Douglas Goldstein: Hi, I’m Doug Goldstein.
I’m the director of Profile Investment Services and I’m a cross boarder financial advisor
which basically means that I specialized in working with people who live outside the United
States who want to have a US brokerage account or for American citizens who might also have
an IRA or some type of retirement account.
These days, it’s a little bit more tricky but I hope that as a result of going through
this presentation, you’ll see that there are strategies you have to know and tactics
you have to follow and once you do all that, it’s not such a big deal.
So let’s dive right in.
The first thing I want you to realize is that the people who I’m talking to here are normal
people, people who want to invest in stocks, bonds, mutual funds, options, bank deposits,
actually people who may need a checkbook or a debit card against their brokerage account,
normal people.
Now this could also include if you are the trustee of a trust or if a regular person,
you own a company or you have some sort of corporation through which you want to invest,
all of that is okay.
The seminar of course is meant for US citizens and non-US citizens alike.
So as long as you are a citizen somewhere on the earth, this is probably going to help
you out.
It’s not meant of course for bad guys who are looking to do money laundering or to do
anything illegal because we certainly don’t help people with that and you’ll see as
result of going through this, how we can make sure that the clients that we open accounts
for are actually legitimate.
Probably the most common type of person I see is someone who’s received a letter that
looks something like this from his brokerage account.
“Dear client, we regret to inform you that we can no longer service your account because
you don’t have a US address.”
Now this could be either for an American or a non-American.
What happens is this big brokerage firms that have huge legal departments and frankly they
don’t want to spend the time or the money or the effort to get to know their clients
who live outside the United States, so what do they do?
They simply don’t allow those accounts whatsoever.
Now, someone who is a cross boarder specialist, I feel this is a mistake, something that they’re
missing out on but there are certainly companies, boutique companies that do help people in
this situation.
So let’s go through the 10 steps you need to open a US brokerage account for someone
who is not a US resident, it could be a US citizen or what we call an NRA, a non-resident
alien.
That means you’re not living in the United States, you’re not a resident and you’re
an alien which means you’re not a US citizen, you are still very welcome to invest in the
US.
The first thing you have to do is you have to contact the brokerage firm that in fact
specializes in working with people outside the United States.
You might find some company, you could call enough companies and say “Hey, I live in
London or in France or in Israel or South Africa, could you please open an account for
me” and maybe someone will but I think it’s a mistake to be the exceptional client.
Find a company that specializes just in handling people who live outside the United States.
You will absolutely have to clearly identify yourself.
When we open accounts for clients, we ask for copies of their passport, driver’s license,
we’re going to look for a utility bill as evidence of their address.
We have to make sure in our office that we know who the people are and they were comfortable
that they have properly identified themselves.
As soon as someone comes in and says “Oh well, you know I don’t have a passport”
or “I left it at home, here can I just give you a letter” or “Here’s a letter from
my lawyer or my friend or a library card.”
If it’s not an official government ID, we won’t open the account.
Then you have to state what your citizenship is and the form you’re going to sign is
either a W9 which is for US citizens or a W8 which is for non-US citizens.
Just one mistake sometimes people make is if you are a US citizen and you live outside
the United States, you still have to sign a W9, you didn’t become a W8.
You’re a US citizen, that’s what you sign.
If for some reason, you gave up your US citizenship and we work with people like that also, then
you would sign a W8.
If you are a non-US citizen but for some reason you have a social security number like you
once worked in the United States then you would still sign a W8.
There are two real services that you should get and by the way this applies whether you’re
working with a cross boarder financial specialist because you live outside the United States
or if you happened to live in the US or anywhere, there are two main services that you get from
investment companies.
One of them is advice and in the case that we’re talking about here, we’re talking
about someone who can specialize in cross boarder advice and in order to make sure that
you get proper advice, make sure that the person you’re talking to is licensed both
in the jurisdiction where you live as well as in the jurisdiction where you’re investing.
So I’ll use myself as an example but there are lots of people like me.
I’m registered in the United States.
I have licenses through FINRA, I’m also a certified financial planner.
Those are US licenses or documents and I’m based in Israel so I’m also licensed by
the Israeli Securities Authority.
The second thing you want to look for is someone who has the ability to custody the account.
Now when I say that, I’m not talking about someone who holds the money in his own name,
that is a big, big mistake.
When we open accounts for clients, we custody the account through a major US brokerage firm
that gives you all the benefits and safeties that anyone who has US brokerage account would
have, also through a major firm, you’ve accessed world markets.
You have currency trading opportunities, you can have different money managers and mutual
funds.
You can buy stocks and bonds.
You have easy access to your money through a checkbook and a Visa or Mastercard or a
debit card.
All of these services are not provided by the individual advisor because obviously this
is not something he can put together but he should have a relationship with a major brokerage
firm who is able to supply those services.
So for you as the client, it should be a turnkey operation.
You go to one office, you get your advice and the clearing in custody.
Do you really want to go into an office where the advisor says “Listen, I’ll tell you
what to do but then you have to go off and do it on your own.
Now some people are do-it-yourself and if that’s you, great but the area that I work
in tends to be with people who really want to get a full service.
These are few questions I would suggest you ask before you get started with the new advisor.
The first one is what experience do you have in dealing with cross boarder clients?
I always tell clients I’m not a tax attorney, I’m not an accountant, I’m not a lawyer,
I’m not going to write your wills and trusts, I’m an investment advisor but I do have
cross boarder experience and it means that I’m able to help clients ask the right questions
to their other professionals whether their tax questions are legal questions and of course
all of the investments that I deal with are constantly things where the questions of what
it means to be cross boarder come up like “Can I own this mutual fund?
