At the beginning of 2021, Wells Fargo announced a reduction in service for international clients . The most significant changes are reported to occur on September 30, 2021.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 (non-resident aliens). These Wells Fargo clients may face restrictions related to their investment accounts which prohibit 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.
Why is Wells Fargo Restricting U.S. Brokerage Accounts?
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 these 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.
For larger financial institutions who offer commercial and investment banking services, they do not want to expose these core banking functions to undue regulatory oversight by servicing U.S. expat retail clients. Wells Fargo may be viewing 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!
What U.S. Expat Brokerage Options Should Americans Living Abroad Use?
The global family team at Round Table Wealth Management is experienced in working with U.S. expats, green card holders, and non-resident 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:
- Charles Schwab
- Fidelity Investments
- J.P. Morgan
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 be the perfect time to do so.
Successful U.S. Expat Investing and Cross-Border Financial Planning
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:
- U.S. expat financial planning strategies.
- Asset allocation across an entire family balance sheet including foreign assets
- Saving for a retirement abroad
- Maintaining U.S. investment accounts with Exchange Trades Funds (ETFs), mutual funds, individual stocks and bonds
- Problems with investing in non-U.S. mutual funds (PFICs)
- Finding competent international tax preparers and lawyers
- Life insurance for U.S. expats and non-resident aliens
- Wills and cross-border estate planning issues (U.S. and foreign trusts)
- Planning for mixed-nationality and families with U.S. and non-U.S. citizen spouses
- Reporting and maximizing non-U.S. pensions for U.S. tax purposes
- Country-specific issues financial planning issues
- Currency Management for U.S. Expats
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. Round Table Wealth Management is a New York based independent registered investment advisory firm founded twenty-two years ago and now manages approximately of $1.3 billion of assets for clients around the world (as of Dec. 31, 2020).