The unprecedented impact of the Coronavirus disease 2019 pandemic has made people, particularly those in business, go back to the drawing board to review their asset management techniques, retirement plans and investment opportunities.
Economic challenges from business closures and massive job losses caused by the Covid-19 pandemic has made financial planning very important or even critical in protecting inheritance, maintaining investments as well as finding new sources of income, US-based wealth management expert Joel Barretto of Abacus Wealth International (AWI) said.
“There is a lot to be learned from this pandemic, and this is the best time to seek financial advice to put things in proper perspective,” Barretto said. He said that some nine million US expatriates around the world, high-net worth foreign nationals and institutions are among the most exposed to the possibility of double taxation and costly investment mistakes. At least 220,000 of these US expatriates are in the Philippines, mostly highly paid and satisfied living in the country in terms of family life and career opportunities.
The Philippines ranks 24th on the list of best countries for expatriates to live and work in, according to the 2019 survey of global banking giant HSBC.
To sustain satisfaction, these expats should avoid unnecessary investment expenses, penalties, interest and punitive taxes to preserve and optimize their wealth, according to Barretto. He said people work hard to accumulate and increase wealth. But the transfer of wealth to loved ones can be costly and estate or inheritance taxes and probate can diminish the entire estate by more than 50 per cent especially for multinational expat families. Barretto said wealth transfer and asset allocation strategies include tax and compliance analysis which are aimed to preserve and optimize transfer of wealth to loved ones.
Meanwhile, deciding on suitable investment strategies require a clear objective and aversion to risk, he said.
“Don’t put all your eggs in one basket,” advised Barretto, adding that balance and diversification of investments can avoid pitfalls.
Extensive life spans of people, or known as longevity revolution has placed retirement plan as a critical component of asset and wealth management. Barretto said expats should engage competent and qualified cross border wealth management services to avoid possible pitfalls from retirement plans and pension schemes. Filipinos should likewise think of developing retirement plans to avoid being a burden to their children.
“Parents who depend on their children for support in old age was alright in the past, but we need to re-think that kind of arrangement as the times have changed,” added Barretto.