Emily Bernstein is an experienced private banker at Investec who specialises in supporting legal leaders and senior lawyers. Here, she tackles the unique financial challenges facing senior legal professionals
‘Currency markets have been volatile and I’ve lost control of my US dollar income. What can I do?’
The truth is, many senior lawyers who receive their monthly draw or profit distributions in US dollars tell us they find it difficult to manage their foreign exchange needs. With variable, performance-based pay and fluctuating currency values, it is not uncommon for income in your sector to be irregular and feel unpredictable. You are not alone.
When choosing a bank, you may not have prioritised the support that is available for a multi-currency income, but where private banks like Investec excel, is in dealing with complexity. Therefore, it might be time to re-think your provider. At Investec, my team specialises in providing private banking to partners and senior legal professionals and we are familiar with the challenges you face.
Increasing visibility and ease of transactions
Firstly, you should make sure your bank allows you to hold foreign currency in your bank account, so you can see your balance at a glance. Secondly, you should be provided with a foreign exchange (FX) specialist who works in partnership with your private banker to give you spending power, by providing market commentary, securing FX rates and executing trades. Thirdly, your bank should allow you to make international payments efficiently online, with reasonable transaction limits, if you need to.
‘My team specialises in providing private banking to partners and senior legal professionals and we are familiar with the challenges you face.’
Emily Bernstein, Investec
At Investec, many of our UK-based clients who work for US firms earn in dollars, but have liabilities in sterling. We allow them to hold their funds in an interest-bearing currency access account. Crucially, we also allocate each client a dedicated FX dealer within our team who they can speak to directly regarding their short and long-term needs. Our clients can also make international payments of up to £100,000 online.
Specialists to manage your exposure
By seeking specialist support you will have access to tools that can give you more certainty over your future income and allow you to plan your expenditure. For example, an FX forward contract allows you to secure current exchange rates up to 24 months in advance. An FX open forward contract provides additional flexibility as it includes a window in which to settle the trade. Both FX forwards and open forward contracts can be used to manage your monthly draw or larger distributions, so you will know the value of your sterling proceeds, ahead of time.
Recently, one of our clients wanted to secure the current exchange rate ahead of receiving his profit distribution in dollars in Q4. While he will not benefit if the value of the dollar increases, an FX open forward has given him peace of mind ahead of purchasing a new home and making a deposit payment.
Improving your mortgage options
In fact, when buying a property, hedging your foreign currency exposure can improve mortgage affordability, by steadying your cash flow and improving the predictability of your income. This clarity may also increase the loan size you can achieve.
We recently helped a newly promoted partner to leverage his foreign currency income to purchase a four-bedroom home in London. We were able to provide a high LTV mortgage for a 20-year-term on an interest-only basis, which included capital reductions to reduce the balance over time, and this support meant he could keep his existing property too.
Relationships built on trust
Always bear in mind that when using any foreign exchange services, you should ask for a transparent breakdown of fees, which might impact the funds you expect. At Investec we build long-term, supportive relationships with our clients and will share details of fees in advance.
If you want to explore your options, my team specialises in working with legal professionals with an income of more than £300,000 and we would be delighted to talk through how we can help with your specific needs.
Important information:
Minimum eligibility criteria and terms and conditions apply. You can only book an FX forward which is for an underlying personal or commercial spending purpose. You cannot book an FX forward for investment or speculative purposes, for example in order to achieve a gain based on movements in exchange rates. Also, you cannot book an FX forward on behalf of any other person. Additional terms and eligibility criteria apply for FX forwards.
Your property may be repossessed if you do not keep up repayments on your mortgage. Investec residential mortgages are only available for residential properties in England or Wales and are primarily available to UK residents and subject to eligibility.
Please contact Emily to discuss your needs.