Expat financial advisors in Saudi Arabia – what’s the best option?

This article will look at your options if you are an expat in Saudi Arabia.

It will compare all local options, together with why we can help as a global, portal and online option.

In an era where expats are moving around more, it makes sense to have a seamless option when you move.

For any questions, or if you are looking to invest, you can contact me using  this form, or via the WhatsApp function below.

Introduction – what does an advisor do?

If we talk about money, then we are all involuntarily involved in a constant financial movement.

After all, every day we perform various monetary transactions. And it depends only on us how conscious this movement will be on the scale of our entire life. To control the future, we need to: 

  • Manage our cash flows
  • Turn the future into a set of clear, measurable financial goals
  • Make a plan to achieve these goals
  • Carry out your plan

This is a common situation with which a financial consultant works.

Along with this, a special case is also possible. A person already clearly understands what tasks he is striving for.

He only needs a specialist who will help you choose the right strategy for achieving the goal. And he will offer the best tools for solving important tasks. In both of these cases, a personal financial advisor is helpful.

The problem for many people is that they have no control over their cash flows. And as a result, they live chaotically, not understanding where they are going financially.

So shortly, a financial advisor is an investment specialist who knows how to save and increase money.

He/she assesses the financial condition and resources of his client, develops an investment policy for him, a scheme for working with banks, brokerage and insurance companies, helps him make financial decisions and manage the budget.

Ideally, a consultant is able to solve all the financial problems of a company or individual. Later in this article we will tell you about financial advisors in Saudi Arabia, and how you can achieve your financial goals with their assistance.

The financial advisors can work both independently and on the staff of a bank, investment, insurance or any large company.

Typically, the main job responsibilities of a financial advisor are:

  • information support for clients on investment issues;
  • budget development (personal, family, corporate);
  • forecasting monthly income and expenses – maintaining a financial plan;
  • selection of individual and corporate investment programs;
  • participation in the development of the company’s pricing policy;
  • preparation of statistical reports (based on the results of the company’s activities, work in the financial markets, etc.).

There are a lot of expatriates living in Saudi Arabia or planning to move there, and probably among them are either businessmen or individuals and many others who are interested in making stronger their finance and need someone who will assist them in further financial decisions.

Let’s see where you can find and how you can contact a financial advisor, and what kind of services he can offer you. To start, let’s say that there are a few types of financial advisory;

  • Bank financial advisor
  • Local financial advisor
  • Online financial advisor
  1. Bank financial advisor

If you want to invest or to open a savings account in Saudi Arabia, it is definitely worth to contact the financial advisor of the bank, who can help you and give valuable advices how to invest, how much to invest or save. 

But the professional activity of a financial consultant includes, first of all, providing clients with comprehensive information on all issues related to economics and finance. 

It is of paramount importance for him to respect the interests of the client, but also he is obliged to give preference to the sale of the product produced by that firm, in this case by the bank. 

In Saudi Arabia there are several banks, which have good reviews and can be recommended to expats for potential cooperation and are really suitable for them to invest or to save, let’s see each one’s quick overviews.

  • Emirates NBD

The bank offers a savings account called Smart Saver Account, which offers you to open an account in three main currencies; USD, AED and GBP. Besides, the bank offers a very serious interest rate which depends on your account balance.

Like for amounts ranging from AED 25,000 to AED 100,000, they offer a monthly interest rate of 1.50%. A monthly interest rate of 1.25% applies for balances between 100k and 2M AED.

You can easily view and download your account statement via the Internet bank. In addition, this Emirates NBD savings account offers the account holder the flexibility to electronically transfer funds to the account through online banking and ATMs for cash deposits.

Some pros:

  • The minimum balance requirement is low enough.
  • You can deposit your funds to the account electronically, through Internet banking and ATMs.
  • There is no monthly fee, unless the balance is less than the minimum balance. 
  • Mobile banking available.

Cons:

  • There is a minimum balance of AED 3,000 required to open a saving account.
  • The interest rate will only be paid above the AED 25,000 deposit and will vary depending on the amount, but can go up to 2.00% depending on the tiered structure.
  • First Abu Dhabi Bank (FAB)

FAB’s iSave Electronic Account is the savings account the bank offers to its clients, which annual return is about 3%. Savings rates up to AED 50,000 earn 0.50 percent, increasing across six levels, so those with over AED 500,000 earn 2.25 percent, with a maximum rate of 3 percent paid on balances over AED 5 million. The account can be opened instantly by existing FAB account holders and there is no minimum balance requirement or restrictions on the number of withdrawals you can make.

Pros:

  • Low minimum balance requirement and no monthly fees.
  • The interest rate is enough competitive, it varies from 0.50% to 3%.
  • A very convenient mobile banking, available for iOS and Android.
  • iSave calculator available in their official website.

