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January 3, 2023
At the beginning of 2021, Wells Fargo announced a reduction in service for international clients. The most impacted Wells Fargo customers include U.S. citizens living abroad (U.S. expats), green card holders returning to their home countries, and non-U.S. investors (nonresident aliens). These Wells Fargo clients may face restrictions related to their investment accounts, prohibiting them from successful long-term investing and saving.
Advisors at Wells Fargo are currently reviewing their clients and determining if any of their brokerage clients no longer physically reside in the United States. If a client is found or suspected to be a non-U.S. resident, Wells Fargo may restrict U.S. expat brokerage accounts to liquidations only (no future purchases allowed). The struggle for most international investors is finding a suitable custodian that will work with clients who are not physically based in the United States. The good news is that several U.S. expat-compliant brokerage account options exist.
There is no U.S. law that says American expat brokerage accounts must be frozen or shut down when moving abroad. The decision to freeze an expat account is an internal financial institution policy. Rather than complying with new international regulations, many U.S.-based brokers (such as UBS, Wells Fargo, Merrill Lynch and Morgan Stanley) decide it is easier to close or freeze American expat brokerage accounts. This is likely the case currently going on with Wells Fargo and their international brokerage account restrictions that were announced in early 2021.
There are several reasons for these U.S. expat brokerage account restrictions and no single factor can be solely to blame. The primary rationale is likely a combination of increased U.S. regulation of financial institutions and a perceived compliance risk that U.S. banks have about operating in certain foreign countries. Laws such as the U.S. Foreign Account Tax Compliance Act (FATCA) have brought increased scrutiny to this area.
Some larger financial institutions who offer commercial and investment banking services do not want to expose these core banking functions to undue regulatory oversight by servicing U.S. expat retail clients. Wells Fargo may view these U.S. expat clients as a source of perceived compliance risk. Ultimately, they may have decided for their overall business practice to close these retail international brokerage accounts. Again, the good news is that compliant and efficient U.S. expat investing options exist.
The global family team at Cerity Partners is experienced in working with U.S. expats, green card holders and nonresident alien clients facing international brokerage account closures. Many of our primary custodians accept non-U.S. citizen clients as well as U.S. citizens living abroad. These primary international investment custodians include:
Not using a U.S. expat-friendly brokerage firm can be disastrous from a tax and long-term financial planning standpoint. Investments may not be optimal from a cross-border compliance and efficiency standpoint. Not being able to purchase new investment funds while living abroad may significantly impact retirement and other savings goals. For U.S. expats, it is essential to take the time to understand your goals and create a long-term cross-border financial plan. These recent U.S. expat changes at Wells Fargo may create the perfect time to do so.
In addition to compliant international custody options, our team of global wealth advisors provide proactive financial planning nuanced to cross-border circumstances. This includes specialized wealth advisory services related to:
The decision of Wells Fargo to close U.S. expat accounts and other international clients may be frustrating in the short-term. However, working with a qualified international financial advisor who is a fiduciary and familiar with unique planning issues may ultimately lead to better outcomes for many years to come.
Should you be impacted by this Wells Fargo decision, we are happy to be a resource to help.
Cerity Partners LLC (“Cerity Partners”) is an SEC-registered investment adviser with office locations throughout the United States. Registration of an Investment Advisor does not imply any level of skill or training. The foregoing is limited to general information about Cerity Partners’ financial market outlook. You should not construe the information contained herein as personalized investment, tax, or legal advice. There is no guarantee that the views and opinions expressed in this commentary will come to pass. The information presented is subject to change without notice and should not be considered as an offer to sell or a solicitation of an offer to buy any security. Material economic conditions and/or events may affect future results. Before making any decision or taking any action that may affect your finances or your company’s finances, you should consult a qualified professional adviser. For information pertaining to the registration status of Cerity Partners, please contact us or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). For additional information about Cerity Partners, including fees, conflicts of interest, and services, send for our disclosure statement as set forth on Form CRS and ADV Part 2 using the contact information herein. Please read the disclosure statement carefully before you invest or send money.
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Frederic Behrens is a Partner in the New York office, where he provides investment management and financial advisory services for high-net-worth individuals and international families....
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