Over the course of a long relationship with their advisor, a client’s circumstances can change in many ways, from a growing family, to changing jobs, to ultimately retiring. While each of these transitions can create planning issues to be addressed, an advisor’s ability to continue working with the client typically remains unchanged. However, a different type of client transition – relocating abroad – can be particularly challenging for advisors, not only in the technical planning questions such a move raises, but, more fundamentally, how (and whether) the advisory relationship may continue.
In this guest post, Ashley Murphy, co-founder and executive director of the Global Financial Planning Institute (GFPI) and the founder and principal of Arete Wealth Strategists Australia, discusses how a client’s international move can affect everything about the advisory relationship, including the regulatory landscape that an advisor is subject to (even if nothing else has changed), as well as custodial options and capabilities.
To start, when a U.S.-based client moves abroad, the U.S. regulatory framework doesn’t go away; rather, the new country’s rules and regulations are added on as another layer of scrutiny. While different locales have their own regulations concerning when an advisor is “doing business” in the country, it’s important for advisors to recognize that advising a client living there could be viewed as engaging in that country even if they don’t have a physical presence there, potentially generating licensing and/or registration requirements.
Another key consideration when assessing whether continuing to serve the client is possible is how the client will be treated by the advisor’s custodian, as some custodians have country- and account-specific restrictions that might not make it possible for a client to keep their current accounts with the custodian after moving abroad. Also, the advisor can examine their E&O policy to determine whether the client’s new jurisdiction is covered at all and, if so, what the policy protects against.