Cons:

  • The account is only available in one currency rate: AED.
  • You have to open a current or savings account with FAB.
  • The average account balance is AED 5,000,000, which is really a huge amount and is dedicated mainly for UAE rich people.
  • HSBC Bank

The savings account HSBC suggests is the Term Deposit Account with the annual return up to 1.75%. You can save in one, two, three, four, six, nine, or 12 months, and the longer your commitment, the better the interest rate. HSBC Premier Clients who save up to AED 150,000 in one month can receive an annual interest rate of 0.25 percent, rising to 1.45 percent for 12 months. Save between AED 150,000 to AED 750,000 and these rates increase to 0.35% for one month and 1.60% for 12 months. For 750,000 dirhams or more, depositors receive from 0.45% to 1.75%.

Pros:

  • The account is available in AED, USD or GBP.
  • You can earn bonus while opening through Online and Internet banking.
  • Interest rate up to 1% per year over the term of the deposit.
  • Wide choice of terms starting from 1 month and up to 36 months.
  • Free online banking, phone banking, mobile banking and text message alerts.
  • HSBC team is extremely efficient in the way they operate the account.
  • $0 balance to keep your account.

Cons:

  • Pretty high minimum deposit requirement of AED 10,000 or USD/GBP 5,000.
  • Not enough branches and not as convenient.
  • The interest rate is not the most competitive, so you can easily find another option with a higher rate.
  • Standard Chartered Bank

Standard Chartered XtraSaver Account with an about 1% annual return. This simple savings account pays 1 percent for the first two months in Dirhams or 0.8 percent in dollars. This then rises to 2 percent (1.6 percent in dollars). The XtraSaver account offers online banking and mobile banking, as well as access to branches. 

A minimum initial deposit of AED 3,000 or the dollar equivalent, but thereafter no minimum balance requirement is required. However, you will not receive interest for any month if you make more than one debit transaction, such as ATM withdrawals, standing payments, retail purchases, or loan repayments.

Pros:

  • A good-working online banking platform, which is available on the iPhones, iPads and Android gadgets.
  • 24/7 access to your funds, you can withdraw them whenever you want.
  • Earning high interest depending on your balance and use of debit card.
  • No minimum balance requirements.
  • Interest is compounded daily and paid monthly.
  • Two currencies available: AED and USD.

Cons:

  • A fee is applicable if the account drops below the minimum balance required.
  • The interest rate is not the highest in the financial market, you can easily find banking services with up to 3-4% interest rates.
  • Monthly fees about AED 25.

Except for saving your money, you can invest in Saudi Arabia which is also a great option for long-term expatriates. The investments can be different such as business investments, property, ETFs, shares and other investments.

To choose the industry of the investment you have to contact a local financial advisor who can help you to make a wise choice and make you aware of all the risks and issues, anyways here are some popular investment options for expatriates.

  • Property investment

The real estate market in Saudi currently accounts for about 5% of government GDP; however, the government wants this figure to double in the next few years.

Property prices have skyrocketed over the past decade as demand outstripped supply (mostly in big cities); and because the economy was growing steadily and strongly.

Property rights are not well protected in Saudi Arabia. This is especially a cause for concern when you need to apply something through the Saudi judicial system. When it comes to collecting housing market statistics, getting reliable and up-to-date statistics can be quite challenging.

In accordance with Saudi Arabian law, foreign citizens can purchase real estate in Saudi Arabia, provided:

  • The property is intended for use as a private residence or for professional purposes, and
  • Preliminary approval received.

To avoid speculation, foreign nationals cannot resell their property before the expiration of the minimum five-year holding period. In the cities of Mecca and Medina, foreigners cannot own land or real estate, although the ban is currently being revised.

  • Business investments

“We are open for business.” This is the message from the Government of Saudi Arabia to foreign investors.

However, as with almost everything else, the reality is much more complicated. Yes, foreigners can invest in all areas of the Kingdom’s economy; except for oil and production. But the country is ranked 92nd out of 190 countries in the World Bank’s 2019 Doing Business ranking. This suggests that not everything is smooth for foreign investors.

If you’re an entrepreneur, you need advice and help. Small and medium-sized enterprises (SMEs) account for about a fifth of national GDP. By 2030, the government wants this figure to be 35%. 

  • Stock and share investment

The Saudi Arabia Stock Exchange is the largest capital market in the Middle East. At the end of 2018, its total capitalization amounted to KGS 1.85 trillion; 10% more than at the end of 2017. In addition, foreign companies can trade on the exchange; they are entitled to purchase up to 49% of the shares of any listed company. However, foreign citizens cannot.

Most institutional investors rely on the services of a broker or investment bank such as Morgan Stanley or Credit Suisse to invest in the Saudi Stock Exchange. In 2016, the Capital Market Authority launched the Real Estate Trading Fund (REIT) on the Saudi Stock Exchange. Foreign non-resident investors can now trade REITs on the exchange.

The biggest negatives about the banks in general, and not just in Saudi, is:

  • They are incentivised to sell their own products. So HSBC funds if they work for HSBC as an example.
  • With the exception of challenger banks like Revolut or Monzo, both of which don’t actually do wealth management, their processes are old fashioned and conservative. So if you move from country to country, they might close done your account due to the banks’ processes.
  1. Local financial advisor

Sending money home is a very common thing among expats living and working abroad, so Saudi Arabian expats are not an exception.

