Has Your Offshore Pension Let You Down?



On the 19th of April 2016, I spoke to a group of international teachers in Muscat, Oman. 

Many owned offshore pensions.  If you’re a non-American expat, odds are high that you own one too.  If you’ve followed your portfolio’s performance, you might be tempted to actually punch your advisor in the nose.

Anyone who has added monthly investments to the stock market should have made money over the past 3, 5, 10, and 15 years. 

But too many investors in offshore pensions haven’t made a penny.

Here’s proof of what investors should have made in global stocks over the past 3, 5, 10, and 15 years. 

I used the service at portfoliovisualizer.com.  Assume you invested regular sums into a U.S. stock index and an international stock index. 

This would give you exposure to the entire global market:  no speculation, no trading, no favoring one economic sector or geographic region over another.

U.S. stocks make up about 50 percent of the total value of all global stocks. International stocks make up the rest. 

So let’s see how $1000 invested monthly would have grown in the global stock market during the past 3, 5, 10 and 15 year periods.


$1000 Invested Per Month

$500 Into a U.S.  Index; $500 Into an International Index

Ending January 1, 2016

Investment Duration

Total Contributed

End Value

3 Years



5 Years



10 Years



15 Years



Source:  portfoliovisualizer.com


Most of the offshore pensions that I have seen haven’t made money–even after the loyalty “bonuses” that many investors received. Here are a couple of examples. 


This first offshore pension is a Friends Provident plan. 

I’ll call the investor, Steven.  He started to invest regular monthly sums into the plan on December 28, 2009.  You can see the screenshot that I took of his statement below.


Screenshot of Friends Provident Statement



Two things should pop out. 

First, despite adding regular sums every month, Steven has made less than $1000. 

He has contributed $49,990 since December 28, 2009.  On January 28, 2015, the portfolio was valued at $50,871.51.

The second poke to the eye is the portfolio’s lack of diversification. 

There’s no exposure to the world’s biggest market, the United States.  There’s no broad exposure to Europe either.  Instead, the portfolio is a lopsided mess of funds that were used solely for the purpose of impressing the client. 

The salesperson wanted a commission. 

It was December 2009.  He looked at funds and regions that had the best recent track record.  If he promised such returns in the future, he could make his sale and bag his commission. 

His portfolio is tilted heavily towards Asian stocks. 

Again, it has no exposure to Europe or the United States.  Here’s why.  From mid 2002 until 2008, Asian stocks gained well over 100 percent.  Below, note the three lines.  The top two lines (the orange and blue ones) both represent Asian markets.

The green line represents the U.S. market.  During that time period (2002-2008) U.S. stocks had gained just 55 percent.  That’s why this salesperson failed to include the world’s biggest market in Steven’s portfolio.


2002-2008 Asian Stocks Crushed U.S. Stocks


Source:  Morningstar.com


But building a portfolio based on yesterday’s winners is one of the most foolish things somebody can do. 

Look what happened after Steven started his portfolio in December 2009. Asian stocks struggled. 

U.S. stocks (see the yellow line) gained 121 percent.  Asian stocks gained just 34 percent (see the orange and yellow line).

Steve’s high investment fees added further pain.


Asian Stocks Versus U.S. Stocks

December 28, 2009-April 20, 2016


Source:  Morningstar.com


Instead, investors need to diversify. 

They need to recognize that yesterday’s winners could be tomorrow’s losers.  In fact, that’s often the case. 

Below is a table of Emerging Market returns.  Each color represents a different country’s stock market. 

Can you see a pattern between geographic regions that performed well in the past and again, in the future?  If you see it, you’re fooled by randomness.  No such pattern exists.


Emerging Market Returns


Source:  The Novel Investor


Let me show you another table, with developed markets this time. 

Do you see any pattern?  None exist.  If anything, the winning markets during one time period are often among the losers during the next.


Developed Market Returns


Source:  The Novel Investor


Compared to broad global index funds, with no favoritism to any geographic sector, how did Steven’s portfolio perform?


Global Stock Index Funds
Compared to Steven’s Friends Provident Account



Instead of ending up with $73,725, Steven ended up with just $50,871. 

