Indeed, it is no coincidence that, after Spain, France is the second most visited country for British holidaymakers and the second biggest overseas destination for annuity payments, according to research by the Office for National Statistics and retirement income provider MGM Advantage.
Cost of living
However, life for the 200,000 or so French-based British expatriates has become more difficult in recent years. Despite some softening of the euro, the currency has strengthened markedly against the pound during the past decade, reducing the spending power of retirees with sterling income.
A Lloyds TSB International survey this year found that just 38% of expats thought France had lower living costs than the UK (although a small majority said they were financially better off, overall). Reforms affecting trusts announced last year – which, as International Adviser reported, resemble elements of the far-reaching US Foreign Account Tax Compliance Act – have made trust-based inheritance planning strategies “a complete no-no” in France, according to Daphne Foulkes, an associate partner at Spectrum IFA Group.
Similarly, the arrival of François Hollande’s socialist government in May has increased the likelihood of further bad news for wealthy individuals. An “exceptional contribution on wealth” charge has been agreed for 2012, but advisers fear worse measures may follow.
Nevertheless, expat IFAs working in affluent areas, or who target wealthy clients located across the country, report that the overall pool of potential customers is growing.
Simon Eveleigh, the southeast regional manager for Bordeaux-headquartered Siddalls, services about 100 clients from Aixen- Provence, 30km north of Marseille.
While Siddalls’ customer base consists mainly of retired Brits, he explains, the firm is getting increasing numbers of enquiries from younger expats, some of whom work at the nearby Eurocopter manufacturing plant and the nuclear research facility at Cadarache. Eveleigh says Siddalls has long-term recruitment plans to boost its capabilities in the region.
“There have been stories in the papers about people returning to the UK because the euro crisis has caused them to rethink their plans, and they cannot afford to live in France anymore,” he adds.
“But I haven’t seen that. You need a certain amount of wealth to live [in the southeast] in the first place, and therefore maybe you are less affected by a drop in the currency or a drop in your portfolio value.”
Influx of business
Another adviser doing brisk business is Kentingtons, which has offices in the Var region of France and Horsham in the UK. The firm targets UK high-net-worth individuals with at least €250,000 ($310,000) in disposable cash, and has been so successful in attracting new business that it plans to increase its minimum threshold to €500,000.
Robert Kent, who left Siddalls to found Kentingtons in 2007, has about 80 clients with an average of €1m to €1.5m in liquid assets, and some with as much as €15m. Three of his wealthier customers have owned a combined 50% stake in the business since it launched.
“We don’t have lots of clients, we just have lots of very rich clients,” Kent says.
“So even though there are two of us, we have invested about €23m in the last eight weeks. That gives you a rough idea of the market we are targeting. It is quite different to anybody else, I think.”
The firm’s recently opened UK base, headed by former Siddalls director Duncan Campbell, replaces an office in Mayfair, London, which was closed down owing to its high costs and lack of use.
“We are attracting retired people,” Kent explains. “Central London was the last place on earth they wanted to go.”
Focus on growth
Horsham is expected to become an increasingly important source of new business for the firm. Kentingtons already participates in London-based expat lifestyle events run by Archant Life, such as The France Show and French Property Exhibition. Campbell’s arrival will allow it to increase its activity in this area. However, the focus is on steady growth.
“We are not trying to be a massive company – we are just trying to serve people extremely well and be a bit niche,” Kent adds.
But while Kentingtons is on the cusp of turning away potential clients by raising its threshold, IFAs in other parts of the country are finding business trickier to come by.
They include Simon Verity, who “cut his teeth” with Siddalls before setting up an office for Blacktower in 2010. Based in Nantes, four hours’ drive southwest of Paris, Verity says the estate agents he deals with are busier selling houses for expats returning to the UK, rather than to Britons seeking a life in France. The stronger pound has come too late for many pensioners who moved to France “on a shoe-string” five years ago, he says, while the depressed UK housing market is discouraging people from selling up and relocating.
The size of France also makes the task of finding expat clients akin to truffle hunting.
“You cannot put your hand on a particular place and say there are loads of Brits there,” Verity explains.
“They are spread out all over the place. In Spain you can go to one of the costas – say Marbella – and there are 200,000 Brits living within 20 miles. It is not like that here. People are going to deal with somebody that they trust, but who is also local.”
Seeking out expats
To bolster Blacktower’s search, two newly recruited advisers will arrive from the UK this month, he adds, taking up positions close to Bordeaux and Perpignan.
Looking ahead, Verity says there may be opportunities for advisers operating in Paris, which tends to attract working expats, rather than pensioners.
Eveleigh and Kent, meanwhile, expect wealthy individuals to continue relocating to the south, despite the prospect of further tax increases.
Tax is not all
“I always stress with clients that sometimes we get hung up on taxation,” Eveleigh says. “It is an important part of life, because the more tax we pay, the less money we have to spend. But that is not the only reason for moving to the south of France. Sometimes a lifestyle choice will win over a pure tax calculation.”
Kent adds: “There’s always a love affair with France. It is a lot of people’s ideal place to retire. People who go to Spain go there for the sun. But people who move to France are looking to enrich their minds and their lives with other things – they are interested in the wines and they know good food. I don’t think that there are many other cultures in the world that know how to live as well as the French.”
