is responsible for executing various tasks within the hospitality lounge. The MEAP suite will be able to give the mobile professionals the chance to write apps that effectively targets employees of the spa or the associates that covers a high intensity of the users.

The proliferation of the types of the devices is very large and sure is expected to rise in the every year to come and with MEAP, the hospitality center owners can have worry free head as MEAP solutions cater to the varied mobile OS like Android, iPhone, Window Phone 7 and Blackberry.

Key Efficacies of the MEAP services

Transparency and Real-time approach: Any business is smooth running when the strategic model is well understood and known to the workforce. Spa or health club workforces will be aware of the prior appointments of the clients, maintenance staff duty and the intensity of the clients during the holidays seasons etc. This kind of information can we streamlined to allocate the work to the employees without any confusions relating to schedules mix-ups or room occupancy.

Intelligent Workflows: With connectivity comes the effective workflow model. And MEAP suite just enhances connectivity with apps that are compatible on all leading mobile platforms. The managers are alerted on the mobile devices in case of any appointment cancellations or re-schedules.

Flexile Integration: MEAP offers instant mobile messaging environment that catches up with real time communication and action plan.

Effective Collaboration: The enterprise data sources like the ERP, CRM, and Web-content are integrated with no hitches.

Benefits of MEAP on the Hospitality Industry:

  1. Any paper documentation and recording is the most complicated and time consuming process in any industry. The MEAP introduces the digital paperless recording of the ongoing activities and enables radio communications.
  2. Real time accessing and updating of work orders and service requesting too are recorded digitally on the wireless devices which can be viewed by the authorized personnel of the health club.
  3. With the capability to handle automatic escalations and alerts for no response, the delay time is almost nil enabling effective work flow of the organization.