That yawning gap came after fewer than 6 years. 


Most offshore pension portfolios reveal much the same thing.


This second offshore pension is a Zurich International Vista Plan. 

Let’s call this investor Lisa.

She received a “bonus” from the firm.  Did it help?


Zurich International Vista Plan
October 1, 2010 – April 8, 2016



Lisa contributed a regular monthly sum from October 1, 2010 to April 8th, 2016.  Like Steven’s portfolio, heavy fees weighed it down.  It was also heavily weighted in yesterday’s winners.  Remember, the advisor needed to make “the sale.”

Lisa did, however, receive a bonus of 6000 GBP for investing in this platform. She has invested 38,400 GBP of her own money, plus 6000 GBP as a bonus.

In total, 44,400 GBP has been invested in the account. 

But the portfolio is valued at just 34,605.25 GBP.

Even when adding the bonus, Lisa lost money. 

Here’s how much she would have gained, if she had invested the same sums into global index funds.


Global Stock Index Funds
Compared to Lisa’s Zurich International Vista Portfolio



Investors should avoid “offshore pension” platforms for three reasons:

  1. Costs are ridiculously high. Investors end up paying 4 percent or more each year in total fees.   If the stock market averages 7 percent, such investors would be giving up 57 percent of the stock market’s profits to the fee monster (4 is 57% of 7). If stock and bond markets averaged 4 percent, investors wouldn’t make money (4 is 100% of 4).
  1. Commission-hungry salespeople are the mouths behind the sales. As such, they will do almost anything to get you to sign on the dotted line.  That means showing you a series of fund charts that have done well in the recent past.  Most of the offshore pensions that I have seen are stuffed with yesterday’s winners.  Few demonstrate global diversification across a series of different geographic regions.  Yesterday’s winners often become tomorrow’s losers.  True diversification might not make a sale.  But it’s responsible portfolio allocation.
  1. Investors are often stuck in their products for a predetermined number of years. If they try to get their money out before such a date (often many years into the future) the company will slap the investor with a penalty.

Most investors find that it’s best to take the hit.  Yes, the penalty hurts.  But a low-cost diversified portfolio of index funds should eventually surpass the fee burdened offshore pension account.



So what should you do with your money?

There are a number of options. 


Do-It-Yourself Investors could use one of the brokerages in the table below. 

These firms don’t give advice.  But my book, The Global Expatriate’s Guide To Investing lists the specific ETFs (index funds) that each respective nationality could buy.  Save your money.  Borrow the book from a friend.




Annual Brokerage  Fee

Commission Fee Per Trade

Contact Information

Interactive Brokers

All nationalities.  But see possible U.S. estate tax question for non-American investors.


1 cent per share

min. $1 per trade

(likely the cheapest in the world)



TD Direct International

(based in Luxembourg)

(no Americans)

€ 95

Euros per year

€ 14.95 Euros

*Differs based on markets and amounts invested



Saxo Capital Markets

(based in Singapore)

(no Americans)


Similar to above




Below, I also include ethical firms that will invest money for you. 

Each of the firms I list builds portfolios of index funds. 




Annual Portfolio Management Fee

Minimum Required

Contact Information

Index Fund Advisors

(based in California)


(for accounts below $500K)





RW Investment Strategies

Robert Wasilewski: Maryland)

0.3% to 0.4%




Creveling & Creveling

(Chad & Peggy: Thailand)




Evanson Asset Management

(offices in CA & VA)

0.4% to 0.5%





(Mark Zoril: Minnesota)

$ 96/yr

No minimum








Annual Portfolio Management Fee

Minimum Required

Contact Information

AES International
(only use the Dubai office)





Index Fund Solutions

(Mark Ikels: Singapore)





Creveling & Creveling
(Chad & Peggy: Thailand)




(Canadians only)

0.35% to 0.6%




Satis Asset Management
(British only)


(drops after first million GBP)

500,000 GBP

+44 (0)20-3272-0120



Please look at which firms accept clients of different nationalities. 

For example, AES International won’t accept U.S. clients.  WealthBar will only accept Canadians.  Creveling & Creveling will accept every nationality.


