Frequently asked questions

General

Who is Dunhill Financial?


We are a group of international financial planners offering fee-based planning and wealth management solutions to primarily (but not exclusively) English-speaking expatriates. Our aim is to create an environment of trust, discretion and confidence through offering personalized solutions. We cater towards clients all across the globe by offering a variety of products and services that are tailored towards the individual.




What does Dunhill Financial do?


We deliver smart-designed portfolios expertly managed to put your money to work whilst naturally hedging the portfolios towards the geographic location where you intend to retire. By asking you a few questions, we can understand your aims, how much you want to invest and the level of risk that you are comfortable with. We then select a globally-diversified portfolio for you designed to grow alongside you over the long term whilst avoiding the risks of investing too much in a specific company, industry or country. Once you are happy with your portfolio, we continuously monitor your portfolio rebalancing if necessary. We do all of this for a competitive low fee meaning more of your wealth is invested expertly and professionally.




How can I get in touch with a representative from Dunhill Financial?


The best way is either to e-mail info@dunhillfinancial.com or use the contact form on our website.




How is Dunhill Financial different from other investment advisors?


At Dunhill Financial, our ethos is to put clients and people first. We’ve made our firm as inclusive and transparent as possible for this. Some ways in which we differentiate ourselves include: 1. A decade of experience advising American expats across all levels of income 2. No minimum investment amount while most competitors have a $500,000 minimum 3. A flat fee for high net-worth individuals - allowing for easy budgeting and transparent fees 4. Straightforward natural hedging strategies such as natural currency hedging to avoid unnecessary risk for every client




Where are we based?


Our headquarters are in Canary Wharf, London with further offices in Germany and Poland.




Do you only advise US expats?


No, while we specialize in advising US expats, our client list includes nationals from all over the world.




What information will you need from me?


We'll need to know various pieces of information about you to properly advise in your situation. In all scenarios, this includes at least your country of residence, where you intend to retire, some financial information to make sure that things are appropriate and how you view risk. We will also need all of the KYC information that would be required under method rules and US regulatory rules.




What is a Fiduciary?


A fiduciary is a person or organization acting on behalf of another, with the person on whose behalf their acting’s best interests in mind.




How does a financial advisor differ from a traditional bank?


US banks will typically allocate your portfolio to 80-90% US securities while European banks will typically set your portfolio to 40-60% European securities. As an expat, this may not be the best solution for you as these allocations don’t take your long-term goals into account. A financial adviser such as ourselves works with you to determine these goals and help minimize long-term currency risk.





Investments

What types of investments does Dunhill Financial offer?


Dunhill Financial offers a wide range of investment options including ETFs, equities, bonds, etc. For our clients that are American citizens, we do not invest in Passive Foreign Income Companies (PFICs). We also check that they’re MiFID and HMRC compliant where appropriate. We make sure to focus on the currency which is most suitable for you. If you plan to use the money in the European Union, we will invest your funds in a Euro-centric portfolio. Likewise if you would like to use the money in the USA, we invest in a Dollar-centric portfolio and so on.




What does each of our model portfolios mean?


Each of our model portfolios is built around a certain risk level, with investment percentages allocated accordingly. Working on a gradual scale, the portfolios vary from Conservative with a majority in bonds, roughly a quarter in stock, and the rest in other investments to our Aggressive Growth portfolio with a large majority in stocks, with the rest in other investments. The higher the risk level of a portfolio, the less bonds and the more stocks it contains. Have a look at one of our more popular ‘Growth USD’ portfolios under 'About Us' > 'US Select Service for Investors'.




Risk and risk assessment - why is it important?


A risk assessment is important for us to determine which level of risk you, as an investor, are comfortable with. Once a risk assessment is completed, you are assigned a risk rating out of 100. This rating helps us determine which portfolio you would be most comfortable with as well as your projected growth.




What is diversification and how does that benefit my long-term plan?


Diversification is a common way to manage risk by mixing a wide range of investments and industries in a portfolio - thereby avoiding a large loss if an investment’s value drops. This brings significant benefits to your long-term plan including: higher long-term returns, hedging against market volatility and overall lower portfolio risk.




What is a natural currency hedge?


Natural currency hedging is a portfolio management strategy that aims to mitigate the risk associated with currency exchange rates. To achieve this, we work with our clients to determine where they envisage using the funds accrued from investing. Once this is determined, the client’s portfolio is set up in the currency of the country where they wish to use the funds - thereby reducing the risk associated with currency fluctuations.




Portfolio rebalancing


As the market is constantly moving, the initial allocation that you have invested in can become out of skew, which can lead to increased risk. Portfolio rebalancing is a way to make sure your investments are in line with your initial goals and risk assessment.




