Many readers have recently contacted me because they received a letter from their U.S. brokerage firm informing them that either “You can no longer purchase additional shares of mutual funds in your account,” or “We will no longer provide investment advisory services to you and/or you may only enter liquidating orders or non-solicited orders in your account.”
This letter is not a result of new American legislation; rather it means the brokerage firm handling your portfolio is no longer interested in working with clients living outside the United States. Don’t despair. There are solutions that can possibly even improve your situation.
What action step you should take
Even if you can’t continue to work with your existing brokerage firm, you do not need to cash out your American account. Rather, work with a firm that specializes in opening brokerage accounts for clients who have an Israeli address (click here for details). Then, transfer over assets “in kind” to the new account. The new account (whether a joint account, individual account, IRA, or other type) can be an exact replica of the old account, unless you wish to change your investment structure. By moving everything over in kind (without selling) there are no tax consequences or reporting requirements.
Basically, after signing new account paperwork, a client’s assets are easily transferred over to the “cross-border-friendly” U.S. brokerage firm. Within one month, clients get a brokerage statement from their old brokerage firm, and the next month they get the statements from the new firm (which they could also choose to get online for free).
If you receive a letter inviting you to leave your existing company, look at this as an opportunity to review your financial plan as well as your investments with an investment advisor who is licensed both in the United States and in Israel.
Douglas Goldstein, CFP®️ is the director of Profile Investment Services, Ltd. www.Profile-Financial.com He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published April 8, 2015.