It’s time to put an evidence based investment plan to work.  That means a low cost diversified portfolio of index funds. 

Image by Pixabay


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.

You may also like...

29 Responses

  1. Jason says:

    I almost cried looking at Steven and Lisa’s actual investment numbers. It’s heartbreaking that these are real situations for expats. The horrible fact of loosing those 6-years of investment profits, is the fact that they are 6-years older and they’ll have to invest even more, and work longer just to catch up. If that’s even possible.

  2. toony says:

    These products are so fiendishly well constructed that people can’t see the bear trap until it is too late. With the ‘enhanced’ ER of many funds (1-2%) and front load (4-6%) on top of all the fees already mentioned by Andrew, avail within these plans, market needs to return at least 6% to break even (8% to keep up with inflation).

    As a bonus, they also employ and play on our psychological fear/aversion to loss of capital that most people just sit around being bleed dry by fees when the better option is actually gnawing off your arm/leg to escape.

    I am amaze that a product with such a malicious intent in it’s construction is even allow to even exist!

  3. Frank o connell says:

    I invested in friends provident for 10 years changed advisors 4 times and rearranged the funds many times and still made nothing
    I have since surrendered this product and now use interactive brokers after reading your books
    I have finally started to make some money and have a much better balanced portfolio now
    Keep up the good work Andrew !

  4. Stockbeard says:

    Andrew, I have myself fell to the offshore pension plan trap. I wrote a review of their product after leaving it, and their lawyers made me take my review down with the threat of a lawsuit. I’m not mentioning the name of fear they would retaliate, but you know who they are, and you can find details on MrMoneyMustache.

    These are not only high fees, they’re trying really hard to make negative reviews of their services go away.

    Thanks for being the voice of those like me who had to shut up.

    • Thanks Stockbeard,

      They are horrible products. They also want the world to be kept in the dark. But if we describe the firms, describe their fees, their inflexibility (early redemption charges etc) they can’t do anything to us. As long as we don’t use words like “scam” they have no legal footing.


  5. Kevin Nielsen says:

    I am like many expat teachers (friends provident through a company called SCI) Luckily I got out and invested in Vanguard (I’m American)

    My school in Egypt at the time actually allowed SCI Group to come in and hold meetings on school premises! I think that is what hurt the most, not that these financial institutions sold me this product (I was naive and they are trying to make money), it is the fact that they school helped me get suckered!

    Do schools not know? Or are they receiving money on the side?

    • Kevin,

      Unfortunately, most school administrators don’t have a clue. Do you know of an organization in the Middle East that hosts school administrators for talks once a year. I think I really need to target one of those.


  6. Jason says:


    For an organization that hosts school administrators once a year start with the NESA Center:


    NESA also hosts 4 teacher conferences each school year in a verity of Middle Eastern and South Asia countries.

    • Thanks Jason,

      I’m on it.


      • Jason says:


        Fall Leadership Conference: October 20-23, 2016 (venue: The Ritz-Carlton Hotel, Doha), is specifically for heads of school, principals, curriculum coordinators, trustees, business managers and others in leadership roles. The other 3 institutes/conferences are geared more for teachers.

        Thank you,


  7. Spud Murphy says:


    A schools organisation here with a list of firms that attend the conferences incl IFAs

    A firm in the Seychelles ( regulated where? Global Net? Unregulated )
    A firm in Prague ( Regulated where? little info )
    A firm in Thailand ( Mentioned by Kevin above )
    A firm in Panama ( little info, Regulated ?)

    What could possibly go wrong?

  8. David says:

    Hi Andrew…

    Great article once again…

    Recently I have been looking at REITs and have noticed they have performed quite well, especially here in Australia… Currently my portfolio doesn’t include them (my portfolio is 33.3% bonds index, 33.3% local market index, 33.3% international index unhedged),,, Essentially i modelled this portfolio from your great book ‘The Millonaire Teacher’… Although I’m happy with the power and simplicity of the portfolio I have set up, I feel myself getting greedy on the idea of including REITs with the prospect of improving my returns…

    For example, I noticed that REITS offer a 4.5% annual dividend, while the international index offers more like 2%… This makes me feel a bit greedy…

    What is your take on the Andrew?

