With an increasing number of US expats relocating to the UK, UK wealth manager Canaccord Wealth has launched a new model portfolio service designed to help advisors manage complexities of cross-border investing for US citizens living in Britain.
Canaccord
Wealth, a UK wealth management firm, has launched a
specialist managed portfolio service (MPS) specifically for US
expatriates living in the UK. It provides advisors and their
clients with a professionally-managed investment solution
tailored to the requirements of cross-border investing.
The new service has been developed to address demand from
intermediaries to address a gap in the market for US expats, who
face restrictions when investing due to being subject to both UK
and US tax rules. Many investment products available to UK
investors are unsuitable for US taxpayers and the consequences of
investing in the wrong assets can be punitive, the firm said in a
statement. (For years, US expats were seen as a compliance burden
because the IRS taxes its citizens on a worldwide, not
territorial, basis. See related articles
here and
here.)
The number of US expats relocating to the UK has been rising
in recent years; they are seeking political stability and a
workable lifestyle, amongst other reasons. (See an analysis
here.) Wealthy Americans also represent a major
non-UK buying demographic for prime real estate in London
such as Belgravia, Mayfair and Chelsea.
Built by Canaccord Wealth’s specialist US expat team, which has
over 20 years’ experience managing an advisory service for
American citizens living overseas, the service aims to provide
diversified investment exposure while remaining mindful of
regulatory and tax considerations faced by US taxpayers who live
in the UK.
The five model portfolios – which complement the existing
advisory investment service for US ex-pats – are based on
the firm’s core asset allocation framework, using selected
vehicles intended to be suitable from an HMRC and an IRS
perspective. This includes the use of US-domiciled, UK reporting
funds and individual government bonds, where appropriate, helping
investors comply with US Passive Foreign Investment Company
(PFIC) rules, while remaining mindful of UK tax requirements. All
five risk-rated models are available on Morningstar.
“The launch of our US-expat MPS service comes at a time when
there is growing demand from intermediaries for specialist wealth
management solutions for their UK-based American clients,” Antony
Champion, chief distribution officer at Canaccord Wealth said.
“For US expats, investing is a complex area to
navigate, they face investment constraints because of their
ongoing US tax obligations. Most investment solutions are not
designed with cross-border tax considerations in mind and the
implications for getting it wrong can be significant.”
“Our aim is to provide a solution that broadens access to
investment opportunities for US ex-pats, while helping advisors
and their clients manage the complexities that come with being
subject to two tax systems,” he continued. “As this is such a
complex area, we always recommend US citizens living in the UK
seek specialist tax advisory services before they consider
investing.”
Canaccord Wealth said it has engaged an independent specialist
tax consultancy to review and monitor the eligibility of
investments used within the portfolios for both US and UK
tax compliance. The service is available through financial
advisors and forms part of the firm’s broader commitment to
supporting internationally-mobile clients.