This article was updated on March 29, 2020
Standard Bank Isle of Man is one of the most popular expat-focused banking and financial services companies. This article reviews some of their most popular products.
This article will review the bank – both from a pure banking but also their investment products.
If you have a Standard Bank policy or have been proposed one and want a second opinion, you can contact me on the chat function below or via email@example.com.
What are the most commonly sold Standard Bank products?
Optimal accounts are pure current accounts designed for expats. They support everyday transaction needs. Minimum deposits are £4 000/ US$6 000/ €6 000/ AU$6 000
Standard Bank also have many investment-linked options like the Quantum series. Sometimes called Quantum Plus, Quantum Plus 10, 11 and Quantum 22 deposits, they are lump sum products with minimums starting from : £10,000, US$15,000 or AU$15,000. They tend to be a 5-6 year commitment.
Whilst there are many different types of Quantum products, all typically have an investment component and a saving element.
So as an example, 40% of the account pays out a fixed rate of 1.5%-3% (depending on the currency chosen – Pounds, USD and Australian Dollars are all accepted), and the remaining 60% is linked to Stock Markets like the US S&P.
Sterling deposits are linked to the performance of the S&P United Kingdom Index. US dollar deposits are linked to the performance of the S&P 500 Low Volatility Index. Finally Australian dollar deposits are linked to the performance of the S&P / ASX 200 Index
Where are Standard Bank products sold?
Around the world, but South Africa, Cambodia, Vietnam, Malaysia, Hong Kong, Singapore, Dubai and other expat-focused cities have many Standard Bank clients. Typically, Standard Bank is sold through brokers rather than directly.
What are the positives of Standard Bank’s products?
It is a well-regulated bank and the current accounts are an excellent option for expats. Optimum Accounts are cheap provided you have a balance of $4,000 or more, you aren’t charged for account management. The current account is one of the best options in the market, despite the foreign exchange rates being relatively high and the online system needing improvement.
Many of the options available in the UK market aren’t available for expats, so when assessing fees and charges, you need to compare apples with apples, and not apples with pears.
What are the negatives of Standard Bank’s products?
When it comes to the investment options, having 40% paying out a guaranteed 2%-3% sounds good, but it isn’t.
The US S&P, and other main stock markets in the US, have regularly produced 10% for over 200 years. Some years are good and some are bad, but the long-term direction of the market is clear.
Having 40% of your money getting just 2%-3% doesn’t make sense, compared to having more money in government bonds and equities.
Remember $10,000 invested in the US S&P in 1941 would be worth a cool 51 million USD today….having a 60%-40% portfolio would have ensured you missed out on millions.
As the late and great Jack Bogle remarked, cash is one of the few investments that are guaranteed to lose you money. It struggles to keep pace with inflation. It is just less volatile. Too many people confuse volatility with stability and safety.
However, as most people are more focused on avoiding losses rather than maximizing gains, too many DIY investors lose out on returns.
In addition to that, Standard Bank have many complicated products linked to structured notes, which increases complexity and risks.
Standard Bank during the 2020 crisis
As many people know, global stock markets haven’t performed well after hiring record highs (in the case of US markets especially) in February.
That isn’t a problem for the buy and hold investor. Markets will recover as they always have done historically.
What will be interesting will be how their structured products hold up during moments of huge falls for markets.
What about the alternatives to Standard Bank?
The likes of HSBC compete with Standard Bank for offshore business and I review the options here:
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For investments rather than bank accounts, far superior options exist.
What does the Standard Bank system look like?
The online system which is basic, looks like this at the time of writing:
The app for mobile is far better than the basic desktop version.
Standard Bank is a good option for pure banking for expats. Far better options exist for investments.
How much do you need to invest to be a millionaire at retirement? The answer might shock you