Is your QROPs or Spanish compliant investment bond a lame duck?

By Sam Kelly

Managing Partner & Financial Planner +34 664 398 702

I have been very vocal in my criticism of commission paying underlying investments in products such as QROPs and Spanish investment bonds for many years now, with that culminating last year in Chorus winning a major European award for our steadfast campaign.

I fail to see the positives of a financial advisor receiving a secret cash incentive for putting their clients into a particular investment fund or structured note. Not only does this dramatically increase the cost of these products for the client, but it also near but guarantees the advisor is not choosing the best product available for their clients. As investors you are already taking a certain degree of risk for that return, and the thought of an advisor increasing that risk to line their owns pockets, with no benefit to their clients, really is stomach churning.

Over the last 5 years I have dedicated many column inches, many radio hours, and many a seminar in my attempts to warn our communities here in Spain about the dangers of such practises. It has been particularly difficult to fight this battle alone, and I’m sure you can all guess why no other major financial advisory in Spain has joined Chorus on this campaign!

These practises were outlawed in the UK in 2013, but despite many companies advertising their UK FCA credentials, these companies continue these exact practises with their Spanish based clients, as it is sadly still legal here, even for companies pass-porting their licenses from the UK.

In 2017 this practise lead to devastating losses for the victims of Continental Wealth Management, and in 2018 many of you sadly saw unnecessary losses in your investment portfolios and are probably still scratching your heads as to why.

Well there is finally some light at the end of the tunnel, as the Malta Financial Services Authority, the regulator of Malta QROPs, has finally agreed to force financial advisors to disclose their commissions. This means that anyone now signing up to a new Malta QROPS should be given a sheet which clearly outlines all the fees they will be exposed to, including the fees for any underlying funds or structured products, along with clear written confirmation of how much the financial advisor will be receiving for recommending such products.

For me this is a start, but by no means the battle won. I don’t personally feel advisors who have spent the last decade only recommending a handful of commission paying products are actually capable of putting together a high-quality portfolio. This would be equivalent to a mechanic who has only changed batteries for 10 years suddenly being trusted to rebuild an engine.

The other issue is that for the many 10,000s of you who have already been placed into commission paying funds without your knowledge, unless your financial advisor chooses to sell you out of these, they will continue to receive payments without your knowledge. This could actually mean you are kept in a low quality fund deliberately so your adviser can continue to receive such backhanders without your knowledge.

These regulatory changes only apply to Malta QROPs, so QROPs in other jurisdictions, and Spanish compliant investment bonds, will continue to be at risk.

Do you have an existing investment that may not be performing as expected, or are you considering a new investment here in Spain? Contact me today to review a plan or provide a like-for-like quote to ensure you are getting the best value and advice possible. As always, I will do this without charge or obligation.

Simply email me on or call direct on +34 664 398 702.

Contact Sam Kelly