Is it better for me to be investing in this currency or that currency?”
These sort of questions are the questions that cross boarder advisors are going to deal
with everyday.
So make sure who ever you’re dealing with has the experience.
You also want to make sure that he’s able to provide not only buying and selling investments
but also proper financial planning because cross boarder people especially – I deal
mostly with US expatriates, people who lived in the United States but then moved away,
you want to make sure that they can help you to develop a proper financial plan for someone
in your situation.
Make sure that whoever it is can set you up with an actual brokerage account and that
you don’t have to go scurrying around to do this on your own.
And finally make sure, very crucial, the brokerage account or if you have an IRA account, an
individual retirement account which is a type of pension account, make sure the assets are
in your own name and that the broker is not just combining assets in his own name and
printing up a statement on his own letterhead.
That is obviously very, very suspect and very dangerous.
Having your money through a proper custodian which would be a major brokerage account in
America is the best way to assure that you’re not going to have your assets co-mingled with
other clients.
I’m always a big fan of meeting the people you talk to, so I encourage face-to-face meetings.
I do know that sometimes it’s not possible in which case try to have a Skype relationship
where you can easily talk to the advisor where you can even do it on video.
A lot of the communication that people have with their advisors is not just what’s said
or what’s written down, it’s what not said, it’s being able to really communicate
and hear what the client’s concerns are.
You know when I talk to someone about how much risk he can take, there’s a lot more
than just filling out a checklist.
I’m an aggressive or a medium or a conservative investor.
I don’t really feel those terms mean too much.
I think that having a discussion with people about risk is very helpful.
So you want to have an open line of communication, again the best way to do it is to meet.
Skype is a great tool or certainly being comfortable to call the advisor on the phone.
That’s also why it’s nice to work with someone who is pretty much on a close time
zone to you if not exactly the same time zone as you.
Now we’re up to the next step, finally you have to sign the paperwork and fund the account.
You’ve got to set up the portfolio in your own name and then transfer the money.
So transferring the money is normally most easily done in a same name transfer.
What do I mean?
If your name is Doug Goldstein and you’re going to open up a new account, well transfer
the money to another account in the name of Doug Goldstein.
If you want to transfer money from John Smith to Doug Goldstein, that usually creates some
compliance issue.
It is not illegal.
You are allowed to transfer money to other people but once you start doing that, the
compliance officers do look more closely at it and they may ask for documentation or for
an explanation about what’s going on and obviously for larger sums of money, there
are going to be more concerned.
So if you’re going to buy a house and you’re going to spend a million dollars on a property,
you might be asked to demonstrate why you’re sending the money to someone else and the
last to see a copy for example of the contract, the purchase contract to make sure that this
is legitimate.
The compliance officers are assigned with the task of making sure that no one is engaging
in money laundering and they take that job very seriously.
Don’t try to deposit cash or traveler’s checks, these are all the tools of money launderers
and I would say the more serious brokerage firms won’t accept money that way.
Also if you deposit money in the account, you can’t just turn around and send it out
immediately.
That looks like someone’s trying to move money and do something illegal.
If you need to move money because let’s say for business reasons, make sure you speak
to the brokerage firm first and ask them if they’ll be okay with that transaction, it
not you may have to work through your current bank.
If you have any stock certificates and you live outside the United States – frankly,
if you live inside the United States, deposit them in the brokerage account.
There’s nothing you can do with the stock certificate quickly.
If you want to trade a stock, you have to have it deposited and verified before you’ll
– any brokerage firm I think would be willing to trade the stock for you.
It’s different from the old days.
So if you remember in the old days, maybe you would go and you’d sell a stock and
then you bring the certificate into the brokerage firm the next day or 2 or 3 days later.
We certainly don’t do that.
We demand that all of the securities are in the account before we’ll trade them and
I don’t know any firm that doesn’t require that.
In any event, it’s much more likely that individual is going to lose a stock certificate
if he keeps the in the filing cabinet in his house than if they are safely deposited in
an SIPC insured brokerage account.
If you have any special needs and requirements and this does happen, maybe you have a need
for power of attorney for someone or you want your advisor to know that your husband or
wife or your ex-husband or ex-wife might be doing something or there are other unusual
financial circumstances, lay it out before you get started.
Make sure if you have any questions or even you need to be writing checks or adding money
or a special type of trading that you want to do, just talk to the advisor before you
open the account to make sure that this is something that they do and that they are comfortable
with.
Next thing you need to do is to choose the right investments.
You have to base them on what are your goals, what’s your tolerance for risk, how do you
decide this is not discussion about financial planning and investment choice but certainly
make sure that whoever you work on is going to help you build a proper plan to make all
of these decisions.
And finally monitor the account regularly.
You should get monthly statements, you should have access online to see what’s going on,
not just to see the value of the stocks and bonds but also to make sure that no one has
stolen your checkbook or is using your Visa or Mastercard.
It’s your responsibility to keep an eye on the account.
If you have any specific questions or you’d like to open a US brokerage account or an
IRA account in America, please feel free to get in touch with me.
You can contact us directly through the website, www.profile-financial.com and just click on
the Contact Us button and at the same time, if you like these are a couple of very popular
books, both of these became bestsellers, The Expatriates Guide to Handling Money and Taxes
is designed for Americans who live outside the United States.
I co-authored that with a tax attorney and other specialist who deal in Americans abroad
and Rich as a King is a great book about financial planning and investing which I co-authored
with world chess champion Susan Polgar.
We use the strategies of chess as the way of illuminating the investment concepts.
So I hope to hear from you soon.
Thanks so much.