Is This The Beginning Of The End For Offshore Pension Commission Structures?


Offshore pensions provided by firms like Friends Provident, Zurich International, Generali and a slew of others are lopsided products geared to make money.  

But to whom do the spoils flow?  Most have hidden charges totaling 3.5 percent to 4 percent each year.  So the investor can hardly gain traction against inflation over time.

Financial advisors love them because they’re paid ludicrous upfront commissions.  

In many cases, advisors receive an upfront commission nearly equal to the total that the client commits to in the first year.  

And if the client catches on to how the massive fees are bleeding their account’s potential?  

Well…that’s usually the first time they find out that to sell their investments and move the money elsewhere may cost them up to 80 percent of what they invested.

The parent firm needs the investor to keep the money in the fund.  

Otherwise, they can’t enjoy reaping high investment costs over time. 

But when people sell before the contractual end-date (which may be 25 years in the future) the investment firm won’t be able to recoup the massive commission paid to the sales rep.  

So it severely punishes anyone leaving its party early.

These products should be illegal.  

They’re popularly sold because of high commissions paid to sales reps. And now, we may be one step closer to making their banning a reality. 

According to International Adviser, starting next year, these products could be banned in Hong Kong.

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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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16 Responses

  1. David says:

    Hello Andrew,

    Here’s hoping! Having fallen for the slick sales and marketing of off-shore mutual funds peddled by Generali, FP et al. I am now surrendering the “investments” at considerable loss. An expensive lesson, but time to move on!

    After reading your excellent book I am taking important the steps to get back into wealth growing mode with low cost ETFs.

    I am specifically looking for low cost ETFs that accumulate the dividend automatically rather than distributing it.

    I am a British ex-pat based in Switzerland for the long term, with about 70K CHF to reinvest in low cost equity ETFs and short term government bonds, as per your model.

    Really looking forward to your the Ex-Pat Investment Guide in November – already pre-ordered on Amazon!

    • Hi David,

      I hope you like the book! There are some swap based ETFs that reinvest dividends without dividend tax implications. I mention a couple of them in my book. I would have to dig into the manuscript to find them specifically. But my wife and I are on a tandem cycling trip at the moment, so I hope you don’t mind me not doing so!


  2. EssJay says:

    Great news for the future.

    However, for someone who is now suffering after being duped into one of these schemes (I was told specifically by the person who signed me up that “it doesn’t matter to me which product you choose because we don’t get commission”) is there ANY recourse to getting back all the money I’ve “invested” into this product without losing it all to surrender fees or continuing with a 25 year investment?

    Or is my only choice to learn a lesson from this and swallow my loss?

  3. David says:

    Hello Essjay,

    I’m not a legal expert, but an adviser saying “we don’t get commission” is clearly not true. Possible mis-selling case? Depends where the product was sold. Check what the local regulator advises.

    Good luck.

  4. Dave says:

    Has anyone else been hit by similar Generali issues? Were you able to avoid the crazy penalties?

  5. HP says:

    Hi Andrew, I have two FP International Pension products, Premier and Premier Plus. I never intended to keep paying into these funds when I leave my current position and my FI was told that. He said it would make no difference to the product as long as I paid into the funds for the first 18 months. I have had the Premier fund since 2011 and the premier Plus since 2012. I would now like to stop paying into them and keep the funds as they stand. My belief was that the funds would continue to grow with the money currently invested and when I reach 65 I can withdraw with a bit of a profit. Am I deluding myself? I am worried that without investing more money, and thus not puchasing any more units, the charges I pay will gradually deplete the money invested to date and I will end up with nothing. I will be 65 in 16 years and I have property and other investments which will provide me with an income upon retirement. The surrender value of the combined funds at today’s date is 68% less than I have invested so I don’t want to surrender them if I can help it. However, would you advise that I do, and invest the money into some other product and keep it ‘frozen’ in there until I reach 65? What is the best option in your opinion?

    • AM says:

      HP / Jason – not sure what you’ve decided to do since the posts…but the early termination surrender penalties are steep in the first couple of years for obvious reasons, but then exponentially slide off as the policy is held longer.

      It may pay to wait a few years before pulling your cash…do the math as it might make sense to wait a few years and take a 20% – 30% hit to your capital in 3yrs time (even with a couple of years of 3-4% fees)…..rather than incur a 65% – 80+% penalty now by terminating so quickly after the initial 18 month minimum hold period.

