A client you’ve looked after for twelve years phones to say they’re moving to Perth in March, and they’d like to sort out the money before they go. You say you’ll help. Then you put the phone down and start wondering what exactly you’ve agreed to.
Before you decide whether to keep the client, get clear on what emigration changes.
Getting on a plane doesn’t end tax residency
Tax residency turns on more than an address. The question is where this person’s real home is, the place they would return to after their travels. Family, property, bank accounts and intentions all count, and so does the time they spend in the country. A client who keeps the house in Pretoria and flies home every December can stay tax resident long after the removal truck has left.
When a client does stop being tax resident, the date matters. Leaving the tax net can trigger capital gains tax on assets the client hasn’t sold, so a client with large unrealised gains can face a tax bill before they’ve moved anything. Which assets are caught, and how much tax is due, is a question for their tax practitioner. Get them involved early.
The old emigration route has gone
Some clients still talk about “formal emigration” through the Reserve Bank. That route has gone, and the steps for moving money offshore changed with it. A client relying on what a friend did ten years ago will get it wrong.
The retirement money has to wait
Retirement money doesn’t follow the client out of the country straight away. There’s a waiting period before a retirement annuity or preservation fund can pay out on emigration, and the fund will want proof before it pays. Check the current rules with the fund administrator before the client plans around the money.
Two-pot adds a wrinkle, because the savings component and the retirement component follow different rules. Ask the fund how each one works for a client living abroad.
So for years, and possibly for good, part of this client’s wealth stays in South Africa under South African rules. Somebody has to look after it, and that can be you.
Advising someone in London is a different job
Once they’ve gone, the client’s life runs on another country’s tax year, pension system and regulator, and your FAIS licence was granted here. You need to know where your advice stops and a local adviser’s starts. Add time zones and double tax agreements you’ve never had to read, and the file gets heavy fast.
Some practices build this into a proper offering, with a partner abroad, a defined scope and a fee that reflects the work. Others take it on by accident, one loyal client at a time, and end up doing complicated work for the fee they charged when the client lived in Durban.
Decide deliberately
Keeping the client makes sense when a meaningful part of their assets stays here, when you can say clearly what you will and won’t do, and when your fee covers the extra work. It makes a lot less sense when everything is moving offshore and the client expects you to answer questions about their new UK pension.
Letting a client go well is a professional outcome. A proper handover to a qualified adviser in their new country, with a clean file and a clear summary of what still sits in South Africa, protects the client and your name. Those clients remember it, and some will send you the parents and siblings who stayed behind.
Whichever way you go, decide at the start, put it in writing and tell the client. The worst result is drifting into a cross-border relationship you never agreed to and never priced.
Look at your book this month
Pull every client with a foreign address or phone number on file, and every client who has mentioned a move. Check what they hold with you, what they earn the practice and whether anyone has agreed the terms of the relationship since they left.
Commspace shows you income client by client, so you know what each of those relationships is worth before you decide how to handle it. See how at www.commspace.co.za.
