Expat Wealth Management (2024)

FAQs

Why are US expat brokerage accounts being closed? ›

Reasons Behind American Expat Brokerage Account Closures

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.

Any minimums in terms of investable assets, net worth or other metrics will be set by individual wealth managers and their firms. That said, a minimum of $2 million to $5 million in assets is the range where it makes sense to consider the services of a wealth management firm.

You might not need a wealth manager if you have clear goals and are confident you can create and implement strategies to protect and grow your wealth. However, a wealth manager may be a good idea if you have substantial assets, would benefit from an expert, and have questions you need help answering.

What Is an Expatriate? An expatriate, or expat, is an individual living and/or working in a country other than their country of citizenship, often temporarily and for work reasons.

Fidelity does not provide discretionary asset management services to customers who reside outside the United States. If you move outside the United States, your discretionary asset management relationships will be terminated, and certain mutual funds held in those accounts may be liquidated as part of that termination.

We understand that as an American living outside the U.S., there are some difficult challenges. That's why we aim to make the financial transition as smooth as possible. We can help you invest in U.S. markets while living abroad, access U.S. dollar–based accounts, and provide reporting for U.S. tax filing.

But, if you're already working with an advisor, the simplest way to determine whether a 1% fee is reasonable may be to look at what they've helped you accomplish. For example, if they've consistently helped you to earn a 12% return in your portfolio for five years running, then 1% may be a bargain.

Most of my research has shown people saying about 1% is normal. Answer: From a regulatory perspective, it's usually prohibited to ever charge more than 2%, so it's common to see fees range from as low as 0.25% all the way up to 2%, says certified financial planner Taylor Jessee at Impact Financial.

Cons of Private Wealth Management

There is also always the risk of misalignment between your financial goals and the wealth manager's incentives. Some wealth managers may prioritize products or investments that generate higher commissions or fees which might not always align with your best interests.

If you earned Social Security benefits, you can visit or live in most foreign countries and still receive payments. Look up the country on the SSA Payments Abroad Screening Tool to be sure you can receive your payments.

Do expats still pay US taxes? ›

U.S. citizens living abroad, often referred to as expatriates or expats, are generally required to file U.S. income tax returns, just like individuals living in the United States.

Limit on excludable amount

The maximum foreign earned income exclusion amount is adjusted annually for inflation. For tax year 2023, the maximum foreign earned income exclusion is the lesser of the foreign income earned or $120,000 per qualifying person. For tax year 2024, the maximum exclusion is $126,500 per person.

Although many US brokers may be hesitant to serve clients abroad, there are still options available for US expats. The optimal choice varies based on individual circ*mstances, including the destination, duration of stay, and long-term objectives.

In some cases, you may be able to maintain your existing brokerage account and continue managing your stocks remotely. However, this may come with certain limitations, such as restrictions on trading or accessing certain financial products.

Brokerages may be required to block an account for a period if the account holder buys or shares securities without having sufficient capital to complete the trade, referred to as freeriding. The specific regulation governing this is part of Regulation T and specifically relates to cash accounts.

There is no citizenship requirement for owning U.S. stock and foreigners can easily access U.S. stock through U.S.-based brokers and international brokers. Despite its popularity among foreign investors, many foreigners haven't properly planned for the U.S. estate tax consequences of owning U.S. stock.