How advisers can manage clients’ offshore cash flow requirements

By Janice Roberts

Rene Grobler

In this turbulent world, financial services providers are seeing increased demand for an international offering from clients who see themselves as “global citizens”. Globalisation could also result in increasing offshore obligations – international education or mortgage repayments on an offshore property are two typical examples. A clear driver of these is the imperative among investors to have a globally diversified investment portfolio.

Tertia Jacobs, Economist at Investec, says emerging market currencies such as the rand are exposed to a wide range of dynamics, including international capital flows. The ebb and flow of capital can cause considerable volatility in the rand, leading to periods of over- or undervaluation and sudden reversals, as has recently been the case with the rand/dollar exchange rate.

According to Rene Grobler, head of Investec Cash Investments at Investec Bank, one option is to facilitate offshore payments or investments to open an offshore bank account to manage and settle clients’ investment and other transactions. But this presents its own difficulties and can be an expensive exercise. Banks in other countries will often have onerous requirements for non-residents, with added charges. A foreign institution also brings with it an added level of administration for adviser and client alike,” she points out.

To meet this need, Investec Bank has created the Corporate Cash Manager (CCM) US dollar (USD) Notice Deposit, a 32-day notice deposit account that allows financial advisers to manage their clients’ offshore cash flow requirements in a simple and seamless way.

“This is the first time that financial advisers will be able to open, manage and facilitate clients’ offshore funds through a foreign currency account with CCM. “This frees them up to create value for their clients through the advice and service that they give,” she adds.

In addition to this, the CCM USD Notice Deposit has several advantages for advisers. Because it’s available on the CCM online banking platform, the account can be conveniently opened online for existing clients. Advisers also enjoy the same level of personal service from their Investec consultants on their foreign currency investments.

Furthermore, there is no minimum balance requirement, though no interest is earned on balances below USD10 000. Above that amount, a competitive interest rate is earned. There are also no fees attached to the account, apart from transaction and foreign exchange charges.

“We believe this is an excellent way to manage clients’ ongoing offshore expenses as well as to facilitate investment – it’s a secure way to build up a capital base while identifying investment opportunities abroad. The foreign currency account further provides a hedge against the volatility of the rand,” concludes Grobler.

Product features

  • 32-day USD notice deposit account linked to a settlement account
  • Funds in the notice deposit account earn a competitive USD interest rate
  • No minimum deposit, with interest earned on balances from USD10 000 in the notice account
  • The settlement account (reflected as a call account online) is a non-interest bearing account
  • Foreign currency account available to individuals only
  • The deposit is held on the Investec Bank Limited balance sheet
  • All transactions to and from these accounts are subject to compliance with SARB exchange control regulations

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