You may have heard that some major U.S. brokerage firms like Merrill Lynch and Morgan Stanley have told clients living outside of America that they must close their accounts. Some people have called me and said, “I don’t understand how they know I live in Israel. I use my brother’s home in California as the address on my account.” These days, it’s pretty standard for companies like Merrill and Morgan (and Wells Fargo, JP Morgan, Fidelity, etc.) to know where you are when you log into your account.
They can see where you are
Since all computers using the internet have a specific location called an “IP address,” websites you visit – including the websites of your brokerage firms – can figure out where you are. They can tell that you’re looking at your account from a country that doesn’t match the legal address that you listed on your account paperwork.
Many American brokerage firms have decided to quit the international client business
Although you may have a great relationship with your specific advisor, he may have no choice but to show you the door. A recent article in Advisor Hub explained, “Hundreds of Morgan Stanley brokers were scrambling on Tuesday after being informed by managers that, effective immediately, they would have to close yet-to-be reviewed accounts with a balance below $5 million and severely restrict accounts over $5 million by disallowing deposits and withdrawals or limiting trading, according to two sources at the firm.”
Don’t introduce potential tax problems by using an American address
Even if you do somehow manage to bypass their security systems and convince them that you live in the States, you might introduce the problem of exposing yourself to taxation by the state and city where you claim to live. This article is not a source of tax advice, but accountants I have met have warned their clients to avoid falsely claiming residency in America if they don’t want to pay more taxes.
Use your real address with a cross-border investment firm
Some brokerage firms specialize in international clients. For over 25 years, I’ve been helping clients handle their U.S. investment (brokerage) and retirement (IRA) accounts from Israel. The reason that my company can handle overseas clients is because I’m licensed both in the U.S. and in Israel, and because my U.S. brokerage firm specializes in cross-border clients. Our compliance officers understand the issues that need to be addressed and can quickly and efficiently approve new accounts.
Whether your portfolio is under or over $5 million, and if you live outside the United States, call (02) 624-2788 or email me directly (doug@profile-financial.com) to see how we can help you maintain your accounts in American while you live overseas.
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 November 23, 2022.