    Thanks so much for being a great leader…


  9. Tricky says:

    Hey Andrew,
    Thanks for this article on FPI. My spouse got suckered into an FPI scheme by an SCI silver tongued type…we all know them. But thanks to you and your advice we figured out what she would lose over the next 13 years if she kept the money in FPI and how much she lost on her initial investment nad even losing $15,000 of her initial investment was still a smarter more economical move than leaving it in FPI for those last 13 years. I thank you so much for being so outspoken about this and informing teachers so that we can keep spreading the word and try to shut these guys down from taking our hard earned dollars. Really upsets me to think about it, so thank you! Loved your books too!

  10. Spud Murphy says:

    Question on the index funds mentioned. Why is it the non-US offerings really only allow well off investors to invest with higher costs?

    AES, as an example, requires 7.5 times as much to be invested for 4 times the cost and why Dubai if they have a UK office?

    • Spud,

      About 8 years ago, anyone in the United States who wanted a financial advisor to build a portfolio of low cost index funds or ETFs required at least $100,000. Different services were introduced over time, such as Robo Advisory platforms which changed the game dramatically. That might have you wondering how some of the U.S. firms I listed can still ask for $500K or more and still get clients. The answer? Service. Many of those firms (Creveling & Creveling, for example, which requires $750,000 entry points) provide impeccable service. This is the kind of firm that skypes with clients almost monthly for the first six months. They want to help with every aspect of your financial planning, right down to what you spend on holidays and groceries.

      The expatriate advisory market for non-Americans has no Robo Advisory presence. It’s a different kind of market. The advisors that you see, for non Americans, typically offer higher levels of service than the lower entry point U.S. firms that you see. That landscape, however, is changing. AES International, for example, is looking at some Robo Advisory type models where they can significantly lower their entry points.

      As an expatriate, you will be most interested in a capital gains free zone for investing. If you used AES International’s UK office, you increase your odds of welcoming taxes. Dubai is a capital gains free zone. What’s more, I am fully confident that everyone in the Dubai office will build you a portfolio of ETFs (index funds) only. I am not as confident with the UK office yet.


  11. David says:

    Hi Andrew…

    Great article once again…

    Recently I have been looking at REITs and have noticed they have performed quite well, especially here in Australia… Currently my portfolio doesn’t include them (my portfolio is 33.3% bonds index, 33.3% local market index, 33.3% international index unhedged),,, Essentially i modelled this portfolio from your great book ‘The Millonaire Teacher’… Although I’m happy with the power and simplicity of the portfolio I have set up, I feel myself getting greedy on the idea of including REITs with the prospect of improving my returns…

    For example, I noticed that REITS offer a 4.5% annual dividend, while the international index offers more like 2%… This makes me feel a bit greedy…

    What is your take on the Andrew?

    Thanks so much for being a great leader…


  12. Chris Holloway says:

    Hi Andrew,
    I’m an American Expat working/living in SINGAPORE for the last 10 years and I’m an IDIOT! I’ve literally been reading all your articles and blog posts about Zurich Vista plans and now need to buy a new keyboard because I’ve head butted mine 7 times and it’s broken.
    I, like many fell into the IFS trap and bought a 26 year Vista Plan in 2008. I put in the maximum $3.2k per month for the GOLD bonus period and all looked great. I then got married and had a kid and bumped it down to the minimum $675(I believe) and have been paying that every month for the last several years!
    So I’m just now trying to sort all this out because I’m moving back to the states at the end of the year. Shame on me, I should have been more knowledgable and done my research. I have a feeling it’s going to be a very expensive lesson…I will be buying your books buy the way, after I finished this post!
    I have just been made aware of the changes in the SEC to American citizens and it sucks. When I move back to the USA, my Vista Plan will essentially be “frozen”. Zurich is no longer licensed to deal with Americans and therefore I’m stuck. After three years of my not being able to contribute, my plan will automatically be surrendered. I will recieve approximately half of The 100k of my hard earned money!!!
    This seems so unfair. When I bought this plan(stupid thing to do, I now know) it was possible to continue contributing when I move back but now the rules have changed. I’ve wrote to Zurich explaining my situation as I’m sure many Americans have but they don’t seem to care. I’ve got the application to Fedric in my hands but I have a feeling that could be a huge waste of time and more money 🙁
    Please Andrew, what should I do?
    Thanks again for your help and I will purchase your books now so I don’t make this mistake again. I really feel like I’ve been screwed!

