When establishing life overseas, many expats share the same experience — American banks and brokerage firms may no longer be interested in serving them. Whether you’ve worked with these businesses before moving abroad or are interested in establishing accounts with them now, here are three reasons why expats are facing the issue of American firms not wanting to work with them.
Regulatory Dissonance
American firms have strict compliance rules and regulations, which became even more constricting following 9/11 and the introduction of the Patriot Act. This put a regulatory burden on investment companies, and as a result, many of them chose to limit their client base to domestic clients since maintaining overseas clients (even if they were American citizens) became increasingly complicated.
Following the Patriot Act, American financial institutions dropped clients at an alarming rate. For example, JP Morgan closed around 50,000 expat accounts, and Wells Fargo gave up $40 billion of client assets for the same reason.
The good news is some companies do specialize in serving offshore clients, including expats living in Israel. Profile Investment Services, Ltd. works with Portfolio Resources Group, Inc., which excels in performing “Know Your Client” due diligence and handling other financial regulations for clients who live outside of the United States.
Time Zone & Cultural Constraints
People want to work normal working hours and that makes it difficult for companies to interact with and serve clients overseas. While expats live in a different culture (and tax code) it is important that their financial advisors understands the cultural differences and is sensitive to the fact that dual citizens have dual tax codes that may impact financial decisions.
Documentation
We’ve found that foreign brokerage firms often struggle to provide the necessary documentation for American tax purposes. As an expat, you still have an American tax liability which, on its own, can be difficult to navigate. But if you’re not receiving the forms and documentation with the information you need for the IRS from a foreign brokerage firm, you’re going to face an uphill battle — potentially spending additional time and money in tax reporting.
One way our firm helps clients with their investments is that all accounts are held in America and provide IRS-compliant 1099s listing dividend and capital gains/loss information in the way American accountants need.
Opening and maintaining a U.S. investment account from Israel through our firm can help minimize the effort put into tax reporting obligations since accounts receive 1099s, and can maximize the service given to account owners since we work in your time zone and share your dual cultures.
If you’d like to learn more about how we serve expats living in Israel, please contact our team today, 02-624-2788.
Douglas Goldstein, CFP®, GFP®, 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 January 3, 2024.