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Wealth Management for Expats in Russia

Submitted: December 2013

Generally speaking, you should look for a wealth manager if you think you need help with financial planning. A financial institution is prone to offer you more sophisticated services as you get wealthier. These services range from traditional lending or investment management to inheritance tax planning or asset protection.

Feel free to consider a fee-based pricing structure, rather than a commission-based one. If you are really wealthy, the former may well land you with much better returns.

Traditionally, Russian clients have been keen to rely on offshore financial services. However, many clients are now seriously considering bringing their funds back onshore, as the Government is looking forward to making Moscow a true financial centre. Consequently, there is a growing wealth management industry in Moscow, and it is largely possible to find English-speaking wealth management professionals there.

It’s best not to overestimate the Russian financial sector though. In fact, Russia still does not have the same sophisticated financial markets as Western countries. As a result, offshore investing is still relevant today, provided your offshore state is reliable enough (Cyprus wasn’t).

Issues for expatriates

Don’t miss out on your compliance requirements upon departure from your home country.

Financial planning complexity increases dramatically when you become an expatriate, as additional cross-border issues must be taken into account. These include, but are not limited to:

  • Availability of RUB-denominated assets
  • Availability of assets in your home country
  • Social security arrangements
  • Effects of international mobility on your pension rights
  • Your residency status for income tax purposes
  • Asset protection
  • Foreign exchange exposure
  • Inheritance law considerations, and
  • Inheritance tax planning.

It is essential to check if your wealth manager is qualified enough to deal with your specific cross-border issues. In particular, it is very important to assess your needs in Russia, as foreign private banks may or may not have the adequate skills to address them.

In addition, departing from your home country may be subject to some paperwork there (e.g. tax compliance, letting your insurer know that you leave, switching to a non-resident bank account, etc.). A wealth manager in your home country is more likely to be qualified to help you with this.

In all cases, be wary of:

  • Language issues
  • Cultural differences, and
  • How contactable your wealth manager is.

 

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