Building on relationship and trust
Joel Barretto was in the US in 1987, a few months before the stock market collapsed. After dabbling in sales, he tried financial planning. He has not looked back since
A 2016 HSBC study showed that American expats living across Asia are the highest paid employees, earning $126,000 (roughly Php6.1 million) in annual income — and, by implication, leaving a lot of excess disposable cash after paying for the region’s low cost of living.
There are nine million US expats worldwide. In 2015, there were 220,000 living in the Philippines, and that number has grown to an estimated 350,000 at present. The increasing number of affluent nationals are some of the underserved sectors, having been sold investments not suited to their respective situations.
This is the scenario that encouraged financial adviser Joel Barretto to relocate to Manila five years ago, following close to three decades of fruitful stay in the US.
Barretto graduated from San Beda University with a business degree and left for the US in 1987 — a few months prior to the stock market collapse that year. After dabbling for a few years in sales, he was invited to try his hand at financial planning.
Barretto pointed out, though, that the Philippine tax shelter is not that rosy.
He has not looked back since.
Barreto set up his own firm, Abacus, in 1999. “Abacus Consultancy offers services in realty trust, insurance products and a suite of different types depending on what clients need. Financial planning is the most regulated US sector because we are fiduciary in nature, like banks and other financial institutions,” Barretto said.
“My firm undergoes a six-step process of financial planning when dealing with clients. We then do analyses with gathered data which includes the goals, concerns and financial standing of each,” he explained. “Thereafter, recommendations are given. Implementation follows once an agreement is set. We then check on clients, once a year at least.”
He pointed out, though, that the Philippine tax shelter is not that rosy.
“Duration of investment intent, whether short- or long-term or for retirement, points to how a client’s money is invested,” he said. “Also, on how inflation rates affect investments in the long run. Sound advice comes before a pandemic, not after. This shows preparedness for scenarios like COVID-19. “A sound financial plan consists of two things. One is cash reserve for exigencies. This covers expenditures for the next three to six months. The other one is protection. This takes care of family members, in case of death or disability.”
Complicated
“Financial planning is complicated as it is,” he said. “Fortunately, technology now is not the same as it was before. Everything used to be done manually. Compliance then was really strict. Software programs now make projections easier. Back then, we only had the phone to make transactions, unlike today with its numerous platforms and programs.
“US financial planning and advising was regulated within its jurisdiction before. Now, it is in two — the US and a client’s country of residency — where we deal with tax compliance on universal income. There’s a law that requires US nationals to report all of their investments outside of US soil.
“That law is the FATCA. In 2010, then President Barack Obama issued the Foreign Account Tax Compliance Act that keeps track of its citizens worldwide. Failure to report universal income carries a $50,000 fine. Thus, some of the investors’ mistakes include not reporting investments outside the US, not foreseeing retirement planning, and not considering passive foreign income companies,” Barretto said. “My business is based on relationship and trust. I cherish my clients,” he added. “I’ve watched their families grow, and they become my clients as well. It’s a thankful job. I’m not here just for the short term. I look after them all like they were family and will be always there for them.”
Hobbies
When not busy with work, he engages in hobbies like mixed martial arts and full-contact sports like karatedo, shaolin temple kungfu and kickboxing.
As part of his ongoing advocacy on financial literacy, he published a book in 2016, Common Centimos.
The 56-year-old financial advisor will hold a webinar series in which he will explain in detail the mistakes investors usually make with their money. Clients may choose which time zone they prefer.
He also gives similar advice on his YouTube channel for his expat clients across the globe.
Joel Barretto is the only licensed cross-border financial analyst in the Philippines. He maintains an office in Manila, as well as a registered advisory firm
in California.