      Agree with Jason’s math…but what does your model look like if you wait 2, 3 or 4 years, drop your contributions to the minimum (or stop them for the maximum allowed period), and then surrender the policy later but at a much lower penalty rate.

      Might be worth considering

      • Jason says:

        Hi AM

        I have already stopped contributing. You bring up a good point. I may have to rerun my calculations based on different penalties to see if there is a better time to cancel than right now… I have gotten nowhere with FPI on negotiating a lesser penalty. Not surprising though after hearing lots of similar stories.



  6. Jason says:

    Hi HP

    Not sure if you are still interested but…

    I am in a bit of a similar situation. I also have two FPI policies (Makes me ill to think how much commission my “Adviser” was paid) I have been looking into the best course of action to mitigate my losses. At first I thought I would just switch all of my funds over to the only low MER fund that FPI offers which is the Vanguard S&P 500 fund (0.25%MER) but even with that low of a cost I am still paying a total of 7.45% annually to FPI in fees (1.5% per quarter, 0.1% per month and 0.25% for the Vanguard MER) which means in order to not loss any money my fund would have to beat 7.45% every year. OK so the over the past 25 years the S&P has averaged about 9.2% so I would be left with an annual growth of 1.75% assuming that index continues to perform. At first I thought well this is better than paying an 81% penalty to get out of my 25 year sentence. Except I didn’t account for inflation. That means I will actually be losing money every year to the tune of about 1.75%(assuming a 3.5% rate of inflation). So let’s say my $50K today will be worth $34K in 2036. If the S&P dropped to an 8% average my $50K would be worth only $21K.

    Now if I opt to cancel the policy pay the 81% penalty I get back only $9.5K, Assuming the same scenario and adjusting for inflation the $9.5K would grow to about $37K which is $4K more than FPI in today’s dollars. This doesn’t seem like much but I really think it is still worth it. Why? Because if I leave that $50K with FPI until 2036 they will make about $193K ($67K in todays dollars) in charging me their absolutely BS fees. So yeah they might take $40.5K today. I may only come out $4K ahead in the end but hey, I worked hard for that money and I lived far away from my family and friends in doing so… FPI and my so called “Adviser” can stick it where the sun don’t shine, I’m not paying them another dime.

    Andrew, I am so glad for this site and your book. I wish I could have ready it 5 years ago. I will try to spread the word as best I can about you and your work. Also if my math above is wrong please feel free too point it out. I used this site to do the calculations



    • Jason,

      Your math isn’t wrong. Best of luck moving forward. And yes, please spread the word about what you have learned. My new book has an entire chapter dedicated to stories like yours. And I dedicated the book to all the innocent people who got caught in these commission snares.

      • Jason says:


        I was hoping you wouldn’t say that… I’m going to fight with FPI. I don’t know if I’ll get anywhere but what do I have to lose.

        I just read the chapter you’re referring to this morning, I’m sure it raised my BP a few points 🙂

        Anyway the future looks bright with self directed investing and low MERs that are within such easy reach. I just might have to work an extra year or two to recover from the FPI debacle.

        Following the steps laid out in your book and success may not be guaranteed but it will be a heck of a lot more likely that sticking with “Friends” Provident.

        For all those who feel as big of a heel as I do for even getting involved with these crooks in the first place…

        “I’ve failed over and over and over again in my life. And that is why I succeed” – Michael Jordan

        Learning from past failures can be invaluable.



  7. AM says:

    Andrew / Jason,

    Wish I’d have come across this a couple of years ago…but maybe there’s a lesson I needed to learn!

    Thanks for spreading the word….feeling absolutely duped and a little pride-wounded, so Jason’s reminder that failure is the best teacher is well timed.

    I’m currently working out a way to extract as much of my cash as I can, take the hit as a hard lesson, and will redirect my savings capacity into self-directed investment strategies.

    I’ve had a US trading account that I play with and have returned ~20% over the past two years so should have backed myself instead of naively buying into the storytelling these guys sell you.

    Andrew – your book is ordered and on the way so looking forward to learning a few of your strategies 🙂 Do the same strategies apply if repatriating to our home country for a period of time?


