Are you having difficulty buying American mutual funds?
Recently, many people contacted me after receiving a letter from their existing American brokerage firm saying, “You can no longer purchase shares in U.S. mutual funds.”
Who says you can’t buy shares in certain U.S. mutual funds?
Ultimately, the compliance division (lawyers) of the mutual fund companies must decide where they want to do business. Because of the Patriot Act enacted as a result of the 9/11 attacks on America, many new regulations were put into place to protect the country, including anti-money laundering and bank secrecy rules. The regulatory environment became so complicated for many firms that they simply decided to stop doing business outside America. This led to various banks, brokerage firms, and mutual funds companies sending “Dear John” letters to their clients, letting them know that they will either cease or severely limit the services available to them.
Were you asked to leave?
Some folks believe that simply using the address of a friend or family member in America will solve the problem. Generally, lying about your address is not a good idea. Who knows what the tax consequences could be. Do you really want to open that can of worms?
Fortunately, there are many investment solutions for people living outside the United States who want to have U.S. brokerage accounts. In fact, there are companies that specialize in that niche market. I spend most of my day helping dual citizens American-Israelis maintain U.S. brokerage accounts and their IRA accounts.
Even if certain mutual funds don’t want my clients as customers, my clients’ portfolios aren’t adversely affected because we can arrange for a diversified choice of managed accounts and exchange traded funds (ETFs) from which they can choose.
If you received a letter from a brokerage firm or mutual fund that limits the services or product choices you are offered, watch this video.
Douglas Goldstein, CFP®, investment advisor is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published May 30, 2019.