It is getting harder and harder to find an expat friendly broker. International brokerage firms such as Morgan Stanley, Merrill Lynch, UBS and Wells Fargo are restricting business with American expat clients1. When these firms discover a customer no longer physically resides in the United States, they may freeze American expat brokerage accounts or force expats to liquidate their investment holdings. Not using an expat friendly brokerage firm can be disastrous from a tax and long-term financial planning standpoint.
U.S. expat brokerage account restrictions vary between brokerage firms. Some firms will let you keep your existing brokerage account once you have moved overseas but will not permit clients to open a new brokerage account due to residency in a foreign country. Other firms request that expat clients close all their existing U.S. financial accounts when discovering a client has an international address. The American expat account restrictions may even be different for taxable and retirement accounts (IRA, Roth IRA, and 401k). Every online expat broker is different!
These international account restrictions are enforced in a variety of ways by brokers. Some non-U.S. residents have reported that they cannot access their U.S. brokerage account when they attempt to log in from a foreign IP address. Other U.S. banks focus more closely on the foreign address listed on the account. Sometimes an investment advisor must report that they have an American expat to their compliance department. Regardless of how the financial institution finds out, the account may ultimately face an international brokerage account restriction and the investor needs to find an expat friendly broker. Fortunately, there are many excellent investment custodian/investment brokerage options for U.S. expats.