Serving internationally mobile clients has become a growth industry for financial advisors, as Contributing Editor Ellen Uzelac discusses in Research magazine's February cover story "Advising Across Borders." Potential clients include an estimated 6.32 million Americans (excluding military and government employees) living in 160-plus countries.
Spending extended time abroad means stepped-up financial complexity, including exposure to currency risk and multiple tax systems. A key to success, Uzelac writes, is "know before you go"; pre-planning can be crucial to avoid getting tripped up on matters ranging from work permits to entitlement eligibility.
Another February article, "Fear of Flying," tells the stories of brokers who left the wirehouse world in order to become registered investment advisors. A major obstacle they had to overcome: anxiety about the unknown, including regulatory compliance and the costs of doing business. The rewards for takign the RIA path can be substantial, however, including an enhanced sense of freedom.
Click through the following slides to preview the February issue of Research.
The February cover story by Ellen Uzelac looks at the challenges and opportunities involved in providing financial advice to clients who are living for a time in foreign countries.
"Cross-border planning is a lot more complicated than people think. Most advisors underestimate it. You've got to know where the minefields are," says Robert Keats, founder of Keats, Connelly & Associates, a cross-border financial planning firm in Phoenix, Ariz.
Writes Uzelac: "The bigger the assets and earnings, the more important it is for the internationally mobile client to plan ahead. Taxes, insurance, estate planning and investments are all treated differently, depending upon the country. Slip-ups — spending so many days in a country that you become a resident for tax purposes, for example, or failing to disclose foreign holdings — can undermine even the best laid financial plans."
A sidebar, "One Former Expat's Story," describes what Jeff Born, an academic with a Ph.D. in finance, discovered about dealing with taxes, work permits, currency risk and more during a few years in Fiji working at University of the South Pacific as inaugural dean of its business and economics program.
Contributing Edtor Jane Wollman Rusoff analyzes the anxieties that arise from leaving the wirehouse world to become a registered investment advisor. She spotlights the stories of two advisors, Amos Stavinsky and Francis Hoey, who made the leap.
Stavinsky discusses how he came to find life at a big firm too confining. "In a wirehouse, you operate in a very confined environment," he says. "It's almost like working for McDonald's: You can buy the hamburger only from McDonald's, the buns only from McDonald's, the fries only from McDonald's. As long as you buy everything from McDonald's, everything is fine."
For Hoey, concerns about becoming his own chief compliance officer were an obstacle that had to be overcome. "Growing up in the broker-dealer world," he says, "they'd tell you that the SEC or FINRA are coming to your door every day to shut you down. They have a very fear-oriented culture, which makes you believe it's too hard to go out on your own."
The article looks at how these former wirehouse brokers do business today, including managing their own costs. "I cannot emphasize this more," Stavinsky says. "Yes, with an RIA, you make 100 percent of the fees — and a lot more than before. But running a business — salaries, health care and so on, are expensive."
To Stavinsky, it's worth it: "For the first time in my career, when walk into the office, I'm smiling. I'm very happy. It's freedom. It's almost like shackles coming off your hands and legs. The sky's the limit!"
In the latest adaptation from his book The 7 Most Important Equations for Your Retirement, Prof. Moshe Milevsky details how Benjamin Gompertz (1779-1865) developed a mathematical method that remains relevant to retirement income planning today, particularly on the crucial question of how long one is likely to be alive to need the money.
Previous researchers had spent much time compiling death statistics. Gompertz discerned an underlying pattern, whereby the probability of a person's dying in the coming year increases with considerable regularity from adulthood into old age.
Writes Milevsky: "While most academics toil in obscurity, and their names eventually perish despite their frenetic publishing, Benjamin Gompertz has joined a very small distinctive group of scholars with an actual equation named after him. The equation has been admired and used by researchers in demographic studies, the world over, for almost two centuries now."
