Like so many of our case studies and examples, at the simplest level payments that involve an exchange from one currency to another between bank accounts share many of the same characteristics. The practicalities of sending, receiving, holding and exchanging money between countries and currencies are largely the same, however, the roles played by 'stakeholders' in the exchange can have an enormous effect on what those parties receive when all is said and done.
In this article we look at who tends to be involved in exchanges relating to divorce and division of assets, what each party can do to maximise foreign currency amounts realised, and how you can make sure your representatives and recipients get the most and do the best by all involved.
Many of the themes discussed apply to scenarios like probate and bequests too, but we'll save the specifics for another post.
Let's set the scene:
A recent divorcee received a sterling aware, payable to her from her solicitor in the UK. She lives in Belgium. Unfortunately she wasn't aware of our services around the time that the funds became liquid. Hence, her solicitor simply electronically transmitted the GBP amount to her personal euro account.
This meant that her receiving bank exchanged the incoming GBP in to EUR without her involvement and using a retail rate of exchange.
Additionally, the divorcee had not fully settled certain sterling liabilities, so, the euro amount she received needed to be allocated and exchange back in to sterling (or at least a portion of it did) and sent back to her solicitor (of all people) and one or two other stakeholders in the UK.
The first point to make is that, had Prime Cap been recommended/introduced as soon as the award was formalised then we could, on the clients invitation, received the sterling sum from her solicitor on her behalf.
Then we would have brokered the exchange of the sterling amount in to euros at our bespoke commercial rate of exchange.
Were it then the case that the client wanted to transmit some of those realised euros back in to GBP and to UK based beneficiaries, we could conduct/execute this for her at a far more favourable rate, however, discussions with the client would have enabled us to advise her not to convert the full award in to euros, but rather to keep the amount that needed to go to the UK beneficiaries as sterling...and to pay those sums directly.
By virtue of her solicitor sending the GBP to her EUR account, not only did she receive far fewer EUR than she would have done, but, she had to sell back some of those euros to cover those sterling denominated liabilities.
Therefore the client was doubly stung.
As it happens, we were invited to act on the matter before the client had resent the aforementioned GBP back to her solicitor et al. This means that at least she is paying fewer euros out to meet those GBP commitments. Owing to the improvement we offer in our rates, our client is paying 3% (approx.) fewer euros out.
What also interested us is the fact that her receiving bank in Belgium is a private bank (or rather she is a private banking customer of this institution). You might think that this would entitle the client to some sort of preferential rate when the GBP amount arrived at the threshold of her EUR account.
Not so.
Even though she may be considered a valuable HNW client of this bank, their foreign exchange services arbitrarily apply a retail rate of exchange to such transactions.
So, introducing a specialist currency broker early on in discussions about awards and disbursements will have a materially beneficial effect on the sum received by overseas individuals in matters such as this.
In the scenario above, the solicitor of our now client is in fact the target of our focus. We feel compelled to introduce ourselves to this firm and to outline how the simple services we offer are distinctly beneficial to their international clients.
Given that all our transactions are conducted through segregated client trust accounts the regulatory particulars of dealing with a business like Prime Cap do not stray from policies relating to client care that may or may not underpin this firms dealings with their customers.
The firm in question may not have been aware of the further or additional GBP payments this client needs(ed) to make. Engaging a broker ensures that these questions are answered by experts motivated to consider the activities of a client in a more holistic way rather than in isolation.
We would be delighted to hear from firms engaging in sending funds abroad and individuals due to receive amounts following life events like divorce, marriage or bereavement.