  8. Charlie says:

    Hi all,

    This site is a Godsend, I just wish I had found it a few months earlier. I am a South African expat of 36 years living in Dubai with my wife and twin babies. I too was sold a Friend’s Provident 25-year Premier Plan by a so-called Financial Advisor.
    He was clever in hiding the full fees as well as telling me I could get out after 18 months, no problem. In the last 6 years, the fund has remained static and one of the funds was in fact suspended. On digging a bit deeper, it turns out that the fund was owned by the secretary of the FA Firm. Very dodgy.

    I was then advised by a ‘friend’ of mine who is an FA, to let him take over the Friends Provident fund and also sold a 5 year plan with Royal Skandia. I was told that i had received bad advice and that he was going to right the wrongs. I am 10 months into Royal Skandia plan and am down by 3000$ on funds and fee’s combined.

    I have since found this site and have filed a complaint with Friends Provident and asked for a Surrender value. (I’ll lose 12000$). They have come back to me and asked me to email the FA Firm directly. Thing is that they are in cahoots, so I don’t expect to get too far, so wish me luck.

    I am having a meeting with my ‘new’ FA this week to ask him some hard questions. Like what his commission was and why he bought funds that have an initial cost of 5%. I’ll report back.


    • Jason says:

      Hi Charlie,

      My FA actually had the gall to tell me his services were “free” – what a joke!

      What I did with FP was first sent a letter to them to severe any authority that my FA had over my accounts (yep i have two accounts thanks to him). In the same letter I notified them that I would be taking over sole control. After that I withdrew all of my accumulated units at no penalty quite easily with no argument from FP. Now I am at the crossroads of facing the 81% penalty for cancelling my initial units or waiting a few years for a lesser penalty.

      Anyways sorry to hear about your similar predicament. Best of luck in the future.



  9. Charlie says:

    Hi all,

    Just to report back, I’ve ordered Andrew’s book off Amazon and am finally empowering myself with some knowledge.

    I am presently building a case against my first IFA on the basis he switched some funds without my consent and that he never even gave me a Friends Provident brochure. Things get more murky, apparently the fund that was suspended was setup in Switzerland with one of the Director’s being the CEO of my FA Firm. Not sure how they could setup their OWN fund and then sell it onto clients. But Dubai is a bit like the Wild West with regards to regulation.

    I also met with my FA who sold me the 5 year Royal Skandia policy. I very blunt and said that looking at my account, 10 months on, the only people who have made money so far have been Royal Skandia and his Firm. He told me that he had collected a commission of around 7000$.

    Anyhow, I’ll be pulling my cash out of FP, but will stick with Skandia for the 5 year term and see what happens, although I don’t feel right about it.

    All the best with everyone fighting their own battles,

  10. toony says:

    Just woke up to some fantastic news for those in the UAE.
    UAE regulators are planning on following the footsteps of developed countries and banning ILAS (investment link assurance scam), used by insurance brokers masquerading as “independent financial advisor” to steal savings and pensions of expats!
    However, it may take time to implement – allowing these scammers to still make hay while the sun shines!
    I’m slightly pessimistic with this news (but always hopeful) – topic of banning ILAS has been brought up many times in the past but not much happened 🙁
    Companies like DeVere will always find a way around the new regulations.
    * Info from someone one the inside – “…they have been preparing for the ILAS ban for a while now…business as usual…plan in place”.
    One only has to look upstream to places like Hong Kong (tried banning these products) to see how these scammers are able to easily adapt and get around the rules.
    I know for certain that their short term goal to make up lost ILAS revenue is to heavily push the sale of “Whole life” insurance on expats 🙁 (whole life is like a twin to ILAS)
    They will also heavily pressure UK expats to move their pension offshore. This is backed up by reports of DeVere heavily lobbying the UK gov to remove the FCA requirement (a safety net for people)
    Something else I have been told (unconfirmed at this stage). Nigel Green (head scammer) has been negotiating a backdoor entry/buy-in/setup his own “bank/banking facility”. The gist/rationale behind this is quiet scary. This bank/banking facility has seemingly normal bank accounts that expats will have their wages paid into AND direct access to “investment” products supplied by DeVere!!! As the accounts are technically offshore, local restrictions/laws can be bypassed! People will have no avenue of appeal!
    This is such a hydra situation – cut off a head, two more spawn!
    Eternal vigilant is required to stop these people!

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