    • Hi Chris,

      The person who sold you this policy deserves to be strung from a rafter by his toenails. As an American, you really shouldn’t own such a product. Relatively few Americans do. There’s a reason for that. The IRS insists that if you own a foreign investment vehicle, such as this, you must pay extraordinary taxes each year on any gains you make. If you don’t file the taxes EXACTLY right (and the filing is different to what you might be used to) you risk being charged with tax evasion by the IRS. I’ll quote from an article I recently published at assetbuilder.com

      “[Some Americans] build offshore portfolios through firms like Friends Provident International, Zurich International Life, Generali and Royal London 360. Such firms still welcome everyone. Many are located on the Isle of Man. It’s a low-tax haven.

      But for Americans, these companies are like three-pronged hooks. When adding up platform fees and fund costs, investors pay 4 percent or more in annual fees. That’s 17 times more than Vanguard charges for its balanced index fund. It’s also about twice the annual yield on typical U.S. asset-based portfolios. So you are literally paying significant principal for the privilege of having an investment account.

      Investors who catch on to the high cost burden find themselves stuck. In many cases, they can’t sell (penalty free) before a predetermined date. That could be 25 years away.

      The IRS also whacks these investors…David Kuenzi, is a CFP with Thun Financial Advisors in Madison, Wisconsin. He says that the IRS taxes all PFIC gains (capital gains and dividends) at 39.6 percent. That’s the highest ordinary income tax rate. In some cases, the total tax on a PFIC investment may rise to well above 50 percent.”

      Chris, the fact that this account would be frozen is a blessing in disguise. Even if you were still able to contribute to it, I would suggest that you sell it…even taking a 50% hit to do so. Your ongoing (mostly hidden) annual fees are massive. As such, you would eventually recoup what you lose in your redemption penalty. Please check out my book, The Global Expatriates Guide To Investing if you choose to remain an expat. I explain much more about this in my book. Here’s link: http://bit.ly/globalexpat


  13. Sue says:

    Dear Andrew,
    I have an investment portfolio at the moment with Aviva and I am very confused about what to do. Apparently Aviva ‘misplaced’ some of my funds that were sent from my previous school (because they didn’t write the correct reference numbers and I didn’t verify), and then I was so mad about being penalised for missing payments that weren’t my fault that I stopped sending payments altogether.
    According to my most recent portfolio valuation, I have put in premiums amounting to $40,000 but my death benefit at the moment is $29,000. I have invested in Gold, Latin America, and China. What is the wisest thing for me to do right now? Should I pull out and salvage what I can to minimise my losses? Or should I pay up right now while I can afford to and hope that the markets will climb? I haven’t paid into it for about a year now.
    I would really appreciate some advice as I clueless about these things. I have started reading Millionaire Teacher and wish I had read it fifteen years ago when I started!
    Thanks for your help.

    • toony says:

      It sounds like you are investing in a product that this whole site and books Andrew is warning people about! 🙁

      Every month you stay in, they get to bleed you dry with fees! Minimise your losses by pulling out NOW!

      Get Andrew’s The Global Expat book which contains vital info to help you get your finance under control, invest more efficiently and become finally literate as an expat

  14. UAE Resident says:

    Dear Andrew, I have attended one of your talks in Dubai. Really informative. I unfortunately transferred my previous pensions in the UK to an overseas SIPP after some bad advice. This is now looking like a very bad decision with huge fees and high redemption fees. All the independent advice i have received says i should surrender this and take the hit. However, I am struggling to find a low cost provider to take the cash amount as i am no longer a UK resident. Can you recommend a provider who I could transfer my SIPP too as a UAE resident?

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.