Since Brexit became officially a reality at the end of 2020, there has been a drastic increase in the number of IFAs and qualified financial planners relocating to the European Union, advisory firm Blevins Franks has found.
According to the firm, this is largely because advisers are following their clients, with Brexit proving very challenging when it comes to doing business with EU-based customers.
Pre-2021, advisers were able to ‘passport’ their services from the UK to the EU, but that is no longer possible now that Britain has left the Union.
If they have an operational base with local authorisation in a member state, they can still advise clients in the EU, or even join a company that is locally regulated, said Jason Porter, director at Blevins Franks.
But for those who are not in this situation, the reality is pretty different.
When the UK left the EU, it gained ‘third country’ status and the relationship between the two is based on the Trade and Cooperation Agreement (TCA) they signed in December 2020. But the TCA makes very little, if any, reference to financial services.
By 2016, there were 5,500 UK authorised firms passporting their services to Europe, meaning that most British expats in the EU could still be served by their UK bank, adviser and/or investment manager, Blevins said.
But Brexit and the trade agreement changed all that, Porter added.
Without passporting or any other special arrangements, the UK financial rules need to be deemed as ‘equivalent’ to EU ones for the UK to gain access to these markets.
And since many clients are still making the move to the bloc, financial advisers are following them, with Blevins seeing a large increase in the number of financial advisers enquiring to move to Europe.
“UK IFAs may welcome the intellectual challenge of learning a new set of tax and estate planning rules in another country in order to serve their clients,” Porter added. “Plus, they get a new life in the sun, just like their clients.”