There are a number of different ways to engage in the services of investment advisors based in the Cayman Islands, either through the local office of a global firm or the asset management group of a local financial institution.
A local investment advisor will be able to offer expert investment guidance on a personal one-on-on basis in the resident’s time zone. He or she will also be familiar with the asset allocation and types of investments that are appropriate.
Most of the retail banks in Cayman have a full range of financial services, and there are an increasing number of specialised financial institutions that advise individuals who are looking for private banking or wealth management facilities. Brokerage firms in Cayman offer a wide range of client accounts and a full suite of products.
The regulator is not responsible for many aspects of investment offerings available locally so do your homework before choosing an investment advisor or broker. Some of the factors to consider or questions to ask, as appropriate, are as follows.
> Make sure you understand the risks and likely expected return of the investments you are evaluating, the investment process, and any competitive advantages the firm you are considering may possess.
> Check the professional qualifications of the individual advising you. Does the firm carry professional indemnity insurance?
> Understand the liquidity of the investments you are contemplating. What are the terms offered when you wish to sell all or part of your investment?
> Make sure your investment time horizon is compatible with the asset class in which you are contemplating investment. For instance, investing in equities is generally not recommended for those investing with a time horizon shorter than 5 years given historic volatility.
> Understand the tax consequences of your investment proposition. Whilst there is no income, capital gains tax or inheritance tax in the Cayman Islands, your investments could be subject to withholding tax on dividends in the country in which they are paid, with the rate varying by country.
> Diversify geographically. You never know what might happen. Markets in one country may be overvalued at the same time that another country’s markets are undervalued. Historically, there has been a wide dispersion in equity market returns between countries decade by decade.
> Does the firm have a track record and has it been independently verified? It is useful to compare this historic performance to the returns of a passive ETF or index fund that tracks a suitable benchmark index to evaluate whether the advisor has added or detracted value in the past.
> Fees and expenses affect your net investment return so make sure you understand all fees and expenses when evaluating an investment proposition. Fees, expenses or commissions may be charged upfront, on a recurring basis, on exiting an investment, and may be embedded in the underlying investment.
There are a number of regulated wealth management firms based in the Cayman Islands that offer securities brokerage, along with investment advice and discretionary management services. Most financial institutions offer products and services to meet the needs of investors of all sizes. We recommend contacting a couple of the following companies to discuss your range of options and their minimum requirements. Some of the leading organisations offering wealth management solutions are listed here:
LOM Financial Group
An award-winning publicly-held, international financial services company, providing a complete range of private investment services and products.
Proven Wealth (Cayman) Ltd (formerly International Financial Planning (IFP))
PROVEN Wealth provides a wide range of financial planning services, premium savings products, investment solutions and retirement programmes.