Where can I invest as an American expat?


As an American expat you should keep all of your investments with US financial institutions.




How often does Dunhill plan to trade ETFs within my account/portfolio?


We balance the accounts once a year; however, should the situation require, we tactically rebalance your portfolio. The overall turnover of the portfolios are kept to a minimum under normal circumstances however as situations arise, such as the 2020 Pandemic, we may be more active in our approach in order to effectively manage and safeguard our clients' portfolios. We have our investment committee meetings on a weekly basis to assess all of our current portfolio offerings.




Are your EUR, GBP & USD Portfolios all US-domiciled and do they all comply/are tax efficient from an IRS and HMRC perspective?


All of our EUR, GBP & USD portfolios are US-domiciled and are tax efficient from an IRS perspective. Only our GBP portfolios are screened for both IRS tax efficiencies and HMRC guidelines/requirements.




How are your model portfolios built?


We start with an approach dubbed ‘Core + Satellite’ and then consider currency hedging.





Portfolio Income

How would I receive my income?


The dividends and interest are paid into your account automatically in the form of cash which you can then withdraw or decide to reinvest back into your portfolio.




Are yields guaranteed?


While yields are not guaranteed, our portfolios have had steady growth over the years thanks to our investment approach dubbed Core + Satellite. For example, our Euro Moderate Growth Portfolio has grown by 17% in the past 2 years.




Is the received income taxable?


Depending on the account type, you may have to pay income when withdrawing money. The exception to this is with a Roth IRA, where you generally do not pay any tax on disbursements.




How often is the income received?


That depends on the fund. Some pay quarterly and some annually. The majority pay out in December.





What is an ETF?

Why do we use ETFs?


Exchange Traded Funds (ETFs) are low-cost structures that allow us to remain diversified amongst hundreds of different securities in different marketplaces. With these low-cost structures, we can go ahead and have a diversified portfolio while only needing 10 to 15 securities inside of a portfolio.




How does Dunhill Financial select which ETF to use?


We select which ETFs we use by using seven different parameters. One of the most important will be buying into low cost ETFs. But that is not the only parameter. For instance when we're going into developed markets, we would prefer to pay more to have a different basis - like a thematic structure - that we use with many of our First Trust portfolios. Like this we get a bigger proportion of companies that are growing faster rather than the biggest companies out there. We have also on occasion used more expensive funds that are socially responsible. This has actually been a boost to performance in shorter and longer term performance ranks because of oil prices going down.




What are the risks?


There’s risk in everything we do. The main risk that we have is investment risk stemming from stocks going up and down. This up and down also includes currencies and bonds. We account for and deal with these types of risks to avoid some other longer term risks. For example, inflation risk would affect us if we were keeping all of our money in cash. All of our portfolios are also going to be naturally hedged into the currency of the country where you want to retire to minimize currency risk inside of your portfolios.





Fees & Taxes

Costs & transactions charges


We charge a fee depending on the assets under management (AUM) and the type of service offered. Please see above for our detailed fee structure. Transaction charges depend on the platform your assets are held with. The various platforms we have partnerships with charge different fees. (TradePMR fees are inclusive) These will be clearly communicated to you before finalizing any agreement. We continuously strive to provide our clients with the most advantageous fees possible. The total expense ratios (TER) consists of Dunhill Financials fee plus platform fee and the fund management fees.




Tax implications?


We take our fee directly from your account so as to avoid having to add VAT onto it. This saves you a certain amount depending on the jurisdiction and also removes any tax declarations you may have for our services.





IRAs, Traditional VS Roth?

What is an IRA?


An IRA is an Individual Retirement Account. IRAs are tax-advantaged, meaning that capital gains, dividends and interest are not taxed. This is contrary to a standard investment account where they are. Their purpose is to save funds for retirement. Every year, you are able to contribute a certain amount to your IRA that benefits from a different tax treatment. As IRAs are intended for retirement purposes, you are usually subject to a 10% penalty if you withdraw the money before age 59½. Depending on the IRA, certain limitations apply. For example, contributing to a Roth IRA is subject to income limitations.




What is the difference?


There are six major differences between how a Roth IRA and a Traditional IRA operate:




This year's IRA allowance?


The allowance for 2021 is $6,000/year. If you are over 50, this limit changes to $7,000/year. This amount applies cumulatively to both Traditional and Roth IRAs.




What if I want to invest more than the yearly allowance?


Should you choose to invest more in an IRA than the yearly allowance, we recommend opening an Individual account to mitigate taxes on excess IRA contributions.




Who can open an IRA?


