After the lifting of exchange controls on companies last year, markets are awash with pre-Budget talk of further relaxation — and even total removal — of exchange controls for individuals. But South Africa's biggest private client asset manager has advised clients not to make hasty decisions if this does occur.

Johan Van Zyl, head of investments at BoE Private Clients, says: "The worst thing someone can do is panic and send money offshore. We have advised all our clients to consider their investment and financial needs in a professional and rational manner. Before moving funds offshore, people need to consider a host of factors like where the person is likely to live for the next few years, cash flows related to living expenses and ensuring assets and liabilities are currency matched.

"This means that if you live in the country, it would be silly to have a large capital base offshore and debts in South Africa. You would then have to rely on income and capital growth to service that debt and pay living expenses and in the past we have seen much better returns locally than abroad. People can no longer rely on rand depreciation to drive offshore asset performance.

Get proper advice before moving money offshore

"There is an enormous amount of world class knowledge in South Africa that can be used to advise people what to do with their funds after a careful analysis of their needs. Also, local institutions have the best knowledge of local tax laws and the superior understanding of the investment options for South Africans. For example BoE Private Clients has an offshore trust company, an offshore investment offering and an offshore private bank."

Van Zyl points to the investor panic in late 2001 when many South Africans took money offshore at the wrong time without going through a proper process of planning and investment assessment and are now showing large paper losses while some have even had to repatriate portions of those funds and realise substantial losses.

"Relaxation of exchange controls is a huge vote of confidence for any country. Don't assume the rand will automatically weaken. All that it means for a person living in South Africa is that the investment horizons are broader. It all boils down to the individual client and his or her asset class requirements."

Stick to local advisors

Van Zyl notes that many South Africans who went through the amnesty process had a particularly difficult time when dealing with offshore institutions with no links to South Africa.

"Many people where given very shoddy treatment from uncooperative offshore institutions that were late to respond to clients' request and many charged people exorbitant fees to get what was basic information.

"We noticed that clients that had funds with local institutions with offshore arms had a much easier time of things. We therefore advise our clients to stick with local advisors who have offshore distribution channels and international know-how."