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The Financial Planning and Wealth Management Needs for Cross Border Professionals


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This is the second article in our series of industry content from Maxim Global Wealth Advisors, designed to help financial professionals better understand the opportunities available in the cross-border financial planning marketplace.

In our first article, we detailed the size, scope and characteristics of the cross border wealth management niche, which is estimated to be over $6 trillion.

Globalization is driving the growth of a large and underserved market niche for wealth management, known collectively as Cross Border Families, which is comprised of the following three sub-groups:

  • International professionals living in the U.S.
  • American expats
  • International families with assets in the U.S.

These individuals and families have specialized needs and are subject to numerous and complex tax, legal, currency and planning issues.   Their specific financial planning and wealth management needs consist of the following.

Cross Border Professionals

Foreign-born professionals living in the U.S., such as a high tech engineer from India working for a U.S. technology company.   These are foreign-born individuals who are well educated and work in a professional capacity in the United States.

This demographic generally has more complicated financial affairs than a typical American. They tend to be accomplished high-income professionals, and they also save at a considerably higher rate than their American peers.  As a result, their planning and investing needs are more complex.  These investors struggle with understanding our unique tax code, along with the various retirement and investment options offered to them here in the U.S.

Most have very little experience with investing as many foreign countries have much less developed and readily accessible investment markets. Further, there are very few financial institutions or advisors that are qualified to help them.  This group generally feels very alone and overwhelmed when it comes to investment and retirement decisions, even though they save a much higher share of their income and thus have fairly secure retirement outlooks.

Americans Living Abroad

Among American expats, there is a considerable amount of confusion surrounding personal finances and retirement. Much of this revolves around U.S. taxes and how it integrates with whatever foreign tax they pay in their resident country.   As a result, they too have very complex financial planning and investing needs.

Effective retirement readiness planning and investment management are major challenges, as there are very few places to turn for answers or advice. Also, self-managing one’s accounts back in the U.S. can be very difficult, given the administrative red tape and because many U.S. financial institutions would rather not take the risk of serving expats.   Many brokerages and banks are systematically closing accounts with a foreign address.

Likewise, most foreign financial institutions are also not disposed to serve American expats, with the cause being compliance with the far-reaching information sharing requirements of FATCA regulations.  As a result, this group is also facing very few options.

Non-Resident Aliens

Foreign citizens living outside the U.S., with no U.S. citizenship or residency, but with U.S. based financial assets.

A large percentage of this segment are foreign professionals who previously worked in the U.S. and accumulated certain financial assets that remain there even after they’ve left the U.S., such as real estate, bank and brokerage accounts, 401k and other qualified assets. Additionally, foreign citizens who have inherited various financial assets in the U.S. and have chosen to leave those accounts in the U.S is also contributing to the growth of this segment.

It is becoming very common for high-net-worth (HNW) international families to purchase U.S. real estate, either as an investment or to establish a stronger connection to the U.S. for their families.

This group also has fairly substantial and complex wealth management needs.  However, the primary opportunity with these investors is to provide oversight of their qualified and non-qualified investment portfolios in the U.S., which would be nearly impossible to self-direct for a non-resident alien living abroad.

Primary Financial Planning and Wealth Management Needs

For these growing niche segments, their primary financial and investment planning needs consist of several specific service requirements.  Beginning with investment management, cross border investors need specialized investment portfolio management that takes into consideration their specific situation. This includes establishing and funding brokerage accounts, investment portfolio construction and ongoing monitoring.

Additionally, many of these investors require specialized financial planning and wealth advisory services, delivered through a personal relationship with a knowledgeable financial advisor. Key areas of focus are:

  • Personal risk tolerance
  • Overall balance sheet review and asset allocation
  • Stock option and equity compensation analysis
  • Tax strategies and optimization of investment portfolios to maximize tax efficiency
  • Retirement readiness and financial projections
  • Review of real estate and other alternative assets
  • Advanced retirement planning related to: estate planning, asset protection and insurance, charitable giving, and more.

Because of the complexities involved, cross border investors also require advanced and specialized client service and administrative support.  Examples include assisting in the movement of funds, management of various investment accounts, as well as handholding in the process of opening new accounts, transferring assets and executing foreign currency transactions.  Other general service items can be complicated by foreign addresses and the lack of U.S. citizenship, thus a dedicated and specialized technology and service platform is necessary.

Finally, rounding out the wealth management needs includes introducing clients to other qualified professionals when required, such as tax, legal, immigration, HR, and others.

In our next few articles, we’ll highlight a specific cross border individual story and how a cross border wealth management approach solved their challenges.

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