There are no legal restrictions on capital flows to and from Saudi Arabia. As is common with cross-border transactions, fees may apply. Of course, you can withdraw cash from ATMs in Saudi Arabia using a foreign debit card, but this option is both unfriendly and expensive. This should be considered temporary and best avoided.

In practice, the best way to save money is:

  • Plan to transfer money in advance, otherwise fees will accumulate quickly.
  • Compare the market and consider using a specialized money transfer company.

If you do not want to make an international bank transfer, for example, you would rather contact a local financial advisor who could help you with that and advice the cheapest option to transfer your money.

Generally money transfer will require a bank account in the country of transfer and in the recipient country. In Saudi Arabia, international wire transfers can be made from major checking accounts, but this is generally not the best value for money on the market.

Opening a current account in Saudi Arabia may take some time as you will need to provide proof of address in Saudi Arabia and possibly an employer’s letter of recommendation. Alternatively, you can take some time to understand what is available in the market before opening an account.

Saudi banks do offer international banking solutions through their private banking services. If you have subscribed to private banking services in your country, you can use similar services.

Anyways bank transfers can be tax-ineffective which is definitely not the best option, so a financial advisor you find can give you in-depth information about possible and less expensive options to transfer your money to your family.

The biggest issue with local advisors is they are less likely to be international.

Countless expats who have had their accounts closed down after they have moved from country to country, have told me most local entities aren’t good at setting up portable and online accounts.

  1. Online financial advisor

Online financial consultants are all the rage right now – at least judging from the financial press and what appears on social media. In fact, almost every financial company either has its own online-consultant or partners with one.

We have been doing things this way for years, and the benefits are huge.

The main benefits are:

  • Lower costs for online firms and the customer and those cost reductions can be passed on.
  • Online Expert Advisors are low cost automated investment platforms that manage money through algorithmic execution.
  • If you move from country to country, your accounts can stay open
  • If something extreme like coronavirus happens again, or indeed a second lockdown, online is safer. The pandemic exposed, once and for all, this old-fashioned idea that traditional businesses are safer. Traditional businesses are much more likely to go bust due to their high costs, and can’t adapt to changes as quickly. When the lockdown happened in March, we didn’t need to adapt at all, as we had been working remote for years beforehand. So, all the processes were already in place.

The first thing you need to think about is what level of advice and experience do you really need to manage your money?

For people with smaller portfolios, robo advisors can be a great option.

Of course, if you have a six or seven-figure portfolio and need advice in tough areas like tax planning, estate planning, using stock options, etc., then a robot advisor is probably not for you, at least in theirs current state.

In that situation, a firm like ours can add significant value-added.

For expats and others with a more modest portfolio who might need advice on asset allocation and perhaps a little help with basic financial planning, many of today’s online consultants may fit the bill.

Online financial advisors for the most part create portfolios that follow passive strategies such as indexing. These are relatively simple investment strategies that use ETFs to optimize a portfolio’s risk versus expected return. 

Newbies and those who prefer to simply install and forget will likely appreciate the automation that online financial advisors provide. Because online advisors are cheap and do not require significant minimums to open an account, they attract people who usually cannot afford a traditional financial consultant.

With an online advisor, you won’t be able to choose stocks or strategies. They make all decisions for you. So, if you are the type of person who may not have a ton of money to invest, but want more control over our autonomy in investment decisions, you can turn to online self-trading platforms like ours.

One of the main advantages of online consultants is the convenience of working with them and ease of access to their services. This generation is very used to buying goods and services online, so why not get financial advice?

Online consultants are available 24/7, which can appeal to a wide range of clients. Given everyone’s busy schedule, this level of affordability may encourage some to go and get the financial assistance they need.

Benefits of having an online financial advisor

  • Cheaper than bank or local financial advisors

One of the biggest benefits of an online financial planner is cost. Financial planners and other service professionals usually own and rent very fashionable offices in high-profile locations.

These offices, which make a great first impression, are also extremely expensive. And you pay for it. We don’t need to rent fancy offices – we need a trendy website that is much cheaper. We can provide you with quality advice without leaving your own home, or we can do it cheaper.

  • A real financial advisor

When people think of an online financial planner, they think of robots first.

And there are articles that show the disadvantages of having a “robo-advisor”. The robot advisor will not be able to help you when the markets are crashing or when you need to announce your plan B.

Here, you are now working with real people who have real families and real qualifications in financial planning. It is important to note that you are dealing with experienced people who understand that working with money is an emotional topic that requires a human factor. You don’t get the same comfort or support when dealing with a robot.

  • The comfort 

You can talk to your advisor without leaving your home! You don’t have to get in your car and try to find the park. No need to board crowded public transport. This could be at home, in the office, on the beach in Bali, or if you want advice.

If you have a computer, iPad or mobile phone and a good internet connection, we can advise you. 

Conclusion

If you don’t have a lot of money right now, and your financial situation isn’t complex, then a robot advisor is a great idea.

As soon as your situation gets more complex as an expat, a portable, global and online firm such as ours brings a huge value-added.

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