Anyone who is a US citizen and earns earned income (from active work and not passive income).




Can I transfer my existing IRA?


Yes, it is possible to roll over your existing IRA into an IRA with one of our providers. The process to do this will depend on your current provider. When transferring IRAs we are able to simply transfer the stock held, thereby not incurring tax or fees.





Onboarding

How do I sign up?


The first step would be to get in touch via our Contact Page. After this you will be asked to provide further information, if needed, followed by a risk assessment and a link to sign up to your Personal Financial Dashboard. Once this is done, we can proceed to open your account with one of our partner providers. Upon signing the application, the account will be opened and all that remains is to transfer funds into the account.




Who can open an account?


Almost anyone. While we have a few restrictions with countries that Americans are prohibited from doing business with, we will try to service anyone.




How long does it take to set up an account?


Depending on the platform, opening an account once the forms are completed can take anywhere from a day or two to a week.




Do I need to have a US mailing address?


We work with a number of our custodial partners to use an address in most countries throughout the world including in the United Kingdom, France, Germany, and many other countries.





Account Maintenance

Minimum investments?


We do not require a minimum investment, but we recommend setting up monthly contributions to get started and build up to what you feel comfortable with in order to achieve your financial goals. After all it's more important to get started and we can always adjust the contributions accordingly based upon your goals. We also employ a dollar-cost averaging approach.




Can I add/remove cash?


Yes. We do not charge for additions or withdrawals from the account.




How do I deposit into my account?


All of our providers are set up to wire money or, in some circumstances, mail physical checks. If you have a current account you would like to transfer in, we can do this while keeping your securities and their cost basis.




How do I withdraw money from my account?


Depending on the provider, you either need to sign a form to authorize the transfer or request it online.





Terms of service

Who are we regulated by?


We are authorized and regulated in the United States by the US Securities and Exchange Commission (SEC) as Dunhill Financial, LLC. We are members of Nexus Global (IFA Network). Nexus Global EU is a division of Blacktower Financial Management (Cyprus) Limited (BFMCL) and Blacktower Insurance Agents & Advisors Ltd (BIAAL). We are an Appointed Representative of BFMCL which is licensed and regulated by the Cyprus Securities & Exchange Commission (CySEC) (Licence No. 386/20) as well as an Appointed Representative of BIAAL which is licensed and regulated by the Insurance Companies Control Service (ICCS) (Licence No. 5101). More information and links can be found at the bottom of this page.





Transfers

How long does it take to transfer investments from another provider?


Depending on the provider, it will take about a week or so to go through the ACAT process if it is a US exchange. Sometimes if it's cross-border it will take a little bit longer. In the UK and Europe, it can take a much longer period of time from one provider to another.




Are all investments transferable?


Almost everything that we invest in is going to be transferable to most any other advisory firm as we don't hold any illiquid investments, alternative hedge funds or similar. We like to have purely liquid ETFs and individual stocks in our portfolio.




Is there a cost involved?


Some of our platforms will have a small account transfer fee, if you were to transfer the accounts to another firm. These would normally be around $100 or less. You can see the terms and conditions of the provider that your assets are held with to get the exact amount.





Other

What are the most common currencies you use?


These would be the US Dollar (USD), Euro (EUR) and the Great British Pound (GBP). We also deal with many other major currencies across the globe. A brief history of each can be viewed below.




Is using my host country’s national pension system more beneficial than opening an IRA?


Not always, let’s take the Belgian system for example. The tax advantages in a Belgian look interesting with a 30% tax benefit, but let’s compare this in relation to the advantages you have when saving the funds in another vehicle. Suppose you invest €990 in an épargne-pension while being in the highest 50% tax bracket in Belgium. While you would save €297 in taxes, you would still have to pay an additional €198 in tax (20% after the 30% tax advantage). Should you need to withdraw the money before the age of 60, you would have to pay ordinary income tax on it. If you withdraw after the age of 60, the tax due drops down to 10%. The net tax you’d have to pay over the course of having the épargne-pension is therefore 10% withdrawal tax plus the 20% you paid on the contribution, equal to 30% overall. Knowing that European funds tend to be more expensive than US funds, these expenses could lead to a realistic return of 4% per annum. If you save this same amount on the US side, e.g. in a Traditional IRA, you get a full tax deduction of this amount in the US. The returns tend to be higher as well since the expenses in holding US funds are lower than in European funds. This could allow for returns to be higher (6-8%). Taking into account that in this example you would be paying the full tax in Belgium on any funds you invest in the US, the lower cost of US funds in combinations with a larger fund universe available in an IRA would still give you access to a larger return until you retire compared to getting the tax cut on an épargne-pension.